UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-03833
MAINSTAY VP SERIES FUND, INC.
(Exact name of Registrant as specified in charter)
51 Madison Avenue, New York, NY 10010
(Address of principal executive offices) (Zip code)
Marguerite E. H. Morrison, Esq.
51 Madison Avenue
New York, New York 10010
(Name and address of agent for service)
Registrant's telephone number, including area code: (973) 394-4437
Date of fiscal year end: December 31
Date of reporting period: 1/1/04-12/31/04
ITEM 1. REPORTS TO STOCKHOLDERS.
LETTER FROM
THE CHAIRMAN
Throughout most of 2004, the U.S. stock market was relatively volatile. Equities
gained and lost ground several times, trading in a range until the November
presidential election. After the election, stocks generally advanced until the
end of the year.
Many factors affected the ups and downs of the market. Early in 2004, economic
signals were mixed. In April, firming economic indicators and concern about
possible inflation caused interest rates to rise in anticipation of Federal
Reserve tightening. At the end of June, the Federal Open Market Committee raised
the targeted federal funds rate by 25 basis points to 1.25%. Four additional
25-basis-point tightening moves brought the targeted federal funds rate to 2.25%
by year-end.
For a brief period in 2004, the price of oil exceeded $50 per barrel. Although
inflation increased during the year, it generally remained contained. The U.S.
trade deficit widened, and the value of the U.S. dollar continued to fall
relative to most foreign currencies. With only a few exceptions, international
stock markets provided strong double-digit returns. High-yield bonds and
emerging market debt also showed strong overall performance in 2004.
The year was marred by continuing hostilities in Iraq, a terrorist attack in
Madrid, major drug recalls, and a celebrity insider-trading conviction. Of
greater concern to investors, however, was the uncertainty surrounding the
presidential election. Once the votes were counted and the winner was clear, the
stock market climbed to its high point for the year.
Throughout 2004, each Portfolio of the MainStay VP Series Fund, Inc. pursued its
objective by consistently seeking to apply the rigorous investment disciplines
outlined in the prospectus. We believe that consistent application of a
well-defined investment approach can help shareholders better understand their
investment results and respond more appropriately when the economy shifts or the
market changes direction.
The reports that follow discuss in greater detail the market conditions and
management decisions that affected the Portfolios in 2004. We are pleased that
you have selected MainStay VP Series Fund, Inc., as part of your long-term
financial strategy, and we look forward to serving your investment needs for
many years to come.
Sincerely,
/s/ GARY E. WENDLANDT
Gary E. Wendlandt
Chairman of the Board
and Chief Executive Officer
MainStay VP Series Fund, Inc.
January 2005
www.mainstayfunds.com M-1
DEFINITION OF INDICES
THE INFORMATION BELOW IS AN EXPLANATION OF THE VARIOUS INDICES AND REFERENCES
COMMONLY CITED THROUGHOUT THE PORTFOLIO INVESTMENT AND PERFORMANCE COMPARISONS
AND PORTFOLIO MANAGER COMMENTARIES (PAGES M-4 THROUGH M-87) IMMEDIATELY
FOLLOWING THIS SECTION. PLEASE USE THIS AS A REFERENCE.
PLEASE NOTE THAT AN INVESTMENT CANNOT BE MADE DIRECTLY INTO AN INDEX OR AN
AVERAGE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RESULTS FOR
SECURITIES INDICES ASSUME REINVESTMENT OF ALL INCOME AND CAPITAL GAINS.
Securities in each Portfolio will not precisely match those in the Index, and as
a result, performance of the Portfolio will differ.
CREDIT SUISSE FIRST BOSTON(TM) CONVERTIBLE SECURITIES INDEX is an unmanaged
index that generally includes 250-300 issues. Convertibles must have a minimum
issue size of $50 million; bonds and preferreds must be rated B- or better by
Standard & Poor's; and preferreds must have a minimum of 500,000 shares
outstanding. Eurobonds are also included if they are issued by U.S.-domiciled
companies, rated B- or higher by Standard & Poor's, and have an issue size
greater than $100 million.
CREDIT SUISSE FIRST BOSTON(TM) HIGH YIELD INDEX is an unmanaged market-weighted
index that includes publicly traded bonds rated below BBB by Standard & Poor's
and below Baa by Moody's. The Index assumes reinvestment of all distributions
and interest payments and does not take into account brokerage fees or taxes.
LEHMAN BROTHERS(R) AGGREGATE BOND INDEX (the "Aggregate Index") is an unmanaged
index that includes the following other unmanaged Lehman Brothers(R) 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 investment-grade quality or higher, have at least one
year to maturity, and have an outstanding par value of at least $150 million.
LEHMAN BROTHERS(R) GOVERNMENT BOND INDEX is an unmanaged index comprised of U.S.
government and agency issues as well as investment-grade fixed-rate debt
securities.
LIPPER INC. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
LIPPER MONEY MARKET FUNDS INDEX tracks the performance of the 30 largest
money-market funds, adjusted for the reinvestment of capital gain and income
distributions. You cannot invest directly in an index.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE (L-VIPPAS) ranks
the portfolios that invest in the separate accounts of insurance companies. Its
rankings are based on total returns with dividends and capital gains reinvested.
Results do not reflect any deduction of sales charges.
MERRILL LYNCH ALL CONVERTIBLE SECURITIES INDEX is a market-capitalization
weighted index of domestic corporate convertible securities. In order to be
included in the Index, bonds and preferred stocks must be convertible only to
common stock and have a market value or original par value of at least $50
million.
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.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, AND FAR EAST
INDEX--THE MSCI EAFE(R) INDEX--is an unmanaged free float-adjusted
market-capitalization index that is designed to measure developed-market equity
performance, excluding the United States and Canada. As of December 2003, the
MSCI EAFE(R) Index consisted of the following 21 developed-market country
indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
RUSSELL 1000(R) INDEX is an unmanaged index that measures the performance of the
1,000 largest companies in the Russell 3000(R) Index based on total market
capitalization. The Index does not reflect fees or expenses.
RUSSELL 1000(R) GROWTH INDEX is an unmanaged index that measures the performance
of those Russell 1000(R) companies with higher price-to-book ratios and higher
forecasted growth values. The Index does not reflect fees or expenses.
RUSSELL 1000(R) VALUE INDEX is an unmanaged index that measures the performance
of those Russell 1000(R) companies with lower price-to-book ratios and lower
forecasted growth values. The Index does not reflect fees or expenses.
RUSSELL 2000(R) INDEX is an unmanaged index that measures the performance of the
2,000 smallest companies in the Russell 3000(R) Index. The Index does not
reflect fees or expenses.
RUSSELL 2000(R) GROWTH INDEX is an unmanaged index that measures the performance
of those Russell 2000(R) companies with higher price-to-book ratios and higher
forecasted growth values. The Index does not reflect fees or expenses.
RUSSELL 2000(R) VALUE INDEX is an unmanaged index that measures the performance
of those Russell 2000(R) compa-
M-2 MainStay VP Series Fund, Inc.
nies with lower price-to-book ratios and lower forecasted growth values. The
Index does not reflect fees or expenses.
RUSSELL 2500(TM) GROWTH INDEX is an unmanaged index that measures the
performance of those Russell 2500(TM) companies with higher price-to-book ratios
and higher forecasted growth values. The Russell 2500(TM) Index measures the
performance of the 2,500 smallest companies in the Russell 3000(R) Index. The
Index does not reflect fees or expenses.
RUSSELL 3000(R) INDEX is an unmanaged index that measures the performance of the
3,000 largest U.S. companies based on total market capitalization. The Index
does not reflect fees or expenses.
RUSSELL MIDCAP(R) INDEX is an unmanaged index that measures the performance of
the 800 smallest companies of the Russell 1000(R) Index. The Index does not
reflect fees or expenses.
RUSSELL MIDCAP(R) GROWTH INDEX is an unmanaged index that measures the
performance of those Russell Midcap(R) companies with higher price-to-book
ratios and high forecasted growth values. The stocks are also members of the
Russell 1000(R) Growth Index. The Index does not reflect fees or expenses.
RUSSELL MIDCAP(R) VALUE INDEX is an unmanaged index that measures the
performance of those Russell Midcap(R) companies with lower price-to-book ratios
and lower forecasted growth values. The stocks are also members of the Russell
1000(R) Value Index. The Index does not reflect fees or expenses.
S&P 500/BARRA VALUE(R) INDEX is an unmanaged capitalization-weighted index of
all stocks in the S&P 500(R) Index that have higher book-to-price ratios. It is
designed so that approximately 50% of the market capitalization of the S&P
500(R) Index is in the S&P 500/Barra Value(R) Index.
S&P MIDCAP 400(R) INDEX is an unmanaged market-value weighted index that
consists of 400 domestic common stocks chosen for market size, liquidity, and
industry-group representation and is generally considered representative of the
market for domestic midcap stocks. Results assume reinvestment of all income and
capital gains.
STANDARD AND POOR'S 500 COMPOSITE STOCK PRICE INDEX(R) AND S&P 500(R) INDEX are
registered trademarks of The McGraw-Hill Companies, Inc. The product is not
sponsored, endorsed, sold, or promoted by Standard & Poor's Corporation. The S&P
500(R) Index is an unmanaged index and is widely regarded as the standard for
measuring large-cap U.S. stock-market performance.
TOTAL RETURN CORE COMPOSITE INDEX is an unmanaged index that is comprised of the
Russell 1000(R) Index and the Lehman Brothers(R) Aggregate Bond Index weighted
60%/40%, respectively.
TOTAL RETURN GROWTH COMPOSITE INDEX is an unmanaged index that is comprised of
the Russell 1000(R) Growth Index and the Lehman Brothers(R) Aggregate Bond
Index, weighted 60%/40%, respectively.
www.mainstayfunds.com M-3
MAINSTAY VP BOND PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ---------------------------------------------------------
After Portfolio operating
expenses 4.09% 7.41% 7.35%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MERRILL LYNCH CORPORATE
MAINSTAY VP BOND AND GOVERNMENT MASTER LEHMAN BROTHERS
PORTFOLIO INDEX AGGREGATE BOND INDEX
---------------- ----------------------- --------------------
12/31/94 10000 10000 10000
11831 11898 11847
12073 12252 12278
13238 13450 13463
14445 14732 14632
14224 14429 14512
15621 16153 16199
17068 17514 17567
18687 19431 19369
19532 20313 20164
12/31/04 20331 21156 21038
</Table>
<Table>
-- MainStay VP Bond Portfolio -- Lehman Brothers Aggregate Bond Index
-- Merrill Lynch Corporate and
Government Master Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ---------------------------------------------------------
After Portfolio operating
expenses 3.83% 7.14% 7.08%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MERRILL LYNCH CORPORATE
MAINSTAY VP BOND AND GOVERNMENT MASTER LEHMAN BROTHERS
PORTFOLIO INDEX AGGREGATE BOND INDEX
---------------- ----------------------- --------------------
12/31/94 10000 10000 10000
11800 11898 11847
12010 12252 12278
13135 13450 13463
14296 14732 14632
14041 14429 14512
15381 16153 16199
16765 17514 17567
18309 19431 19369
19090 20313 20164
12/31/04 19822 21156 21038
</Table>
<Table>
-- MainStay VP Bond Portfolio -- Lehman Brothers Aggregate Bond Index
-- Merrill Lynch Corporate and
Government Master Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARKS YEAR YEARS YEARS
Lehman Brothers Aggregate Bond Index* 4.34% 7.71% 7.72%
Merrill Lynch Corporate and Government Master Index* 4.15 7.95 7.78
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/95 through
6/3/03, adjusted to reflect the fees and expenses for Service Class shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-4 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP BOND PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,041.20 $2.77 $1,022.30 $2.75
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,039.95 $4.05 $1,021.05 $4.01
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government & Federal Agencies 52.3%
Corporate Bonds 34.6
Short-Term Investments 15.0
Foreign Corporate Bonds 5.3
Asset-Backed Securities 3.1
Mortgage-Backed Security 2.1
Liabilities in Excess of Cash and Other Assets -12.4
</Table>
See Portfolio of Investments on page M-92 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security) 5.00%, due 2/15/35 TBA
2. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security) 5.50%, due 2/15/34 TBA
3. United States Treasury Note 3.50%, due 12/15/09
4. Federal National Mortgage Association (Mortgage
Pass-Through Security) 5.50%, due 9/1/33
5. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security) 6.00%, due 8/1/34
6. United States Treasury Note 4.25%, due 11/15/14
7. Morgan Stanley Capital I Series 2004-HQ3 Class
A4 4.80%, due 1/13/41
8. Federal Home Loan Bank 3.625%, due 11/14/08
9. Federal National Mortgage Association (Mortgage
Pass-Through Securities) 6.00%, due 2/15/34 TBA
10. Federal National Mortgage Association (Mortgage
Pass-Through Securities) 5.00%, due 1/1/18
</Table>
www.mainstayfunds.com M-5
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Donald F. Serek and Thomas Volpe, Jr.,
of New York Life Investment Management LLC.
MAINSTAY VP BOND PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
We seek to achieve strong, consistent investment results by following a
well-defined, fundamental value-oriented approach. The core principles of our
investment philosophy are: maintain a long-term focus, avoid macro forecasting
bets, and diversify.
The Portfolio normally invests 80% of its assets in bonds, which include all
types of debt securities. At least 65% of the Portfolio's total assets are rated
Baa or better by Moody's(1) or BBB or better by Standard & Poor's at the time of
purchase, or if unrated, are deemed by the manager to be of comparable quality.
The Portfolio's investment process may include consideration of economic cycles,
interest-rate trends, and fundamental and technical analysis.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Bond Portfolio returned
4.09% for Initial Class shares and 3.83% for Service Class shares. Both share
classes underperformed the 4.22% return of the average Lipper* Variable Products
Corporate Debt A Rated Portfolio over the same period. Both share classes also
underperformed the Lehman Brothers(R) Aggregate Bond Index,* the Portfolio's
benchmark, which returned 4.34% for the 12 months ended December 31, 2004.
WHAT SIGNIFICANT FACTORS INFLUENCED THE BOND MARKETS IN 2004?
The bond markets were primarily affected by the changing economic outlook.
Interest rates rose and declined several times during the year as the market's
consensus outlook for growth changed. When the outlook for the economy was
bullish, rates generally went up. When the outlook for the economy was bearish,
rates generally went down. On June 30, 2004, the Federal Open Market Committee
raised the targeted federal funds rate for the first time since 2000. By
year-end, the Federal Open Market Committee had raised the targeted federal
funds rate an additional four times, for a cumulative increase of 125 basis
points. The targeted federal funds rate began 2004 at 1.00% and ended the year
at 2.25%.
Corporate-bond yield spreads also closely tracked the economic outlook. When the
outlook for the economy was more favorable, corporate-bond yield spreads
contracted, which increased valuation. When the outlook was less favorable,
corporate bond spreads widened, which lowered valuation.
WAS THE PORTFOLIO'S PERFORMANCE AFFECTED BY ITS DURATION POSITIONING DURING THE
YEAR?
Not really. We maintained a relatively neutral duration strategy during the
year. As a result, duration had minimal impact on the Portfolio's performance
relative to that of its benchmark.
HOW DID YOU POSITION THE PORTFOLIO DURING 2004?
Relative to the Lehman Brothers(R) Aggregate Bond Index,* the Portfolio
maintained a market weight in mortgage-backed securities, an underweighted
position in U.S. government and agency securities, and an overweighted position
in corporate bonds. The overweighted position in credit had a favorable impact
on the Portfolio's returns, since corporate bond valuations increased relative
to U.S. Treasuries during 2004.
WHAT IS YOUR STRATEGIC OUTLOOK GOING FORWARD?
The year ahead has the makings to be one of the more challenging periods for
market-outlook assessment. Many market observers expect that the economy will
slow modestly to a more sustainable range of 3% to 3.5% and that the Federal
Open Market
1. Bonds rated Baa by Moody's Investors Service are considered by Moody's to be
medium-grade obligations (i.e., obligations that Moody's believes are neither
highly protected nor poorly secured). It is Moody's opinion that interest
payments and principal security appear adequate for the present, but that
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Moody's believes that such bonds
lack outstanding investment characteristics and that they in fact have
speculative characteristics as well. Debt rated BBB by Standard & Poor's is
deemed by Standard & Poor's to exhibit adequate protection parameters. It is
the opinion of Standard & Poor's, however, that 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 than would be
the case for debt in higher-rated categories. When applied to Portfolio
holdings, ratings are based solely on the creditworthiness of the bonds in
the Portfolio and are not meant to represent the security or safety of the
Portfolio.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-6 MainStay VP Series Fund, Inc.
Committee will continue to reduce its accommodative monetary policy by raising
the targeted federal funds rate. It is more difficult to say what will happen to
corporate and mortgage-backed security valuations. In 2004, credit spreads
rallied to their tightest level since 1998--a fact that led many to question
whether spreads could continue to tighten, particularly with the aggressive
pricing of mortgage-backed securities.
We expect fundamentals, technicals, and event risk to continue to drive of
spreads in 2005, as they did in 2004. In the absence of substantial merger-and-
acquisition activity, we expect corporate new-issue supply to remain at the same
level we saw in 2004 (or about 25% lower than 2003 on a year-over-year basis).
This clearly bodes well for the strong supply/demand landscape in credit to
continue into 2005. Although fundamental credit improvement is near its peak and
idiosyncratic risk is omnipresent, we expect that the strength of technical
demand for credit will keep credit spreads relatively tight over the near term.
In such an environment, security selection is of paramount importance,
particularly since the market is differentiating less among corporate issuers.
In the mortgage-backed securities market, we expect supply to remain light, even
if the Treasury yield curve flattens. We believe that with the emergence of the
hybrid ARM market, volatility is less likely to rise. This type of
mortgage-backed security generally has a shorter duration and has a more
predictable response to interest-rate changes than traditional mortgage-backed
securities. As a result, the need for certain kinds of hedging is reduced. In
the absence of an unanticipated significant increase in volatility, we expect
mortgage-backed security spreads to remain near their levels at year-end 2004.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-7
MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ----------------------------------------------------------
After Portfolio operating
expenses 4.16% -8.91% 8.02%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CAPITAL RUSSELL 1000 GROWTH
APPRECIATION PORTFOLIO S&P 500 INDEX INDEX
---------------------- ------------- -------------------
12/31/94 10000 10000 10000
13578 13758 13718
16124 16917 16889
19911 22561 22039
27504 29008 30569
34494 35112 40705
30798 31915 31578
23647 28122 25128
16357 21907 18122
20773 28190 23513
12/31/04 21636 31258 24994
</Table>
<Table>
-- MainStay VP Capital Appreciation -- Russell 1000 Growth Index
Portfolio
-- S&P 500 Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ----------------------------------------------------------
After Portfolio operating
expenses 3.90% -9.14% 7.75%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CAPITAL RUSSELL 1000 GROWTH
APPRECIATION PORTFOLIO S&P 500 INDEX INDEX
---------------------- ------------- -------------------
12/31/94 10000 10000 10000
13544 13758 13718
16043 16917 16889
19759 22561 22039
27224 29008 30569
34050 35112 40705
30316 31915 31578
23219 28122 25128
16021 21907 18122
20297 28190 23513
12/31/04 21088 31258 24994
</Table>
<Table>
-- MainStay VP Capital Appreciation -- Russell 1000 Growth Index
Portfolio
-- S&P 500 Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARKS YEAR YEARS YEARS
Russell 1000(R) Growth Index* 6.30% -9.29% 9.59%
S&P 500(R) Index* 10.88 -2.30 12.07
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/95 through
6/4/03, adjusted to reflect the fees and expenses for Service Class shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-8 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CAPITAL APPRECIATION
PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,030.25 $3.32 $1,021.75 $3.30
- ------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,029.00 $4.59 $1,020.50 $4.57
- ------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 99.1%
Short-Term Investments (collateral from securities lending
is 2.1%) 2.3
Liabilities in Excess of Cash and Other Assets -1.4
</Table>
See Portfolio of Investments on page M-101 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. UnitedHealth Group, Inc.
2. American Express Co.
3. FedEx Corp.
4. Dell, Inc.
5. Danaher Corp.
6. Wellpoint Health Networks, Inc.
7. Caremark Rx, Inc.
8. Johnson & Johnson
9. Coach, Inc.
10. United Technologies Corp.
</Table>
www.mainstayfunds.com M-9
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Rudolph C. Carryl and Edmund C. Spelman
of MacKay Shields LLC.
MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio invests in securities of U.S. companies with sound fundamental
growth characteristics. We are very mindful of investor sentiment surrounding
any potential investment. We also seek situations where a potential future
catalyst could drive a company's stock price higher or fuel an acceleration in
earnings growth. Changes in management, new-product launches, rising consumer
demand, and the emergence of a favorable macroeconomic trend are good examples
of the kinds of catalysts we consider. We may sell a security if we no longer
believe that the fundamentals are in place to drive the stock higher within a
reasonable time frame.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Capital Appreciation
Portfolio returned 4.16% for Initial Class shares and 3.90% for Service Class
shares. Both share classes underperformed the 8.04% return of the average
Lipper* Variable Products Large-Cap Growth Portfolio over the same period. Both
share classes underperformed the 6.30% return of the Russell 1000(R) Growth
Index,* the Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT KEY FACTORS INFLUENCED THE EQUITY MARKETS DURING THE YEAR?
Arguably the biggest factor was a 34% rise in the price of crude oil, which has
stoked inflation fears and has the potential to put a damper on consumer
spending. Another factor that impacted the markets during the year was the
beginning of a new tightening cycle by the Federal Reserve. Fortunately, the
Federal Open Market Committee is raising rates at a truly measured pace.
Investors continue to monitor reports from the Middle East--in particular, news
coming out of Iraq--since this news influences the price of oil. During 2004,
the employment market staged a modest recovery, which was welcome news to the
investment community. Annualized growth in gross domestic product remained in
the range of 3.1% to 4.5% throughout the year,(1) suggesting the U.S. economy
remains on solid footing. The fact that interest rates remain at historically
low levels is noteworthy, since low interest rates have helped fuel consumer
spending.
WHICH INDIVIDUAL SECURITIES HAD THE GREATEST POSITIVE IMPACT ON THE PORTFOLIO'S
PERFORMANCE IN 2004?
UnitedHealth Group is a leading provider of products and resources to plan and
administer employee-health-benefit plans. The company recently allied with
top-tier regional health plans and plan administrators, which has led to network
savings and an acceleration in membership growth. These factors had a positive
impact on the company's bottom line growth, which helped fuel gains in
UnitedHealth Group's stock in 2004.
Caremark Rx, a leading provider of prescription-benefit-management and
therapeutic pharmaceutical services, was weighed down most of the year by
concerns that John Kerry might become president and make dramatic changes to the
U.S. health care system. Certainly any significant changes would have had a
meaningful impact on Caremark Rx's business. From Bush's reelection on November
2 through year-end 2004, the price of the company's stock rallied 38%.
FedEx, a leading package delivery company, was another big gainer during the
year. The company appears to be gaining share in the ground market from its
closest competitor, United Parcel Service. In addition, FedEx reported very
strong earnings growth throughout the year. In the second half of 2004, the
company posted earnings growth of 55% year-over-year, which helped FedEx stock
advance.
Symantec is a leading provider of Internet-security software. While the
information technology sector as a whole has struggled to grow, security
software remains one of the few bright spots. Symantec has capitalized on this
strength, and the company's fundamentals and stock price have reacted
accordingly.
WHICH STOCKS DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2004?
VERITAS Software, a leading vendor of enterprise storage-management products,
suffered in 2004 on concerns about accounting irregularities. After reaching a
52-week high in mid-January of 2004, the stock traded down and finally bottomed
in early September. In early July, the company missed consensus sales
expectations, prompting further concerns that the company was losing share to
close competitors in the U.S. market. The stock staged a meaningful rebound
1. This range includes advance estimates from the Bureau of Economic Analysis
for fourth-quarter 2004 real gross domestic product. Estimates are subject to
revision.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-10 MainStay VP Series Fund, Inc.
when investors were encouraged by the company's decision to reorganize around
product groups. The company also beat analysts' expectations for the third
quarter of 2004 by a penny.
New York Community Bancorp is a bank holding company that owns New York
Community Bank. In 2004, New York Community Bancorp declined sharply on concerns
about the impact of rising interest rates on New York Community Bank's
variable-rate debt. Seeing the potential for margin contraction, we sold the
stock in October.
Intel is a leading manufacturer of semiconductors and related products. At the
beginning of the year, the market correctly anticipated a slowdown in
semiconductor demand in the second half of 2004. This downturn resulted in
cancelled orders, rising channel inventories, and falling prices. Analysts'
consensus estimates called for 7% bottom-line growth in 2005, and this tepid
earnings outlook weighed heavily on Intel's stock in 2004. After hitting a
52-week low in September 2004, however, the stock recently traded up as analysts
began to reconsider their estimates of the company's earnings potential.
Texas Instruments is a leading manufacturer of semiconductors and related
products. The company's stock was hurt by a widespread sell-off in semiconductor
stocks in 2004. Since the pressure on semiconductor stocks has abated, shares of
Texas Instruments moved well ahead of a 52-week low reached in early August.
Analysts' consensus estimates have called for a 10% rise in Texas Instruments'
earnings in 2005.
WERE THERE ANY SIGNIFICANT PURCHASES DURING 2004?
During the year, we added Harmon International, Brunswick, Coach, Centex, D.R.
Horton, Nike, Quest Diagnostics, Fisher Scientific, Gilead Sciences, and L-3
Communications Holdings to the Portfolio.
WHICH SECURITIES DID YOU SELL DURING THE YEAR?
We sold Marsh & McLennan, Bank of America, Gannett, Sysco, IAC/InterActiveCorp,
Viacom, Colgate-Palmolive, Clear Channel Communications, Coca-Cola, Forest
Laboratories, International Game Technologies, Wal-Mart Stores, Baxter
International, Cardinal Health, HCA, Medtronic, Pfizer, and Fifth Third Bancorp
in 2004.
HOW DID THE PORTFOLIO'S SECTOR WEIGHTINGS CHANGE OVER THE 12-MONTH REPORTING
PERIOD?
The Portfolio uses bottom-up stock selection, and all sector weightings are a
residual of the Portfolio's rigorous investment discipline. We increased the
Portfolio's weighting in the consumer discretionary, energy, and industrials
sectors during the year and decreased the Portfolio's weighting in the consumer
staples, financials, health care, information technology, and materials sectors.
HOW DID THIS COMPARE WITH THE RUSSELL 1000(R) GROWTH INDEX?*
Relative to the Russell 1000(R) Growth Index,* the Portfolio began 2004
overweighted in the consumer discretionary, energy, and materials sectors. The
Portfolio was market weighted in the information technology and industrials
sectors and underweighted in the consumer staples, financials, and health care
sectors. The Portfolio did not have any holdings in the telecommunications
services or utilities sectors. As of December 31, 2004, the Portfolio was
overweighted relative to the Index in the consumer discretionary, energy,
industrials, and materials sectors. At year-end, the Portfolio was underweighted
in the consumer staples, financials, health care, and information technology
sectors. The Portfolio did not have any holdings in the telecommunications
services or utilities sectors.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO IN THE COMING MONTHS?
With the uncertainty of the presidential election now behind us, we expect
investors to refocus their attention on company fundamentals, which on balance
remain fairly strong as we move into the new year. Although high energy prices,
rising interest rates, and the specter of rising inflation remain risk factors,
we believe that a combination of historically low interest rates, moderate
economic growth, and strengthening employment should help to drive stocks higher
in 2005.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
made will come to pass. This material does not constitute investment advice and
is not intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-11
MAINSTAY VP CASH MANAGEMENT PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS(1) YEAR YEARS YEARS
- ---------------------------------------------------------
After Portfolio operating
expenses 0.85% 2.53% 3.84%
7-DAY CURRENT YIELD -- 1.72%
</Table>
After Portfolio operating expenses
<Table>
<Caption>
MAINSTAY VP CASH MANAGEMENT LIPPER MONEY MARKET FUND
PORTFOLIO INDEX
--------------------------- ------------------------
12/31/94 10000 10000
10559 10553
11083 11082
11664 11651
12269 12246
12862 12826
13641 13588
14165 14105
14357 14291
14452 14380
12/31/04 14575 14491
</Table>
<Table>
-- MainStay VP Cash Management Portfolio -- Lipper Money Market Fund Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK YEAR YEARS YEARS
Lipper Money Market Fund Index* 0.78% 2.47% 3.78%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. As of 12/31/04, MainStay VP Cash Management Portfolio had an effective 7-day
yield of 1.73% and current yield of 1.72%. 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 1.73% and
1.72% respectively. These expense limitations are voluntary and may be
terminated or revised at any time. The current yield is more reflective of
the Portfolio's earnings than the total return.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-12 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CASH MANAGEMENT PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,005.65 $2.77 $1,022.25 $2.80
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government& Federal Agencies 57.3%
Commercial Paper 44.0
Medium-Term Notes 7.3
Corporate Bond 1.3
Bank Note 1.1
Liabilities in Excess of Cash and Other Assets -11.0
</Table>
See Portfolio of Investments on page M-108 for specific holdings within these
categories.
www.mainstayfunds.com M-13
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Claude Athaide, Ph.D., CFA, of MacKay
Shields LLC.
MAINSTAY VP CASH MANAGEMENT PORTFOLIO
CAN YOU BRIEFLY DESCRIBE MAINSTAY VP CASH MANAGEMENT PORTFOLIO'S INVESTMENT
APPROACH?
The Portfolio invests in short-term dollar-denominated securities that mature in
397 days or less. The weighted average Portfolio maturity will not exceed 90
days. The Portfolio may invest in U.S. government securities; bank and bank
holding company obligations, such as CDs and bankers' acceptances; commercial
paper; and dollar-denominated loans to U.S. and foreign issuers and securities
of foreign branches of U.S. banks and foreign banks, such as negotiable CDs,
also known as Eurodollars. These securities may be variable-rate notes,
floating-rate notes, mortgage-related securities, or asset-backed securities. To
help mitigate the risk of loss, all securities purchased by the Portfolio must
meet the requirements of Rule 2a-7 under the Investment Company Act of 1940.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the seven-day period ended December 31, 2004, MainStay VP Cash Management
Portfolio Initial Class shares provided a current yield of 1.72% and an
effective yield of 1.73%. For the 12 months ended December 31, 2004, the
Portfolio returned 0.85%. The Portfolio outperformed the 0.83% return of the
average Lipper* Variable Products Money Market Portfolio for the 12-month
period. The Portfolio also outperformed the 0.78% return of the Lipper Money
Market Fund Index,* the Portfolio's benchmark, for the 12 months ended December
31, 2004.
WHAT MAJOR FACTORS AFFECTED THE MONEY MARKET DURING 2004?
Real gross domestic product grew at a 3.7% rate during 2004. The first two years
of the recovery from the 2001 recession were characterized by lackluster
employment gains. For the three months that began in March 2004, U.S. payrolls
expanded strongly, adding almost 900,000 jobs. Employment growth moderated
during the next few months before picking up in the fall. In all, payrolls
increased by more than 2.3 million in 2004.
In the spring of 2004, markets were surprised by higher-than-expected data for
the Consumer Price Index, or CPI. Strong employment and inflation data in the
spring helped send interest rates sharply higher. The yield on the two-year
Treasury note rose from 1.46% in late March to 2.93% in June 2004. When job
creation slowed during the summer and inflation statistics remained benign,
yields declined.
In June 2004, the Federal Open Market Committee raised the targeted federal
funds from 1.00% to 1.25%. This was the first increase in the targeted federal
funds rate since May 2000. The Federal Open Market Committee continued to raise
the targeted federal funds rate in 25-basis-point increments four more times
during the second half of 2004.
Because the Federal Reserve gave no indication that it would pause--even
temporarily--in raising the targeted federal funds rate, yields on short-term
instruments kept rising. The yield on the two-year Treasury note increased 50
basis points during the last two months of the year to 3.07%. On December 31,
2004, the yield on the three-month Treasury bill was 2.23%, while three-month
LIBOR was 2.56%.
HOW WAS THE PORTFOLIO POSITIONED DURING 2004?
The Portfolio invested in securities issued by the U.S. Treasury and
government-sponsored agencies, and securities rated Tier 1 that are issued by
finance, insurance, brokerage, and industrial companies, as well as banks and
bank holding companies. Tier 1 securities are securities in the highest rating
category of major rating agencies.
The Portfolio's duration was longer than that of the average peer portfolio
during 2004. In the second half of the year, however, this stance had a negative
impact on performance because securities in the Portfolio were reinvested into
higher-yielding instruments at a slower rate than securities in portfolios with
shorter durations.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO IN 2005?
The minutes of the December 2004 Federal Open Market Committee meeting were
released in early January. The minutes revealed that several members were
worried that inflationary pressures were building up in the economy. Some
members also felt that the current level of rates was generating excess
liquidity, which would result in excessive risk taking. Members were uncertain
about the size of the output gap, and they discussed the need to bring rates
back to a "neutral level." The futures markets are pricing in more than 90 basis
points of tightening during the first half of 2005.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-14 MainStay VP Series Fund, Inc.
The hawkish tone of the minutes was not reflected in the Federal Open Market
Committee's December press release, which claimed that the upside and downside
risks to inflation were equal. We do not think that inflation is a problem. It
took widespread discounting to lure shoppers into the stores during the holiday
season. Domestic automakers are expected to offer additional incentives in the
coming weeks to spur sales. Strong growth in consumer spending will be
critically dependent on strong payroll growth. The personal savings rate has
fallen to 0.4%, and there is no additional fiscal stimulus in the pipeline. We
think that the Federal Reserve will ultimately raise rates by a smaller amount
than the markets are assuming. Consequently, we have been purchasing securities
maturing in May 2005 and later because we feel that the implied forward rates
are attractive.
We will continuously monitor the economic data and our portfolio stance over the
coming months. The Portfolio will continue to focus on high-quality, liquid
investments as it seeks a level of income that is considered consistent with the
preservation of capital and liquidity.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts will
come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-15
MAINSTAY VP COMMON STOCK PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ------------------------------------------------------------
After Portfolio operating
expenses 10.90% -3.18% 11.05%
</Table>
After Portfolio operating expenses
<Table>
<Caption>
MAINSTAY VP COMMON
STOCK PORTFOLIO S&P 500 INDEX RUSSELL 1000 INDEX
------------------ ------------- ------------------
12/31/94 10000 10000 10000
12916 13758 13777
16081 16917 16869
20381 22561 22411
25801 29008 28467
33533 35112 34420
32413 31915 31739
26875 28122 27788
20357 21907 21771
25725 28190 28279
12/31/04 28529 31258 31504
</Table>
<Table>
-- MainStay VP Common Stock Portfolio -- Russell 1000 Index
-- S&P 500 Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ------------------------------------------------------------
After Portfolio operating
expenses 10.62% -3.42% 10.79%
</Table>
After Portfolio operating expenses
<Table>
<Caption>
MAINSTAY VP COMMON
STOCK PORTFOLIO S&P 500 INDEX RUSSELL 1000 INDEX
------------------ ------------- ------------------
12/31/94 10000 10000 10000
12885 13758 13777
16007 16917 16869
20243 22561 22411
25565 29008 28467
33148 35112 34420
31967 31915 31739
26438 28122 27788
19976 21907 21771
25183 28190 28279
12/31/04 27857 31258 31504
</Table>
<Table>
-- MainStay VP Common Stock Portfolio -- Russell 1000 Index
-- S&P 500 Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARKS YEAR YEARS YEARS
S&P 500(R) Index* 10.88% -2.30% 12.07%
Russell 1000(R) Index* 11.40 -1.76 12.16
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/95 through
6/4/03, adjusted to reflect the fees and expenses for Service Class shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-16 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP COMMON STOCK PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,078.35 $2.77 $1,022.35 $2.69
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,077.10 $4.07 $1,021.10 $3.96
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 99.3%
Investment Company 0.5
Cash and Other Assets (less liabilities) 0.2
Warrants 0.0*
</Table>
See Portfolio of Investments on page M-115 for specific holdings within these
categories.
* Less than one-tenth of one percent.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. General Electric Co.
2. ExxonMobil Corp.
3. International Business Machines Corp.
4. American International Group, Inc.
5. Microsoft Corp.
6. Pfizer, Inc.
7. Johnson & Johnson
8. Verizon Communications, Inc.
9. Citigroup, Inc.
10. Cisco Systems, Inc.
</Table>
www.mainstayfunds.com M-17
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Harvey Fram of New York Life Investment
Management LLC
MAINSTAY VP COMMON STOCK PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its assets in common stocks. The
Portfolio's management process is based on a bottom-up, quantitative model. We
seek to identify large-cap companies that have a high probability of
outperforming the S&P 500(R) Index* over the following six to 12 months. The
Portfolio is managed with a large-cap core orientation and is benchmarked to the
S&P 500(R) Index.*
On March 1, 2004, Harvey Fram became the Portfolio Manager, replacing James
Agostisi and Patricia S. Rossi. At that time, the Portfolio's investment process
changed and the number of stocks held in the Portfolio increased substantially.
Effective May 1, 2004, the Portfolio (formerly MainStay VP Growth Equity
Portfolio) was renamed MainStay VP Common Stock Portfolio. The new name better
reflects the Portfolio's core orientation, which includes both growth and value
equities. The Portfolio's investment objective did not change.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
During the 12 months ended December 31, 2004, MainStay VP Common Stock Portfolio
returned 10.90% for Initial Class shares and 10.62% for Service Class shares.
The Portfolio outperformed the 8.59% return of the average Lipper* Variable
Products Large-Cap Core Portfolio over the same period. Initial Class shares
outperformed and Service Class shares underperformed the 10.88% return of the
S&P 500(R) Index,* the Portfolio's benchmark, for the 12 months ended December
31, 2004.
For the two months prior to the management change, the Portfolio underperformed
the S&P 500(R) Index.* During the ten-month period between March and December,
the Portfolio outperformed its benchmark.
WHAT MAJOR FACTORS AFFECTED THE STOCK MARKET IN 2004?
The dominant themes that influenced the market were the war in Iraq, the
November election, the declining value of the U.S. dollar, job growth, and
rising oil prices. The Federal Open Market Committee raised the targeted federal
funds rate from a low 1.00% to 2.25% over the course of the year, but this
measured tightening of monetary policy did not seem to adversely affect the
stock market. Indeed, fourth quarter returns were the highest of the year.
HOW DID THESE MARKET EVENTS AFFECT THE PORTFOLIO?
During the year, the energy sector made the single largest contribution to the
Portfolio's excess returns. This strong performance resulted from the high price
of oil, the Portfolio's overweighted position in the sector, and the fact that
energy stocks generally outperformed the Portfolio's benchmark.
The utilities and health care sectors were other large contributors to the
Portfolio's strong performance. While the utilities sector provided strong
absolute performance, health care stocks provided comparatively low returns.
Fortunately, an underweighted position in the health care sector helped the
Portfolio's relative performance. Many drug companies were hurt late in the year
after Merck recalled its popular Vioxx product. Pfizer also suffered greatly as
attention was placed on the safety of their drug Celebrex.
Materials and telecommunication services both showed strong performance, and
both were overweighted in the Portfolio. On the negative side, eBay took the
largest toll on relative performance, since eBay had outstanding results but was
underweighted in the Portfolio. Pfizer and Merck were the next-biggest negative
contributors, even though the health care sector as a whole contributed
positively to the Portfolio.
WERE THERE ANY MAJOR MANAGEMENT DECISIONS DURING 2004?
MainStay VP Common Stock Portfolio is run using a quantitative model. There were
no changes to the model from March to December. The Portfolio was positioned
fairly neutrally during the period, with a projected beta very close to one. The
Portfolio was most heavily overweighted in the financials, telecommunication
services, and energy sectors during the
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-18 MainStay VP Series Fund, Inc.
ten-month period. As the year progressed, the Portfolio increased its
overweighted position in energy stocks to take advantage of strong cash-flow and
earnings prospects. The Portfolio has added insurance stocks at the expense of
other financial stocks as the cash flow of insurance companies has improved.
WHICH HOLDINGS WERE THE STRONGEST POSITIVE CONTRIBUTORS TO THE PORTFOLIO'S
PERFORMANCE IN 2004?
The stocks that made the strongest positive contributions to the Portfolio's
performance in 2004 were TXU, Coca-Cola, Sprint, Eli Lilly, and Cardinal Health.
In some cases, stocks provided negative performance but were underweighted in
the Portfolio and therefore made the net contribution to return positive.
WHICH HOLDINGS WERE THE WEAKEST CONTRIBUTORS?
The five stocks whose contributions detracted the most from the Portfolio's
performance in 2004 were eBay, Pfizer, Merck, Altria Group, and Texas
Instruments. In some cases, stocks provided positive performance but were
underweighted in the Portfolio and therefore made the net contribution to return
negative.
DID THE PORTFOLIO MAKE ANY SIGNIFICANT PURCHASES OR SALES IN 2004?
During 2004, the Portfolio underwent a manager change. Portfolio holdings
increased from approximately 100 stocks to approximately 550. The management
style changed from traditional fundamental to quantitative, with a large
emphasis on managing risk relative to the benchmark.
In 2004, the Portfolio's largest purchases were American International Group,
Pfizer, ExxonMobil, Verizon Communications, and ChevronTexaco. The largest sales
were 3M, Boston Scientific, Goldman Sachs Group, Dell, and Morgan Stanley.
The Portfolio uses a quantitative model whose primary inputs include
price-to-cash-flow, earnings trends, earnings quality, and price trends.
Security selection for the Portfolio is based on a combination of these factors.
In some cases, stocks are included in the Portfolio for diversification and
risk-control purposes, even if the stocks score poorly in the model.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE S&P 500(R) INDEX AT YEAR-END
2004?
As of December 31, 2004, the Portfolio's most significantly underweighted
positions relative to the S&P 500(R) Index* were in the consumer staples and
consumer discretionary sectors. The Portfolio's most significantly overweighted
positions were in financials and telecommunication services.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO?
President Bush has suggested that he will address a number of issues during his
second term. His stance on social security reform, health care, energy, defense,
budget deficits, tax reform, and deregulation could affect the markets in a
number of ways. In 2005, the markets will also have to respond to changing oil
prices and employment trends. Security selection will continue to be based on
the Portfolio's quantitative model, whatever the markets or the economy may
bring.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts will
come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
The Portfolio may invest in derivatives, which may increase the volatility of
the Portfolio's net asset value and may result in a loss to the Portfolio.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
1. Performance percentages reflect total returns of the indicated securities for
the 12 months ended December 31, 2004, or the period the securities were held
in the Fund, if shorter. Purchases and sales within the Portfolio may cause
the performance of Portfolio holdings to differ from that of the securities
themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-19
MAINSTAY VP CONVERTIBLE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- -----------------------------------------------------------
After Portfolio operating
expenses 6.11% 2.11% 8.59 %
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CONVERTIBLE CREDIT SUISSE FIRST BOSTON
PORTFOLIO CONVERTIBLE SECURITIES INDEX
----------------------- ----------------------------
10/1/96 10000 10000
10389 10296
11991 12038
12529 12827
17789 18248
16896 16820
16529 15740
15222 14460
18606 18507
12/31/04 19742 19887
</Table>
<Table>
- -- MainStay VP Convertible Portfolio -- Credit Suisse First Boston Convertible
Securities Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- -----------------------------------------------------------
After Portfolio operating
expenses 5.85% 1.86% 8.33 %
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CONVERTIBLE CREDIT SUISSE FIRST BOSTON
PORTFOLIO CONVERTIBLE SECURITIES INDEX
----------------------- ----------------------------
10/1/96 10000 10000
10382 10296
11954 12038
12461 12827
17652 18248
16728 16820
16325 15740
14998 14460
18287 18507
12/31/04 19357 19887
</Table>
<Table>
- -- MainStay VP Convertible Portfolio -- Credit Suisse First Boston Convertible
Securities Index
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARKS YEAR YEARS INCEPTION
Credit Suisse First Boston(TM) Convertible Securities Index* 7.46% 1.74% 8.69%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (10/1/96)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-20 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CONVERTIBLE PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,053.70 $3.41 $1,021.70 $3.35
- ------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,052.45 $4.69 $1,020.45 $4.62
- ------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Convertible Bonds 70.1%
Short-Term Investments (collateral from securities lending
is 11.3%) 19.8
Convertible Preferred Stocks 13.2
Common Stocks 6.9
Corporate Bond 1.1
Liabilities in Excess of Cash and Other Assets -11.1
</Table>
See Portfolio of Investments on page M-127 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Schlumberger Ltd. 1.50%, due 6/1/23
2. Tyco International Group S.A. 2.75%, due 1/15/18
3. Pride International, Inc. 2.50%, due 3/1/07
4. Whole Foods Market, Inc. (zero coupon), due
3/2/18
5. Teva Pharmaceutical Industries Ltd. 0.375%, due
11/15/22
6. Cooper Cameron Corp. 1.50%, due 5/15/24
7. Lehman Brothers Holdings, Inc.
Series HAL 0.25%, due 9/25/10
8. Hilton Hotels Corp. 3.375%, due 4/15/23
9. Lehman Brothers Holdings, Inc.
Series TXU 1.00%, due 11/3/11
10. BJ Services Co. 0.3954%, due 4/24/22
</Table>
www.mainstayfunds.com M-21
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Edward Silverstein of MacKay Shields LLC
MAINSTAY VP CONVERTIBLE PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio invests at least 80% of its assets in convertible securities. It
may also purchase high-yield debt, nonconvertible debt, equities, U.S.
government securities, and cash or cash equivalents. The Portfolio takes a
flexible approach by investing in a broad range of securities from a variety of
companies and industries. In selecting securities, the subadvisor may consider
the potential return of the underlying common stock, credit risk, projected
interest return, and the premium of the convertible security relative to the
underlying common stock.
During the first half of 2004, Edward Silverstein, who had formerly served as a
co-Portfolio Manager, assumed the role of lead Portfolio Manager. Thomas Wynn
has resigned from MacKay Shields LLC.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Convertible Portfolio
returned 6.11% for Initial Class shares and 5.85% for Service Class shares. Both
share classes underperformed the 8.58% return of the average Lipper* Convertible
Securities Portfolio over the same period. Both share classes underperformed the
7.46% return of the Credit Suisse First Boston(R) Convertible Securities Index,*
the Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT SIGNIFICANT FACTORS AFFECTED THE MARKET FOR CONVERTIBLE SECURITIES DURING
2004?
As hybrid securities, convertible bonds are influenced by the performance of the
broad fixed-income market and by the performance of the underlying equities into
which the convertible bonds can be converted. The major fixed-income and equity
indices posted gains for 2004, which moved the convertible bond market higher.
In addition, the tightening of credit spreads versus Treasuries added to the
performance of straight-corporate and convertible bonds during the year.
WHY DID THE PORTFOLIO UNDERPERFORM?
Lehman Brothers data shows that non-investment-grade convertible bonds rose
12.6% in 2004, compared to investment-grade bonds, which rose only 5.6%. The
Portfolio was overweighted in investment-grade securities and had an overall
credit rating higher than the market average. Although the credit-quality
weighting detracted from performance, security selection enhanced the
Portfolio's performance in 2004. The Portfolio was significantly overweighted in
the energy sector and underweighted in technology. In 2004, convertible bonds
issued by energy-related companies increased 9.8% and technology-related
convertible bonds increased only 6.6%. Most of the underperformance that
resulted from the Portfolio's higher credit quality occurred during the first
quarter of 2004. For the final three quarters of the year, the Portfolio
performed roughly in line with its benchmark, even managing to eek out a slight
outperformance.
HOW DID RISING INTEREST RATES AFFECT THE PERFORMANCE OF THE PORTFOLIO?
Despite a series of tightening moves by the Federal Open Market Committee,
interest rates have remained at levels close to their historical lows. For this
reason, we believe that interest rates can almost only move in one
direction--higher. To accommodate this view, we have structured the Portfolio to
minimize any negative impact from rising interest rates. We chose to divest
interest-rate-sensitive bonds, including bonds with low equity sensitivity,
long-term maturities, or both. We also overweighted bonds with higher equity
sensitivity and those with put features that significantly reduce effective
duration. This positioning had little impact on the Portfolio in 2004, since the
changes in interest rates were not significant. Since we believe that an
economic recovery, a growing budget deficit, and a depressed dollar could all
push interest rates higher, we believe the Portfolio is well positioned for the
foreseeable future.
DID THE PORTFOLIO HAVE A PARTICULAR SECTOR EMPHASIS IN 2004?
The Portfolio's largest investment area and most significant market overweight
remains energy, specifically energy equipment & services. The prospects for the
energy sector have not been better since the 1970s, and we believe that
companies in energy services will continue to outperform the general market for
the next two years or longer. The demand for oil, particularly from Asian
countries engaged in rapid industrialization, has absorbed most of the capacity
of the world's oil-producing nations. Supply
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-22 MainStay VP Series Fund, Inc.
and demand are in relatively tight balance, and demand should continue to
increase while producers struggle to keep pace. The prospect of a continuing
tight market--coupled with the fear of supply disruption from the Middle
East--has kept oil and gas prices at high levels. These elevated prices have
acted as a strong incentive for oil companies to increase their spending on
equipment and services, to increase production from existing reservoirs, and to
find and exploit new fields.
The Portfolio is heavily invested in equipment and service providers, such as
Schlumberger, Halliburton, Pride International, and Cooper Cameron. We believe
that these companies stand to gain the most from a prolonged period of high
energy prices. In 2004, the strongest performer in this group was Halliburton.
Not only did the company benefit from the improved energy outlook, but
Halliburton also reached a successful resolution in an asbestos-related law suit
that posed substantial financial risk. With that cloud lifted, investors focused
on the core business--oil services--and drove Halliburton's shares and
convertible bonds higher.
WERE THERE OTHER SIGNIFICANT HOLDINGS IN THE PORTFOLIO?
Another key investment in 2004 was Tyco International. The shares and
convertible bonds did very well when the company demonstrated to investors that
its operations and financial health had been restored. The Portfolio also
benefited from convertible bonds issued by Whole Foods Markets. The bonds rose
nicely as the company continued to post stellar increases in same-store and
total sales. The company's management is well regarded, and the balance sheet is
pristine. Indeed, there is more cash on the books than there are convertible
bonds outstanding. The convertible bonds are the company's only debt. The
company's shares, however, are not cheap, and they are volatile because the
company provides no earnings outlook for future periods. We believe that the
solid fundamentals outweigh these risks, and the Portfolio continues to hold the
bonds.
WHICH HOLDINGS DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2004?
Although the Portfolio was approximately market-weighted in health care, several
of its health care holdings showed poor performance. The Portfolio owned common
stock of Merck and Pfizer. Shares of both companies declined when investors
learned that Vioxx and Celebrex might pose cardiovascular risks for long-time
users. We continue to hold shares of Merck, since we believe that investors have
overestimated the potential litigation risk related to the sale of Vioxx. Teva
Pharmaceutical Industries' convertible bonds also detracted from the Portfolio's
performance. Although the decline in the bonds was modest, the Portfolio's
substantial position weighed on the Portfolio's performance. The company had
outstanding operational results and handily beat earnings expectations each
quarter. Unfortunately, earnings shortfalls at other generic-drug companies led
investors to sell Teva Pharmaceutical Industries' shares on concerns that the
company might not be immune to the problems of its competitors. We used the
weakness in the stock as an opportunity to add to the Portfolio's position, and
Teva Pharmaceutical Industries' convertible bonds remain a key Portfolio
holding.
WHAT WERE SOME SIGNIFICANT PURCHASES DURING 2004?
We've already mentioned several, including Schlumberger, Pride International,
Cooper Cameron, and Whole Foods Markets. Another significant purchase was TXU,
which was valued at a significant discount to the electric utility group,
largely because of a heavy debt burden from noncore acquisitions. A new CEO, a
restructuring plan, and efforts to deleverage the company attracted us to TXU
convertible bonds--and later to a synthetic bond that would convert to TXU
common stock when the original bonds were called as part of the restructuring.
TXU successfully executed its plans and announced that earnings for 2004 and
2005 would be significantly higher than analysts' estimates. This, in turn, led
to a substantial rise in TXU's stock and convertible bonds.
Although Goodyear Tire was widely disliked by some analysts, we believed that
Goodyear Tire's prospects were improving and bought the common stock for the
Portfolio. We held the stock until June, when the company issued convertible
bonds, which we subsequently purchased. The shares rose approximately 50% from
the Portfolio's initial purchase price. We recently sold half of the Portfolio's
position in the convertible bonds because we felt that the stock was approaching
full value.
Sirius Satellite Radio's successful strategies for acquiring content (NFL
football), talent (Howard Stern), and distribution (new auto-manufacturer and
retail deals) served as catalysts to push the company's common stock and
convertible bonds higher in the fall of 2004. We bought the convertible bonds
for the Portfolio on the day we learned of the signing of
www.mainstayfunds.com M-23
Stern. We believed that news of Stern's departure from conventional radio to
satellite would ignite interest in Sirius Satellite Radio.
WHICH SECURITIES DID THE PORTFOLIO SELL IN 2004?
We sold the Portfolio's holdings in Mandalay Resorts in June, after the company
accepted an all-cash takeover offer from MGM Mirage. Given the nature of the
offer, there was little upside in Mandalay Resorts' convertible bonds once the
offer was announced.
We sold the Portfolio's Sirius Satellite Radio bonds in November, when they had
nearly doubled in value just two months after they were purchased. Once Stern
agreed to abandon conventional radio for satellite, Sirius Satellite Radio
announced that it had also landed Mel Karmazin, former CEO of Infinity Radio, to
become the company's new CEO. Market euphoria took over, pushing the company's
shares to valuation levels that were not supported by current or future
cash-flow and earnings prospects.
We sold convertible preferred shares of Prudential Financial in November, after
the shares rose substantially, moving price-to-earnings and price-to-book ratios
to levels that have represented peaks in the company's past cycles. Bonds of
Officemax and Dominion were called at the discretion of the respective companies
and converted into shares of common stock. In both cases, we sold the shares
shortly after the conversion. We sold Health Management Associates bonds in
September, when it became increasingly apparent to us that the company would be
unable to meet investor's targets for near-and longer-term earnings and
cash-flow growth.
HAS THE PORTFOLIO CHANGED ITS BENCHMARK?
As of December 2004, Credit Suisse First Boston discontinued publication of the
Credit Suisse First Boston(TM) Convertible Securities Index.* Going forward, the
Portfolio will measure itself against the Merrill Lynch All Convertibles
Securities Index.*
WHAT IS YOUR OUTLOOK GOING FORWARD?
With the U.S. presidential election behind us and the price of crude oil down
20%, we see continued investor optimism leading to higher equity and convertible
bond markets in 2005, as long as foreign terrorists stay away from American
soil. Although, rising interest rates may weigh slightly on convertible
instruments, we believe that even a modest rise in equity prices could offset
this potential headwind. An easing of hostilities in Iraq and reduced American
involvement in that situation could serve as a positive catalyst for the
markets. Barring a major exogenous event, we view the environment for equity and
convertible bond markets for 2005 with a positive outlook.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts will
come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
Certain of the Portfolio's investments have speculative characteristics.
High-yield securities ("junk bonds") are generally considered speculative
because they present a greater risk of loss than higher-quality debt securities
and may be subject to greater price volatility.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-24 MainStay VP Series Fund, Inc.
MAINSTAY VP GOVERNMENT PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- -------------------------------------------------------------
After Portfolio operating
expenses 3.33% 6.71% 6.84%
</Table>
(after Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP GOVERNMENT LEHMAN BROTHERS GOV'T BOND
PORTFOLIO INDEX
---------------------- --------------------------
12/31/94 10000 10000
11672 11834
11938 12162
13069 13328
14245 14641
13998 14314
15708 16210
16751 17382
18401 19380
18747 19837
12/31/04 19371 20527
</Table>
<Table>
-- MainStay VP Government Portfolio -- Lehman Brothers Gov't Bond Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- -------------------------------------------------------------
After Portfolio operating
expenses 3.07% 6.45% 6.57%
</Table>
(after Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP GOVERNMENT LEHMAN BROTHERS GOV'T BOND
PORTFOLIO INDEX
---------------------- --------------------------
12/31/94 10000 10000
11643 11834
11879 12162
12972 13328
14104 14641
13825 14314
15475 16210
16462 17382
18038 19380
18333 19837
12/31/04 18895 20527
</Table>
<Table>
-- MainStay VP Government Portfolio -- Lehman Brothers Gov't Bond Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK YEAR YEARS YEARS
Lehman Brothers(R) Government Bond Index* 3.48% 7.48% 7.46%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/95 through
6/3/03, adjusted to reflect the fees and expenses for Service Class shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-25
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,035.45 $3.02 $1,022.05 $3.00
- ------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,034.20 $4.30 $1,020.80 $4.27
- ------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government & Federal Agencies 86.5%
Short-Term Investments (collateral from securities lending
is 16.2%) 35.3
Asset-Backed Securities 5.6
Corporate Bonds 3.7
Mortgage-Backed Securities 1.8
Municipal Bond 0.4
Liabilities in Excess of Cash and Other Assets -33.3
</Table>
See Portfolio of Investments on page M-138 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Federal National Mortgage Association 6.00%, due
2/10/35 TBA
2. Federal National Mortgage Association 4.50%, due
7/1/18
3. Federal Home Loan Mortgage Corporation 5.50%,
due 1/1/33
4. Federal National Mortgage Association 6.625%,
due 9/15/09
5. Federal National Mortgage Association 5.50%, due
2/15/20 TBA
6. Federal National Mortgage Association 4.50%, due
11/1/18
7. Federal National Mortgage Association 5.00%, due
11/1/17
8. Federal Home Loan Mortgage Corporation 5.00%,
due 6/1/33
9. United States Treasury Bond 6.875%, due 8/15/25
10. Federal National Mortgage Association 5.50%, due
11/1/17
</Table>
M-26 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Gary Goodenough and Joseph Portera of
MacKay Shields LLC.
MAINSTAY VP GOVERNMENT PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio invests primarily in U.S. government securities, but it may also
invest a portion of its assets in mortgage-related and asset-backed securities
or other non-U.S. government securities. The Portfolio's investment process
includes an analysis of economic trends and an evaluation of factors pertinent
to particular issuers and securities.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Government Portfolio
returned 3.33% for Initial Class shares and 3.07% for Service Class shares. Both
share classes underperformed the 3.92% return of the average Lipper* Variable
Products General U.S. Government Portfolio over the same period. Both share
classes also underperformed the Lehman Brothers(R) Government Bond Index,* the
Portfolio's benchmark, which returned 3.48% for the 12 months ended December 31,
2004.
The Lipper* Variable Products General U.S. Government universe is far from
homogeneous, especially on the dimension of duration. The portfolios that
specialize in longer-duration securities outperformed in 2004, and their
performance, in turn, skewed the average return higher. Comparing the Portfolio
to the category's median, which it outperformed, would give a better picture of
how well the Portfolio performed, given its shorter duration.
WHAT MAJOR FACTORS INFLUENCED THE BOND MARKET DURING 2004?
The level of interest rates, the pace of economic growth, the price of oil, and
the performance of the U.S. dollar relative to other currencies all had an
impact on the bond market. The year began with the targeted federal funds rate
at an accommodative 1.00%. In the first few months of 2004, it appeared that a
tighter monetary policy might inhibit economic growth and lead to deflation.
With slack in the labor markets, unutilized manufacturing capacity, and little
pricing power in most industries, there appeared to be little risk of the
economy overheating. In April, however, uniformly firm economic releases
challenged this outlook, and investors began to anticipate a Federal Reserve
move to raise interest rates. Consistent with market expectations, the Federal
Open Market Committee raised the targeted federal funds rate to 1.25% in June.
Additional 25-basis-point tightening moves--in August, September, November, and
December--brought the targeted federal funds rate to 2.25% by year-end 2004.
Although the price of oil rose dramatically during the year, inflationary
pressures remained relatively subdued. The decline in the U.S. dollar, however,
led foreign banks to purchase large blocks of U.S. Treasuries. This move was
designed to help keep locally produced goods competitive in the global
marketplace.
HOW DID YOU POSITION THE PORTFOLIO IN THIS ENVIRONMENT?
During 2004, we sold about 13% of the Portfolio's holdings in U.S. Treasuries to
increase the Portfolio's allocation to agency debentures by 10% and its
allocation to mortgage-backed securities by 3%. As of December 31, 2004, the
Portfolio was invested 13% in U.S. Treasuries, 37.6% in agency debentures and
discount notes, 53.4% in mortgage-backed securities issued by
government-sponsored and government-related enterprises, 1.8% in commercial
mortgage-backed securities, 5.6% in asset-backed securities, and 3.7% in
investment-grade corporate debt.
We typically strive to maintain the Portfolio's duration within 5% (plus or
minus) of the median duration in the Lipper* Variable Products General U.S.
Government Portfolio universe. We prefer to allow the Portfolio's duration to
float within this range, rather than to manage to a duration point. This reduces
the need for frequent and costly rebalancing when the duration of the
Portfolio's mortgage-backed securities is affected by shifts in interest rates.
As of December 31, 2004, the Portfolio's duration was 3.9 years.
We favor securitized products for their high quality, liquidity, and potential
yield advantage relative to Treasuries, and we diversify our commitment to the
sector across residential mortgage-backed securities, commercial mortgage-backed
securities, and asset-backed securities. In total, the allocation to non-
government-related securities does not exceed 10%. The Portfolio typically seeks
to generate yields at least 75 basis points better than the yield of a
duration-matched U.S. Treasury security.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-27
HOW DID YOUR POSITIONING AFFECT THE PORTFOLIO'S PERFORMANCE?
Our preference for securities other than U.S. Treasuries had a positive impact
on performance. Relative to duration-matched Treasuries, agency debentures
provided 78 basis points of excess return over the 12-month period, while
residential mortgage-backed securities and asset-backed securities each provided
142 basis points of excess return. These sectors tend to do well when cash flows
are more predicable, which can occur when Treasuries are range bound. In 2004,
Treasury yields for maturities of five years and longer remained within a fairly
tight range that did not exceed 150 basis points from peak to trough.
WHY DID THE PORTFOLIO UNDERPERFORM ITS PEERS IN 2004?
The Portfolio's underperformance was largely due to its duration posture. In
April, the Portfolio's duration was longer than that of the median peer
portfolio, which made it more sensitive to interest rates as they rose sharply.
Since a long duration posture was not consistent with our bearish interest-rate
bias, we decided to shift the Portfolio's duration closer to the median duration
by selling long Treasuries and buying shorter-duration mortgage-backed
securities and agency debentures. Yield trends for the balance of the year,
however, did not work in favor of our duration-shortening repositioning. When
central banks, many from export-led economies, bought large blocks of Treasuries
to stall the appreciation of their currencies against the weaker dollar,
Treasury yields for maturities of 10 years and longer fell 30 to 50 basis points
between April and year-end. We foresee that the central-bank trade could lose
traction as the U.S. dollar strengthens on its own accord in response to
economic growth.
HOW DID THE TREASURY YIELD CURVE CHANGE IN 2004?
During the year, the Treasury yield curve pivoted around the 10-year maturity
benchmark. Two-year yields rose from 1.8% to 3.1%, five-year yields rose from
3.2% to 3.6%, 10-year yields were basically unchanged at 4.2%, and 30-year
yields fell from 5.1% to 4.8%. The narrowing of the yield spread between the
two-year and 30-year maturities (or the flattening of the yield curve) resulted
from Federal Reserve tightening, reduced inflation expectations, and foreign
purchases of U.S. Treasury securities. Since we maintained a neutral yield-curve
posture, the reshaping of the yield curve had minimal impact on the Portfolio's
performance.
WHAT DO YOU SEE GOING FORWARD?
Although there are a variety of ways to interpret the economic data, we expect
the Federal Open Market Committee to raise its federal funds target rate to 3.0%
by mid-year 2005. With low interest rates, lower marginal tax rates, modest
inflation, firm consumer spending, and stronger corporate confidence, a pick-up
in growth as we move into 2005 is a reasonable assumption. We will continue to
monitor key economic data, such as payrolls, durable-goods orders, consumer
spending, the Consumer Price Index, and inventories, to corroborate our
cautiously optimistic economic view.
More Treasury issuance will no doubt be needed to fund the federal budget
imbalance. This fact suggests that interest rates may be close to a turning
point and explains our decision to remain short-of-neutral on duration. If our
view changes, we would probably express it through a moderation of the
Portfolio's duration position. With Treasuries yielding, on average, a
less-than-stellar 3.7% at year-end, we expect to remain generously exposed to
products that typically offer yield advantages. We believe that at year-end
breakeven inflation levels, Treasury inflation-protected securities (TIPS)
offered limited value relative to nominal Treasuries. If higher inflation
expectations caused the yield curve to steepen, we would reassess our view.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
While some securities in the Portfolio may carry government backing or
guaranteed payment of interest and principal, shares of the Portfolio are not
guaranteed, their prices will fluctuate, and shares, when sold, may be worth
more or less than their original cost.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-28 MainStay VP Series Fund, Inc.
MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ----------------------------------------------------------
After Portfolio operating
expenses 12.72% 9.15% 10.44%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP HIGH YIELD CREDIT SUISSE FIRST BOSTON HIGH
CORPORATE BOND PORTFOLIO YIELD INDEX
------------------------ -------------------------------
5/1/95 10000 10000
11006 10967
12895 12329
14575 13887
14963 13967
16885 14426
15895 13674
16675 14468
17017 14916
23207 19084
12/31/04 26159 21365
</Table>
<Table>
-- MainStay VP High Yield Corporate -- Credit Suisse First Boston High
Bond Portfolio Yield Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ----------------------------------------------------------
After Portfolio operating
expenses 12.44% 8.90% 10.19%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP HIGH YIELD CREDIT SUISSE FIRST BOSTON HIGH
CORPORATE BOND PORTFOLIO YIELD INDEX
------------------------ -------------------------------
5/1/95 10000 10000
10988 10967
12844 12329
14483 13887
14834 13967
16701 14426
15686 13674
16418 14468
16718 14916
22744 19084
12/31/04 25574 21365
</Table>
<Table>
-- MainStay VP High Yield Corporate -- Credit Suisse First Boston High
Bond Portfolio Yield Index
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK YEAR YEARS INCEPTION
Credit Suisse First Boston(TM) High Yield Index* 11.95% 8.17% 8.17%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from inception (5/1/95)
through 6/3/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-29
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP HIGH YIELD CORPORATE BOND
PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,098.75 $3.11 $1,022.05 $3.00
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,097.60 $4.43 $1,020.80 $4.27
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Corporate Bonds 59.2%
Short-Term Investments (collateral from securities lending
is 7.5%) 26.7
Foreign Corporate Bonds 7.9
Yankee Bonds 3.8
Convertible Bonds 3.1
Common Stocks 2.3
Preferred Stocks 1.4
Loan Assignments & Participations 1.2
Convertible Preferred Stocks 0.4
Warrants 0.1
Liabilities in Excess of Cash and Other Assets -6.1
</Table>
See Portfolio of Investments on page M-145 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. UnitedGlobalCom, Inc.
2. El Paso Production Holding Co. 7.75%, due 6/1/13
3. Sovereign Real Estate Investment Corp. 12%
4. Petroleum Geo-Services ASA 10.00%, due 11/5/10
5. Goodyear Tire & Rubber Co. (The) 11.00%, due
3/1/11
6. Ono Finance PLC 10.50%, due 5/15/14
7. Rainbow National Services LLC 10.375%, due
9/1/14
8. Calpine Corp. 8.50%, due 7/15/10
9. Cedar Brakes II LLC 9.875%, due 9/1/13
10. LSI Logic Corp. 4.00%, due 11/1/06
</Table>
M-30 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Donald E. Morgan, CFA, and J. Matthew
Philo, CFA, of MacKay Shields LLC.
MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its assets in high-yield
corporate debt securities, including all types of high-yield domestic and
foreign corporate debt securities that are rated below investment grade by
Moody's or S&P or, if unrated, that we consider to be of comparable quality. In
implementing this strategy, we seek to identify investment opportunities based
primarily on the financial condition and competitiveness of individual
companies. The Portfolio's principal investments include domestic corporate debt
securities, Yankee (dollar-denominated) debt securities, zero-coupon bonds, U.S.
government securities, convertible corporate bonds, and loan participation
interests. The Portfolio may invest up to 20% of its net assets in equity
securities and may invest up to 20% of its net assets in securities rated lower
than B by Moody's and S&P.(1)
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP High Yield Corporate Bond
Portfolio returned 12.72% for Initial Class shares and 12.44% for Service Class
shares. Both share classes outperformed the 9.84% return of the average Lipper*
Variable Products High Current Yield Portfolio over the same period. Both share
classes also outperformed the 11.95% return of the Credit Suisse First
Boston(TM) High Yield Index,* the Portfolio's benchmark, for the 12 months ended
December 31, 2004.
WHAT TRENDS CONTRIBUTED TO THE STRONG PERFORMANCE OF THE HIGH-YIELD MARKET IN
2004?
The robust performance of the high-yield bond market was fueled by positive
fundamental and technical factors. Investors were encouraged that high-yield
default rates continued to decline from their peak in 2002 and that an ongoing
economic recovery was increasing the likelihood that high-yield issuers would
meet their debt obligations. In 2004, the ability of issuers to refinance their
high-yield debt at more-attractive interest rates resulted in frequent tenders.
(A tender is a payment for bonds called prior to maturity.) The combination of
refinancing activity and lower default rates significantly decreased the
difference in yield between high-yield bonds and comparable investment-grade
bonds. Such a decrease is referred to as spread tightening. Spreads between
high-yield bonds and comparable Treasuries also tightened and approached
historical lows. During the year, the Federal Reserve increased the targeted
federal funds rate by 25 basis points in June--and by the same amount in each of
August, September, November, and December. All of these moves were widely
anticipated, and each was priced into the market by the time the Federal Open
Market Committee actually took action.
WHICH INDUSTRIES WERE PARTICULARLY STRONG OR WEAK?
Most industries in the high-yield market had positive results for the year,
except airlines. The top-performing industries were steel, restaurants, and
building materials. The worst industries were airlines, consumer durables, and
environmental services. The Portfolio held an overweighted position in airlines
in 2004, which hurt performance relative to the benchmark. Consumer durables and
restaurants are industries that the Portfolio continues to underweight since few
companies in these sectors meet our process on a cash-flow or asset-coverage
basis. Our underweighted position in consumer durables helped the Portfolio's
performance while our underweighted exposure to restaurants hindered
performance.
WHAT EFFECT DID THESE MARKET TRENDS HAVE ON THE FUND?
With high-yield spreads near their historical lows, we kept cash levels in the
Portfolio higher than usual
1. Bonds rated B by Moody's Investors Service are deemed by Moody's to generally
lack characteristics of the desirable investment. According to Moody's,
assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small. Debt rated B by
Standard & Poor's is deemed by Standard & Poor's to be more vulnerable to
nonpayment than obligations rated BB, but it is the opinion of Standard &
Poor's that the obligor currently has the capacity to meet its financial
commitment on the obligation. Standard & Poor's believes that adverse
business, financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the obligation.
When applied to Portfolio holdings, ratings are based solely on the
creditworthiness of the bonds in the Portfolio and are not meant to represent
the security or safety of the Portfolio.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-31
during 2004. We found only a limited number of attractive buying opportunities,
and we had some concerns regarding the quality of newly issued securities. The
Portfolio also experienced higher-than-normal tenders from bond issuers, which
further added to the Portfolio's cash position.
HOW DID YOU POSITION THE PORTFOLIO FROM A SECTOR OR INDUSTRY PERSPECTIVE?
We are bottom-up investors, so the Portfolio's exposure to various sectors and
industries is primarily the result of individual security selection. During the
12 months ended December 31, 2004, we reduced the Portfolio's exposure to
utilities, print media, telecommunications, and information technology. We
increased the Portfolio's absolute weightings in bonds issued by services,
real-estate-development, and automotive companies. At the end of December 2004,
the Portfolio's largest overweighted positions relative to the Credit Suisse
First Boston(TM) High Yield Index* were in airlines, broadcasting, and
information technology. At the same time, the Portfolio held underweighted
positions relative to its benchmark index in telecommunications, manufacturing,
and utilities.
DID YOU ADJUST THE PORTFOLIO'S DURATION POSITIONING DURING THE PERIOD?
As bottom-up investors, duration is primarily a residual of our investment
process. We believe that high-yield bonds have risk and reward characteristics
similar to those of equities. For this reason, traditional fixed-income
strategies, such as yield-curve positioning, maturity structure, and duration
management, are not the focal point of our investment process. Nevertheless, we
believe that duration may have a greater impact in the coming year, since yields
are at record lows. Because of our concern that the Federal Open Market
Committee would continue to raise the targeted federal funds rate, we actively
reduced the Portfolio's duration to 10% lower than the benchmark. While rising
interest rates might have a negative impact on the Portfolio, we would expect
the effects to be less than the related impact on investment-grade debt. Over
the 12-month reporting period, the yield on the 10-year Treasury bond declined
slightly from 4.25% to 4.22%. During that time, however, the 10-year Treasury
yield hit a high of 4.87% and a low of 3.68%. Over the same period, high-yield
bonds rallied, with the yield on the Credit Suisse First Boston(TM) High Yield
Index falling from 7.78% to 6.99%. (The term "rally" is used because bond prices
tend to rise when yields fall.)
WHAT WERE SOME OF THE PORTFOLIO'S STRONG PERFORMERS IN 2004?
The top performers for the year were Ono Finance, UnitedGlobalCom, and Goodyear
Tire & Rubber. Ono Finance, a Spanish cable company, generally showed strong
performance, and the value of the company's securities received a boost in
mid-November from a public offer by a competitor. United-GlobalCom is a cable
company that provided the Portfolio with new securities as part of a
restructuring at the end of 2003. Goodyear Tire & Rubber, the well-known tire
company, benefited by following through on its operational turnaround.
WERE THERE OTHER AREAS OF STRENGTH IN THE PORTFOLIO?
Utility securities make up the Portfolio's largest industry position. Several of
the Portfolio's utility holdings showed strong performance in 2004. ANR
Pipeline, El Paso-Cedar Brakes, El Paso Corporation, El Paso Production, and
Mirant Americas Generation each outperformed the utility portion of the Credit
Suisse First Boston(TM) High Yield Index.*
WERE THERE ANY HOLDINGS THAT DIDN'T MEET YOUR EXPECTATIONS?
Airlines were punished for most of the year as oil prices climbed higher. The
industry rebounded throughout the fourth quarter of 2004, when oil prices eased.
The Portfolio's holdings in Delta were among the top performers for the fourth
quarter. The airline reached a settlement with their pilots' union late in
October, which alleviated concerns that Delta might file for bankruptcy (at
least in the near term). As the year ended, Delta introduced new pricing that
was quickly matched by other carriers. The effects of this strategy remain to be
seen.
Other weak performers for the year included Lumbermens Mutual Casualty, an
insurance company that defaulted in 2003, and Collins and Aikman, a supplier of
automotive-interior systems.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-32 MainStay VP Series Fund, Inc.
DID YOU MAKE ANY SIGNIFICANT PURCHASES OR SALES DURING THE YEAR?
In 2004, we initiated positions in several securities. Significant additions to
the Portfolio included issues of El Paso Production Holdings, Goodyear Tire &
Rubber, Ono Finance, and Tembec Industries. We eliminated Portfolio holdings in
TDL Infomedia Group, Commonwealth Aluminum, and Universal City Development
Partners.
WHAT DO YOU ANTICIPATE FOR THE HIGH-YIELD BOND MARKET GOING FORWARD?
We believe that with spreads around 300 basis points over Treasuries, the
high-yield market may have approached fair value. We are becoming concerned that
at the levels we see in the market, the Portfolio may not be adequately
compensated for both interest-rate risk and credit risk. We are raising the
Portfolio's exposure to floating-rate debt and are actively selling bonds that
have reached our price targets. Cash levels, which are higher than normal, may
remain elevated during the next few months until we see a correction in
high-yield securities. Although a large cash position certainly could impede the
management of an equity portfolio, in our opinion, the opportunity cost of cash
versus high-yield securities (which are currently yielding 7% or less) is not as
great as the potential cost of deviating from our process to lower the cash
level of the Portfolio. We will use the Portfolio's cash position tactically to
take quick action as opportunities arise, particularly in the secondary market.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
made will come to pass. This material does not constitute investment advice and
is not intended as an endorsement of any specific investment.
High-yield securities ("junk bonds") are generally considered speculative
because they present a greater risk of loss than higher-quality debt securities
and may be subject to greater price volatility.
Foreign securities may be subject to greater risks than U.S. investments,
including currency fluctuations, less-liquid trading markets, greater price
volatility, political and economic instability, less publicly available
information, and changes in tax or currency laws or monetary policy. These risks
are likely to be greater in emerging markets than in developed markets.
The Portfolio may invest in derivatives, which may increase the volatility of
the Portfolio's net asset value and may result in a loss to the Portfolio.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-33
MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ----------------------------------------------------------
After Portfolio operating
expenses 17.34% 0.54% 7.50%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP INTERNATIONAL
EQUITY PORTFOLIO MSCI EAFE INDEX
------------------------- ---------------
5/1/95 10000 10000
10696 10522
11823 11158
12434 11356
15308 13627
19603 17302
16062 14850
13810 11666
13200 9807
17160 13590
12/31/04 20136 16342
</Table>
<Table>
-- MainStay VP International Equity Portfolio -- MSCI EAFE Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ----------------------------------------------------------
After Portfolio operating
expenses 17.05% 0.29% 7.24%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP INTERNATIONAL
EQUITY PORTFOLIO MSCI EAFE INDEX
------------------------- ---------------
5/1/95 10000 10000
10678 10522
11775 11158
12354 11356
15172 13627
19381 17302
15844 14850
13588 11666
12956 9807
16803 13590
12/31/04 19668 16342
</Table>
<Table>
-- MainStay VP International Equity Portfolio -- MSCI EAFE Index
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK YEAR YEARS INCEPTION
MSCI EAFE(R) Index* 20.25% -1.13% 5.21%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (5/1/95)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-34 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP INTERNATIONAL EQUITY
PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,140.95 $5.33 $1,020.05 $5.03
- ------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,139.70 $6.67 $1,018.80 $6.29
- ------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 82.4%
Short-Term Investments (collateral from securities lending
is 3.9%) 5.4
Cash and Other Assets (less liabilities) 4.7
Investment Companies 3.8
Warrants 2.5
Preferred Stock 1.2
</Table>
See Portfolio of Investments on page M-162 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Tesco PLC
2. Deutsche Boerse AG
3. Nestle S.A. Registered
4. Canon, Inc.*
5. UBS AG Registered*
6. Diageo PLC*
7. Bayerische Motoren Werke AG
8. TPG N.V.
9. NTT DoCoMo, Inc.*
10. Ryanair Holdings PLC
</Table>
* Security traded on more than one exchange.
www.mainstayfunds.com M-35
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Rupal J. Bhansali of MacKay Shields LLC.
MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio seeks to generate competitive risk-adjusted returns by investing
in quality companies that we believe are currently undervalued. The Portfolio
normally invests at least 80% of its assets in equity securities of issuers who
do business mainly outside the U.S. We invest in countries with established
economies, as well as emerging-market countries that we believe present
favorable opportunities. In implementing this strategy, we utilize a bottom-up,
stock-picking investment discipline. Proprietary, quantitative, and qualitative
tools are used to identify attractive companies. Particular attention is paid to
cash flow, return on invested capital, and management's demonstrated ability to
create shareholder value.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP International Equity
Portfolio returned 17.34% for Initial Class shares and 17.05% for Service Class
shares. Both share classes underperformed the 17.94% return of the average
Lipper* Variable Products International Core Portfolio over the same period.
Both share classes underperformed the 20.25% return of the Morgan Stanley
Capital International EAFE(R) Index,* the Portfolio's benchmark, for the 12
months ended December 31, 2004.
We attribute the Portfolio's relative underperformance to our bottom-up
investment approach, which emphasizes companies with high returns on invested
capital--a profile that happened to be out of favor in 2004. The Portfolio's
holdings in consumer staples and utilities provided the greatest positive
contribution to absolute performance in 2004. Business-services companies
detracted from absolute performance.
WHAT SIGNIFICANT FACTORS AFFECTED THE MARKET FOR INTERNATIONAL STOCKS IN 2004?
In Japan, the official view of the government and the Bank of Japan is that the
country's economy is on course to enter a sustainable growth path. For the
government's rosy scenario to occur, however, the strength of the corporate
sector needs to be transmitted to households. Unfortunately, household incomes
have remained weak.
In Europe, economic news has been mixed. The euro hit a record high versus the
U.S. dollar in November 2004, and the European Central Bank has not indicated
concern regarding the strength of the currency. We believe that the European
Central Bank is content to let the euro do its job by reducing pricing
pressures. This strategy, however, may have a negative impact on exporters.
HOW DID YOU POSITION THE PORTFOLIO IN THIS ENVIRONMENT?
As always, we remained focused on the fundamental analysis of individual
businesses rather than any view on the markets. This approach has directed the
Portfolio toward high-dividend-yielding utilities and consumer staples and
underweighting tech and telecommunication services and Japanese stocks.
WHICH INDUSTRY GROUPS WERE STRONG AND WEAK PERFORMERS IN 2004?
The equity market's advance was broad based. As measured by the MSCI EAFE
Index,* utilities and energy were the best-performing industry groups. Each
advanced more than 25% in U.S. dollars in 2004.(1) Semiconductors &
semiconductor equipment was the worst-performing industry group, declining by
18% in U.S. dollars for the year.
WHICH PORTFOLIO HOLDINGS WERE STRONG PERFORMERS IN 2004?
Strong performers included European utilities and a United Kingdom-based food
retailer. Snam Rete Gas is an Italian gas-transmission concern. The company is a
highly regulated monopoly. The Portfolio holds Snam Rete Gas because increased
demand from consumers and generators of electricity is creating a need for
additional gas infrastructure. Tesco, a United Kingdom-based food retailer,
benefited when sales continued to increase and earnings results surpassed
expectations, which helped push the stock higher.
1. Performance percentages reflect total returns of the industry groups
mentioned for the 12 months ended December 31, 2004. Purchases and sales
within the Portfolio may cause the performance of Portfolio holdings to
differ from that of the securities themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-36 MainStay VP Series Fund, Inc.
WHICH SECURITIES DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2004?
Weak performers included two business-services companies based in Europe.
Rentokil Initial, a global business-services company operating in over 40
countries, found itself under pressure when competition forced margins lower. We
sold the Portfolio's entire position in the company. Compass Group operates as
an international food-services company. The company provides contract and
concession catering in more than 90 countries. Compass Group warned that
earnings would fall short of expectations in 2004.
WHAT WERE SOME SIGNIFICANT PURCHASES FOR THE PORTFOLIO IN 2004?
Ryanair, the largest low cost airline servicing destinations throughout Europe
was added to the portfolio in 2003. We continued to increase the position during
2004 as competition and fuel prices increased. Given the size and strength of
Ryanair, it is only a matter of time until some smaller competitors call it
quits. In the latest reporting period, fares did not decline as much as expected
and in turn earnings were better. In addition, Ryanair is continuing to grow
passenger ancillary revenues by selling a variety of services and products on
their web site and aircraft.
Hannover Rueckversicherung operates globally offering life, health, accident and
property insurance. The company had positive confirmation on the state of the
renewals for property and casualty lines of business. Overall, expectation of
stable rates with marginal positive and negative on some lines has been
confirmed. More importantly, the CEO is anticipating another strong renewals
year for property and two more for casualty. The underwriting discipline
continues and deductible levels and claims inflation is still protecting the
business.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO ITS BENCHMARK AT YEAR-END 2004?
The Portfolio uses a bottom-up stock selection process. All sector weightings
are a residual of this process, and do not reflect top-down industry, country,
or regional selections. As of December 31, 2004, the Portfolio held overweighted
positions relative to the MSCI EAFE(R) Index* in defensive sectors, such as
consumer staples and utilities, with an overweighted position in diversified
financials. Underweighted positions included telecommunication services, banks,
and basic resources. At year-end, the Portfolio was market-weighted in
pharmaceuticals.
At year-end 2004, we found Japanese investments less compelling than those in
other Asian nations and Europe. As a result, the Portfolio is underweighted in
Japan. Even so, the level of underweight has decreased as we have recently found
businesses in Japan that meet all of our criteria for ownership in the
Portfolio.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
Overall, we remain cautiously optimistic. The Portfolio has holdings in
companies that we believe are well positioned in their respective sectors to
generate returns above their cost of capital. The ability to manage capital
efficiently is an important aspect of good management. We remain alert to
opportunities and would be willing to purchase shares of businesses in
underweighted sectors/regions.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
Foreign securities may be subject to greater risks than U.S. investments,
including currency fluctuations, less-liquid trading markets, greater price
volatility, political and economic instability, less publicly available
information, and changes in U.S. or foreign tax or currency laws or monetary
policy. These risks are likely to be greater in emerging markets than in
developed markets.
The Portfolio may invest in derivatives, which may increase the volatility of
the Portfolio's net asset value and may result in a loss to the Portfolio.
Because of its trading strategies, the Portfolio may experience a portfolio
turnover rate of more than 100%.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-37
MAINSTAY VP MID CAP CORE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -----------------------------------------------------------
After Portfolio operating
expenses 22.27% 9.10%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP CORE
PORTFOLIO RUSSELL MIDCAP INDEX
------------------------ --------------------
7/2/01 10000 10000
9414 9626
8197 8068
11102 11300
12/31/04 13574 13585
</Table>
<Table>
-- MainStay VP Mid Cap Core Portfolio -- Russell Midcap Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -----------------------------------------------------------
After Portfolio operating
expenses 21.96% 8.83%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP CORE
PORTFOLIO RUSSELL MIDCAP INDEX
------------------------ --------------------
7/2/01 10000 10000
9402 9626
8167 8068
11032 11300
12/31/04 13456 13585
</Table>
<Table>
-- MainStay VP Mid Cap Core Portfolio -- Russell Midcap Index
</Table>
<Table>
<Caption>
ONE SINCE
BENCHMARK YEAR INCEPTION
Russell Midcap(R) Index* 20.22% 9.15%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (7/2/01)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-38 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MID CAP CORE PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,150.20 $5.30 $1,020.10 $4.98
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,148.95 $6.64 $1,018.85 $6.24
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 95.4%
Investment Companies 4.1
Cash and Other Assets (less liabilities) 0.5
</Table>
See Portfolio of Investments on page M-170 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. S&P MidCap 400 Index-MidCap SPDR Trust, Series 1
2. DIAMONDS Trust, Series 1
3. Apple Computer, Inc.
4. Eastman Kodak Co.
5. Xerox Corp.
6. Valero Energy Corp.
7. Edison International
8. Georgia-Pacific Corp.
9. Limited Brands, Inc.
10. Phelps Dodge Corp.
</Table>
www.mainstayfunds.com M-39
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Harvey Fram of New York Life Investment
Management LLC.
MAINSTAY VP MID CAP CORE PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its assets in companies with
market capitalizations at the time of investment that are similar to those of
companies in the Russell Midcap(R) Index. The Portfolio invests primarily in
common stocks of U.S. companies. We seek those mid-cap companies that we believe
will outperform the average of the mid-cap universe. In implementing this
strategy, we employ a quantitative management approach that uses a proprietary
model to rank stocks. The model focuses on value, earnings, and behavioral
characteristics in the market. We generally invest in stocks that rank in the
top 50% of the universe, considering the financial strength of the issuer and
the potential for strong, long-term earnings growth.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Mid Cap Core Portfolio
returned 22.27% for Initial Class shares and 21.96% for Service Class shares.
Both share classes outperformed the 16.47% return of the average Lipper*
Variable Products Mid-Cap Core Portfolio over the same period. Both share
classes outperformed the 20.22% return of the Russell Midcap(R) Index, the
Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT MAJOR FACTORS INFLUENCED THE EQUITY MARKETS IN 2004?
All broadly watched equity indices ended the year with positive returns. Small-
and mid-capitalization stocks generally outperformed large capitalization issues
in 2004, and the market favored value stocks over growth stocks at all
capitalization levels. After considerable turbulence earlier in the year, the
markets responded favorably after the presidential election. Job growth,
record-high oil prices, and the declining value of the dollar all affected
investor decisions during the year.
HOW DID THESE MARKET FORCES AFFECT THE PORTFOLIO?
The high price of oil was one of the biggest factors affecting the markets in
2004. This made the energy sector one of the Portfolio's top performers. The
positive impact was intensified because the Portfolio held an overweighted
position in energy stocks. Apple Computer's iPod music player was one of the
most popular consumer products of 2004. The Portfolio was overweighted in Apple
Computer, which along with Autodesk, helped make the information technology
sector the Portfolio's top contributor to performance.
WHAT ACCOUNTED FOR THE PORTFOLIO'S STRONG PERFORMANCE RELATIVE TO ITS BENCHMARK?
The Portfolio outperformed the Russell Midcap(R) Index* with better stock
selection and more favorable weightings in most sectors. The only sectors that
detracted from performance relative to the benchmark were financials, health
care, and consumer staples. Top individual stocks that helped performance
included TXU, Monsanto, and J.C. Penney.
DID YOU MAKE ANY SIGNIFICANT PORTFOLIO MANAGEMENT DECISIONS IN 2004?
Our decision to maintain overweighted positions in the consumer discretionary,
utilities, materials, industrials, energy, and telecommunication services
sectors served to help the Portfolio's relative performance. Our decision to
hold an underweighted position in financials detracted from performance when the
sector showed relatively strong results for the year.
WHICH STOCKS WERE THE PORTFOLIO'S STRONGEST PERFORMERS IN 2004?
From a total-return perspective, Autodesk (+209.6%) was particularly strong, The
company benefited from strong sales, improved gross margins, and positive
foreign-currency effects. Apple Computer (+201.4%) soared on strong iPod sales.
TXU (+177.3%) is a Texas power company that benefited from higher energy trading
activity. Monsanto (+96.0%) is an agricultural-products company that saw strong
earnings and strong sales of seed and genetically engineered products. Finally,
Starwood Hotels & Resorts Worldwide (64.7%) advanced on increased sales from its
hotel and leisure properties.
WHICH STOCKS WERE WEAK PERFORMERS IN 2004?
Sanmina-SCI (-32.8%) is a global provider of electronics-manufacturing services.
The stock fell when Morgan Stanley reduced its earnings estimates for the
company. Biogen Idec (+72.3%) was a strong performer but hurt relative
performance, since the stock was underweighted in the Portfolio. Sears Roebuck
(+14.6%) performed relatively well, but with purchases and sales throughout the
year, the stock
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-40 MainStay VP Series Fund, Inc.
detracted from the Portfolio's overall performance. Lucent Technologies (+33.1%)
was a strong performer that was underweighted in the Portfolio. Humana (+29.9%)
had strong results, but detracted from performance because of the timing of
purchases and sales throughout the year.
WHAT STOCKS DID THE PORTFOLIO PURCHASE IN 2004?
The Portfolio added a new position in photography company Eastman Kodak.
Earnings for the company started to recover in 2004. Limited Brands, a women's
clothing retailer, was another company that we added to the Portfolio. The
company's sales growth was impressive for the year, and as with Eastman Kodak,
the company's earnings had been on the rise.
WHICH STOCKS DID THE PORTFOLIO SELL DURING THE YEAR?
Significant sales included Coach and Juniper Networks. Coach, a producer of
leather and mixed-material products, experienced tremendous earnings growth in
the past few years. The stock price rose to the point where the company no
longer appeared to be a good value. The stock price of Juniper Networks, a
designer and provider of Internet-protocol network-infrastructure solutions,
also rose far enough to suggest that the company was no longer undervalued.
HOW DID THE PORTFOLIO'S SECTOR WEIGHTINGS CHANGE IN 2004?
Throughout the year, the Portfolio substantially increased its exposure to the
materials and energy sectors. Both sectors were underweighted relative to the
Russell Midcap(R) Index* at the beginning of the year, but at year-end were the
Portfolio's most heavily overweighted sectors. During the year, we increased the
Portfolio's already overweighted position in telecommunication services.
The Portfolio decreased its exposure to utilities, information technology, and
health care. As of December 31, 2003, information technology was an overweighted
sector. But at year-end 2004, the Portfolio held an underweighted position in
information technology.
HOW WAS THE PORTFOLIO POSITIONED AT YEAR-END 2004?
As of December 31, 2004, relative to the Russell Midcap(R) Index, materials was
the most heavily overweighted sector in the Portfolio. Materials stocks have
showed strong performance, partly because of the large demand for raw materials
in China. As of the same date, the energy sector was also overweighted in the
Portfolio. This positioning had a positive impact, largely because of the high
price of oil.
At year-end 2004, the most underweighted sector in the Portfolio was financials.
Over the past few years, low interest rates had led to record numbers of new
mortgages, which helped banks and other lending-institutions achieve large
profits. Now, however, the Federal Open Market Committee has begun to steadily
raise the targeted federal funds rate and banks will have to adapt. The
Portfolio ended 2004 underweighted relative to the Russell Midcap(R) Index* in
the health care sector.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO?
President Bush has suggested that he will address a number of issues during his
second term. His stance on social security reform, health care, energy, defense,
budget deficits, tax reform, and deregulation could affect the markets in a
number of ways. In 2005, the markets will also have to respond to changing oil
prices and employment trends. The Portfolio increased its weighting in energy
and materials stocks toward the end of 2004 to take advantage of high oil prices
and sustained demand for raw materials.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
Investors should note that portfolios that invest in companies with market
capitalizations below $10 billion involve additional risks. The securities of
these companies may be more volatile and less liquid than the securities of
larger companies.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
www.mainstayfunds.com M-41
MAINSTAY VP MID CAP GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -------------------------------------------------------------
After Portfolio operating
expenses 22.61% 4.34%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP RUSSELL 2500 GROWTH
GROWTH PORTFOLIO S&P MIDCAP 400 INDEX INDEX
------------------- -------------------- -------------------
7/2/01 10000 10000 10000
9157 9844 9181
6538 8416 6510
9466 11413 9525
12/31/04 11607 13295 10915
</Table>
<Table>
-- MainStay VP Mid Cap Growth Portfolio -- S&P MidCap 400 Index
-- Russell 2500 Growth Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -------------------------------------------------------------
After Portfolio operating
expenses 22.30% 4.08%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP RUSSELL 2500 GROWTH
GROWTH PORTFOLIO S&P MIDCAP 400 INDEX INDEX
------------------- -------------------- -------------------
7/2/01 10000 10000 10000
9145 9844 9181
6514 8416 6510
9408 11413 9525
12/31/04 11506 13295 10915
</Table>
<Table>
-- MainStay VP Mid Cap Growth Portfolio -- S&P MidCap 400 Index
-- Russell 2500 Growth Index
</Table>
<Table>
<Caption>
ONE SINCE
BENCHMARKS YEAR INCEPTION
Russell 2500(R) Growth Index* 14.59% 2.53%
S&P MidCap 400(R) Index* 16.48% 8.48%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (7/2/01)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-42 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MID CAP GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,168.00 $4.80 $1,020.60 $4.47
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,166.75 $6.15 $1,019.35 $5.74
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 99.2%
Short-Term Investment 1.1
Liabilities in Excess of Cash and Other Assets -0.3
</Table>
See Portfolio of Investments on page M-180 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. D.R. Horton, Inc.
2. PacifiCare Health Systems, Inc.
3. Peabody Energy Corp.
4. Coventry Health Care, Inc.
5. St. Joe Co. (The)
6. Harman International Industries, Inc.
7. Penn National Gaming, Inc.
8. Eagle Materials, Inc.
9. Garmin Ltd.
10. Coach, Inc.
</Table>
www.mainstayfunds.com M-43
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Rudolph C. Carryl and Edmund C. Spelman
of MacKay Shields LLC
MAINSTAY VP MID CAP GROWTH PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its assets in common stocks and
securities related to U.S. common stocks of companies with market
capitalizations similar to the market capitalization of companies in the S&P
MidCap 400(R) Index.* The Portfolio seeks to participate primarily in expanding
markets of technology, health care, communications, and other high-growth
industries. We also seek stocks with above-average growth in earnings. We select
investments according to the economic environment, the attractiveness of
particular markets, and the financial condition and competitiveness of
individual companies.
In implementing this strategy, we use a flexible approach and may invest in
various types of companies and securities. We look for stocks and companies that
we believe may be poised for a rise in price or an acceleration in earnings
growth--possibly because of special factors, such as changes in management,
products, consumer demand, or the economy. We may sell a stock if its earnings
growth rate decelerates, if it appears overvalued in relation to its growth rate
or peer group, or if the stock no longer appears likely to help the Portfolio
meet its investment objective.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Mid Cap Growth Portfolio
returned 22.61% for Initial Class shares and 22.30% for Service Class shares.
Both share classes outperformed the 14.75% return of the average Lipper*
Variable Products Mid-Cap Growth Portfolio over the same period. Both share
classes outperformed the 14.59% return of the Russell 2500(R) Growth Index,* the
Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT KEY FACTORS INFLUENCED THE EQUITY MARKETS DURING 2004?
Arguably the biggest factor was a 34% rise in the price of crude oil, which has
stoked inflation fears and has the potential to put a damper on consumer
spending. Another factor that affected the markets during the year was the
beginning of a new tightening cycle by the Federal Reserve. Fortunately, the
Federal Open Market Committee is raising rates at a truly measured pace.
Investors continue to monitor reports from the Middle East--in particular, news
coming out of Iraq--since this news influences the price of oil. During 2004,
the employment market staged a modest recovery, which was welcome news to the
investment community. The Bureau of Economic Analysis estimates that real gross
domestic product increased 4.4% in 2004, suggesting that the U.S. economy
remains on solid footing. The fact that interest rates remain at historically
low levels is noteworthy, since low interest rates have helped fuel consumer
spending.
WHAT FACTORS HAD THE GREATEST IMPACT ON THE PORTFOLIO'S RELATIVE PERFORMANCE IN
2004?
MainStay VP Mid Cap Growth Portfolio's strong performance relative to its peers
during 2004 resulted primarily from individual security selection within the
consumer discretionary, health care, and information technology sectors.
Although the Portfolio's energy stocks advanced in concert with the rising price
of oil, the Portfolio held an underweighted position in the sector, which
detracted from the Portfolio's relative performance.
WHAT DECISIONS GUIDED THE PORTFOLIO'S PERFORMANCE DURING THE REPORTING PERIOD?
A key decision that had a positive effect on the Portfolio's performance was to
increase the Portfolio's exposure to the consumer discretionary sector. Reducing
the Portfolio's weighting in the information technology sector also proved
beneficial. While our decision to increase the Portfolio's exposure in the
high-performing energy sector had a positive impact, remaining underweighted in
the sector hurt relative performance.
WHICH STOCKS WERE THE STRONGEST POSITIVE CONTRIBUTORS TO THE PORTFOLIO'S
PERFORMANCE?
In 2004, the holdings that contributed the most to the Portfolio's performance
were Penn National Gaming, Autodesk, PacifiCare Health Systems, and Harman
International Industries.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-44 MainStay VP Series Fund, Inc.
Penn National Gaming is an owner and operator of gaming properties. The
company's stock price rose when investors concluded that the proposed merger
with Argosy Gaming would create a stronger combined company, one that would be
better able to compete in the rapidly consolidating gaming industry. Penn
National has also benefited from an increase in year-over-year revenues in its
gaming properties, horse racetracks, and associated off-track wagering
facilities.
Autodesk, one of the world's leading design software and digital content
companies, received international recognition for its flagship AutoCAD software.
The stock rose on news of a 75% gain in third-quarter earnings.
PacifiCare's Secure Horizons was one of the nation's first--and today is one of
the largest--Medicare Advantage plans. Secure Horizons offers health care
coverage in eight western states. The company recently received approval by the
Centers for Medicare & Medicaid Services to expand its Secure Horizons Medicare
Advantage plan to Fremont County in South Central Colorado.
Harman International, a manufacturer of high-quality high-fidelity audio and
electronic products, is benefiting in large part from its solid long-term
contracts with several major automakers. The company has profited from its
growing sales in the luxury auto category, since these units carry particularly
high profit margins.
WHICH STOCKS WERE THE LARGEST DETRACTORS FROM THE PORTFOLIO'S PERFORMANCE IN
2004?
In 2004, the largest detractors from the Portfolio's performance were New York
Community Bancorp, Emulex, and SPX.
New York Community Bancorp's shares declined on the news of a significant drop
in earnings for 2004. After a merger with Roslyn Bancorp, New York Community
Bancorp's balance sheet was highly leveraged, and the company was caught off
guard by the big sell-off in bonds earlier in 2004. The company's thrift was
forced to unload some $5 billion of interest-rate sensitive securities and incur
steep losses. We sold the Portfolio's shares on the news.
Emulex, which provides interface connections between computer systems and their
attached data-storage peripherals, announced disappointing results for the
fourth quarter of 2003. A majority of the revenue shortfall was related to a
decline in expected orders from original equipment manufacturers for host bus
adapters. We sold Emulex in July 2004.
SPX designs, manufactures, and markets equipment for networking, broadcast,
power, and fire-detection applications. The company's share price declined when
third-quarter 2004 earnings per share fell short of expectations. The company
reported that various costs and expenses had an impact on margins. We sold the
Portfolio's position in the stock.
WERE THERE ANY NOTEWORTHY PURCHASES DURING 2004?
Yes. With energy prices at high levels, we purchased shares of National-Oilwell
and Newfield Exploration for the Portfolio. In the materials sector, we
purchased shares of coal company Peabody Energy and construction materials
manufacturer Eagle Materials. In the financials sector, we added Affiliated
Managers Group, an asset management holding company. In the industrials sector,
we added Terex, a manufacturer of equipment for construction and surface mining.
We added to the Portfolio's consumer discretionary holdings with the purchase of
Penn National Gaming, Boyd Gamming, and The St. Joe Company. In health care, we
added PacifiCare Health Systems and WellChoice.
HOW DID THE PORTFOLIO'S WEIGHTINGS CHANGE DURING 2004?
The Portfolio uses bottom-up stock selection, and all sector weightings are a
residual of the Portfolio's rigorous investment disciplines. The Portfolio
increased its exposure to the consumer discretionary sector from 25.9% at the
end of 2003 to 32.3% at the end of 2004. Over the same period, we increased the
Portfolio's weighting in the energy sector from 0.0% to 3.0%. We increased the
Portfolio's weighting in the financials sector from 11.3% of net assets at the
beginning of 2004 to 12.9% at year-end. Over the same period, the Portfolio's
allocation to the materials sector grew from 0.2% to 9.9%.
In 2004, the Portfolio decreased its exposure to the health care sector from
22.2% to 19.9%. The Portfolio's weighting in the industrials sector dropped from
15.9% to 10.6%, and exposure to the information technology sector declined from
24.5% to 11.3% of net assets.
HOW DO THE PORTFOLIO'S WEIGHTINGS COMPARE WITH THOSE OF THE RUSSELL 2500(R)
GROWTH INDEX?*
As of December 31, 2004, the Portfolio was overweighted relative to the Russell
2500(R) Growth Index* in the consumer discretionary, financials,
www.mainstayfunds.com M-45
health care, and materials sectors. At the same time, the Portfolio was
underweighted in the consumer staples, energy, industrials, and information
technology sectors. At year-end 2004, the Portfolio had no representation in the
telecommunication services or utilities sectors.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO?
With the uncertainty of the presidential election now behind us, we expect
investors to refocus their attention on company fundamentals, which on balance
remain fairly strong as we move into the new year. Although high energy prices,
rising interest rates and the specter of rising inflation remain risk factors,
we believe that a combination of historically low interest rates, moderate
economic growth, and strengthening employment should help to drive stocks higher
in 2005.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
made will come to pass. This material does not constitute investment advice and
is not intended as an endorsement of any specific investment.
The investor should note that portfolios that invest in companies with market
capitalizations below $10 billion involve additional risks. The securities of
these companies may be more volatile and less liquid than the securities of
larger companies.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-46 MainStay VP Series Fund, Inc.
MAINSTAY VP MID CAP VALUE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -----------------------------------------------------------
After Portfolio operating
expenses 17.54% 7.33%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP RUSSELL MIDCAP VALUE
VALUE PORTFOLIO RUSSELL 1000 VALUE INDEX INDEX
------------------- ------------------------ --------------------
7/02/01 10000 10000 10000
9897 9561 9909
8455 8077 8953
10904 10503 12362
12/31/04 12817 12235 15292
</Table>
<Table>
-- MainStay VP Mid Cap Value Portfolio -- Russell 1000 Value Index
-- Russell Midcap Value Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -----------------------------------------------------------
After Portfolio operating
expenses 17.25% 7.07%
</Table>
After Portfolio operating expenses
<Table>
<Caption>
MAINSTAY VP MID CAP RUSSELL MIDCAP VALUE
VALUE PORTFOLIO RUSSELL 1000 VALUE INDEX INDEX
------------------- ------------------------ --------------------
7/02/01 10000 10000 10000
9885 9561 9909
8424 8077 8953
10837 10503 12362
12/31/04 12706 12235 15292
</Table>
<Table>
-- MainStay VP Mid Cap Value Portfolio -- Russell 1000 Value Index
-- Russell Midcap Value Index
</Table>
<Table>
<Caption>
ONE SINCE
BENCHMARKS YEAR INCEPTION
Russell Midcap(R) Value Index* 23.71% 12.90%
Russell 1000(R) Value Index* 16.49% 5.93%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (7/2/01)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-47
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MID CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,105.75 $4.29 $1,020.95 $4.11
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,104.50 $5.61 $1,019.70 $5.38
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 85.4%
Short-Term Investments 16.2
Liabilities in Excess of Cash and Other Assets -1.6
</Table>
See Portfolio of Investments on page M-186 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Transocean, Inc.
2. Bowater, Inc.
3. Rowan Cos., Inc.
4. ENSCO International, Inc.
5. GlobalSantaFe Corp.
6. PMI Group, Inc. (The)
7. Temple-Inland, Inc.
8. Burlington Northern Santa Fe Corp.
9. Pride International, Inc.
10. Navistar International Corp.
</Table>
M-48 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Michael C. Sheridan of MacKay Shields
LLC.
MAINSTAY VP MID CAP VALUE PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio invests at least 80% of its assts in common and preferred stocks
with market capitalizations that, at the time of investment, are similar to
those of companies in the Russell Midcap(R) Value Index.* The Portfolio
primarily invests in securities that the subadvisor believes are undervalued
when purchased. Most of the Portfolio's securities pay cash dividends and are
listed on a national securities exchange or are traded in the over-the-counter
market. The Portfolio may also invest up to 20% of its assets in debt
securities, U.S. government securities, and cash or cash equivalents. The
Portfolio also invests in convertible securities and REITS (real estate
investment trusts). In implementing this strategy, the subadvisor seeks to
identify investment opportunities on the basis of the financial condition and
competitiveness of individual companies.
Effective May 1, 2004, the Portfolio changed its name from MainStay VP Equity
Income Portfolio to MainStay VP Mid Cap Value Portfolio. The new name more
accurately reflects the focus on mid-capitalization stocks in which the
Portfolio typically invests. The Portfolio's investment objective remains
unchanged. The Portfolio will continue to seek maximum long-term total return
through a combination of capital appreciation and income.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Mid Cap Value Portfolio
returned 17.54% for Initial Class shares and 17.25% for Service Class shares.
Both share classes outperformed the 13.64% return of the average Lipper*
Variable Products Equity Income Portfolio over the same period. Both share
classes underperformed the 23.71% return of the Russell Midcap(R) Value Index,*
the Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT MAJOR FACTORS AFFECTED THE EQUITY MARKETS IN 2004?
Around the world, accommodative monetary policies and generally low interest
rates led to rapid global economic growth. Demand for raw materials was
particularly strong from emerging Asian countries, including China and India.
During the year, prices for energy and commodities rose sharply, which helped
energy and basic materials stocks generate strong performance. Industrial stocks
also benefited from strong global growth. Despite economic expansion, interest
rates remained relatively low, allowing interest-rate-sensitive sectors, such as
financials and utilities, to produce solid gains.
WHICH SECTORS AND SECURITIES MADE THE STRONGEST POSITIVE CONTRIBUTION TO THE
PORTFOLIO'S PERFORMANCE?
The biggest positive contributor to performance was the Portfolio's overweighted
position in the energy sector. In late 2003, we were convinced that the energy
sector's fundamentals would continue to improve amid strong demand and global
production constraints. Over the course of 2004, we further increased the
Portfolio's weighting in the energy sector.
The top three contributors to performance within the energy sector were
Transocean, GlobalSantaFe, and ENSCO International. Transocean benefited from
increased utilization of the company's high-specification drillships and
semisubmersible rigs. As utilization approached full capacity, Transocean's day
rates increased dramatically. GlobalSantaFe and ENSCO are leading offshore oil
and gas drilling contractors that offer a full range of premium equipment and
drilling-management services worldwide. The companies' shares appreciated on
announcements that offshore-drilling-rig day rates had become more profitable.
Outside of energy, the Portfolio's strongest performer was machinery company
Cummins. This diesel-engine producer benefited from the robust increase in
demand for commercial trucks. We recently reduced the Portfolio's position,
since we felt that the stock was approaching fair value.
Our decision to underweight the health care sector helped the Portfolio's
performance. Strong stock selection in the information technology and
telecommunications services sectors also had a beneficial impact.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-49
WHICH SECTORS AND SECURITIES DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2004?
The Portfolio's underperformance of its benchmark, the Russell Midcap(R) Value
Index, was driven by underweighted positions in utilities and financials,
coupled with poor stock selection in the consumer discretionary, industrials,
and materials sectors.
After strong performance in 2003, industrial holding Navistar International was
a disappointment in 2004. The company did not fully capitalize on the strong
upturn in commercial-vehicle demand, as Cummins did. Manufacturing
inefficiencies produced by a far-reaching and aggressive restructuring program
were partly to blame. We trimmed the Portfolio's position later in the year but
still maintain exposure to Navistar, which may benefit when the ongoing truck-
replacement cycle picks up steam.
In the consumer discretionary sector, golf-equipment manufacturer Callaway Golf
and office-supplies and paper company OfficeMax were the biggest detractors.
Callaway Golf faced stiff competition from its well-financed competitors
Titleist (owned by Fortune Brands) and Taylor Made (owned by Adidas). The
Portfolio has eliminated its position in Callaway Golf. Shares of OfficeMax
suffered when a class action lawsuit against the company was announced. The
complaint alleges that OfficeMax made misleading statements with respect to the
company's financial performance and internal controls. We have sold the
Portfolio's entire position in OfficeMax.
Bowater in the materials sector and Safeway in consumer staples both failed to
perform as expected. Bowater is a manufacturer of coated paper and newsprint
that declined because advertising and help-wanted pages in newspapers remained
depressed. Newsprint is a highly consolidated industry that may be on the cusp
of an upturn in light of encouraging new-job creation and pricing increases. We
believe that a weaker U.S. dollar may also help Bowater's product lines, and the
Portfolio continues to hold the stock. Safeway, a grocery chain, suffered from
strike-related costs and sales shortfalls. We sold the position and used the
proceeds to purchase shares of Safeway's competitor Kroger, which we felt was
better positioned as a grocery retailer.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO?
In our opinion, the market provides excellent opportunities, yet it also
presents high levels of risk. We believe the Portfolio is appropriately
positioned for these dynamics. We continue to see potential opportunities in the
energy sector in general--and offshore drillers in particular. Basic materials
producers are just starting to enjoy a positive mix of increasing demand, high
factory operating rates, low inventories, and price increases. We feel that a
weaker U.S. dollar may disproportionately benefit U.S.-based producers held by
the Portfolio. In the industrials sector, we anticipate increased demand for
commercial vehicles and growing transport volumes. If our picture proves
correct, several Portfolio holdings could benefit.
Among financial companies, we are concerned about high bank valuations, little
apparent new-loan demand, and potential for credit deterioration. Our assessment
of long-term valuations suggests that real estate investment trusts (REITS) and
utilities may both be overvalued. Consumer cyclical stocks appear overvalued,
with companies in some industries trading at very high--or even
record--valuations. We believe that all of these sectors look extremely
vulnerable to higher interest rates, a weaker dollar, and continued high energy
prices. For these reasons, we have underweighted risk-laden market segments and
have carefully chosen stocks in sectors that may present higher risk.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
Investors should note that portfolios that invest in companies with market
capitalizations below $10 billion involve additional risks. The securities of
these companies may be more volatile and less liquid than the securities of
larger companies.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-50 MainStay VP Series Fund, Inc.
MAINSTAY VP S&P 500 INDEX PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ------------------------------------------------------------
After Portfolio operating
expenses 10.49% -2.57% 11.73%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP S&P 500 INDEX
PORTFOLIO S&P 500 INDEX
------------------------- -------------
12/31/94 10000 10000
13689 13758
16759 16917
22261 22561
28603 29008
34523 35112
31306 31915
27514 28122
21402 21907
27436 28190
12/31/04 30314 31258
</Table>
<Table>
-- MainStay VP S&P 500 Index Portfolio -- S&P 500 Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- ------------------------------------------------------------
After Portfolio operating
expenses 10.22% -2.81% 11.45%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP S&P 500 INDEX
PORTFOLIO S&P 500 INDEX
------------------------- -------------
12/31/94 10000 10000
13653 13758
16672 16917
22090 22561
28312 29008
34087 35112
30835 31915
27033 28122
20976 21907
26824 28190
12/31/04 29565 31258
</Table>
<Table>
-- MainStay VP S&P 500 Index Portfolio -- S&P 500 Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK YEAR YEARS YEARS
S&P 500(R) Index* 10.88% -2.30% 12.07%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/95 through
6/4/03, adjusted to reflect the fees and expenses for Service Class shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-51
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP S&P 500 INDEX PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,070.15 $2.03 $1,023.05 $1.98
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,068.90 $3.33 $1,021.80 $3.25
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 96.7%
Short-Term Investments 2.6
Cash and Other Assets (less liabilities) 0.7
Warrants 0.0*
</Table>
See Portfolio of Investments on page M-192 for specific holdings within these
categories.
*Less than one-tenth of one percent.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. General Electric Co.
2. ExxonMobil Corp.
3. Microsoft Corp.
4. Citigroup, Inc.
5. Wal-Mart Stores, Inc.
6. Pfizer, Inc.
7. Bank of America Corp.
8. Johnson & Johnson
9. American International Group, Inc.
10. International Business Machines Corp.
</Table>
M-52 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Francis J. Ok of New York Life
Investment Management LLC.
MAINSTAY VP S&P 500 INDEX PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its total assets in stocks in the
S&P 500(R) Index* in the same proportions, to the extent feasible, as they are
represented in the S&P 500(R) Index.*
Effective May 1, 2004, the Portfolio changed its name from MainStay VP Indexed
Equity Portfolio to MainStay VP S&P 500 Index Portfolio. The new name more
clearly identifies the index that is being tracked. The Portfolio's
objective--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(R) Index*--remains unchanged.
During 2004, Francis J. Ok, who already served as part of the management team,
replaced Stephen Killian as Portfolio Manager.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND THE S&P 500(R) INDEX* IN
2004?
For the 12 months ended December 31, 2004, MainStay VP S&P 500 Index Portfolio
returned 10.49% for Initial Class shares and 10.22% for Service Class shares.
Initial Class shares outperformed and Service Class shares underperformed the
10.35% return of the average Lipper* Variable Products S&P 500 Index Objective
Portfolio over the same period. Both share classes underperformed the 10.88%
return of the S&P 500(R) Index,* the Portfolio's benchmark, for the 12 months
ended December 31, 2004. Since the Portfolio incurs actual expenses that a
hypothetical index does not, there will be times when the Portfolio lags the
Index.
WHAT KEY FACTORS INFLUENCED THE EQUITY MARKETS DURING THE YEAR?
All broadly watched equity indices ended 2004 with positive results. Small- and
mid-capitalization stocks performed relatively better than large-capitalization
stocks. The market favored value stocks over growth stocks at all capitalization
levels. Throughout much of the year, low interest rates and indications of
rebounding economic activity contributed to an optimistic outlook for domestic
equities. Investors also had to consider the potential impact of rising
employment, record high oil prices, and a declining U.S. dollar. The stock
market responded favorably after the Presidential election and climbed from
early November to the end of 2004.
WHAT WERE THE BEST PERFORMING INDUSTRY GROUPS IN THE S&P 500(R) INDEX* IN 2004?
From a total-return perspective, the best performing industry group was hotels,
restaurants & leisure (+39.11%).(1) This was followed by energy (+31.24%), real
estate (+28.91%), utilities (+24.50%), and consumer durables & apparel
(+24.15%).
From an impact perspective, which takes both total returns and weightings into
account, the industry group that made the greatest positive contribution to the
performance of the S&P 500(R) Index* in 2004 was energy (+31.24%), followed by
capital goods (+19.01%), banks (+14.21%), retailing (+22.39%), and health care
equipment & services (+18.23%).
WHICH COMPANIES WERE THE STRONGEST PERFORMERS IN THE INDEX IN 2004?
The S&P 500(R) company with the highest total-return for 2004 was Autodesk
(+209.62%). Next was Apple Computer (+201.36%), followed by TXU (+177.67%),
Valero Energy (+97.64%), and Monsanto (+96.09%).
The companies with the greatest positive contribution to the performance of the
S&P 500(R) Index* in 2004 all had higher weightings and lower total returns. The
company with the greatest positive impact on the performance of the Index,
including weightings and total returns, was ExxonMobil (+28.04%), followed by
General Electric (+20.68%), Johnson & Johnson (+25.17%), Bank of America
(+21.50%), and eBay (+80.05%).
WHICH INDUSTRY GROUPS WERE THE WEAKEST PERFORMERS IN 2004?
The S&P 500(R) industry group with the worst total return for 2004 was
semiconductors & semiconductor equipment (-21.20%). The second-worst performing
industry group in terms of total returns alone was pharmaceuticals &
biotechnology (-5.22%), followed by media (-2.53%), automobiles & components
(-2.26%), and food & staples retailing (+3.51%).
1. Performance percentages reflect total returns of the industry groups and
securities mentioned for the 12 months ended December 31, 2004. Purchases and
sales within the Portfolio may cause the performance of Portfolio holdings to
differ from that of the securities themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-53
From an impact perspective, which takes weightings and total returns both into
account, the industry groups that made the greatest negative contributions to
the performance of the Index were the same in the first four instances. The
fifth-greatest detractor from the performance of the Index, however, was
commercial services & supplies (+6.94%).
WHICH COMPANIES DETRACTED FROM THE PERFORMANCE OF THE INDEX IN 2004?
In 2004, Winn-Dixie Stores (-54.02%) was the worst-performing stock in the S&P
500(R) Index from a total-return perspective. Ciena (-49.09%) was next, followed
by PMC-Sierra (-44.03%), Chiron (-41.51%), and LSI Logic (-38.22%). From an
impact perspective, which takes total returns and weightings both into account,
the company that made the greatest negative contribution to the performance of
the Index was Pfizer (-22.31%), followed by Intel (-26.56%), Cisco Systems
(-20.26%), Merck (-27.76%), and Coca-Cola (-16.11%).
WERE THERE ANY SIGNIFICANT CHANGES TO THE INDEX IN 2004?
The Portfolio seeks to track the performance and weightings of stocks in the S&P
500(R) Index. The Index itself, however, may change from time to time as
companies merge, divest units, add to their market capitalization, or face
financial difficulties. Standard & Poor's may also occasionally adjust the Index
to better reflect the companies that it believes are most representative of the
makeup of our economy. In 2004, there were 20 companies deleted from the S&P
500(R) Index and 20 companies added to it. Among the deleted companies were
familiar names such as Tupperware, American Greetings, John Hancock Financial
Services, AT&T Wireless, and Winn-Dixie Stores. Among the additions were such
well-known companies as Caremark Rx, E*Trade Financial, Valero Energy, Coach,
and News Corporation. Several of the changes in the Index were the result of
mergers and acquisitions.
WHAT IS YOUR OUTLOOK GOING FORWARD?
President Bush has suggested that he will address a number of issues during his
second term. His stance on social security reform, health care, energy, defense,
budget deficits, tax reform, and deregulation could affect the markets in a
number of ways. In 2005, the markets will also have to respond to changing oil
prices and employment trends. As always, the Portfolio will seek to track the
performance and makeup of the S&P 500(R) Index, regardless of how the market is
affected by these forces.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts will
come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
The Portfolio may invest in derivatives, which may increase the volatility of
the Portfolio's net asset value and may result in a loss to the Portfolio.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-54 MainStay VP Series Fund, Inc.
MAINSTAY VP SMALL CAP GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- --------------------------------------------------------------
After Portfolio operating
expenses 9.40% 2.47%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP SMALL CAP RUSSELL 2000 GROWTH
GROWTH PORTFOLIO INDEX RUSSELL 2000 INDEX
--------------------- ------------------- ------------------
7/2/01 10000 10000 10000
9548 9074 9591
7027 6328 7627
9956 9400 11231
12/31/04 10892 10744 13289
</Table>
<Table>
-- MainStay VP Small Cap Growth Portfolio -- Russell 2000 Index
-- Russell 2000 Growth Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- --------------------------------------------------------------
After Portfolio operating
expenses 9.13% 2.21%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP SMALL CAP RUSSELL 2000 GROWTH
GROWTH FUND INDEX RUSSELL 2000 INDEX
--------------------- ------------------- ------------------
7/2/01 10000 10000 10000
9536 9074 9591
7000 6328 7627
9894 9400 11231
12/31/04 10798 10744 13289
</Table>
<Table>
-- MainStay VP Small Cap Growth Portfolio -- Russell 2000 Index
-- Russell 2000 Growth Index
</Table>
<Table>
<Caption>
ONE SINCE
BENCHMARKS YEAR INCEPTION
Russell 2000(R) Growth Index* 14.31% 2.07%
Russell 2000(R) Index* 18.33% 8.46%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (7/2/01)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-55
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP SMALL CAP GROWTH
PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,070.65 $4.94 $1,020.25 $4.82
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,069.50 $6.24 $1,019.00 $6.09
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 96.3%
Short-Term Investments (collateral from securities lending
is 10.8%) 14.6
Liabilities in Excess of Cash and Other Assets -10.9
</Table>
See Portfolio of Investments on page M-204 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. WCI Communities, Inc.
2. Ryland Group, Inc. (The)
3. Sierra Health Services, Inc.
4. Terex Corp.
5. Guitar Center, Inc.
6. MSC Industrial Direct Co., Inc. Class A
7. Affiliated Managers Group, Inc.
8. Cooper Cos., Inc. (The)
9. Hovnanian Enterprises, Inc. Class A
10. Meritage Homes Corp.
</Table>
M-56 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Rudolph C. Carryl and Edmund C. Spelman
of MacKay Shields LLC.
MAINSTAY VP SMALL CAP GROWTH PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its assets in companies with
market capitalizations at the time of investment comparable to those of
companies in the Russell 2000(R) Index.* We select investments according to the
economic environment and the attractiveness of particular markets and the
financial condition and competitiveness of individual companies. In implementing
this strategy, we look for securities of companies with above-average revenue
and earnings-per-share growth, potential for positive earnings surprises, and
strong management. Ideally, the companies will have high levels of ownership by
insiders. We may also invest in companies that we believe are attractive because
of special factors, such as new management, new products, changes in consumer
demand, or changes in the economy. We may sell a stock if its fundamentals
deteriorate, if its valuation is deemed too high in relation to its growth rate
or its peer group, or if, in general, we do not believe the security will help
the Portfolio meet its investment objective.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
During the 12 months ended December 31, 2004, MainStay VP Small Cap Growth
Portfolio returned 9.40% for Initial Class shares and 9.13% for Service Class
shares. Both share classes underperformed the 11.71% return of the average
Lipper* Variable Products Small-Cap Growth Portfolio over the same period. Both
share classes underperformed the 14.31% return of the Russell 2000(R) Growth
Index,* the Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT MAJOR FACTORS INFLUENCED THE STOCK MARKET DURING 2004?
The equity markets managed to register a healthy gain for the year, despite
concerns regarding Federal Reserve interest-rate hikes, sharply higher oil
prices, the ongoing war in Iraq, and the uncertainties that surrounded the U.S.
presidential election. Much of the market's advance took place toward the end of
the year, when investors began to refocus on those market fundamentals, such as
earnings growth, that appeared to be favorable.
WHICH SECTORS HAD THE GREATEST IMPACT ON THE PORTFOLIO'S PERFORMANCE IN 2004?
During the year, effective stock selection in the consumer discretionary and
industrials sectors helped the Portfolio's performance relative to the Russell
2000(R) Growth Index.* The Portfolio's health care holdings underperformed,
however, and an underweighted position in energy also detracted from the
Portfolio's relative results when the energy sector rallied sharply with the
rising price of oil.
WHAT WERE SOME OF THE PORTFOLIO'S STOCK-SPECIFIC SUCCESS STORIES?
In 2004, the greatest positive contributors to the Portfolio's performance were
Station Casinos, Coldwater Creek, Penn National Gaming, FLIR Systems, and Cytyc.
Station Casinos benefited from healthy demand from local Las Vegas citizens as
well as from expansion of the company's management contracts at Native American
casinos in California. Coldwater Creek--a retailer of women's clothes,
accessories, jewelry, and gifts--operates 113 stores and plans to open as many
as 500 in the next six to eight years.
Penn National Gaming is an owner and operator of casinos, racetracks, and
off-track wagering facilities in seven states and Ontario, Canada. In November,
Penn National Gaming made an offer to acquire Argosy Gaming, which would create
the third-largest gaming property operator in the United States. This merger
will create a presence in nearly every major regional gaming market.
Earnings at FLIR Systems rose steadily on strong government and commercial
demand for the company's thermal-imaging and infrared-camera systems. Cytyc's
stock price benefited from continued growth in the company's core ThinPrep Pap
smear product. Cytyc's growth prospects were also enhanced by the introduction
of a new diagnostic imaging product and by the acquisition of a new women's
health product known as NovaSure.
WHICH HOLDINGS WERE THE LARGEST DETRACTORS FROM THE PORTFOLIO'S RESULTS FOR THE
YEAR?
Taro Pharmaceutical, Odyssey Healthcare, Fairchild Semiconductor, Hot Topic, and
Wireless Facilities were
1. Performance percentages reflect total returns of the indicated securities for
the 12 months ended December 31, 2004, or for the portion of the period
securities were held in the Portfolio, if shorter. Purchases and sales within
the Portfolio may cause the performance of the Portfolio to differ from that
of the securities themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-57
the largest detractors from the Portfolio's performance in 2004.
Taro Pharmaceuticals swung from profitability to an unexpected loss in the
second quarter of 2004 because of excess inventory and a sharp decline in sales.
Taro Pharmaceuticals also spent heavily to promote an acquired product that
generated disappointing revenues. Odyssey Healthcare's stock price fell because
of an SEC investigation. To make matters worse, higher-than-expected
pharmaceutical and labor costs and adverse Medicare-reimbursement developments
led to declining earnings at Odyssey's hospice operations. Fairchild
Semiconductor, which provides power and interface solutions for a broad range of
electronic devices, saw poor performance in its second fiscal quarter, which
ended in June 2004. Reasons included a volatile backlog and slowing end-market
demand. Hot Topic, an alternative teen retailer, experienced disappointing sales
growth mainly because of sluggish demand for the company's less-traditional
style of apparel and accessories. Wireless Facilities experienced disappointing
demand for its outsourcing services for wireless telecommunications service
providers and equipment manufacturers. The company also disclosed accounting
irregularities, which resulted in a restatement of earnings. We sold each of
these Portfolio holdings during 2004.
WERE THERE ANY SIGNIFICANT PURCHASES DURING THE YEAR?
With energy prices at record-high levels, we established Portfolio positions in
Cal Dive, Grey Wolf, and Petroleum Development Corp. In the industrials sector,
we added Terex, a manufacturer of construction and surface-mining equipment. We
also added to the Portfolio's position--originally established in late 2003--in
Actuant, a manufacturer of components for recreational vehicles and of other
tools and supplies. We added casino operator Penn National Gaming, Coldwater
Creek, and Meritage Homes, to the Portfolio's consumer discretionary holdings,
all of which had a positive impact on the Portfolio in 2004. In health care, we
added multistate managed-care organization Molina Healthcare.
WHAT STOCKS DID THE PORTFOLIO SELL IN 2004?
In addition to selling the Portfolio's primary detractors, we eliminated
Advanced Energy Industries, Business Objects, Medicis Pharmaceutical, MKS
Instruments, and SkyWest. Each of these sales reflected our belief that business
prospects for these issuers were deteriorating. In late December 2004, we sold
some of the Portfolio's top-performing stocks--including casino gaming operator
Station Casinos, Cytyc, OSI Pharmaceuticals, and Harman International--because
of market-capitalization considerations.
DID THE PORTFOLIO CHANGE ITS INDUSTRY GROUP WEIGHTINGS DURING 2004?
We significantly reduced the Portfolio's weighting in the information technology
sector from 36.5% to 16.4% of the Portfolio's net assets. This decision had a
positive effect on the Portfolio's performance. The Portfolio also benefited by
establishing a position in the materials sector and raising exposure from 0% to
2.4% of net assets. We also decreased the Portfolio's weighting in health care
from 16.8% to 12.1% of net assets. We increased the Portfolio's weighting in the
strongly performing energy sector from 2.1% to 8.4% of net assets during the
2004. Unfortunately, the Portfolio's underweighted energy position early in the
reporting period hurt relative performance.
HOW WAS THE PORTFOLIO POSITIONED AT THE END OF 2004?
As of December 31, 2004, the Portfolio held overweighted positions relative to
the Russell 2000(R) Growth Index* in the consumer discretionary, energy, and
industrial sectors. At the same time, the Portfolio held underweighted positions
in health care and information technology. At year-end, the Portfolio had no
representation in the utilities sector.
WHAT DO YOU ANTICIPATE GOING FORWARD?
Although terrorism, the weak dollar, and high energy prices remain risk factors
to be monitored, we believe that the economy will experience moderate growth in
2005 and that corporate profits will continue to improve. We will continue to
focus on stocks of strong, well-managed small-cap companies that we believe have
good growth prospects.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
made will come to pass. This material does not constitute investment advice and
is not intended as an endorsement of any specific investment.
Stocks of small companies may be subject to higher price volatility,
significantly lower trading volumes, and greater spreads between bid and ask
prices than stocks of larger companies. Small companies may be more vulnerable
to adverse business or market developments than mid- or large-capitalization
companies.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-58 MainStay VP Series Fund, Inc.
MAINSTAY VP TOTAL RETURN PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- -------------------------------------------------------------
After Portfolio operating
expenses 6.37% -1.93% 8.62%
</Table>
(after Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP TOTAL TOTAL RETURN GROWTH TOTAL RETURN CORE
RETURN PORTFOLIO COMPOSITE INDEX COMPOSITE INDEX S&P 500 INDEX
----------------- ------------------- ----------------- -------------
12/31/94 10000 10000 10000 10000
12833 12945 12977 13758
14384 14905 14884 16917
16943 18195 18354 22561
21540 23068 22051 29008
25205 27405 24682 35112
24107 24798 24652 31915
21530 22628 23652 28122
17963 19502 21397 21907
21498 23215 25494 28190
12/31/94 22867 24523 27689 31258
</Table>
<Table>
-- MainStay VP Total Return -- Total Return Growth Composite Index
Portfolio
-- Total Return Core Composite -- S&P 500 Index
Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS YEARS
- -------------------------------------------------------------
After Portfolio operating
expenses 6.10% -2.17% 8.35%
</Table>
(after Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP TOTAL TOTAL RETURN GROWTH TOTAL RETURN CORE
RETURN PORTFOLIO COMPOSITE INDEX COMPOSITE INDEX S&P 500 INDEX
----------------- ------------------- ----------------- -------------
12/31/94 10000 10000 10000 10000
12800 12945 12977 13758
14310 14905 14884 16917
16814 18195 18354 22561
21319 23068 22051 29008
24884 27405 24682 35112
23737 24798 24652 31915
21147 22628 23652 28122
17601 19502 21397 21907
21013 23215 25494 28190
12/31/94 22295 24523 27689 31258
</Table>
<Table>
-- MainStay VP Total Return -- Total Return Growth Composite Index
Portfolio
-- Total Return Core Composite -- S&P 500 Index
Index
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARKS YEAR YEARS YEARS
Total Return Core Composite Index* 8.61% 2.33% 10.72%
Total Return Growth Composite Index* 5.63 -2.20 9.38
S&P 500(R) Index* 10.88 -2.30 12.07
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from (1/1/95) through
6/3/03, adjusted to reflect the fees and expenses for Service Class shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-59
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP TOTAL RETURN PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,051.90 $3.20 $1,021.90 $3.15
------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,050.65 $4.48 $1,020.65 $4.42
------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 67.5%
U.S. Government & Federal Agencies 17.0
Short-Term Investments (collateral from securities lending
is 2.9%) 9.8
Corporate Bonds 8.7
Foreign Bonds 1.9
Asset-Backed Securities 1.3
Convertible Preferred Stocks 0.7
Commercial Mortgage Loans 0.7
Yankee Bonds 0.3
Preferred Stock 0.1
Municipal Bond 0.1
Liabilities in Excess of Cash and Other Assets -8.1
</Table>
See Portfolio of Investments on page M-211 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Federal National Mortgage Association
6.00%, due 2/10/35 TBA
2. Citigroup, Inc.
3. Federal National Mortgage Association
5.50%, due 2/15/20 TBA
4. International Business Machines Corp.
5. Bank of America Corp.
6. Federal National Mortgage Association
5.50%, due 2/15/35 TBA
7. Rowan Cos., Inc.
8. United States Treasury Note
6.00%, due 8/15/09
9. UnitedHealth Group, Inc.
10. Transocean, Inc.
</Table>
M-60 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Rudolph C. Carryl, Gary Goodenough,
Christopher Harms, Richard A. Rosen, and Edmund C. Spelman of MacKay Shields
LLC.
MAINSTAY VP TOTAL RETURN PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 30% of its net assets in U.S. equity
securities and at least 30% in U.S. debt securities. In the past, the equity
portion of the Portfolio invested primarily in growth-oriented stocks. During
the first half of the year the Portfolio's investment strategy was modified, and
the Portfolio began investing about half of its equity assets in growth-oriented
stocks and about half of its equity assets in value-oriented stocks. The
Portfolio's investment objective--to seek to realize current income consistent
with reasonable opportunity for future growth of capital and income--did not
change. To implement the Portfolio's modified investment strategy, Richard A.
Rosen was added as a Portfolio Manager during the reporting period.
The bond portion of the Portfolio invests primarily in securities that are rated
A or better by S&P or Moody's,(1) or if unrated, are deemed by the subadvisor to
be of comparable credit quality. During 2004, the Portfolio's investment
capability was expanded to allow up to 20% of the Portfolio's debt securities to
be invested across the full range of high-yield securities. This range consists
of debt securities rated below Baa by Moody's or BBB by S&P(2) or deemed by the
subadvisor to be of comparable quality. Both the stock and bond portions of the
Portfolio may take a flexible approach by investing in a variety of securities,
industries, and issuers.
To reflect the modification of the Portfolio's equity investment strategy, the
equity portion of the Portfolio (which was formerly measured against the Russell
1000(R) Growth Index)* is now measured against the Russell 1000(R) Index.*
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Total Return Portfolio
returned 6.37% for Initial Class shares and 6.10% for Service Class shares. Both
share classes underperformed the 8.55% return of the average Lipper* Variable
Products Balanced Portfolio over the same period. Both share classes also
underperformed the 8.61% return of the Portfolio's benchmark, the Total Return
Core Composite Index,* for the 12 months ended December 31, 2004.(3) The stock
portion of the Portfolio underperformed the Russell 1000(R) Index,* while the
bond portion of the Portfolio outperformed the Lehman Brothers(R) Aggregate Bond
Index.*
WHAT FACTORS AFFECTED THE STOCK MARKET DURING THE 12 MONTHS ENDED DECEMBER 31,
2004?
Arguably the biggest factor was a 34% rise in the price of crude oil, which has
stoked inflation fears and has the potential to put a damper on consumer
spending. Another factor that affected the markets
1. Bonds rated A by Moody's Investors Service possess many favorable investment
attributes and in Moody's opinion are to be considered as upper medium-grade
obligations. Factors giving security to principal and interest are considered
by Moody's to be adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Debt rated A by Standard
& Poor's is deemed by Standard & Poor's to be somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher-rated categories. In the opinion of Standard & Poor's,
however, the obligor's capacity to meet its financial commitment on the
obligation is still strong. When applied to Portfolio holdings, ratings are
based solely on the creditworthiness of the bonds in the Portfolio and are
not meant to represent the security or safety of the Portfolio.
2. Bonds rated Baa by Moody's Investors Service are considered by Moody's to be
medium-grade obligations (i.e., obligations that Moody's believes are neither
highly protected nor poorly secured). It is Moody's opinion that interest
payments and principal security appear adequate for the present, but that
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Moody's believes that such bonds
lack outstanding investment characteristics and that they in fact have
speculative characteristics as well. Debt rated BBB by Standard & Poor's is
deemed by Standard & Poor's to exhibit adequate protection parameters. It is
the opinion of Standard & Poor's, however, that 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 than would be
the case for debt in higher-rated categories. When applied to Portfolio
holdings, ratings are based solely on the creditworthiness of the bonds in
the Portfolio and are not meant to represent the security or safety of the
Portfolio.
3. The Portfolio also compares itself to the Total Return Growth-Core Composite
Index, an unmanaged index that reflects the change in the makeup of the
Portfolio. The Total Return Growth-Core Composite Index consists of two
portions--a 40% bond portion that is represented by the Lehman Brothers(R)
Aggregate Bond Index and a 60% equity portion that is represented by the
Russell 1000(R) Growth Index through May 31, 2005, and the Russell 1000(R)
thereafter.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-61
during the year was the beginning of a new tightening cycle by the Federal
Reserve. Fortunately, the Federal Open Market Committee is raising rates at a
truly measured pace. Investors continue to monitor reports from the Middle
East--in particular, news coming out of Iraq--since this news influences the
price of oil. During 2004, the employment market staged a modest recovery, which
was welcome news to the investment community. Annualized growth in gross
domestic product remained in the range of 3.1% to 4.5% throughout the year,(3)
suggesting that the U.S. economy remains on solid footing. The fact that
interest rates remain at historically low levels is noteworthy, since low
interest rates have helped fuel consumer spending.
WHICH SECTORS WERE STRONG PERFORMERS FOR THE EQUITY PORTION OF THE PORTFOLIO?
Most sectors showed positive total returns for 2004. The sole exception was
information technology, which posted a slightly negative return. An overweighted
position and strong individual security selection helped make health care and
energy the best-performing sectors in the Portfolio, followed by
telecommunication services. Although the Portfolio was underweighted in
telecommunication services relative to the Russell 1000(R) Index,* solid
security selection in the sector helped provide a strong contribution to
performance. The Portfolio's holdings in industrials and consumer staples stocks
posted double-digit returns for 2004 and outperformed securities in these
sectors in the Russell 1000(R) Index.*
WHICH SECTORS SHOWED WEAK PERFORMANCE IN THE EQUITY PORTION OF THE PORTFOLIO?
The only sector with an absolute negative return was information technology.
Although the Portfolio was underweighted in the sector relative to the Russell
1000(R) Index,* weak security selection also detracted from performance. All
other sectors had positive total returns, but Portfolio's holdings in the
consumer discretionary, financials, materials and utilities sectors
underperformed peer securities in the Index for 2004.
WHICH INDIVIDUAL STOCKS WERE STRONG PERFORMERS?
UnitedHealth Group is a leading provider of products and resources to plan and
administer employee-health-benefit plans. The company recently allied with
top-tier regional health plans and plan administrators, which has led to network
savings and an acceleration in membership growth. These factors had a positive
impact on the company's bottom-line growth, which helped fuel gains in
UnitedHealth Group's stock in 2004.
Caremark Rx, a leading provider of prescription-benefit-management and
therapeutic pharmaceutical services was weighed down most of the year by
concerns that John Kerry might become president and make dramatic changes to the
U.S. health care system. Certainly any significant changes would have had a
meaningful impact on Caremark Rx's business. From Bush's reelection on November
2 through year-end 2004, the price of the company's stock rallied 38%.
Symantec is a leading provider of Internet-security software. While the
information technology sector as a whole has struggled to grow, security
software remains one of the few bright spots. Symantec has capitalized on this
strength, and the company's fundamentals and stock price have reacted
accordingly.
Transocean, which provides offshore and inland marine contract drilling services
for oil and gas wells, benefited from higher energy prices and rising day-
rates. The company's shares gained 77% in 2004.(4)
WHICH STOCKS SHOWED POOR PERFORMANCE IN 2004?
VERITAS Software, a leading vendor of enterprise storage-management products,
suffered in 2004 on concerns about accounting irregularities. After reaching a
52-week high in mid-January of 2004, the stock traded down and finally bottomed
in early September. In early July, the company missed consensus sales
expectations, prompting further concerns that the company was losing share to
close competitors in the U.S. market. The stock staged a meaningful
3. This range includes advance estimates from the Bureau of Economic Analysis
for fourth-quarter 2004 real gross domestic product. Estimates are subject to
revision.
4. Performance percentages reflect the price performance of the securities
mentioned for the 12 months ended December 31, 2004, or for the portion of
the reporting period shares were held in the Portfolio, if shorter.
Performance percentages reflect the impact of dividends received, if any.
Purchases and sales within the Portfolio may cause the performance of
Portfolio holdings to differ from that of the securities themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-62 MainStay VP Series Fund, Inc.
rebound when investors were encouraged by the company's decision to reorganize
around product groups. The company also beat analysts' expectations for the
third quarter of 2004 by a penny.
New York Community Bancorp is a bank holding company that owns New York
Community Bank. In 2004, New York Community Bancorp declined sharply on concerns
about the impact of rising interest rates on New York Community Bank's
variable-rate debt. Seeing the potential for margin contraction, we sold the
stock in October.
Intel is a leading manufacturer of semiconductors and related products. At the
beginning of the year, the market correctly anticipated a slowdown in
semiconductor demand in the second half of 2004. This downturn resulted in
cancelled orders, rising channel inventories, and falling prices. Analysts'
consensus estimates called for 7% bottom-line growth in 2005, and this tepid
earnings outlook weighed heavily on Intel's stock in 2004. After hitting a
52-week low in September 2004, however, the stock recently traded up as analysts
began to reconsider their estimates of the company's earnings potential.
Texas Instruments is a leading manufacturer of semiconductors and related
products. The company's stock was hurt by a widespread sell-off in semiconductor
stocks in 2004. Since the pressure on semiconductor stocks has abated, shares of
Texas Instruments moved well ahead of a 52-week low reached in early August.
Analysts' consensus estimates have called for a 10% rise in Texas Instruments'
earnings in 2005.
Merck shares fell precipitously in late September after Vioxx was pulled from
the market because of safety concerns. We remained uncomfortable with Merck's
potential drug-safety liability, and we sold the shares late in the year after
they had recovered somewhat from their dramatic decline.
HOW DID THE PORTFOLIO'S SECTOR WEIGHTINGS CHANGE DURING THE YEAR?
The equity portion of the Portfolio uses bottom-up stock selection, and all
sector weightings are a residual of the Portfolio's rigorous investment
disciplines. Relative to the Russell 1000(R) Index,* the equity portion of the
Portfolio began the year overweighted in the information technology, consumer
discretionary, health care, industrials, and materials sectors. The equity
portion of the Portfolio was underweighted in the financials, utilities,
consumer staples, telecommunication services, and energy sectors. During the
course of the year, we reduced the Portfolio's exposure to information
technology, consumer staples, consumer discretionary, and health care stocks and
increased its equity weightings in the energy, financials and telecommunication
services sectors. At year-end 2004, the equity portion of the Portfolio held
overweighted positions relative to the Index in the energy, consumer
discretionary, materials, industrials, telecommunication services, and
information technology sectors. The equity portion of the Portfolio was
underweighted in the financials, consumer staples, and utilities sectors.
WHAT MAJOR FACTORS INFLUENCED THE BOND MARKETS DURING 2004?
The level of interest rates, the pace of economic growth, the price of oil, and
the performance of the U.S. dollar relative to other currencies all had an
impact on the bond market. The year began with the targeted federal funds rate
at an accommodative 1.0%.
In the first few months of 2004, it appeared that a tighter monetary policy
might inhibit economic growth and lead to deflation. With slack in the labor
markets, unutilized manufacturing capacity, and little pricing power in most
industries, there appeared to be little risk of the economy overheating. In
April, however, uniformly firm economic releases challenged this outlook, and
investors began to anticipate a Federal Reserve move to raise interest rates.
Consistent with market expectations, the Federal Open Market Committee raised
the targeted federal funds rate to 1.25% in June. Additional 25-basis-point
tightening moves--one in each of August, September, November, and December--
brought the targeted federal funds rate to 2.25% by year-end 2004.
Although the price of oil rose dramatically during the year, inflationary
pressures remained relatively subdued. The decline in the U.S. dollar, however,
led foreign banks to purchase large blocks of U.S. Treasuries. This move was
designed to help keep locally produced goods competitive in the global market-
place. During 2004, high-yield bonds benefited from relatively benign default
rates, declining stock-market
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-63
volatility, the avid pursuit of yield by U.S. investors, and an appetite for
credit risk among foreign investors.
HOW HAVE YOU POSITIONED THE BOND PORTION OF THE PORTFOLIO IN THIS ENVIRONMENT.
During 2004, we took profits on 4% of the Portfolio's corporate-bond allocation
and rotated the proceeds into higher-quality residential and commercial
mortgage-backed securities.
As of December 31, 2004, the bond portion of the Portfolio had a duration of
4.16 years, or 96% of the duration of the Lehman Brothers(R) Aggregate Bond
Index. The short duration posture expresses our view that interest rates will
gradually rise as the Federal Open Market Committee raises the targeted federal
funds rate in response to a rebounding economy. As of year-end 2004, the bond
portion of the Portfolio held 12% of its net assets in U.S. Treasuries, 9% in
agency debentures, 24% in investment-grade corporate bonds, 13% high-yield
corporate bonds, 34% in residential mortgage-backed securities, 3% in commercial
mortgage-backed securities, 3% in asset-backed securities, and 2% in
money-market instruments.
DOES THIS POSITIONING REFLECT YOUR FORWARD-LOOKING VIEWS?
Yes, it does. In our pursuit of excess return, we have overweighted moderate-
and lower-quality corporate bonds at the expense of lower-yielding Treasury and
agency securities. Among residential mortgage-backed securities, we favor the
more stable cash-flow profiles of lower-coupon securities and loans with terms
of fifteen-years. Among asset-backed securities, we prefer non-mortgage-related
collateral such as auto loans, credit card receivables, and electric utility
tariffs. In light of recent Congressional regulatory debates, we remain cautious
about agency debentures. In particular, we wonder whether the small yield
advantage that Fannie Mae and Freddie Mac securities offer relative to
Treasuries will provide a sufficient buffer to withstand headline risk.
WHICH BOND SECTORS WERE STRONG PERFORMERS DURING 2004?
Throughout 2004, we continued to harvest strong excess returns from prudent
risk-taking and savvy issue selection in triple-B rated corporates,(5) high-
yield corporates, and emerging-market credits. In emerging markets, spreads are
tightening because fiscal discipline, liberalized markets, and a global economic
recovery have created positive ratings momentum. During 2004, holdings in
credit-related product contributed most of the excess return in the bond portion
of the Portfolio.
The balance of the excess return in the bond portion of the Portfolio came from
mortgage-backed and asset-backed securities. These sectors tend to do well when
cash flows are more predicable, which can occur when Treasuries are range bound.
In 2004, Treasury yields for maturities of five years and longer remained within
a fairly tight range that did not exceed 150 basis points from peak to trough.
HOW DID DURATION POSITIONING AFFECT PERFORMANCE?
For much of the year, the duration of the bond portion of the Portfolio was from
95% to 99% of the duration of the Lehman Brothers(R) Aggregate Bond Index.* This
made the bond portion of the Portfolio less sensitive to interest-rate changes
than the Index. Yet this posture cost approximately 12 basis points in excess
return when intermediate and long-maturity Treasury yields moved against us. We
had shortened duration anticipating higher Treasury yields. What we failed to
appreciate was the sizeable impact of a weaker U.S. dollar on interest rates.
Foreign central banks bought large blocks of Treasuries to protect their
currencies and the relative prices of locally produced goods. With strong
demand, Treasury prices remained higher and yields lower than we had
anticipated.
HOW DID THE YIELD CURVE AFFECT PERFORMANCE IN THE BOND PORTION OF THE PORTFOLIO?
During 2004, the Treasury yield curve pivoted around the ten-year maturity
benchmark. Two-year
5. Debt rated BBB by Standard & Poor's is deemed by Standard & Poor's to exhibit
adequate protection parameters. It is the opinion of Standard & Poor's,
however, that 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 than would be the case for debt in higher- rated
categories. When applied to Portfolio holdings, ratings are based solely on
the creditworthiness of the bonds in the Portfolio and are not meant to
represent the security or safety of the Portfolio.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-64 MainStay VP Series Fund, Inc.
yields rose from 1.8% to 3.1%, five-year yields rose from 3.2% to 3.6%, 10-year
yields were basically unchanged at 4.2%, and 30-year yields fell from 5.1% to
4.8%. The compression of the yield spread between the two-year and thirty-year
maturities (or the flattening of the yield curve) resulted from Federal Reserve
tightening, reduced inflation expectations, and foreign purchases of U.S.
Treasury securities. Since we maintained a neutral yield-curve posture, the
reshaping of the yield curve had minimal impact on the Portfolio's performance.
WHAT DO YOU SEE GOING FORWARD?
With the uncertainty of the presidential election now behind us, we expect
investors to refocus their attention on company fundamentals, which on balance
remain fairly strong as we move into the new year. Although high energy prices,
rising interest rates and the specter of rising inflation remain risk factors,
we believe that a combination of historically low interest rates, moderate
economic growth, and strengthening employment should help to drive stocks higher
in 2005.
From a bond perspective, we expect the Federal Open Market Committee to raise
its federal funds target rate to 3.0% by mid-year 2005. We will continue to
monitor key economic data, such as payrolls, durable-goods orders, consumer
spending, the Consumer Price Index, and inventories, to corroborate our
cautiously optimistic economic view. With Treasuries yielding, on average, a
less-than-stellar 3.7% at year-end, we expect to remain generously exposed to
products that typically offer yield advantages. Recent price levels, however,
have tempered our enthusiasm for the high-yield sector, and we are unlikely to
commit additional dollars until prices back-off to less aggressive levels.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
The Portfolio may invest in derivatives, which may increase the volatility of
the Portfolio's net asset value and may result in a loss to the Portfolio.
High-yield securities ("junk bonds") are generally considered speculative
because they present a greater risk of loss than higher-quality debt securities
and may be subject to greater price volatility.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
www.mainstayfunds.com M-65
MAINSTAY VP VALUE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ------------------------------------------------------------
After Portfolio operating
expenses 11.28% 4.87% 9.17%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP VALUE
PORTFOLIO RUSSELL 1000 VALUE INDEX S&P 500 INDEX
----------------- ------------------------ -------------
5/1/95 10000 10000 10000
11676 12246 12178
14387 14896 14975
17680 20138 19971
16949 23285 25678
18441 24996 31081
20818 26749 28251
20902 25254 24893
16501 21334 19392
21017 27741 24954
12/31/04 23389 32316 27670
</Table>
<Table>
-- MainStay VP Value Portfolio -- S&P 500 Index
-- Russell 1000 Value Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ------------------------------------------------------------
After Portfolio operating
expenses 11.01% 4.61% 8.90%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP VALUE
PORTFOLIO RUSSELL 1000 VALUE INDEX S&P 500 INDEX
----------------- ------------------------ -------------
5/1/95 10000 10000 10000
11656 12246 12178
14325 14896 14975
17559 20138 19971
16790 23285 25678
18223 24996 31081
20521 26749 28251
20554 25254 24893
16186 21334 19392
20566 27741 24954
12/31/04 22830 32316 27670
</Table>
<Table>
-- MainStay VP Value Portfolio -- S&P 500 Index
-- Russell 1000 Value Index
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARKS YEAR YEARS INCEPTION
Russell 1000(R) Value Index* 16.49% 5.27% 12.90%
S&P 500(R) Index* 10.88 -2.30 11.10
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from inception (5/1/95)
through 6/3/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-66 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,070.25 $3.38 $1,021.75 $3.30
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,069.00 $4.68 $1,020.50 $4.57
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 87.7%
Short-Term Investments (collateral from securities lending
is 4.8%) 13.3
Convertible Preferred Stocks 2.6
Investment Company 1.6
Liabilities in Excess of Cash and Other Assets -5.2
</Table>
See Portfolio of Investments on page M-226 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Citigroup, Inc.
2. Bank of America Corp.
3. Transocean, Inc.
4. JPMorgan Chase & Co.
5. International Business Machines Corp.
6. Sprint Corp.
7. General Mills, Inc.
8. Wachovia Corp.
9. Kimberly-Clark Corp.
10. Rowan Cos., Inc.
</Table>
www.mainstayfunds.com M-67
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Richard A. Rosen of MacKay Shields LLC.
MAINSTAY VP VALUE PORTFOLIO
CAN YOU BRIEFLY DESCRIBE THE MAINSTAY VP VALUE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 65% of its total assets in equity
securities and is not managed primarily to produce current income. In
implementing this strategy, the Portfolio normally invests in common stocks that
we believe to be "undervalued," or selling below their value, when purchased.
The stocks in which the Portfolio invests typically pay dividends, but the
Portfolio may invest in non-dividend-paying stocks if they meet the
"undervalued" criterion. Normally, the Portfolio invests in stocks that are
listed on a national securities exchange or are traded in the over-the-counter
market. When assessing whether a stock is undervalued, we compare the stock's
market price to: the company's cash flow and interest coverage ratios, the
company's book value, the estimated value of the company's assets, the company's
growth rates, and its future earnings. We may sell stocks if we no longer
believe they will contribute to meeting the investment objective of the
Portfolio.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Value Portfolio returned
11.28% for Initial Class shares and 11.01% for Service Class shares. Both share
classes underperformed the 11.53% return of the average Lipper* Variable
Products Large-Cap Value Portfolio over the same period. Both share classes
underperformed the 16.49% return of the Russell 1000(R) Value Index,* the
Portfolio's benchmark, for the 12 months ended December 31, 2004. The Portfolio
posted strong absolute gains in the year, but lagged on a relative basis because
of mediocre individual-stock performance in the health care, materials, and
financials sectors.
WHAT MAJOR FACTORS AFFECTED THE STOCK MARKET DURING THE YEAR?
In general, an improving economy and strong growth in corporate profits drove
stock prices higher, particularly in the fourth quarter. In the spring and
summer of 2004, the equity markets moved mostly sideways as investors became
concerned about higher energy prices, the unsteady pace of job growth, and the
distractions of election-year politics. In the fall, the market welcomed easing
energy prices and the conclusion of election uncertainties, including the
potential for a terrorist incident. Macroeconomic news was mixed late in the
year, but lower crude-oil and natural-gas prices and positive news on the job
front gave investors confidence that the recovery would be sustainable. Although
the Federal Open Market Committee raised the targeted federal funds rate five
times in 2004, higher interest rates and inflation seemed to remain manageable
risks. The persistently weak U.S. dollar gained more attention as a potential
risk to equity investors. Other continuing risks include the unsettled
geopolitical landscape and the likelihood that corporate profit growth will be
modest in 2005.
WHICH SECURITIES DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2004?
Among the Portfolio's health care holdings, Merck was down 36%(1) from the
beginning of the year through the time when we sold the entire position. Merck
shares fell precipitously in late September after Vioxx was pulled from the
market because of safety concerns. We remained uncomfortable with Merck's
potential drug-safety liability, and we sold the shares late in the year after
they had recovered somewhat from their dramatic decline. We have a more
favorable view of the risk/reward profile of Pfizer, whose drug Celebrex came
under similar scrutiny. Pfizer shares were down 22% in 2004. We see Pfizer's
potential liability as limited, and significantly more quantifiable than Merck's
Vioxx liability. Since we view Pfizer's full new drug pipeline and strong cash
flow as investment positives, we added to the Portfolio's position late in the
year. Hospital operator HCA fell 6% in the year. The hospital industry continues
to face headwinds from weak admissions trends and rising bad debt expense.
In the materials sector, aluminum maker Alcoa moved lower. The shares slipped
16% during the year because it appeared that higher costs were likely to affect
near-term earnings trends. In the paper industry, Bowater was down 3%, while
investors awaited earnings gains from recent price increases. Financials holding
Marsh & McLennan fell sharply after the New York attorney general impli-
1. Performance percentages reflect the price performance of the securities
mentioned for the 12 months ended December 31, 2004, or for the portion of
the reporting period shares were held in the Portfolio, if shorter.
Performance percentages reflect the impact of dividends received, if any.
Purchases and sales within the Portfolio may cause the performance of
Portfolio holdings to differ from that of the securities themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-68 MainStay VP Series Fund, Inc.
cated the company in a bid-rigging scandal. After a precipitous drop, the shares
rebounded slightly. We took advantage of the price rise to exit the Portfolio's
position.
WHICH SECTORS AND SECURITIES MADE POSITIVE CONTRIBUTIONS TO THE PORTFOLIO'S
PERFORMANCE IN 2004?
During the year, the Portfolio saw positive relative performance in the
information technology, energy, and telecommunication services sectors. In each
case, good stock selection helped results.
Information technology holdings Advanced Micro Devices (+48%) and Computer
Sciences (+27%) provided the greatest positive contributions to the Portfolio's
performance. Shares of AMD benefited from competitive gains in the
microprocessor market. IT services company CSC continued to demonstrate positive
trends in bookings and cash-flow generation.
A number of the Portfolio's energy holdings rose sharply as crude-oil and
natural-gas prices increased. An overweighted position in the sector also helped
performance. Integrated producers ExxonMobil (+28%), ConocoPhillips (+36%), and
ChevronTexaco (+26%) performed well. Offshore driller Transocean (+77) benefited
from higher energy prices and rising day rates.
In the telecommunication services sector, Sprint was a positive contributor. The
stock appreciated 45% from its time of purchase in mid-year through year-end.
Earnings expectations for Sprint rose when fundamentals improved at the
company's leading wireless business. Sprint's December 2004 decision to merge
with wireless competitor Nextel met with investor approval. The strategic
combination--and the announcement of plans to spin-off the local wireline
business--highlighted Sprint's potential asset value.
HOW HAVE YOU CHANGED THE PORTFOLIO'S WEIGHTINGS?
We have reduced the Portfolio's positions in a number of basic materials and
industrial-oriented holdings, since many of these securities are near our price
targets and may represent a less attractive risk/reward profile. We continue to
find the energy sector attractive for its improving fundamentals. The
possibility that sustainably higher oil and gas prices may spur increased
exploration activity has kept the Portfolio invested in selected energy services
companies. We have been selling integrated-energy and refining concerns because
their valuations have, in our opinion, become extended.
The Portfolio remains underweighted in many areas of the market that depend on
consumer spending. Our concern about the consumer's incremental spending ability
going forward extends to the consumer discretionary sector and to some financial
institutions. The Portfolio is broadly underweighted in financials and, within
the sector, has low relative exposure to interest-rate-sensitive stocks. In the
absence of apparent value opportunities, we have kept the Portfolio
underweighted in the utilities sector. On a selective basis, we are finding good
value in the information technology and telecommunication services sectors. We
are focusing on companies with high free-cash-flow yields, strong balance
sheets, and low-end valuations.
As of December 31, 2004, the Portfolio was overweighted relative to the Russell
1000(R) Value Index* in energy, health care, information technology,
telecommunication services, and consumer staples. At the same time, the
Portfolio was underweighted relative to the Index in financials, consumer
discretionary, industrials, and utilities.
WHAT IS YOUR OUTLOOK FOR 2005?
We remain optimistic about the worldwide economy and our disciplined value style
of investing. We will continue to use our rigorous bottom-up investment process
as we seek to seize opportunities that may arise among companies with
value-enhancing attributes.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-69
MAINSTAY VP AMERICAN CENTURY INCOME
& GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- --------------------------------------------------------------
After Portfolio operating
expenses 12.65% -0.96% 3.13%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP AMERICAN CENTURY
INCOME & GROWTH PORTFOLIO S&P 500 INDEX
---------------------------- -------------
5/1/98 10000 10000
10960 11171
12888 13522
11505 12291
10527 10830
8472 8437
10903 10857
12/31/04 12283 12038
</Table>
<Table>
-- MainStay VP American Century Income & -- S&P 500 Index
Growth Portfolio
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- --------------------------------------------------------------
After Portfolio operating
expenses 12.38% -1.20% 2.87%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP AMERICAN CENTURY
INCOME & GROWTH PORTFOLIO S&P 500 INDEX
---------------------------- -------------
5/1/98 10000 10000
10942 11171
12835 13522
11429 12291
10431 10830
8374 8437
10752 10857
12/31/04 12083 12038
</Table>
<Table>
-- MainStay VP American Century Income & -- S&P 500 Index
Growth Portfolio
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK YEAR YEARS INCEPTION
S&P 500(R) Index* 10.88% -2.30% 2.82%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/13/03, includes the
historical performance of the Initial Class shares from inception (5/1/98)
through 6/12/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-70 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP AMERICAN CENTURY INCOME &
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,076.00 $4.70 $1,020.50 $4.57
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,074.85 $6.00 $1,019.25 $5.84
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 99.0%
Short-Term Investment 0.5
Convertible Preferred Stocks 0.4
Cash and Other Assets (less liabilities) 0.1
Warrants 0.0*
</Table>
See Portfolio of Investments on page M-234 for specific holdings within these
categories.
* Less than one-tenth of one percent.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Bank of America Corp.
2. ChevronTexaco Corp.
3. Johnson & Johnson
4. International Business Machines Corp.
5. Intel Corp.
6. Ford Motor Co.
7. National City Corp.
8. CIGNA Corp.
9. Pfizer, Inc.
10. Countrywide Financial Corp.
</Table>
www.mainstayfunds.com M-71
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Managers Kurt Borgwardt, John Schniedwind and
Zili Zhang of American Century Investment Management, Inc.
MAINSTAY VP AMERICAN CENTURY INCOME & GROWTH PORTFOLIO(1)
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio selects equity securities from a universe of the 1,500 largest
companies traded in the United States, ranked by market capitalization. The
Portfolio maintains a structured, disciplined investment approach for both stock
selection and portfolio construction. The Portfolio incorporates both growth and
value measures (with a value tilt) into its stock-selection process to seek
consistent long-term performance.
During 2004, Zili Zhang replaced Vivienne Hsu as comanager of MainStay VP
American Century Income & Growth Portfolio.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
During the 12 months ended December 31, 2004, MainStay VP American Century
Income & Growth Portfolio returned 12.65% for Initial Class shares and 12.38%
for Service Class shares. Both share classes underperformed the 14.62% return of
the average Lipper* Variable Products Multi-Cap Value Portfolio over the same
period. Both share classes outperformed the 10.88% return of the S&P 500(R)
Index,* the Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT FACTORS AFFECTED THE STOCK MARKET IN 2004?
Uncertainty held the U.S. stock market in check for most of the year. Although
corporate earnings growth remained strong (profits of S&P 500(R)* companies grew
by nearly 20% in 2004, according to estimates by Thomson First Call), stocks
were unable to generate any positive momentum. Several factors dampened investor
enthusiasm for stocks. Among these were evidence of moderating economic growth,
a sharp rise in the price of oil, a series of interest-rate hikes by the Federal
Open Market Committee, terrorism concerns, and uncertainty about the November
elections.
In the last few months of the year, however, oil prices fell from their
record-high levels, a rebound in job growth suggested that the economic recovery
might have some resilience, and the presidential election ended decisively,
without any legal wrangling. As a result, investor confidence surged, providing
stock prices with a solid boost.
HOW DID THESE FACTORS AFFECT OVERALL MARKET PERFORMANCE IN 2004?
The major stock indices posted double-digit gains for the second consecutive
year. Small-cap stocks extended their winning streak over large-capitalization
stocks to five straight years when the small-cap Russell 2000(R) Index* finished
2004 with a return of 18.33%. Value stocks outperformed growth issues across all
market capitalizations.
Every sector of the S&P 500(R)* produced positive results in 2004, but the
best-performing sectors were energy, utilities, and telecommunication services.
Lagging sectors included information technology and health care.
WHAT WAS THE MAJOR REASON FOR THE PORTFOLIO'S STRONG PERFORMANCE RELATIVE TO THE
S&P 500(R) INDEX?*
The Portfolio's tilt toward value proved favorable, but stock selection was the
main driver of the Portfolio's outperformance of the S&P 500(R)* in 2004. Stock
selection worked best in the consumer staples and materials sectors.
WHICH CONSUMER STAPLES HOLDINGS SHOWED PARTICULAR STRENGTH IN 2004?
The top relative-performance contributor among the Portfolio's consumer staples
stocks was Reynolds American (+43%).(2) The company was created from the merger
of RJ Reynolds Tobacco and the U.S. arm of Brown & Williamson Tobacco in July
2004. Thanks to successful cost-cutting efforts, Reynolds American reported
strong earnings growth.
1. The MainStay VP American Century Income & Growth Portfolio is a Portfolio of
the MainStay VP Series Fund, Inc. American Century Investment Management,
Inc., serves as subadvisor to this Portfolio.
2. Performance percentages reflect total returns of the indicated securities for
the 12 months ended December 31, 2004. Purchases and sales within the
Portfolio may cause the performance of the Portfolio to differ from that of
the securities themselves.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-72 MainStay VP Series Fund, Inc.
The Portfolio also benefited from favorable stock selection among food & staples
retailers and beverage companies. In particular, overweighted positions in
grocery chain SUPERVALU (+23%) and beer maker Adolph Coors (+37%) strengthened
absolute and relative performance. Our decision to avoid discount retailer
Wal-Mart Stores (+1%) and soft-drink maker Coca-Cola Enterprises (-16%) enhanced
relative performance.
WHICH MATERIALS STOCKS FARED WELL DURING THE YEAR?
The top contributor to the Portfolio's performance on both an absolute and
relative basis was chemicals company Monsanto (+96%). The company's fiscal-year
2004 earnings nearly tripled from the previous year as herbicide and corn seed
sales improved. Overweighted positions in forest products companies Potlatch
(+55%) and Louisiana-Pacific (+51%) also helped relative performance.
WERE THERE ANY OTHER STRONG SECTORS AND SECURITIES IN 2004?
Stock selection was also successful in the utilities and financial sectors. Two
of the top-five relative contributors to performance were electric utilities TXU
(+178%) and Edison International (+52%). TXU sold some of its noncore assets and
reduced its debt substantially during the year, while Edison increased 2004
earnings projections and boosted its dividend. In the financials sector, strong
contributors included real estate investment trust CBL & Associates (+42%) and
commercial banking enterprise Bank of America (+22%). During 2004, Bank of
America was one of the Portfolio's most significantly overweighted positions
relative to the S&P 500(R) Index.*
It is also worth mentioning the Portfolio's two most heavily overweighted energy
positions, Sunoco (+63%) and ChevronTexaco (+26%). The latter was one of the
largest individual holding in the Portfolio at year-end. Since the price of oil
remained high in 2004, these stocks were among the strongest contributors to the
Portfolio's relative performance.
WERE THERE ANY AREAS WHERE STOCK SELECTION HAD A NEGATIVE IMPACT?
Stock selection detracted from the Portfolio's relative performance in the
information technology and health care sectors. Relative results in the
information technology sector were hampered by overweighted positions in
semiconductor manufacturer Intel (-27%) and computer-hardware maker
Hewlett-Packard (-7%). Relative performance was also hurt by a lack of exposure
to search engine company Yahoo! (+67%) and by an underweighted position in
wireless chipmaker QUALCOMM (+58%).
The health care sector contained the biggest individual detractor from the
Portfolio's performance--pharmaceutical giant Merck (-28%). The company pulled
its top-selling pain-relief medication off the market after the medication was
linked to increased risk of heart attack. Other negative contributors to
relative performance included drug company Bristol-Myers Squibb (-7%) and health
services provider Health Net (-12%), both of which were overweighted in the
Portfolio.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE S&P 500(R) INDEX* FROM A SECTOR
PERSPECTIVE?
The Portfolio focuses on individual stock selection and does not take
substantial positions in market sectors or industries. Our individual
stock-selection process resulted in the Portfolio holding modestly overweighted
positions relative to the S&P 500(R) Index* in the consumer discretionary,
utilities, and financials sectors in 2004. Underweighted sectors in the
Portfolio included industrials and consumer staples.
HOW WILL YOU POSITION THE PORTFOLIO GOING FORWARD?
As always, we will continue to seek stocks that we believe have an attractive
combination of value and growth potential, while we attempt to balance the
Portfolio's risk and expected return.
The opinions expressed are those of the Portfolio Managers as of the date of
this report and are subject to change. There is no guarantee that any forecasts
made will come to pass. This material does not constitute investment advice and
is not intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-73
MAINSTAY VP DREYFUS LARGE COMPANY
VALUE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ------------------------------------------------------------
After Portfolio operating
expenses 11.37% 2.27% 3.12%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP DREYFUS LARGE
COMPANY VALUE PORTFOLIO S&P 500/BARRA VALUE INDEX
------------------------- -------------------------
5/1/98 10000.00 10000.00
10283.00 10160.00
10975.00 11452.00
11698.00 12149.00
11171.00 10726.00
8618.00 8489.00
11026.00 11188.00
12/31/04 12279.00 12945.00
</Table>
<Table>
-- MainStay VP Dreyfus Large Company -- S&P 500/Barra Value Index
Value Portfolio
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ------------------------------------------------------------
After Portfolio operating
expenses 11.09% 2.02% 2.87%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP DREYFUS LARGE
COMPANY VALUE PORTFOLIO S&P 500/BARRA VALUE INDEX
------------------------- -------------------------
5/1/98 10000.00 10000.00
10266.00 10160.00
10929.00 11452.00
11621.00 12149.00
11069.00 10726.00
8518.00 8489.00
10872.00 11188.00
12/31/04 12078.00 12945.00
</Table>
<Table>
-- MainStay VP Dreyfus Large Company -- S&P 500/Barra Value Index
Value Portfolio
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK YEAR YEARS INCEPTION
S&P 500/Barra Value(R) Index* 15.71% 2.48% 3.95%
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (5/1/98)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-74 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP DREYFUS LARGE COMPANY
VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,083.30 $5.03 $1,020.20 $4.87
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,082.05 $6.33 $1,018.95 $6.14
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 98.2%
Short-Term Investment 1.5
Cash and Other Assets (less liabilities) 0.3
</Table>
See Portfolio of Investments on page M-242 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. ExxonMobil Corp.
2. Citigroup, Inc.
3. Bank of America Corp.
4. General Electric Co.
5. JPMorgan Chase & Co.
6. Tyco International Ltd.
7. Morgan Stanley
8. Wachovia Corp.
9. United Technologies Corp.
10. Goldman Sachs Group, Inc. (The)
</Table>
www.mainstayfunds.com M-75
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Brian C. Ferguson, Director of U.S. Large Cap Value
Portfolio Management, The Boston Company U.S. Large Cap Value Portfolio
Management Team, The Dreyfus Corporation.
MAINSTAY VP DREYFUS LARGE COMPANY VALUE PORTFOLIO(1)
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio normally invests at least 80% of its assets in domestic and
foreign large-capitalization stocks and seeks to outperform its benchmark over a
full market cycle. The subadvisor uses a bottom-up, research-driven, and
fundamentally based investment process.
During 2004, Brian C. Ferguson, J. David Macey, William E. Costello, and Robert
J. Eastman replaced Valerie J. Sill as comanagers of MainStay VP Dreyfus Large
Company Value Portfolio.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Dreyfus Large Company
Value Portfolio returned 11.37% for Initial Class shares and 11.09% for Service
Class shares. Both share classes underperformed the 11.53% return of the average
Lipper* Variable Products Large-Cap Value Portfolio over the same period. Both
share classes underperformed the 15.71% return of the S&P 500(R)/Barra Value
Index,* the Portfolio's benchmark, for the 12 months ended December 31, 2004.
WHAT MAJOR FACTORS AFFECTED THE STOCK MARKET IN 2004?
During 2004, the U.S. market transitioned from a dramatic rebound to a more
cautious advance, as U.S. dollar weakness and the current account deficit
tempered investor enthusiasm. Interest rates bottomed out at 40-year lows,
global tension continued in the Middle East, and oil prices briefly soared
beyond $50 per barrel as U.S. gross domestic product slowed from its rapid
growth rate to a more moderate and sustainable level. A clear outcome to the
U.S. presidential elections, higher corporate expenditures, fewer jobless
claims, and stronger fundamentals helped provide support for an increasingly
sustainable advance by the U.S. economy.
WHICH SECTORS AND SECURITIES WERE PARTICULARLY STRONG DURING 2004?
Defensive sectors led the market as typically cyclical companies faced selling
pressure. Soaring oil prices caused the energy sector to surge forward. The
energy stocks of the Russell 1000(R) Value Index* advanced 31%,(2) while
investor demand for strong cash flow and high dividend yields drove the Index's
utilities stocks up 24% and telecommunication services companies up 20%. Earlier
in the year, an investor migration toward defensive sectors helped consumer
staples companies return 20% for 2004. The remaining sectors all posted positive
returns, including health care, which lagged other sectors with a 2% return.
The most significant relative contributor during 2004 was telecommunication
services. The Portfolio's telecom holdings substantially outperformed the
telecom stocks of the Russell 1000(R) Value Index.* Much of the outperformance
was driven largely by diversified telecommunication services provider Sprint,
which advanced 55% on strong wireless subscriber growth (including 23% growth in
Blackberry subscribers). Sprint also benefited from its pending merger with
Nextel Communication, which would create the third-largest wireless company in
the United States.
Strong stock selection in the utilities sector helped the Portfolio
substantially outperform utility stocks in the Russell 1000(R) Value Index.* In
particular, the Portfolio benefited from an overweighted position in TXU
Corporation. The stock doubled in price from the time it was purchased earlier
in the year, and we trimmed the position.
WHY DID THE PORTFOLIO UNDERPERFORM?
Several factors contributed to the Portfolio's underperformance. In general, our
unwillingness to hold overvalued companies that were riding waves of
positive--but in our view irrational--investor sentiment contributed a
substantial amount to the Portfolio's relative results.
1. The MainStay VP Dreyfus Large Company Value Portfolio is a Portfolio of the
MainStay VP Series Fund, Inc. The Dreyfus Corporation serves as subadvisor to
this Portfolio.
2. Since neither Barra nor Standard & Poor's provides sector return data for the
Portfolio's benchmark, the S&P 500(R)/Barra Value Index,* we have used
Russell 1000(R) Value Index* data for all sector performance comparisons in
this Portfolio Management Discussion and Analysis.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-76 MainStay VP Series Fund, Inc.
In the financials sector, there were three primary sources of underperformance.
The Portfolio's lack of exposure to the real estate investment and development
industry detracted from overall performance, as real estate continues to advance
around the country. In the residential-mortgage segment, there were two major
detractors--PMI Group and Fannie Mae. PMI Group is a company that offers
mortgage insur-ance and credit enhancements. Fannie Mae is a
government-affiliated mortgage lender. Both stocks suffered from speculation
about imminent interest-rate increases and the potential for lower volumes.
Finally, American International Group languished in 2004, since the massive
insurance firm faced billions in claims after four devastating hurricanes
battered the southeastern United States.
In the consumer discretionary sector, lower industry-wide radio advertising sent
airwaves giant Clear Channel Communications down 28%. Viacom, a diversified
media conglomerate with television, radio, and movie interests, fell 17% when it
spun off Blockbuster. Although the divesture helped Viacom shed a slow-growth
business and is expected to provide long-term benefits, the deal's short-term
dilutive effect sent shares downward.
In the energy sector, sustained high oil prices drove profits skyward as oil
peaked at over $55 per barrel in November. Although the Portfolio earned a 25%
absolute return on its energy holdings, a slightly underweighted position
detracted from relative performance. The rationale for our strategic under-
weight turned out to be correct but a little too early. Since November, oil
prices have settled to a more moderate and sustainable $42, and the sector has
pulled back accordingly.
WHAT IS YOUR OUTLOOK GOING FORWARD?
We believe that U.S. current account deficit, a weak dollar, decreasing
unemployment, and measured interest-rate increases will combine for a favorable
investment environment in 2005. As we begin 2005, we continue to focus on
uncovering value in a market that has become increasingly expensive over the
last 24 months.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts will
come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-77
MAINSTAY VP EAGLE ASSET MANAGEMENT
GROWTH EQUITY PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ------------------------------------------------------------
After Portfolio operating
expenses -2.32% -7.57% 4.20%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP EAGLE ASSET
MANAGEMENT GROWTH RUSSELL 1000 GROWTH
EQUITY PORTFOLIO INDEX S&P 500 INDEX
----------------------- ------------------- -------------
5/1/98 10000.00 10000.00 10000.00
11785.00 11881.00 11171.00
19504.00 15821.00 13522.00
17561.00 12273.00 12291.00
14653.00 9766.00 10830.00
10520.00 7043.00 8437.00
13471.00 9138.00 10857.00
12/31/04 13158.00 9714.00 12038.00
</Table>
<Table>
-- MainStay VP Eagle Asset Management -- S&P 500 Index
Growth Equity Portfolio
-- Russell 1000 Growth Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ------------------------------------------------------------
After Portfolio operating
expenses -2.57% -7.81% 3.92%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP EAGLE ASSET
MANAGEMENT GROWTH RUSSELL 1000 GROWTH
EQUITY PORTFOLIO INDEX S&P 500 INDEX
----------------------- ------------------- -------------
5/1/98 10000.00 10000.00 10000.00
11765.00 11881.00 11171.00
19416.00 15821.00 13522.00
17426.00 12273.00 12291.00
14504.00 9766.00 10830.00
10387.00 7043.00 8437.00
13269.00 9138.00 10857.00
12/31/04 12928.00 9714.00 12038.00
</Table>
<Table>
-- MainStay VP Eagle Asset Management -- S&P 500 Index
Growth Equity Portfolio
-- Russell 1000 Growth Index
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARKS YEAR YEARS INCEPTION
Russell 1000(R) Growth Index* 6.30% -9.29% -0.43%
S&P 500(R) Index* 10.88 -2.30 2.82
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/6/03, includes the
historical performance of the Initial Class shares from inception (5/1/98)
through 6/5/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-78 MainStay VP Series Fund, Inc.
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP EAGLE ASSET MANAGEMENT
GROWTH EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,019.60 $4.16 $1,020.90 $4.17
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,018.35 $5.43 $1,019.65 $5.43
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 99.8%
Cash and Other Assets (less liabilities) 0.2
</Table>
See Portfolio of Investments on page M-248 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Dell, Inc.
2. eBay, Inc.
3. Microsoft Corp.
4. Pfizer, Inc.
5. Broadcom Corp., Class A
6. General Electric Co.
7. Yahoo!, Inc.
8. McDonald's Corp.
9. Coca-Cola Co. (The)
10. Harrah's Entertainment, Inc.
</Table>
www.mainstayfunds.com M-79
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Ashi Parikh of Eagle Asset Management,
Inc.
MAINSTAY VP EAGLE ASSET MANAGEMENT GROWTH EQUITY PORTFOLIO(1)
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio invests primarily in U.S. common stocks, mostly of companies with
market capitalizations greater than $5 billion at the time of purchase. The
Portfolio's subadvisor seeks companies with potential to offer above-average
long-term capital appreciation. Companies in which the Portfolio invests
normally have better-than-average expected earnings-per-share growth or
better-than-average expected revenue growth, or relatively high return on
equity. Securities that meet the Portfolio's quantitative criteria are subjected
to extensive fundamental analysis of competitive advantages, management
capability, and the ability of the company to improve its market share and drive
earnings growth.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Eagle Asset Management
Growth Equity Portfolio returned -2.32% for Initial Class shares and -2.57% for
Service Class shares. Both share classes underperformed the 8.59% return of the
average Lipper* Variable Products Large-Cap Core Portfolio over the same period.
Both share classes also underperformed the Russell 1000(R) Growth Index,* the
Portfolio's benchmark, which returned 6.30% for the 12 months ended December 31,
2004.
WHY DID THE PORTFOLIO UNDERPERFORM?
Throughout 2004 the Portfolio was structured to benefit from sustained economic
expansion. This positioning had a negative influence on the Portfolio's
near-term performance when growth in global gross domestic product slowed, which
intensified concerns that higher energy prices and continued geopolitical
uncertainty might disrupt global commerce. About two-thirds of the Portfolio's
relative underperformance resulted from stock selection and about one-third from
sector-allocation decisions.
WHAT ECONOMIC FACTORS INFLUENCED THE STOCK MARKET DURING 2004?
Economic data from the fourth quarter and from the year provide what we perceive
as evidence of a well-balanced recovery. Real gross domestic product and real
consumer spending both rose approximately 4% in 2004. Capital expenditures grew
approximately 8%, and residential investment increased by 5%. At the same time,
federal and state government spending increased only 2%.
Private-sector growth has been essential to the recovery. We believe that
corporate profits will end the year up about 17%, an improvement that may have
helped ease hiring restrictions. During 2004, the unemployment rate declined
from 5.9% to 5.4%. The Federal Reserve has taken a measured approach to
tightening monetary policy, by gradually raising the targeted federal funds rate
from 1.00% at the beginning of 2004 to 2.25% by the end of the year.
Counterbalancing the positive growth were high and volatile oil prices, a
declining dollar, an increasing trade deficit, a growing federal deficit, and a
wide array of geopolitical risks. High energy prices remain a concern because
they increase input costs for producers and manufacturers and act as a tax on
the consumer. Even so, overall economic data appear to signal an economy that is
moving out of a recovery phase and into an expansion phase.
WHAT SECTORS HURT THE PORTFOLIO'S PERFORMANCE?
Stocks in the consumer discretionary and consumer staples sectors detracted from
the Portfolio's performance as a result of stock selection in the media industry
and an underweighted position in the consumer staples sector. The Portfolio
maintains a large allocation to media companies, although we have trimmed the
position from earlier levels. The Portfolio did not benefit from the strong
outperformance seen in the multiline retail industry and the consumer staples
sector. Valuations among consumer staples companies continue to reinforce our
caution about the sector. The information technology sector hurt performance
because the Portfolio held overweighted positions in underperforming stocks in
the semiconductors & semiconductor equipment industry.
WHAT WERE SOME OF THE PORTFOLIO'S STRONGEST PERFORMING SECURITIES IN 2004?
Top performers included eBay, Tempur-Pedic International, Harrah's
Entertainment, Caremark Rx, and
1. The MainStay VP Eagle Asset Management Growth Equity Portfolio is a Portfolio
of the MainStay VP Series Fund, Inc. Eagle Asset Management, Inc., serves as
subadvisor to this Portfolio.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-80 MainStay VP Series Fund, Inc.
General Electric. During the year, eBay benefited when advertising dollars
migrated from traditional-media companies--with interests in radio, television
and newspapers--to nontraditional media companies that tend to leverage the
Internet better. Continued growth in auction listings and eBay's overseas
expansion have helped sustain the company's growth. Brand penetration has been a
key to success for mattress retailer Tempur-Pedic. Increasing demand and minimal
growth in supply helped Harrah's Entertainment record better-than-expected
profits in 2004. We believe that Harrah's has yet to realize the full benefits
of acquiring Caesars Entertainment and selling Caesars Entertainment's noncore
assets. Popular television shows have helped ratings momentum at Walt Disney,
and we believe that the outlook for the company's theme-park business remains
strong. Caremark Rx continues to improve efficiencies in the
pharmaceutical-purchasing channel. The company's efficiencies have led to lower
prices for consumers. General Electric benefited from a transition to higher-
growth, higher-return endeavors.
WHICH STOCKS DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2004?
Fairchild Semiconductor International, Applied Micro Circuits, VERITAS Software,
IAC/InterActiveCorp, and Nortel Networks were the Portfolio's worst-performing
securities. Semiconductor companies Fairchild Semiconductor and Applied Micro
Circuits had poor results despite strong year-over-year revenue growth. While we
would view any evidence of an inventory reduction or a pickup in demand as a
positive catalyst, we see inventory increases or flat capital spending as
potential risks. VERITAS Software did not meet analysts' expectations for the
year. IAC/InterActiveCorp's performance suffered from increasing competition
among existing Web sites and third-party aggregators and from concerns about
continued inventory-supply constraints. Although telecommunications equipment
company Nortel Networks detracted from the Portfolio's performance in 2004, we
believe that robust financial conditions should support increased spending for
telecommunications equipment in 2005.
WHICH SECURITIES DID YOU BUY AND SELL FOR THE PORTFOLIO DURING 2004?
We sold a few health care names--Aetna, Guidant, St. Jude Medical, and
Wyeth--when they reached what we believed to be their full value. The Portfolio
recorded gains on each of these sales both since purchase and for the reporting
period. We purchased Chiron after a well-publicized flu-vaccine withdrawal
dropped the stock to what we viewed as attractive levels. News of
insurance-brokerage industry investigations by New York Attorney General Eliot
Spitzer dominated the headlines and sent insurance stocks significantly lower.
We used the opportunity to buy American International Group (AIG), which has a
AAA-rated balance sheet and less than 2% of revenues exposed to the ongoing
investigation. We sold consumer names Cendant, Gannett, and IAC/InterActive-
Corp and purchased McDonald's and Target. Both McDonald's and Target are among
the leaders in their respective markets and have seen continued strength in
sales. We also added software company Symantec, which has benefited from
continued concern about information security.
WHAT HAS DETERMINED YOUR POSITIONING OF THE PORTFOLIO?
We continue to position the Portfolio with a bias toward an economic recovery.
At the same time, we have sought to lower the Portfolio's risk profile by
reducing the size of its overweighted allocations and by focusing on
higher-quality names. We have maintained an underweighted position in the
consumer staples sector and have overweighted consumer discretionary names.
Additionally, we have continued to overweight the semiconductors & semiconductor
equipment industry while shifting the Portfolio's assets toward higher-quality
companies.
WHAT IS YOUR OUTLOOK GOING FORWARD?
Economic indicators have continued to move in a positive direction throughout
2004. Major risks include a moderating housing cycle, Federal Reserve
tightening, fading fiscal stimulus, the modest pace of corporate investment, a
lack of pent-up consumer demand, and high levels of consumer debt. Even so, we
believe that recent data suggests a continued economic expansion in 2005. The
federal funds rate remains low enough to spur capital investment. In our
opinion, global corporate profitability, balance-sheet strength, and cash flows
have laid the foundation for sustainable growth. There is an estimated $1
trillion in cash on the balance sheets of American corporations, and we believe
CEOs are inclined to use that cash. A reduction in speculative positions and
moderating demand for crude oil should help bring down energy costs to
corporations, which in turn will help consumers.
www.mainstayfunds.com M-81
As we see it, the global economy appears poised for continued solid expansion in
2005, although we perceive risk in the delicate balance between growth and
inflation. We believe that solid top-line growth and high, stable margins should
drive earnings growth over the year ahead.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts will
come to pass. This material does not constitute investment advice and is not
intended as an endorsement of any specific investment.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-82 MainStay VP Series Fund, Inc.
MAINSTAY VP LORD ABBETT DEVELOPING
GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CALL 1-800-598-2019.
INITIAL CLASS AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- --------------------------------------------------------------
After Portfolio operating
expenses 5.86% -4.83% -0.76%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP LORD
ABBETT DEVELOPING RUSSELL 2000 GROWTH
GROWTH PORTFOLIO INDEX S&P 500 INDEX
----------------- ------------------- -------------
5/1/98 10000.00 10000.00 10000.00
9210.00 8993.00 11171.00
12176.00 12868.00 13522.00
9852.00 9982.00 12291.00
9130.00 9061.00 10830.00
6484.00 6319.00 8437.00
8979.00 9386.00 10857.00
12/31/04 9506.00 10729.00 12038.00
</Table>
<Table>
-- MainStay VP Lord Abbett Developing -- S&P 500 Index
Growth Portfolio
-- Russell 2000 Growth Index
</Table>
SERVICE CLASS(1) AS OF 12/31/04
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- --------------------------------------------------------------
After Portfolio operating
expenses 5.60% -5.07% -1.01%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP LORD
ABBETT DEVELOPING RUSSELL 2000 GROWTH
GROWTH PORTFOLIO INDEX S&P 500 INDEX
----------------- ------------------- -------------
5/1/98 10000.00 10000.00 10000.00
9195.00 8993.00 11171.00
12123.00 12868.00 13522.00
9783.00 9982.00 12291.00
9043.00 9061.00 10830.00
6406.00 6319.00 8437.00
8850.00 9386.00 10857.00
12/31/04 9345.00 10729.00 12038.00
</Table>
<Table>
-- MainStay VP Lord Abbett Developing -- S&P 500 Index
Growth Portfolio
-- Russell 2000 Growth Index
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARKS YEAR YEARS INCEPTION
Russell 2000 Growth Index* 14.31% -3.57% 1.06%
S&P 500(R) Index* 10.88 -2.30 2.82
</Table>
PERFORMANCE TABLES AND GRAPHS DO NOT REFLECT ANY DEDUCTION OF SALES CHARGES,
MORTALITY AND EXPENSE CHARGES, CONTRACT CHARGES, OR ADMINISTRATIVE CHARGES.
RETURNS REFLECTIVE OF THESE CHARGES ARE PROVIDED IN THE BEGINNING OF THIS BOOK.
PLEASE REFER TO THE PERFORMANCE SUMMARY APPROPRIATE FOR YOUR POLICY.
1. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from inception (5/1/98)
through 6/4/03, adjusted to reflect the fees and expenses for Service Class
shares.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-83
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP LORD ABBETT DEVELOPING
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third data column of the table
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different portfolios. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 7/1/04 12/31/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS(1) $1,000.00 $1,037.25 $5.48 $1,019.65 $5.43
- ------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS(1) $1,000.00 $1,036.00 $6.76 $1,018.40 $6.70
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio multiplied by
the average account value over the period, divided by 366, multiplied by 184
(to reflect the one-half year period).
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 97.0%
Short-Term Investment 4.2
Liabilities in Excess of Cash and Other Assets -1.2
</Table>
See Portfolio of Investments on page M-254 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2004 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Resources Connection, Inc.
2. Centene Corp.
3. AMERIGROUP Corp.
4. Integra LifeSciences Holdings
5. Armor Holdings, Inc.
6. EGL, Inc.
7. LandStar System, Inc.
8. Kronos, Inc.
9. Scientific Games Corp.
10. Joy Global, Inc.
</Table>
M-84 MainStay VP Series Fund, Inc.
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager F. Thomas O'Halloran, of Lord, Abbett &
Co. LLC.
MAINSTAY VP LORD ABBETT DEVELOPING GROWTH PORTFOLIO(1)
CAN YOU BRIEFLY DESCRIBE THE PORTFOLIO'S INVESTMENT APPROACH?
The Portfolio invests primarily in the common stocks of companies with
above-average long-range growth potential, particularly smaller companies
considered to be in the developing growth phase. We use a bottom-up stock
selection process, which means that we focus on the investment fundamentals of
companies rather than react to stock-market events. The Portfolio may also
invest in companies that are in their formative years.
HOW DID THE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS BENCHMARK IN 2004?
For the 12 months ended December 31, 2004, MainStay VP Lord Abbett Developing
Growth Portfolio returned 5.86% for Initial Class shares and 5.60% for Service
Class shares. Both share classes underperformed the 11.71% return of the average
Lipper* Variable Products Small-Cap Growth Portfolio over the same period. Both
share classes underperformed the 14.31% return of the Portfolio's benchmark, the
Russell 2000(R) Growth Index,* for the 12 months ended December 31, 2004.
HOW DID THE STOCK MARKET PERFORM DURING 2004?
After experiencing significant volatility throughout much of 2004, the equity
market rallied sharply in the fourth quarter. As we had anticipated, the rally
gained strength when the uncertainty surrounding the U.S. presidential election
subsided. Data from both Russell and Standard & Poor's confirm that investors
preferred small- and mid-capitalization stocks over large-cap issues in 2004.
They also preferred value stocks over growth stocks at all capitalization
levels.
By year-end 2004, the broad Russell 2000(R) Index* had exceeded its previous
peak, which was reached in early 2000. The Russell 2000(R) Growth Index,*
however, closed 2004 well below its previous high-water mark.
WHY DID THE PORTFOLIO UNDERPERFORM IN 2004?
The Portfolio suffered from disappointing stock selection during the year. Stock
selection in the information technology sector was the greatest detractor from
performance relative to the Portfolio's benchmark, the Russell 2000(R) Growth
Index.* Stock selection in the health care and telecommunication services
sectors also negatively affected the Portfolio's results. The largest
contributor to relative performance during 2004 was stock selection within the
consumer discretionary sector.
WHICH PORTFOLIO HOLDINGS SHOWED STRONG PERFORMANCE DURING 2004?
Overstock.com is an online retailer that purchases excess name-brand merchandise
from retailers and sells it directly to customers via the Internet. The
company's stock price improved because of strong earnings growth in the third
and fourth quarters of 2004. Earnings growth was fueled by an increase in
Internet holiday shopping.
AMERIGROUP, a Medicaid HMO, advanced when the company reported solid earning
growth, which resulted from significant rate increases and expanding membership.
Shuffle Master, which develops casino machinery, saw its stock price climb in
2004. The increases followed several acquisitions that helped the company
increase revenue growth.
TIBCO Software, a provider of "middle-ware software," continued to see strength
in the company's enterprise-wide data-integration segment.
Resources Connection, a professional-services firm, continued to benefit from
demand for Sarbanes-Oxley related services.
1. The MainStay VP Lord Abbett Developing Growth Portfolio is a Portfolio of the
MainStay VP Series Fund, Inc. Lord, Abbett & Co. LLC serves as subadvisor to
this Portfolio.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-85
WHICH PORTFOLIO HOLDINGS SHOWED WEAK PERFORMANCE DURING THE YEAR?
Odyssey Healthcare, a hospice service provider, fell in 2004 when increased
competition led to lower patient volume. Since the health care sector showed
continuing weakness, we sold the Portfolio's position in the company.
Vitesse Semiconductor, a developer of high-performance semiconductors, saw its
stock price decline when lower demand for storage solutions led earnings to fall
short of expectations. The Portfolio eliminated the position.
Wireless Facilities is a provider of outsourced communications and integration
services for the wireless industry. The company's stock price declined when
performance results came in below analysts' expectations and the company
announced a restatement of earnings. The Portfolio's position in Wireless
Facilities has been sold.
KVH Industries, a maker of mobile satellite systems, suffered when the market
lowered its expectations for the company's sales to the U.S. military. The
Portfolio sold its position in the stock.
Shares of Plexus, an electronics contract-manufacturing-services firm, fell when
the company announced operating inefficiencies that weakened margins. The
Portfolio continues to hold its relatively small position in Plexus.
WHAT WERE SOME OF THE PORTFOLIO'S LARGEST PURCHASES IN 2004?
Armor Holdings, a security-products and consulting firm, has been held by the
Portfolio for a number of years. We bought and sold shares of Armor Holdings at
various points in 2004. Although profit taking involved several trades over a
number of months, the Portfolio's average gain on sales of the company's shares
in 2004 was 42%.(2) Armor Holdings continues to be a significant position in the
Portfolio.
Another new holding, Landstar System, was purchased principally in July 2004.
Landstar is a freight-forwarding and global-logistics company, whose shares
advanced owing to a strengthening industrial economy throughout the U.S. and
hurricane-related business in Florida. Landstar continues to be a significant
holding in the Portfolio, although we trimmed a small portion in 2004 at an
average gain of 11%.
VISX is a company that provides equipment and service to the laser eye-surgery
market. The Portfolio added VISX stock beginning in April, and the majority of
the position was established by June. The company's stock declined on a
disappointing earnings outlook, and by November we had eliminated the position
at an average loss of 18%.
WHAT WERE SOME OF THE PORTFOLIO'S MOST SIGNIFICANT SALES DURING THE YEAR?
Digital River is an e-commerce outsourcing company that focuses on software
publishers. The Portfolio accumulated the bulk of its position in 2003, and
after strong price appreciation, the position was eliminated in 2004 at an
average gain of 63%.
Netflix is an online DVD-rental company. The Portfolio accumulated a position in
this company in mid-2003, and it was a strong performer for most of that year.
Owing to increased competition and pricing pressure, however, the company's
share price declined in 2004. The position was eliminated by mid-year, with an
average gain of approximately 18%.
As we mentioned when discussing large purchases, Armor Holdings was also a large
sale in 2004.
HOW DID YOU CHANGE THE PORTFOLIO'S POSITIONING DURING 2004?
As the year progressed, we focused on increasing the Portfolio's exposure to
companies that we believed are better positioned to benefit from a cyclical
economic recovery. We also focused on reducing exposure to traditional growth
sectors. To this end, the Portfolio increased its positions in the industrials
sector and reduced its holdings in the information technology and consumer
discretionary sectors.
The Portfolio also increased its exposure to the financials sector. Within
financials, our focus has been on institutions that Lord Abbett expects to
benefit from economic and asset growth, rather than on banks with exposure to
interest-rate spreads.
2. Performance percentages represent average gains or losses for the periods
indicated.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
M-86 MainStay VP Series Fund, Inc.
At year-end, the Portfolio's most significantly overweighted position versus the
Russell 2000(R) Growth Index* was in the industrials sector. At the same time,
the Portfolio's most significantly underweighted position was in the health care
sector.
WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO?
While economic growth remains solid, Lord Abbett expects that business momentum
may have peaked. In Lord Abbett's view, the principal benefits from expansionary
monetary and fiscal policies are behind us. Accordingly, the Portfolio is likely
to begin to modify its exposure to industrial and information technology names
and to continue its careful evaluation of retail holdings. The Portfolio is
likely to increase its exposure to less economically sensitive areas, such as
commercial service firms with a regulatory focus, health care companies, and
defense companies. The Portfolio will continue to see potential in individual
stock selections rather than sector positioning.
The opinions expressed are those of the Portfolio Manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
The views of the Lord, Abbett & Co. LLC, the Portfolio's subadvisor, and the
Portfolio's holdings described in this report are as of December 31, 2004; these
views and holdings may have changed subsequent to this date. Information
provided in this report should not be considered a recommendation to purchase or
sell securities. The Portfolio is not insured by the FDIC, is not a deposit or
other obligation of, or guaranteed by banks, and is subject to investment risks
including loss of principal amount invested. For a more detailed discussion of
the risks associated with the Portfolio, see the Portfolio's Prospectus.
Stocks of small companies may be subject to higher price volatility,
significantly lower trading volumes, and greater spreads between bid and ask
prices, than stocks of larger companies. Small companies may be more vulnerable
to adverse business or market developments than mid- or large-capitalization
companies.
The Investment and Performance Comparison and the Portfolio Management
Discussion and Analysis for this Portfolio have not been audited.
Not all investment divisions are available under all policies.
* Please refer to pages M-2 and M-3 for additional explanations and disclosure
regarding the Portfolios, their benchmark indices, and other indices,
averages, and service providers mentioned in the reports.
www.mainstayfunds.com M-87
DIRECTORS AND OFFICERS
The following are the Directors and Officers of MainStay VP Series Fund, Inc.,
together with a brief description of their principal occupations during the past
five years.
Each Director serves until his/her successor is elected and qualified or until
his/her resignation, death, or removal. Officers serve a term of one year and
are elected annually by the Directors.
The business address of each Director and Officer is 51 Madison Avenue, New
York, New York 10010.
<Table>
<Caption>
POSITION(S) HELD WITH NUMBER OF PORTFOLIOS OTHER
NAME AND FUND AND LENGTH PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH OF TIME SERVED DURING PAST FIVE YEARS OVERSEEN BY DIRECTOR HELD BY DIRECTOR
-------------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS*
GARY E. Chairman and Chief Chief Executive Officer, Chairman, and 53 None
WENDLANDT Executive Officer Manager, New York Life Investment
10/8/50 since 2002 and Management LLC (including predecessor
Director since 2001 advisory organizations) and New York
Life Investment Management Holdings LLC;
Executive Vice President, New York Life
Insurance Company; Executive Vice
President and Manager, NYLIFE LLC;
Manager, NYLIFE Distributors LLC; Vice
Chairman, McMorgan & Company LLC;
Manager, MacKay Shields LLC; Executive
Vice President, New York Life Insurance
and Annuity Corporation; Chairman,
President and Chief Executive Officer,
and Trustee, The MainStay Funds (23
portfolios); Executive Vice President
and Chief Investment Officer, MassMutual
Life Insurance Company (1993 to 1999).
-------------------------------------------------------------------------------------------------------------------------
ANNE F. POLLACK President since 1990 Senior Vice President and Chief 19 Community
11/7/55 and Director since Investment Officer, New York Life Preservation
1989 Insurance Company; Senior Vice Corporation (Not
President, Chief Investment Officer, and for Profit)
Manager, NYLIFE LLC; Senior Vice since 2002; Coro
President and Director, New York Life New York
Insurance and Annuity Corporation and Leadership
NYLIFE Insurance Company of Arizona; Center (Not for
Senior Vice President, Chief Investment Profit) since
Officer, and Manager, New York Life December 2004
International, LLC; Director, NYLIFE
Securities Inc.
-------------------------------------------------------------------------------------------------------------------------
ROBERT D. ROCK Vice President since Senior Vice President, New York Life 19 None
12/16/54 1985 and Director Insurance Company; Senior Vice
since 1984 President, Chief Investment Officer, and
Director, New York Life Insurance and
Annuity Corporation and NYLIFE Insurance
Company of Arizona; Senior Vice
President and Manager, NYLIFE
Distributors LLC; Senior Vice President,
NYLIFE Securities Inc.
-------------------------------------------------------------------------------------------------------------------------
</Table>
* Certain Directors are considered to be interested persons of the Company
within the meaning of the 1940 Act because of their affiliation with New
York Life Insurance Company, New York Life Insurance and Annuity
Corporation, NYLIFE LLC, New York Life Investment Management LLC, MacKay
Shields LLC, McMorgan & Company LLC, Eclipse Funds, Eclipse Funds Inc.,
The MainStay Funds, NYLIFE Securities Inc., and/or NYLIFE Distributors
LLC, as described in detail in the column "Principal Occupation(s) During
Past Five Years."
M- 88 MainStay VP Series Fund, Inc.
<Table>
<Caption>
POSITION(S) HELD WITH NUMBER OF PORTFOLIOS OTHER
NAME AND FUND AND LENGTH PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH OF TIME SERVED DURING PAST FIVE YEARS OVERSEEN BY DIRECTOR HELD BY DIRECTOR
-------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED DIRECTORS
MICHAEL J. DRABB Director since 1994 Retired. Executive Vice President, 19 Director, MONY
10/4/33 O'Brien Asset Management (1993 to 1999). Series Fund Inc.
(7 portfolios);
Director, New
York Life
Settlement
Corporation.
-------------------------------------------------------------------------------------------------------------------------
JILL FEINBERG Director since 1995 President, Jill Feinberg & Company, Inc. 19 Director, New
4/14/54 (special events and meeting planning York Life
firm). Settlement
Corporation
-------------------------------------------------------------------------------------------------------------------------
DANIEL HERRICK Director since 1983 Retired. Treasurer and Executive 19 None
12/1/20 Officer, National Gallery of Art (1985
to 1995).
-------------------------------------------------------------------------------------------------------------------------
ROMAN L. WEIL Director since 1994 V. Duane Rath Professor of Accounting, 19 None
5/22/40 Graduate School of Business, University
of Chicago; President, Roman L. Weil
Associates, Inc. (consulting firm).
-------------------------------------------------------------------------------------------------------------------------
JOHN A. WEISSER, Director since 1997 Retired. Managing Director of Salomon 19 None
JR. Brothers, Inc. (1981 to 1995).
10/22/41
-------------------------------------------------------------------------------------------------------------------------
<Caption>
POSITION(S) HELD WITH NUMBER OF PORTFOLIOS OTHER
NAME AND FUND AND LENGTH PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH OF TIME SERVED DURING PAST FIVE YEARS OVERSEEN BY OFFICER HELD BY OFFICER
-------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
THEODORE A. Executive Vice Executive Vice President and Co-Head of 19 None
MATHAS President since 2002 Life & Annuity (as of January 1, 2004)
4/4/67 and Senior Vice President and Chief
Operating Officer for Life & Annuity
(1998 to December 2003), New York Life
Insurance Company; Executive Vice
President and Director, New York Life
Insurance and Annuity Corporation and
NYLIFE Insurance Company of Arizona;
Director, NYLIFE Securities Inc.
-------------------------------------------------------------------------------------------------------------------------
PATRICK J. Treasurer, Chief Managing Director, New York Life 61 None
FARRELL Financial and Investment Management LLC (including
9/27/59 Accounting Officer predecessor advisory organizations);
since 2001 Vice President, Treasurer, and Chief
Financial and Accounting Officer, The
MainStay Funds; Treasurer and Chief
Financial and Accounting Officer,
Eclipse Funds Inc. and Eclipse Funds;
Chief Financial Officer and Assistant
Treasurer, McMorgan Funds.
-------------------------------------------------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M- 89
<Table>
<Caption>
NUMBER OF
POSITION(S) HELD WITH PORTFOLIOS OTHER
NAME AND FUND AND LENGTH PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH OF TIME SERVED DURING PAST FIVE YEARS OVERSEEN BY OFFICER HELD BY OFFICER
--------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
ALISON H. Vice President-- Managing Director and Chief Compliance 53 None
MICUCCI Compliance since Officer, New York Life Investment
12/16/65 September 2004 Management LLC (June 2003); Vice
President--Compliance, The MainStay Funds,
Eclipse Funds, and Eclipse Funds Inc.;
Senior Managing Director--Compliance,
NYLIFE Distributors; Deputy Chief
Compliance Officer, New York Life
Investment Management LLC (September 2002
to June 2003); Vice President and
Compliance Officer, Goldman Sachs Asset
Management (November 1999 to August 2002)
--------------------------------------------------------------------------------------------------------------------------
MARGUERITE E.H. Secretary since Managing Director and Associate General 53 None
MORRISON September 2004 Counsel, New York Life Investment
3/26/56 Management LLC (since June 2004);
Secretary, The MainStay Funds, Eclipse
Funds, Eclipse Funds Inc.; Managing
Director and Secretary, NYLIFE Distributors
LLC; Chief Legal Officer--Mutual Funds and
Vice President and Corporate Counsel, The
Prudential Insurance Company of America
(2000 to June 2004).
--------------------------------------------------------------------------------------------------------------------------
RICHARD W. Tax Vice President Vice President, New York Life Insurance 53 None
ZUCCARO since 1991 Company; Vice President, New York Life
12/12/49 Insurance and Annuity Corporation, NYLIFE
Insurance Company of Arizona, NYLIFE LLC,
NYLIFE Securities Inc., and NYLIFE
Distributors LLC; Tax Vice President, New
York Life International, LLC; Tax Vice
President, Eclipse Funds, Eclipse Funds
Inc., and The MainStay Funds.
--------------------------------------------------------------------------------------------------------------------------
</Table>
M- 90 MainStay VP Series Fund, Inc.
DIRECTORS AND OFFICERS*
GARY E. WENDLANDT
Chairman, Chief Executive Officer and Director
ANNE F. POLLACK
President and Director
MICHAEL J. DRABB
Director
JILL FEINBERG
Director
DANIEL HERRICK
Director
ROBERT D. ROCK
Director and Vice President
ROMAN L. WEIL
Director
JOHN A. WEISSER, JR.
Director
THEODORE A. MATHAS
Executive Vice President
PATRICK J. FARRELL
Treasurer, Chief Financial and Accounting Officer and Assistant Secretary
MARGUERITE E. H. MORRISON
Secretary
ALISON H. MICUCCI
Vice President--Compliance
RICHARD W. ZUCCARO
Tax Vice President
INVESTMENT ADVISER
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
Some Portfolios may not be available in all products.
* As of December 31, 2004.
** An affiliate of New York Life Investment Management LLC.
SUBADVISORS
MACKAY SHIELDS LLC**
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
THE DREYFUS CORPORATION
EAGLE ASSET MANAGEMENT, INC.
LORD, ABBETT & CO., LLC
ADMINISTRATOR
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
DISTRIBUTOR
NYLIFE DISTRIBUTORS LLC
CUSTODIANS
THE BANK OF NEW YORK
JP MORGAN CHASE & CO.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRICEWATERHOUSECOOPERS LLP
LEGAL COUNSEL
DECHERT LLP
www.mainstayfunds.com M- 91
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (97.4%)+
ASSET-BACKED SECURITIES (3.1%)
- ------------------------------------------------------------------------------
CONSUMER FINANCE (2.1%)
American Express Master Trust
Series 2002-2 Class A
2.15%, due 5/15/06 (d) $ 5,000,000 $ 5,001,606
MBNA Credit Card Master
Note Trust
Series 2003-A2 Class A2
2.45%, due 8/15/08 (d) 5,000,000 5,003,003
------------
10,004,609
------------
DIVERSIFIED FINANCIAL SERVICES (1.0%)
Bank One Issuance Trust
Series 2003-A2 Class A2
2.45%, due 10/15/08 (d) 5,000,000 5,002,814
------------
Total Asset-Backed Securities
(Cost $15,007,938) 15,007,423
------------
CORPORATE BONDS (34.6%)
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.2%)
Raytheon Co.
6.50%, due 7/15/05 809,000 823,452
------------
AUTOMOBILES (1.4%)
DaimlerChrysler North America Holdings, Inc.
8.00%, due 6/15/10 1,000,000 1,155,805
Ford Motor Co.
7.45%, due 7/16/31 1,500,000 1,508,607
General Motors Corp.
7.125%, due 7/15/13 2,000,000 2,046,664
8.375%, due 7/15/33 2,000,000 2,072,166
------------
6,783,242
------------
BEVERAGES (0.3%)
Coca-Cola Enterprises, Inc.
8.50%, due 2/1/22 1,000,000 1,333,365
------------
CAPITAL MARKETS (2.2%)
Goldman Sachs Group, Inc. (The)
5.70%, due 9/1/12 4,000,000 4,240,076
J.P. Morgan Chase & Co.
3.50%, due 3/15/09 2,000,000 1,959,542
6.625%, due 3/15/12 2,000,000 2,238,634
Morgan Stanley Dean Witter & Co.
6.75%, due 4/15/11 2,000,000 2,243,276
------------
10,681,528
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL BANKS (2.8%)
Bank of America Corp.
7.80%, due 2/15/10 $ 2,000,000 $ 2,325,800
Bank One Corp.
4.125%, due 9/1/07 2,000,000 2,032,006
First Chicago NBD Corp.
6.125%, due 2/15/06 1,750,000 1,800,836
Fleet National Bank
5.75%, due 1/15/09 5,000,000 5,314,655
National City Corp.
3.20%, due 4/1/08 1,000,000 979,766
Wells Fargo & Co.
6.375%, due 8/1/11 1,000,000 1,107,147
------------
13,560,210
------------
CONSUMER FINANCE (1.6%)
American General Finance Corp.
Series G
5.375%, due 9/1/09 1,000,000 1,048,824
Capital One Bank
Series BNKT
4.25%, due 12/1/08 1,000,000 1,007,271
8.25%, due 6/15/05 2,000,000 2,044,422
Ford Motor Credit Co.
6.25%, due 2/16/06 1,000,000 1,017,344
Household Finance Corp.
4.75%, due 7/15/13 2,500,000 2,480,620
------------
7,598,481
------------
DIVERSIFIED FINANCIAL SERVICES (3.9%)
Associates Corp. of North America
6.95%, due 11/1/18 3,000,000 3,472,860
Boeing Capital Corp.
5.75%, due 2/15/07 3,000,000 3,133,113
CIT Group, Inc.
7.75%, due 4/2/12 2,000,000 2,367,408
Mellon Funding Corp.
6.40%, due 5/14/11 1,125,000 1,248,324
National Rural Utilities Cooperative Finance Corp.
3.875%, due 2/15/08 2,000,000 2,007,974
NiSource Finance Corp.
7.625%, due 11/15/05 3,000,000 3,109,284
Principal Life Global Funding Inc.
6.25%, due 2/15/12 (a) 3,110,000 3,399,578
------------
18,738,541
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.1%)
BellSouth Corp.
5.20%, due 9/15/14 1,000,000 1,019,222
SBC Communications, Inc.
6.45%, due 6/15/34 1,000,000 1,071,367
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term investments.
May be subject to change daily.
</Table>
M- 92 MainStay VP Bond Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
Sprint Capital Corp.
7.125%, due 1/30/06 $ 1,000,000 $ 1,040,115
8.375%, due 3/15/12 1,000,000 1,218,142
8.75%, due 3/15/32 750,000 999,232
------------
5,348,078
------------
ELECTRIC UTILITIES (4.5%)
Arizona Public Service Co.
7.625%, due 8/1/05 3,000,000 3,077,982
Cleveland Electric Illuminating Co. (The)
5.65%, due 12/15/13 1,000,000 1,037,112
Consumers Energy Co.
Series J
6.00%, due 2/15/14 3,000,000 3,224,712
DTE Energy Co.
6.45%, due 6/1/06 1,000,000 1,041,000
FPL Group Capital, Inc.
3.25%, due 4/11/06 2,000,000 2,001,068
Illinois Power Co.
7.50%, due 6/15/09 1,500,000 1,691,807
Kansas Gas & Electric Co.
6.20%, due 1/15/06 2,000,000 2,056,742
Pepco Holdings, Inc.
3.75%, due 2/15/06 1,000,000 1,004,909
Potomac Edison Co.
5.35%, due 11/15/14 (a) 2,750,000 2,771,400
Progress Energy, Inc.
6.125%, due 9/15/33 1,000,000 1,064,901
6.50%, due 7/15/12 2,000,000 2,218,380
Public Service Co. of
New Mexico
4.40%, due 9/15/08 500,000 504,181
------------
21,694,194
------------
ENERGY EQUIPMENT & SERVICES (0.5%)
Enbridge Energy Partners, L.P.
6.30%, due 12/15/34 2,250,000 2,329,175
------------
FOOD & STAPLES RETAILING (2.6%)
Albertson's Inc. Series C
6.625%, due 6/1/28 1,000,000 1,048,238
Delhaize America, Inc.
7.375%, due 4/15/06 2,500,000 2,624,942
9.00%, due 4/15/31 1,000,000 1,293,797
Kroger Co. (The)
Series B
7.70%, due 6/1/29 1,000,000 1,206,032
Safeway, Inc.
5.625%, due 8/15/14 3,000,000 3,095,277
6.50%, due 3/11/11 2,125,000 2,327,266
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOOD & STAPLES RETAILING (CONTINUED)
SUPERVALU, Inc.
7.50%, due 5/15/12 $ 1,000,000 $ 1,167,166
------------
12,762,718
------------
FOOD PRODUCTS (0.4%)
Kellogg Co.
Series B
6.60%, due 4/1/11 2,000,000 2,240,448
------------
GAS UTILITIES (0.8%)
Atmos Energy Corp.
5.95%, due 10/15/34 1,000,000 1,011,936
Kinder Morgan Energy
Partners, L.P.
5.125%, due 11/15/14 2,750,000 2,744,533
------------
3,756,469
------------
INSURANCE (0.4%)
ACE Ltd.
6.00%, due 4/1/07 1,750,000 1,825,574
------------
MEDIA (3.2%)
Clear Channel Communications, Inc.
5.50%, due 9/15/14 2,000,000 2,007,726
Cox Communications, Inc.
6.875%, due 6/15/05 2,260,000 2,296,282
Time Warner, Inc.
7.57%, due 2/1/24 2,500,000 2,940,883
7.625%, due 4/15/31 3,000,000 3,629,283
Walt Disney Co. (The)
Series B
6.75%, due 3/30/06 2,000,000 2,083,830
7.00%, due 3/1/32 2,130,000 2,496,760
------------
15,454,764
------------
MULTILINE RETAIL (0.3%)
May Department Stores Co. (The)
5.75%, due 7/15/14 1,500,000 1,541,522
------------
MULTI-UTILITIES & UNREGULATED POWER (0.3%)
Pacific Electric & Gas Co.
6.05%, due 3/1/34 1,500,000 1,557,924
------------
OIL & GAS (0.6%)
Duke Energy Field Services Corp.
7.50%, due 8/16/05 2,000,000 2,052,842
Enterprise Products Partners L.P.
5.60%, due 10/15/14 (a) 1,000,000 1,008,870
------------
3,061,712
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 93
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.4%)
Weyerhaeuser Co.
7.375%, due 3/15/32 $ 1,500,000 $ 1,778,769
------------
REAL ESTATE (3.7%)
Archstone-Smith Trust
8.20%, due 7/3/05 3,305,000 3,385,381
Avalonbay Communities, Inc.
6.625%, due 9/15/11 1,000,000 1,106,726
Camden Property Trust
4.375%, due 1/15/10 3,585,000 3,573,549
Kimco Realty Corp.
Series A
6.73%, due 6/30/05 1,000,000 1,018,374
Regency Centers LP
7.95%, due 1/15/11 2,250,000 2,599,139
Rouse Co. (The)
3.625%, due 3/15/09 1,000,000 942,744
Summit Properties Partnership, LP
7.04%, due 5/9/06 5,000,000 5,138,975
------------
17,764,888
------------
ROAD & RAIL (1.6%)
CSX Corp.
2.48%, due 8/3/06 (d) 2,000,000 2,000,522
5.50%, due 8/1/13 1,000,000 1,045,810
Norfolk Southern Corp.
7.80%, due 5/15/27 2,000,000 2,505,082
8.375%, due 5/15/05 2,000,000 2,038,586
------------
7,590,000
------------
SPECIALTY RETAIL (0.4%)
Erac USA Finance Co.
8.25%, due 5/1/05 (a) 2,000,000 2,032,958
------------
THRIFTS & MORTGAGE FINANCE (1.4%)
Countrywide Financial Corp.
4.00%, due 3/22/11 1,500,000 1,458,390
General Electric Capital Corp.
6.00%, due 6/15/12 5,000,000 5,450,185
------------
6,908,575
------------
Total Corporate Bonds (Cost $162,965,426) 167,166,587
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN BONDS (5.3%)
- ------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.8%)
Deutsche Telekom International
Finance BV
9.25%, due 6/1/32 $ 1,000,000 $ 1,423,086
Telecom Italia Capital
6.00%, due 9/30/34 (a) 2,375,000 2,321,931
------------
3,745,017
------------
FOREIGN GOVERNMENTS (4.0%)
Province of British Columbia
4.625%, due 10/3/06 5,000,000 5,118,530
Province of Manitoba
2.75%, due 1/17/06 4,000,000 3,996,456
Province of Ontario
5.50%, due 10/1/08 4,000,000 4,240,836
Province of Quebec
5.00%, due 7/17/09 2,000,000 2,089,142
Republic of Italy
2.50%, due 3/31/06 3,000,000 2,980,062
United Mexican States
Series A
6.75%, due 9/27/34 1,000,000 987,500
------------
19,412,526
------------
REAL ESTATE (0.5%)
Westfield Capital Corp.
5.125%, due 11/15/14 (a) 2,625,000 2,612,387
------------
Total Foreign Bonds
(Cost $25,210,294) 25,769,930
------------
MORTGAGE-BACKED SECURITY (2.1%)
- ------------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS (COLLATERALIZED MORTGAGE OBLIGATIONS) (2.1%)
VMorgan Stanley Capital I
Series 2004-HQ3 Class A4
4.80%, due 1/13/41 10,000,000 10,023,206
------------
Total Mortgage-Backed Security (Cost $9,531,195) 10,023,206
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (52.3%)
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (4.1%)
2.625%, due 2/16/07 5,000,000 4,922,595
V 3.625%, due 11/14/08 10,000,000 9,970,580
3.75%, due 8/15/07 5,000,000 5,043,425
------------
19,936,600
------------
</Table>
M- 94 MainStay VP Bond Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (18.6%)
4.50%, due 6/1/18-7/1/19 $15,934,304 $ 15,898,676
5.00%, due 7/15/14-6/1/34 5,707,268 5,867,491
5.00%, due 1/15/19 TBA (b) 2,000,000 2,030,000
V 5.00%, due 2/15/35 TBA (b) 26,000,000 25,748,112
5.50%, due 12/1/33 212,375 215,946
V 5.50%, due 2/15/34 TBA (b) 17,000,000 17,223,125
6.00%, due 1/1/33 5,281,782 5,463,694
V 6.00%, due 8/1/34 13,751,941 14,212,881
6.50%, due 7/1/17 444,202 470,381
7.00%, due 1/1/33 2,571,518 2,725,412
------------
89,855,718
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (1.5%)
4.25%, due 5/15/09 5,000,000 5,087,440
5.25%, due 8/1/12 2,000,000 2,075,260
------------
7,162,700
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (15.0%)
4.00%, due 1/15/20 TBA (b) 3,000,000 2,927,814
4.50%, due 5/1/18 6,122,469 6,116,765
V 5.00%, due 1/1/18 6,914,522 7,033,826
5.00%, due 6/1/18-5/1/33 8,297,441 8,433,006
5.00%, due 2/15/34 TBA (b) 3,000,000 2,968,125
5.50%, due 5/1/16-5/1/33 8,911,742 9,084,700
V 5.50%, due 9/1/33 15,319,656 15,566,015
5.50%, due 2/15/35 TBA (b) 6,000,000 6,075,000
6.00%, due 2/1/14-9/1/32 1,108,251 1,159,350
V 6.00%, due 2/15/34 TBA (b) 8,000,000 8,252,496
6.50%, due 11/1/09-7/1/31 2,534,166 2,661,463
7.00%, due 2/1/27-4/1/31 1,446,031 1,537,024
7.50%, due 7/1/28 350,011 375,604
------------
72,191,188
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (1.8%)
5.50%, due 3/15/33-4/15/33 3,923,517 4,011,035
6.50%, due 4/15/32-6/15/32 3,788,762 3,991,853
7.00%, due 7/15/31 352,486 374,651
9.00%, due 4/15/26 218,677 245,446
------------
8,622,985
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
UNITED STATES TREASURY BONDS (1.0%)
5.375%, due 2/15/31 $ 3,250,000 $ 3,514,316
6.25%, due 8/15/23 1,000,000 1,170,742
------------
4,685,058
------------
UNITED STATES TREASURY NOTES (10.3%)
2.25%, due 2/15/07 3,100,000 3,047,446
2.875%, due 11/30/06 4,000,000 3,987,500
3.00%, due 11/15/07-2/15/08 9,500,000 9,435,390
V 3.50%, due 12/15/09 16,250,000 16,171,285
V 4.25%, due 11/15/14 11,425,000 11,454,899
5.00%, due 2/15/11 1,000,000 1,063,789
5.75%, due 8/15/10 4,250,000 4,679,152
------------
49,839,461
------------
Total U.S. Government &
Federal Agencies
(Cost $251,862,248) 252,293,710
------------
Total Long-Term Bonds
(Cost $464,577,101) 470,260,856
------------
SHORT-TERM INVESTMENTS (15.0%) (C)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (12.8%)
Caterpillar Financial Services Corp.
2.23%, due 1/27/05 10,000,000 9,983,891
Citigroup Global Markets Holdings, Inc.
2.25%, due 1/6/05 10,000,000 9,996,871
First Data Corp.
2.27%, due 1/3/05 5,000,000 4,999,369
Inter-American Development Bank
2.23%, due 1/18/05 10,635,000 10,623,790
Morgan Stanley Dean Witter & Co.
2.32%, due 1/5/05 10,000,000 9,997,419
NICOR, Inc.
2.25%, due 1/13/05 10,000,000 9,992,499
Rabobank USA Financial Corp.
2.17%, due 1/3/05 6,515,000 6,514,215
------------
Total Commercial Paper
(Cost $62,108,054) 62,108,054
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 95
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
FEDERAL AGENCY (2.2%)
Federal Home Loan Bank
2.255%, due 1/12/05 $10,500,000 $ 10,492,758
------------
Total Federal Agency
(Cost $10,492,758) 10,492,758
------------
Total Short-Term Investments
(Cost $72,600,812) 72,600,812
------------
Total Investments
(Cost $537,177,913) (e) 112.4% 542,861,668(f)
Liabilities in Excess of
Cash and Other Assets (12.4) (60,095,770)
----------- ------------
Net Assets 100.0% $482,765,898
=========== ============
</Table>
<Table>
(a) May be sold to institutional investors only.
(b) TBA: Securities purchased on a forward commitment basis
with an approximate principal amount and maturity date.
The actual principal amount and the maturity will be
determined upon settlement.
(c) Segregated as collateral for TBA's.
(d) Floating rate. Rate shown is the rate in effect at
December 31, 2004.
(e) The cost for federal income tax purposes is
$537,222,915.
(f) At December 31, 2004 net unrealized depreciation was
$5,638,753, 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 $6,994,187 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $1,355,434.
</Table>
M- 96 MainStay VP Bond Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $537,177,913) $542,861,668
Cash 1,122
Receivables:
Investment securities sold 85,487,034
Interest 4,260,304
Fund shares sold 1,115,220
Other assets 1,354
------------
Total assets 633,726,702
------------
LIABILITIES:
Payables:
Investment securities purchased 150,627,552
Adviser 101,708
Administrator 81,366
Shareholder communication 68,617
Fund shares redeemed 14,532
NYLIFE Distributors 12,684
Accrued expenses 54,345
------------
Total liabilities 150,960,804
------------
Net assets $482,765,898
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 316,349
Service Class 46,447
Additional paid-in capital 476,764,119
Accumulated undistributed net investment
income 230
Accumulated net realized loss on investments (45,002)
Net unrealized appreciation on investments 5,683,755
------------
Net assets $482,765,898
============
INITIAL CLASS
Net assets applicable to outstanding shares $421,045,500
============
Shares of capital stock outstanding 31,634,871
============
Net asset value per share outstanding $ 13.31
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 61,720,398
============
Shares of capital stock outstanding 4,644,736
============
Net asset value per share outstanding $ 13.29
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 97
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Interest $18,969,582
Dividends 17,006
-----------
Total income 18,986,588
-----------
EXPENSES:
Advisory 1,216,915
Administration 973,532
Shareholder communication 216,474
Distribution and service -- Service Class 103,087
Professional 86,437
Directors 34,399
Custodian 26,116
Portfolio pricing 21,480
Miscellaneous 34,010
-----------
Total expenses 2,712,450
-----------
Net investment income 16,274,138
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments 5,900,864
Net change in unrealized appreciation on
investments (2,941,022)
-----------
Net realized and unrealized gain on investments 2,959,842
-----------
Net increase in net assets resulting from
operations $19,233,980
===========
</Table>
M- 98 MainStay VP Bond Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 16,274,138 $ 19,448,494
Net realized gain on investments 5,900,864 13,627,665
Net change in unrealized
appreciation on investments (2,941,022) (10,541,500)
---------------------------
Net increase in net assets
resulting from operations 19,233,980 22,534,659
---------------------------
Dividends and distributions to
shareholders:
From net investment income:
Initial Class (14,969,635) (19,902,818)
Service Class (2,089,723) (768,712)
From net realized gain on
investments:
Initial Class (4,501,523) (11,892,619)
Service Class (658,893) (466,633)
---------------------------
Total dividends and distributions
to shareholders (22,219,774) (33,030,782)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 15,267,534 77,278,859
Service Class 42,943,428 19,885,771
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions:
Initial Class 19,471,158 31,795,437
Service Class 2,748,616 1,235,344
---------------------------
80,430,736 130,195,411
Cost of shares redeemed:
Initial Class (96,808,855) (96,297,101)
Service Class (2,505,761) (506,395)
---------------------------
(99,314,616) (96,803,496)
---------------------------
Increase (decrease) in net
assets derived from capital
share transactions (18,883,880) 33,391,915
---------------------------
Net increase (decrease) in net
assets (21,869,674) 22,895,792
NET ASSETS:
Beginning of year 504,635,572 481,739,780
---------------------------
End of year $482,765,898 $504,635,572
===========================
Accumulated undistributed net
investment income at end of year $ 230 $ --
===========================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 99
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
-------------------------------------------------------- ---------------------------
JUNE 4,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 13.41 $ 13.73 $ 13.11 $ 12.59 $ 12.24 $ 13.40 $ 14.33
-------- -------- -------- -------- -------- ------- -------
Net investment income 0.47 0.52(b) 0.60 0.65 0.85 0.46 0.28(b)
Net realized and unrealized
gain (loss) on investments 0.08 0.10 0.64 0.52 0.35 0.05 (0.28)
-------- -------- -------- -------- -------- ------- -------
Total from investment
operations 0.55 0.62 1.24 1.17 1.20 0.51 (0.00)(c)
-------- -------- -------- -------- -------- ------- -------
Less dividends and
distributions:
From net investment income (0.50) (0.59) (0.61) (0.65) (0.85) (0.47) (0.58)
From net realized gain on
investments (0.15) (0.35) (0.01) -- -- (0.15) (0.35)
-------- -------- -------- -------- -------- ------- -------
Total dividends and
distributions (0.65) (0.94) (0.62) (0.65) (0.85) (0.62) (0.93)
-------- -------- -------- -------- -------- ------- -------
Net asset value at end of
period $ 13.31 $ 13.41 $ 13.73 $ 13.11 $ 12.59 $ 13.29 $ 13.40
======== ======== ======== ======== ======== ======= =======
Total investment return 4.09% 4.52% 9.48% 9.27% 9.82% 3.83% 0.00%(d)(e)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 3.36% 3.75% 4.93% 5.66% 6.37% 3.11% 3.50%+(f)
Expenses 0.54% 0.54% 0.52% 0.52% 0.51% 0.79% 0.79%+
Portfolio turnover rate 335% 149% 76% 54% 58% 335% 149%
Net assets at end of period
(in 000's) $421,046 $485,033 $481,740 $372,983 $257,573 $61,720 $19,603
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Less than one cent per share.
(d) Total return is not annualized.
(e) Less than one tenth of a percent.
(f) Represents income earned for the year by the Initial Class
shares less service fee of 0.25%.
+ Annualized.
</Table>
M- 100 MainStay VP Bond Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (99.1%)+
- -------------------------------------------------------------------------------
AEROSPACE & DEFENSE (3.6%)
L-3 Communications Holdings, Inc. (b) 223,100 $ 16,339,844
VUnited Technologies Corp. 184,000 19,016,400
--------------
35,356,244
--------------
AIR FREIGHT & LOGISTICS (2.1%)
VFedEx Corp. 208,500 20,535,165
--------------
AUTOMOBILES (1.7%)
Harley-Davidson, Inc. 276,300 16,785,225
--------------
BEVERAGES (1.0%)
PepsiCo, Inc. 183,400 9,573,480
--------------
BIOTECHNOLOGY (4.1%)
Amgen, Inc. (a) 274,600 17,615,590
Genentech, Inc. (a) 223,700 12,178,228
Gilead Sciences, Inc. (a) 280,800 9,825,192
--------------
39,619,010
--------------
CAPITAL MARKETS (1.7%)
Morgan Stanley & Co. 297,000 16,489,440
--------------
CHEMICALS (1.9%)
Praxair, Inc. 420,700 18,573,905
--------------
COMMERCIAL SERVICES & SUPPLIES (1.6%)
Cendant Corp. 675,900 15,802,542
--------------
COMMUNICATIONS EQUIPMENT (4.3%)
Avaya, Inc. (a) 974,200 16,756,240
Cisco Systems, Inc. (a) 605,000 11,676,500
QUALCOMM, Inc. 327,100 13,869,040
--------------
42,301,780
--------------
COMPUTERS & PERIPHERALS (4.4%)
VDell, Inc. (a) 474,600 19,999,644
Hewlett-Packard Co. 567,000 11,889,990
International Business Machines Corp. 114,800 11,316,984
--------------
43,206,618
--------------
CONSUMER FINANCE (4.0%)
VAmerican Express Co. 364,900 20,569,413
Capital One Financial Corp. 220,000 18,526,200
--------------
39,095,613
--------------
DIVERSIFIED FINANCIAL SERVICES (1.1%)
Citigroup, Inc. 212,962 10,260,509
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.8%)
Agilent Technologies, Inc. (a) 342,300 $ 8,249,430
--------------
ENERGY EQUIPMENT & SERVICES (4.1%)
Baker Hughes, Inc. 306,000 13,057,020
BJ Services Co. (b) 278,900 12,980,006
Weatherford International Ltd. (a) 274,500 14,081,850
--------------
40,118,876
--------------
FOOD & STAPLES RETAILING (1.3%)
Walgreen Co. 327,300 12,558,501
--------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.3%)
Boston Scientific Corp. (a) 431,000 15,322,050
Fisher Scientific International, Inc. (a) 264,200 16,480,796
--------------
31,802,846
--------------
HEALTH CARE PROVIDERS & SERVICES (8.3%)
VCaremark Rx, Inc. (a) 498,700 19,663,741
Quest Diagnostics, Inc. 157,200 15,020,460
VUnitedHealth Group, Inc. 305,300 26,875,559
VWellPoint Health Networks, Inc. (a) 172,700 19,860,500
--------------
81,420,260
--------------
HOUSEHOLD DURABLES (6.8%)
Centex Corp 227,800 13,572,324
D.R. Horton, Inc. 448,700 18,087,097
Harman International Industries, Inc. 128,600 16,332,200
Lennar Corp.
Class A 323,400 18,330,312
--------------
66,321,933
--------------
INDUSTRIAL CONGLOMERATES (3.6%)
3M Co. 195,900 16,077,513
General Electric Co. 517,700 18,896,050
--------------
34,973,563
--------------
INTERNET & CATALOG RETAIL (1.0%)
eBay, Inc. (a) 85,200 9,907,056
--------------
IT SERVICES (1.6%)
Accenture Ltd. Class A (a) 353,400 9,541,800
First Data Corp. 136,800 5,819,472
--------------
15,361,272
--------------
LEISURE EQUIPMENT & PRODUCTS (1.1%)
Brunswick Corp. 211,300 10,459,350
--------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term investments.
May be subject to change daily.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 101
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------------------------
MACHINERY (5.6%)
VDanaher Corp. 346,100 $ 19,869,601
Dover Corp. 405,500 17,006,670
Illinois Tool Works, Inc. 197,800 18,332,104
--------------
55,208,375
--------------
MEDIA (1.7%)
Omnicom Group, Inc. 197,200 16,627,904
--------------
MULTILINE RETAIL (3.5%)
Kohl's Corp. (a) 332,100 16,329,357
Target Corp. 355,300 18,450,729
--------------
34,780,086
--------------
PHARMACEUTICALS (3.6%)
VJohnson & Johnson 305,200 19,355,784
Teva Pharmaceutical Industries Ltd. ADR (b)(c) 533,800 15,939,268
--------------
35,295,052
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (4.6%)
Analog Devices, Inc. 204,100 7,535,372
Applied Materials, Inc. (a) 370,500 6,335,550
Intel Corp. 426,600 9,978,174
KLA-Tencor Corp. (a)(b) 175,600 8,179,448
Maxim Integrated Products, Inc. 158,600 6,723,054
Texas Instruments, Inc. 242,500 5,970,350
--------------
44,721,948
--------------
SOFTWARE (6.0%)
Electronic Arts, Inc. (a) 109,100 6,729,288
Microsoft Corp. 506,400 13,525,944
Oracle Corp. (a) 864,600 11,862,312
Symantec Corp. (a) 705,400 18,171,104
VERITAS Software Corp. (a) 308,200 8,799,110
--------------
59,087,758
--------------
SPECIALTY RETAIL (6.8%)
Bed Bath & Beyond, Inc. (a) 409,800 16,322,334
Best Buy Co., Inc. 254,500 15,122,390
Lowe's Cos., Inc. 315,400 18,163,886
TJX Cos., Inc. (The) 653,000 16,409,890
--------------
66,018,500
--------------
TEXTILES, APPAREL & LUXURY GOODS (3.9%)
VCoach, Inc. (a) 338,300 19,080,120
NIKE, Inc. Class B 208,200 18,881,658
--------------
37,961,778
--------------
Total Common Stocks
(Cost $784,414,803) 968,474,019
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (2.3%)
- -------------------------------------------------------------------------------
COMMERCIAL PAPER (0.2%)
UBS Finance (Delaware) LLC
2.180%, due 1/3/2005 $2,025,000 2,024,755
--------------
Total Commercial Paper
(Cost $2,024,755) 2,024,755
--------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.1%)
AIM Institutional Funds Group (d) 976,195 976,195
--------------
Total Investment Company
(Cost $976,195) 976,195
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.1%)
Banc of America Securities LLC
2.3923%, due 1/3/05 (d) $ 640,000 640,000
--------------
Total Master Note
(Cost $640,000) 640,000
--------------
REPURCHASE AGREEMENTS (1.9%)
Credit Suisse First Boston LLC
2.3624%, dated 12/31/04 due 1/3/05
Proceeds at Maturity
$10,101,988 (d)
(Collateralized by
Various Bonds
with a Principal Amount of $12,033,977 and a
Market Value of $10,302,062) (e) 10,100,000 10,100,000
Dresdner Kleinwort Wasserstein Securities LLC
2.3824%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,000,199 (d)
(Collateralized by Various
Bonds with a Principal
Amount of $1,048,034 and a Market Value of
$1,050,041) (e) 1,000,000 1,000,000
</Table>
M- 102 MainStay VP Capital Appreciation Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
Lehman Brothers, Inc.
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$2,043,402 (d)
(Collateralized by Various
Bonds with a Principal
Amount of $2,779,626
and a Market Value of
$2,083,825) (e) $2,043,000 $ 2,043,000
Merrill Lynch & Co., Inc.
2.3925%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$3,668,731 (d)
(Collateralized by Various
Bonds with a Principal
Amount of $3,620,164
and a Market Value of
$3,851,406) (e) 3,668,000 3,668,000
Morgan Stanley & Co.
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$2,100,413 (d)
(Collateralized by Various
Bonds with a Principal
Amount of $3,684,244
and a Market Value of
$2,214,929) (e) 2,100,000 2,100,000
--------------
Total Repurchase Agreements
(Cost $18,911,000) 18,911,000
--------------
Total Short-Term Investments
(Cost $22,551,950) 22,551,950
--------------
Total Investments
(Cost $806,966,753) (f) 101.4% $ 991,025,969(g)
Liabilities in Excess of Cash and Other Assets (1.4) (13,580,564)
---------- --------------
Net Assets 100.0% $ 977,445,405
========== ==============
</Table>
<Table>
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is
out on loan.
(c) ADR -- American Depositary Receipt.
(d) Represents a security, or a portion thereof, purchased
with cash collateral received for securities on loan.
(e) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(f) The cost for federal income tax purposes is
$808,229,871.
(g) At December 31, 2004 net unrealized appreciation was
$182,796,098, based on cost for federal income tax pur-
poses. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $197,929,883 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $15,133,785.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 103
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $806,966,753) including
$19,925,394 market value of securities
loaned $ 991,025,969
Cash 2,274
Receivables:
Fund shares sold 7,474,852
Dividends and interest 420,895
Other Assets 2,778
--------------
Total assets 998,926,768
--------------
LIABILITIES:
Securities lending collateral 20,527,195
Payables:
Adviser 293,254
Fund shares redeemed 244,462
Shareholder communication 179,722
Administrator 162,919
Custodian 13,290
NYLIFE Distributors 9,916
Accrued expenses 50,605
--------------
Total liabilities 21,481,363
--------------
Net assets $ 977,445,405
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 432,093
Service Class 22,457
Additional paid-in capital 1,068,618,362
Accumulated undistributed net investment
income 36,366
Accumulated net realized loss on investments (275,723,089)
Net unrealized appreciation on investments 184,059,216
--------------
Net assets $ 977,445,405
==============
INITIAL CLASS
Net assets applicable to outstanding shares $ 929,226,910
==============
Shares of capital stock outstanding 43,209,291
==============
Net asset value per share outstanding $ 21.51
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 48,218,495
==============
Shares of capital stock outstanding 2,245,713
==============
Net asset value per share outstanding $ 21.47
==============
</Table>
M- 104 MainStay VP Capital Appreciation Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 8,593,494
Interest 104,881
Income from securities loaned -- net 53,908
-----------
Total Income 8,752,283
-----------
EXPENSES:
Advisory 3,544,528
Administration 1,969,182
Shareholder communication 558,284
Professional 111,109
Distribution and service -- Service Class 82,015
Custodian 81,983
Directors 67,753
Portfolio pricing 2,680
Miscellaneous 53,571
-----------
Total expenses 6,471,105
Reimbursement of advisory fee (33,656)
-----------
Net expenses 6,437,449
-----------
Net investment income 2,314,834
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (37,683,374)
Net change in unrealized appreciation on
investments 71,793,482
-----------
Net realized and unrealized gain on investments 34,110,108
-----------
Net increase in net assets resulting from
operations $36,424,942
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$20,865.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 105
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 2,314,834 $ 1,834,479
Net realized loss on investments (37,683,374) (18,610,933)
Net change in unrealized
appreciation (depreciation) on
investments 71,793,482 234,800,097
-------------------------------
Net increase in net assets
resulting from operations 36,424,942 218,023,643
-------------------------------
Dividends to shareholders:
From net investment income:
Initial Class (2,244,209) (1,999,649)
Service Class (34,898) (18,614)
-------------------------------
Total dividends to shareholders (2,279,107) (2,018,263)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 25,995,212 41,724,882
Service Class 32,764,947 14,725,797
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 2,244,209 1,999,649
Service Class 34,898 18,614
-------------------------------
61,039,266 58,468,942
Cost of shares redeemed:
Initial Class (142,824,843) (89,669,709)
Service Class (2,035,070) (94,205)
-------------------------------
(144,859,913) (89,763,914)
-------------------------------
Decrease in net assets derived
from capital share
transactions (83,820,647) (31,294,972)
-------------------------------
Net increase (decrease) in net
assets (49,674,812) 184,710,408
NET ASSETS:
Beginning of year 1,027,120,217 842,409,809
-------------------------------
End of year $ 977,445,405 $1,027,120,217
===============================
Accumulated undistributed net
investment income at end of year $ 36,366 $ 639
===============================
</Table>
M- 106 MainStay VP Capital Appreciation Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2004 2003 2002 2001 2000
Net asset value at beginning
of period $ 20.70 $ 16.33 $ 23.64 $ 30.81 $ 36.98
-------- ---------- -------- ---------- ----------
Net investment income (loss) 0.05 0.04(b) 0.02 0.02 (0.05)(b)
Net realized and unrealized
gain (loss) on investments 0.81 4.37 (7.31) (7.17) (3.73)
-------- ---------- -------- ---------- ----------
Total from investment
operations 0.86 4.41 (7.29) (7.15) (3.78)
-------- ---------- -------- ---------- ----------
Less dividends and
distributions:
From net investment income (0.05) (0.04) (0.02) (0.02) --
From net realized gain on
investments -- -- -- -- (2.39)
-------- ---------- -------- ---------- ----------
Total dividends and
distributions (0.05) (0.04) (0.02) (0.02) (2.39)
-------- ---------- -------- ---------- ----------
Net asset value at end of
period $ 21.51 $ 20.70 $ 16.33 $ 23.64 $ 30.81
======== ========== ======== ========== ==========
Total investment return 4.16% 26.99% (30.83%) (23.22%) (10.72%)
Ratios (to average net
assets)/ Supplemental Data:
Net investment income
(loss) 0.24% 0.20% 0.11% 0.09% (0.15%)
Expenses 0.65% 0.64% 0.64% 0.63% 0.63%
Portfolio turnover rate 34% 26% 72% 46% 33%
Net assets at end of period
(in 000's) $929,227 $1,011,538 $842,410 $1,345,799 $1,813,776
<Caption>
SERVICE CLASS
---------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
2004 2003
Net asset value at beginning
of period $ 20.68 $ 18.43
------- -------
Net investment income (loss) 0.02 0.01(b)
Net realized and unrealized
gain (loss) on investments 0.79 2.27
------- -------
Total from investment
operations 0.81 2.28
------- -------
Less dividends and
distributions:
From net investment income (0.02) (0.03)
From net realized gain on
investments -- --
------- -------
Total dividends and
distributions (0.02) (0.03)
------- -------
Net asset value at end of
period $ 21.47 $ 20.68
======= =======
Total investment return 3.90% 12.36%(c)
Ratios (to average net
assets)/ Supplemental Data:
Net investment income
(loss) (0.01%) (0.05%)+(d)
Expenses 0.90% 0.89%+
Portfolio turnover rate 34% 26%
Net assets at end of period
(in 000's) $48,218 $15,582
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Total return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 107
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
SHORT-TERM INVESTMENTS (111.0%)+
- ------------------------------------------------------------------------------
BANK NOTE (1.1%)
Bank of America Corp.
7.875%, due 5/16/05 (c) $ 3,515,000 $ 3,588,492
------------
COMMERCIAL PAPER (44.0%)
Abbey National North America
2.20%, due 1/3/05 5,000,000 4,999,389
ABN-AMRO North America Finance, Inc.
1.91%, due 1/21/05 2,900,000 2,896,923
2.32%, due 3/3/05 4,250,000 4,233,293
American Express Credit Corp.
1.90%, due 1/3/05 7,000,000 6,999,261
ANZ (DE), Inc.
2.07%, due 2/14/05 3,900,000 3,890,133
2.43%, due 4/7/05 2,825,000 2,806,694
Barclays U.S. Funding Corp.
2.10%, due 2/3/05 3,000,000 2,994,225
2.35%, due 2/15/05 2,700,000 2,692,069
BellSouth Corp.
2.05%, due 2/8/05 (a) 3,425,000 3,417,589
BP Amoco Capital PLC
2.50%, due 1/4/05 5,250,000 5,249,016
Dexia Delaware LLC
2.18%, due 1/27/05 1,150,000 1,148,189
2.37%, due 2/14/05 2,575,000 2,567,541
General Electric Capital Corp.
2.01%, due 3/21/05 2,450,000 2,439,193
2.04%, due 1/24/05 3,000,000 2,996,090
Harvard University
1.85%, due 2/10/05 3,200,000 3,193,422
2.10%, due 1/3/05 4,500,000 4,499,475
HBOS Treasury Services
2.42%, due 3/18/05 2,575,000 2,561,845
ING U.S. Funding LLC
2.44%, due 3/21/05 3,000,000 2,983,937
2.45%, due 5/2/05 975,000 966,971
International Business Machines Corp.
2.17%, due 1/27/05 1,225,000 1,223,080
KFW International Finance, Inc.
1.98%, due 3/9/05 (a) 2,825,000 2,814,590
2.42%, due 5/11/05 (a) 3,700,000 3,667,666
2.58%, due 7/15/05 (a) 3,225,000 3,179,931
Lloyds Bank PLC
1.97%, due 3/17/05 3,000,000 2,987,625
2.05%, due 3/10/05 3,000,000 2,988,383
Nestle Capital Corp.
1.95%, due 1/18/05 (a) 3,100,000 3,097,145
Pfizer, Inc.
2.36%, due 4/4/05 (a) 3,000,000 2,981,710
</Table>
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
COMMERCIAL PAPER (CONTINUED)
Prudential Funding LLC
1.80%, due 2/4/05 $ 4,000,000 $ 3,993,200
Rabobank USA Financial Corp.
2.098%, due 4/12/05 3,000,000 2,982,241
2.17%, due 1/3/05 9,000,000 8,998,915
2.34%, due 3/18/05 1,950,000 1,940,366
Santander Hispano Finance Delaware Inc.
2.10%, due 3/24/05 3,000,000 2,985,650
SBC Communications, Inc.
2.06%, due 1/19/05 (a) 4,000,000 3,995,880
Shell Finance (UK) PLC
2.00%, due 1/28/05 4,000,000 3,994,000
Societe Generale N.A., Inc.
2.00%, due 1/27/05 2,575,000 2,571,281
2.61%, due 6/20/05 2,000,000 1,975,350
Svenska Handelsbanken AB
1.97%, due 1/31/05 3,000,000 2,995,075
UBS Finance Delaware LLC
2.20%, due 1/3/05 9,000,000 8,998,900
2.345%, due 1/3/05 3,950,000 3,949,485
------------
135,855,728
------------
CORPORATE BOND (1.3%)
Metropolitan Life Insurance Co.
Series EXL
2.4575%, due 4/28/08 (a)(b)(c) 4,000,000 4,000,000
------------
MEDIUM-TERM NOTES (7.3%)
American Express Credit Corp.
Series B
2.3813%, due 3/5/08 (b)(c) 4,000,000 4,000,000
Series B
2.43%, due 9/30/05 (b)(c) 3,500,000 3,501,012
Bank One Corp.
Series C
2.30%, 7/25/05 (b)(c) 3,000,000 3,004,225
Household Finance Corp.
2.41%, due 8/18/05 (b)(c) 4,000,000 4,003,225
J.P. Morgan Chase & Co.
Series C
2.61%, due 2/24/05 (b)(c) 4,000,000 4,001,622
Morgan Stanley
Series C
2.5225%, due 8/15/05 (b)(c) 4,000,000 4,003,700
------------
22,513,784
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
</Table>
M- 108 MainStay VP Cash Management Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
U.S. GOVERNMENT & FEDERAL AGENCIES (57.3%)
Federal Home Loan Banks
1.36%, due 4/1/05 (b)(c) $ 3,000,000 $ 2,999,856
1.60%, due 3/1/05 (b)(c) 3,000,000 3,000,000
1.91%, due 10/5/05 (b)(c) 6,000,000 5,996,409
4.63%, due 4/15/05 (c) 3,000,000 3,020,883
Federal Home Loan Banks
(Discount Notes)
1.92%, due 1/7/05 2,250,000 2,249,280
1.925%, due 3/11/05 4,100,000 4,084,873
1.94%, due 3/18/05 3,500,000 3,485,665
1.95%, due 1/14/05 900,000 899,366
1.975%, due 1/21/04 3,940,000 3,935,677
2.355%, due 3/11/05 3,000,000 2,986,459
Federal National Mortgage Association (Discount
Notes)
1.765%, due 1/12/05 3,100,000 3,098,328
1.80%, due 1/7/05-2/2/05 8,000,000 7,992,400
1.82%, due 1/25/05 4,000,000 3,995,147
1.87%, due 2/7/05 4,125,000 4,117,072
1.98%, due 2/22/05 1,600,000 1,595,424
2.00%, due 1/26/05 3,000,000 2,995,833
2.03%, due 3/9/05 5,465,000 5,444,353
2.12%, due 3/3/05 2,150,000 2,142,277
2.24%, due 3/15/05 4,175,000 4,156,036
2.33%, due 2/16/05 3,275,000 3,265,250
2.46%, due 5/25/05 3,000,000 2,970,480
2.48%, due 4/27/05 2,500,000 2,480,022
2.54%, due 5/18/05-6/1/05 6,100,000 6,038,962
2.64%, due 6/22/05 3,650,000 3,603,961
Freddie Mac (Discount Notes)
1.81%, due 1/11/05 1,300,000 1,299,343
1.82%, due 1/11/05 3,000,000 2,998,492
1.84%, due 1/10/05 2,800,000 2,798,712
1.99%, due 2/14/05 3,000,000 2,992,703
</Table>
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
Freddie Mac (Discount Notes) (continued)
2.00%, due 2/1/05-2/22/05 $ 8,775,000 $ 8,754,316
2.02%, due 3/7/05 3,000,000 2,989,058
2.05%, due 3/8/05-3/22/05 6,225,000 6,199,033
2.06%, due 3/14/05 2,575,000 2,564,391
2.07%, due 3/29/05 2,870,000 2,855,643
2.11%, due 3/22/05 4,100,000 4,080,776
2.17%, due 4/5/05 1,500,000 1,491,501
2.27%, due 3/28/05 2,550,000 2,536,172
2.33%, due 2/23/05 4,100,000 4,085,936
2.38%, due 4/5/05 3,925,000 3,900,608
2.40%, due 4/14/05 2,474,000 2,457,012
2.41%, due 5/3/05 2,600,000 2,578,765
2.44%, due 5/9/05-5/10/05 10,600,000 10,507,593
2.475%, due 5/2/05 3,000,000 2,975,044
2.505%, due 5/24/05 3,250,000 3,217,661
2.63%, due 6/21/05 2,750,000 2,715,646
United States Treasury Notes
1.50%, due 2/28/05 (c) 8,400,000 8,395,732
1.625%, due 3/31/05 (c) 7,800,000 7,793,728
------------
176,741,878
------------
Total Short-Term Investments
(Amortized Cost $342,699,882) (d) 111.0% 342,699,882
Liabilities in Excess of
Cash and Other Assets (11.0) (34,040,326)
----------- ------------
Net Assets 100.0% $308,659,556
=========== ============
</Table>
<Table>
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at
December 31, 2004.
(c) Coupon interest bearing security.
(d) The cost stated also represents the aggregate cost for
federal income tax purposes.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 109
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
The table below sets forth the diversification of the Cash Management Portfolio
investments by industry.
<Table>
<Caption>
AMORTIZED
COST PERCENT+
INDUSTRY
Banks $ 81,981,710 26.5%
Computer Systems 1,223,080 0.4
Consumer Financial Services 4,003,225 1.3
Diversified Financial Services 5,435,283 1.7
Education 7,692,897 2.5
Finance 18,503,972 6.0
Health Care -- Medical Products 2,981,710 1.0
Insurance 7,993,200 2.6
Investment Bank/Brokerage 4,001,623 1.3
Oil -- Integrated Domestic 3,994,000 1.3
Special Purpose Finance 20,733,835 6.7
Telecommunication Services 3,995,880 1.3
Telephone 3,417,589 1.1
U.S. Government & Federal Agencies# 176,741,878 57.3
------------ --------
Total Investments 342,699,882 111.0
Liabilities in Excess of Cash and Other Assets (34,040,326) (11.0)
------------ --------
Net Assets $308,659,556 100.0%
============ ========
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
# The Portfolio will invest more than 25% of the market
value of its total assets in the securities of banks and
bank holding companies, including certificates of deposit
and bankers' acceptances.
</Table>
M- 110 MainStay VP Cash Management Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value (amortized
cost $342,699,882) $342,699,882
Cash 30,856
Receivables:
Interest 235,614
Fund shares sold 224,056
Other assets 932
------------
Total assets 343,191,340
------------
LIABILITIES:
Payables:
Fund shares redeemed 34,289,433
Adviser 64,248
Administrator 51,399
Shareholder communication 49,198
Custodian 5,312
Accrued expenses 35,477
Dividend payable 36,717
------------
Total liabilities 34,531,784
------------
Net assets $308,659,556
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
700 million shares authorized $ 3,086,666
Additional paid-in capital 305,574,167
Accumulated net realized loss on investments (1,277)
------------
Net assets applicable to outstanding shares $308,659,556
============
Shares of capital stock outstanding 308,666,641
============
Net asset value per share outstanding $ 1.00
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 111
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Interest $4,907,419
----------
EXPENSES:
Advisory 889,971
Administration 711,976
Shareholder communication 198,976
Professional 58,292
Custodian 33,853
Directors 25,587
Portfolio pricing 2,576
Miscellaneous 24,344
----------
Total expenses 1,945,575
Reimbursement of advisory fee (399)
----------
Net expenses 1,945,176
----------
Net investment income 2,962,243
----------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (1,277)
----------
Net increase in net assets resulting from
operations $2,960,966
==========
</Table>
M- 112 MainStay VP Cash Management Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 2,962,243 $ 3,014,546
Net realized gain (loss) on
investments (1,277) 5,686
-------------------------------
Net increase in net assets
resulting from operations 2,960,966 3,020,232
-------------------------------
Dividends and distributions to
shareholders:
From net investment income (2,962,243) (3,014,546)
From net realized gain on
investments (4,788) (27,721)
-------------------------------
Total dividends and distributions
to shareholders (2,967,031) (3,042,267)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares 567,122,376 939,340,790
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions 2,967,031 3,042,267
-------------------------------
570,089,407 942,383,057
Cost of shares redeemed (621,398,239) (1,100,734,862)
-------------------------------
Decrease in net assets derived
from capital share transactions (51,308,832) (158,351,805)
-------------------------------
Net decrease in net assets (51,314,897) (158,373,840)
NET ASSETS:
Beginning of year 359,974,453 518,348,293
-------------------------------
End of year $ 308,659,556 $ 359,974,453
===============================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 113
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
2004 2003 2002 2001 2000
Net asset value at beginning
of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.01 0.01 0.01 0.04 0.06
Net realized and unrealized
gain on investments 0.00(a) 0.00(a) 0.00(a) 0.00(a) --
-------- -------- -------- -------- --------
Total from investment
operations 0.01 0.01 0.01 0.04 0.06
-------- -------- -------- -------- --------
Less dividends and
distributions:
From net investment income (0.01) (0.01) (0.01) (0.04) (0.06)
From net realized gain on
investments (0.00)(a) (0.00)(a) (0.00)(a) (0.00)(a) --
-------- -------- -------- -------- --------
Total dividends and
distributions (0.01) (0.01) (0.01) (0.04) (0.06)
-------- -------- -------- -------- --------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return 0.85% 0.67% 1.36% 3.84% 6.06%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 0.83% 0.67% 1.33% 3.57% 5.87%
Expenses 0.55% 0.55% 0.55% 0.54% 0.52%
Net assets at end of year (in
000's) $308,660 $359,974 $518,348 $481,171 $305,915
</Table>
<Table>
(a) Less than one cent per share.
</Table>
M- 114 MainStay VP Cash Management Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (99.3%)+
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.2%)
Boeing Co. (The) 181,882 $ 9,416,031
General Dynamics Corp. 20,340 2,127,564
Honeywell International, Inc. 32,578 1,153,587
Lockheed Martin Corp. 15,705 872,413
Northrop Grumman Corp. 43,309 2,354,277
Precision Castparts Corp. 9,264 608,460
Raytheon Co. 119,145 4,626,400
------------
21,158,732
------------
AIR FREIGHT & LOGISTICS (0.6%)
C.H. Robinson Worldwide, Inc. 1,786 99,159
CNF, Inc. 6,398 320,540
FedEx Corp. 25,070 2,469,144
J.B. Hunt Transport Services, Inc. 10,142 454,869
Ryder System, Inc. 16,509 788,635
United Parcel Service, Inc. Class B 20,086 1,716,549
------------
5,848,896
------------
AIRLINES (0.0%) (B)
AirTran Holdings, Inc. (a) 26,580 284,406
Alaska Air Group, Inc. (a) 3,395 113,699
Delta Air Lines, Inc. (a) 1 7
------------
398,112
------------
AUTO COMPONENTS (0.4%)
BorgWarner, Inc. 9,539 516,728
Dana Corp. 29,919 518,496
Delphi Corp. 68,549 618,312
Goodyear Tire & Rubber Co. (The) (a) 7,373 108,088
Johnson Controls, Inc. 22,030 1,397,583
Lear Corp. 2,944 179,614
Visteon Corp. 33,438 326,689
------------
3,665,510
------------
AUTOMOBILES (1.0%)
Ford Motor Co. 473,164 6,927,121
General Motors Corp. 57,794 2,315,228
------------
9,242,349
------------
BEVERAGES (1.1%)
Adolph Coors Co. Class B 9,605 726,810
Coca-Cola Co. (The) 63,828 2,657,160
Coca-Cola Enterprises, Inc. 132,131 2,754,931
Constellation Brands, Inc. Class A (a) 6,567 305,431
Pepsi Bottling Group, Inc. (The) 78,809 2,130,995
PepsiAmericas, Inc. 23,732 504,068
PepsiCo, Inc. 27,095 1,414,359
------------
10,493,754
------------
BIOTECHNOLOGY (1.6%)
Amgen, Inc. (a) 122,025 7,827,904
Biogen Idec, Inc. (a) 58,777 3,915,136
Cephalon, Inc. (a) 5,726 291,339
</Table>
<Table>
<Caption>
SHARES VALUE
BIOTECHNOLOGY (CONTINUED)
Chiron Corp. (a) 35,461 $ 1,181,915
Gilead Sciences, Inc. (a) 18,946 662,921
Millennium Pharmaceuticals, Inc. (a) 94,626 1,146,867
Vertex Pharmaceuticals, Inc. (a) 3,404 35,980
------------
15,062,062
------------
BUILDING PRODUCTS (0.5%)
Masco Corp. 112,680 4,116,201
York International Corp. 12,810 442,457
------------
4,558,658
------------
CAPITAL MARKETS (1.9%)
A.G. Edwards, Inc. 5,862 253,297
Bank of New York Co., Inc. (The) 201,273 6,726,544
Bear Stearns Cos., Inc. (The) 4,366 446,685
E*TRADE Financial Corp. (a) 95,625 1,429,594
Eaton Vance Corp. 2,795 145,759
Franklin Resources, Inc. 21,236 1,479,087
Janus Capital Group, Inc. 51,551 866,572
LaBranche & Co., Inc. (a) 2,596 23,260
Legg Mason, Inc. 18,868 1,382,270
Merrill Lynch & Co., Inc. 79,858 4,773,113
Raymond James Financial, Inc. 6,458 200,069
SEI Investments Co. 4,350 182,396
T. Rowe Price Group, Inc. 5,450 338,990
------------
18,247,636
------------
CHEMICALS (1.7%)
Albemarle Corp. 1,770 68,517
Cabot Corp. 5,412 209,336
Crompton Corp. 7,162 84,512
Cytec Industries, Inc. 1,652 84,946
Dow Chemical Co. (The) 144,009 7,129,885
E.I. du Pont de Nemours & Co. 66,961 3,284,437
Eastman Chemical Co. 9,527 549,994
Engelhard Corp. 5,519 169,268
Ferro Corp. 12,960 300,542
FMC Corp. (a) 6,316 305,063
Lyondell Chemical Co. 12,425 359,331
Monsanto Co. 33,006 1,833,483
PPG Industries, Inc. 20,225 1,378,536
Praxair, Inc. 14,013 618,674
------------
16,376,524
------------
COMMERCIAL BANKS (5.4%)
Bank of America Corp. 284,342 13,361,231
BB&T Corp. 102,404 4,306,088
Comerica, Inc. 7,306 445,812
Fifth Third Bancorp 33,900 1,602,792
First Horizon National Corp. 14,498 625,009
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V AMONG THE PORTFOLIO'S 10 LARGEST HOLDINGS, EXCLUDING SHORT-TERM INVESTMENTS.
MAY BE SUBJECT TO CHANGE DAILY.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 115
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
COMMERCIAL BANKS (CONTINUED)
First National Bankshares of Florida 140,808 $ 3,365,311
Hibernia Corp. Class A 33,600 991,536
Huntington Bancshares, Inc. 9,576 237,293
National City Corp. 171,370 6,434,944
Regions Financial Corp. 18,149 645,923
SunTrust Banks, Inc. 55,308 4,086,155
TCF Financial Corp. 12,452 400,207
U.S. Bancorp 116,410 3,645,961
Unizan Financial Corp. 26,607 701,094
Wachovia Corp. 6,373 335,220
Wells Fargo & Co. 167,591 10,415,781
Wilmington Trust Corp. 2,865 103,570
------------
51,703,927
------------
COMMERCIAL SERVICES & SUPPLIES (1.3%)
Allied Waste Industries, Inc. (a) 99,519 923,536
Apollo Group, Inc. Class A (a) 419 33,817
Brink's Co. (The) 14,811 585,331
Career Education Corp. (a) 29,138 1,165,520
Cendant Corp. 277,202 6,480,983
H&R Block, Inc. 11,289 553,161
Korn/Ferry International (a) 792 16,434
Pitney Bowes, Inc. 20,156 932,820
Sotheby's Holdings, Inc. Class A (a) 1,310 23,790
United Rentals, Inc. (a) 19,896 376,034
Waste Management, Inc. 42,783 1,280,923
------------
12,372,349
------------
COMMUNICATIONS EQUIPMENT (4.0%)
3Com Corp. (a) 117,352 489,358
ADTRAN, Inc. 23,620 452,087
Andrew Corp. (a) 48,149 656,271
VCisco Systems, Inc. (a) 755,532 14,581,768
CommScope, Inc. (a) 6,816 128,822
Comverse Technology, Inc. (a) 656 16,039
Corning, Inc. (a) 64,841 763,179
Harris Corp. 14,232 879,395
JDS Uniphase Corp. (a) 366,276 1,161,095
Lucent Technologies, Inc. (a) 316,994 1,191,897
Motorola, Inc. 532,196 9,153,771
QUALCOMM, Inc. 195,205 8,276,692
Tellabs, Inc. (a) 30,027 257,932
------------
38,008,306
------------
COMPUTERS & PERIPHERALS (3.9%)
Apple Computer, Inc. (a) 66,861 4,305,848
Dell, Inc. (a) 53,790 2,266,711
Hewlett-Packard Co. 289,498 6,070,773
Imation Corp. 10,519 334,820
</Table>
<Table>
<Caption>
SHARES VALUE
COMPUTERS & PERIPHERALS (CONTINUED)
VInternational Business Machines Corp. 203,120 $ 20,023,570
Lexmark International, Inc. Class A (a) 736 62,560
NCR Corp. (a) 8,156 564,640
Network Appliance, Inc. (a) 2,665 88,531
Storage Technology Corp. (a) 28,637 905,215
Sun Microsystems, Inc. (a) 502,027 2,700,905
------------
37,323,573
------------
CONSTRUCTION & ENGINEERING (0.0%) (B)
Granite Construction, Inc. 1,742 46,337
Quanta Services, Inc. (a) 5,020 40,160
------------
86,497
------------
CONSTRUCTION MATERIALS (0.1%)
Martin Marietta Materials, Inc. 2,363 126,799
Vulcan Materials Co. 13,210 721,398
------------
848,197
------------
CONSUMER FINANCE (1.2%)
American Express Co. 34,880 1,966,186
AmeriCredit Corp. (a) 14,923 364,867
Capital One Financial Corp. 62,225 5,239,967
MBNA Corp. 107,357 3,026,394
Providian Financial Corp. (a) 74,599 1,228,646
------------
11,826,060
------------
CONTAINERS & PACKAGING (0.3%)
Ball Corp. 29,083 1,279,070
Longview Fibre Co. 11,063 200,683
Pactiv Corp. (a) 13,108 331,501
Sealed Air Corp. (a) 10,927 582,081
Sonoco Products Co. 4,364 129,393
Temple-Inland, Inc. 9,511 650,553
------------
3,173,281
------------
DISTRIBUTORS (0.0%) (B)
Genuine Parts Co. 7,477 329,437
------------
DIVERSIFIED FINANCIAL SERVICES (2.6%)
CIT Group, Inc. 9,253 423,973
VCitigroup, Inc. 305,334 14,710,992
GATX Corp. 12,906 381,501
JPMorgan Chase & Co. 175,674 6,853,043
Principal Financial Group, Inc. 54,185 2,218,334
------------
24,587,843
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (4.2%)
ALLTEL Corp. 17,269 1,014,727
AT&T Corp. 205,419 3,915,286
BellSouth Corp. 121,103 3,365,452
CenturyTel, Inc. 23,692 840,355
Cincinnati Bell, Inc. (a) 31,839 132,132
Citizens Communications Co. 54,974 758,091
</Table>
M- 116 MainStay VP Common Stock Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
Qwest Communications International, Inc. (a) 404,184 $ 1,794,577
SBC Communications, Inc. 403,682 10,402,885
Sprint Corp. 93,021 2,311,572
VVerizon Communications, Inc 375,302 15,203,484
------------
39,738,561
------------
ELECTRIC UTILITIES (2.3%)
Allegheny Energy, Inc. (a) 34,192 673,924
Alliant Energy Corp. 4,885 139,711
American Electric Power Co., Inc. 84,702 2,908,667
CenterPoint Energy, Inc. 53,354 602,900
DPL, Inc. 5,224 131,175
DTE Energy Co. 7,425 320,240
Duquesne Light Holdings, Inc. 9,964 187,821
Edison International 83,489 2,674,153
FirstEnergy Corp. 10,014 395,653
FPL Group, Inc. 16,195 1,210,576
Great Plains Energy, Inc. 3,041 92,082
IDACORP, Inc. 10,035 306,770
Northeast Utilities 33,099 623,916
Pinnacle West Capital Corp. 23,529 1,044,923
PNM Resources, Inc. 13,133 332,134
PPL Corp. 23,650 1,260,072
Progress Energy, Inc. 10,479 474,070
Public Service Enterprise Group, Inc. 112,756 5,837,378
TXU Corp. 35,138 2,268,509
Xcel Energy, Inc. 51,221 932,222
------------
22,416,896
------------
ELECTRICAL EQUIPMENT (0.5%)
AMETEK, Inc. 1,456 51,936
Cooper Industries, Ltd. Class A 4,042 274,411
Emerson Electric Co. 36,633 2,567,973
Hubbell, Inc. Class A 2,700 130,572
Hubbell, Inc. Class B 1,317 68,879
Power-One, Inc. (a) 25,701 229,253
Rockwell Automation, Inc. 15,455 765,795
Thomas & Betts Corp. (a) 15,236 468,507
------------
4,557,326
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.9%)
Avnet, Inc. (a) 37,268 679,768
Jabil Circuit, Inc. (a) 46,422 1,187,475
KEMET Corp. (a) 26,758 239,484
Molex, Inc. 44,109 1,323,270
National Instruments Corp. 24,479 667,053
PerkinElmer, Inc. 33,015 742,507
Plexus Corp. (a) 13,358 173,787
Sanmina-SCI Corp. (a) 140,602 1,190,899
Tech Data Corp. (a) 4,989 226,501
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS (CONTINUED)
Tektronix, Inc. 1,036 $ 31,297
Thermo Electron Corp. (a) 18,882 570,048
Varian, Inc. (a) 2,986 122,456
Vishay Intertechnology, Inc. (a) 47,850 718,707
Waters Corp. (a) 10,405 486,850
------------
8,360,102
------------
ENERGY EQUIPMENT & SERVICES (0.2%)
Grant Prideco, Inc. (a) 5,204 104,340
Halliburton Co. 37,931 1,488,412
Transocean, Inc. (a) 7,002 296,815
------------
1,889,567
------------
FOOD & STAPLES RETAILING (2.9%)
Albertson's, Inc. 63,692 1,520,965
BJ's Wholesale Club, Inc. (a) 9,034 263,160
Costco Wholesale Corp. 99,068 4,795,882
Kroger Co. (The) (a) 190,422 3,340,002
Ruddick Corp. 4,055 87,953
Safeway, Inc. (a) 114,760 2,265,362
SUPERVALU, Inc. 35,081 1,210,996
Wal-Mart Stores, Inc. 257,875 13,620,958
Whole Foods Market, Inc. 2,758 262,975
Winn-Dixie Stores, Inc. 6,422 29,220
------------
27,397,473
------------
FOOD PRODUCTS (1.0%)
Archer-Daniels-Midland Co. 53,463 1,192,759
ConAgra Foods, Inc. 21,419 630,790
Hershey Foods Corp. 10,668 592,501
J.M. Smucker Co. (The) 18,074 850,743
Kellogg Co. 18,247 814,911
Sara Lee Corp. 170,635 4,119,129
Sensient Technologies Corp. 970 23,270
Tyson Foods, Inc. Class A 91,148 1,677,123
------------
9,901,226
------------
GAS UTILITIES (0.4%)
KeySpan Corp. 34,503 1,361,143
Nicor, Inc. 11,267 416,203
NiSource, Inc. 34,200 779,076
Peoples Energy Corp. 1,608 70,672
Sempra Energy 29,093 1,067,131
WGL Holdings, Inc. 4,189 129,189
------------
3,823,414
------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.0%)
Applera Corp. -- Applied Biosystems Group 30,843 644,927
Bausch & Lomb, Inc. 7,546 486,415
Baxter International, Inc. 7,515 259,568
Becton, Dickinson & Co. 64,535 3,665,588
Biomet, Inc. 5,215 226,279
Boston Scientific Corp. (a) 32,481 1,154,699
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 117
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (CONTINUED)
C.R. Bard, Inc. 5,464 $ 349,587
Cytyc Corp. (a) 4,660 128,476
DENTSPLY International, Inc. 13,866 779,269
Edwards Lifesciences Corp. (a) 1,220 50,337
Fisher Scientific International, Inc. (a) 4,153 259,064
Hillenbrand Industries, Inc. 19,172 1,064,813
Millipore Corp. (a) 2,207 109,931
STERIS Corp. (a) 21,486 509,648
Varian Medical Systems, Inc. (a) 5,803 250,922
------------
9,939,523
------------
HEALTH CARE PROVIDERS & SERVICES (3.0%)
Aetna, Inc. 19,163 2,390,584
AmerisourceBergen Corp. 28,862 1,693,622
Apria Healthcare Group, Inc. (a) 8,196 270,058
Cardinal Health, Inc. 92,132 5,357,476
Caremark Rx, Inc. (a) 73,873 2,912,813
CIGNA Corp. 17,156 1,399,415
Covance, Inc. (a) 10,825 419,469
Coventry Health Care, Inc. (a) 7,802 414,130
First Health Group Corp. (a) 11,947 223,528
HCA, Inc. 56,497 2,257,620
Humana, Inc. (a) 3,304 98,096
Laboratory Corp. of America Holdings (a) 1,822 90,772
Lincare Holdings, Inc. (a) 9,980 425,647
Manor Care, Inc. 7,490 265,371
McKesson Corp. 102,550 3,226,223
PacifiCare Health Systems, Inc. (a) 5,504 311,086
Tenet Healthcare Corp. (a) 79,645 874,502
Triad Hospitals, Inc. (a) 19,663 731,660
UnitedHealth Group, Inc. 47,608 4,190,932
Universal Health Services, Inc. Class B 5,056 224,992
WellPoint, Inc. (a) 5,754 661,710
------------
28,439,706
------------
HOTELS, RESTAURANTS & LEISURE (2.0%)
Bob Evans Farms, Inc. 10,919 285,423
Brinker International, Inc. (a) 11,845 415,404
Caesars Entertainment, Inc. (a) 79,965 1,610,495
Carnival Corp. 19,713 1,136,060
CBRL Group, Inc. 4,264 178,449
Darden Restaurants, Inc. 13,591 377,014
GTECH Holdings Corp. 10,299 267,259
Harrah's Entertainment, Inc. 9,839 658,131
Hilton Hotels Corp. 17,553 399,155
International Game Technology 34,409 1,182,982
Krispy Kreme Doughnuts, Inc. (a) 2,588 32,609
Mandalay Resort Group 15,646 1,101,948
</Table>
<Table>
<Caption>
SHARES VALUE
HOTELS, RESTAURANTS & LEISURE (CONTINUED)
Marriott International, Inc. Class A 9,437 $ 594,342
McDonald's Corp. 204,970 6,571,338
Ruby Tuesday, Inc. 20,085 523,817
Six Flags, Inc. (a) 16,268 87,359
Starbucks Corp. (a) 24,956 1,556,256
Starwood Hotels & Resorts Worldwide, Inc. 21,773 1,271,543
Yum! Brands, Inc. 17,568 828,858
------------
19,078,442
------------
HOUSEHOLD DURABLES (0.8%)
American Greetings Corp. Class A 17,686 448,340
Black & Decker Corp. (The) 10,060 888,600
Blyth, Inc. 12,650 373,934
Furniture Brands International, Inc. 16,840 421,842
Harman International Industries, Inc. 14,266 1,811,782
Leggett & Platt, Inc. 8,188 232,785
Maytag Corp. 20,285 428,013
Newell Rubbermaid, Inc. 69,785 1,688,099
Snap-on, Inc. 2,580 88,649
Stanley Works (The) 10,642 521,352
Whirlpool Corp. 17,139 1,186,190
------------
8,089,586
------------
HOUSEHOLD PRODUCTS (1.1%)
Energizer Holdings, Inc. (a) 13,771 684,281
Kimberly-Clark Corp. 57,912 3,811,189
Procter & Gamble Co. (The) 108,901 5,998,267
------------
10,493,737
------------
INDUSTRIAL CONGLOMERATES (4.0%)
3M Co. 10,259 841,956
VGeneral Electric Co 791,370 28,885,005
Textron, Inc. 35,650 2,630,970
Tyco International Ltd. 160,175 5,724,655
------------
38,082,586
------------
INSURANCE (7.7%)
ACE, Ltd. 73,342 3,135,371
AFLAC, Inc. 131,423 5,235,892
Allstate Corp. (The) 30,395 1,572,029
Ambac Financial Group, Inc. 2,480 203,682
American Financial Group, Inc. 6,406 200,572
VAmerican International Group, Inc. 298,630 19,611,032
AmerUs Group Co. 8,404 380,701
Aon Corp. 54,487 1,300,060
Arthur J. Gallagher & Co. 3,938 127,985
Chubb Corp. (The) 49,239 3,786,479
Cincinnati Financial Corp. 7,468 330,534
Everest Re Group Ltd. 12,027 1,077,138
Fidelity National Financial, Inc. 7,605 347,320
First American Corp. 11,564 406,359
</Table>
M- 118 MainStay VP Common Stock Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
INSURANCE (CONTINUED)
Hartford Financial Services Group, Inc. (The) 57,003 $ 3,950,878
HCC Insurance Holdings, Inc. 16,839 557,708
Horace Mann Educators Corp. 7,450 142,146
Lincoln National Corp. 7,641 356,682
Loews Corp. 33,264 2,338,459
Marsh & McLennan Cos., Inc. 92,588 3,046,145
MetLife, Inc. 192,610 7,802,631
Ohio Casualty Corp. (a) 15,824 367,275
Old Republic International Corp. 7,787 197,011
Progressive Corp. (The) 27,282 2,314,605
Protective Life Corp. 14,910 636,508
Prudential Financial, Inc. 67,765 3,724,364
SAFECO Corp. 32,140 1,678,994
St. Paul Travelers Cos., Inc. (The) 144,351 5,351,092
StanCorp Financial Group, Inc. 2,493 205,673
UnumProvident Corp. 37,267 668,570
W. R. Berkley Corp. 14,455 681,842
XL Capital Ltd. Class A 23,679 1,838,674
------------
73,574,411
------------
INTERNET & CATALOG RETAIL (0.1%)
eBay, Inc. (a) 5,607 651,982
------------
INTERNET SOFTWARE & SERVICES (0.0%) (B)
Retek, Inc. (a) 17,320 106,518
Yahoo!, Inc. (a) 6,746 254,189
------------
360,707
------------
IT SERVICES (0.8%)
Acxiom Corp. 22,196 583,755
Alliance Data Systems Corp. (a) 3,364 159,723
CheckFree Corp. (a) 3,550 135,184
Computer Sciences Corp. (a) 15,765 888,673
CSG Systems International, Inc. (a) 6,800 127,160
Electronic Data Systems Corp. 116,187 2,683,920
First Data Corp. 9,479 403,236
Sabre Holdings Corp. Class A 42,841 949,356
Titan Corp. (The) (a) 26,199 424,424
Unisys Corp. (a) 106,622 1,085,412
------------
7,440,843
------------
LEISURE EQUIPMENT & PRODUCTS (0.4%)
Brunswick Corp. 8,054 398,673
Eastman Kodak Co. 64,786 2,089,348
Hasbro, Inc. 55,160 1,069,001
------------
3,557,022
------------
MACHINERY (0.8%)
Crane Co. 18,264 526,734
Cummins, Inc. 5,561 465,956
Deere & Co. 10,700 796,080
</Table>
<Table>
<Caption>
SHARES VALUE
MACHINERY (CONTINUED)
Eaton Corp. 8,853 $ 640,603
Federal Signal Corp. 14,885 262,869
Flowserve Corp. (a) 3,426 94,352
Graco, Inc. 15,059 562,454
Harsco Corp. 2,655 147,990
Nordson Corp. 3,085 123,616
PACCAR, Inc. 17,047 1,371,943
Parker-Hannifin Corp. 15,334 1,161,397
Pentair, Inc. 10,595 461,518
SPX Corp. 23,723 950,343
Tecumseh Products Co. Class A 4,763 227,671
------------
7,793,526
------------
MARINE (0.0%) (B)
Alexander & Baldwin, Inc. 1,789 75,889
------------
MEDIA (2.4%)
Catalina Marketing Corp. 4,378 129,720
Clear Channel Communications, Inc. 34,922 1,169,538
Comcast Corp. Class A (a) 32,651 1,086,625
Emmis Communications Corp. Class A (a) 15,970 306,464
Entercom Communications Corp. (a) 15,164 544,236
McGraw-Hill Cos., Inc. (The) 7,374 675,016
Media General, Inc. Class A 1,024 66,365
Reader's Digest Association, Inc. (The) 17,024 236,804
Scholastic Corp. (a) 826 30,529
Time Warner, Inc. (a) 320,673 6,233,883
Tribune Co. 27,633 1,164,455
Univision Communications, Inc. Class A (a) 40,811 1,194,538
Viacom, Inc. Class B 53,092 1,932,018
Walt Disney Co. (The) 277,689 7,719,754
------------
22,489,945
------------
METALS & MINING (0.6%)
Allegheny Technologies, Inc. 4,150 89,931
Nucor Corp. 19,924 1,042,822
Peabody Energy Corp. 13,752 1,112,674
Phelps Dodge Corp. 19,942 1,972,663
Steel Dynamics, Inc. 2,086 79,018
United States Steel Corp. 29,117 1,492,246
------------
5,789,354
------------
MULTILINE RETAIL (1.6%)
Dillard's, Inc. Class A 10,464 281,168
Dollar Tree Stores, Inc. (a) 4,853 139,184
Federated Department Stores, Inc. 45,615 2,636,091
J.C. Penney Co., Inc. Holding Co. 61,723 2,555,332
May Department Stores Co. 25,347 745,202
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 119
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
MULTILINE RETAIL (CONTINUED)
Nordstrom, Inc. 4,866 $ 227,388
Saks, Inc. 18,371 266,563
Sears, Roebuck & Co. 13,683 698,244
Target Corp. 147,298 7,649,185
------------
15,198,357
------------
MULTI-UTILITIES & UNREGULATED POWER (1.0%)
AES Corp. (The) (a) 80,566 1,101,337
Calpine Corp. (a) 158,919 626,141
Duke Energy Corp. 200,942 5,089,861
Dynegy, Inc. Class A (a) 40,231 185,867
El Paso Corp. 54,695 568,828
National Fuel Gas Co. 6,971 197,558
ONEOK, Inc. 17,629 501,016
Questar Corp. 10,893 555,108
Sierra Pacific Resources (a) 30,226 317,373
Williams Cos., Inc. (The) 47,245 769,621
------------
9,912,710
------------
OFFICE ELECTRONICS (0.4%)
Xerox Corp. (a) 222,382 3,782,718
------------
OIL & GAS (7.8%)
Amerada Hess Corp. 7,848 646,518
Anadarko Petroleum Corp. 42,704 2,767,646
Apache Corp. 8,147 411,994
Ashland, Inc. 9,209 537,621
Burlington Resources, Inc. 100,991 4,393,108
ChevronTexaco Corp. 209,473 10,999,427
ConocoPhillips 104,364 9,061,926
Devon Energy Corp. 125,156 4,871,071
EOG Resources, Inc. 25,523 1,821,321
VExxonMobil Corp. 469,815 24,082,717
Forest Oil Corp. (a) 2,529 80,220
Kerr-McGee Corp. 33,197 1,918,455
Marathon Oil Corp. 69,742 2,622,997
Murphy Oil Corp. 3,894 313,272
Newfield Exploration Co. (a) 15,791 932,459
Noble Energy, Inc. 4,977 306,882
Occidental Petroleum Corp. 27,916 1,629,178
Overseas Shipholding Group, Inc. 9,865 544,548
Plains Exploration & Production Co. (a) 6,542 170,092
Sunoco, Inc. 19,160 1,565,564
Valero Energy Corp. 65,472 2,972,429
XTO Energy, Inc. 53,339 1,887,134
------------
74,536,579
------------
PAPER & FOREST PRODUCTS (0.6%)
Georgia-Pacific Corp. 62,289 2,334,592
Louisiana-Pacific Corp. 28,206 754,228
MeadWestvaco Corp. 12,030 407,697
</Table>
<Table>
<Caption>
SHARES VALUE
PAPER & FOREST PRODUCTS (CONTINUED)
Potlatch Corp. 6,741 $ 340,960
Rayonier, Inc. 2,122 103,787
Weyerhaeuser Co. 28,019 1,883,437
------------
5,824,701
------------
PERSONAL PRODUCTS (1.1%)
Avon Products, Inc. 81,914 3,170,072
Gillette Co. (The) 173,478 7,768,345
------------
10,938,417
------------
PHARMACEUTICALS (5.6%)
IVAX Corp. (a) 73,997 1,170,632
VJohnson & Johnson 286,939 18,197,671
King Pharmaceuticals, Inc. (a) 74,718 926,503
Lilly (Eli) & Co. 3,148 178,649
Merck & Co., Inc. 367,962 11,826,299
Mylan Laboratories, Inc. 7,464 131,964
Perrigo Co. 22,026 380,389
VPfizer, Inc 683,094 18,368,398
Sepracor, Inc. (a) 15,057 893,934
Wyeth 31,718 1,350,870
------------
53,425,309
------------
REAL ESTATE (0.2%)
Apartment Investment & Management Co. Class A 3,907 150,576
Equity Office Properties Trust 17,013 495,419
Equity Residential 11,979 433,400
Simon Property Group, Inc. 9,429 609,773
------------
1,689,168
------------
ROAD & RAIL (0.6%)
Burlington Northern Santa Fe Corp. 35,715 1,689,677
CSX Corp. 4,481 179,598
Norfolk Southern Corp. 49,170 1,779,462
Swift Transportation Co., Inc. (a) 10,204 219,182
Union Pacific Corp. 22,207 1,493,421
Werner Enterprises, Inc. 10,280 232,739
------------
5,594,079
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.2%)
Advanced Micro Devices, Inc. (a) 100,931 2,222,501
Altera Corp. (a) 31,898 660,289
Analog Devices, Inc. 32,293 1,192,257
Applied Materials, Inc. (a) 68,609 1,173,214
Atmel Corp. (a) 91,929 360,362
Broadcom Corp. Class A (a) 36,085 1,164,824
Cabot Microelectronics Corp. (a) 3,207 128,440
Cree, Inc. (a) 6,170 247,294
Cypress Semiconductor Corp. (a) 19,526 229,040
Freescale Semiconductor, Inc. Class B (a) 65,021 1,193,785
Integrated Circuit Systems, Inc. (a) 21,740 454,801
</Table>
M- 120 MainStay VP Common Stock Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
Integrated Device Technology, Inc. (a) 33,184 $ 383,607
Intel Corp. 361,115 8,446,480
Intersil Corp. Class A 46,553 779,297
Lam Research Corp. (a) 22,063 637,841
Linear Technology Corp. 9,389 363,918
LSI Logic Corp. (a) 115,406 632,425
Maxim Integrated Products, Inc. 28,102 1,191,244
Micrel, Inc. (a) 27,853 306,940
Micron Technology, Inc. (a) 34,536 426,520
National Semiconductor Corp. 15,782 283,287
Novellus Systems, Inc. (a) 41,993 1,171,185
PMC-Sierra, Inc. (a) 53,792 605,160
RF Micro Devices, Inc. (a) 57,947 396,357
Teradyne, Inc. (a) 58,876 1,005,013
Texas Instruments, Inc. 165,815 4,082,365
TriQuint Semiconductor, Inc. (a) 42,538 189,294
Xilinx, Inc. 39,408 1,168,447
------------
31,096,187
------------
SOFTWARE (3.4%)
Adobe Systems, Inc. 8,935 560,582
Autodesk, Inc. 28,399 1,077,742
BMC Software, Inc. (a) 56,775 1,056,015
Citrix Systems, Inc. (a) 29,324 719,318
Computer Associates International, Inc. 50,216 1,559,709
Compuware Corp. (a) 33,633 217,605
Electronic Arts, Inc. (a) 12,956 799,126
Intuit, Inc. (a) 7,981 351,244
Macromedia, Inc. (a) 9,350 290,972
Macrovision Corp. (a) 6,424 165,225
McAfee, Inc. (a) 13,402 387,720
VMicrosoft Corp 702,709 18,769,357
Parametric Technology Corp. (a) 22,975 135,323
Reynolds & Reynolds Co. (The) Class A 11,338 300,570
RSA Security, Inc. (a) 2,849 57,151
Siebel Systems, Inc. (a) 117,547 1,234,244
Synopsys, Inc. (a) 47,206 926,182
Transaction Systems Architects, Inc. Class A (a) 11,821 234,647
VERITAS Software Corp. (a) 115,175 3,288,246
------------
32,130,978
------------
SPECIALTY RETAIL (1.8%)
Abercrombie & Fitch Co. Class A 24,421 1,146,566
American Eagle Outfitters, Inc. 7,544 355,322
AnnTaylor Stores Corp. (a) 21,824 469,871
AutoZone, Inc. (a) 10,668 974,095
Barnes & Noble, Inc. (a) 7,226 233,183
</Table>
<Table>
<Caption>
SHARES VALUE
SPECIALTY RETAIL (CONTINUED)
Borders Group, Inc. 13,198 $ 335,229
Circuit City Stores, Inc. 58,063 908,105
Claire's Stores, Inc. 4,278 90,907
Gap, Inc. (The) 154,003 3,252,543
Home Depot, Inc. (The) 88,528 3,783,687
Limited Brands, Inc. 57,692 1,328,070
Michaels Stores, Inc. 29,250 876,622
Office Depot, Inc. (a) 37,749 655,323
Pacific Sunwear of California, Inc. (a) 22,960 511,090
Payless ShoeSource, Inc. (a) 18,182 223,639
RadioShack Corp. 6,882 226,280
Rent-A-Center, Inc. (a) 6,348 168,222
Sherwin-Williams Co. (The) 12,267 547,476
Toys "R" Us, Inc. (a) 55,544 1,136,986
------------
17,223,216
------------
THRIFTS & MORTGAGE FINANCE (3.4%)
Countrywide Financial Corp. 121,289 4,488,906
Fannie Mae 163,055 11,611,147
Freddie Mac 143,348 10,564,748
Independence Community Bank Corp. 2,163 92,100
New York Community Bancorp, Inc. 57,728 1,187,465
Washington Mutual, Inc. 105,740 4,470,687
Webster Financial Corp. 4,622 234,058
------------
32,649,111
------------
TOBACCO (0.9%)
Altria Group, Inc. 119,996 7,331,756
Reynolds American, Inc. 13,707 1,077,370
UST, Inc. 6,825 328,351
------------
8,737,477
------------
TRADING COMPANIES & DISTRIBUTORS (0.0%) (B)
Grainger (W.W.), Inc. 3,825 254,822
------------
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
Nextel Communications, Inc. Class A (a) 213,843 6,415,290
Telephone & Data Systems, Inc. 14,775 1,136,936
------------
7,552,226
------------
Total Common Stocks
(Cost $878,220,345) 949,799,582
------------
INVESTMENT COMPANY (0.5%)
- --------------------------------------------------------------------------------
CAPITAL MARKETS (0.5%)
DIAMONDS Trust Series 1 (c) 45,100 4,848,701
------------
Total Investment Company
(Cost $4,851,776) 4,848,701
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 121
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
WARRANTS (0.0%) (B)
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (0.0%) (B)
Lucent Technologies, Inc. (a) 42,250 $ 66,755
------------
Total Warrants
(Cost $0) 66,755
------------
Total Investments
(Cost $883,072,121) (d) 99.8% 954,715,038(e)
Cash and Other Assets,
Less Liabilities 0.2 1,957,369
---------- ------------
Net Assets 100.0% $956,672,407
========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Exchange Traded Fund -- represents a basket of
securities that are traded on an exchange.
(d) The cost for federal income tax purposes is
$887,780,817.
(e) At December 31, 2004 net unrealized appreciation was
$66,934,221, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $92,046,168 and
aggregate unrealized depreciation for all investments on
which there was an excess of cost over market value of
$25,111,947.
</Table>
M- 122 MainStay VP Common Stock Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $883,072,121) $ 954,715,038
Cash 4,314,705
Receivables:
Investment securities sold 47,984,028
Dividends and interest 1,409,611
Fund shares sold 58,616
Other assets 39,025
--------------
Total assets 1,008,521,023
--------------
LIABILITIES:
Payables:
Investment securities purchased 51,163,003
Adviser 200,640
Administrator 160,512
Shareholder communication 134,112
Fund shares redeemed 118,259
Custodian 14,053
NYLIFE Distributors 6,720
Accrued expenses 51,317
--------------
Total liabilities 51,848,616
--------------
Net assets $ 956,672,407
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 450,178
Service Class 16,114
Additional paid-in capital 909,222,009
Accumulated undistributed net investment
income 20,370
Accumulated net realized loss on investments (24,679,181)
Net unrealized appreciation on investments 71,642,917
--------------
Net assets $ 956,672,407
==============
INITIAL CLASS
Net assets applicable to outstanding shares $ 923,659,752
==============
Shares of capital stock outstanding 45,017,833
==============
Net asset value per share outstanding $ 20.52
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 33,012,655
==============
Shares of capital stock outstanding 1,611,445
==============
Net asset value per share outstanding $ 20.49
==============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 123
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 17,575,338
Interest 19,127
-------------
Total income 17,594,465
-------------
EXPENSES:
Advisory 2,232,387
Administration 1,785,910
Shareholder communication 404,224
Professional 104,392
Custodian 82,508
Directors 60,223
Distribution and service -- Service Class 55,602
Portfolio pricing 11,215
Miscellaneous 58,133
-------------
Total expenses 4,794,594
-------------
Net investment income 12,799,871
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 148,353,610
Net increase from payment by affiliate for
loss on the disposal of investment in
violation of restrictions 160,608
Net change in unrealized appreciation on
investments (65,086,231)
-------------
Net realized and unrealized gain on
investments: 83,427,987
-------------
Net increase in net assets resulting from
operations $ 96,227,858
=============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$10,413.
M- 124 MainStay VP Common Stock Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 12,799,871 $ 8,087,956
Net realized gain on investments 148,353,610 18,759,322
Net increase from payment by
affiliate for loss on the disposal
of investment in violation of
restrictions 160,608 --
Net change in unrealized
appreciation (depreciation) on
investments (65,086,231) 156,761,390
----------------------------
Net increase in net assets
resulting from operations 96,227,858 183,608,668
----------------------------
Dividends to shareholders:
From net investment income:
Initial Class (12,327,924) (8,089,391)
Service Class (383,179) (85,863)
----------------------------
Total dividends to shareholders (12,711,103) (8,175,254)
----------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 91,409,988 29,371,935
Service Class 20,966,187 9,527,499
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Initial Class 12,327,924 8,089,391
Service Class 383,179 85,863
----------------------------
125,087,278 47,074,688
Cost of shares redeemed:
Initial Class (125,547,914) (79,528,644)
Service Class (902,834) (146,680)
----------------------------
(126,450,748) (79,675,324)
----------------------------
Decrease in net assets derived
from capital share transactions (1,363,470) (32,600,636)
----------------------------
Net increase in net assets 82,153,285 142,832,778
NET ASSETS:
Beginning of year 874,519,122 731,686,344
----------------------------
End of year $ 956,672,407 $874,519,122
============================
Accumulated undistributed net
investment income at end of year $ 20,370 $ --
============================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 125
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------------------------------------ ----------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 18.75 $ 14.98 $ 19.99 $ 24.28 $ 27.78 $ 18.74 $ 16.45
-------- -------- -------- ---------- ---------- ------- -------
Net investment income 0.28(c) 0.17(b) 0.16 0.14 0.15 0.24(c) 0.07(b)
Net realized and unrealized
gain (loss) on investments 1.77 3.78 (5.01) (4.29) (1.06) 1.75 2.38
-------- -------- -------- ---------- ---------- ------- -------
Total from investment
operations 2.05 3.95 (4.85) (4.15) (0.91) 1.99 2.45
-------- -------- -------- ---------- ---------- ------- -------
Less dividends and
distributions:
From net investment income (0.28) (0.18) (0.16) (0.14) (0.15) (0.24) (0.16)
From net realized gain on
investments -- -- -- -- (2.44) -- --
-------- -------- -------- ---------- ---------- ------- -------
Total dividends and
distributions (0.28) (0.18) (0.16) (0.14) (2.59) (0.24) (0.16)
-------- -------- -------- ---------- ---------- ------- -------
Net asset value at end of
period $ 20.52 $ 18.75 $ 14.98 $ 19.99 $ 24.28 $ 20.49 $ 18.74
======== ======== ======== ========== ========== ======= =======
Total investment return 10.90% 26.37% (24.25%) (17.09%) (3.34%) 10.62% 14.93%(d)
Ratios (to average net
assets)/
Supplemental Data:
Net investment income 1.44%(c) 1.05% 0.89% 0.66% 0.55% 1.19%(c) 0.80%+(e)
Expenses 0.53% 0.52% 0.51% 0.50% 0.50% 0.78% 0.77%+
Portfolio turnover rate 151% 72% 120% 93% 77% 151% 72%
Net assets at end of period
(in 000's) $923,660 $864,373 $731,686 $1,059,832 $1,331,634 $33,013 $10,146
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Included in net investment income per share and the ratio of
net investment income to average net assets are $0.03 per
share and 0.27%, respectively, resulting from a special
one-time dividend from Microsoft Corp. that paid $3.00 per
share.
(d) Total return is not annualized.
(e) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
M- 126 MainStay VP Common Stock Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONVERTIBLE SECURITIES (83.3%)+
CONVERTIBLE BONDS (70.1%)
- ------------------------------------------------------------------------------
AUTO COMPONENTS (0.9%)
Goodyear Tire & Rubber Co. (The)
4.00%, due 6/15/34 (c) $ 2,395,000 $ 3,460,775
------------
BIOTECHNOLOGY (1.0%)
Invitrogen Corp.
1.50%, due 2/15/24 3,935,000 3,708,737
------------
CAPITAL MARKETS (4.4%)
Affiliated Managers Group, Inc.
(zero coupon), due 5/7/21 (f) 1,870,000 2,236,988
Credit Suisse First Boston, Inc.
0.50%, due 3/21/11 (c) 3,670,000 3,495,675
Merrill Lynch & Co., Inc.
(zero coupon), due 3/13/32 (d)(f) 1,290,000 1,322,998
Series DIA (Diamonds Trust)
0.25%, due 5/17/10 (c)(g) 2,320,000 3,181,300
Morgan Stanley & Co.
Series JPM
(J.P. Morgan Chase & Co.)
0.30%, due 1/30/11 (g) 3,250,000 3,176,875
Series JPM
(J.P. Morgan Chase & Co.)
0.30%, due 7/30/11 (g) 3,020,000 2,952,050
------------
16,365,886
------------
COMMERCIAL BANKS (0.7%)
Wells Fargo & Co.
1.91%, due 5/1/33 (d) 2,715,000 2,713,154
------------
COMMERCIAL SERVICES & SUPPLIES (0.5%)
Waste Connections, Inc.
2.66%, due 5/1/22 (d) 1,565,000 1,825,181
------------
COMMUNICATIONS EQUIPMENT (1.6%)
Brocade Communications Systems, Inc.
2.00%, due 1/1/07 (e) 1,745,000 1,666,475
CIENA Corp.
3.75%, due 2/1/08 2,435,000 2,173,238
Extreme Networks, Inc.
3.50%, due 12/1/06 1,215,000 1,193,738
Lucent Technologies, Inc.
Series B
2.75%, due 6/15/25 (e) 650,000 949,811
------------
5,983,262
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMPUTERS & PERIPHERALS (0.2%)
Gateway, Inc.
1.50%, due 12/31/09 (c)(e) $ 870,000 $ 889,575
------------
DIVERSIFIED FINANCIAL SERVICES (1.0%)
Verizon Global Funding Corp
(zero coupon), due 5/15/21 (e) 5,755,000 3,546,519
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.1%)
At Home Corp.
4.75%, due 12/15/06 (h) 2,335,418 326,959
------------
ELECTRIC UTILITIES (0.5%)
PG&E Corp.
9.50%, due 6/30/10 725,000 1,937,562
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.7%)
Agilent Technologies, Inc.
3.00%, due 12/1/21 2,550,000 2,585,062
------------
ENERGY EQUIPMENT & SERVICES (15.2%)
VBJ Services Co.
0.3954%, due 4/24/22 (e) 8,215,000 6,859,525
VCooper Cameron Corp.
1.50%, due 5/15/24 (e) 9,875,000 10,455,155
Halliburton Co.
3.125%, due 7/15/23 3,160,000 3,902,600
VLehman Brothers Holdings, Inc.
Series HAL (Halliburton Co.)
0.25%, due 9/25/10 (g) 5,365,000 7,443,938
VPride International, Inc.
2.50%, due 3/1/07 (e) 10,323,700 13,124,004
VSchlumberger Ltd.
Series A
1.50%, due 6/1/23 12,865,000 14,151,500
------------
55,936,722
------------
FOOD & STAPLES RETAILING (5.1%)
SUPERVALU, Inc.
(zero coupon), due 11/2/31 (e)(f) 17,370,000 6,296,625
VWhole Foods Market, Inc.
(zero coupon), due 3/2/18 11,285,000 11,510,700
Wild Oats Markets, Inc.
3.25%, due 5/15/34 (c) 980,000 873,425
------------
18,680,750
------------
FOOD PRODUCTS (0.3%)
General Mills, Inc.
(zero coupon), due 10/28/22 1,510,000 1,077,762
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V AMONG THE PORTFOLIO'S 10 LARGEST HOLDINGS, EXCLUDING SHORT-TERM
INVESTMENTS. MAY BE SUBJECT TO CHANGE DAILY.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 127
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONVERTIBLE BONDS (CONTINUED)
- ------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (4.4%)
ALZA Corp.
(zero coupon), due 7/28/20 $ 5,525,000 $ 4,841,281
Fisher Scientific International, Inc.
2.50%, due 10/1/23 (e) 2,760,000 4,119,300
3.25%, due 3/1/24 (e) 2,170,000 2,443,963
Medtronic, Inc.
1.25%, due 9/15/21 4,740,000 4,817,025
------------
16,221,569
------------
HEALTH CARE PROVIDERS & SERVICES (0.6%)
Quest Diagnostics, Inc.
1.75%, due 11/30/21 2,025,000 2,219,906
------------
HOTELS, RESTAURANTS & LEISURE (4.0%)
Brinker International, Inc.
(zero coupon), due 10/10/21 5,635,000 3,648,663
VHilton Hotels Corp.
3.375%, due 4/15/23 (e) 6,060,000 7,279,574
International Game Technology
(zero coupon), due 1/29/33 5,165,000 3,970,594
------------
14,898,831
------------
HOUSEHOLD PRODUCTS (0.8%)
Merrill Lynch & Co., Inc.
Series PG
(Proctor & Gamble Co., The)
0.40%, due 4/15/10 (c)(g) 2,585,000 2,901,662
------------
INDUSTRIAL CONGLOMERATES (3.9%)
VTyco International Group S.A.
Series A
2.75%, due 1/15/18 8,335,000 13,252,650
Series B
3.125%, due 1/15/23 735,000 1,238,475
------------
14,491,125
------------
INSURANCE (1.4%)
American International Group, Inc.
5.25%, due 12/6/24 (c) 650,000 730,438
Aon Corp.
3.50%, due 11/15/12 3,000,000 3,716,250
USF & G Corp.
(zero coupon), due 3/3/09 930,000 773,062
------------
5,219,750
------------
INTERNET SOFTWARE & SERVICES (1.1%)
Yahoo!, Inc.
(zero coupon), due 4/1/08 2,040,000 3,893,850
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
IT SERVICES (0.8%)
DST Systems, Inc.
Series A
4.125%, due 8/15/23 $ 2,060,000 $ 2,693,450
------------
MACHINERY (1.4%)
Navistar Financial Corp.
4.75%, due 4/1/09 3,975,000 4,129,031
Wabash National Corp.
3.25%, due 8/1/08 570,000 906,300
------------
5,035,331
------------
MEDIA (3.7%)
Lamar Advertising Co.
2.875%, due 12/31/10 (e) 2,460,000 2,727,525
Lehman Brothers Holdings, Inc.
Series VIA (Viacom, Inc.)
0.25%, due 9/30/10 (g) 3,255,000 2,945,775
Liberty Media Corp.
3.50%, due 1/15/31 2,265,000 2,137,594
0.75%, due 3/30/23 1,295,000 1,558,856
Sirius Satellite Radio, Inc.
2.50%, due 2/15/09 615,000 1,160,044
Walt Disney Co. (The)
2.125%, due 4/15/23 (e) 2,560,000 2,860,800
------------
13,390,594
------------
METALS & MINING (0.5%)
GrafTech International Ltd.
1.625%, due 1/15/24 (e) 1,135,000 1,056,969
Placer Dome, Inc.
2.75%, due 10/15/23 660,000 812,625
------------
1,869,594
------------
MULTI-UTILITIES & UNREGULATED POWER (1.8%)
Calpine Corp.
4.75%, due 11/15/23 (e) 2,885,000 2,524,375
Reliant Energy, Inc.
5.00%, due 8/15/10 2,385,000 3,929,288
------------
6,453,663
------------
OIL & GAS (0.5%)
Salomon Smith Barney Holdings
Series XOI (AMEX Oil Index)
0.25%, due 2/18/10 (g) 1,245,000 1,901,115
------------
PAPER & FOREST PRODUCTS (2.4%)
International Paper Co.
(zero coupon), due 6/20/21 3,055,000 1,703,163
Lehman Brothers Holdings, Inc.
Series IP
(International Paper Co.)
0.25%, due 5/8/10 (g) 4,440,000 4,828,500
</Table>
M- 128 MainStay VP Convertible Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONVERTIBLE BONDS (CONTINUED)
- ------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (CONTINUED)
Merrill Lynch & Co., Inc.
Series MWV
(MeadWestvaco Corp.)
0.25%, due 7/28/10 (g) $ 1,880,000 $ 2,310,050
------------
8,841,713
------------
PHARMACEUTICALS (4.0%)
Elan Capital Corp. Ltd.
6.50%, due 11/10/08 1,420,000 1,603,896
Teva Pharmaceutical Financial LLC
Series A
0.50%, due 2/1/24 2,715,000 2,779,481
VTeva Pharmaceutical Industries Ltd.
0.375%, due 11/15/22 7,185,000 10,472,138
------------
14,855,515
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.4%)
Advanced Micro Devices, Inc.
4.75%, due 2/1/22 (e) 1,770,000 2,042,138
ASM International N.V.
4.25%, due 12/6/11 (c) 875,000 926,406
Cymer, Inc.
3.50%, due 2/15/09 1,485,000 1,485,000
Cypress Semiconductor Corp.
1.25%, due 6/15/08 2,815,000 2,987,419
Fairchild Semiconductor International, Inc.
5.00%, due 11/1/08 (e) 3,465,000 3,512,643
Vitesse Semiconductor International, Inc.
1.50%, due 10/1/24 (c) 1,030,000 1,205,100
------------
12,158,706
------------
SOFTWARE (0.5%)
Computer Associates International, Inc.
1.625%, due 12/15/09 1,170,000 1,937,813
------------
TRANSPORTATION INFRASTRUCTURE (0.8%)
Morgan Stanley & Co.
Series CNI (Canadian National
Railway Co.)
(zero coupon), due 5/30/10 (g) 1,730,000 2,784,219
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
UTILITIES-ELECTRIC & GAS (1.9%)
VLehman Brothers Holdings, Inc.
Series TXU (TXU Corp.)
1.00%, due 11/3/11 (g) $ 6,850,000 $ 6,995,563
------------
Total Convertible Bonds
(Cost $238,769,028) 257,801,875
------------
<Caption>
SHARES VALUE
CONVERTIBLE PREFERRED STOCKS (13.2%)
- ------------------------------------------------------------------------------
AIRLINES (0.2%)
Continental Air Finance Trust II
6.00% 32,800 766,700
------------
AUTOMOBILES (1.1%)
Ford Motor Co. Capital Trust II
6.50% 74,100 3,911,739
------------
BUILDING PRODUCTS (0.2%)
Owens Corning Capital LLC
6.50% (c) 36,500 894,250
------------
CAPITAL MARKETS (1.6%)
Gabelli Asset Management, Inc.
6.95% (i) 31,900 854,282
Lehman Brothers Holdings, Inc.
6.25% 122,700 3,312,900
State Street Corp.
6.75% 8,100 1,814,400
------------
5,981,582
------------
COMMUNICATIONS EQUIPMENT (0.5%)
Lucent Technologies Capital Trust I
7.75% 1,375 1,635,645
------------
ELECTRIC UTILITIES (0.6%)
FPL Group, Inc.
8.00% (j) 39,100 2,355,384
------------
GOVERNMENT AGENCIES (1.1%)
Federal National Mortgage Association
5.38% 39 4,134,000
------------
INSURANCE (0.5%)
Hartford Financial Services Group, Inc. (The)
7.00% (k) 27,700 1,826,815
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 129
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
MACHINERY (0.9%)
Cummins Capital Trust I
7.00% 36,410 $ 3,336,066
------------
MEDIA (0.2%)
Interpublic Group
of Cos., Inc. (The)
5.375%, Series A 16,700 818,300
------------
METALS & MINING (0.5%)
Freeport-McMoRan
Copper & Gold, Inc.
5.50% 1,775 1,739,500
------------
MULTI-UTILITIES & UNREGULATED POWER (0.3%)
El Paso Corp.
9.00% (l) 30,100 952,364
------------
OFFICE ELECTRONICS (0.5%)
Xerox Corp.
6.25% 13,600 2,010,216
------------
OIL & GAS (1.6%)
Amerada Hess Corp.
7.00% 27,500 2,033,625
Chesapeake Energy Corp.
5.00% (e) 32,800 4,013,080
------------
6,046,705
------------
PAPER & FOREST PRODUCTS (0.5%)
International Paper Capital Trust
5.25% 32,700 1,655,437
------------
THRIFTS & MORTGAGE FINANCE (2.2%)
PMI Group, Inc. (The)
5.875% (m) 137,200 3,627,568
Sovereign Capital Trust IV
4.375% 55,500 2,719,500
Washington Mutual, Inc.
5.375% 30,000 1,676,880
------------
8,023,948
------------
WIRELESS TELECOMMUNICATION SERVICES (0.7%)
Nextel Communications, Inc. 4,180 2,536,738
------------
Total Convertible Preferred Stocks
(Cost $44,920,019) 48,625,389
------------
Total Convertible Securities
(Cost $283,689,047) 306,427,264
------------
</Table>
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (6.9%)
- ------------------------------------------------------------------------------
CAPITAL MARKETS (1.3%)
Bank of New York Co., Inc. (The) 85,100 $ 2,844,042
S&P 500 Depository Receipt (n) 16,800 2,030,616
------------
4,874,658
------------
DIVERSIFIED FINANCIAL SERVICES (0.4%)
Citigroup, Inc. 27,974 1,347,787
------------
ENERGY EQUIPMENT & SERVICES (3.6%)
Cooper Cameron Corp. (a) 34,300 1,845,683
Diamond Offshore Drilling, Inc. (e) 17,000 680,850
Grant Prideco, Inc. (a) 56,000 1,122,800
Input/Output, Inc. (a) 103,100 911,404
Rowan Cos., Inc. (a) 111,800 2,895,620
Tidewater, Inc. 72,400 2,578,164
Transocean, Inc. (a) 74,200 3,145,338
------------
13,179,859
------------
HOTELS, RESTAURANTS & LEISURE (0.0%) (B)
FHC Delaware, Inc. (a)(o) 6,624 66
------------
MEDIA (0.1%)
Time Warner, Inc. (a) 20,400 396,576
------------
MULTI-UTILITIES & UNREGULATED POWER (0.3%)
AES Corp. (The) (a) 87,100 1,190,657
------------
PAPER & FOREST PRODUCTS (0.2%)
International Paper Co. 14,800 621,600
------------
PHARMACEUTICALS (0.6%)
Merck & Co., Inc. 65,200 2,095,528
------------
SOFTWARE (0.4%)
Microsoft Corp. 55,100 1,471,722
------------
Total Common Stocks
(Cost $21,957,716) 25,178,453
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BOND (1.1%)
- ------------------------------------------------------------------------------
BIOTECHNOLOGY (1.1%)
Genzyme Corp.
1.25%, due 12/1/23 $ 3,995,000 $ 4,234,700
------------
Total Corporate Bond
(Cost $4,059,131) 4,234,700
------------
</Table>
M- 130 MainStay VP Convertible Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (19.8%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (8.5%)
American General Finance Corp.
2.30%, due 1/5/05 $ 5,000,000 $ 4,998,721
Chevron Texaco Funding Corp.
2.25%, due 1/12/05 3,500,000 3,497,594
General Electric Capital Corp.
2.28%, due 1/27/05 4,000,000 3,993,411
Goldman Sachs Group, Inc. (The)
2.33%, due 1/3/05 5,000,000 4,999,352
International Business Machines Corp.
2.16%, due 1/7/05 4,335,000 4,333,438
Morgan Stanley & Co.
2.32%, due 1/5/05 115,000 114,970
Rabobank USA Financial Corp.
2.17%, due 1/3/05 5,445,000 5,444,344
USAA Capital Corp.
2.27%, due 1/6/05 4,000,000 3,998,739
------------
Total Commercial Paper
(Cost $31,380,569) 31,380,569
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.3%)
AIM Institutional Funds Group (p) 991,176 991,176
------------
Total Investment Company
(Cost $991,176) 991,176
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.8%)
Banc of America Securities LLC
2.3924%, due 1/3/05 (p) $ 3,300,000 3,300,000
------------
Total Master Note
(Cost $3,300,000) 3,300,000
------------
REPURCHASE AGREEMENTS (10.2%)
Credit Suisse First Boston LLC
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$9,301,831 (p)
(Collateralized by
Various Bonds
with a Principal Amount of
$11,080,791 and a
Market Value of $9,486,057) (q) 9,300,000 9,300,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
Dresdner Kleinwort Wasserstein Securities LLC
2.3825%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$4,250,844 (p)
(Collateralized by
Various Bonds
with a Principal Amount of
$4,454,146 and a
Market Value of $4,462,674) (q) $ 4,250,000 $ 4,250,000
Lehman Brothers, Inc.
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$7,481,473 (p)
(Collateralized by
Various Bonds
with a Principal Amount of
$10,176,997 and a
Market Value of $7,629,471) (q) 7,480,000 7,480,000
Merrill Lynch & Co., Inc.
2.3925%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$12,338,459 (p)
(Collateralized by
Various Bonds
with a Principal Amount of $12,175,122 and a
Market Value of $12,952,819) (q) 12,336,000 12,336,000
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 131
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co., Inc.
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$4,000,787 (p)
(Collateralized by
Various Bonds
with a Principal Amount of $7,017,608 and a
Market Value of $4,218,913) (q) $ 4,000,000 $ 4,000,000
------------
Total Repurchase Agreements
(Cost $37,366,000) 37,366,000
------------
Total Short-Term Investments
(Cost $73,037,745) 73,037,745
------------
Total Investments
(Cost $382,743,639) (r) 111.1% 408,878,162(s)
Liabilities in Excess of
Cash and Other Assets (11.1) (40,831,648)
------- ------------
Net Assets 100.0% $368,046,514
=========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) Floating rate. Rate shown is the rate in effect at
December 31, 2004.
(e) Represents a security, or a portion thereof, which is
out on loan.
(f) LYON -- Liquid Yield Option Note: callable, zero coupon
securities priced at a deep discount from par. They
include a "put" feature that enables holders to redeem
them at a specific date, at a specific price. Put
prices reflect fixed interest rates, and therefore
increase over time.
(g) Synthetic Convertible -- An equity-linked security
issued by an entity other than the issuer of the
underlying equity instrument.
(h) Issuer in default.
(i) Equity Units -- each unit reflects 1 Senior Note plus 1
purchase contract to acquire shares of common stock at
$25.00 by February 17, 2005.
(j) Equity Units -- each unit reflects 1 Senior Note plus 1
purchase contract to acquire shares of common stock at
$50.00 by February 16, 2006.
(k) Equity Units -- each unit reflects 1 Senior Note plus 1
purchase contract to acquire shares of common stock at
$50.00 by August 16, 2006.
(l) Equity Units -- each unit reflects 1 Senior Note plus 1
purchase contract to acquire shares of common stock at
$50.00 by August 16, 2005.
(m) Equity Units -- each unit reflects 1 Senior Note plus 1
purchase contract to acquire shares of common stock at
$25.00 by November 16, 2006.
(n) Exchange Traded Fund -- Represents a basket of
securities that are traded on an exchange.
(o) Fair valued security.
(p) Represents a security, or a portion thereof, purchased
with cash collateral received for securities on loan.
(q) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(r) The cost for federal income tax purposes is
$384,684,659.
(s) At December 31, 2004 net unrealized appreciation was
$24,193,503, based on cost for federal income tax pur-
poses. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $28,941,377 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $4,747,874.
</Table>
M- 132 MainStay VP Convertible Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value (identified
cost $382,743,639) including $40,647,144
market value of securities loaned $408,878,162
Cash 1,053
Receivables:
Dividends and interest 1,073,163
Fund shares sold 146,960
Other assets 975
------------
Total assets 410,100,313
------------
LIABILITIES:
Securities lending collateral 41,657,176
Payables:
Adviser 110,422
Fund shares redeemed 98,661
Administrator 61,346
Shareholder communication 56,089
NYLIFE Distributors 15,442
Custodian 6,642
Accrued expenses 48,021
------------
Total liabilities 42,053,799
------------
Net assets $368,046,514
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 259,261
Service Class 67,637
Additional paid-in capital 363,358,191
Accumulated undistributed net
investment income 392,590
Accumulated net realized loss
on investments (22,165,688)
Net unrealized appreciation
on investments 26,134,523
------------
Net assets $368,046,514
============
INITIAL CLASS
Net assets applicable to outstanding shares $291,994,686
============
Shares of capital stock outstanding 25,926,131
============
Net asset value per share outstanding $ 11.26
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 76,051,828
============
Shares of capital stock outstanding 6,763,660
============
Net asset value per share outstanding $ 11.24
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 133
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 4,587,188
Dividends (a) 4,280,596
Income from securities loaned -- net 146,735
-----------
Total Income 9,014,519
-----------
EXPENSES:
Advisory 1,246,430
Administration 692,461
Shareholder communication 181,604
Distribution and service -- Service Class 125,060
Professional 74,878
Custodian 39,538
Directors 25,160
Portfolio pricing 7,084
Miscellaneous 33,881
-----------
Total expenses 2,426,096
Reimbursement of advisory fee (17,587)
-----------
Net expenses 2,408,509
-----------
Net investment income 6,606,010
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 14,981,415
Net change in unrealized appreciation on
investments (1,165,619)
-----------
Net realized and unrealized gain on investments 13,815,796
-----------
Net increase in net assets resulting from
operations $20,421,806
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $511.
M- 134 MainStay VP Convertible Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 6,606,010 $ 6,659,388
Net realized gain on investments 14,981,415 1,934,390
Net change in unrealized
appreciation on investments (1,165,619) 42,603,775
---------------------------
Net increase in net assets
resulting from operations 20,421,806 51,197,553
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (5,520,255) (6,059,293)
Service Class (1,305,524) (454,004)
---------------------------
Total dividends to shareholders (6,825,779) (6,513,297)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 29,309,634 56,086,647
Service Class 51,125,505 22,609,558
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Initial Class 5,520,255 6,059,293
Service Class 1,305,524 454,004
---------------------------
87,260,918 85,209,502
Cost of shares redeemed:
Initial Class (45,869,033) (18,089,291)
Service Class (2,656,652) (352,627)
---------------------------
(48,525,685) (18,441,918)
---------------------------
Increase in net assets derived
from capital share transactions 38,735,233 66,767,584
---------------------------
Net increase in net assets 52,331,260 111,451,840
NET ASSETS:
Beginning of year 315,715,254 204,263,414
---------------------------
End of year $368,046,514 $315,715,254
===========================
Accumulated undistributed net
investment income at end of year $ 392,590 $ 265,840
===========================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 135
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
---------------------------------------------------- ---------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 10.82 $ 9.04 $ 10.11 $ 10.71 $ 12.68 $ 10.81 $ 9.95
-------- -------- -------- -------- -------- ------- -------
Net investment income 0.21 0.27(b) 0.28 0.36(c) 0.42 0.20 0.14(b)
Net realized and unrealized
gain (loss) on investments 0.45 1.74 (1.08) (0.58)(c) (1.00) 0.43 0.94
-------- -------- -------- -------- -------- ------- -------
Total from investment
operations 0.66 2.01 (0.80) (0.22) (0.58) 0.63 1.08
-------- -------- -------- -------- -------- ------- -------
Less dividends and
distributions:
From net investment income (0.22) (0.23) (0.27) (0.38) (0.42) (0.20) (0.22)
From net realized gain on
investments -- -- -- -- (0.97) -- --
-------- -------- -------- -------- -------- ------- -------
Total dividends and
distributions (0.22) (0.23) (0.27) (0.38) (1.39) (0.20) (0.22)
-------- -------- -------- -------- -------- ------- -------
Net asset value at end of
period $ 11.26 $ 10.82 $ 9.04 $ 10.11 $ 10.71 $ 11.24 $ 10.81
======== ======== ======== ======== ======== ======= =======
Total investment return 6.11% 22.23% (7.91%) (2.18%) (5.02%) 5.85% 10.84%(d)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.94% 2.71% 2.97% 3.86%(c) 4.25% 1.69% 2.46%+(f)
Expenses 0.66% 0.67% 0.67% 0.67% 0.66% 0.91% 0.92%+
Portfolio turnover rate 108% 76% 95% 171% 183% 108% 76%
Net assets at end of period
(in 000's) $291,995 $292,043 $204,263 $202,564 $168,085 $76,052 $23,672
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) As required, effective January 1, 2001, the Portfolio has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended December 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to January 1, 2001 have
not been restated to reflect this change in presentation.
</Table>
<Table>
Decrease net investment income $(0.00)(e)
Increase net realized and unrealized gains and
losses 0.00(e)
Decrease ratio of net investment income (0.11%)
</Table>
<Table>
(d) Total return is not annualized.
(e) Less than one cent per share.
(f) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
M- 136 MainStay VP Convertible Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (98.0%)+
ASSET-BACKED SECURITIES (5.6%)
- ------------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS (1.0%)
Citigroup Commercial Mortgage Trust
Series 2004-C2 Class A5
4.733%, due 10/15/41 $ 3,000,000 $ 2,979,840
------------
CONSUMER FINANCE (2.0%)
Harley-Davidson Motorcycle Trust
Series 2002-1 Class A2
4.50%, due 1/15/10 2,881,262 2,918,243
Volkswagen Auto Loan
Enhanced Trust
Series 2003-2 Class A3
2.27%, due 10/22/07 3,530,000 3,502,864
------------
6,421,107
------------
CONSUMER LOANS (0.6%)
Atlantic City Electric
Transition Funding LLC
Series 2002-1 Class A4
5.55%, due 10/20/23 1,650,000 1,736,169
------------
DIVERSIFIED FINANCIAL SERVICES (1.3%)
Capital One Master Trust
Series 2001-5 Class A
5.30%, due 6/15/09 1,350,000 1,391,021
Massachusetts RRB
Special Purpose Trust Series 2001-1 Class A
6.53%, due 6/1/15 2,568,310 2,803,206
------------
4,194,227
------------
MULTI-UTILITIES & UNREGULATED POWER (0.4%)
Public Service of New Hampshire Funding LLC
Series 2002-1 Class A
4.58%, due 2/1/10 1,233,327 1,256,452
------------
THRIFTS & MORTGAGE FINANCE (0.3%)
Vanderbilt Mortgage Finance
Series 1999-B Class 1A4
6.545%, due 4/7/18 975,911 989,940
------------
Total Asset-Backed Securities (Cost $17,280,612) 17,577,735
------------
CORPORATE BONDS (3.7%)
- ------------------------------------------------------------------------------
COMMERCIAL BANKS (0.5%)
Wachovia Corp.
4.875%, due 2/15/14 1,625,000 1,619,602
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONSUMER FINANCE (0.5%)
Ford Motor Credit Co.
7.00%, due 10/1/13 (c) $ 1,180,000 $ 1,250,956
General Motors
Acceptance Corp.
6.875%, due 8/28/12 330,000 336,923
------------
1,587,879
------------
ELECTRIC UTILITIES (0.6%)
Kiowa Power Partners LLC
Series B
5.737%, due 3/30/21 (a) 2,000,000 2,008,000
------------
MEDIA (1.3%)
AT&T Broadband Corp.
9.455%, due 11/15/22 1,225,000 1,694,239
TCI Communication, Inc.
8.75%, due 8/1/15 1,060,000 1,351,986
Tele-Communications, Inc.
10.125%, due 4/15/22 645,000 925,944
------------
3,972,169
------------
REAL ESTATE (0.8%)
HRPT Properties Trust
6.40%, due 2/15/15 2,300,000 2,445,878
------------
Total Corporate Bonds (Cost $11,337,576) 11,633,528
------------
MORTGAGE-BACKED SECURITIES (1.8%)
- ------------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (1.8%)
Fannie Mae Grantor Trust Series 2003-T1 Class B
4.491%, due 11/25/12 2,660,000 2,672,441
Series 1998-M6 Class A2
6.32%, due 8/15/08 2,938,139 3,137,493
------------
Total Mortgage-Backed Securities
(Cost $5,841,387) 5,809,934
------------
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term
investments. May be subject to change daily.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 137
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MUNICIPAL BOND (0.4%)
- ------------------------------------------------------------------------------
TEXAS (0.4%)
Harris County Texas Industrial
Development Corp.
Solid Waste Deer Park
5.683%, due 3/1/23 $ 1,280,000 $ 1,296,115
------------
Total Municipal Bond
(Cost $1,307,305) 1,296,115
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (86.5%)
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (3.5%)
3.625%, due 9/15/08 7,000,000 7,002,408
5.25%, due 11/5/12 4,100,000 4,168,880
------------
11,171,288
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (11.2%)
3.00%, due 8/1/10 2,690,927 2,598,985
V 5.00%, due 6/1/33 (d) 9,851,981 9,805,921
5.00%, due 8/1/33 (d) 4,640,397 4,617,859
5.00%, due 2/10/35 TBA (b) 2,830,000 2,802,583
V 5.50%, due 1/1/33 (d) 15,266,319 15,523,036
------------
35,348,384
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (15.0%)
2.80%, due 3/1/19 1,250,000 1,239,224
4.375%, due 7/17/13 3,725,000 3,624,932
4.625%, due 10/15/14 (c) 3,885,000 3,887,918
5.25%, due 4/15/07-8/1/12 12,460,000 12,957,117
5.50%, due 5/2/06 (c) 7,035,000 7,243,672
6.25%, due 2/1/11 4,290,000 4,703,191
V 6.625%, due 9/15/09 (c) 12,170,000 13,588,705
------------
47,244,759
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (38.7%)
3.355%, due 4/1/34 5,003,306 4,972,865
V 4.50%, due 7/1/18 (d) 15,780,524 15,765,822
V 4.50%, due 11/1/18 (d) 11,105,955 11,095,608
V 5.00%, due 11/1/17 10,633,320 10,816,789
5.00%, due 2/10/35 TBA (b) 5,980,000 5,916,462
V 5.50%, due 11/1/17 7,486,109 7,745,113
V 5.50%, due 2/15/20 TBA (b) 11,900,000 12,268,162
5.50%, due 12/1/33 (d) 7,377,918 7,496,564
5.50%, due 2/10/35 TBA (b) 6,165,000 6,242,063
6.00%, due 12/1/16 593,563 622,368
V 6.00%, due 2/10/35 TBA (b) 28,060,000 28,945,630
6.50%, due 10/1/31-7/1/32 1,723,537 1,809,214
7.00%, due 7/1/31-11/1/32 4,018,581 4,256,573
7.50%, due 1/1/30-8/1/31 4,099,708 4,396,118
------------
122,349,351
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (3.5%)
6.00%, due 8/15/32-10/15/32 $ 5,393,984 $ 5,597,856
6.50%, due 7/15/28-7/15/32 3,367,490 3,549,225
7.50%, due 12/15/28-3/15/32 1,717,971 1,846,344
------------
10,993,425
------------
HVIDE VAN OMMEREN TANKERS LLC (1.6%) (F)
Series I
7.54%, due 12/14/23 2,458,000 2,554,698
Series II
7.54%, due 12/14/23 2,438,000 2,533,911
------------
5,088,609
------------
UNITED STATES TREASURY BONDS (8.0%)
5.375%, due 2/15/31 (c) 4,250,000 4,595,644
6.25%, due 8/15/23 (c) 5,880,000 6,883,963
V 6.875%, due 8/15/25 7,570,000 9,534,945
8.75%, due 8/15/20 (c) 2,985,000 4,314,725
------------
25,329,277
------------
UNITED STATES TREASURY NOTES (5.0%)
3.00%, due 2/15/08 (c) 2,065,000 2,048,141
4.375%, due 5/15/07 (c) 3,725,000 3,828,454
4.625%, due 5/15/06 (c) 330,000 337,606
5.75%, due 11/15/05-8/15/10 (c) 8,450,000 8,781,820
6.00%, due 8/15/09 600,000 661,735
------------
15,657,756
------------
Total U.S. Government &
Federal Agencies
(Cost $271,094,727) 273,182,849
------------
Total Long-Term Bonds
(Cost $306,861,607) 309,500,161
------------
SHORT-TERM INVESTMENTS (35.3%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (6.4%)
Bavaria TRR Corp.
2.4624%, due 1/12/05 (e) 7,146,000 7,140,716
Quatro-PMX Funding Corp.
2.4621%, due 1/10/05 (e) 5,051,000 5,047,944
Rhineland Funding Capital Corp.
2.4535%, due 2/14/05 (e) 8,000,000 7,976,533
------------
Total Commercial Paper (Cost $20,165,193) 20,165,193
------------
FEDERAL AGENCIES (19.1%)
Federal Home Loan Bank
(Discount Note)
2.24%, due 1/26/05 8,160,000 8,147,304
------------
</Table>
M- 138 MainStay VP Government Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
FEDERAL AGENCIES (CONTINUED)
Federal National Mortgage Association
(Discount Notes)
2.22%, due 2/1/05 $ 6,120,000 $ 6,108,280
2.24%, due 1/3/05 13,855,000 13,853,275
2.25%, due 1/3/05 1,215,000 1,214,848
2.25%, due 1/10/05 7,545,000 7,540,753
2.37%, due 3/4/05 6,400,000 6,373,876
------------
35,091,032
------------
Freddie Mac
(Discount Notes)
2.24%, due 2/1/05 10,000,000 9,980,684
2.26%, due 1/4/05 7,000,000 6,998,681
------------
16,979,365
------------
Total Federal Agencies
(Cost $60,217,701) 60,217,701
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.1%)
AIM Institutional Fund Group
2.151%, due 1/3/05 (e) 168,670 168,670
------------
Total Investment Company
(Cost $168,670) 168,670
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.8%)
Bank of America LLC
2.3925%, due 1/3/05 (e) $ 2,723,000 2,723,000
------------
Total Master Note
(Cost $2,723,000) 2,723,000
------------
REPURCHASE AGREEMENTS (8.9%)
Credit Suisse First Boston Corp.
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$7,201,418 (e)
(Collateralized by
Various Bonds
with a Principal Amount of
$8,578,677 and a
Market Value of $7,344,044) (g) 7,200,000 7,200,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
Deutsche Bank Securities, Inc.
2.3725%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$2,500,488 (e)
(Collateralized by
Various Bonds
with a Principal Amount of $4,274,753 and a
Market Value of $2,550,000) (g) $ 2,500,000 $ 2,500,000
Dresdner Kleinwort Wasserstein Securities LLC
2.3824%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$3,000,587 (e)
(Collateralized by
Various Bonds
with a Principal Amount of $3,144,103 and a
Market Value of $3,150,123) (g) 3,000,000 3,000,000
Lehman Brothers, Inc.
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$8,001,573 (e)
(Collateralized by
Various Bonds
with a Principal Amount of $11,020,545 and a
Market Value of $8,261,861) (g) 8,100,000 8,100,000
Merrill Lynch Pierce Fenner & Smith
2.3924%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$5,840,148 (e)
(Collateralized by
Various Bonds
with a Principal Amount of $5,762,852 and a
Market Value of $6,130,959) (g) 5,839,000 5,839,000
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 139
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co., Inc.
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,477,287 (e)
(Collateralized by
Various Bonds
with a Principal Amount of $2,591,252 and a
Market Value of $1,557,834) (g) $ 1,477,000 $ 1,477,000
------------
Total Repurchase Agreements
(Cost $28,116,000) 28,116,000
------------
Total Short-Term Investments
(Cost $111,390,564) 111,390,564
------------
Total Investments
(Cost $418,252,171) (h) 133.3% 420,890,725(i)
Liabilities in Excess of Cash and Other Assets (33.3) (105,131,895)
------- ------------
Net Assets 100.0% $315,758,830
------- ------------
------- ------------
</Table>
<Table>
(a) May be sold to institutional investors only.
(b) TBA: Securities purchased on a forward commitment basis
with an approximate principal amount and maturity date.
The actual principal amount and the maturity will be
determined upon settlement.
(c) Represents securities out on loan or a portion of which
is out on loan.
(d) Segregated as collateral for TBA.
(e) Represents security or a portion thereof, purchased with
cash collateral received for securities on loan.
(f) United States Government Guaranteed Security.
(g) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(h) The cost for federal income tax purpose is $418,253,981.
(i) At December 31, 2004 net unrealized appreciation was
$2,636,744 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 $3,538,312 and
aggregate unrealized depreciation for all investments on
which there was an excess of cost over market value of
$901,568.
</Table>
M- 140 MainStay VP Government Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $418,252,171) including
$49,474,223 market value of securities
loaned $420,890,725
Cash 1,901
Receivables:
Interest 2,304,939
Fund shares sold 124,497
Other assets 927
------------
Total assets 423,322,989
------------
LIABILITIES:
Securities lending collateral 51,172,863
Payables:
Investment securities purchased 56,103,621
Adviser 80,129
Administrator 53,419
Fund shares redeemed 49,087
Shareholder communication 48,238
NYLIFE Distributors 8,164
Custodian 6,425
Accrued expenses 42,213
------------
Total liabilities 107,564,159
------------
Net assets $315,758,830
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 259,440
Service Class 37,779
Additional paid-in capital 317,245,134
Accumulated undistributed net investment
income 13,079
Accumulated net realized loss on investments (4,435,156)
Net unrealized appreciation on investments 2,638,554
------------
Net assets $315,758,830
============
INITIAL CLASS
Net assets applicable to outstanding shares $275,674,147
============
Shares of capital stock outstanding 25,944,034
============
Net asset value per share outstanding $ 10.63
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 40,084,683
============
Shares of capital stock outstanding 3,777,899
============
Net asset value per share outstanding $ 10.61
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 141
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Interest $14,049,915
Income from securities loaned -- net 73,500
Dividends 1,763
-----------
Total income 14,125,178
-----------
EXPENSES:
Advisory 1,003,220
Administration 668,813
Shareholder communication 149,384
Distribution and service -- Service Class 68,669
Professional 64,355
Custodian 37,152
Directors 24,832
Portfolio pricing 10,818
Miscellaneous 25,140
-----------
Total expenses 2,052,383
Reimbursement of advisory fee (6,228)
-----------
Net expenses 2,046,155
-----------
Net investment income 12,079,023
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (950,448)
Net change in unrealized appreciation
investments (135,851)
-----------
Net realized and unrealized loss on investments (1,086,299)
-----------
Net increase in net assets resulting from
operations $10,992,724
===========
</Table>
M- 142 MainStay VP Government Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND THE YEAR ENDED DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 12,079,023 $ 14,740,039
Net realized gain (loss) on
investments (950,448) 3,618,862
Net change in unrealized
appreciation on investments (135,851) (11,082,191)
-----------------------------
Net increase in net assets
resulting from operations 10,992,724 7,276,710
-----------------------------
Dividends to shareholders:
From net investment income:
Initial Class (11,407,862) (16,889,280)
Service Class (1,581,929) (608,313)
-----------------------------
Total dividends to shareholders (12,989,791) (17,497,593)
-----------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 16,414,104 102,859,265
Service Class 30,745,896 14,071,403
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Initial Class 11,407,862 16,889,280
Service Class 1,581,929 608,313
-----------------------------
60,149,791 134,428,261
Cost of shares redeemed:
Initial Class (110,143,295) (183,509,906)
Service Class (5,103,381) (660,551)
-----------------------------
(115,246,676) (184,170,457)
-----------------------------
Decrease in net assets derived
from capital share transactions (55,096,885) (49,742,196)
-----------------------------
Net decrease in net assets (57,093,952) (59,963,079)
NET ASSETS:
Beginning of year 372,852,782 432,815,861
-----------------------------
End of year $ 315,758,830 $ 372,852,782
=============================
Accumulated undistributed
(distributions in excess of) net
investment income at end of year $ 13,079 $ (20,222)
=============================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 143
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
-------------------------------------------------------------------- ---------------------------
JUNE 4,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 10.73 $ 11.05 $ 10.35 $ 10.11 $ 9.56 $ 10.72 $ 11.42
-------- -------- -------- -------- -------- ------- -------
Net investment income 0.45 0.36(b) 0.31 0.42(c) 0.62 0.44 0.21(b)
Net realized and unrealized
gain (loss) on investments (0.09) (0.15) 0.71 0.25(c) 0.55 (0.11) (0.39)
-------- -------- -------- -------- -------- ------- -------
Total from investment
operations 0.36 0.21 1.02 0.67 1.17 0.33 (0.18)
-------- -------- -------- -------- -------- ------- -------
Less dividends:
From net investment income (0.46) (0.53) (0.32) (0.43) (0.62) (0.44) (0.52)
-------- -------- -------- -------- -------- ------- -------
Net asset value at end of
period $ 10.63 $ 10.73 $ 11.05 $ 10.35 $ 10.11 $ 10.61 $ 10.72
======== ======== ======== ======== ======== ======= =======
Total investment return 3.33% 1.88% 9.85% 6.64% 12.22% 3.07% (1.63%)(d)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 3.63% 3.25% 3.94% 5.01%(c) 6.29% 3.38% 3.00%+(e)
Expenses 0.59% 0.59% 0.59% 0.60% 0.60% 0.84% 0.84%+
Portfolio turnover rate 113% 106% 146% 137% 311% 113% 106%
Net assets at end of period
(in 000's) $275,674 $359,332 $432,816 $223,387 $130,390 $40,085 $13,521
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) As required, effective January 1, 2001, the portfolio has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended December 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to January 1, 2001 have
not been restated to reflect this change in presentation.
</Table>
<Table>
Decrease net investment income ($0.04)
Increase net realized and unrealized gains and
losses 0.04
Decrease ratio of net investment income (0.39%)
</Table>
<Table>
(d) Total Return is not annualized.
(e) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
M- 144 MainStay VP Government Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (75.2%)+
CONVERTIBLE BONDS (3.1%)
- ---------------------------------------------------------------------------------
AIRLINES (0.1%)
Delta Air Lines, Inc.
8.00%, due 6/3/23 $ 1,900,000 $ 1,261,125
--------------
COMMUNICATIONS EQUIPMENT (1.1%)
CIENA Corp.
3.75%, due 2/1/08 4,355,000 3,886,838
Nortel Networks Corp.
4.25%, due 9/1/08 8,975,000 8,773,062
Riverstone Networks, Inc.
3.75%, due 12/1/06 (c)(d) 3,235,000 2,960,025
--------------
15,619,925
--------------
CONSUMER FINANCE (0.1%)
Providian Financial Corp.
3.25%, due 8/15/05 950,000 953,563
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.1%)
At Home Corp.
0.5246%, due 12/28/18 (d)(e)(f) 1,967,498 157,400
4.75%, due 12/15/06 (d)(e)(f) 9,032,054 1,264,487
--------------
1,421,887
--------------
HEALTH CARE PROVIDERS & SERVICES (0.7%)
Laboratory Corp. of America Holdings
(zero coupon), due 9/11/21 (k) 7,640,000 5,930,550
Lincare Holdings, Inc.
3.00%, due 6/15/33 4,525,000 4,858,719
--------------
10,789,269
--------------
INSURANCE (0.2%)
Loews Corp.
3.125%, due 9/15/07 810,000 795,825
PMA Capital Corp.
6.50%, due 9/30/22 (c) 1,985,000 2,188,462
--------------
2,984,287
--------------
IT SERVICES (0.1%)
Electronic Data Systems Corp.
3.875%, due 7/15/23 1,450,000 1,538,813
--------------
MEDIA (0.0%) (B)
Adelphia Communications Corp.
6.00%, due 2/15/06 (d) 1,760,000 387,200
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.7%)
VLSI Logic Corp.
4.00%, due 11/1/06 $ 10,355,000 $ 10,290,281
--------------
Total Convertible Bonds
(Cost $46,316,672) 45,246,350
--------------
CORPORATE BONDS (59.2%)
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.7%)
BE Aerospace, Inc.
Series B
8.00%, due 3/1/08 1,360,000 1,361,700
8.50%, due 10/1/10 470,000 517,000
Series B
8.875%, due 5/1/11 2,685,000 2,805,825
Hexcel Corp.
9.75%, due 1/15/09 815,000 847,600
Sequa Corp.
Series B
8.875%, due 4/1/08 2,275,000 2,491,125
9.00%, due 8/1/09 1,700,000 1,916,750
--------------
9,940,000
--------------
AIRLINES (2.2%)
Continental Airlines, Inc.
Series A
7.875%, due 7/2/18 6,451,815 6,226,905
Delta Air Lines, Inc.
8.30%, due 12/15/29 12,570,000 6,096,450
Series A
9.25%, due 12/27/07 (e) 2,270,000 1,657,100
9.25%, due 3/15/22 1,000,000 495,000
9.75%, due 5/15/21 125,000 63,750
10.00%, due 8/15/08 (i) 2,070,000 1,526,625
10.375%, due 2/1/11 4,335,000 2,644,350
10.375%, due 12/15/22 2,520,000 1,285,200
Northwest Airlines, Inc.
8.875%, due 6/1/06 1,030,000 988,800
8.97%, due 1/2/15 1,131,166 765,268
9.875%, due 3/15/07 (i) 5,440,000 4,909,600
10.00%, due 2/1/09 (i) 6,020,000 5,071,850
--------------
31,730,898
--------------
AUTO COMPONENTS (2.7%)
Advanced Accessory Systems
10.75%, due 6/15/11 514,432 488,710
ArvinMeritor, Inc.
8.75%, due 3/1/12 (i) 2,060,000 2,379,300
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V AMONG THE PORTFOLIO'S 10 LARGEST HOLDINGS, EXCLUDING SHORT-TERM INVESTMENTS.
MAY BE SUBJECT TO CHANGE DAILY.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 145
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
AUTO COMPONENTS (CONTINUED)
Collins & Aikman Products
12.875%, due 8/15/12 (c)(i) $ 6,125,000 $ 5,290,469
Cooper Standard
7.00%, due 12/15/12 (c) 2,460,000 2,496,900
Dana Corp.
7.00%, due 3/1/29 2,010,000 2,004,975
9.00%, due 8/15/11 2,260,000 2,780,636
Goodyear Tire & Rubber Co. (The)
6.375%, due 3/15/08 (i) 1,032,000 1,037,160
6.625%, due 12/1/06 2,150,000 2,246,750
8.50%, due 3/15/07 (i) 1,380,000 1,476,600
2nd Lien Note
V 11.00%, due 3/1/11 (c)(h) 10,945,000 12,723,563
Tenneco Automotive, Inc.
Series B
10.25%, due 7/15/13 2,070,000 2,442,600
Visteon Corp.
7.00%, due 3/10/14 (i) 3,850,000 3,676,750
--------------
39,044,413
--------------
BUILDING MATERIALS & COMPONENTS (0.1%)
Goodman Global Holding Co., Inc.
5.76%, due 6/15/12 (c)(j) 1,110,000 1,126,650
--------------
BUILDING PRODUCTS (0.8%)
Dayton Superior Corp.
10.75%, due 9/15/08 4,545,000 4,863,150
Interline Brands, Inc.
11.50%, due 5/15/11 3,405,000 3,830,625
MMI Products, Inc.
Series B
11.25%, due 4/15/07 2,790,000 2,831,850
--------------
11,525,625
--------------
CAPITAL MARKETS (0.6%)
LaBranche & Co., Inc.
9.50%, due 5/15/09 2,375,000 2,422,500
11.00%, due 5/15/12 5,420,000 5,826,500
--------------
8,249,000
--------------
CHEMICALS (2.8%)
Crompton Corp.
9.875%, due 8/1/12 (c) 5,695,000 6,520,775
Equistar Chemicals, L.P.
7.55%, due 2/15/26 2,400,000 2,370,000
10.125%, due 9/1/08 1,080,000 1,244,700
10.625%, due 5/1/11 (i) 4,400,000 5,104,000
Lyondell Chemical Co.
9.50%, due 12/15/08 1,905,000 2,066,925
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CHEMICALS (CONTINUED)
Lyondell Chemical Co. (continued)
Series A
9.625%, due 5/1/07 $ 450,000 $ 495,000
10.50%, due 6/1/13 (i) 3,125,000 3,718,750
Millennium America, Inc.
7.00%, due 11/15/06 1,960,000 2,038,400
7.625%, due 11/15/26 3,150,000 3,102,750
Sovereign Specialty Chemicals, Inc.
11.875%, due 3/15/10 2,667,000 2,857,024
Terra Capital, Inc.
12.875%, due 10/15/08 6,855,000 8,568,750
Witco Corp.
7.75%, due 4/1/23 1,965,000 1,915,875
--------------
40,002,949
--------------
COMMERCIAL BANKS (0.2%)
UGS Corp.
10.00%, due 6/1/12 (c)(i) 2,945,000 3,349,937
--------------
COMMERCIAL SERVICES & SUPPLIES (2.4%)
American Color Graphics, Inc.
10.00%, due 6/15/10 2,905,000 2,451,094
El Comandante Capital Corp.
11.75%, due 12/15/05 (d)(e) 891,000 507,870
Geo Sub Corp.
11.00%, due 5/15/12 5,630,000 5,658,150
Language Line, Inc.
11.125%, due 6/15/12 5,305,000 5,623,300
Phoenix Color Corp.
10.375%, due 2/1/09 3,065,000 2,670,381
Protection One Alarm Monitoring, Inc.
7.375%, due 8/15/05 7,970,000 8,049,700
Series B
8.125%, due 1/15/09 3,855,000 3,700,800
Vertrue, Inc.
9.25%, due 4/1/14 6,090,000 6,455,400
--------------
35,116,695
--------------
COMMUNICATIONS EQUIPMENT (1.1%)
Lucent Technologies, Inc.
5.50%, due 11/15/08 (i) 1,745,000 1,792,987
6.45%, due 3/15/29 7,190,000 6,506,950
7.25%, due 7/15/06 (i) 6,635,000 6,933,575
--------------
15,233,512
--------------
CONSTRUCTION & ENGINEERING (1.5%)
AMSTED Industries, Inc.
10.25%, due 10/15/11 (c) 5,800,000 6,554,000
J. Ray McDermott, S.A.
11.00%, due 12/15/13 (c) 5,085,000 5,669,775
</Table>
MainStay VP High Yield
M- 146 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (CONTINUED)
Shaw Group, Inc. (The)
10.75%, due 3/15/10 (i) $ 5,675,000 $ 6,256,688
URS Corp.
11.50%, due 9/15/09 2,927,000 3,366,050
Series B
12.25%, due 5/1/09 55,000 58,575
--------------
21,905,088
--------------
CONTAINERS & PACKAGING (1.9%)
Consolidated Container Co. LLC
(zero coupon), due 6/15/09
10.75%, beginning 6/15/07 5,900,000 4,956,000
Owens-Brockway
Glass Container, Inc.
7.75%, due 5/15/11 2,060,000 2,229,950
8.25%, due 5/15/13 1,200,000 1,320,000
8.875%, due 2/15/09 5,715,000 6,207,919
Owens-Illinois, Inc.
7.80%, due 5/15/18 2,265,000 2,355,600
8.10%, due 5/15/07 (i) 7,300,000 7,774,500
Tekni-Plex, Inc.
8.75%, due 11/15/13 (c) 2,615,000 2,601,925
--------------
27,445,894
--------------
DIVERSIFIED FINANCIAL SERVICES (3.5%)
Caithness Coso Funding Corp.
Series B
9.05%, due 12/15/09 4,302,529 4,732,782
CanWest Media, Inc.
8.00%, due 9/15/12 (c) 5,289,880 5,673,396
Dollar Financial Group, Inc.
9.75%, due 11/15/11 1,930,000 2,094,050
ESI Tractebel Acquisition Corp.
Series B
7.99%, due 12/30/11 2,496,000 2,635,866
IPC Acquisition Corp.
11.50%, due 12/15/09 5,830,000 6,383,850
National Beef Packing Co. LLC
10.50%, due 8/1/11 3,500,000 3,675,000
Pharma Services Intermediate
Holding Corp.
(zero coupon),
due 4/1/14 (c) 8,285,000 5,882,350
Rainbow National Services LLC
8.75%, due 9/1/12 (c) 2,940,000 3,226,650
V 10.375%, due 9/1/14 (c) 10,280,000 11,590,700
UCAR Finance, Inc.
10.25%, due 2/15/12 (i) 4,185,000 4,781,362
--------------
50,676,006
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED TELECOMMUNICATION SERVICES (2.9%)
Mountain States Telephone & Telegraph Co.
7.375%, due 5/1/30 (e) $ 2,485,000 $ 2,360,750
Qwest Capital Funding, Inc.
7.75%, due 8/15/06 1,565,000 1,647,163
Qwest Communications
International, Inc.
7.25%, due 2/15/11 (c) 2,505,000 2,567,625
Series B
7.50%, due 11/1/08 1,970,000 1,950,300
7.50%, due 2/15/14 (c)(i) 2,130,000 2,151,300
Qwest Corp.
5.625%, due 11/15/08 300,000 305,250
7.25%, due 9/15/25 920,000 894,700
8.875%, due 6/1/31 2,115,000 2,210,175
9.125%, due 3/15/12 (c) 4,820,000 5,567,100
Qwest Services Corp.
13.50%, due 12/15/07 (c) 3,346,000 3,822,805
14.00%, due 12/15/10 (c) 7,417,000 8,918,942
14.50%, due 12/15/14 (c) 2,951,000 3,733,015
Syniverse Technologies, Inc.
Series B
12.75%, due 2/1/09 5,440,000 6,201,600
--------------
42,330,725
--------------
ELECTRIC UTILITIES (1.3%)
VCedar Brakes II LLC
9.875%, due 9/1/13 9,101,268 10,876,015
Mirant Americas Generation LLC
7.20%, due 10/1/08 (d) 4,515,000 4,853,625
8.50%, due 10/1/21 (d) 1,940,000 2,022,450
9.125%, due 5/1/31 (d) 945,000 985,163
--------------
18,737,253
--------------
ELECTRICAL EQUIPMENT (0.4%)
Knowles Electronics Holdings, Inc.
13.125%, due 10/15/09 5,510,000 5,744,175
--------------
ENERGY EQUIPMENT & SERVICES (1.4%)
El Paso Natural Gas Co.
7.50%, due 11/15/26 385,000 401,844
Series A
7.625%, due 8/1/10 3,975,000 4,352,625
Grant Prideco, Inc.
9.00%, due 12/15/09 365,000 404,237
Series B
9.625%, due 12/1/07 1,000,000 1,117,500
Lone Star Technologies, Inc.
Series B
9.00%, due 6/1/11 4,125,000 4,413,750
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 147
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (CONTINUED)
Parker Drilling Co.
9.625%, due 10/1/13 (i) $ 4,400,000 $ 4,939,000
Series B
10.125%, due 11/15/09 448,000 470,400
Pride International, Inc.
7.375%, due 7/15/14 2,770,000 3,026,225
Seitel, Inc.
11.75%, due 7/15/11 (c) 415,000 437,825
--------------
19,563,406
--------------
FOOD & STAPLES RETAILING (0.1%)
Duane Reade, Inc.
7.01%, due 12/15/10 (c)(j) 1,595,000 1,618,925
--------------
FOOD PRODUCTS (1.1%)
Pinnacle Foods Holding Corp.
8.25%, due 12/1/13 (c)(i) 5,025,000 4,786,312
Seminis, Inc.
10.25%, due 10/1/13 4,990,000 5,613,750
Swift & Co.
10.125%, due 10/1/09 650,000 724,750
12.50%, due 1/1/10 4,810,000 5,435,300
--------------
16,560,112
--------------
GAS UTILITIES (0.4%)
ANR Pipeline, Inc.
9.625%, due 11/1/21 4,270,000 5,374,863
Southern Natural Gas Co.
7.35%, due 2/15/31 1,100,000 1,141,250
--------------
6,516,113
--------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.4%)
Fisher Scientific
International, Inc.
8.125%, due 5/1/12 5,120,000 5,683,200
--------------
HEALTH CARE PROVIDERS & SERVICES (2.8%)
AmeriPath, Inc.
10.50%, due 4/1/13 5,870,000 6,236,875
Caremark Rx, Inc.
7.375%, due 10/1/06 1,960,000 2,075,811
Chemed Corp.
8.75%, due 2/24/11 7,440,000 7,774,800
HCA, Inc.
7.50%, due 11/15/95 (g) 10,270,000 9,615,092
National Nephrology Associates, Inc.
9.00%, due 11/1/11 (c) 1,525,000 1,765,187
Quintiles Transnational Corp.
10.00%, due 10/1/13 6,985,000 7,823,200
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
Vanguard Health Holdings, Inc.
(zero coupon), due 10/1/14
11.25%, beginning 10/1/09 (c) $ 1,430,000 $ 936,650
9.00%, due 10/1/14 (c) 4,485,000 4,798,950
--------------
41,026,565
--------------
HOTELS, RESTAURANTS & LEISURE (2.8%)
Caesars Entertainment, Inc.
8.875%, due 9/15/08 3,000,000 3,397,500
9.375%, due 2/15/07 875,000 964,688
Gaylord Entertainment Co.
8.00%, due 11/15/13 1,065,000 1,150,200
ITT Corp.
7.375%, due 11/15/15 4,300,000 4,783,750
Jacobs Entertainment, Inc.
11.875%, due 2/1/09 1,765,000 1,994,450
MGM Mirage
8.375%, due 2/1/11 (i) 2,420,000 2,728,550
Mirage Resorts, Inc.
7.25%, due 10/15/06 1,555,000 1,628,862
President Casinos, Inc.
12.00%,
due 12/31/05 (c)(d)(e)(l) 895,000 599,650
13.00%,
due 12/31/05 (d)(e)(l) 1,752,000 1,086,240
Six Flags, Inc.
9.625%, due 6/1/14 4,420,000 4,442,100
9.75%, due 4/15/13 (i) 2,440,000 2,476,600
Trump Atlantic City Associates
11.25%, due 5/1/06 (d) 8,285,000 7,901,819
Venetian Casino Resort LLC
11.00%, due 6/15/10 6,130,000 6,995,862
--------------
40,150,271
--------------
HOUSEHOLD DURABLES (0.2%)
Fedders North America, Inc.
9.875%, due 3/1/14 2,270,000 1,850,050
Foamex L.P.
10.75%, due 4/1/09 740,000 723,350
--------------
2,573,400
--------------
INSURANCE (0.9%)
Crum & Forster Holdings Corp.
10.375%, due 6/15/13 4,200,000 4,683,000
Fremont General Corp.
Series B
7.875%, due 3/17/09 4,845,000 4,917,675
Lumbermens Mutual Casualty
8.45%, due 12/1/97 (c)(d) 555,000 56
9.15%, due 7/1/26 (c)(d) 12,235,000 1,223
Provident Companies, Inc.
7.25%, due 3/15/28 870,000 823,238
</Table>
MainStay VP High Yield
M- 148 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
INSURANCE (CONTINUED)
UnumProvident Corp.
6.75%, due 12/15/28 $ 2,055,000 $ 1,854,637
--------------
12,279,829
--------------
INTERNET SOFTWARE & SERVICES (0.1%)
Globix Corp.
11.00%,
due 5/1/08 (c)(e)(m) 1,473,940 1,356,025
--------------
IT SERVICES (0.5%)
Electronic Data Systems Corp.
Series B
6.50%, due 8/1/13 515,000 543,784
7.125%, due 10/15/09 1,770,000 1,949,455
7.45%, due 10/15/29 1,040,000 1,123,706
Unisys Corp.
7.25%, due 1/15/05 2,525,000 2,657,563
8.125%, due 6/1/06 705,000 705,000
--------------
6,979,508
--------------
MACHINERY (1.1%)
Dresser-Rand Group, Inc.
7.375%, due 11/1/14 (c)(i) 1,325,000 1,351,500
Mark IV Industries, Inc.
7.50%, due 9/1/07 7,905,000 7,707,375
Mueller Group, Inc.
10.00%, due 5/1/12 3,385,000 3,689,650
Thermadyne Holdings Corp.
9.25%, due 2/1/14 2,555,000 2,491,125
--------------
15,239,650
--------------
MEDIA (4.5%)
Adelphia Communications Corp.
Series B
9.25%, due 10/1/05 (d) 390,000 373,425
9.375%, due 11/15/09 (d) 2,265,000 2,236,687
10.25%, due 11/1/06 (d) 3,285,000 3,194,663
10.25%, due 6/15/11 (d) 6,425,000 6,505,312
Dex Media East LLC
12.125%, due 11/15/12 625,000 761,719
FrontierVision Holdings, L.P.
11.875%, due 9/15/07 (d) 2,750,000 3,671,250
Series B
11.875%, due 9/15/07 (d) 1,650,000 2,202,750
FrontierVision Operating
Partners L.P.
11.00%, due 10/15/06 (d) 5,475,000 7,172,250
LCE Acquisition Corp.
9.00%, due 8/1/14 (c) 3,710,000 4,016,075
Medianews Group, Inc.
6.875%, due 10/1/13 1,615,000 1,655,375
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MEDIA (CONTINUED)
Morris Publishing Group LLC
7.00%, due 8/1/13 $ 4,820,000 $ 4,916,400
PanAmSat Corp.
9.00%, due 8/15/14 (c) 3,875,000 4,325,469
Paxson Communications Corp.
(zero coupon), due 1/15/09
12.25% beginning 1/15/06 7,185,000 6,717,975
Radio One, Inc.
Series B
8.875%, due 7/1/11 2,675,000 2,912,406
Spanish Broadcasting
System, Inc.
9.625%, due 11/1/09 2,315,000 2,430,750
United Artists Theatres
Circuit, Inc.
9.30%, due 7/1/15 (e) 1,230,083 1,254,685
Vertis, Inc.
9.75%, due 4/1/09 3,880,000 4,209,800
Warner Music Group
7.375%, due 4/15/14 (c) 2,240,000 2,296,000
Young Broadcasting, Inc.
8.50%, due 12/15/08 780,000 834,600
Ziff Davis Media, Inc.
Series B
13.00%, due 8/12/09 (m) 2,582,239 2,762,996
--------------
64,450,587
--------------
METALS & MINING (0.7%)
Allegheny Ludlum Corp.
6.95%, due 12/15/25 4,420,000 4,331,600
Allegheny Technologies, Inc.
8.375%, due 12/15/11 1,390,000 1,542,900
United States Steel Corp.
9.75%, due 5/15/10 645,000 735,300
10.75%, due 8/1/08 2,590,000 3,049,725
--------------
9,659,525
--------------
MULTI-UTILITIES & UNREGULATED POWER (4.9%)
AES Corp. (The)
7.75%, due 3/1/14 4,410,000 4,784,850
9.00%, due 5/15/15 (c)(g) 7,025,000 8,043,625
AES Eastern Energy L.P.
Series 1999-A
9.00%, due 1/2/17 8,173,938 9,277,420
Calpine Corp.
7.625%, due 4/15/06 175,000 171,938
7.75%, due 4/15/09 (i) 1,790,000 1,369,350
V 8.50%, due 7/15/10 (c)(i) 13,227,000 11,342,153
8.75%, due 7/15/07 1,040,000 910,000
Calpine Gilroy, L.P.
10.00%
due 9/30/14 (d)(e)(h) 5,113,119 5,113,119
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 149
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (CONTINUED)
Dynegy Holdings, Inc.
9.875%, due 7/15/10 (c) $ 8,905,000 $ 9,951,338
10.125%, due 7/15/13 (c) 2,690,000 3,080,050
NRG Energy, Inc.
8.00%, due 12/15/13 (c) 7,415,000 8,082,350
Reliant Energy, Inc.
9.25%, due 7/15/10 1,535,000 1,711,525
Salton Sea Funding Corp.
Series B
7.37%, due 5/30/05 (e) 421,996 426,117
Tiverton/Rumford Power Associates Ltd., L.P.
9.00%, due 7/15/18 (c) 5,508,260 4,406,608
Westar Energy, Inc.
7.125%, due 8/1/09 855,000 938,860
7.875%, due 5/1/07 1,205,000 1,310,372
--------------
70,919,675
--------------
OIL & GAS (3.8%)
El Paso Corp.
6.95%, due 12/15/07 (i) 1,005,000 1,052,738
7.80%, due 8/1/31 1,145,000 1,099,200
VEl Paso Production Holding Co.
7.75%, due 6/1/13 12,625,000 13,224,687
Energy Corp. of America
Series A
9.50%, due 5/15/07 2,900,000 2,769,500
Evergreen Resources, Inc.
5.875%, due 3/15/12 3,165,000 3,306,995
EXCO Resources, Inc.
7.25%, due 1/15/11 4,190,000 4,483,300
Forest Oil Corp.
8.00%, due 12/15/11 3,465,000 3,958,762
Gas Transmission Northwest Corp.
7.10%, due 6/1/05 4,630,000 4,703,126
Hilcorp Energy I L.P.
10.50%, due 9/1/10 (c) 455,000 514,150
Newfield Exploration Co.
7.625%, due 3/1/11 345,000 388,125
8.375%, due 8/15/12 340,000 380,800
Northwest Pipeline Corp.
7.125%, due 12/1/25 4,180,000 4,368,100
Pacific Energy Partners L.P.
7.125%, due 6/15/14 3,475,000 3,700,875
Plains Exploration & Production Co.
Series B
8.75%, due 7/1/12 3,310,000 3,698,925
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
OIL & GAS (CONTINUED)
Vintage Petroleum, Inc.
8.25%, due 5/1/12 (g) $ 7,205,000 $ 7,943,513
--------------
55,592,796
--------------
PAPER & FOREST PRODUCTS (2.1%)
Bowater, Inc.
9.00%, due 8/1/09 2,205,000 2,451,636
Georgia-Pacific Corp.
7.25%, due 6/1/28 3,375,000 3,611,250
7.375%, due 12/1/25 1,310,000 1,431,175
7.75%, due 11/15/29 2,105,000 2,357,600
8.00%, due 1/15/24 5,330,000 6,182,800
8.875%, due 2/1/10 1,180,000 1,373,225
8.875%, due 5/15/31 5,535,000 6,918,750
9.375%, due 2/1/13 1,600,000 1,864,000
Pope & Talbot, Inc.
8.375%, due 6/1/13 3,740,000 3,927,000
--------------
30,117,436
--------------
PHARMACEUTICALS (0.2%)
WH Holdings Ltd.
9.50%, due 4/1/11 2,540,000 2,794,000
--------------
REAL ESTATE (2.0%)
American Real Estate
Partners L.P.
8.125%, due 6/1/12 (g) 6,705,000 7,149,206
CB Richard Ellis Services, Inc.
9.75%, due 5/15/10 2,093,000 2,386,020
11.25%, due 6/15/11 5,290,000 6,083,500
Crescent Real Estate
Equities L.P.
7.50%, due 9/15/07 6,920,000 7,421,700
OMEGA Healthcare
Investors, Inc.
7.00%, due 4/1/14 6,175,000 6,344,813
--------------
29,385,239
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.8%)
Amkor Technology, Inc.
7.125%, due 3/15/11 (i) 4,665,000 4,385,100
7.75%, due 5/15/13 (i) 535,000 502,900
10.50%, due 5/1/09 (i) 2,560,000 2,560,000
MagnaChip Semiconductor SA
5.76%, due 12/15/11 (c)(j) 2,690,000 2,763,975
8.00%, due 12/15/14 (c) 1,910,000 1,991,175
--------------
12,203,150
--------------
SPECIALIZED SERVICES (0.2%)
Venoco, Inc.
8.75%, due 12/15/11 (c) 2,730,000 2,811,900
--------------
</Table>
MainStay VP High Yield
M- 150 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
SPECIALTY RETAIL (0.5%)
Rent-Way, Inc.
11.875%, due 6/15/10 $ 4,045,000 $ 4,555,681
Stratus Technologies, Inc.
10.375%, due 12/1/08 3,215,000 2,901,538
--------------
7,457,219
--------------
TOBACCO (0.6%)
Commonwealth Brands, Inc.
9.75%, due 4/15/08 (c) 5,635,000 5,916,750
10.625%, due 9/1/08 (c) 3,110,000 3,265,500
--------------
9,182,250
--------------
TRANSPORTATION INFRASTRUCTURE (0.2%)
Great Lakes Dredge & Dock Corp.
7.75%, due 12/15/13 (i) 3,400,000 3,094,000
--------------
WIRELESS TELECOMMUNICATION SERVICES (1.8%)
Alamosa Delaware, Inc.
(zero coupon), due 7/31/09
12.00% beginning 7/31/05 6,010,000 6,520,850
11.00%, due 7/31/10 513,000 604,058
American Tower Escrow Corp.
(zero coupon), due 8/1/08 1,305,000 975,487
Dobson Cellular Systems
6.96%, due 11/1/11 (c)(j) 1,100,000 1,138,500
8.375%, due 11/1/11 (c) 1,105,000 1,140,913
9.875%, due 11/1/12 (c)(i) 1,945,000 1,915,825
Dobson Communications Corp.
8.875%, due 10/1/13 845,000 593,612
10.875%, due 7/1/10 (i) 1,345,000 1,042,375
Loral CyberStar, Inc.
10.00%, due 7/15/06 (d) 5,773,000 4,387,480
Triton PCS, Inc.
8.50%, due 6/1/13 3,930,000 3,792,450
US Unwired, Inc.
Series B
8.50%, due 6/15/12 2,875,000 3,241,562
--------------
25,353,112
--------------
Total Corporate Bonds
(Cost $784,643,571) 854,726,713
--------------
FOREIGN CORPORATE BONDS (7.9%)
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.4%)
Heckler & Koch GmbH
9.25%, due 7/15/11 (c) 3,505,000 5,335,871
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
BROADCASTING & PUBLISHING (0.1%)
Telenet Communications NV
9.00%, due 12/15/13 (c) E 880,000 $ 1,327,715
--------------
CHEMICALS (0.4%)
Invista
9.25%, due 5/1/12 (c) $ 5,250,000 5,853,750
--------------
COMMERCIAL SERVICES & SUPPLIES (0.6%)
Quebecor Media, Inc.
(zero coupon), due 7/15/11
13.75%, beginning 7/15/06 8,180,000 8,098,200
11.125%, due 7/15/11 955,000 1,091,088
--------------
9,189,288
--------------
CONTAINERS & PACKAGING (0.8%)
Crown Euro Holdings S.A.
9.50%, due 3/1/11 (i) 6,295,000 7,176,300
10.875%, due 3/1/13 (i) 4,280,000 5,061,100
--------------
12,237,400
--------------
ELECTRIC UTILITIES (0.2%)
WRG Acquisitions PLC
8.3638%, due 12/15/11 (c)(j) L 1,450,000 2,881,292
--------------
FOOD & STAPLES RETAILING (0.2%)
Parmalat Finance Corp. BV
6.25%, due 2/7/05 (d)(f) E 7,330,000 2,191,926
--------------
FOOD PRODUCTS (0.5%)
Burns Philp Capital
Property Ltd.
9.50%, due 11/15/10 $ 1,545,000 1,707,225
10.75%, due 2/15/11 4,785,000 5,383,125
--------------
7,090,350
--------------
INSURANCE (0.1%)
Lindsey Morden Group, Inc.
Series B
7.00%, due 6/16/08 C$ 2,963,000 2,150,255
--------------
MARINE (0.4%)
Navigator Gas Transport PLC
10.50%,
due 6/30/07 (c)(d)(e) $ 7,885,000 5,923,606
--------------
MEDIA (1.8%)
CanWest Media, Inc.
Series B
7.625%, due 4/15/13 820,000 892,775
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 151
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
MEDIA (CONTINUED)
Hollinger, Inc.
12.875%, due 3/1/11 (c) $ 1,849,000 $ 2,181,820
2nd Lien
11.875%, due 3/1/11 (c) 625,000 630,469
Shaw Communications, Inc.
7.50%, due 11/20/13 C$ 5,470,000 4,942,974
Sun Media Corp.
7.625%, due 2/15/13 $ 2,330,000 2,542,612
Telenet Group Holding NV
(zero coupon), due 6/15/14
11.50%,
beginning 12/15/08 (c)(i) 3,715,000 2,823,400
VOno Finance PLC
10.50%, due 5/15/14 (c) E 8,135,000 12,660,833
--------------
26,674,883
--------------
MULTI-UTILITIES & UNREGULATED POWER (0.5%)
Calpine Canada
Energy Finance
8.50%, due 5/1/08 (i) $ 9,365,000 7,679,300
--------------
PAPER & FOREST PRODUCTS (0.4%)
Norske Skog Canada Ltd.
7.375%, due 3/1/14 1,590,000 1,657,575
Tembec Industries, Inc.
7.75%, due 3/15/12 2,475,000 2,394,563
8.50%, due 2/1/11 1,070,000 1,075,350
--------------
5,127,488
--------------
PERSONAL PRODUCTS (0.3%)
Jafra Cosmetics International, Inc.
10.75%, due 5/15/11 3,560,000 4,022,800
--------------
ROAD & RAIL (0.3%)
Grupo Transportacion Ferroviaria Mexicana, S.A. de
C.V.
12.50%, due 6/15/12 4,005,000 4,675,837
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.1%)
STATS ChipPAC Ltd.
6.75%, due 11/15/11 (c) 1,060,000 1,049,400
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
Inmarsat Finance PLC
(zero coupon), due 11/15/12
10.375%,
beginning 11/15/08 (c) $ 6,585,000 $ 4,741,200
Millicom International Cellular S.A.
10.00%, due 12/1/13 (c) 6,225,000 6,512,906
--------------
11,254,106
--------------
Total Foreign Corporate Bonds
(Cost $99,856,947) 114,665,267
--------------
LOAN ASSIGNMENTS & PARTICIPATIONS (1.2%)
- ---------------------------------------------------------------------------------
AUTO COMPONENTS (0.3%)
Goodyear Tire &
Rubber Co. (The)
Bank debt, Term Loan
7.03%, due 3/31/06 (h)(j) 4,800,000 4,860,000
--------------
CONTAINERS & PACKAGING (0.1%)
Graham Packaging Co., Inc.
Bank debt, Term Loan C
6.813%, due 4/7/12 (h)(j) 1,000,000 1,024,500
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%)
Qwest Corp.
Bank debt, Term Loan B
6.95%, due 6/30/10 (h)(j) 4,250,000 4,347,750
--------------
MULTI-UTILITIES & UNREGULATED POWER (0.0%) (B)
Mirant Corp.
Bank debt, Revolver 5
4.65%, due 7/17/05 (d)(h)(j) 1,262,754 956,536
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.4%)
Amkor Technology, Inc.
2nd Lien Term Loan
6.86%, due 10/27/10 (h)(j) 5,000,000 5,208,335
--------------
</Table>
MainStay VP High Yield
M- 152 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LOAN ASSIGNMENTS & PARTICIPATIONS (CONTINUED)
- ---------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.1%)
Jostens IH Corp.
Bank debt, Term Loan C
4.67%, due 10/4/11 (h)(j) $ 1,000,000 $ 1,006,429
--------------
Total Loan Assignments & Participations
(Cost $16,991,472) 17,403,550
--------------
YANKEE BONDS (3.8%) (N)
- ---------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.7%)
Crown Cork & Seal Finance PLC
7.00%, due 12/15/06 4,925,000 5,171,250
Smurfit Capital Funding PLC
7.50%, due 11/20/25 4,475,000 4,452,625
--------------
9,623,875
--------------
ENERGY EQUIPMENT & SERVICES (0.9%)
Petroleum Geo-Services ASA
8.00%, due 11/5/06 1,050,691 1,071,705
V 10.00%, due 11/5/10 11,219,054 12,789,721
--------------
13,861,426
--------------
INSURANCE (0.4%)
Fairfax Financial Holdings Ltd.
7.375%, due 4/15/18 (i) 795,000 755,250
7.75%, due 4/26/12 885,000 902,700
7.75%, due 7/15/37 135,000 121,500
8.30%, due 4/15/26 (i) 3,865,000 3,778,038
--------------
5,557,488
--------------
MARINE (0.2%)
Sea Containers Ltd.
Series B
10.75%, due 10/15/06 2,995,000 3,137,263
--------------
MEDIA (0.4%)
Rogers Cablesystem, Ltd.
Series B
10.00%, due 3/15/05 2,210,000 2,240,388
11.00%, due 12/1/15 3,045,000 3,395,175
--------------
5,635,563
--------------
METALS & MINING (0.4%)
Algoma Steel, Inc.
11.00%, due 12/31/09 5,063,000 5,632,587
--------------
PAPER & FOREST PRODUCTS (0.5%)
Tembec Industries, Inc.
8.625%, due 6/30/09 7,175,000 7,210,875
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ROAD & RAIL (0.1%)
Grupo Transportacion Ferroviaria Mexicana, S.A. de
C.V.
11.75%, due 6/15/09 $ 935,000 $ 952,531
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
Rogers Cantel, Inc.
9.75%, due 6/1/16 2,560,000 3,059,200
--------------
Total Yankee Bonds
(Cost $48,367,504) 54,670,808
--------------
Total Long-Term Bonds
(Cost $996,176,166) 1,086,712,688
--------------
<Caption>
SHARES VALUE
COMMON STOCKS (2.3%)
- ---------------------------------------------------------------------------------
AUTO COMPONENTS (0.4%)
Goodyear Tire &
Rubber Co. (The) (a) 424,400 6,221,704
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.0%) (B)
ICO Global Communications
Holdings Ltd. (a)(e) 728,403 437,042
--------------
HEALTH CARE PROVIDERS & SERVICES (0.1%)
QuadraMed Corp. (a)(e) 486,384 1,215,960
Skilled Healthcare
Group, Inc. (a)(e)(h)(l) 1,691 27,056
--------------
1,243,016
--------------
INTERNET SOFTWARE & SERVICES (0.1%)
Globix Corp. (a)(e)(h)(l) 236,469 611,864
Remote Dynamics, Inc. (a) 72,541 73,266
--------------
685,130
--------------
MACHINERY (0.3%)
Joy Global, Inc. 14,265 619,529
Morris Material
Handling, Inc. (a)(e)(h)(l) 9,371 49,666
Thermadyne Holdings Corp. (a)(e) 272,057 3,577,550
--------------
4,246,745
--------------
MEDIA (1.1%)
VUnitedGlobalCom, Inc. (a) 1,633,609 15,780,663
--------------
METALS & MINING (0.1%)
ACP Holding Co. (a)(c)(e) 739,787 1,220,648
--------------
PAPER & FOREST PRODUCTS (0.1%)
Abitibi-Consolidated, Inc. 286,870 1,985,140
--------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 153
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ---------------------------------------------------------------------------------
TOBACCO (0.0%) (B)
North Atlantic Trading Co., Inc. (a)(e)(h)(l) 2,418 $ 24
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.1%)
NEON Communications, Inc. (a)(e)(h)(l) 367,043 458,804
US Unwired, Inc. (a) 67,720 325,056
--------------
783,860
--------------
Total Common Stocks
(Cost $33,506,848) 32,603,972
--------------
CONVERTIBLE PREFERRED STOCKS (0.4%)
- ---------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.0%) (B)
Pacific & Atlantic (Holdings), Inc.
7.50%, Class A (e)(h)(l) 14,496 145
--------------
HEALTH CARE PROVIDERS & SERVICES (0.4%)
QuadraMed Corp. (c)(e) 234,600 5,161,200
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.0%) (B)
NEON Communications, Inc.
12.00% (a)(e)(h)(l)(m) 39,998 449,977
--------------
Total Convertible Preferred Stocks
(Cost $6,310,726) 5,611,322
--------------
PREFERRED STOCKS (1.4%)
- ---------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.0%) (B)
Colorado Prime Corp. (a)(e)(h)(l)(m) 1,395 14
--------------
MEDIA (0.5%)
Haights Cross Communications, Inc.
16.00% Class B (e)(h)(m) 91,000 4,777,500
Paxson Communications Corp.
14.25% (m) 349 2,562,651
Ziff Davis Media, Inc.
10.00% Series E-1 (a)(e) 674 465,060
--------------
7,805,211
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
REAL ESTATE (0.9%)
VSovereign Real Estate
Investment Corp.
12.00%, Class A (c) 8,455 $ 12,809,325
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.0%) (B)
Rural Cellular Corp.
11.375% Series B (a)(m) 2 1,356
--------------
Total Preferred Stocks
(Cost $20,882,790) 20,615,906
--------------
WARRANTS (0.1%)
- ---------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.0%) (B)
ASAT Finance LLC
Strike Price $18.60
Expire 11/1/06 (a)(c)(e)(l) 1,530 15
--------------
MEDIA (0.0%) (B)
Haights Cross
Communications, Inc.
Strike Price $0.001
Expire 12/10/11 (a)(e)(h)(l) 91 1
Preferred Class A
Strike Price $0.001
Expire 12/10/11 (a)(e)(h)(l) 86,850 868
Ono Finance PLC
Strike Price $0.01
Expire 2/15/11 (a)(c)(e)(l) 7,855 79
Ziff Davis Media, Inc.
Strike Price $0.001
Expire 8/12/12 (a)(c) 123,640 12,364
--------------
13,312
--------------
METALS & MINING (0.1%)
ACP Holding Co.
Strike Price $0.01
Expire 10/7/13 (a)(c)(e) 744,004 1,227,607
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.0%) (B)
NEON Communications, Inc.
Strike Price $0.01
Expire 12/2/12 (a)(e)(h)(l) 367,043 3,670
Class A
Strike Price $0.01
Expire 12/2/12 (a)(e)(h)(l) 200,064 250,080
Redeemable Preferred
Strike Price $0.01
Expire 12/2/12 (a)(e)(h)(l) 240,062 2,401
</Table>
MainStay VP High Yield
M- 154 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
WARRANTS (CONTINUED)
- ---------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (CONTINUED)
UbiquiTel, Inc.
Strike Price $22.74
Expire 4/15/10 (a)(c)(e) 2,510 $ 25
--------------
256,176
--------------
Total Warrants
(Cost $1,150,768) 1,497,110
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (26.7%)
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER (20.2%)
AIG Funding, Inc.
2.31%, due 1/6/05 $ 26,730,000 26,721,414
American Express Credit Corp.
2.26%, due 1/11/05 17,000,000 16,989,326
American General Finance Corp.
2.27%, due 1/14/05 19,125,000 19,109,321
BellSouth Corp.
2.28%, due 1/19/05 13,035,000 13,020,136
Chevron Texaco Funding Corp.
2.25%, due 1/12/05 17,000,000 16,988,310
General Electric Capital Corp.
2.28%, due 1/27/05 20,000,000 19,967,056
Goldman Sachs
Group, Inc. (The)
2.33%, due 1/3/05 2,000,000 1,999,741
International Business Machines Corp.
2.16%, due 1/7/05 25,000,000 24,990,994
Merrill Lynch & Co., Inc.
2.28%, due 1/24/05 18,000,000 17,973,773
Morgan Stanley & Co.
2.32%, due 1/5/05 45,000,000 44,988,387
Stanfield Victoria Funding LLC
2.1462%, due 1/25/05 (o) 20,000,000 19,972,000
UBS Finance Delaware LLC
2.18%, due 1/3/05 26,365,000 26,361,807
2.30%, due 1/10/05 2,865,000 2,863,351
USAA Capital Corp.
2.29%, due 1/7/05 17,500,000 17,493,319
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Wachovia Capital
Markets, LLC
2.3824%, due 1/03/05 (o) $ 22,000,000 $ 22,000,000
--------------
Total Commercial Paper
(Cost $291,438,935) 291,438,935
--------------
<Caption>
SHARES VALUE
INVESTMENT COMPANIES (1.9%)
AIM Institutional Funds
Group (o) 782,154 782,154
Merrill Lynch Premier
Institutional Fund 26,351,251 26,351,251
--------------
Total Investment Companies
(Cost $27,133,405) 27,133,405
--------------
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.4%)
Bank of America
Securities LLC
2.3925, due 1/3/05 (o) $ 6,340,000 6,340,000
--------------
Total Master Note
(Cost $6,340,000) 6,340,000
--------------
REPURCHASE AGREEMENTS (4.1%)
Credit Suisse First
Boston LLC
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$10,702,107 (o)
(Collateralized by
Various Bonds
with a Principal Amount of
$12,748,867 and a Market
Value of $10,914,065) (p) 10,700,000 10,700,000
Dresdner Kleinwort Wasserstein Securities, LLC
2.3824%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$500,099 (o)
(Collateralized by
Various Bonds
with a Principal Amount of
$524,017 and a Market
Value of $525,021) (p) 500,000 500,000
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 155
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
Lehman Brothers, Inc.
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$19,226,785 (o)
(Collateralized by
Various Bonds
with a Principal Amount of
$26,154,066 and a Market
Value of $19,607,130) (p) $ 19,223,000 $ 19,223,000
Merrill Lynch & Co., Inc.
2.3924%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$17,437,476 (o)
(Collateralized by
Various Bonds
with a Principal Amount of
$17,206,637 and a Market
Value of $18,305,726) (p) 17,434,000 17,434,000
Morgan Stanley & Co.
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$11,702,303 (o)
(Collateralized by
Various Bonds
with a Principal Amount of
$20,526,504 and a Market
Value of $12,340,321) (p) 11,700,000 11,700,000
--------------
Total Repurchase Agreements
(Cost $59,557,000) 59,557,000
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM LOAN ASSIGNMENT &
PARTICIPATION (0.1%)
- ---------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (0.1%)
Mirant Corp.
Bank debt, Revolver 1
4.75%, due 1/15/05 (d)(h)(j) $ 1,480,000 $ 1,042,660
--------------
Total Short-Term Loan Assignment & Participation
(Cost $1,226,194) 1,042,660
--------------
Total Short-Term Investments
(Cost $385,695,534) 385,512,000
--------------
Total Investments
(Cost $1,443,722,832) (q) 106.1% $1,532,552,998(r)
Liabilities in Excess of Cash and Other Assets (6.1) (88,785,086)
------------ --------------
Net Assets 100.0% $1,443,767,912
============ ==============
</Table>
MainStay VP High Yield
M- 156 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) Issue in default.
(e) Illiquid security.
(f) Issuer in bankruptcy.
(g) Partially segregated for unfunded loan commitments.
(h) Restricted security.
(i) Represents a security, or a portion thereof, which is
out on loan.
(j) Floating rate. Rate shown is the rate in effect at
December 31, 2004.
(k) LYON-Liquid Yield Option Note: callable, zero coupon
securities priced at a deep discount from par. They
include a "put" feature that enables holders to redeem
them at a specific date, at a specific price. Put
prices reflect fixed interest rates, and therefore
increase over time.
(l) Fair valued security.
(m) PIK ("Payment in Kind") -- Interest or dividend payment
is made with additional securities.
(n) Yankee bond--Dollar denominated bonds issued in the
United States by foreign banks and corporations.
(o) Represents a security, or a portion thereof, purchased
with cash collateral received for securities on loan.
(p) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(q) The cost for federal income tax purposes is
$1,445,101,645.
(r) At December 31, 2004, net unrealized appreciation was
$87,451,353 based on cost for federal income tax pur-
poses. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $126,280,509 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $38,829,156.
The following abbreviations are used in the above
portfolio:
C$ -- Canadian Dollar.
E -- Euro.
L -- Pound Sterling.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 157
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $1,443,722,832) including
$103,425,725 market value of securities
loaned $1,532,552,998
Cash denominated in foreign currencies
(identified cost $68,352) 68,440
Cash 1,692,875
Deposit with security lending agent for
securities loaned 501
Receivables:
Dividends and interest 18,920,181
Fund shares sold 982,008
Investments securities sold 295,621
Other assets 3,477
--------------
Total assets 1,554,516,101
--------------
LIABILITIES:
Securities lending collateral 108,651,656
Payables:
Investment securities purchased 1,007,923
Adviser 359,649
Administrator 239,766
Shareholder communication 212,113
Fund shares redeemed 109,487
NYLIFE Distributors 55,141
Custodian 22,107
Accrued expenses 90,347
--------------
Total liabilities 110,748,189
--------------
Net assets $1,443,767,912
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
300 million shares authorized
Initial Class $ 1,179,673
Service Class 279,576
Additional paid-in capital 1,475,926,220
Accumulated distributions in excess of net
investment income (3,126,487)
Accumulated net realized loss
on investments (119,346,779)
Net unrealized appreciation on
investments 88,855,709
--------------
Net assets $1,443,767,912
==============
INITIAL CLASS
Net assets applicable to outstanding shares $1,167,527,242
==============
Shares of capital stock outstanding 117,967,349
==============
Net asset value per share outstanding $ 9.90
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 276,240,670
==============
Shares of capital stock outstanding 27,957,612
==============
Net asset value per share outstanding $ 9.88
==============
</Table>
MainStay VP High Yield
M- 158 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 99,164,106
Dividends (a) 2,035,321
Income from securities loaned -- net 500,189
------------
Total income 101,699,616
------------
EXPENSES:
Advisory 3,817,867
Administration 2,545,244
Shareholder communication 630,214
Distribution and service -- Service Class 422,254
Professional 152,464
Custodian 124,463
Directors 83,579
Portfolio pricing 35,533
Miscellaneous 64,533
------------
Total expenses 7,876,151
Reimbursement of advisory fee (58,744)
------------
Net expenses 7,817,407
------------
Net investment income 93,882,209
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions 39,129,753
Foreign currency transactions 2,692,087
------------
Net realized gain on investments and foreign
currency transactions 41,821,840
------------
Net change in unrealized appreciation on:
Security transactions 18,836,371
Translation of other assets and liabilities
in foreign currencies 5,587
------------
Net change in unrealized appreciation on
investments and foreign currency
transactions 18,841,958
------------
Net realized and unrealized gain on
investments and foreign currency
transactions 60,663,798
------------
Net increase in net assets resulting from
operations $154,546,007
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $3,073.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 159
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 93,882,209 $ 78,202,938
Net realized gain (loss) on
investments and foreign currency
transactions 41,821,840 (66,953,054)
Net change in unrealized
appreciation (depreciation) on
investments and foreign currency
transactions 18,841,958 267,652,672
-------------------------------
Net increase in net assets
resulting from operations 154,546,007 278,902,556
-------------------------------
Dividends to shareholders:
From net investment income:
Initial Class (77,608,906) (73,734,344)
Service Class (17,767,155) (5,027,950)
-------------------------------
Total dividends to shareholders (95,376,061) (78,762,294)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 98,801,775 247,591,043
Service Class 180,342,620 76,651,823
Net asset value of shares issued to
shareholders in reinvestment of dividends:
Initial Class 77,608,906 73,734,344
Service Class 17,767,155 5,027,950
-------------------------------
374,520,456 403,005,160
Cost of shares redeemed:
Initial Class (178,035,733) (103,653,652)
Service Class (6,260,880) (1,617,935)
-------------------------------
(184,296,613) (105,271,587)
Increase in net assets derived
from capital share
transactions 190,223,843 297,733,573
-------------------------------
Net increase in net assets 249,393,789 497,873,835
NET ASSETS:
Beginning of year 1,194,374,123 696,500,288
-------------------------------
End of year $1,443,767,912 $1,194,374,123
===============================
Accumulated distributions in
excess of net investment income
at end of year $ (3,126,487) $ (4,324,838)
===============================
</Table>
MainStay VP High Yield
M- 160 Corporate Bond Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2004 2003 2002 2001 2000
Net asset value at beginning
of period $ 9.41 $ 7.39 $ 8.09 $ 8.72 $ 10.69
---------- ---------- -------- -------- --------
Net investment income 0.70 0.75(b) 0.85 1.05(c) 1.32
Net realized and unrealized
gain (loss) on investments 0.47 1.93 (0.67) (0.64)(c) (1.96)
Net realized and unrealized
gain (loss) on foreign
currency 0.02 0.01 (0.02) 0.01 0.02
---------- ---------- -------- -------- --------
Total from investment
operations 1.19 2.69 0.16 0.42 (0.62)
---------- ---------- -------- -------- --------
Less dividends and
distributions:
From net investment income (0.70) (0.67) (0.86) (1.05) (1.35)
From net realized gain on
investments -- -- -- -- (0.00)(d)
---------- ---------- -------- -------- --------
Total dividends and
distributions (0.70) (0.67) (0.86) (1.05) (1.35)
---------- ---------- -------- -------- --------
Net asset value at end of
period $ 9.90 $ 9.41 $ 7.39 $ 8.09 $ 8.72
========== ========== ======== ======== ========
Total investment return 12.72% 36.37% 2.05% 4.91% (5.87%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 7.40% 8.51% 10.44% 11.61%(c) 12.10%
Expenses 0.59% 0.60% 0.60% 0.58% 0.60%
Portfolio turnover rate 39% 43% 49% 56% 64%
Net assets at end of period
(in 000's) $1,167,527 $1,114,766 $696,500 $684,738 $616,807
<Caption>
SERVICE CLASS
---------------------------
JUNE 4,
2003(A)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
2004 2003
Net asset value at beginning
of period $ 9.40 $ 8.69
-------- -------
Net investment income 0.68 0.44(b)
Net realized and unrealized
gain (loss) on investments 0.47 0.92
Net realized and unrealized
gain (loss) on foreign
currency 0.02 0.00(d)
-------- -------
Total from investment
operations 1.17 1.36
-------- -------
Less dividends and
distributions:
From net investment income (0.69) (0.65)
From net realized gain on
investments -- --
-------- -------
Total dividends and
distributions (0.69) (0.65)
-------- -------
Net asset value at end of
period $ 9.88 $ 9.40
======== =======
Total investment return 12.44% 15.66%(e)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 7.15% 8.26%+(f)
Expenses 0.84% 0.85%+
Portfolio turnover rate 39% 43%
Net assets at end of period
(in 000's) $276,241 $79,608
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) As required, effective January 1, 2001 the Portfolio has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended December 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to January 1, 2001 have
not been restated to reflect this change in presentation.
</Table>
<Table>
Decrease net investment income $(0.00)(d)
Increase net realized and unrealized gains and losses 0.00(d)
Decrease ratio of net investment income (0.03%)
</Table>
<Table>
(d) Less than one cent per share.
(e) Total return is not annualized.
(f) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 161
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (82.4%)+
- -----------------------------------------------------------------------------
AUSTRALIA (0.7%)
Australian Gas Light Co., Ltd. (multi-utilities &
unregulated power) 154,904 $ 1,663,581
------------
BERMUDA (0.6%)
RenaissanceRe Holdings Ltd. (insurance) 24,400 1,270,752
------------
CANADA (0.1%)
Bank of Montreal (commercial banks) 4,700 226,576
------------
DENMARK (1.0%)
Danske Bank A/S (commercial banks) 74,445 2,281,962
------------
FINLAND (0.9%)
TietoEnator Oyj (IT services) 67,140 2,135,485
------------
FRANCE (4.3%)
BNP Paribas, S.A. (diversified financial services) 52,794 3,824,820
Dexia (commercial banks) 63,800 1,468,172
M6 Metropole Television (broadcasting &
publishing) 27,200 772,706
Societe Generale, S.A. (commercial banks) 3,700 374,426
Total, S.A. (oil & gas) 14,850 3,243,707
------------
9,683,831
------------
GERMANY (7.8%)
BASF AG (chemicals) 24,000 1,726,356
VBayerische Motoren Werke AG (automobiles) 136,279 6,140,613
VDeutsche Boerse AG (diversified financial
services) 117,430 7,063,039
Hannover Rueckversicherung AG Registered
(insurance) 58,623 2,291,691
Muenchener Rueckversicherungs-Gesellschaft AG
Registered (insurance) 4,476 549,324
------------
17,771,023
------------
HONG KONG (0.9%)
Hongkong Electric Holdings, Ltd. (electric
utilities) 458,000 2,091,808
------------
INDIA (0.5%)
ITC, Ltd. GDR (tobacco) (b)(d) 40,900 1,232,362
------------
IRELAND (2.0%)
Bank of Ireland (commercial banks) 269,720 4,469,059
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ITALY (7.2%)
Banco Popolare di Verona e Novara Scrl (commercial
banks) 26,700 $ 542,928
Enel S.p.A. (utilities-electric & gas) 387,600 3,809,091
Eni S.p.A. (oil & gas) 149,200 3,735,577
Eni S.p.A. ADR (oil & gas) (c) 4,500 566,280
Riunione Adriatica di Sicurta S.p.A. (insurance) 59,000 1,334,457
Snam Rete Gas S.p.A. (gas utilities) 883,375 5,139,112
UniCredito Italiano S.p.A. (banking) 214,800 1,235,020
------------
16,362,465
------------
JAPAN (10.3%)
VCanon, Inc. (office electronics) 87,100 4,700,527
VCanon, Inc. ADR (office electronics) (c) 41,311 2,241,535
Fuji Photo Film Co., Ltd. (leisure equipment &
products) 24,400 890,563
INPEX Corp. (oil & gas) (a) 34 171,543
VNTT DoCoMo, Inc. (wireless telecommunication
services) 2,953 5,446,638
VNTT DoCoMo, Inc. ADR (wireless telecommunication
services) (c) 27,700 515,774
OBIC Co., Ltd. (IT services) 200 39,719
RICOH Co., Ltd. (data processing & reproduction) 6,000 115,761
Secom Co., Ltd. (commercial services & supplies) 30,800 1,232,361
Seven-Eleven Japan Co., Ltd. (food & staples
retailing) 31,200 983,468
Shin-Etsu Chemical Co., Ltd. (chemicals) 25,300 1,036,986
Takeda Pharmaceutical Co., Ltd. (pharmaceuticals) 106,700 5,373,007
Toyota Motor Corp. ADR (automobiles) (c) 7,000 573,090
------------
23,320,972
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term
investments. One of the 10 largest holdings may be a security traded on
more than one exchange. May be subject to change daily.
</Table>
M- 162 MainStay VP International Equity Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
NETHERLANDS (7.1%)
Euronext N.V. (diversified financial services) 128,131 $ 3,913,421
Reed Elsevier N.V. (media) 242,755 3,309,545
Royal Dutch Petroleum Co. NY Shares (oil & gas) 49,600 2,846,048
VTPG N.V. (air freight & logistics) 222,042 6,030,174
------------
16,099,188
------------
SINGAPORE (0.2%)
SembCorp Logistics Ltd. (air freight & logistics) 373,000 395,301
------------
SPAIN (4.0%)
Banco Popular Espanol, S.A. (commercial banks) (g) 82,966 5,469,418
Iberdrola, S.A. (multi-utilities & unregulated
power) (g) 84,290 2,142,481
Indra Sistemas, S.A. (IT services) 24,852 424,616
Red Electrica de Espana (electric utilities) (g) 44,800 1,004,757
------------
9,041,272
------------
SWEDEN (3.2%)
AB SKF B Shares (machinery) 52,600 2,342,914
Autoliv, Inc. (auto components) 22,100 1,067,430
Hennes & Mauritz AB B Shares (multiline retail) 49,300 1,717,421
Sandvik AB (machinery) 51,960 2,095,476
------------
7,223,241
------------
SWITZERLAND (10.4%)
Adecco, S.A. Registered (business & public
services) 7,100 357,467
Credit Suisse Group ADR (commercial banks) (a)(c) 17,895 754,990
VNestle, S.A. Registered (food products) 26,971 7,056,435
Novartis AG ADR (pharmaceuticals) (c) 63,300 3,199,182
Novartis AG Registered (pharmaceuticals) 42,280 2,130,546
Serono S.A. Class B (pharmaceuticals) 775 510,487
Swiss Re Registered (insurance) 33,800 2,410,676
Syngenta AG (chemicals) (a) 4,100 435,564
VUBS AG Registered (capital markets) 53,563 4,491,454
VUBS AG Registered (capital markets) (e) 26,234 2,199,459
------------
23,546,260
------------
</Table>
<Table>
<Caption>
SHARES VALUE
UNITED KINGDOM (21.2%)
AstraZeneca PLC ADR (pharmaceuticals) (c) 20,200 $ 735,078
BP PLC ADR (oil & gas) (c) 57,900 3,381,360
Compass Group PLC (hotels, restaurants & leisure) 453,900 2,141,572
VDiageo PLC (beverages) 374,229 5,345,513
VDiageo PLC ADR (beverages) (c) 20,850 1,206,798
Exel PLC (air freight & logistics) 227,462 3,159,558
GlaxoSmithKline PLC ADR (pharmaceuticals) (c) 71,400 3,383,646
Kingfisher PLC (merchandising) 190,100 1,129,593
Lloyds TSB Group PLC (diversified financial
services) 558,157 5,068,699
Lloyds TSB Group PLC ADR (diversified financial
services) (c) 7,365 270,958
Man Group PLC (diversified financial services) 170,700 4,824,145
Next PLC (merchandising) 17,100 541,372
Provident Financial PLC (consumer finance) 42,800 553,427
Reckitt Benckiser PLC (household products) 150,262 4,546,575
Rio Tinto PLC (metals & mining) 11,100 326,909
Scottish & Southern Energy PLC (multi-utilities &
unregulated power) 74,760 1,252,316
Smith & Nephew PLC (health & personal care) 56,500 579,796
VTesco PLC (food & staples retailing) 1,547,299 9,550,678
------------
47,997,993
------------
Total Common Stocks (Cost $151,706,933) 186,813,131
------------
INVESTMENT COMPANIES (3.8%)
- -----------------------------------------------------------------------------
EUROPE, AUSTRALASIA AND FAR EAST (1.9%)
iShares MSCI EAFE Index Fund (capital markets)
(f)(g)(i) 26,900 4,310,725
------------
IRELAND (0.2%)
iShares DJ STOXX 50 Index Fund (capital markets)
(f) 14,200 536,577
------------
JAPAN (0.5%)
iShares MSCI Japan Index Fund (capital markets)
(f) 97,800 1,067,976
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 163
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
INVESTMENT COMPANIES (CONTINUED)
- -----------------------------------------------------------------------------
UNITED KINGDOM (1.2%)
iShares MSCI United Kingdom Index Fund (capital
markets) (f)(g) 145,700 $ 2,635,713
------------
Total Investment Companies (Cost $7,880,331) 8,550,991
------------
PREFERRED STOCK (1.2%)
- -----------------------------------------------------------------------------
GERMANY (1.2%)
Porsche AG E3.40
(automobiles) (m) 4,165 2,642,117
------------
Total Preferred Stock (Cost $2,048,590) 2,642,117
------------
WARRANTS (2.5%)
- -----------------------------------------------------------------------------
IRELAND (2.5%)
VRyanair Holdings PLC
Strike Price E0.000001 Expire 3/21/08 (airlines)
(a)(b)(m) 772,845 5,628,522
------------
Total Warrants (Cost $4,133,003) 5,628,522
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (5.4%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (1.5%)
UNITED STATES (1.5%)
Rabobank USA Financial Corp.
2.17%, due 1/3/05
(diversified financial services) $3,505,000 3,504,577
------------
Total Commercial Paper (Cost $3,504,577) 3,504,577
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.1%)
UNITED STATES (0.1%)
AIM Institutional Funds Group (capital markets)
(h) 281,217 281,217
------------
Total Investment Company
(Cost $281,217) 281,217
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.1%)
UNITED STATES (0.1%)
Banc of America Securities LLC
2.3928%, due 1/3/05
(capital markets) (h) $ 150,000 $ 150,000
------------
Total Master Note
(Cost $150,000) 150,000
------------
REPURCHASE AGREEMENTS (3.7%)
UNITED STATES (3.7%)
Credit Suisse First Boston LLC
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$2,100,413
(capital markets) (h)
(Collateralized by Various Bonds with a
Principal Amount of $2,502,114 and a
Market Value of $2,142,013) (j) 2,100,000 2,100,000
Dresdner Kleinwort Wasserstein Securities LLC
2.3824%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,500,298
(capital markets) (h)
(Collateralized by Various Bonds with a
Principal Amount of $1,572,051 and a
Market Value of $1,575,062) (j) 1,500,000 1,500,000
Lehman Brothers, Inc.
2.3624%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$2,500,492
(capital markets) (h) (Collateralized by Various
Bonds with a Principal Amount of $3,401,403 and
a
Market Value of $2,549,957) (j) 2,500,000 2,500,000
Merrill Lynch Pierce Fenner & Smith, Inc.
2.3921%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$411,082
(capital markets) (h)
(Collateralized by Various Bonds with a
Principal Amount of $405,640 and a
Market Value of $431,551) (j) 411,000 411,000
</Table>
M- 164 MainStay VP International Equity Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
UNITED STATES (CONTINUED)
Morgan Stanley & Co., Inc.
2.3626%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,800,354
(capital markets) (h)
(Collateralized by Various Bonds with a
Principal Amount of $3,157,924 and a
Market Value of $1,898,511) (j) $1,800,000 $ 1,800,000
------------
Total Repurchase Agreements (Cost $8,311,000) 8,311,000
------------
Total Short-Term Investments (Cost $12,246,794) 12,246,794
------------
Total Investments
(Cost $178,015,651) (k) 95.3% 215,881,555(l)
Cash and Other Assets, Less Liabilities 4.7 10,698,174
---------- ------------
Net Assets 100.0% $226,579,729
========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) May be sold to institutional investors only.
(c) ADR -- American Depositary Receipt.
(d) GDR -- Global Depositary Receipt.
(e) Security primarily trades on the New York Stock
Exchange.
(f) Exchange Traded Fund -- represents a basket of
securities that are traded on an exchange.
(g) Represents a security, or a portion thereof, of which is
out on loan.
(h) Represents a security, or portion thereof, purchased
with cash collateral received for securities on loan.
(i) The Morgan Stanley Capital International Europe,
Australasia, and Far East Index is an unmanaged index
that is considered to be representative of the
international stock market.
(j) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(k) The cost for federal income tax purposes is
$178,654,514.
(l) At December 31, 2004 net unrealized appreciation for
securities was $37,227,041, 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
$38,219,760 and aggregate gross unrealized depreciation
for all investments on which there was an excess of cost
over market value of $992,719.
(m) The following abbreviation is used in the above
portfolio:
E -- Euro.
</Table>
The table below sets forth the diversification of International Equity Portfolio
investments by industry.
<Table>
<Caption>
VALUE PERCENT+
INDUSTRY DIVERSIFICATION
Air Freight & Logistics $ 9,585,033 4.2%
Airlines 5,628,522 2.5
Auto Components 1,067,430 0.5
Automobiles 9,355,820 4.1
Banking 1,235,020 0.5
Beverages 6,552,311 2.9
Broadcasting & Publishing 772,706 0.3
Business & Public Services 357,467 0.2
Capital Markets 23,984,121 10.6
Chemicals 3,198,906 1.4
Commercial Banks 15,587,531 6.9
Commercial Services & Supplies 1,232,361 0.5
Consumer Finance 553,427 0.2
Data Processing & Reproduction 115,761 0.1
Diversified Financial Services 28,469,659 12.6
Electric Utilities 3,096,565 1.4
Food & Staples Retailing 10,534,146 4.6
Food Products 7,056,435 3.1
Gas Utilities 5,139,112 2.3
Health & Personal Care 579,796 0.3
Hotels, Restaurants & Leisure 2,141,572 0.9
Household Products 4,546,575 2.0
Insurance 7,856,900 3.5
IT Services 2,599,820 1.1
Leisure Equipment & Products 890,563 0.4
Machinery 4,438,390 2.0
Media 3,309,545 1.5
Merchandising 1,670,965 0.7
Metals & Mining 326,909 0.1
Multiline Retail 1,717,421 0.8
Multi-Utilities & Unregulated Power 5,058,378 2.2
Office Electronics 6,942,062 3.1
Oil & Gas 13,944,515 6.2
Pharmaceuticals 15,331,946 6.8
Tobacco 1,232,362 0.5
Utilities-Electric & Gas 3,809,091 1.7
Wireless Telecommunication Services 5,962,412 2.6
------------ --------
215,881,555 95.3
Cash and Other Assets,
Less Liabilities 10,698,174 4.7
------------ --------
Net Assets $226,579,729 100.0%
============ ========
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 165
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $178,015,651) including
$8,373,357 market value of securities
loaned $215,881,555
Cash denominated in foreign currencies
(identified cost $19,195,380) 20,016,240
Cash 4,478
Receivables:
Fund shares sold 1,163,191
Dividends and interest 451,982
Unrealized appreciation on foreign currency
forward contracts 243,128
Other assets 9,743
------------
Total assets 237,770,317
------------
LIABILITIES:
Securities lending collateral 8,742,217
Payables:
Investment securities purchased 1,933,076
Adviser 110,156
Administrator 36,719
Custodian 19,325
NYLIFE Distributors 10,150
Fund shares redeemed 64
Accrued expenses 69,806
Unrealized depreciation on foreign currency
forward contracts 269,075
------------
Total liabilities 11,190,588
------------
Net assets $226,579,729
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 124,142
Service Class 36,506
Additional paid-in capital 186,603,774
Accumulated undistributed net investment
income 765,976
Accumulated net realized gain on investments 367,503
Net unrealized appreciation on investments 37,865,904
Net unrealized appreciation on translation of
other assets and liabilities in foreign
currencies and foreign currency forward
contracts 815,924
------------
Net assets $226,579,729
============
INITIAL CLASS
Net assets applicable to outstanding shares $175,171,721
============
Shares of capital stock outstanding 12,414,162
============
Net asset value per share outstanding $ 14.11
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 51,408,008
============
Shares of capital stock outstanding 3,650,590
============
Net asset value per share outstanding $ 14.08
============
</Table>
M- 166 MainStay VP International Equity Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 3,521,224
Interest 94,115
Income from securities loaned -- net 91,227
-----------
Total income 3,706,566
-----------
EXPENSES:
Advisory 890,129
Administration 296,710
Custodian 96,290
Shareholder communication 78,120
Distribution and service -- Service Class 66,825
Professional 55,587
Portfolio pricing 15,256
Directors 11,233
Miscellaneous 18,894
-----------
Total expenses 1,529,044
Waiver of advisory fee (26,819)
-----------
Net expenses 1,502,225
-----------
Net investment income 2,204,341
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions 7,499,597
Foreign currency transactions 224,531
-----------
Net realized gain on investments and foreign
currency transactions 7,724,128
-----------
Net increase from payment by affiliate for loss
on the disposal of investment in violation of
restrictions 25,426
-----------
Net change in unrealized appreciation on:
Security transactions 19,522,817
Translation of other assets and liabilities
in foreign currencies and foreign currency
forward contracts 758,905
-----------
Net unrealized appreciation on investments and
foreign currency transactions 20,281,722
-----------
Net realized and unrealized gain on investments
and foreign currency transactions 28,031,276
-----------
Net increase in net assets resulting from
operations $30,235,617
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$409,047.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 167
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 2,204,341 $ 1,243,286
Net realized gain on investments
and foreign currency transactions 7,724,128 4,557,327
Net increase from payment by
affiliate for loss on the disposal
of investment in violation of
restrictions 25,426 3,437
Net change in unrealized
appreciation on investments and
foreign currency transactions 20,281,722 17,624,411
----------------------------
Net increase in net assets
resulting from operations 30,235,617 23,428,461
----------------------------
Dividends to shareholders:
From net investment income:
Initial Class (1,508,650) (1,509,712)
Service Class (376,282) (134,807)
----------------------------
Total dividends to shareholders (1,884,932) (1,644,519)
----------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 69,316,225 208,175,989
Service Class 36,772,185 8,308,006
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 1,508,650 1,509,712
Service Class 376,282 134,807
----------------------------
107,973,342 218,128,514
Cost of shares redeemed:
Initial Class (14,015,340) (196,725,788)
Service Class (629,272) (49,827)
----------------------------
(14,644,612) (196,775,615)
----------------------------
Increase in net assets derived
from capital share transactions 93,328,730 21,352,899
----------------------------
Net increase in net assets 121,679,415 43,136,841
NET ASSETS:
Beginning of year 104,900,314 61,763,473
----------------------------
End of year $226,579,729 $ 104,900,314
============================
Accumulated undistributed net
investment income at end of year $ 765,976 $ 222,036
============================
</Table>
M- 168 MainStay VP International Equity Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
---------------------------------------------------- ---------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 12.13 $ 9.48 $ 10.06 $ 11.90 $ 15.48 $ 12.12 $10.40
-------- ------- ------- ------- ------- ------- ------
Net investment income 0.19(b) 0.17(b) 0.11 0.11(b) 0.07(b) 0.15(b) 0.00(b)(c)
Net realized and unrealized
gain (loss) on investments 1.84 2.61 (0.63) (1.78) (2.97) 1.84 1.85
Net realized and unrealized
gain (loss) on foreign
currency transactions 0.07 0.06 0.08 (0.00)(c) 0.12 0.07 0.06
-------- ------- ------- ------- ------- ------- ------
Total from investment
operations 2.10 2.84 (0.44) (1.67) (2.78) 2.06 1.91
-------- ------- ------- ------- ------- ------- ------
Less dividends and
distributions:
From net investment income (0.12) (0.19) (0.14) (0.14) (0.09) (0.10) (0.19)
From net realized gain on
investments -- -- -- (0.03) (0.71) -- --
-------- ------- ------- ------- ------- ------- ------
Total dividends and
distributions (0.12) (0.19) (0.14) (0.17) (0.80) (0.10) (0.19)
-------- ------- ------- ------- ------- ------- ------
Net asset value at end of
period $ 14.11 $ 12.13 $ 9.48 $ 10.06 $ 11.90 $ 14.08 $12.12
======== ======= ======= ======= ======= ======= ======
Total investment return 17.34% 30.00% (4.41%) (14.02%) (18.06%) 17.05% 18.31%(d)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.53% 1.67% 1.06% 1.04% 0.53% 1.28% 1.42%+(e)
Expenses 0.99% 1.07% 1.11% 1.12% 1.01% 1.24% 1.32%+
Portfolio turnover rate 49% 105% 102% 130% 28% 49% 105%
Net assets at end of period
(in 000's) $175,172 $95,754 $61,763 $55,515 $65,429 $51,408 $9,146
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Less than one cent per share.
(d) Total return is not annualized.
(e) Represents income earned for the year by the Initial Class
shares less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 169
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (95.4%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.9%)
Goodrich Corp. 11,694 $ 381,692
Precision Castparts Corp. 9,288 610,036
Rockwell Collins, Inc. 7,858 309,920
United Defense Industries, Inc. (a) 3,464 163,674
------------
1,465,322
------------
AIR FREIGHT & LOGISTICS (0.7%)
C.H. Robinson Worldwide, Inc. 1,207 67,013
CNF, Inc. 3,814 191,081
Expeditors International of Washington, Inc. 5,407 302,143
J.B. Hunt Transport Services, Inc. 4,311 193,348
Ryder System, Inc. 9,397 448,895
------------
1,202,480
------------
AUTO COMPONENTS (1.0%)
Autoliv, Inc. 8,062 389,395
BorgWarner, Inc. 6,259 339,050
Dana Corp. 3,734 64,710
Delphi Corp. 11,975 108,015
Johnson Controls, Inc. 12,462 790,589
------------
1,691,759
------------
BEVERAGES (0.6%)
Adolph Coors Co. Class B 2,248 170,106
Constellation Brands, Inc. Class A (a) 6,545 304,408
Pepsi Bottling Group, Inc. (The) 19,694 532,526
PepsiAmericas, Inc. 2,610 55,436
------------
1,062,476
------------
BIOTECHNOLOGY (0.8%)
Charles River Laboratories International, Inc. (a) 4,965 228,439
Chiron Corp. (a) 13,591 452,988
Millennium Pharmaceuticals, Inc. (a) 36,865 446,804
OSI Pharmaceuticals, Inc. (a) 2,174 162,724
------------
1,290,955
------------
CAPITAL MARKETS (1.7%)
A.G. Edwards, Inc. 3,546 153,223
Allied Capital Corp. 17,974 464,448
BlackRock, Inc. 2,681 207,134
Eaton Vance Corp. 3,010 156,972
Friedman, Billings, Ramsey Group, Inc. Class A 22,583 437,884
Janus Capital Group, Inc. 7,516 126,344
Legg Mason, Inc. 14,751 1,080,658
Nuveen Investments Class A 2,815 111,108
SEI Investments Co. 2,832 118,746
------------
2,856,517
------------
CHEMICALS (2.3%)
Air Products & Chemicals, Inc. 1,930 111,882
Cabot Corp. 6,049 233,975
</Table>
<Table>
<Caption>
SHARES VALUE
CHEMICALS (CONTINUED)
Eastman Chemical Co. 5,672 $ 327,445
Lyondell Chemical Co. 6,349 183,613
Monsanto Co. 17,091 949,405
PPG Industries, Inc. 11,418 778,251
Praxair, Inc. 25,526 1,126,973
RPM International, Inc. 876 17,222
Scotts Co. (The) Class A (a) 949 69,771
Sigma-Aldrich Corp. 3,061 185,068
------------
3,983,605
------------
COMMERCIAL BANKS (3.6%)
Associated Banc-Corp 12,117 402,406
Bank of Hawaii Corp. 3,841 194,892
Colonial BancGroup, Inc. (The) 9,775 207,523
Comerica, Inc. 11,966 730,165
Commerce Bancshares, Inc. 874 43,875
Compass Bancshares, Inc. 3,590 174,725
First Horizon National Corp. 8,947 385,705
Hibernia Corp. Class A 22,300 658,073
International Bancshares Corp. 657 25,873
Mercantile Bankshares Corp. 2,481 129,508
National City Corp. 1 29
Regions Financial Corp. 1 32
Sky Financial Group, Inc. 117 3,355
South Financial Group, Inc. (The) 5,066 164,797
Synovus Financial Corp. 21,836 624,073
TCF Financial Corp. 10,173 326,960
UCBH Holdings, Inc. 647 29,646
UnionBanCal Corp. 1,527 98,461
Unizan Financial Corp. 28,872 760,777
Wachovia Corp. 17,072 897,987
Wilmington Trust Corp. 6,601 238,626
------------
6,097,488
------------
COMMERCIAL SERVICES & SUPPLIES (1.8%)
Allied Waste Industries, Inc. (a) 45,764 424,690
ARAMARK Corp. Class B 4,136 109,645
Brink's Co. (The) 8,335 329,399
Career Education Corp. (a) 11,171 446,840
Corporate Executive Board Co. (The) 1,589 106,368
H&R Block, Inc. 7,306 357,994
Hewitt Associates, Inc. Class A (a) 1,109 35,499
IKON Office Solutions, Inc. 20,044 231,709
Laureate Education, Inc. (a) 973 42,900
Pitney Bowes, Inc. 11,662 539,717
ServiceMaster Co. (The) 16,383 225,922
Steelcase, Inc. Class A 7,104 98,319
West Corp. (a) 1,975 65,392
------------
3,014,394
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term
investments. May be subject to change daily.
</Table>
M- 170 MainStay VP Mid Cap Core Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (1.5%)
3Com Corp. (a) 63,908 $ 266,496
ADTRAN, Inc. 10,410 199,248
Andrew Corp. (a) 26,301 358,483
Comverse Technology, Inc. (a) 6,140 150,123
Foundry Networks, Inc. (a) 19,452 255,988
Harris Corp. 9,561 590,774
JDS Uniphase Corp. (a) 140,411 445,103
McDATA Corp. Class A (a) 18,282 108,961
Polycom, Inc. (a) 3,130 72,992
Tellabs, Inc. (a) 11,765 101,061
------------
2,549,229
------------
COMPUTERS & PERIPHERALS (2.0%)
VApple Computer, Inc. (a) 34,027 2,191,339
NCR Corp. (a) 6,825 472,495
Network Appliance, Inc. (a) 7,103 235,962
Storage Technology Corp. (a) 15,586 492,673
------------
3,392,469
------------
CONSTRUCTION MATERIALS (0.7%)
Florida Rock Industries, Inc. 700 41,671
Lafarge North America, Inc. 3,400 174,488
Martin Marietta Materials, Inc. 2,707 145,257
Vulcan Materials Co. 14,039 766,670
------------
1,128,086
------------
CONSUMER FINANCE (0.8%)
AmeriCredit Corp. (a) 21,440 524,208
Providian Financial Corp. (a) 41,680 686,469
WFS Financial, Inc. (a) 2,247 114,103
------------
1,324,780
------------
CONTAINERS & PACKAGING (0.8%)
Ball Corp. 13,133 577,589
Owens-Illinois, Inc. (a) 8,306 188,131
Sealed Air Corp. (a) 2,643 140,793
Sonoco Products Co. 4,346 128,859
Temple-Inland, Inc. 5,507 376,679
------------
1,412,051
------------
DISTRIBUTORS (0.5%)
Genuine Parts Co. 19,608 863,928
------------
DIVERSIFIED FINANCIAL SERVICES (1.0%)
Chicago Mercantile Exchange (The) 3,032 693,418
CIT Group, Inc. 21,803 999,013
Instinet Group, Inc. (a) 20,351 122,717
------------
1,815,148
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.4%)
CenturyTel, Inc. 20,421 724,333
Citizens Communications Co. 43,704 602,678
IDT Corp. Class B (a) 9,687 149,955
</Table>
<Table>
<Caption>
SHARES VALUE
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
Level 3 Communications, Inc. (a) 111,181 $ 376,903
NTL, Inc. (a) 3,058 223,112
Qwest Communications International, Inc. (a) 66,002 293,049
------------
2,370,030
------------
ELECTRIC UTILITIES (3.8%)
Allegheny Energy, Inc. (a) 18,707 368,715
Alliant Energy Corp. 3,044 87,058
CenterPoint Energy, Inc. 26,057 294,444
Consolidated Edison, Inc. 9,259 405,081
DPL, Inc. 2,901 72,844
VEdison International 46,444 1,487,601
FPL Group, Inc. 4,176 312,156
Hawaiian Electric Industries, Inc. 2,525 73,604
Northeast Utilities 7,522 141,790
OGE Energy Corp. 13,164 701,378
Pinnacle West Capital Corp. 7,464 197,871
PPL Corp. 6,765 300,434
TECO Energy, Inc. 15,795 242,295
TXU Corp. 14,747 952,066
Wisconsin Energy Corp. 5,233 176,405
Xcel Energy, Inc. 39,345 716,079
------------
6,529,821
------------
ELECTRICAL EQUIPMENT (0.7%)
AMETEK, Inc. 5,005 178,528
Hubbell, Inc. Class A 3,100 149,916
Hubbell, Inc. Class B 2,921 152,768
Rockwell Automation, Inc. 12,290 608,970
Roper Industries, Inc. 1,004 61,013
------------
1,151,195
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.0%)
Amphenol Corp. Class A (a) 1,855 68,153
Avnet, Inc. (a) 19,720 359,693
AVX Corp. 8,500 107,100
Cogent, Inc. (a) 922 30,426
Ingram Micro, Inc. Class A (a) 13,580 282,464
Jabil Circuit, Inc. (a) 17,668 451,947
National Instruments Corp. 8,790 239,528
PerkinElmer, Inc. 18,353 412,759
Sanmina-SCI Corp. (a) 53,901 456,541
Tech Data Corp. (a) 2,361 107,189
Tektronix, Inc. 6,101 184,311
Vishay Intertechnology, Inc. (a) 23,843 358,122
Waters Corp. (a) 8,615 403,096
------------
3,461,329
------------
ENERGY EQUIPMENT & SERVICES (0.8%)
Baker Hughes, Inc. 22,795 972,663
Diamond Offshore Drilling, Inc. 2,192 87,790
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 171
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (CONTINUED)
ENSCO International, Inc. 6,692 $ 212,404
Grant Prideco, Inc. (a) 8,800 176,440
------------
1,449,297
------------
FOOD & STAPLES RETAILING (1.1%)
7-Eleven, Inc. (a) 3,776 90,435
Albertson's, Inc. 14,816 353,806
BJ's Wholesale Club, Inc. (a) 6,959 202,716
Rite Aid Corp. (a) 70,478 257,950
Safeway, Inc. (a) 12,185 240,532
SUPERVALU, Inc. 19,451 671,448
------------
1,816,887
------------
FOOD PRODUCTS (1.1%)
Archer-Daniels-Midland Co. 22,699 506,415
Campbell Soup Co. 10,192 304,639
Hershey Foods Corp. 3,962 220,050
J.M. Smucker Co. (The) 9,394 442,175
Pilgrim's Pride Corp. Class B 1,505 46,173
Tyson Foods, Inc. Class A 20,693 380,751
------------
1,900,203
------------
GAS UTILITIES (1.0%)
KeySpan Corp. 23,021 908,178
Sempra Energy 17,716 649,823
UGI Corp. 2,245 91,843
------------
1,649,844
------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.8%)
Bausch & Lomb, Inc. 5,268 339,575
Cooper Cos., Inc. 1,015 71,649
C.R. Bard, Inc. 8,874 567,758
Dade Behring Holdings, Inc. (a) 6,122 342,832
DENTSPLY International, Inc. 11,575 650,515
Edwards Lifesciences Corp. (a) 2,632 108,596
Hillenbrand Industries, Inc. 8,167 453,595
Hospira, Inc. (a) 6,918 231,753
Kinetic Concepts, Inc. (a) 963 73,477
Millipore Corp. (a) 239 11,905
Respironics, Inc. (a) 3,332 181,128
------------
3,032,783
------------
HEALTH CARE PROVIDERS & SERVICES (4.0%)
Accredo Health, Inc. (a) 7,937 220,014
AmerisourceBergen Corp. 20,747 1,217,434
CIGNA Corp. 10,174 829,893
Covance, Inc. (a) 6,242 241,878
Coventry Health Care, Inc. (a) 8,814 467,847
DaVita, Inc. (a) 6,532 258,210
Express Scripts, Inc. (a) 2,058 157,313
Humana, Inc. (a) 3,698 109,794
Laboratory Corp. of America Holdings (a) 2,822 140,592
</Table>
<Table>
<Caption>
SHARES VALUE
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
Lincare Holdings, Inc. (a) 18,452 $ 786,978
Manor Care, Inc. 2,425 85,918
McKesson Corp. 9,825 309,094
PacifiCare Health Systems, Inc. (a) 4,130 233,428
Pharmaceutical Product Development, Inc. (a) 2,123 87,659
Quest Diagnostics, Inc. 3,607 344,649
Service Corp. International (a) 11,139 82,985
Triad Hospitals, Inc. (a) 8,536 317,624
WellChoice, Inc. (a) 428 22,855
WellPoint, Inc. (a) 8,504 977,960
------------
6,892,125
------------
HOTELS, RESTAURANTS & LEISURE (3.8%)
Caesars Entertainment, Inc. (a) 45,274 911,818
Choice Hotels International, Inc. 3,033 175,914
Darden Restaurants, Inc. 23,050 639,407
Harrah's Entertainment, Inc. 11,217 750,305
Hilton Hotels Corp. 28,468 647,362
Mandalay Resort Group 3,084 217,206
Marriott International, Inc. Class A 6,574 414,031
MGM Mirage (a) 3,160 229,859
Ruby Tuesday, Inc. 10,898 284,220
Starwood Hotels & Resorts Worldwide, Inc. 14,795 864,028
Station Casinos, Inc. 4,213 230,367
Yum! Brands, Inc. 24,229 1,143,124
------------
6,507,641
------------
HOUSEHOLD DURABLES (2.0%)
Black & Decker Corp. (The) 5,957 526,182
Harman International Industries, Inc. 8,219 1,043,813
Leggett & Platt, Inc. 19,092 542,786
Newell Rubbermaid, Inc. 31,997 774,007
NVR, Inc. (a) 405 311,607
Snap-on, Inc. 1,823 62,638
Stanley Works (The) 5,077 248,722
------------
3,509,755
------------
HOUSEHOLD PRODUCTS (0.4%)
Clorox Co. (The) 4,698 276,853
Energizer Holdings, Inc. (a) 8,157 405,321
------------
682,174
------------
INDUSTRIAL CONGLOMERATES (1.0%)
Alleghany Corp. (a) 663 189,121
ALLETE, Inc. 4,998 183,677
Textron, Inc. 17,438 1,286,925
------------
1,659,723
------------
INSURANCE (4.8%)
Ambac Financial Group, Inc. 4,415 362,604
American Financial Group, Inc. 1,363 42,676
Aon Corp. 31,324 747,391
</Table>
M- 172 MainStay VP Mid Cap Core Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
INSURANCE (CONTINUED)
Cincinnati Financial Corp. 4,058 $ 179,607
Erie Indemnity Co. Class A 1,149 60,403
First American Corp. 5,010 176,051
Gallagher (Arthur J.) & Co. 5,331 173,258
Genworth Financial, Inc. Class A 21,278 574,506
HCC Insurance Holdings, Inc. 7,246 239,987
Jefferson-Pilot Corp. 5,700 296,172
Lincoln National Corp. 7,104 331,615
Loews Corp. 16,915 1,189,124
Markel Corp. (a) 989 359,996
Mercury General Corp. 2,214 132,663
Nationwide Financial Services, Inc. Class A 7,985 305,266
Old Republic International Corp. 10,685 270,330
Protective Life Corp. 6,894 294,305
Reinsurance Group of America, Inc. 1,293 62,646
SAFECO Corp. 19,440 1,015,546
StanCorp Financial Group, Inc. 2,069 170,692
Torchmark Corp. 4,099 234,217
UnumProvident Corp. 33,301 597,420
W.R. Berkley Corp. 7,845 370,049
------------
8,186,524
------------
INTERNET SOFTWARE & SERVICES (0.5%)
VeriSign, Inc. (a) 25,875 867,330
------------
IT SERVICES (2.3%)
Acxiom Corp. 10,933 287,538
Affiliated Computer Services, Inc. Class A (a) 3,356 201,998
Alliance Data Systems Corp. (a) 1,754 83,280
BearingPoint, Inc. (a) 25,984 208,651
Certegy, Inc. 1,998 70,989
CheckFree Corp. (a) 6,913 263,247
Computer Sciences Corp. (a) 13,934 785,459
Electronic Data Systems Corp. 49,040 1,132,824
Sabre Holdings Corp. Class A 21,819 483,509
Unisys Corp. (a) 44,971 457,805
------------
3,975,300
------------
LEISURE EQUIPMENT & PRODUCTS (1.7%)
Brunswick Corp. 9,942 492,129
VEastman Kodak Co. 53,241 1,717,022
Hasbro, Inc. 23,452 454,500
Polaris Industries, Inc. 3,275 222,766
------------
2,886,417
------------
MACHINERY (3.0%)
Crane Co. 8,470 244,275
Cummins, Inc. 2,943 246,594
Eaton Corp. 15,379 1,112,824
Graco, Inc. 6,896 257,566
</Table>
<Table>
<Caption>
SHARES VALUE
MACHINERY (CONTINUED)
Harsco Corp. 4,678 $ 260,752
PACCAR, Inc. 11,319 910,953
Parker Hannifin Corp. 17,178 1,301,062
Pentair, Inc. 5,175 225,423
SPX Corp. 11,139 446,228
Timken Co. (The) 2,768 72,023
------------
5,077,700
------------
MEDIA (1.4%)
Cox Radio, Inc. Class A (a) 6,254 103,066
Dex Media, Inc. 2,341 58,431
Entercom Communications Corp. (a) 6,403 229,804
Gemstar-TV Guide International, Inc. (a) 43,887 259,811
Lamar Advertising Co. Class A (a) 3,383 144,725
McClatchy Co. (The) Class A 1,297 93,137
Meredith Corp. 1,620 87,804
Metro-Goldwyn-Mayer, Inc. (a) 2,584 30,698
Regal Entertainment Group Class A 3,498 72,584
Sirius Satellite Radio, Inc. (a) 28,276 216,311
UnitedGlobalCom, Inc. (a) 15,406 148,822
Univision Communications, Inc. Class A (a) 15,644 457,900
Wiley (John) & Sons, Inc. Class A 6,757 235,414
XM Satellite Radio Holdings, Inc. Class A (a) 7,105 267,290
------------
2,405,797
------------
METALS & MINING (2.5%)
CONSOL Energy, Inc. 8,961 367,849
International Steel Group, Inc. (a) 752 30,501
Massey Energy Co. 10,909 381,270
Nucor Corp. 11,966 626,300
Peabody Energy Corp. 9,191 743,644
VPhelps Dodge Corp. 13,436 1,329,089
United States Steel Corp. 16,276 834,145
------------
4,312,798
------------
MULTILINE RETAIL (1.9%)
Dillard's, Inc. Class A 6,987 187,741
Federated Department Stores, Inc. 15,364 887,885
J.C. Penney Co., Inc. (Holding Co.) 23,897 989,336
Kmart Holding Corp. (a) 6,794 672,266
Sears, Roebuck and Co. 9,086 463,659
------------
3,200,887
------------
MULTI-UTILITIES & UNREGULATED POWER (2.9%)
AES Corp. (The) (a) 49,681 679,139
Constellation Energy Group, Inc. 6,863 299,982
Dynegy, Inc. Class A (a) 19,128 88,371
El Paso Corp. 28,412 295,485
Energy East Corp. 14,021 374,080
MDU Resources Group, Inc. 8,832 235,638
National Fuel Gas Co. 10,398 294,679
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 173
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (CONTINUED)
NRG Energy, Inc. (a) 5,900 $ 212,695
ONEOK, Inc. 14,744 419,025
Questar Corp. 8,639 440,244
Reliant Energy, Inc. (a) 22,011 300,450
Westar Energy, Inc. 5,838 133,515
Williams Cos., Inc. (The) 75,170 1,224,519
------------
4,997,822
------------
OFFICE ELECTRONICS (1.0%)
VXerox Corp. (a) 100,841 1,715,305
------------
OIL & GAS (6.3%)
Amerada Hess Corp. 11,124 916,395
Ashland, Inc. 7,916 462,136
EOG Resources, Inc. 16,748 1,195,137
Kerr-McGee Corp. 14,173 819,044
Marathon Oil Corp. 27,210 1,023,368
Murphy Oil Corp. 11,754 945,609
Newfield Exploration Co. (a) 5,952 351,466
Noble Energy, Inc. 8,351 514,923
Sunoco, Inc. 10,864 887,697
Unocal Corp. 25,148 1,087,400
VValero Energy Corp. 34,342 1,559,127
XTO Energy, Inc. 27,755 981,972
------------
10,744,274
------------
PAPER & FOREST PRODUCTS (1.5%)
VGeorgia-Pacific Corp. 36,514 1,368,545
Louisiana-Pacific Corp. 15,629 417,919
MeadWestvaco Corp. 19,057 645,842
Rayonier, Inc. 3,254 159,153
------------
2,591,459
------------
PERSONAL PRODUCTS (0.4%)
Estee Lauder Cos., Inc. (The) Class A 10,751 492,074
NBTY, Inc. (a) 8,925 214,289
------------
706,363
------------
PHARMACEUTICALS (1.3%)
Endo Pharmaceuticals Holdings, Inc. (a) 7,681 161,455
Eon Labs, Inc. (a) 4,593 124,011
IVAX Corp. (a) 28,364 448,719
King Pharmaceuticals, Inc. (a) 36,715 455,266
Medicis Pharmaceutical Corp. Class A 9,178 322,239
MGI Pharma, Inc. (a) 11,529 322,927
Mylan Laboratories, Inc. 3,826 67,644
Sepracor, Inc. (a) 6,173 366,491
------------
2,268,752
------------
REAL ESTATE (4.2%)
Apartment Investment & Management Co. Class A 9,691 373,491
</Table>
<Table>
<Caption>
SHARES VALUE
REAL ESTATE (CONTINUED)
Archstone-Smith Trust 16,650 $ 637,695
Arden Realty, Inc. 2,898 109,313
Avalonbay Communities, Inc. 10,288 774,687
Catellus Development Corp. 4,565 139,689
CBL & Associates Properties, Inc. 2,203 168,199
Equity Office Properties Trust 21,057 613,180
Equity Residential 22,918 829,173
Federal Realty Investment Trust 2,289 118,227
Host Marriot Corp. 36,844 637,401
Mack-Cali Realty Corp. 2,688 123,729
Mills Corp. (The) 2,374 151,366
Plum Creek Timber Co., Inc. 18,225 700,569
Reckson Associates Realty Corp. 10,014 328,559
Regency Centers Corp. 2,695 149,303
St. Joe Co. (The) 2,049 131,546
Simon Property Group, Inc. 5,363 346,825
Trizec Properties, Inc. 12,734 240,927
Vornado Realty Trust 7,261 552,780
------------
7,126,659
------------
ROAD & RAIL (1.4%)
Burlington Northern Santa Fe Corp. 20,362 963,326
CSX Corp. 9,509 381,121
Norfolk Southern Corp. 23,501 850,501
Sirva, Inc. (a) 3,310 63,618
Yellow Roadway Corp. (a) 3,895 216,991
------------
2,475,557
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.9%)
Advanced Micro Devices, Inc. (a) 37,802 832,400
Agere Systems, Inc. Class B (a) 282,285 381,085
Altera Corp. (a) 52,102 1,078,511
Conexant Systems, Inc. (a) 75,460 150,165
Cree, Inc. (a) 6,919 277,313
Freescale Semiconductor, Inc. Class B (a) 35,738 656,150
Integrated Circuit Systems, Inc. (a) 11,882 248,571
Intersil Corp. Class A 24,559 411,118
Lam Research Corp. (a) 18,455 533,534
LSI Logic Corp. (a) 62,558 342,818
Microchip Technology, Inc. 1,737 46,308
Novellus Systems, Inc. (a) 16,250 453,213
PMC-Sierra, Inc. (a) 28,915 325,294
Rambus, Inc. (a) 14,198 326,554
RF Micro Devices, Inc. (a) 24,498 167,566
Teradyne, Inc. (a) 26,738 456,418
------------
6,687,018
------------
SOFTWARE (2.7%)
Adobe Systems, Inc. 4,370 274,174
Autodesk, Inc. 17,455 662,417
BMC Software, Inc. (a) 31,745 590,457
Citrix Systems, Inc. (a) 30,954 759,302
</Table>
M- 174 MainStay VP Mid Cap Core Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
SOFTWARE (CONTINUED)
Intuit, Inc. (a) 7,813 $ 343,850
Macromedia, Inc. (a) 4,915 152,955
McAfee, Inc. (a) 14,178 410,170
Red Hat, Inc. (a) 26,497 353,735
Reynolds & Reynolds Co. (The) Class A 1,979 52,463
Siebel Systems, Inc. (a) 45,062 473,151
Synopsys, Inc. (a) 21,544 422,693
TIBCO Software, Inc. (a) 4,813 64,205
------------
4,559,572
------------
SPECIALTY RETAIL (3.4%)
Abercrombie & Fitch Co. Class A 13,675 642,041
American Eagle Outfitters, Inc. 4,025 189,577
AnnTaylor Stores Corp. (a) 11,172 240,533
Barnes & Noble, Inc. (a) 2,337 75,415
Borders Group, Inc. 2,849 72,365
Circuit City Stores, Inc. 36,235 566,715
Claire's Stores, Inc. 11,639 247,329
VLimited Brands, Inc. 57,981 1,334,723
Michaels Stores, Inc. 20,086 601,977
Office Depot, Inc. (a) 9,808 170,267
Pacific Sunwear of California, Inc. (a) 12,550 279,363
PETCO Animal Supplies, Inc. (a) 582 22,977
PETsMART, Inc. 9,824 349,047
Sherwin-Williams Co. (The) 8,604 383,997
Talbots, Inc. (The) 3,181 86,619
Toys "R" Us, Inc. (a) 30,754 629,534
------------
5,892,479
------------
TEXTILES, APPAREL & LUXURY GOODS (0.2%)
Liz Claiborne, Inc. 3,484 147,060
Polo Ralph Lauren Corp. 3,049 129,887
------------
276,947
------------
THRIFTS & MORTGAGE FINANCE (0.6%)
Independence Community Bank Corp. 5,976 254,458
New York Community Bancorp, Inc. 22,127 455,152
People's Bank 2,260 87,892
W Holding Co., Inc. 3,177 72,880
Webster Financial Corp. 1,639 82,999
------------
953,381
------------
TOBACCO (0.6%)
Loews Corp.-Carolina Group 8,352 241,790
Reynolds American, Inc. 7,256 570,322
UST, Inc. 6,128 294,818
------------
1,106,930
------------
</Table>
<Table>
<Caption>
SHARES VALUE
TRADING COMPANIES & DISTRIBUTORS (0.1%)
Grainger (W.W.), Inc. 1,760 $ 117,251
------------
WIRELESS TELECOMMUNICATION SERVICES (1.2%)
American Tower Corp. Class A (a) 35,734 657,505
Crown Castle International Corp. (a) 13,673 227,519
Nextel Partners, Inc. Class A (a) 8,692 169,841
SpectraSite, Inc. (a) 5,621 325,456
Telephone and Data Systems, Inc. 4,905 377,440
United States Cellular Corp. (a) 2,222 99,457
Western Wireless Corp. Class A (a) 8,620 252,566
------------
2,109,784
------------
Total Common Stocks
(Cost $137,052,331) 163,005,800
------------
INVESTMENT COMPANIES (4.1%)
- -----------------------------------------------------------------------------
CAPITAL MARKETS (4.1%)
VDIAMONDS Trust, Series I (b) 31,777 3,416,345
S&P 500 Index-SPDR Trust, Series 1 (b) 1 121
VS&P MidCap 400 Index-MidCap SPDR Trust, Series 1
(b) 30,022 3,632,662
------------
Total Investment Companies
(Cost $6,881,106) 7,049,128
------------
Total Investments
(Cost $143,933,437) (c) 99.5% 170,054,928(d)
Cash and Other Assets,
Less Liabilities 0.5 784,817
------- ------------
Net Assets 100.0% $170,839,745
======= ============
</Table>
<Table>
(a) Non-income producing security.
(b) Exchange Traded Fund-represents a basket of securities
that are traded on an exchange.
(c) The cost for federal income tax purposes is
$144,230,332.
(d) At December 31, 2004 net unrealized appreciation was
$25,824,596, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $26,209,050 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $384,454.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 175
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $143,933,437) $170,054,928
Cash 2,327,066
Receivables:
Investment securities sold 18,585,957
Fund shares sold 3,006,024
Dividends 335,290
Other assets 229
------------
Total assets 194,309,494
------------
LIABILITIES:
Payables:
Investment securities purchased 23,312,933
Manager 84,603
NYLIFE Distributors 8,321
Fund shares redeemed 11
Accrued expenses 63,881
------------
Total liabilities 23,469,749
------------
Net assets $170,839,745
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 97,662
Service Class 32,572
Additional paid-in capital 139,156,528
Accumulated undistributed net investment
income 12,994
Accumulated net realized gain on investments 5,418,498
Net unrealized appreciation on investments 26,121,491
------------
Net assets $170,839,745
============
INITIAL CLASS
Net assets applicable to outstanding shares $128,177,665
============
Shares of capital stock outstanding 9,766,191
============
Net asset value per share outstanding $ 13.12
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 42,662,080
============
Shares of capital stock outstanding 3,257,153
============
Net asset value per share outstanding $ 13.10
============
</Table>
M- 176 MainStay VP Mid Cap Core Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 1,787,373
Interest 1,443
-----------
Total income 1,788,816
-----------
EXPENSES:
Manager 902,871
Custodian 66,453
Distribution and service -- Service Class 58,683
Shareholder communication 55,578
Professional 43,732
Directors 11,478
Portfolio pricing 8,743
Miscellaneous 16,838
-----------
Total expenses 1,164,376
Expense reimbursement from Manager (64,736)
-----------
Net expenses 1,099,640
-----------
Net investment income 689,176
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on Investments 8,341,960
Net increase from payment by affiliate for loss
on the disposal of investment in violation of
restrictions 990
Net change in unrealized appreciation on
investments 17,978,513
-----------
Net realized and unrealized gain on investments 26,321,463
-----------
Net increase in net assets resulting from
operations $27,010,639
-----------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 177
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 689,176 $ 226,410
Net realized gain on investments 8,341,960 4,508,079
Net increase from payment by
affiliate for loss on the disposal
of investment in violation of
restrictions 990 --
Net change in unrealized
appreciation (depreciation) on
investments 17,978,513 8,591,738
--------------------------
Net increase in net assets resulting
from operations 27,010,639 13,326,227
--------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (553,375) (198,571)
Service Class (128,738) (26,563)
From net realized gain on investments:
Initial Class (2,585,993) --
Service Class (875,838) --
--------------------------
Total dividends and distributions to
shareholders (4,143,944) (225,134)
--------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 57,048,634 18,988,558
Service Class 28,371,406 8,285,865
Net asset value of shares issued
to shareholders in reinvestment of dividends and
distributions:
Initial Class 3,139,368 198,571
Service Class 1,004,576 26,563
--------------------------
89,563,984 27,499,557
Cost of shares redeemed:
Initial Class (5,180,326) (4,197,983)
Service Class (691,945) (57,250)
--------------------------
(5,872,271) (4,255,233)
--------------------------
Increase in net assets derived
from capital share transactions 83,691,713 23,244,324
--------------------------
Net increase in net assets 106,558,408 36,345,417
NET ASSETS:
Beginning of year 64,281,337 27,935,920
--------------------------
End of year $170,839,745 $64,281,337
==========================
Accumulated undistributed net
investment income at end of year $ 12,994 $ 5,931
==========================
</Table>
M- 178 MainStay VP Mid Cap Core Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
-------------------------------------------------------- ---------------------------
JUNE 5, JUNE 5,
2003(A) 2003(A)
THROUGH YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2004 2003
Net asset value at beginning
of period $ 11.01 $ 8.16 $ 9.40 $ 10.00 $ 11.00 $ 9.28
-------- ------- ------- ------- ------- ------
Net investment income 0.06 0.05(b) 0.02 0.02 0.04 0.03(b)
Net realized and unrealized
gain (loss) on investments 2.39 2.84 (1.24) (0.60) 2.38 1.72
-------- ------- ------- ------- ------- ------
Total from investment
operations 2.45 2.89 (1.22) (0.58) 2.42 1.75
-------- ------- ------- ------- ------- ------
Less dividends and
distributions:
From net investment income (0.06) (0.04) (0.02) (0.02) (0.04) (0.03)
From net realized gain on
investments (0.28) -- -- -- (0.28) --
-------- ------- ------- ------- ------- ------
Total dividends and
distributions (0.34) (0.04) (0.02) (0.02) (0.32) (0.03)
-------- ------- ------- ------- ------- ------
Net asset value at end of
period $ 13.12 $ 11.01 $ 8.16 $ 9.40 $ 13.10 $11.00
======== ======= ======= ======= ======= ======
Total investment return 22.27% 35.43% (12.92%) (5.86%)(c) 21.96% 18.89%(c)
Ratios (to average net
assets)/Supplement Data:
Net investment income 0.70% 0.55% 0.39% 0.44%+ 0.45% 0.30%+(d)
Net expenses 0.98% 0.98% 0.98% 0.98%+ 1.23% 1.23%+
Expenses (before
reimbursement) 1.04% 1.18% 1.34% 1.84%+ 1.29% 1.43%+
Portfolio turnover rate 185% 202% 217% 74% 185% 202%
Net assets at end of period
(in 000's) $128,178 $55,351 $27,936 $12,741 $42,662 $8,930
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Total Return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 179
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (99.2%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (4.1%)
Alliant Techsystems, Inc. (a) 34,500 $ 2,255,610
L-3 Communications Holdings, Inc. 41,300 3,024,812
United Defense Industries, Inc. (a) 59,800 2,825,550
------------
8,105,972
------------
AUTOMOBILES (1.6%)
Winnebago Industries, Inc. 78,300 3,058,398
------------
BIOTECHNOLOGY (0.7%)
Mannkind Corp. (a) 88,400 1,392,300
------------
CAPITAL MARKETS (2.9%)
Affiliated Managers Group, Inc. (a) 49,550 3,356,517
E*TRADE Financial Corp. (a) 152,100 2,273,895
------------
5,630,412
------------
CHEMICALS (1.3%)
Scotts Co. (The) Class A (a) 34,700 2,551,144
------------
COMMERCIAL BANKS (2.4%)
UCBH Holdings, Inc. 49,400 2,263,508
Westcorp 54,500 2,503,185
------------
4,766,693
------------
COMMERCIAL SERVICES & SUPPLIES (0.8%)
Corinthian Colleges, Inc. (a) 86,300 1,626,324
------------
COMMUNICATIONS EQUIPMENT (1.2%)
Avocent Corp. (a) 13,600 551,072
InterDigital Communications Corp. (a) 24,500 541,450
QLogic Corp. (a) 35,400 1,300,242
------------
2,392,764
------------
CONSTRUCTION & ENGINEERING (1.2%)
Fluor Corp. 42,800 2,333,028
------------
CONSTRUCTION MATERIALS (1.9%)
VEagle Materials, Inc. 40,389 3,487,590
Eagle Materials, Inc. Class B 2,481 209,148
------------
3,696,738
------------
CONSUMER FINANCE (2.5%)
Capital One Financial Corp. 34,300 2,888,403
Providian Financial Corp. (a) 124,000 2,042,280
------------
4,930,683
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.8%)
Amphenol Corp. Class A (a) 22,300 819,302
CDW Corp. 19,500 1,293,825
VGarmin Ltd. 57,300 3,486,132
------------
5,599,259
------------
ENERGY EQUIPMENT & SERVICES (1.5%)
National-Oilwell, Inc. (a) 82,400 2,907,896
------------
</Table>
<Table>
<Caption>
SHARES VALUE
HEALTH CARE EQUIPMENT & SUPPLIES (5.6%)
Cooper Cos., Inc. (The) 43,500 $ 3,070,665
Cytyc Corp. (a) 110,700 3,051,999
Fisher Scientific International, Inc. (a) 31,500 1,964,970
Varian Medical Systems, Inc. (a) 70,100 3,031,124
------------
11,118,758
------------
HEALTH CARE PROVIDERS & SERVICES (12.5%)
Caremark Rx, Inc. (a) 52,600 2,074,018
VCoventry Health Care, Inc. (a) 73,200 3,885,456
First Health Group Corp. (a) 71,800 1,343,378
Henry Schein, Inc. (a) 31,600 2,200,624
VPacifiCare Health Systems, Inc. (a) 75,000 4,239,000
Pharmaceutical Product Development, Inc. (a) 50,100 2,068,629
Quest Diagnostics, Inc. 25,900 2,474,745
Sierra Health Services, Inc. (a) 56,300 3,102,693
WellChoice, Inc. (a) 59,100 3,155,940
------------
24,544,483
------------
HOTELS, RESTAURANTS & LEISURE (3.6%)
Boyd Gaming Corp. 77,800 3,240,370
Las Vegas Sands Corp. (a) 4,500 216,000
VPenn National Gaming, Inc. (a) 60,700 3,675,385
------------
7,131,755
------------
HOUSEHOLD DURABLES (17.1%)
Centex Corp. 35,300 2,103,174
VD.R. Horton, Inc. 107,250 4,323,248
VHarman International Industries, Inc. 29,500 3,746,500
Hovnanian Enterprises, Inc. Class A (a) 60,700 3,005,864
KB HOME 30,400 3,173,760
Lennar Corp. Class A 50,000 2,834,000
Lennar Corp. Class B 2,540 132,613
M.D.C. Holdings, Inc. 32,260 2,788,554
Mohawk Industries, Inc. (a) 32,900 3,002,125
Ryland Group, Inc. (The) 49,200 2,830,968
Stanley Works (The) 55,300 2,709,147
Toro Co. (The) 36,500 2,969,275
------------
33,619,228
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term
investments. May be subject to change daily.
</Table>
M- 180 MainStay VP Mid Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (1.5%)
VeriSign, Inc. (a) 88,600 $ 2,969,872
------------
IT SERVICES (1.8%)
Acxiom Corp. 92,800 2,440,640
Affiliated Computer Services, Inc. Class A (a) 20,000 1,203,800
------------
3,644,440
------------
LEISURE EQUIPMENT & PRODUCTS (0.5%)
Brunswick Corp. 20,000 990,000
------------
MACHINERY (2.9%)
Oshkosh Truck Corp. 39,100 2,673,658
Terex Corp. (a) 62,600 2,982,890
------------
5,656,548
------------
METALS & MINING (6.7%)
Arch Coal, Inc. 90,800 3,227,032
Massey Energy Co. 94,300 3,295,785
VPeabody Energy Corp. 50,800 4,110,228
Steel Dynamics, Inc. 68,100 2,579,628
------------
13,212,673
------------
OIL & GAS (1.5%)
Newfield Exploration Co. (a) 50,000 2,952,500
------------
PHARMACEUTICALS (1.0%)
Endo Pharmaceuticals
Holdings, Inc. (a) 89,100 1,872,882
------------
REAL ESTATE (1.9%)
VSt. Joe Co. (The) 59,300 3,807,060
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.6%)
Altera Corp. (a) 18,700 387,090
Integrated Circuit Systems, Inc. (a) 36,200 757,304
Novellus Systems, Inc. (a) 25,000 697,250
Semtech Corp. (a) 24,900 544,563
Silicon Laboratories, Inc. (a) 19,900 702,669
------------
3,088,876
------------
SOFTWARE (4.0%)
Activision, Inc. (a) 74,600 1,505,428
Amdocs Ltd. (a) 27,300 716,625
Autodesk, Inc. 80,400 3,051,180
FactSet Research Systems, Inc. 45,800 2,676,552
------------
7,949,785
------------
SPECIALTY RETAIL (6.4%)
Aaron Rents, Inc. 102,500 2,562,500
Chico's FAS, Inc. (a) 62,900 2,863,837
Claire's Stores, Inc. 88,100 1,872,125
Michaels Stores, Inc. 87,800 2,631,366
Sherwin-Williams Co. (The) 60,000 2,677,800
------------
12,607,628
------------
TEXTILES, APPAREL & LUXURY GOODS (2.7%)
VCoach, Inc. (a) 61,300 3,457,320
Warnaco Group, Inc. (The) (a) 85,900 1,855,440
------------
5,312,760
------------
THRIFTS & MORTGAGE FINANCE (3.0%)
Doral Financial Corp. 60,450 2,977,163
IndyMac Bancorp, Inc. 87,100 3,000,595
------------
5,977,758
------------
Total Common Stocks
(Cost $146,849,340) 195,448,617
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (1.1%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (1.1%)
UBS Finance (Delaware) LLC 2.18%, due 1/3/05 $2,100,000 2,099,745
------------
Total Short-Term Investment
(Cost $2,099,745) 2,099,745
------------
Total Investments
(Cost $148,949,085) (b) 100.3% 197,548,362(c)
Liabilities in Excess of
Cash and Other Assets (0.3) (552,576)
---------- ------------
Net Assets 100.0% $196,995,786
========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) The cost for federal income tax purposes is
$149,386,293.
(c) At December 31, 2004 net unrealized appreciation was
$48,162,069, 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 $49,367,117 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $1,205,048.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 181
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $148,949,085) $197,548,362
Cash 676
Receivables:
Investment securities sold 3,205,415
Fund shares sold 222,666
Dividends 48,812
Other assets 372
------------
Total assets 201,026,303
------------
LIABILITIES:
Payables:
Investment securities purchased 3,823,043
Manager 120,067
NYLIFE Distributors 13,966
Fund shares redeemed 8,728
Custodian 3,972
Accrued expenses 60,741
------------
Total liabilities 4,030,517
------------
Net assets $196,995,786
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 109,716
Service Class 60,241
Additional paid-in capital 151,930,781
Accumulated net realized loss on investments (3,704,229)
Net unrealized appreciation on investments 48,599,277
------------
Net assets $196,995,786
============
INITIAL CLASS
Net assets applicable to outstanding shares $127,345,055
============
Shares of capital stock outstanding 10,971,604
============
Net asset value per share outstanding $ 11.61
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 69,650,731
============
Shares of capital stock outstanding 6,024,075
============
Net asset value per share outstanding $ 11.56
============
</Table>
M- 182 MainStay VP Mid Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 767,363
Interest 34,981
-----------
Total income 802,344
-----------
EXPENSES:
Manager 1,083,456
Distribution and service -- Service Class 102,817
Shareholder communication 82,297
Professional 47,253
Custodian 22,826
Directors 11,582
Portfolio pricing 3,391
Miscellaneous 18,623
-----------
Total expenses 1,372,245
-----------
Net investment loss (569,901)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 4,467,613
Net change in unrealized appreciation on
investments 29,489,311
-----------
Net realized and unrealized gain on investments 33,956,924
-----------
Net increase in net assets resulting from
operations $33,387,023
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $2,469.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 183
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (569,901) $ (287,590)
Net realized gain (loss) on
investments 4,467,613 (1,945,913)
Net change in unrealized
appreciation (depreciation) on
investments 29,489,311 20,457,689
---------------------------
Net increase in net assets
resulting from operations 33,387,023 18,224,186
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 35,057,296 47,169,766
Service Class 46,396,892 16,117,063
---------------------------
81,454,188 63,286,829
Cost of shares redeemed:
Initial Class (13,969,281) (3,683,456)
Service Class (4,498,876) (435,043)
---------------------------
(18,468,157) (4,118,499)
---------------------------
Increase in net assets derived
from capital share transactions 62,986,031 59,168,330
---------------------------
Net increase in net assets 96,373,054 77,392,516
NET ASSETS:
Beginning of year 100,622,732 23,230,216
---------------------------
End of year $196,995,786 $100,622,732
===========================
</Table>
M- 184 MainStay VP Mid Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
----------------------------------------------- ---------------------------
JULY 2, JUNE 5,
2001(A) 2003(A)
THROUGH YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2004 2003
Net asset value at beginning
of period $ 9.47 $ 6.54 $ 9.16 $ 10.00 $ 9.45 $ 7.77
-------- ------- ------- ------- ------- -------
Net investment loss (b) (0.03) (0.04) (0.05) (0.02) (0.05) (0.03)
Net realized and unrealized
gain (loss) on investments 2.17 2.97 (2.57) (0.82) 2.16 1.71
-------- ------- ------- ------- ------- -------
Total from investment
operations 2.14 2.93 (2.62) (0.84) 2.11 1.68
-------- ------- ------- ------- ------- -------
Net asset value at end of
period $ 11.61 $ 9.47 $ 6.54 $ 9.16 $ 11.56 $ 9.45
======== ======= ======= ======= ======= =======
Total investment return 22.61% 44.78% (28.59%) (8.43%)(c) 22.30% 21.71%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment loss (0.32%) (0.57%) (0.67%) (0.41%)+ (0.57%) (0.82%)+(d)
Net expenses 0.88% 0.97% 0.97% 0.97%+ 1.13% 1.22%+
Expenses (before
reimbursement) 0.88% 0.97% 1.10% 1.79%+ 1.13% 1.22%+
Portfolio turnover rate 50% 38% 163% 57% 50% 38%
Net assets at end of period
(in 000's) $127,345 $83,839 $23,230 $13,967 $69,651 $16,783
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Total return is not annualized.
(d) Represents income earned for the year by the Initial Class
shares less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. M- 185
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (85.4%)+
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.1%)
Raytheon Co. 92,400 $ 3,587,892
------------
AUTO COMPONENTS (0.9%)
TRW Automotive Holdings Corp. (a) 144,500 2,991,150
------------
CHEMICALS (5.0%)
Air Products & Chemicals, Inc. 18,750 1,086,937
Arch Chemicals, Inc. 143,700 4,135,686
Crompton Corp. 580,900 6,854,620
Mosaic Co. (The) (a) 17,200 280,704
Olin Corp. 207,075 4,559,792
------------
16,917,739
------------
COMMERCIAL BANKS (2.5%)
Compass Bancshares, Inc. 105,470 5,133,225
Hibernia Corp. Class A 51,897 1,531,480
Marshall & Ilsley Corp. 37,573 1,660,727
------------
8,325,432
------------
COMMERCIAL SERVICES & SUPPLIES (2.6%)
Imagistics International, Inc. (a) 7,136 240,198
Pitney Bowes, Inc. 181,000 8,376,680
------------
8,616,878
------------
CONTAINERS & PACKAGING (7.7%)
Owens-Illinois, Inc. (a) 247,400 5,603,610
Smurfit-Stone Container Corp. (a) 400,000 7,472,000
VTemple-Inland, Inc. 183,800 12,571,920
------------
25,647,530
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.7%)
ALLTEL Corp. 41,600 2,444,416
------------
ELECTRIC UTILITIES (4.2%)
DTE Energy Co. 87,000 3,752,310
Entergy Corp. 53,400 3,609,306
PG&E Corp. (a) 42,794 1,424,184
PPL Corp. 100,100 5,333,328
------------
14,119,128
------------
ENERGY EQUIPMENT & SERVICES (21.4%)
Diamond Offshore Drilling, Inc. 57,900 2,318,895
VENSCO International, Inc. 471,200 14,955,888
VGlobalSantaFe Corp. 404,300 13,386,373
VPride International, Inc. (a) 413,600 8,495,344
VRowan Cos., Inc. (a) 579,700 15,014,230
VTransocean, Inc. (a) 412,500 17,485,875
------------
71,656,605
------------
FOOD & STAPLES RETAILING (1.7%)
Kroger Co. (The) (a) 330,000 5,788,200
------------
</Table>
<Table>
<Caption>
SHARES VALUE
FOOD PRODUCTS (2.0%)
Cadbury Schweppes PLC ADR (b) 176,100 $ 6,638,970
------------
HEALTH CARE PROVIDERS & SERVICES (1.1%)
Apria Healthcare Group, Inc. (a) 78,900 2,599,755
Universal Health Services, Inc. Class B ADR (b) 24,000 1,068,000
------------
3,667,755
------------
INSURANCE (2.2%)
Axis Capital Holdings, Ltd. 6,700 183,312
Hartford Financial Services Group, Inc. (The) 82,600 5,725,006
St. Paul Travelers Cos., Inc. (The) 36,500 1,353,055
------------
7,261,373
------------
IT SERVICES (0.9%)
Computer Sciences Corp. (a) 55,200 3,111,624
------------
LEISURE EQUIPMENT & PRODUCTS (0.4%)
Mattel, Inc. 75,400 1,469,546
------------
MACHINERY (8.4%)
AGCO Corp. (a) 180,100 3,942,389
Cummins, Inc. 92,400 7,742,196
VNavistar International Corp. (a) 190,680 8,386,106
Timken Co. (The) 316,000 8,222,320
------------
28,293,011
------------
MEDIA (0.8%)
Regal Entertainment Group Class A 124,900 2,591,675
------------
MULTI-UTILITIES & UNREGULATED POWER (0.6%)
Constellation Energy Group, Inc. 44,500 1,945,095
------------
OIL & GAS (2.3%)
Kerr-McGee Corp. 81,000 4,680,990
Premcor, Inc. 71,000 2,994,070
------------
7,675,060
------------
PAPER & FOREST PRODUCTS (6.5%)
VBowater, Inc. 387,910 17,056,403
MeadWestvaco Corp. 134,951 4,573,489
------------
21,629,892
------------
REAL ESTATE (0.8%)
Highwoods Properties, Inc. 92,400 2,559,480
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term investments.
May be subject to change daily.
</Table>
M- 186 MainStay VP Mid Cap Value The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
ROAD & RAIL (3.4%)
VBurlington Northern Santa Fe Corp. 191,400 $ 9,055,134
CSX Corp. 60,600 2,428,848
------------
11,483,982
------------
SOFTWARE (0.3%)
BMC Software, Inc. (a) 61,000 1,134,600
------------
SPECIALTY RETAIL (2.8%)
Limited Brands, Inc. 59,200 1,362,784
OfficeMax, Inc. 205,700 6,454,866
Payless ShoeSource, Inc. (a) 130,800 1,608,840
------------
9,426,490
------------
THRIFTS & MORTGAGE FINANCE (5.1%)
VPMI Group, Inc. (The) 320,600 13,385,050
Sovereign Bancorp, Inc. 157,841 3,559,315
------------
16,944,365
------------
Total Common Stock
(Cost $235,363,684) 285,927,888
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (16.2%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (16.2%)
AIG Funding, Inc.
2.31%, due 1/6/2005 $ 3,335,000 3,333,929
American General Finance Corp. 2.30%, due 1/5/2005 310,000 309,921
General Electric Capital Corp. 2.28%, due
1/27/2005 4,000,000 3,993,411
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Goldman Sachs Group, Inc. (The) 2.33%, due
1/3/2005 $ 7,000,000 $ 6,999,093
International Business Machines Corp.
2.16%, due 1/7/2005 7,735,000 7,732,213
Lloyds Bank PLC
2.26%, due 1/14/2005 5,000,000 4,995,919
Morgan Stanley Dean Witter & Co. 2.32%, due
1/5/2005 10,000,000 9,997,419
UBS Finance (Delaware) LLC 2.18%, due 1/3/2005 11,050,000 11,048,662
USAA Capital Corp.
2.27%, due 1/6/2005 6,000,000 5,998,108
------------
Total Commercial Paper
(Cost $54,408,675) 54,408,675
------------
Total Investments
(Cost $289,772,359) (c) 101.6% 340,336,563(d)
Liabilities in Excess of Cash and Other Assets (1.6) (5,394,081)
----------- ------------
Net Assets 100.0% $334,942,482
=========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) ADR -- American Depositary Receipt.
(c) The cost for federal income tax purposes is
$290,180,911.
(d) At December 31, 2004 net unrealized appreciation was
$50,155,652, 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 $50,472,034 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $316,382.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 187
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $289,772,359) $340,336,563
Cash 2,304
Receivables:
Dividends 488,369
Fund shares sold 316,097
Other assets 513
------------
Total assets 341,143,846
------------
LIABILITIES:
Payables:
Investment securities purchased 5,887,643
Manager 190,463
Shareholder communication 44,330
Fund shares redeemed 21,027
NYLIFE Distributors 15,776
Custodian 6,924
Accrued expenses 35,201
------------
Total liabilities 6,201,364
------------
Net assets $334,942,482
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 207,217
Service Class 64,954
Additional paid-in capital 279,435,472
Accumulated undistributed net realized gain on
investments 4,670,635
Net unrealized appreciation on investments 50,564,204
------------
Net assets $334,942,482
============
INITIAL CLASS
Net assets applicable to outstanding shares $255,129,116
============
Shares of capital stock outstanding 20,721,668
============
Net asset value per share outstanding $ 12.31
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 79,813,366
============
Shares of capital stock outstanding 6,495,440
============
Net asset value per share outstanding $ 12.29
============
</Table>
M- 188 MainStay VP Mid Cap Value The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 3,931,705
Interest 376,045
-----------
Total income 4,307,750
-----------
EXPENSES:
Manager 1,593,894
Shareholder communication 114,950
Distribution and service -- Service Class 109,059
Professional 55,161
Custodian 32,050
Directors 16,367
Portfolio pricing 2,620
Miscellaneous 20,380
-----------
Total expenses 1,944,481
-----------
Net investment income 2,363,269
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 10,298,197
Net change in unrealized appreciation on
investments 31,052,287
-----------
Net realized and unrealized gain on investments 41,350,484
-----------
Net increase in net assets resulting from
operations $43,713,753
===========
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 189
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 2,363,269 $ 1,325,290
Net realized gain on investments 10,298,197 3,939,121
Net change in unrealized
appreciation on investments 31,052,287 26,168,345
---------------------------
Net increase in net assets
resulting from operations 43,713,753 31,432,756
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (1,957,895) (1,207,211)
Service Class (502,828) (135,516)
From net realized gain on
investments
Initial Class (2,187,840) --
Service Class (683,724) --
---------------------------
Total dividends and distributions
to shareholders (5,332,287) (1,342,727)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 87,080,837 36,089,827
Service Class 54,156,460 15,944,392
Net asset value of shares issued
to shareholders in reinvestment of
dividends and distributions:
Initial Class 4,145,735 1,207,211
Service Class 1,186,552 135,516
---------------------------
146,569,584 53,376,946
Cost of shares redeemed:
Initial Class (8,488,510) (8,465,482)
Service Class (780,411) (133,110)
---------------------------
(9,268,921) (8,598,592)
---------------------------
Increase in net assets derived
from capital share transactions 137,300,663 44,778,354
---------------------------
Net increase in net assets 175,682,129 74,868,383
NET ASSETS:
Beginning of year 159,260,353 84,391,970
---------------------------
End of year $334,942,482 $159,260,353
===========================
</Table>
M- 190 MainStay VP Mid Cap Value The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------------------------ ---------------------------
JULY 2, JUNE 5,
2001(A) 2003(A)
THROUGH YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2004 2003
Net asset value at beginning
of period $ 10.65 $ 8.33 $ 9.85 $ 10.00 $ 10.64 $ 9.18
-------- -------- ------- ------- ------- -------
Net investment income 0.10 0.11(b) 0.09 0.05 0.08 0.05(b)
Net realized and unrealized
gain (loss) on investments 1.77 2.30 (1.52) (0.15) 1.76 1.50
-------- -------- ------- ------- ------- -------
Total from investment
operations 1.87 2.41 (1.43) (0.10) 1.84 1.55
-------- -------- ------- ------- ------- -------
Less dividends and
distributions:
From net investment income (0.10) (0.09) (0.09) (0.05) (0.08) (0.09)
From net realized gain on
investments (0.11) -- -- -- (0.11) --
-------- -------- ------- ------- ------- -------
Total dividends and
distributions (0.21) (0.09) (0.09) (0.05) (0.19) (0.09)
-------- -------- ------- ------- ------- -------
Net asset value at end of
period $ 12.31 $ 10.65 $ 8.33 $ 9.85 $ 12.29 $ 10.64
======== ======== ======= ======= ======= =======
Total investment return 17.54% 28.97% (14.57%) (1.03%)(c) 17.25% 16.89%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.08% 1.21% 1.39% 1.60% 0.83% 0.96%+(d)
Net expenses 0.81% 0.84% 0.89% 0.89% 1.06% 1.09%+
Expenses (before
reimbursement) 0.81% 0.84% 0.92% 1.29% 1.06% 1.09%+
Portfolio turnover rate 29% 34% 46% 21% 29% 34%
Net assets at end of period
(in 000's) $255,129 $141,877 $84,392 $29,821 $79,813 $17,384
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Total Return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 191
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (96.7%)+
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.0%)
Boeing Co. (The) 105,786 $ 5,476,541
General Dynamics Corp. 25,189 2,634,769
Goodrich Corp. 14,807 483,301
Honeywell International, Inc. 108,356 3,836,886
L-3 Communications Holdings, Inc. 14,500 1,061,980
Lockheed Martin Corp. 55,776 3,098,357
Northrop Grumman Corp. 46,401 2,522,358
Raytheon Co. 56,527 2,194,943
Rockwell Collins, Inc. 22,625 892,330
United Technologies Corp. 64,270 6,642,305
--------------
28,843,770
--------------
AIR FREIGHT & LOGISTICS (1.1%)
FedEx Corp. 37,872 3,730,013
Ryder System, Inc. 7,993 381,826
United Parcel Service, Inc. Class B 141,029 12,052,338
--------------
16,164,177
--------------
AIRLINES (0.1%)
Delta Air Lines, Inc. (a) 15,876 118,753
Southwest Airlines Co. 99,168 1,614,455
--------------
1,733,208
--------------
AUTO COMPONENTS (0.2%)
Cooper Tire & Rubber Co. 9,423 203,066
Dana Corp. 18,850 326,670
Delphi Corp. 70,704 637,750
Goodyear Tire & Rubber Co. (The) (a) 22,063 323,444
Johnson Controls, Inc. 23,971 1,520,720
Visteon Corp. 16,343 159,671
--------------
3,171,321
--------------
AUTOMOBILES (0.6%)
Ford Motor Co. 230,955 3,381,181
General Motors Corp. 71,147 2,850,149
Harley-Davidson, Inc. 37,198 2,259,779
--------------
8,491,109
--------------
BEVERAGES (2.2%)
Adolph Coors Co. Class B 4,697 355,422
Anheuser-Busch Cos., Inc. 99,530 5,049,157
Brown-Forman Corp. Class B 15,358 747,627
Coca-Cola Co. (The) (c) 304,481 12,675,544
Coca-Cola Enterprises, Inc. 59,092 1,232,068
Pepsi Bottling Group, Inc. (The) 31,550 853,112
PepsiCo, Inc. 211,918 11,062,120
--------------
31,975,050
--------------
BIOTECHNOLOGY (1.3%)
Amgen, Inc. (a) 159,754 10,248,219
Biogen Idec, Inc. (a) 42,052 2,801,084
Chiron Corp. (a) 23,696 789,788
</Table>
<Table>
<Caption>
SHARES VALUE
BIOTECHNOLOGY (CONTINUED)
Genzyme Corp. (a) 31,191 $ 1,811,261
Gilead Sciences, Inc. (a) 54,564 1,909,194
MedImmune, Inc. (a) 31,413 851,607
--------------
18,411,153
--------------
BUILDING PRODUCTS (0.2%)
American Standard Cos., Inc. (a) 27,435 1,133,614
Masco Corp. 56,475 2,063,032
--------------
3,196,646
--------------
CAPITAL MARKETS (2.8%)
Bank of New York Co., Inc. (The) 97,607 3,262,026
Bear Stearns Cos., Inc. (The) 12,960 1,325,938
Charles Schwab Corp. (The) 170,543 2,039,694
E*TRADE Financial Corp. (a) 46,160 690,092
Federated Investors, Inc. Class B 13,720 417,088
Franklin Resources, Inc. 31,554 2,197,736
Goldman Sachs Group, Inc. (The) 60,924 6,338,533
Janus Capital Group, Inc. 30,162 507,023
Lehman Brothers Holdings, Inc. 33,858 2,961,898
Mellon Financial Corp. 53,472 1,663,514
Merrill Lynch & Co., Inc. 117,161 7,002,713
Morgan Stanley 137,694 7,644,771
Northern Trust Corp. 27,700 1,345,666
State Street Corp. 42,365 2,080,969
T. Rowe Price Group, Inc. 15,870 987,114
--------------
40,464,775
--------------
CHEMICALS (1.6%)
Air Products & Chemicals, Inc. 28,683 1,662,753
Dow Chemical Co. (The) 118,831 5,883,323
E.I. du Pont de Nemours & Co. 125,145 6,138,362
Eastman Chemical Co. 9,762 563,560
Ecolab, Inc. 32,451 1,140,004
Engelhard Corp. 16,140 495,014
Great Lakes Chemical Corp. 6,377 181,681
Hercules, Inc. (a) 14,049 208,628
International Flavors & Fragrances, Inc. 11,896 509,625
Monsanto Co. 33,273 1,848,315
PPG Industries, Inc. 21,639 1,474,914
Praxair, Inc. 40,943 1,807,633
Rohm & Haas Co. 28,164 1,245,694
Sigma-Aldrich Corp. 8,675 524,490
--------------
23,683,996
--------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings,
excluding short-term investments. May be subject
to change daily.
</Table>
M- 192 MainStay VP S&P 500 Index Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
COMMERCIAL BANKS (5.8%)
AmSouth Bancorp 44,284 $ 1,146,956
VBank of America Corp. 508,202 23,880,412
BB&T Corp. 69,587 2,926,133
Comerica, Inc. 21,904 1,336,582
Compass Bancshares, Inc. 15,400 749,518
Fifth Third Bancorp 70,678 3,341,656
First Horizon National Corp. 15,597 672,387
Huntington Bancshares, Inc. 28,841 714,680
KeyCorp 51,791 1,755,715
M&T Bank Corp. 14,770 1,592,797
Marshall & Ilsley Corp. 28,119 1,242,860
National City Corp. 85,373 3,205,756
North Fork Bancorp., Inc. 58,999 1,702,121
PNC Financial Services Group, Inc. (The) 35,586 2,044,060
Regions Financial Corp. 58,557 2,084,044
SunTrust Banks, Inc. 46,679 3,448,644
Synovus Financial Corp. 39,034 1,115,592
U.S. Bancorp 235,235 7,367,560
Wachovia Corp. 201,744 10,611,734
Wells Fargo & Co. 212,827 13,227,198
Zions Bancorp 11,242 764,793
--------------
84,931,198
--------------
COMMERCIAL SERVICES & SUPPLIES (1.0%)
Allied Waste Industries, Inc. (a) 40,089 372,026
Apollo Group, Inc. Class A (a) 23,334 1,883,287
Avery Dennison Corp. 13,920 834,782
Cendant Corp. 133,043 3,110,545
Cintas Corp. 21,587 946,805
Donnelley (R.R.) & Sons Co. 27,671 976,510
Equifax, Inc. 17,176 482,646
H&R Block, Inc. 21,235 1,040,515
Monster Worldwide, Inc. (a) 14,931 502,279
Pitney Bowes, Inc. 29,100 1,346,748
Robert Half International, Inc. 21,553 634,305
Waste Management, Inc. 72,106 2,158,854
--------------
14,289,302
--------------
COMMUNICATIONS EQUIPMENT (2.6%)
ADC Telecommunications, Inc. (a) 101,944 273,210
Andrew Corp. (a) 20,244 275,926
Avaya, Inc. (a) 57,060 981,432
CIENA Corp. (a) 71,697 239,468
Cisco Systems, Inc. (a) 829,668 16,012,592
Comverse Technology, Inc. (a) 24,689 603,646
Corning, Inc. (a) 175,634 2,067,212
JDS Uniphase Corp. (a) 181,657 575,853
Lucent Technologies, Inc. (a) 557,016 2,094,380
Motorola, Inc. 306,753 5,276,152
</Table>
<Table>
<Caption>
SHARES VALUE
COMMUNICATIONS EQUIPMENT (CONTINUED)
QLogic Corp. (a) 11,596 $ 425,921
QUALCOMM, Inc. 206,231 8,744,194
Scientific-Atlanta, Inc. 18,875 623,064
Tellabs, Inc. (a) 58,113 499,191
--------------
38,692,241
--------------
COMPUTERS & PERIPHERALS (3.8%)
Apple Computer, Inc. (a) 50,693 3,264,629
Dell, Inc. (a) 312,610 13,173,386
EMC Corp. (a) 302,999 4,505,595
Gateway, Inc. (a) 47,346 284,550
Hewlett-Packard Co. 380,488 7,978,833
VInternational Business Machines Corp. 209,424 20,645,018
Lexmark International, Inc. (a) 16,273 1,383,205
NCR Corp. (a) 11,892 823,283
Network Appliance, Inc. (a) 45,064 1,497,026
Sun Microsystems, Inc. (a) 423,135 2,276,466
--------------
55,831,991
--------------
CONSTRUCTION & ENGINEERING (0.0%) (B)
Fluor Corp. 10,236 557,964
--------------
CONSTRUCTION MATERIALS (0.0%) (B)
Vulcan Materials Co. 12,915 705,288
--------------
CONSUMER FINANCE (1.3%)
American Express Co. 158,132 8,913,901
Capital One Financial Corp. 30,536 2,571,437
MBNA Corp. 161,216 4,544,679
Providian Financial Corp. (a) 36,700 604,449
SLM Corp. 54,137 2,890,374
--------------
19,524,840
--------------
CONTAINERS & PACKAGING (0.2%)
Ball Corp. 14,474 636,567
Bemis Co., Inc. 13,468 391,784
Pactiv Corp. (a) 18,893 477,804
Sealed Air Corp. (a) 10,614 565,408
Temple-Inland, Inc. 6,891 471,344
--------------
2,542,907
--------------
DISTRIBUTORS (0.1%)
Genuine Parts Co. 22,153 976,061
--------------
DIVERSIFIED FINANCIAL SERVICES (3.6%)
CIT Group, Inc. 26,600 1,218,812
VCitigroup, Inc. 653,014 31,462,214
JPMorgan Chase & Co. 448,274 17,487,169
Moody's Corp. 18,678 1,622,184
Principal Financial Group, Inc. 38,587 1,579,752
--------------
53,370,131
--------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial
statements. www.mainstayfunds.com M- 193
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (2.9%)
ALLTEL Corp. 38,226 $ 2,246,160
AT&T Corp. 99,750 1,901,235
BellSouth Corp. 231,052 6,420,935
CenturyTel, Inc. 17,032 604,125
Citizens Communications Co. 41,349 570,202
Qwest Communications International, Inc. (a) 228,743 1,015,619
SBC Communications, Inc. 417,642 10,762,634
Sprint Corp. (FON Group) 185,349 4,605,923
Verizon Communications, Inc. 348,866 14,132,562
--------------
42,259,395
--------------
ELECTRIC UTILITIES (2.3%)
Allegheny Energy, Inc. (a) 17,239 339,781
Ameren Corp. 24,496 1,228,229
American Electric Power Co., Inc. 49,888 1,713,154
CenterPoint Energy, Inc. 38,818 438,643
Cinergy Corp. 22,854 951,412
CMS Energy Corp. (a) 23,901 249,765
Consolidated Edison, Inc. 30,409 1,330,394
Dominion Resources, Inc. 41,658 2,821,913
DTE Energy Co. 21,896 944,375
Edison International 41,094 1,316,241
Entergy Corp. 28,203 1,906,241
Exelon Corp. 83,361 3,673,719
FirstEnergy Corp. 41,688 1,647,093
FPL Group, Inc. 23,296 1,741,376
PG&E Corp. (a) 50,542 1,682,038
Pinnacle West Capital Corp. 11,508 511,070
PPL Corp. 23,776 1,266,785
Progress Energy, Inc. 31,134 1,408,502
Public Service Enterprise Group, Inc. 29,757 1,540,520
Southern Co. (The) 93,060 3,119,371
TECO Energy, Inc. 23,777 364,739
TXU Corp. 30,270 1,954,231
Xcel Energy, Inc. 50,408 917,426
--------------
33,067,018
--------------
ELECTRICAL EQUIPMENT (0.5%)
American Power Conversion Corp. 24,932 533,545
Cooper Industries, Ltd. Class A 11,952 811,421
Emerson Electric Co. 53,312 3,737,171
Power-One, Inc. (a) 10,587 94,436
Rockwell Automation, Inc. 23,266 1,152,831
--------------
6,329,404
--------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.4%)
Agilent Technologies, Inc. (a) 60,790 1,465,039
Jabil Circuit, Inc. (a) 25,109 642,288
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS (CONTINUED)
Molex, Inc. 23,906 $ 717,180
PerkinElmer, Inc. 16,042 360,785
Sanmina-SCI Corp. (a) 64,799 548,847
Solectron Corp. (a) 121,190 645,943
Symbol Technologies, Inc. 28,894 499,866
Tektronix, Inc. 10,776 325,543
Thermo Electron Corp. (a) 20,536 619,982
Waters Corp. (a) 14,925 698,341
--------------
6,523,814
--------------
ENERGY EQUIPMENT & SERVICES (0.9%)
Baker Hughes, Inc. 42,384 1,808,525
BJ Services Co. 20,374 948,206
Halliburton Co. 55,630 2,182,921
Nabors Industries, Ltd. (a) 18,715 959,892
Noble Corp. (a) 17,078 849,460
Rowan Cos., Inc. (a) 13,174 341,207
Schlumberger Ltd. 74,102 4,961,129
Transocean, Inc. (a) 40,420 1,713,404
--------------
13,764,744
--------------
FOOD & STAPLES RETAILING (3.1%)
Albertson's, Inc. 46,337 1,106,528
Costco Wholesale Corp. 59,049 2,858,562
CVS Corp. 50,374 2,270,356
Kroger Co. (The) (a) 93,086 1,632,728
Safeway, Inc. (a) 56,264 1,110,651
SUPERVALU, Inc. 16,926 584,287
Sysco Corp. 80,638 3,077,953
Walgreen Co. 128,721 4,939,025
VWal-Mart Stores, Inc. 532,854 28,145,347
--------------
45,725,437
--------------
FOOD PRODUCTS (1.3%)
Archer-Daniels-Midland Co. 82,087 1,831,361
Campbell Soup Co. 51,743 1,546,598
ConAgra Foods, Inc. 64,768 1,907,418
General Mills, Inc. 45,870 2,280,198
H.J. Heinz Co. 44,099 1,719,420
Hershey Foods Corp. 31,083 1,726,350
Kellogg Co. 52,131 2,328,171
McCormick & Co., Inc. 17,162 662,453
Sara Lee Corp. 99,909 2,411,803
Wm. Wrigley Jr. Co. 28,355 1,961,882
--------------
18,375,654
--------------
GAS UTILITIES (0.3%)
KeySpan Corp. 20,191 796,535
Kinder Morgan, Inc. 15,485 1,132,418
Nicor, Inc. 5,525 204,093
NiSource, Inc. 33,189 756,045
Peoples Energy Corp. 4,750 208,763
</Table>
M- 194 MainStay VP S&P 500 Index Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
GAS UTILITIES (CONTINUED)
Sempra Energy 29,213 $ 1,071,533
--------------
4,169,387
--------------
HEALTH CARE EQUIPMENT & SUPPLIES (2.1%)
Applera Corp.-Applied Biosystems Group 25,426 531,658
Bausch & Lomb, Inc. 6,660 429,304
Baxter International, Inc. 77,592 2,680,028
Becton, Dickinson & Co. 31,863 1,809,818
Biomet, Inc. 31,997 1,388,350
Boston Scientific Corp. (a) 106,278 3,778,183
C.R. Bard, Inc. 13,118 839,290
Fisher Scientific International, Inc. (a) 14,449 901,329
Guidant Corp. 40,138 2,893,950
Hospira, Inc. (a) 19,629 657,571
Medtronic, Inc. 152,288 7,564,145
Millipore Corp. (a) 5,982 297,963
St. Jude Medical, Inc. (a) 44,452 1,863,872
Stryker Corp. 50,457 2,434,550
Zimmer Holdings, Inc. (a) 30,891 2,474,987
--------------
30,544,998
--------------
HEALTH CARE PROVIDERS & SERVICES (2.2%)
Aetna, Inc. 18,607 2,321,223
AmerisourceBergen Corp. 13,225 776,043
Cardinal Health, Inc. 54,352 3,160,569
Caremark Rx, Inc. (a) 57,303 2,259,457
CIGNA Corp. 16,955 1,383,019
Express Scripts, Inc. (a) 9,600 733,824
HCA, Inc. 52,961 2,116,322
Health Management Associates, Inc. Class A 30,370 690,006
Humana, Inc. (a) 20,056 595,463
IMS Health, Inc. 29,418 682,792
Laboratory Corp. of America Holdings (a) 17,400 866,868
Manor Care, Inc. 11,001 389,765
McKesson Corp. 36,947 1,162,353
Medco Health Solutions, Inc. (a) 34,301 1,426,922
Quest Diagnostics, Inc. 12,798 1,222,849
Tenet Healthcare Corp. (a) 58,774 645,338
UnitedHealth Group, Inc. 82,289 7,243,901
Wellpoint, Inc. (a) 37,141 4,271,215
--------------
31,947,929
--------------
HOTELS, RESTAURANTS & LEISURE (1.5%)
Carnival Corp. 79,686 4,592,304
Darden Restaurants, Inc. 19,901 552,054
Harrah's Entertainment, Inc. 14,207 950,306
Hilton Hotels Corp. 47,844 1,087,964
International Game Technology 43,400 1,492,092
</Table>
<Table>
<Caption>
SHARES VALUE
HOTELS, RESTAURANTS & LEISURE (CONTINUED)
Marriott International, Inc. Class A 28,176 $ 1,774,525
McDonald's Corp. 158,195 5,071,732
Starbucks Corp. (a) 50,359 3,140,387
Starwood Hotels & Resorts Worldwide, Inc. 26,241 1,532,474
Wendy's International, Inc. 14,685 576,533
Yum! Brands, Inc. 36,657 1,729,477
--------------
22,499,848
--------------
HOUSEHOLD DURABLES (0.5%)
Black & Decker Corp. (The) 9,909 875,262
Centex Corp. 15,586 928,614
Fortune Brands, Inc. 18,204 1,404,985
KB HOME 5,985 624,834
Leggett & Platt, Inc. 24,189 687,693
Maytag Corp. 9,900 208,890
Newell Rubbermaid, Inc. 34,619 837,434
Pulte Homes, Inc. 16,040 1,023,352
Snap-on, Inc. 7,250 249,110
Stanley Works (The) 10,354 507,242
Whirlpool Corp. 8,346 577,627
--------------
7,925,043
--------------
HOUSEHOLD PRODUCTS (1.8%)
Clorox Co. (The) 19,100 1,125,563
Colgate-Palmolive Co. 66,790 3,416,976
Kimberly-Clark Corp. 61,443 4,043,564
Procter & Gamble Co. (The) 319,214 17,582,307
--------------
26,168,410
--------------
INDUSTRIAL CONGLOMERATES (4.6%)
3M Co. 97,941 8,038,018
VGeneral Electric Co. (c) 1,330,301 48,555,987
Textron, Inc. 17,429 1,286,260
Tyco International Ltd. 253,257 9,051,405
--------------
66,931,670
--------------
INSURANCE (4.1%)
Ace, Ltd. 35,763 1,528,868
AFLAC, Inc. 63,926 2,546,812
Allstate Corp. (The) 86,492 4,473,366
Ambac Financial Group, Inc. 13,633 1,119,678
VAmerican International Group, Inc. 327,747 21,523,146
Aon Corp. 39,580 944,379
Chubb Corp. (The) 24,038 1,848,522
Cincinnati Financial Corp. 21,246 940,348
Hartford Financial Services Group, Inc. (The) 36,916 2,558,648
Jefferson-Pilot Corp. 17,273 897,505
Lincoln National Corp. 22,500 1,050,300
Loews Corp. 23,338 1,640,662
Marsh & McLennan Cos., Inc. 66,028 2,172,321
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial
statements. www.mainstayfunds.com M- 195
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
INSURANCE (CONTINUED)
MBIA, Inc. 18,058 $ 1,142,710
MetLife, Inc. 93,830 3,801,053
Progressive Corp. (The) 25,241 2,141,447
Prudential Financial, Inc. 64,649 3,553,109
SAFECO Corp. 15,834 827,168
St. Paul Travelers Cos., Inc. (The) 83,822 3,107,282
Torchmark Corp. 13,628 778,704
UnumProvident Corp. 36,577 656,191
XL Capital Ltd. Class A 17,436 1,353,905
--------------
60,606,124
--------------
INTERNET & CATALOG RETAIL (0.7%)
eBay, Inc. (a) 83,366 9,693,798
--------------
INTERNET SOFTWARE & SERVICES (0.4%)
Yahoo!, Inc. (a) 173,257 6,528,324
--------------
IT SERVICES (1.1%)
Affiliated Computer Services, Inc. Class A (a) 16,155 972,369
Automatic Data Processing, Inc. 73,436 3,256,886
Computer Sciences Corp. (a) 23,783 1,340,648
Convergys Corp. (a) 17,936 268,861
Electronic Data Systems Corp. 64,536 1,490,782
First Data Corp. 104,607 4,449,982
Fiserv, Inc. (a) 24,455 982,846
Paychex, Inc. 47,676 1,624,798
Sabre Holdings Corp. 17,270 382,703
SunGard Data Systems, Inc. (a) 35,997 1,019,795
Unisys Corp. (a) 41,582 423,305
--------------
16,212,975
--------------
LEISURE EQUIPMENT & PRODUCTS (0.2%)
Brunswick Corp. 12,000 594,000
Eastman Kodak Co. 36,354 1,172,417
Hasbro, Inc. 22,038 427,096
Mattel, Inc. 52,186 1,017,105
--------------
3,210,618
--------------
MACHINERY (1.5%)
Caterpillar, Inc. 42,964 4,189,420
Cummins, Inc. 5,391 451,712
Danaher Corp. 38,685 2,220,906
Deere & Co. 31,191 2,320,610
Dover Corp. 25,581 1,072,867
Eaton Corp. 19,077 1,380,412
Illinois Tool Works, Inc. 37,256 3,452,886
Ingersoll-Rand Co. Class A 21,890 1,757,767
ITT Industries, Inc. 11,595 979,198
Navistar International Corp. (a) 8,658 380,779
</Table>
<Table>
<Caption>
SHARES VALUE
MACHINERY (CONTINUED)
PACCAR, Inc. 22,111 $ 1,779,493
Pall Corp. 15,628 452,431
Parker-Hannifin Corp. 15,110 1,144,431
--------------
21,582,912
--------------
MEDIA (3.9%)
Clear Channel Communications, Inc. 72,274 2,420,456
Comcast Corp. Class A (a) 279,724 9,309,215
Dow Jones & Co., Inc. 10,354 445,843
Gannett Co., Inc. 32,163 2,627,717
Interpublic Group of Cos., Inc. (The) (a) 53,207 712,974
Knight-Ridder, Inc. 9,668 647,176
McGraw-Hill Cos., Inc. (The) 24,024 2,199,157
Meredith Corp. 6,301 341,514
New York Times Co. (The) Class A 18,549 756,799
News Corp. Class A 329,200 6,142,872
Omnicom Group, Inc. 23,425 1,975,196
Time Warner, Inc. (a) 576,123 11,199,831
Tribune Co. 40,148 1,691,837
Univision Communications, Inc. Class A (a) 40,614 1,188,772
Viacom, Inc. Class B 214,798 7,816,499
Walt Disney Co. (The) 257,131 7,148,242
--------------
56,624,100
--------------
METALS & MINING (0.7%)
Alcoa, Inc. 109,800 3,449,916
Allegheny Technologies, Inc. 11,752 254,666
Freeport-McMoRan Copper & Gold, Inc. Class B 22,343 854,173
Newmont Mining Corp. 55,834 2,479,588
Nucor Corp. 19,936 1,043,450
Phelps Dodge Corp. 12,051 1,192,085
United States Steel Corp. 14,289 732,311
--------------
10,006,189
--------------
MULTILINE RETAIL (1.1%)
Big Lots, Inc. (a) 14,515 176,067
Dillard's, Inc. Class A 10,550 283,479
Dollar General Corp. 41,381 859,483
Family Dollar Stores, Inc. 21,167 661,045
Federated Department Stores, Inc. 21,286 1,230,118
J.C. Penney Co., Inc. (Holding Co.) 35,955 1,488,537
Kohl's Corp. (a) 43,055 2,117,014
May Department Stores Co. (The) 36,789 1,081,597
Nordstrom, Inc. 17,646 824,598
Sears, Roebuck and Co. 26,101 1,331,934
</Table>
M- 196 MainStay VP S&P 500 Index Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
MULTILINE RETAIL (CONTINUED)
Target Corp. 112,698 $ 5,852,407
--------------
15,906,279
--------------
MULTI-UTILITIES & UNREGULATED POWER (0.5%)
AES Corp. (The) (a) 80,373 1,098,699
Calpine Corp. (a) 67,184 264,705
Constellation Energy Group, Inc. 22,094 965,729
Duke Energy Corp. 120,575 3,054,165
Dynegy, Inc. Class A (a) 46,130 213,120
El Paso Corp. 80,911 841,474
Williams Cos., Inc. (The) 70,013 1,140,512
--------------
7,578,404
--------------
OFFICE ELECTRONICS (0.1%)
Xerox Corp. (a) 120,143 2,043,632
--------------
OIL & GAS (5.8%)
Amerada Hess Corp. 11,298 930,729
Anadarko Petroleum Corp. 31,156 2,019,221
Apache Corp. 41,044 2,075,595
Ashland, Inc. 8,603 502,243
Burlington Resources, Inc. 49,770 2,164,995
ChevronTexaco Corp. 266,574 13,997,801
ConocoPhillips 86,888 7,544,485
Devon Energy Corp. 60,996 2,373,964
EOG Resources, Inc. 14,747 1,052,346
VExxonMobil Corp. 811,723 41,608,921
Kerr-McGee Corp. 18,870 1,090,497
Marathon Oil Corp. 43,629 1,640,887
Occidental Petroleum Corp. 49,711 2,901,134
Sunoco, Inc. 9,248 755,654
Unocal Corp. 33,216 1,436,260
Valero Energy Corp. 32,338 1,468,145
XTO Energy, Inc. 32,800 1,160,464
--------------
84,723,341
--------------
PAPER & FOREST PRODUCTS (0.5%)
Georgia-Pacific Corp. 32,553 1,220,086
International Paper Co. 61,293 2,574,306
Louisiana-Pacific Corp. 13,751 367,702
MeadWestvaco Corp. 25,427 861,721
Weyerhaeuser Co. 30,460 2,047,521
--------------
7,071,336
--------------
PERSONAL PRODUCTS (0.6%)
Alberto-Culver Co. 11,354 551,464
Avon Products, Inc. 59,468 2,301,411
Gillette Co. (The) 124,900 5,593,022
--------------
8,445,897
--------------
PHARMACEUTICALS (6.6%)
Abbott Laboratories 195,996 9,143,213
</Table>
<Table>
<Caption>
SHARES VALUE
PHARMACEUTICALS (CONTINUED)
Allergan, Inc. 16,601 $ 1,345,843
Bristol-Myers Squibb Co. 245,137 6,280,410
Forest Laboratories, Inc. (a) 46,417 2,082,267
VJohnson & Johnson 373,380 23,679,760
King Pharmaceuticals, Inc. (a) 30,390 376,836
Lilly (Eli) & Co. 142,430 8,082,903
Merck & Co., Inc. 279,429 8,980,848
Mylan Laboratories, Inc. 33,793 597,460
VPfizer, Inc. 947,651 25,482,335
Schering-Plough Corp. 185,655 3,876,476
Watson Pharmaceuticals, Inc. (a) 13,528 443,854
Wyeth 167,847 7,148,604
--------------
97,520,809
--------------
REAL ESTATE (0.5%)
Apartment Investment & Management Co. Class A 11,953 460,669
Archstone-Smith Trust 24,700 946,010
Equity Office Properties Trust 50,464 1,469,512
Equity Residential 35,149 1,271,691
Plum Creek Timber Co., Inc. 23,082 887,272
ProLogis 22,773 986,754
Simon Property Group, Inc. 27,902 1,804,422
--------------
7,826,330
--------------
ROAD & RAIL (0.5%)
Burlington Northern Santa Fe Corp. 47,096 2,228,112
CSX Corp. 27,082 1,085,446
Norfolk Southern Corp. 49,852 1,804,144
Union Pacific Corp. 32,703 2,199,277
--------------
7,316,979
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.9%)
Advanced Micro Devices, Inc. (a) 48,584 1,069,820
Altera Corp. (a) 46,871 970,230
Analog Devices, Inc. 47,724 1,761,970
Applied Materials, Inc. (a) 213,970 3,658,887
Applied Micro Circuits Corp. (a) 39,497 166,282
Broadcom Corp. Class A (a) 41,490 1,339,297
Freescale Semiconductor, Inc. Class B (a) 49,165 902,669
Intel Corp. 796,674 18,634,205
KLA-Tencor Corp. (a) 24,598 1,145,775
Linear Technology Corp. 38,721 1,500,826
LSI Logic Corp. (a) 47,623 260,974
Maxim Integrated Products, Inc. 40,657 1,723,450
Micron Technology, Inc. (a) 77,024 951,246
National Semiconductor Corp. 45,012 807,965
Novellus Systems, Inc. (a) 17,998 501,964
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial
statements. www.mainstayfunds.com M- 197
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
NVIDIA Corp. (a) 20,899 $ 492,381
PMC-Sierra, Inc. (a) 21,427 241,054
Teradyne, Inc. (a) 23,859 407,273
Texas Instruments, Inc. 218,143 5,370,681
Xilinx, Inc. 43,558 1,291,495
--------------
43,198,444
--------------
SOFTWARE (4.1%)
Adobe Systems, Inc. 30,156 1,891,987
Autodesk, Inc. 28,044 1,064,270
BMC Software, Inc. (a) 28,116 522,958
Citrix Systems, Inc. (a) 20,667 506,961
Computer Associates International, Inc. 73,587 2,285,612
Compuware Corp. (a) 48,670 314,895
Electronic Arts, Inc. (a) 38,079 2,348,713
Intuit, Inc. (a) 24,148 1,062,753
Mercury Interactive Corp. (a) 10,614 483,468
VMicrosoft Corp. (c) 1,367,935 36,537,544
Novell, Inc. (a) 48,716 328,833
Oracle Corp. (a) 646,180 8,865,590
Parametric Technology Corp. (a) 33,953 199,983
PeopleSoft, Inc. (a) 1,400 37,072
Siebel Systems, Inc. (a) 63,731 669,175
Symantec Corp. (a) 79,902 2,058,276
VERITAS Software Corp. (a) 53,169 1,517,975
--------------
60,696,065
--------------
SPECIALTY RETAIL (2.3%)
AutoNation, Inc. (a) 34,283 658,576
AutoZone, Inc. (a) 10,017 914,652
Bed Bath & Beyond, Inc. (a) 37,948 1,511,469
Best Buy Co., Inc. 40,849 2,427,248
Circuit City Stores, Inc. 25,090 392,408
Gap, Inc. (The) 110,448 2,332,662
Home Depot, Inc. (The) 276,329 11,810,301
Limited Brands, Inc. 50,901 1,171,741
Lowe's Cos., Inc. 97,355 5,606,674
Office Depot, Inc. (a) 39,196 680,443
OfficeMax, Inc. 11,773 369,437
RadioShack Corp. 20,075 660,066
Sherwin-Williams Co. (The) 17,799 794,369
Staples, Inc. 63,033 2,124,842
Tiffany & Co. 18,407 588,472
TJX Cos., Inc. (The) 60,715 1,525,768
Toys "R" Us, Inc. (a) 26,989 552,465
--------------
34,121,593
--------------
TEXTILES, APPAREL & LUXURY GOODS (0.4%)
Coach, Inc. (a) 23,706 1,337,019
Jones Apparel Group, Inc. 15,407 563,434
Liz Claiborne, Inc. 13,526 570,932
</Table>
<Table>
<Caption>
SHARES VALUE
TEXTILES, APPAREL & LUXURY GOODS (CONTINUED)
NIKE, Inc. Class B 33,031 $ 2,995,581
Reebok International Ltd. 7,529 331,276
V.F. Corp. 13,897 769,616
--------------
6,567,858
--------------
THRIFTS & MORTGAGE FINANCE (1.8%)
Countrywide Financial Corp. 73,149 2,707,244
Fannie Mae 121,994 8,687,193
Freddie Mac 86,838 6,399,961
Golden West Financial Corp. 38,458 2,362,090
MGIC Investment Corp. 12,237 843,252
Sovereign Bancorp, Inc. 43,150 973,033
Washington Mutual, Inc. 110,097 4,654,901
--------------
26,627,674
--------------
TOBACCO (1.2%)
Altria Group, Inc. 258,645 15,803,209
Reynolds American, Inc. 18,622 1,463,689
UST, Inc. 21,261 1,022,867
--------------
18,289,765
--------------
TRADING COMPANIES & DISTRIBUTORS (0.0%) (B)
Grainger (W.W.), Inc. 11,450 762,799
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
Nextel Communications, Inc. Class A (a) 140,022 4,200,660
--------------
Total Common Stocks (Cost $1,199,236,157) 1,421,152,784(d)
--------------
WARRANTS (0.0%) (B)
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (0.0%) (B)
Lucent Technologies, Inc. (a) 18,011 28,457
--------------
Total Warrants
(Cost $0) 28,457
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (2.6%)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (0.9%)
Baystate Health Systems
2.27%, due 1/5/05 (c) $ 200,000 199,949
Dealers Capital Access Trust
2.30%, due 1/14/05 (c) 300,000 299,750
ING Funding LLC
2.11%, due 1/4/05 (c) 1,000,000 999,825
New Jersey Natural Gas Co.
2.30%, due 1/7/05 (c) 3,400,000 3,398,695
UBS Finance Delaware LLC
2.35%, due 1/3/05 (c) 5,900,000 5,899,231
</Table>
M- 198 MainStay VP S&P 500 Index Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Wisconsin Public Service Corp.
2.30%, due 1/4/05 (c) $ 2,220,000 $ 2,199,578
--------------
Total Commercial Paper (Cost $12,997,028) 12,997,028
--------------
U.S. GOVERNMENT (1.7%)
United States Treasury Bills
1.75%, due 1/20/05 (c) 23,400,000 23,379,670
1.75%, due 1/27/05 (c) 2,200,000 2,197,205
--------------
Total U.S. Government
(Cost $25,576,875) 25,576,875
--------------
Total Short-Term Investments
(Cost $38,573,903) 38,573,903
--------------
Total Investments
(Cost $1,237,810,060) (e) 99.3% 1,459,755,144(f)
Cash and Other Assets,
Less Liabilities 0.7 10,005,144
----------- --------------
Net Assets 100.0% $1,469,760,288
=========== ==============
</Table>
<Table>
<Caption>
UNREALIZED
CONTRACTS APPRECIATION
LONG (DEPRECIATION) (G)
FUTURES CONTRACTS (0.0%) (B)
- ----------------------------------------------------------------------------------
Standard & Poor's 500 Index
March 2005 155 $ 676,408
Mini March 2005 9 (1,764)
------------------
Total Futures Contracts
(Settlement Value $47,577,040) (d) $ 674,644
==================
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Represents security or a portion thereof, which is
segregated or designated as collateral for futures
contracts.
(d) The combined market value of common stocks and settle-
ment value of Standard & Poor's 500 Index futures
contracts represents 99.9% of net assets.
(e) The cost for federal income tax purposes is
$1,251,378,836.
(f) At December 31 2004, net unrealized appreciation was
$208,376,308 based on cost for federal income tax pur-
poses. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $361,759,377, and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $153,383,069.
(g) Represents the difference between the value of the con-
tracts at the time they were opened and the value at
December 31, 2004.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial
statements. www.mainstayfunds.com M- 199
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $1,237,810,060) $1,459,755,144
Cash 29,128
Receivables:
Fund shares sold 11,190,316
Dividends 1,867,065
Investment securities sold 1,017,393
Other assets 3,611
--------------
Total assets 1,473,862,657
--------------
LIABILITIES:
Payables:
Investment securities purchased 2,600,057
Fund shares redeemed 752,887
Administrator 244,192
Shareholder communication 235,098
Adviser 122,096
NYLIFE Distributors 29,935
Variation margin on futures contracts 25,066
Custodian 22,707
Accrued expenses 70,331
--------------
Total liabilities 4,102,369
--------------
Net assets $1,469,760,288
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 542,165
Service Class 60,676
Additional paid-in capital 1,344,447,475
Accumulated undistributed net investment
income 126,715
Accumulated net realized loss on investments (98,036,471)
Net unrealized appreciation on investments
and futures transactions 222,619,728
--------------
Net assets $1,469,760,288
==============
INITIAL CLASS
Net assets applicable to outstanding shares $1,322,061,005
==============
Shares of capital stock outstanding 54,216,539
==============
Net asset value per share outstanding $ 24.38
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 147,699,283
==============
Shares of capital stock outstanding 6,067,630
==============
Net asset value per share outstanding $ 24.34
==============
</Table>
M- 200 MainStay VP S&P 500 Index Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 26,512,044
Interest 596,895
------------
Total income 27,108,939
------------
EXPENSES:
Administration 2,674,893
Advisory 1,337,447
Shareholder communication 705,236
Distribution and service -- Service Class 225,562
Professional 146,216
Custodian 143,136
Directors 88,638
Portfolio pricing 13,983
Miscellaneous 76,799
------------
Total expenses 5,411,910
------------
Net investment income 21,697,029
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from:
Security transactions (7,581,488)
Futures transactions 2,564,717
------------
Net realized loss on investments (5,016,771)
------------
Net change in unrealized appreciation on:
Security transactions 120,727,597
Futures transactions (187,041)
------------
Net unrealized appreciation on investments 120,540,556
------------
Net realized and unrealized gain on
investments 115,523,785
------------
Net increase in net assets resulting from
operations $137,220,814
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial
statements. www.mainstayfunds.com M- 201
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 21,697,029 $ 15,028,822
Net realized loss on investments
and
futures transactions (5,016,771) (18,541,477)
Net change in unrealized
appreciation (depreciation) on
investments and futures
transactions 120,540,556 277,146,705
-------------------------------
Net increase in net assets
resulting from operations 137,220,814 273,634,050
-------------------------------
Dividends and distributions to
shareholders:
From net investment income:
Initial Class (19,506,112) (14,545,804)
Service Class (1,958,536) (428,723)
Return of capital:
Initial Class -- (111,649)
Service Class -- (3,291)
-------------------------------
Total dividends and distributions
to shareholders (21,464,648) (15,089,467)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 77,240,992 84,842,598
Service Class 99,175,026 36,816,399
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 19,506,112 14,657,453
Service Class 1,958,536 432,014
-------------------------------
197,880,666 136,748,464
Cost of shares redeemed:
Initial Class (120,375,153) (93,551,369)
Service Class (2,353,717) (195,773)
-------------------------------
(122,728,870) (93,747,142)
-------------------------------
Increase in net assets derived
from capital share
transactions 75,151,796 43,001,322
-------------------------------
Net increase in net assets 190,907,962 301,545,905
NET ASSETS:
Beginning of year 1,278,852,326 977,306,421
-------------------------------
End of year $1,469,760,288 $1,278,852,326
===============================
Accumulated undistributed net
investment income at end of year $ 126,715 $ --
===============================
</Table>
M- 202 MainStay VP S&P 500 Index Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------------------------------------------- ----------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 22.40 $ 17.68 $ 23.14 $ 26.88 $ 30.50 $ 22.38 $ 19.95
---------- ---------- -------- ---------- ---------- -------- -------
Net investment income 0.37(b)(c) 0.27(b) 0.26 0.25 0.27 0.34(b)(c) 0.12(b)
Net realized and unrealized
gain (loss) on investments 1.98 4.72 (5.40) (3.49) (3.10) 1.95 2.56
---------- ---------- -------- ---------- ---------- -------- -------
Total from investment
operations 2.35 4.99 (5.14) (3.24) (2.83) 2.29 2.68
---------- ---------- -------- ---------- ---------- -------- -------
Less dividends and
distributions:
From net investment income (0.37) (0.27) (0.26) (0.25) (0.27) (0.33) (0.25)
From net realized gain on
investments -- -- (0.06) (0.25) (0.52) -- --
Return of capital -- (0.00)(d) -- -- -- -- (0.00)(c)
---------- ---------- -------- ---------- ---------- -------- -------
Total dividends and
distributions (0.37) (0.27) (0.32) (0.50) (0.79) (0.33) (0.25)
---------- ---------- -------- ---------- ---------- -------- -------
Net asset value at end of
period $ 24.38 $ 22.40 $ 17.68 $ 23.14 $ 26.88 $ 24.34 $ 22.38
========== ========== ======== ========== ========== ======== =======
Total investment return 10.49% 28.19% (22.21%) (12.11%) (9.32%) 10.22% 13.50%(e)
Ratios (to average net
assets)/Supplement Data:
Net investment income 1.64%(c) 1.40% 1.25% 1.01% 0.94% 1.39%(c) 1.15%+(f)
Expenses 0.39% 0.39% 0.38% 0.37% 0.37% 0.64% 0.64%+
Portfolio turnover rate 3% 3% 5% 4% 6% 3% 3%
Net assets at end of period
(in 000's) $1,322,061 $1,239,412 $977,306 $1,326,940 $1,527,577 $147,699 $39,440
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Included in net investment income per share and the ratio of
net investment income to average net assets are $0.07 per
share and 0.32%, respectively, resulting from a special
one-time dividend from Microsoft Corp. that paid $3.00 per
share.
(d) Less than one cent per share.
(e) Total Return is not annualized.
(f) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial
statements. www.mainstayfunds.com M- 203
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (96.3%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.3%)
Alliant Techsystems, Inc. (a) 11,700 $ 764,946
DRS Technologies, Inc. (a) 35,300 1,507,663
Innovative Solutions & Support, Inc. (a) 45,700 1,524,552
------------
3,797,161
------------
AUTOMOBILES (1.1%)
Winnebago Industries, Inc. 46,800 1,828,008
------------
BIOTECHNOLOGY (0.5%)
Nabi Biopharmaceuticals (a) 56,200 823,330
------------
BUILDING PRODUCTS (0.9%)
Trex Co., Inc. (a) 29,400 1,541,736
------------
CAPITAL MARKETS (2.7%)
VAffiliated Managers Group, Inc. (a)(b) 33,800 2,289,612
Jefferies Group, Inc. 52,800 2,126,784
------------
4,416,396
------------
COMMERCIAL BANKS (4.8%)
Hanmi Financial Corp. 43,900 1,577,766
UCBH Holdings, Inc. 46,900 2,148,958
Westcorp 41,500 1,906,095
Wintrust Financial Corp. 38,000 2,164,480
------------
7,797,299
------------
COMMERCIAL SERVICES & SUPPLIES (1.8%)
Charles River Associates, Inc. (a) 34,000 1,590,180
Corinthian Colleges, Inc. (a) 73,000 1,375,685
------------
2,965,865
------------
COMMUNICATIONS EQUIPMENT (1.8%)
Ixia (a) 82,400 1,385,144
Tekelec (a) 78,900 1,612,716
------------
2,997,860
------------
ELECTRICAL EQUIPMENT (1.9%)
Baldor Electric Co. 56,200 1,547,186
Genlyte Group, Inc. (The) (a) 18,500 1,585,080
------------
3,132,266
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (5.6%)
FARO Technologies, Inc. (a) 45,700 1,424,926
FLIR Systems, Inc. (a) 22,000 1,403,380
Global Imaging Systems, Inc. (a) 35,300 1,394,350
OSI Systems, Inc. (a) 69,400 1,576,074
ScanSource, Inc. (a) 26,800 1,665,888
Trimble Navigation Ltd. (a) 48,000 1,585,920
------------
9,050,538
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (4.5%)
Cal Dive International, Inc. (a) 47,000 $ 1,915,250
Grey Wolf, Inc. (a) 144,800 763,096
Maverick Tube Corp. (a)(b) 53,400 1,618,020
Offshore Logistics, Inc. (a) 47,000 1,526,090
TETRA Technologies, Inc. (a) 50,500 1,429,150
------------
7,251,606
------------
HEALTH CARE EQUIPMENT & SUPPLIES (7.3%)
ArthroCare Corp. (a)(b) 36,600 1,173,396
VCooper Cos., Inc. (The) (b) 31,400 2,216,526
Dade Behring Holdings, Inc. (a) 27,100 1,517,600
Immucor, Inc. (a) 67,000 1,575,170
Integra LifeSciences Holdings (a) 39,300 1,451,349
Mine Safety Appliances Co. 19,400 983,580
Nektar Therapeutics (a) 58,900 1,192,136
SurModics, Inc. (a)(b) 49,800 1,618,998
------------
11,728,755
------------
HEALTH CARE PROVIDERS & SERVICES (3.6%)
American Healthways, Inc. (a) 48,400 1,599,136
Molina Healthcare, Inc. (a) 34,600 1,604,748
VSierra Health Services, Inc. (a) 47,000 2,590,170
------------
5,794,054
------------
HOTELS, RESTAURANTS & LEISURE (2.3%)
Penn National Gaming, Inc. (a) 33,900 2,052,645
WMS Industries, Inc. (a)(b) 48,600 1,630,044
------------
3,682,689
------------
HOUSEHOLD DURABLES (10.7%)
VHovnanian Enterprises, Inc. Class A (a) 44,700 2,213,544
Jarden Corp. (a)(b) 46,000 1,998,240
M.D.C. Holdings, Inc. 18,930 1,636,309
M/I Homes, Inc. 29,300 1,614,723
VMeritage Homes Corp. (a) 19,300 2,175,110
VRyland Group, Inc. (The) 48,500 2,790,690
VWCI Communities, Inc. (a) 100,100 2,942,940
Yankee Candle Co., Inc. (The) (a) 57,500 1,907,850
------------
17,279,406
------------
INTERNET & CATALOG RETAIL (1.3%)
Coldwater Creek, Inc. (a) 63,750 1,967,962
HouseValues, Inc. (a) 4,200 63,084
------------
2,031,046
------------
INTERNET SOFTWARE & SERVICES (0.8%)
Digitas, Inc. (a) 131,900 1,259,645
------------
MACHINERY (8.6%)
A.S.V., Inc. (a) 26,400 1,264,560
</Table>
<Table>
+ Percentages indicated are based on Fund net assets.
V Among the Portfolio's 10 largest holdings, excluding
short-term investments. May be subject to change daily.
</Table>
M- 204 MainStay VP Small Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
MACHINERY (CONTINUED)
Actuant Corp. Class A (a) 32,200 $ 1,679,230
Ceradyne, Inc. (a)(b) 29,000 1,659,090
CLARCOR, Inc. 30,900 1,692,393
Cummins, Inc. 19,900 1,667,421
VTerex Corp. (a) 50,600 2,411,090
Wabash National Corp. (a) 70,600 1,901,258
Wabtec Corp. 74,300 1,584,076
------------
13,859,118
------------
MARINE (1.9%)
Kirby Corp. (a) 35,800 1,588,804
Knightsbridge Tankers Ltd. (b) 43,700 1,460,891
------------
3,049,695
------------
METALS & MINING (2.3%)
Alliance Resource Partners, L.P. 22,200 1,642,800
Massey Energy Co. (b) 59,900 2,093,505
------------
3,736,305
------------
OIL & GAS (2.7%)
OMI Corp. 76,800 1,294,080
Petroleum Development Corp. (a) 38,900 1,500,373
Remington Oil & Gas Corp. (a) 56,600 1,542,350
------------
4,336,803
------------
PERSONAL PRODUCTS (1.1%)
Chattem, Inc. (a) 52,200 1,727,820
------------
PHARMACEUTICALS (1.0%)
Bradley Pharmaceuticals, Inc. (a) 79,400 1,540,360
------------
REAL ESTATE (2.0%)
American Home Mortgage Investment Corp. 45,800 1,568,650
Bluegreen Corp. (a) 81,100 1,608,213
------------
3,176,863
------------
ROAD & RAIL (3.0%)
Arkansas Best Corp. 35,300 1,584,617
Knight Transportation, Inc. 62,700 1,554,960
Old Dominion Freight Line, Inc. (a) 47,200 1,642,560
------------
4,782,137
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.7%)
ATMI, Inc. (a) 12,600 283,878
Sigmatel, Inc. (a) 61,200 2,174,436
Tessera Technologies, Inc. (a) 49,600 1,845,616
------------
4,303,930
------------
SOFTWARE (4.0%)
Altiris, Inc. (a) 35,600 1,261,308
Epicor Software Corp. (a) 86,900 1,224,421
FactSet Research Systems, Inc. 27,600 1,612,944
</Table>
<Table>
<Caption>
SHARES VALUE
SOFTWARE (CONTINUED)
MICROS Systems, Inc. (a) 15,600 $ 1,217,736
Progress Software Corp. (a) 48,100 1,123,135
------------
6,439,544
------------
SPECIALTY RETAIL (8.5%)
A.C. Moore Arts & Crafts, Inc. (a) 36,400 1,048,684
Children's Place Retail Stores, Inc. (The) (a) 48,200 1,784,846
Electronics Boutique Holdings Corp. (a) 40,200 1,726,188
Guess?, Inc. (a) 58,200 730,410
VGuitar Center, Inc. (a) 43,800 2,307,822
Hibbett Sporting Goods, Inc. (a) 40,950 1,089,680
Jos. A. Bank Clothiers, Inc. (a)(b) 56,200 1,590,460
PETCO Animal Supplies, Inc. (a) 48,500 1,914,780
Too, Inc. (a) 65,100 1,592,346
------------
13,785,216
------------
TEXTILES, APPAREL & LUXURY GOODS (0.9%)
Fossil, Inc. (a) 59,800 1,533,272
------------
THRIFTS & MORTGAGE FINANCE (1.1%)
Commercial Capital Bancorp, Inc. 78,966 1,830,432
------------
TRADING COMPANIES & DISTRIBUTORS (2.6%)
Hughes Supply, Inc. 57,600 1,863,360
VMSC Industrial Direct Co., Inc. Class A 63,900 2,299,122
------------
4,162,482
------------
Total Common Stocks (Cost $129,871,380) 155,641,637
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (14.6%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (3.8%)
UBS Finance Delaware LLC 2.18%, due 1/3/05 $3,120,000 3,119,622
USAA Capital Corp. 2.27%, due 1/6/05 3,000,000 2,999,054
------------
Total Commercial Paper (Cost $6,118,676) 6,118,676
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.2%)
AIM Institutional Funds Group (c) 469,528 469,528
------------
Total Investment Company
(Cost $469,528) 469,528
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 205
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
MASTER NOTE (0.4%)
Banc of America Securities LLC 2.3926%, due 1/3/05
(c) 650,000 650,000
------------
Total Master Note (Cost $650,000) 650,000
------------
REPURCHASE AGREEMENTS (10.2%)
Credit Suisse First Boston LLC 2.3625%, dated
12/31/04
due 1/3/05
Proceeds at Maturity $2,600,512 (c)
(Collateralized by Various Bonds with a
Principal Amount of $3,097,856 and a Market
Value of $2,652,016) (d) 2,600,000 2,600,000
Dresdner Kleinwort Wasserstein Securities, LLC
2.3824%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $1,500,298 (c)
(Collateralized by Various Bonds with a
Principal Amount of $1,572,051 and a Market
Value of $1,575,062) (d) 1,500,000 1,500,000
Lehman Brothers, Inc.
2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $5,801,142 (c)
(Collateralized by Various Bonds with a
Principal Amount of $7,891,254 and a Market
Value of $5,915,900) (d) 5,800,000 5,800,000
Merrill Lynch Pierce Fenner & Smith, Inc.
2.3925%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $5,601,116 (c)
(Collateralized by Various Bonds with a
Principal Amount of $5,526,968 and a Market
Value of $5,880,008) (d) 5,600,000 5,600,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co, Inc.
2.3626%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $1,000,197 (c)
(Collateralized by Various Bonds with a
Principal Amount of $1,754,402 and a Market
Value of $1,054,728) (d) 1,000,000 1,000,000
------------
Total Repurchase Agreements (Cost $16,500,000) 16,500,000
------------
Total Short-Term Investments (Cost $23,738,204) 23,738,204
------------
Total Investments (Cost $153,609,584) (e) 110.9% 179,379,841(f)
Liabilities in Excess of
Cash and Other Assets (10.9) (17,693,154)
---------- ------------
Net Assets 100.0% $161,686,687
========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) Represents security, or a portion thereof, which is out
on loan.
(c) Represents security, or a portion thereof, purchased
with cash collateral received for securities on loan.
(d) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(e) The cost for federal income tax purposes is
$153,904,752.
(f) At December 31, 2004 net unrealized appreciation was
$25,475,089, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $26,759,186 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $1,284,097.
</Table>
M- 206 MainStay VP Small Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $137,109,584) including
$16,576,961 market value of securities
loaned $162,879,841
Investment in repurchase agreements, at value
(amortized cost $16,500,000) 16,500,000
Deposit with security lending agent for
securities loaned 283,001
Receivables:
Investment securities sold 3,341,341
Fund shares sold 136,478
Dividends and interest 28,853
Other assets 339
------------
Total assets 183,169,853
------------
LIABILITIES:
Securities lending collateral 17,902,529
Due to custodian 2,454,589
Payables:
Investment securities purchased 838,470
Fund shares redeemed 123,376
Manager 92,593
Shareholder communication 25,376
NYLIFE Distributors 11,362
Custodian 4,259
Accrued expenses 30,612
------------
Total liabilities 21,483,166
------------
Net assets $161,686,687
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 97,000
Service Class 51,647
Additional paid-in capital 133,661,041
Accumulated net realized gain on investments 2,106,742
Net unrealized appreciation on investments 25,770,257
------------
Net assets $161,686,687
============
INITIAL CLASS
Net assets applicable to outstanding shares $105,650,096
============
Shares of capital stock outstanding 9,699,955
============
Net asset value per share outstanding $ 10.89
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 56,036,591
============
Shares of capital stock outstanding 5,164,721
============
Net asset value per share outstanding $ 10.85
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 207
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 341,562
Interest 62,544
Income from securities loaned -- net 35,083
-----------
Total income 439,189
-----------
EXPENSES:
Manager 1,301,168
Distribution and service -- Service Class 86,187
Shareholder communication 74,202
Professional 45,865
Custodian 26,093
Directors 10,902
Portfolio pricing 4,172
Miscellaneous 19,266
-----------
Total expenses before reimbursement 1,567,855
Expense reimbursement from Manager (245,558)
-----------
Net expenses 1,322,297
-----------
Net investment loss (883,108)
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investment 9,702,368
Net change in unrealized appreciation on
investments 4,777,088
-----------
Net realized and unrealized gain on investments 14,479,456
-----------
Net increase in net assets resulting from
operations $13,596,348
===========
</Table>
M- 208 MainStay VP Small Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (883,108) $ (430,501)
Net realized gain on investments 9,702,368 1,057,811
Net change in unrealized
appreciation on investments 4,777,088 20,848,719
---------------------------
Net increase in net assets
resulting from operations 13,596,348 21,476,029
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 18,619,208 42,064,068
Service Class 38,995,959 14,434,170
---------------------------
57,615,167 56,498,238
Cost of shares redeemed:
Initial Class (11,835,509) (6,768,740)
Service Class (2,172,539) (1,090,450)
---------------------------
(14,008,048) (7,859,190)
---------------------------
Increase in net assets derived
from capital share transactions 43,607,119 48,639,048
---------------------------
Net increase in net assets 57,203,467 70,115,077
NET ASSETS:
Beginning of year 104,483,220 34,368,143
---------------------------
End of year $161,686,687 $104,483,220
===========================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 209
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
--------------------------------------------- ---------------------------
JULY 2, JUNE 5,
2001(A) 2003(A)
THROUGH YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2004 2003
Net asset value at beginning
of period $ 9.96 $ 7.03 $ 9.55 $ 10.00 $ 9.94 $ 8.06
-------- ------- ------- ------- ------- -------
Net investment loss (b) (0.06) (0.06) (0.05) (0.02) (0.08) (0.04)
Net realized and unrealized
gain (loss) on investments 0.99 2.99 (2.47) (0.43) 0.99 1.92
-------- ------- ------- ------- ------- -------
Total from investment
operations 0.93 2.93 (2.52) (0.45) 0.91 1.88
-------- ------- ------- ------- ------- -------
Net asset value at end of
period $ 10.89 $ 9.96 $ 7.03 $ 9.55 $ 10.85 $ 9.94
======== ======= ======= ======= ======= =======
Total investment return 9.40% 41.69% (26.41%) (4.52%)(c) 9.13% 23.37%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income
(loss) (0.61%) (0.73%) (0.68%) (0.50%) (0.86%) (0.98%)+(d)
Net expenses 0.95% 0.95% 0.95% 0.95% 1.20% 1.20%+
Expenses (before
reimbursement) 1.14% 1.21% 1.29% 1.96% 1.39% 1.46%
Portfolio turnover rate 108% 65% 126% 55% 108% 65%
Net assets at end of period
(in 000's) $105,650 $90,085 $34,368 $20,435 $56,037 $14,398
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Total return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
M- 210 MainStay VP Small Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (30.0%)+
ASSET-BACKED SECURITIES (1.3%)
- -----------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS (0.1%)
Citigroup Commercial Mortgage Trust
Series 2004-C2 Class A5
4.733%, due 10/15/41 $ 760,000 $ 754,893
------------
CONSUMER FINANCE (0.7%)
BMW Vehicle Owner Trust
Series 2003-A Class A3
1.94%, due 2/25/07 600,004 597,269
Harley-Davidson Motorcycle Trust
Series 2004-1 Class A2
2.53%, due 11/15/11 1,650,000 1,615,744
Volkswagen Auto Loan
Enhanced Trust
Series 2003-2 Class A3
2.27%, due 10/22/07 1,390,000 1,379,315
------------
3,592,328
------------
CONSUMER LOANS (0.2%)
Atlantic City Electric Transition
Funding LLC
Series 2002-1 Class A4
5.55%, due 10/20/23 850,000 894,390
------------
DIVERSIFIED FINANCIAL SERVICES (0.1%)
Capital One Master Trust
Series 2001-5 Class A
5.30%, due 6/15/09 480,000 494,585
------------
MULTI-UTILITIES & UNREGULATED POWER (0.2%)
Public Service of New Hampshire
Funding LLC
Series 2002-1 Class A
4.58%, due 2/1/08 1,233,327 1,256,452
------------
THRIFTS & MORTGAGE FINANCE (0.0%) (B)
Vanderbilt Mortgage Finance
Series 1999-B Class 1A4
6.545%, due 4/7/18 201,219 204,111
------------
Total Asset-Backed Securities
(Cost $7,200,198) 7,196,759
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (8.7%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.2%)
General Dynamics Corp.
4.50%, due 8/15/10 $ 565,000 $ 577,316
Sequa Corp.
Series B
8.875%, due 4/1/08 340,000 372,300
9.00%, due 8/1/09 115,000 129,662
------------
1,079,278
------------
AIRLINES (0.1%)
Delta Air Lines, Inc.
8.30%, due 12/15/29 375,000 181,875
Southwest Airlines Co.
5.25%, due 10/1/14 310,000 311,139
------------
493,014
------------
AUTO COMPONENTS (0.2%)
ArvinMeritor, Inc.
6.625%, due 6/15/07 110,000 114,950
Collins & Aikman Products
12.875%, due 8/15/12 (c)(f) 125,000 107,969
Dana Corp.
9.00%, due 8/15/11 165,000 203,011
Goodyear Tire & Rubber Co. (The)
6.375%, due 3/15/08 (f) 105,000 105,525
11.00%, due 3/1/11 (c)(k) 160,000 186,000
Visteon Corp.
7.00%, due 3/10/14 60,000 57,300
8.25%, due 8/1/10 (f) 245,000 256,637
------------
1,031,392
------------
AUTOMOBILES (0.0%) (B)
DaimlerChrysler North America
Holdings, Inc.
6.50%, due 11/15/13 125,000 135,577
General Motors Corp.
8.375%, due 7/15/33 65,000 67,345
------------
202,922
------------
BIOTECHNOLOGY (0.1%)
Amgen, Inc.
4.85%, due 11/18/14 (c) 530,000 529,970
------------
CAPITAL MARKETS (0.3%)
Bear Stearns Cos., Inc. (The)
4.00%, due 1/31/08 580,000 584,317
Goldman Sachs Group, Inc. (The)
6.345%, due 2/15/34 150,000 156,196
Morgan Stanley
3.625%, due 4/1/08 435,000 432,620
4.75%, due 4/1/14 340,000 331,299
------------
1,504,432
------------
CHEMICALS (0.3%)
Crompton Corp.
9.875%, due 8/1/12 (c) 120,000 137,400
Equistar Chemicals, L.P.
7.55%, due 2/15/26 195,000 192,563
FMC Corp.
10.25%, due 11/1/09 200,000 229,500
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term
investments. May be subject to change daily.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 211
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
CHEMICALS (CONTINUED)
Lyondell Chemical Co.
9.50%, due 12/15/08 $ 175,000 $ 189,875
10.50%, due 6/1/13 50,000 59,500
Millennium America, Inc.
7.625%, due 11/15/26 535,000 526,975
Terra Capital, Inc.
12.875%, due 10/15/08 215,000 268,750
Witco Corp.
7.75%, due 4/1/23 45,000 43,875
------------
1,648,438
------------
COMMERCIAL BANKS (0.1%)
BankBoston NA
7.00%, due 9/15/07 610,000 662,468
UGS Corp.
10.00%, due 6/1/12 (c) 100,000 113,750
------------
776,218
------------
COMMERCIAL SERVICES & SUPPLIES (0.0%) (B)
Geo Sub Corp.
11.00%, due 5/15/12 120,000 120,600
------------
CONSUMER FINANCE (0.5%)
Capital One Bank
5.75%, due 9/15/10 340,000 360,674
Ford Motor Credit Co.
7.00%, due 10/1/13 (f) 710,000 752,694
General Motors Acceptance Corp.
6.75%, due 12/1/14 600,000 600,820
6.875%, due 9/15/11 400,000 409,917
6.875%, due 8/28/12 65,000 66,364
MBNA Corp.
6.25%, due 1/17/07 295,000 310,409
------------
2,500,878
------------
CONTAINERS & PACKAGING (0.2%)
Owens-Brockway Glass
Container, Inc.
7.75%, due 5/15/11 235,000 254,387
8.875%, due 2/15/09 170,000 184,663
Owens-Illinois, Inc.
7.80%, due 5/15/18 95,000 98,800
8.10%, due 5/15/07 65,000 69,225
Rock-Tenn Co.
8.20%, due 8/15/11 530,000 624,509
Tekni-Plex, Inc.
8.75%, due 11/15/13 (c) 25,000 24,875
------------
1,256,459
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES (0.5%)
Canwest Media, Inc.
8.00%, due 9/15/12 (c) $ 120,000 $ 128,700
Citigroup, Inc.
5.00%, due 9/15/14 (c) 1,050,000 1,055,065
FGIC Corp.
6.00%, due 1/15/34 (c) 1,105,000 1,140,446
J Paul Getty Trust Series 2003
5.875%, due 10/1/33 435,000 454,024
Rainbow National Services LLC
8.75%, due 9/1/12 (c) 210,000 230,475
------------
3,008,710
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.4%)
MCI, Inc.
6.908%, due 5/1/07 282,000 288,698
7.688%, due 5/1/09 282,000 291,870
8.735%, due 5/1/14 242,000 260,150
Qwest Capital Funding, Inc.
7.75%, due 8/15/06 405,000 426,262
Qwest Communications
International, Inc.
7.25%, due 2/15/11 (c) 85,000 87,125
Qwest Corp.
5.625%, due 11/15/08 10,000 10,175
7.125%, due 11/15/43 80,000 73,200
7.25%, due 9/15/25 130,000 126,425
8.875%, due 3/15/12 (c) 85,000 98,175
14.00%, due 12/15/10 (c) 310,000 372,775
SBC Communications, Inc.
4.125%, due 9/15/09 410,000 409,252
------------
2,444,107
------------
ELECTRIC UTILITIES (0.4%)
Cedar Brakes II LLC
9.875%, due 9/1/13 246,456 294,515
Consumers Energy Co.
6.25%, due 9/15/06 240,000 250,574
Kiowa Power Partners LLC
5.737%, due 3/30/21 (c) 490,000 491,960
PPL Energy Supply LLC
5.40%, due 8/15/14 620,000 635,995
Southern California Edison Co.
8.00%, due 2/15/07 215,000 234,131
Tenaska Virginia Partners LP
6.119%, due 3/30/24 (c) 377,740 396,438
------------
2,303,613
------------
ELECTRICAL EQUIPMENT (0.1%)
Emerson Electric Co.
6.00%, due 8/15/32 520,000 558,215
------------
ENERGY EQUIPMENT & SERVICES (0.0%) (B)
Pride International, Inc.
7.375%, due 7/15/14 95,000 103,788
------------
FOOD & STAPLES RETAILING (0.2%)
CVS Corp.
5.298%, due 1/11/27 (c) 435,000 436,623
5.789%, due 1/10/26 (c) 415,760 431,800
Duane Reade, Inc.
7.01%, due 12/15/10 (c)(n) 90,000 91,350
</Table>
M- 212 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
FOOD & STAPLES RETAILING (CONTINUED)
Safeway, Inc.
4.125%, due 11/1/08 $ 330,000 $ 328,062
------------
1,287,835
------------
FOOD PRODUCTS (0.2%)
Cargill, Inc.
4.375%, due 6/1/13 (c) 460,000 449,078
5.00%, due 11/15/13 (c) 580,000 588,255
Smithfield Foods, Inc.
7.625%, due 2/15/08 (f) 140,000 149,800
------------
1,187,133
------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.0%) (B)
Fisher Scientific International, Inc.
6.75%, due 8/15/14 (c) 85,000 91,163
------------
HEALTH CARE PROVIDERS & SERVICES (0.6%)
HCA, Inc.
7.50%, due 11/15/95 145,000 135,753
8.36%, due 4/15/24 80,000 87,371
8.75%, due 9/1/10 245,000 280,056
Highmark, Inc.
6.80%, due 8/15/13 (c) 835,000 910,764
Manor Care, Inc.
6.25%, due 5/1/13 235,000 251,145
8.00%, due 3/1/08 187,000 206,313
Medco Health Solutions, Inc.
7.25%, due 8/15/13 935,000 1,045,937
Service Corp. International
6.50%, due 3/15/08 35,000 36,137
7.20%, due 6/1/06 115,000 119,600
WellPoint, Inc.
5.00%, due 12/15/14 (c) 175,000 174,449
------------
3,247,525
------------
HOTELS, RESTAURANTS & LEISURE (0.3%)
Caesars Entertainment, Inc.
8.125%, due 5/15/11 175,000 202,125
9.375%, due 2/15/07 350,000 385,875
Chumash Casino & Resort
Enterprise
9.00%, due 7/15/10 (c) 110,000 121,825
ITT Corp.
7.375%, due 11/15/15 295,000 328,187
Mandalay Resort Group
7.00%, due 11/15/36 105,000 110,250
MGM Mirage, Inc.
6.75%, due 9/1/12 80,000 84,200
8.375%, due 2/1/11 130,000 146,575
Mirage Resorts, Inc.
7.25%, due 10/15/06 35,000 36,663
Mohegan Tribal Gaming Authorities
6.375%, due 7/15/09 185,000 190,088
Venetian Casino Resort LLC
11.00%, due 6/15/10 230,000 262,487
------------
1,868,275
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
HOUSEHOLD DURABLES (0.1%)
D.R. Horton, Inc.
5.625%, due 1/15/16 $ 330,000 $ 324,638
------------
INSURANCE (0.3%)
Crum & Forster
10.375%, due 6/15/13 165,000 183,975
Fund American Cos., Inc.
5.875%, due 5/15/13 905,000 921,069
Marsh & McLennan Cos., Inc.
7.125%, due 6/15/09 140,000 151,945
Phoenix Life Insurance
7.15%, due 12/15/34 (c) 205,000 204,484
Provident Companies, Inc.
7.25%, due 3/15/28 40,000 37,850
UnumProvident Corp.
6.75%, due 12/15/28 100,000 90,250
------------
1,589,573
------------
IT SERVICES (0.1%)
Electronic Data Systems Corp.
Series B
6.00%, due 8/1/13 50,000 52,795
7.125%, due 10/15/09 25,000 27,535
7.45%, due 10/15/29 50,000 54,024
Unisys Corp.
6.875%, due 3/15/10 115,000 123,050
------------
257,404
------------
MACHINERY (0.0%) (B)
Cummins, Inc.
6.45%, due 3/1/05 115,000 115,000
------------
MEDIA (0.8%)
Clear Channel
Communications, Inc.
4.90%, due 5/15/15 385,000 365,542
5.50%, due 9/15/14 365,000 366,410
Houghton Mifflin Co.
7.20%, due 3/15/11 245,000 258,475
Medianews Group, Inc.
6.375%, due 4/1/14 110,000 108,900
Morris Publishing Group LLC
7.00%, due 8/1/13 190,000 193,800
PanAmSat Corp.
9.00%, due 8/15/14 (c) 80,000 89,300
Reader's Digest Association,
Inc. (The)
6.50%, due 3/1/11 150,000 156,750
Tele-Communications, Inc.
10.125%, due 4/15/22 220,000 315,826
Time Warner Entertainment Co. LP
8.375%, due 3/15/23 510,000 639,391
10.15%, due 5/1/12 1,700,000 2,230,233
------------
4,724,627
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 213
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
METALS & MINING (0.1%)
Allegheny Ludlum Corp.
6.95%, due 12/15/25 $ 335,000 $ 328,300
United States Steel LLC
10.75%, due 8/1/08 140,000 164,850
------------
493,150
------------
MULTILINE RETAIL (0.3%)
Kohl's Corp.
6.00%, due 1/15/33 1,100,000 1,150,638
Target Corp.
8.60%, due 1/15/12 370,000 460,949
------------
1,611,587
------------
MULTI-UTILITIES & UNREGULATED POWER (0.6%)
AES Corp. (The)
9.00%, due 5/15/15 (c) 235,000 269,075
AES Eastern Energy LP
Series 1999-A
9.00%, due 1/2/17 339,187 384,978
Calpine Corp.
8.50%, due 7/15/10 (c) 76,000 65,170
NRG Energy, Inc.
8.00%, due 12/15/13 (c) 290,000 316,100
Pacific Electric & Gas Co.
6.05%, due 3/1/34 275,000 285,619
PSE&G Power LLC
6.875%, due 4/15/06 1,260,000 1,313,500
Tiverton/Rumford Power
Associates Ltd., L.P.
9.00%, due 7/15/18 (c) 372,515 298,012
Westar Energy, Inc.
7.125%, due 8/1/09 320,000 351,386
7.875%, due 5/1/07 220,000 239,238
------------
3,523,078
------------
OIL & GAS (0.5%)
El Paso Corp.
7.80%, due 8/1/31 50,000 48,000
Enterprise Products Partners L.P.
5.60%, due 10/15/14 (c) 285,000 287,528
Evergreen Resources, Inc.
5.875%, due 3/15/12 370,000 386,600
Forest Oil Corp.
8.00%, due 12/15/11 220,000 251,350
Newfield Exploration Co.
8.375%, due 8/15/12 170,000 190,400
Pacific Energy Partners LP
7.125%, due 6/15/14 180,000 191,700
Tesoro Corp.
8.00%, due 4/15/08 285,000 309,937
Tosco Corp.
8.125%, due 2/15/30 465,000 620,679
Vintage Petroleum, Inc.
8.25%, due 5/1/12 290,000 319,725
------------
2,605,919
------------
PAPER & FOREST PRODUCTS (0.4%)
Appleton Papers, Inc.
8.125%, due 6/15/11 325,000 350,187
Bowater, Inc.
9.00%, due 8/1/09 240,000 266,845
Georgia-Pacific Corp.
8.875%, due 2/1/10 305,000 354,944
9.375%, due 2/1/13 245,000 285,425
OMX Timber Finance
Investments LLC
5.42%, due 1/29/20 (c) 255,000 254,291
Pope & Talbot, Inc.
8.375%, due 6/1/13 475,000 498,750
------------
2,010,442
------------
PERSONAL PRODUCTS (0.1%)
Estee Lauder Cos., Inc.
5.75%, due 10/15/33 370,000 380,538
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REAL ESTATE (0.4%)
American Real Estate Partners LP
8.125%, due 6/1/12 $ 205,000 $ 218,581
CB Richard Ellis Services, Inc.
9.75%, due 5/15/10 75,000 85,500
Hospitality Properties Trust
7.00%, due 3/1/08 175,000 186,890
Host Marriot LP
7.00%, due 8/15/12 (c) 240,000 253,800
HRPT Properties Trust
5.75%, due 2/15/14 685,000 703,513
6.25%, due 8/15/16 170,000 179,315
iStar Financial, Inc.
6.50%, due 12/15/13 590,000 622,176
OMEGA Healthcare Investors, Inc.
7.00%, due 4/1/14 185,000 190,088
------------
2,439,863
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.0%) (B)
MagnaChip Semiconductor SA
5.74%, due 12/15/11 (c)(n) 100,000 102,750
8.00%, due 12/15/14 (c) 70,000 72,975
------------
175,725
------------
SOFTWARE (0.1%)
Computer Associates
International, Inc.
4.75%, due 12/1/09 (c) 300,000 302,195
------------
TRANSPORTATION INFRASTRUCTURE (0.0%) (B)
Great Lakes Dredge & Dock Corp.
7.75%, due 12/15/13 50,000 45,500
------------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
AT&T Wireless Services, Inc.
8.75%, due 3/1/31 385,000 519,101
AirGate PCS, Inc.
5.82%, due 10/15/11 (c)(n) 80,000 82,200
</Table>
M- 214 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (CONTINUED)
Dobson Cellular Systems
6.96%, due 11/1/11 (c)(n) $ 35,000 $ 36,225
Dobson Communications Corp.
8.875%, due 10/1/13 20,000 14,050
10.875%, due 7/1/10 25,000 19,375
Triton PCS, Inc.
8.50%, due 6/1/13 100,000 96,500
US Unwired, Inc.
10.00%, due 6/15/12 60,000 67,650
------------
835,101
------------
Total Corporate Bonds
(Cost $46,720,878) 48,678,305
------------
FOREIGN BONDS (1.9%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.0%) (B)
Heckler & Koch GmbH
9.25%, due 7/15/11 (c) E 75,000 114,177
------------
BEVERAGES (0.4%)
Bavaria S.A.
8.875%, due 11/1/10 (c) $ 240,000 259,200
CIA Brasileira de Bebidas
10.50%, due 12/15/11 1,355,000 1,700,525
Coca-Cola HBC Finance BV
5.125%, due 9/17/13 245,000 251,291
------------
2,211,016
------------
BUILDING PRODUCTS (0.0%) (B)
Votorantim Overseas III
7.875%, due 1/23/14 (c) 100,000 103,250
------------
CHEMICALS (0.1%)
Acetex Corp.
10.875%, due 8/1/09 200,000 217,500
Invista
9.25%, due 5/1/12 (c) 260,000 289,900
------------
507,400
------------
COMMERCIAL SERVICES & SUPPLIES (0.1%)
Hutchison Whamp International Ltd.
5.45%, due 11/24/10 (c) 620,000 642,121
------------
CONTAINERS & PACKAGING (0.1%)
Crown Euro Holdings S.A.
10.875%, due 3/1/13 335,000 396,138
------------
DIVERSIFIED FINANCIAL SERVICES (0.0%) (B)
Tengizchevroil LLP
6.124%, due 11/15/14 (c) 230,000 230,575
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED TELECOMMUNICATION SERVICES (0.1%)
Telefonos de Mexico, S.A.
4.50%, due 11/19/08 $ 675,000 $ 679,498
------------
ELECTRIC UTILITIES (0.1%)
Singapore Powerassets Ltd.
5.00%, due 10/22/13 (c) 360,000 365,169
WRG Acquisitions PLC
8.36%, due 12/15/11 (c)(n) L 30,000 59,613
------------
424,782
------------
FOREIGN GOVERNMENTS (0.4%)
Province of Quebec
5.00%, due 7/17/09 $ 920,000 961,005
Russian Federation
5.00%, due 3/31/30 735,000 760,284
United Mexican States
4.625%, due 10/8/08 95,000 96,188
8.125%, due 12/30/19 250,000 293,375
------------
2,110,852
------------
GOVERNMENT AGENCIES (0.1%)
Aries Vermogensverwaltungs GmbH
9.60%, due 10/25/2014 ADR (c)(i) 250,000 307,500
------------
INDUSTRIAL CONGLOMERATES (0.0%) (B)
Stena AB
9.625%, due 12/1/12 315,000 355,950
------------
METALS & MINING (0.1%)
Citigroup (JSC Severstal)
9.25%, due 4/19/14 244,000 243,951
Corporacion Nacional del
Cobre-Codelco, Inc.
5.50%, due 10/15/13 (c) 475,000 494,512
------------
738,463
------------
OIL & GAS (0.1%)
Gazprom International S.A.
7.201%, due 2/1/20 (c) 400,000 423,000
------------
PAPER & FOREST PRODUCTS (0.1%)
Norske Skog Canada Ltd.
7.375%, due 3/1/14 100,000 104,250
8.625%, due 6/15/11 135,000 144,787
Tembec Industries, Inc.
8.50%, due 2/1/11 195,000 195,975
------------
445,012
------------
ROAD & RAIL (0.0%) (B)
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.
12.50%, due 6/15/12 115,000 134,262
------------
TRANSPORTATION INFRASTRUCTURE (0.1%)
PSA Corp. Ltd.
7.125%, due 8/1/05 (c) 900,000 919,283
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 215
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN BONDS (CONTINUED)
- -----------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.1%)
Vodafone Group PLC
3.95%, due 1/30/08 $ 530,000 $ 533,693
------------
Total Foreign Bonds
(Cost $10,457,801) 11,276,972
------------
MUNICIPAL BOND (0.1%)
- -----------------------------------------------------------------------------
TEXAS (0.1%)
Harris County Texas Industrial
Development Corp.
Solid Waste Deer Park
5.683%, due 3/1/23 395,000 399,973
------------
Total Municipal Bond
(Cost $395,000) 399,973
------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (0.7%)
- -----------------------------------------------------------------------------
COMMERCIAL BANKS (0.1%)
Wachovia Bank National Association
Series 2004-C14 Class A1
3.477%, due 8/15/41 382,322 379,780
------------
DIVERSIFIED FINANCIAL SERVICES (0.1%)
Morgan Stanley Capital I
Series 2003-IQ5 Class A1
3.02%, due 4/15/38 750,094 738,532
------------
THRIFTS & MORTGAGE FINANCE (0.5%)
Banc of America Commercial
Mortgage, Inc.
Series 2001-PB1 Class A1
4.907%, due 5/11/35 914,544 935,993
LB-UBS Commercial Mortgage
Trust
Series 2004-C7 Class A1
3.625%, due 10/15/29 1,062,490 1,058,081
Merrill Lynch Mortgage Trust
Series 2004-MKB1 Class A1
3.563%, due 2/12/42 931,191 924,951
------------
2,919,025
------------
Total Commercial Mortgage Loans
(Collateralized Mortgage Obligations)
(Cost $4,073,327) 4,037,337
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (17.0%)
- -----------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (1.1%)
3.00%, due 8/1/10 (e) $ 470,912 $ 454,822
3.625%, due 9/15/08 755,000 755,260
5.00%, due 2/15/20 TBA (d) 1,065,000 1,078,978
5.00%, due 8/1/33 (e) 789,666 785,831
5.50%, due 2/10/35 TBA (d) 3,160,000 3,201,475
------------
6,276,366
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (2.6%)
4.625%, due 5/1/13 870,000 866,694
4.75%, due 1/2/07 3,445,000 3,533,216
5.125%, due 1/2/14 545,000 555,796
5.25%, due 8/1/12 2,805,000 2,910,552
5.50%, due 5/2/06 3,350,000 3,449,368
6.25%, due 2/1/11 435,000 476,897
6.625%, due 9/15/09 2,565,000 2,864,012
------------
14,656,535
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (8.9%)
4.50%, due 4/1/18-11/1/18 (e)(m) 8,202,878 8,195,236
5.50%, due 2/1/17-11/1/33 (e) 8,720,192 8,931,308
V 5.50%, due 2/15/20 TBA (d) 8,640,000 8,907,304
V 5.50%, due 2/10/35 TBA (d) 5,770,000 5,842,125
V 6.00%, due 2/10/35 TBA (d) 12,380,000 12,770,738
6.32%, due 8/15/08 697,808 745,155
6.50%, due 6/1/31-10/1/31 (e) 1,756,790 1,844,234
7.00%, due 2/1/32-4/1/32 (e) 1,135,299 1,203,524
7.50%, due 8/1/31 (e) 1,221,512 1,308,841
------------
49,748,465
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (0.8%)
6.00%, due 4/15/29-8/15/32 (e) 2,975,995 3,090,951
7.50%, due 12/15/23-12/25/28 (e) 1,179,596 1,270,530
------------
4,361,481
------------
U.S. TREASURY BONDS (0.9%)
5.375%, due 2/15/31 (f) 2,515,000 2,719,540
6.875%, due 8/15/25 1,205,000 1,517,782
8.75%, due 8/15/20 580,000 838,372
------------
5,075,694
------------
U.S. TREASURY NOTES (2.7%)
3.00%, due 2/15/08 (f) 1,645,000 1,631,570
4.25%, due 8/15/14-11/15/14 (f) 4,140,000 4,149,986
4.625%, due 5/15/06 (f) 965,000 987,240
5.75%, due 11/15/05-8/15/10 (f) 2,845,000 2,948,798
V 6.00%, due 8/15/09 (f) 4,905,000 5,409,680
------------
15,127,274
------------
Total U.S. Government &
Federal Agencies
(Cost $94,495,087) 95,245,815
------------
</Table>
M- 216 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
YANKEE BONDS (0.3%) (H)
- -----------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (0.0%) (B)
Petroleum Geo-Services ASA
10.75%, due 11/5/10 $ 220,000 $ 250,800
------------
INSURANCE (0.2%)
Fairfax Financial Holdings Ltd.
7.375%, due 4/15/18 10,000 9,500
7.75%, due 4/26/12-7/15/37 105,000 104,100
8.30%, due 4/15/26 10,000 9,775
Montpelier Re Holdings Ltd.
6.125%, due 8/15/13 955,000 982,242
------------
1,105,617
------------
MARINE (0.0%) (B)
Sea Containers Ltd.
10.75%, due 10/15/06 90,000 94,275
------------
MEDIA (0.1%)
Rogers Cablesystem, Ltd.
11.00%, due 12/1/15 230,000 256,450
------------
Total Yankee Bonds
(Cost $1,653,129) 1,707,142
------------
Total Long-Term Bonds
(Cost $164,995,420) 168,542,303
------------
<Caption>
SHARES VALUE
COMMON STOCKS (67.5%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.3%)
Boeing Co. (The) 17,700 916,329
L-3 Communications Holdings, Inc. 43,500 3,185,940
Northrop Grumman Corp. 59,000 3,207,240
Raytheon Co. 49,100 1,906,553
United Technologies Corp. 35,900 3,710,265
------------
12,926,327
------------
AIR FREIGHT & LOGISTICS (0.7%)
FedEx Corp. 41,600 4,097,184
------------
AUTOMOBILES (0.6%)
Harley-Davidson, Inc. 53,900 3,274,425
------------
BEVERAGES (0.3%)
PepsiCo, Inc. 35,800 1,868,760
------------
BIOTECHNOLOGY (1.4%)
Amgen, Inc. (a) 54,600 3,502,590
Genentech, Inc. (a) 43,600 2,373,584
Gilead Sciences, Inc. (a) 61,800 2,162,382
------------
8,038,556
------------
</Table>
<Table>
<Caption>
SHARES VALUE
BUILDING PRODUCTS (0.6%)
American Standard Cos., Inc. (a) 76,200 $ 3,148,584
------------
CAPITAL MARKETS (2.2%)
Goldman Sachs Group, Inc. (The) (e) 30,200 3,142,008
Merrill Lynch & Co., Inc. 50,500 3,018,385
Morgan Stanley 56,600 3,142,432
State Street Corp. 56,600 2,780,192
------------
12,083,017
------------
CHEMICALS (0.9%)
Air Products & Chemicals, Inc. 26,000 1,507,220
Praxair, Inc. 80,200 3,540,830
------------
5,048,050
------------
COMMERCIAL BANKS (2.8%)
VBank of America Corp. 132,200 6,212,078
PNC Financial Services Group,
Inc. (The) 40,600 2,332,064
U.S. Bancorp 103,100 3,229,092
Wachovia Corp. 80,300 4,223,780
------------
15,997,014
------------
COMMERCIAL SERVICES & SUPPLIES (0.6%)
Cendant Corp. 134,100 3,135,258
------------
COMMUNICATIONS EQUIPMENT (2.8%)
Avaya, Inc. (a) 196,000 3,371,200
Cisco Systems, Inc. (a) 115,700 2,233,010
Motorola, Inc. 208,600 3,587,920
Nokia Corp. ADR (i) 244,600 3,832,882
QUALCOMM, Inc. 65,300 2,768,720
------------
15,793,732
------------
COMPUTERS & PERIPHERALS (2.7%)
Dell, Inc. (a) 90,600 3,817,884
Hewlett-Packard Co. 210,200 4,407,894
VInternational Business Machines Corp. 71,200 7,018,896
------------
15,244,674
------------
CONSUMER FINANCE (1.4%)
American Express Co. 70,300 3,962,811
Capital One Financial Corp. 45,600 3,839,976
------------
7,802,787
------------
CONTAINERS & PACKAGING (0.5%)
Smurfit-Stone Container Corp. (a) 147,500 2,755,300
------------
DIVERSIFIED FINANCIAL SERVICES (2.5%)
VCitigroup, Inc. 197,133 9,497,868
JPMorgan Chase & Co. 123,584 4,821,012
------------
14,318,880
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (2.6%)
ALLTEL Corp. 25,800 1,516,008
BellSouth Corp. 82,800 2,301,012
SBC Communications, Inc. 107,800 2,778,006
Sprint Corp. (FON Group) 181,200 4,502,820
Verizon Communications, Inc. 86,300 3,496,013
------------
14,593,859
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 217
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
ELECTRIC UTILITIES (0.4%)
DTE Energy Co. 28,900 $ 1,246,457
FirstEnergy Corp. 30,200 1,193,202
------------
2,439,659
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.3%)
Agilent Technologies, Inc. (a) 65,400 1,576,140
------------
ENERGY EQUIPMENT & SERVICES (4.6%)
Baker Hughes, Inc. 59,700 2,547,399
BJ Services Co. 54,400 2,531,776
ENSCO International, Inc. 82,000 2,602,680
Pride International, Inc. (a) 220,600 4,531,124
VRowan Cos., Inc. (a) 223,600 5,791,240
VTransocean, Inc. (a)(i) 114,300 4,845,177
Weatherford International Ltd. (a)(i) 53,600 2,749,680
------------
25,599,076
------------
FOOD & STAPLES RETAILING (1.6%)
CVS Corp. 75,500 3,402,785
Kroger Co. (The) (a) 158,200 2,774,828
Walgreen Co. 66,600 2,555,442
------------
8,733,055
------------
FOOD PRODUCTS (1.7%)
Cadbury Schweppes PLC ADR (i) 92,300 3,479,710
General Mills, Inc. 82,100 4,081,191
Kraft Foods, Inc. Class A 56,200 2,001,282
------------
9,562,183
------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.1%)
Boston Scientific Corp. (a) 80,000 2,844,000
Fisher Scientific International, Inc. (a) 51,600 3,218,808
------------
6,062,808
------------
HEALTH CARE PROVIDERS & SERVICES (3.7%)
Caremark Rx, Inc. (a) 97,300 3,836,539
HCA, Inc. 57,100 2,281,716
Quest Diagnostics, Inc. 30,700 2,933,385
VUnitedHealth Group, Inc. 59,600 5,246,588
Universal Health Services, Inc. Class B (f) 60,500 2,692,250
Wellpoint, Inc. (a) 33,700 3,875,500
------------
20,865,978
------------
HOUSEHOLD DURABLES (2.3%)
Centex Corp. 47,700 2,841,966
D.R. Horton, Inc. 87,700 3,535,187
Harman International
Industries, Inc. 25,100 3,187,700
Lennar Corp. 62,700 3,553,836
------------
13,118,689
------------
</Table>
<Table>
<Caption>
SHARES VALUE
HOUSEHOLD PRODUCTS (0.7%)
Kimberly-Clark Corp. 59,100 $ 3,889,371
------------
INDUSTRIAL CONGLOMERATES (1.2%)
General Electric Co. 99,900 3,646,350
3M Co. 37,500 3,077,625
------------
6,723,975
------------
INSURANCE (2.4%)
Allstate Corp. (The) 54,500 2,818,740
American International Group, Inc. 25,400 1,668,018
Hartford Financial Services Group, Inc. (The) 45,300 3,139,743
Prudential Financial, Inc. 53,900 2,962,344
St. Paul Travelers Cos., Inc. (The) 75,500 2,798,785
------------
13,387,630
------------
INTERNET & CATALOG RETAIL (0.3%)
eBay, Inc. (a) 16,600 1,930,248
------------
IT SERVICES (1.2%)
Accenture Ltd. Class A (a)(i) 68,900 1,860,300
Computer Sciences Corp. (a) 61,900 3,489,303
First Data Corp. 26,700 1,135,818
------------
6,485,421
------------
LEISURE EQUIPMENT & PRODUCTS (0.6%)
Brunswick Corp. 41,200 2,039,400
Mattel, Inc. 79,800 1,555,302
------------
3,594,702
------------
MACHINERY (2.5%)
Danaher Corp. 65,900 3,783,319
Dover Corp. 81,200 3,405,528
Illinois Tool Works, Inc. 37,600 3,484,768
Navistar International Corp. (a) 77,371 3,402,777
------------
14,076,392
------------
MEDIA (1.0%)
Omnicom Group, Inc. 40,000 3,372,800
Time Warner, Inc. (a) 101,300 1,969,272
------------
5,342,072
------------
METALS & MINING (0.6%)
Alcoa, Inc. 103,500 3,251,970
------------
MULTILINE RETAIL (1.2%)
Kohl's Corp. (a) 62,600 3,078,042
Target Corp. 70,200 3,645,486
------------
6,723,528
------------
MULTI-UTILITIES & UNREGULATED POWER (0.4%)
Energy East Corp. 82,100 2,190,428
------------
OIL & GAS (2.5%)
ChevronTexaco Corp. 72,200 3,791,222
ConocoPhillips 28,000 2,431,240
ExxonMobil Corp. 74,400 3,813,744
Kerr-McGee Corp. 40,700 2,352,053
Unocal Corp. 43,600 1,885,264
------------
14,273,523
------------
</Table>
M- 218 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.1%)
Bowater, Inc. 81,700 $ 3,592,349
International Paper Co. 55,000 2,310,000
------------
5,902,349
------------
PHARMACEUTICALS (2.3%)
Bristol-Myers Squibb Co. 126,600 3,243,492
Johnson & Johnson 56,300 3,570,546
Pfizer, Inc. 117,500 3,159,575
Teva Pharmaceutical Industries Ltd. ADR (i) 102,400 3,057,664
------------
13,031,277
------------
ROAD & RAIL (0.2%)
Burlington Northern Santa Fe Corp. 21,700 1,026,627
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.7%)
Advanced Micro Devices, Inc. (a) 35,400 779,508
Analog Devices, Inc. 39,000 1,439,880
Applied Materials, Inc. (a) 82,300 1,407,330
Intel Corp. 81,600 1,908,624
KLA-Tencor Corp. (a) 33,600 1,565,088
Maxim Integrated Products, Inc. 30,300 1,284,417
Texas Instruments, Inc. 46,400 1,142,368
------------
9,527,215
------------
SOFTWARE (2.4%)
BMC Software, Inc. (a) 133,000 2,473,800
Electronic Arts, Inc. (a) 27,100 1,671,528
Microsoft Corp. 96,800 2,585,528
Oracle Corp. (a) 112,620 1,545,146
Symantec Corp. (a) 134,800 3,472,448
VERITAS Software Corp. (a) 64,800 1,850,040
------------
13,598,490
------------
SPECIALTY RETAIL (2.9%)
Bed Bath & Beyond, Inc. (a) 82,100 3,270,043
Best Buy Co., Inc. 49,700 2,953,174
Gap, Inc. (The) 174,700 3,689,664
Lowe's Cos., Inc. 60,300 3,472,677
TJX Cos., Inc. (The) 126,200 3,171,406
------------
16,556,964
------------
TEXTILES, APPAREL & LUXURY GOODS (1.3%)
Coach, Inc. (a) 66,000 3,722,400
NIKE, Inc. Class B 39,800 3,609,462
------------
7,331,862
------------
THRIFTS & MORTGAGE FINANCE (0.4%)
Washington Mutual, Inc. 50,600 2,139,368
------------
Total Common Stocks
(Cost $327,773,517) 379,067,407
------------
CONVERTIBLE PREFERRED STOCK (0.7%)
- -----------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (0.0%) (B)
QuadraMed Corp. 5.50% (c)(j) 4,900 107,800
------------
PHARMACEUTICALS (0.7%)
Goldman Sachs Group, Inc. (The) 2.875% Serie BSKT 40,000 4,113,240
------------
Total Convertible Preferred Stocks
(Cost $4,122,500) 4,221,040
------------
PREFERRED STOCK (0.1%)
- -----------------------------------------------------------------------------
REAL ESTATE (0.1%)
Sovereign Real Estate
Investment Corp.
12.00%, Class A (c) 200 303,000
------------
Total Preferred Stock
(Cost $298,000) 303,000
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (9.8%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (6.9%)
American General Finance Corp.
2.30%, due 1/5/05 $5,605,000 5,603,567
Chevron Texaco Funding Corp.
2.25%, due 1/12/05 (e) 6,700,000 6,695,393
Freddie Mac Discount Note
2.24%, due 2/1/05 (e) 5,000,000 4,990,342
Goldman Sachs Group, Inc. (The)
2.33%, due 1/3/05 6,710,000 6,709,131
International Business Machines Corp.
2.16%, due 1/7/05 1,015,000 1,014,634
Morgan Stanley Dean Witter & Co.
2.32%, due 1/5/05 405,000 404,895
Rabobank USA Financial Corp.
2.17%, due 1/3/05 13,270,000 13,268,400
------------
Total Commercial Paper
(Cost $38,686,362) 38,686,362
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANIES (0.0%) (B)
AIM Institutional Funds Group (g) 82,875 82,875
------------
Total Investment Company
(Cost $82,875) 82,875
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.4%)
Banc of America Securities LLC
2.39%, due 1/3/05 (g) $2,170,000 2,170,000
------------
Total Master Note
(Cost $2,170,000) 2,170,000
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 219
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS (2.5%)
Credit Suisse First Boston LLC
2.36%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$250,049 (g)
(Collateralized by
Various Bonds
with a Principal Amount of
$297,871 and a
Market Value of $255,002) (o) $ 250,000 $ 250,000
Dresdner Kleinwort Wasserstein Securities LLC
2.38%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$9,000,595 (g)
(Collateralized by
Various Bonds
with a Principal Amount of
$9,432,309 and a
Market Value of $9,450,369) (o) 9,000,000 9,000,000
Lehman Brothers Inc.
2.36%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,690,111 (g)
(Collateralized by
Various Bonds
with a Principal Amount
of $2,299,348 and a
Market Value of $1,723,771) (o) 1,690,000 1,690,000
Merrill Lynch Pierce Fenner & Smith
2.39%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,306,087 (g)
(Collateralized by
Various Bonds
with a Principal Amount
of $1,288,968 and a
Market Value of $1,371,302) (o) 1,306,000 1,306,000
Morgan Stanley & Co.
2.36%, dated 12/31/04
due 1/3/05
Proceeds at Maturity
$1,950,128 (g)
(Collateralized by
Various Bonds
with a Principal Amount
of $3,421,084 and a
Market Value of $2,056,720) (o) 1,950,000 1,950,000
------------
Total Repurchase Agreements
(Cost $14,196,000) 14,196,000
------------
Total Short-Term Investments
(Cost $55,135,237) 55,135,237
------------
Total Investments
(Cost $552,324,674) (p) 108.1% 607,268,987(q)
Liabilities in Excess of
Cash and Other Assets (8.1) (45,737,054)
---------- ------------
Net Assets 100.0% $561,531,933
========== ============
<Caption>
NUMBER OF
CONTRACTS (L) VALUE
WRITTEN CALL OPTION (0.0%) (B)
CAPITAL MARKETS (0.0%) (B)
Goldman Sachs Group, Inc. (The)
Strike Price $110.00
Expire 1/22/05 (a) $ (103) $(2,060)
------
Total Written Call Option
(Premium received $17,200) (2,060)
------
</Table>
M- 220 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(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
deter-mined upon settlement.
(e) Represents security, or a portion thereof, which is
segregated as collateral for TBA and for written
options.
(f) Represent securities, or a portion thereof, which is
out on loan.
(g) Represents security, or portion thereof, purchased with
cash collateral received for securities on loan.
(h) Yankee Bond -- Dollar Denominated bonds issued in
United States by foreign banks and corporations.
(i) ADR -- American Depository Receipt
(j) Illiquid security.
(k) Restricted security.
(l) One contract relates to 100 shares.
(m) Partially segregated for unfunded loan commitment.
(n) Floating rate. Rate shown is the rate in effect at
December 31, 2004.
(o) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(p) The cost for federal income tax purposes is
$554,747,133.
(q) At December 31, 2004, net unrealized appreciation was
$52,521,854 based on cost for federal income tax pur-
poses. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $55,327,544 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $2,805,690
The following abbreviations are used in the above
portfolio:
L -- Pound Sterling
E -- Euro
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 221
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value (identified
cost $552,324,674) including $16,068,006
market value of securities loaned $607,268,987
Cash 48,098
Receivables:
Dividends and interest 2,028,220
Investment securities sold 1,599,885
Fund shares sold 67,092
Other Assets 1,556
------------
Total assets 611,013,838
------------
LIABILITIES:
Securities lending collateral 16,448,875
Written call option, at value (premium
received $17,200) 2,060
Payables:
Investment securities purchased 32,534,850
Adviser 151,292
Administrator 94,557
Fund shares redeemed 83,876
Custodian 11,469
NYLIFE Distributors 7,783
Accrued expenses 147,143
------------
Total liabilities 49,481,905
------------
Net assets $561,531,933
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 314,235
Service Class 22,748
Additional paid-in capital 522,967,902
Accumulated undistributed net investment
income 52,762
Accumulated net realized loss on investments (16,797,186)
Accumulated net realized gain on foreign
currency transactions 12,019
Net unrealized appreciation on investments 54,959,453
------------
Net assets $561,531,933
============
INITIAL CLASS
Net assets applicable to capital stock $523,683,295
============
Shares of beneficial interest outstanding 31,423,487
============
Net asset value per share outstanding $ 16.67
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 37,848,638
============
Shares of capital stock outstanding 2,274,772
============
Net asset value per share outstanding $ 16.64
============
</Table>
M- 222 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 8,210,121
Dividends(a) 4,412,562
Income from securities loaned -- net 34,147
-----------
Total Income 12,656,830
-----------
EXPENSES:
Advisory 1,794,615
Administration 1,121,634
Shareholder communication 279,865
Professional 93,798
Custodian 69,174
Distribution and service -- Service Class 65,289
Directors 39,305
Portfolio pricing 32,354
Miscellaneous 35,093
-----------
Total expenses 3,531,127
Reimbursement of advisory fee (27,480)
-----------
Net expenses 3,503,647
-----------
Net investment income 9,153,183
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions 19,599,586
Foreign currency transactions 1,612
-----------
Net realized gain on investments and foreign
currency transactions 19,601,198
-----------
Net increase from payment by affiliate for a
loss on the disposal of investment in
violation of restrictions 765
-----------
Net change in unrealized appreciation on
investments 5,128,816
-----------
Net realized and unrealized gain on investments
and foreign currency transactions 24,730,779
-----------
Net increase in net assets resulting from
operations $33,883,962
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $5,926.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 223
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 9,153,183 $ 9,737,251
Net realized gain on investments
and foreign currency transactions 19,601,198 476,989
Net increase from payment by
affiliate for loss on the
disposal of investment in
violation of restrictions 765 --
Net change in unrealized
appreciation (depreciation) on
investments and foreign currency
transactions 5,128,816 83,514,759
---------------------------
Net increase in net assets
resulting from operations 33,883,962 93,728,999
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (8,776,752) (9,713,495)
Service Class (567,487) (196,299)
---------------------------
Total dividends to shareholders (9,344,239) (9,909,794)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 10,043,736 24,764,458
Service Class 25,979,363 11,837,704
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 8,776,752 9,713,495
Service Class 567,487 196,299
---------------------------
45,367,338 46,511,956
Cost of shares redeemed:
Initial Class (76,468,605) (58,273,096)
Service Class (2,203,673) (245,380)
---------------------------
(78,672,278) (58,518,476)
---------------------------
Decrease in net assets derived
from capital share
transactions (33,304,940) (12,006,520)
---------------------------
Net increase (decrease) in net
assets (8,765,217) 71,812,685
NET ASSETS:
Beginning of year 570,297,150 498,484,465
---------------------------
End of year $561,531,933 $570,297,150
===========================
Accumulated undistributed net
investment income at end of year $ 52,762 $ 179,771
===========================
</Table>
M- 224 MainStay VP Total Return Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------------------------------- ---------------------------
JUNE 4,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31 DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 15.93 $ 13.55 $ 16.69 $ 19.21 $ 22.36 $ 15.92 $ 14.79
-------- -------- -------- -------- -------- ------- -------
Net investment income 0.28(c) 0.27(d) 0.37 0.44(b) 0.43 0.24(c) 0.14(d)
Net realized and unrealized
gain (loss) on investments 0.74 2.39 (3.13) (2.49)(b) (1.36) 0.73 1.26
-------- -------- -------- -------- -------- ------- -------
Total from investment
operations 1.02 2.66 (2.76) (2.05) (0.93) 0.97 1.40
-------- -------- -------- -------- -------- ------- -------
Less dividends and
distributions:
From net investment income (0.28) (0.28) (0.38) (0.44) (0.43) (0.25) (0.27)
From net realized gain on
investments -- -- -- (0.03) (1.79) --
-------- -------- -------- -------- -------- ------- -------
Total dividends and
distributions (0.28) (0.28) (0.38) (0.47) (2.22) (0.25) (0.27)
-------- -------- -------- -------- -------- ------- -------
Net asset value at end of
period $ 16.67 $ 15.93 $ 13.55 $ 16.69 $ 19.21 $ 16.64 $ 15.92
======== ======== ======== ======== ======== ======= =======
Total investment return 6.37% 19.68% (16.57%) (10.69%) (4.36%) 6.10% 9.47%(e)
Ratios (to average net
assets)/
Supplemental Data:
Net investment income 1.64%(c) 1.87% 2.28% 2.42%(b) 2.05% 1.39%(c) 1.62%+(f)
Expenses 0.62% 0.61% 0.61% 0.59% 0.59% 0.87% 0.86%+
Portfolio turnover rate 111% 69% 101% 125% 120% 111% 69%
Net assets at end of period
(in 000's) $523,683 $558,181 $498,484 $679,154 $805,862 $37,849 $12,116
</Table>
<Table>
(a) Commencement of Operations.
(b) As required, effective January 1, 2001, the Portfolio has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended December 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to January 1, 2001 have
not yet been restated to reflect this change in
presentation.
</Table>
<Table>
Decrease net investment income $(0.02)
Increase net realized and unrealized gains and losses $ 0.02
Decrease ratio of net investment income (0.12%)
</Table>
<Table>
(c) Included in net investment income per share and the ratio of
net investment income to average net assets are $0.01 per
share and 0.05%, respectively, resulting from a special
one-time dividend from Microsoft Corp. that paid $3.00 per
share.
(d) Per Share data based on average shares outstanding during
the period.
(e) Total Return is not annualized.
(f) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
www.mainstayfunds.com M- 225
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (87.7%)+
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (3.1%)
Boeing Co. (The) 55,300 $ 2,862,881
Northrop Grumman Corp. 191,700 10,420,812
Raytheon Co. 151,100 5,867,213
------------
19,150,906
------------
BUILDING PRODUCTS (0.8%)
American Standard Cos., Inc. (a) 116,200 4,801,384
------------
CAPITAL MARKETS (4.4%)
Goldman Sachs Group, Inc. (The) 91,100 9,478,044
Merrill Lynch & Co., Inc. 154,100 9,210,557
State Street Corp. 176,400 8,664,768
------------
27,353,369
------------
COMMERCIAL BANKS (9.5%)
VBank of America Corp. 423,492 19,899,889
PNC Financial Services Group, Inc. (The) 125,300 7,197,232
U.S. Bancorp 328,300 10,282,356
VWachovia Corp. 239,700 12,608,220
Wells Fargo & Co. 145,100 9,017,965
------------
59,005,662
------------
COMMUNICATIONS EQUIPMENT (3.5%)
Motorola, Inc. 625,900 10,765,480
Nokia Corp. ADR (e) 713,200 11,175,844
------------
21,941,324
------------
COMPUTERS & PERIPHERALS (3.5%)
Hewlett-Packard Co. 322,000 6,752,340
VInternational Business Machines Corp. 150,800 14,865,864
------------
21,618,204
------------
CONTAINERS & PACKAGING (1.4%)
Smurfit-Stone Container Corp. (a) 456,700 8,531,156
------------
DIVERSIFIED FINANCIAL SERVICES (6.1%)
VCitigroup, Inc. 476,697 22,967,262
VJPMorgan Chase & Co. 386,840 15,090,628
------------
38,057,890
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (7.6%)
ALLTEL Corp. 104,800 6,158,048
BellSouth Corp. 263,200 7,314,328
SBC Communications, Inc. 344,800 8,885,496
VSprint Corp. 572,400 14,224,140
Verizon Communications, Inc. 270,700 10,966,057
------------
47,548,069
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (6.8%)
ENSCO International, Inc. 245,600 $ 7,795,344
Pride International, Inc. (a) 365,600 7,509,424
VRowan Cos., Inc. (a) 468,200 12,126,380
VTransocean, Inc. (a) 356,900 15,128,991
------------
42,560,139
------------
FOOD & STAPLES RETAILING (3.1%)
CVS Corp. 236,500 10,659,055
Kroger Co. (The) (a) 500,100 8,771,754
------------
19,430,809
------------
FOOD PRODUCTS (4.8%)
Cadbury Schweppes PLC ADR (e) 291,600 10,993,320
VGeneral Mills, Inc. 259,700 12,909,687
Kraft Foods, Inc. Class A (c) 174,900 6,228,189
------------
30,131,196
------------
HEALTH CARE PROVIDERS & SERVICES (1.0%)
HCA, Inc. 161,600 6,457,536
------------
HOUSEHOLD PRODUCTS (2.0%)
VKimberly-Clark Corp. 188,900 12,431,509
------------
INSURANCE (6.7%)
Allstate Corp. (The) 172,400 8,916,528
American International Group, Inc. 80,400 5,279,868
Hartford Financial Services Group, Inc. (The) 142,700 9,890,537
Prudential Financial, Inc. 167,000 9,178,320
St. Paul Travelers Cos., Inc. (The) (c) 233,910 8,671,043
------------
41,936,296
------------
IT SERVICES (1.7%)
Computer Sciences Corp. (a) 192,000 10,823,040
------------
MACHINERY (1.4%)
Navistar International Corp. (a) 196,800 8,655,264
------------
MEDIA (1.0%)
Time Warner, Inc. (a) 325,100 6,319,944
------------
METALS & MINING (1.5%)
Alcoa, Inc. 289,028 9,081,260
------------
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term investments.
May be subject to change daily.
</Table>
M- 226 MainStay VP Value Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
OIL & GAS (6.2%)
ChevronTexaco Corp. 218,086 $ 11,451,696
ConocoPhillips 88,000 7,641,040
ExxonMobil Corp. 233,500 11,969,210
Kerr-McGee Corp. 128,600 7,431,794
------------
38,493,740
------------
PAPER & FOREST PRODUCTS (2.3%)
Bowater, Inc. 147,800 6,498,766
International Paper Co. 189,700 7,967,400
------------
14,466,166
------------
PHARMACEUTICALS (4.0%)
Bristol-Myers Squibb Co. (c) 373,900 9,579,318
Pfizer, Inc. 370,100 9,951,989
Pharmaceutical Holders Trust (c)(d) 75,800 5,509,902
------------
25,041,209
------------
ROAD & RAIL (0.5%)
Burlington Northern Santa Fe Corp. 67,700 3,202,887
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.4%)
Advanced Micro Devices, Inc. (a) 110,100 2,424,402
------------
SOFTWARE (0.9%)
BMC Software, Inc. (a) 308,400 5,736,240
------------
SPECIALTY RETAIL (1.9%)
Gap, Inc. (The) 562,300 11,875,776
------------
THRIFTS & MORTGAGE FINANCE (1.6%)
PMI Group, Inc. (The) 75,600 3,156,300
Washington Mutual, Inc. 161,500 6,828,220
------------
9,984,520
------------
Total Common Stock (Cost $470,003,994) 547,059,897
------------
CONVERTIBLE PREFERRED STOCKS (2.6%)
- ------------------------------------------------------------------------------
CAPITAL MARKETS (1.1%)
Goldman Sachs Group, Inc. (The)
2.50% Series BSKT (f) 70,000 7,010,640
------------
</Table>
<Table>
<Caption>
SHARES VALUE
PHARMACEUTICALS (1.5%)
Goldman Sachs Group, Inc. (The)
2.875% Series BSKT (f) 90,000 $ 9,254,790
------------
Total Convertible Preferred Stocks (Cost
$16,021,477) 16,265,430
------------
INVESTMENT COMPANY (1.6%)
- ------------------------------------------------------------------------------
CAPITAL MARKETS (1.6%)
iShares Russel 1000 Value Index Fund (d) 151,000 10,028,507
------------
Total Investment Company (Cost $9,411,900) 10,028,507
------------
<Caption>
NUMBER OF
CONTRACTS (G) VALUE
PURCHASED CALL OPTIONS (0.0%)(B)
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.0%) (B)
ALLTEL Corp.
Strike Price $60.00
Expire 1/22/05 (a)(h) 678 33,900
Strike Price $60.00
Expire 4/16/05 (a)(h) 457 77,690
------------
111,590
------------
PHARMACEUTICALS (0.0%) (B)
Pfizer, Inc.
Strike Price $27.50
Expire 1/22/05 (a)(h) 2,291 103,095
------------
Total Purchased Call Options (Cost $163,034) 214,685
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (13.3%)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (8.5%)
AIG Funding, Inc. 2.31%, due 1/6/05 $ 2,535,000 2,534,186
American Express Credit Corp. 2.26%, due 1/11/05 6,000,000 5,996,232
American General Finance Corp. 2.30%, due 1/5/05 10,000,000 9,997,443
Chevron Texaco Funding Corp. 2.25%, due 1/12/05 5,000,000 4,996,562
General Electric Capital Corp. 2.28%, due 1/27/05 6,000,000 5,990,117
Merrill Lynch & Co., Inc. 2.28%, due 1/24/05 6,000,000 5,991,258
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 227
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (13.3%) (CONTINUED)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Morgan Stanley & Co. 2.32%, due 1/5/05 $ 6,090,000 $ 6,088,428
UBS Finance (Delaware) LLC 2.18%, due 1/3/05 5,320,000 5,319,356
USAA Capital Corp. 2.27%, due 1/6/05 6,000,000 5,998,108
------------
Total Commercial Paper (Cost $52,911,690) 52,911,690
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.00%) (B)
AIM Institutional Funds Group (i) 145,383 145,383
------------
Total Investment Company (Cost $145,383) 145,383
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (0.2%)
Banc of America Securities LLC 2.3923.%, due
1/3/05 (i) $ 1,100,000 1,100,000
------------
Total Master Note (Cost $1,100,000) 1,100,000
------------
REPURCHASE AGREEMENTS (4.6%)
Credit Suisse First Boston LLC
2.3624%, dated 12/31/04 due 1/3/05
Proceeds at Maturity $3,300,650 (i)
(Collateralized by Various Bonds with a
Principal Amount of $3,931,894 and a Market
Value of $3,366,020) 3,300,000 3,300,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
Deutsche Bank Securities, Inc. 2.3725%, dated
12/31/04
due 1/3/05
Proceeds at Maturity $9,501,878 (i)
(Collateralized by Various Bonds with a
Principal Amount of $16,244,060 and a Market
Value of $9,690,000) (j) $ 9,500,000 $ 9,500,000
Dresdner Kleinwort Wasserstein Securities LLC
2.3824%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $7,501,489 (i)
(Collateralized by Various Bonds with a
Principal Amount of $7,860,257 and a Market
Value of $7,875,308) (j) 7,500,000 7,500,000
Lehman Brothers, Inc.
2.3626%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $865,170 (i)
(Collateralized by Various Bonds with a
Principal Amount of $1,176,885 and a Market
Value of $882,285) (j) 865,000 865,000
Merrill Lynch & Co., Inc. 2.3925%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $2,400,479 (i)
(Collateralized by Various Bonds with a
Principal Amount of $2,368,701 and a Market
Value of $2,520,004) (j) 2,400,000 2,400,000
</Table>
M- 228 MainStay VP Value Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co., Inc. 2.3625%, dated 12/31/04
due 1/3/05
Proceeds at Maturity $5,101,004 (i)
(Collateralized by Various Bonds with a
Principal Amount of $8,947,451 and a Market
Value of $5,379,114) (j) $ 5,100,000 $ 5,100,000
------------
Total Repurchase Agreements (Cost $28,665,000) 28,665,000
------------
Total Short-Term Investments (Cost $82,822,073) 82,822,073
------------
Total Investments
(Cost $578,422,478) (k) 105.2% 656,390,592(l)
Liabilities in Excess of Cash & Other Assets (5.2) (32,841,826)
=========== ============
Net Assets 100.0% $623,548,766
=========== ============
<Caption>
NUMBER OF
CONTRACTS (G) VALUE
WRITTEN CALL OPTION (-0.0%)(B)
- --------------------------------------------------------------------------------
CAPITAL MARKETS (-0.0%) (B)
Goldman Sachs Group, Inc. (The) Strike Price
$110.00 Expire 1/22/05 (a)(h) (310) (6,200)
------------
Total Written Call Option
(Premium received ($51,769)) $ (6,200)
============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one-tenth of a percent.
(c) Represents security, or a portion thereof, which is out
on loan.
(d) Exchange Traded Fund-represents a basket of securities
that are traded on an exchange.
(e) ADR-American Depositary Receipt.
(f) Synthetic Convertible-an equity linked security issued
by an entity other than the issuer of the underlying
equity instrument.
(g) One contract relates to 100 shares.
(h) Options can be exercised into the underlying common
stock.
(i) Represents security, or a portion thereof, purchased
with cash collateral received for securities on loan.
(j) Collateralization from various bonds on repurchase
agreements may include collateralized mortgage
obligations, asset-backed securities, mortgage-backed
securities or other long-term corporate bonds.
(k) The cost for federal income tax purposes is
$580,425,436.
(l) At December 31, 2004 net unrealized appreciation was
$75,965,156, 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 $78,343,167 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $2,378,011.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 229
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value (identified
cost $578,422,478) including $28,780,145
market value of securities loaned $656,390,592
Cash 3,573
Receivables:
Fund shares sold 716,571
Dividends and interest 596,920
Other assets 1,234
------------
Total assets 657,708,890
------------
LIABILITIES:
Securities lending collateral 29,910,384
Written call option, at value
(premium received $51,769) 6,200
Payables:
Investment securities purchased 3,768,650
Adviser 187,215
Administrator 104,008
Shareholder communication 87,994
Fund shares redeemed 29,800
NYLIFE Distributors 11,420
Custodian 10,737
Accrued expenses 43,716
------------
Total liabilities 34,160,124
------------
Net assets $623,548,766
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 344,469
Service Class 34,292
Additional paid-in capital 570,632,532
Accumulated undistributed net
investment income 52,502
Accumulated net realized loss on investments
and written option transactions (25,528,712)
Net unrealized appreciation on investments and
written option transactions 78,013,683
------------
Net assets $623,548,766
============
INITIAL CLASS
Net assets applicable to outstanding shares $567,182,134
============
Shares of capital stock outstanding 34,446,920
============
Net asset value per share outstanding $ 16.47
============
SERVICE CLASS
Net assets applicable to outstanding shares $ 56,366,632
============
Shares of capital stock outstanding 3,429,242
============
Net asset value per share outstanding $ 16.44
============
</Table>
M- 230 MainStay VP Value Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 9,584,844
Interest 522,549
Income from securities loaned -- net 37,340
-----------
Total Income 10,144,733
-----------
EXPENSES:
Advisory 1,835,097
Administration 1,019,498
Shareholder communication 254,757
Distribution and service -- Service Class 89,863
Professional 77,475
Custodian 53,994
Directors 34,234
Portfolio pricing 4,091
Miscellaneous 34,830
-----------
Total expenses 3,403,839
Reimbursement of advisory fee (12,191)
-----------
Net Expenses 3,391,648
-----------
Net investment income 6,753,085
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND WRITTEN OPTION TRANSACTIONS:
Net realized gain from:
Security transactions 31,207,037
Written option transactions 154,459
-----------
Net realized gain on investments 31,361,496
-----------
Net change in unrealized appreciation on:
Security transactions 23,318,536
Written option transactions (13,443)
-----------
Net change in unrealized appreciation on
investments and written option transactions 23,305,093
-----------
Net realized and unrealized gain on investments
and written option transactions 54,666,589
-----------
Net increase in net assets resulting from
operations $61,419,674
===========
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 231
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 6,753,085 $ 5,735,009
Net realized gain (loss) on
investments and written option
transactions 31,361,496 (5,013,300)
Net change in unrealized
appreciation (depreciation) on
investments and written option
transactions 23,305,093 90,298,226
---------------------------
Net increase in net assets
resulting from operations 61,419,674 91,019,935
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (6,179,109) (5,659,716)
Service Class (522,096) (186,298)
---------------------------
Total dividends to shareholders (6,701,205) (5,846,014)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 136,542,811 30,675,066
Service Class 38,934,480 13,819,659
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Initial Class 6,179,109 5,659,716
Service Class 522,096 186,298
---------------------------
182,178,496 50,340,739
Cost of shares redeemed:
Initial Class (45,197,455) (33,249,110)
Service Class (2,166,910) (82,177)
---------------------------
(47,364,365) (33,331,287)
Increase in net assets derived
from capital share transactions 134,814,131 17,009,452
---------------------------
Net increase in net assets 189,532,600 102,183,373
NET ASSETS:
Beginning of year 434,016,166 331,832,793
---------------------------
End of year $623,548,766 $434,016,166
===========================
Accumulated undistributed net
investment income at end of year $ 52,502 $ 622
===========================
</Table>
M- 232 MainStay VP Value Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
---------------------------------------------------- ---------------------------
JUNE 4,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 14.96 $ 11.91 $ 15.35 $ 16.21 $ 15.00 $ 14.95 $ 12.81
-------- -------- -------- -------- -------- ------- -------
Net investment income 0.18 0.21(b) 0.20 0.23 0.20 0.15 0.10(b)
Net realized and unrealized
gain (loss) on investments 1.51 3.04 (3.43) (0.15) 1.73 1.49 2.23
-------- -------- -------- -------- -------- ------- -------
Total from investment
operations 1.69 3.25 (3.23) 0.08 1.93 1.64 2.33
-------- -------- -------- -------- -------- ------- -------
Less dividends and
distributions:
From net investment income (0.18) (0.20) (0.19) (0.23) (0.21) (0.15) (0.19)
From net realized gain on
investments -- -- (0.02) (0.71) (0.51) -- --
-------- -------- -------- -------- -------- ------- -------
Total dividends and
distributions (0.18) (0.20) (0.21) (0.94) (0.72) (0.15) (0.19)
-------- -------- -------- -------- -------- ------- -------
Net asset value at end of
period $ 16.47 $ 14.96 $ 11.91 $ 15.35 $ 16.21 $ 16.44 $ 14.95
======== ======== ======== ======== ======== ======= =======
Total investment return 11.28% 27.37% (21.05%) 0.40% 12.89% 11.01% 18.14%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.34% 1.60% 1.43% 1.53% 1.33% 1.09% 1.35%+(d)
Expenses 0.65% 0.66% 0.65% 0.64% 0.64% 0.90% 0.91%+
Portfolio turnover rate 81% 62% 64% 70% 90% 81% 62%
Net assets at end of period
(in 000's) $567,182 $418,992 $331,833 $404,174 $338,596 $56,367 $15,024
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Total return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 233
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (99.0%)+
- --------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.2%)
Boeing Co. (The) 17,927 $ 928,081
Northrop Grumman Corp. 3,448 187,433
-----------
1,115,514
-----------
AIR FREIGHT & LOGISTICS (1.1%)
FedEx Corp. 2,441 240,414
United Parcel Service, Inc. Class B 9,299 794,693
-----------
1,035,107
-----------
AIRLINES (0.1%)
Delta Air Lines, Inc. (a) 2,447 18,304
Southwest Airlines Co. 7,265 118,274
-----------
136,578
-----------
AUTO COMPONENTS (0.3%)
Magna International, Inc. Class A 3,919 323,513
-----------
AUTOMOBILES (2.6%)
VFord Motor Co. 168,922 2,473,018
-----------
BEVERAGES (0.5%)
Adolph Coors Co. Class B 6,676 505,173
-----------
BIOTECHNOLOGY (0.1%)
Amgen, Inc. (a) 1,850 118,678
-----------
CAPITAL MARKETS (0.3%)
Raymond James Financial, Inc. 9,149 283,436
-----------
CHEMICALS (0.4%)
Monsanto Co. 6,012 333,967
-----------
COMMERCIAL BANKS (9.4%)
VBank of America Corp. 95,504 4,487,733
Comerica, Inc. 2,673 163,106
VNational City Corp. 61,984 2,327,499
Wachovia Corp. 22,088 1,161,829
Wells Fargo & Co. 12,940 804,221
-----------
8,944,388
-----------
COMMERCIAL SERVICES & SUPPLIES (1.3%)
Cendant Corp. 51,580 1,205,940
-----------
COMMUNICATIONS EQUIPMENT (1.7%)
Aspect Communications Corp. (a) 1,243 13,847
Cisco Systems, Inc. (a) 20,664 398,815
CommScope, Inc. (a) 483 9,129
</Table>
<Table>
<Caption>
SHARES VALUE
COMMUNICATIONS EQUIPMENT (CONTINUED)
Harris Corp. 662 $ 40,905
Motorola, Inc. 68,215 1,173,298
-----------
1,635,994
-----------
COMPUTERS & PERIPHERALS (4.5%)
Hewlett-Packard Co. 58,691 1,230,750
VInternational Business Machines Corp. 30,976 3,053,614
-----------
4,284,364
-----------
CONSUMER FINANCE (1.0%)
Capital One Financial Corp. 11,545 972,204
-----------
DIVERSIFIED FINANCIAL SERVICES (1.4%)
JPMorgan Chase & Co. 32,966 1,286,004
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES (3.9%)
ALLTEL Corp. 13,382 786,326
AT&T Corp. 7,686 146,495
BellSouth Corp. 30,639 851,458
SBC Communications, Inc. 27,697 713,752
Sprint Corp. 11,760 292,236
Verizon Communications, Inc. 23,861 966,609
-----------
3,756,876
-----------
ELECTRIC UTILITIES (3.5%)
American Electric Power Co., Inc. 4,971 170,704
CenterPoint Energy, Inc. 33,460 378,098
Exelon Corp. 8,559 377,195
FirstEnergy Corp. 46,072 1,820,305
FPL Group, Inc. 2,631 196,667
Great Plains Energy, Inc. 3,522 106,646
OGE Energy Corp. 9,644 255,663
TXU Corp. 959 61,913
-----------
3,367,191
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.7%)
Arrow Electronics, Inc. (a) 10,236 248,735
Ingram Micro, Inc. Class A (a) 17,659 367,307
Tech Data Corp. (a) 1,750 79,450
-----------
695,492
-----------
FOOD & STAPLES RETAILING (1.5%)
SUPERVALU, Inc. 41,586 1,435,549
-----------
FOOD PRODUCTS (1.8%)
Corn Products International, Inc. 6,738 360,887
Pilgrim's Pride Corp. 6,792 208,379
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term
investments. May be subject to change daily.
</Table>
MainStay VP American Century
M- 234 Income & Growth Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------
FOOD PRODUCTS (CONTINUED)
Sanderson Farms, Inc. 3,361 $ 145,464
Tyson Foods, Inc. Class A 53,257 979,929
-----------
1,694,659
-----------
GAS UTILITIES (0.8%)
Nicor, Inc. 18,912 698,609
UGI Corp. 1,138 46,556
-----------
745,165
-----------
HEALTH CARE EQUIPMENT & SUPPLIES (1.1%)
Applera Corp.-Applied Biosystems Group 19,718 412,303
Becton, Dickinson & Co. 10,306 585,381
-----------
997,684
-----------
HEALTH CARE PROVIDERS & SERVICES (3.9%)
AmerisourceBergen Corp. 15,490 908,953
Cardinal Health, Inc. 7,526 437,637
VCIGNA Corp. 28,375 2,314,549
Humana, Inc. (a) 3,157 93,731
-----------
3,754,870
-----------
HOTELS, RESTAURANTS & LEISURE (1.5%)
McDonald's Corp. 43,777 1,403,491
-----------
HOUSEHOLD DURABLES (1.0%)
American Greetings Corp. Class A 5,360 135,876
Black & Decker Corp. (The) 4,650 410,734
Newell Rubbermaid, Inc. 4,487 108,541
Stanley Works (The) 633 31,011
Whirlpool Corp. 4,368 302,309
-----------
988,471
-----------
HOUSEHOLD PRODUCTS (1.6%)
Kimberly-Clark Corp. 10,836 713,117
Procter & Gamble Co. (The) 14,253 785,055
-----------
1,498,172
-----------
INDUSTRIAL CONGLOMERATES (1.7%)
General Electric Co. 20,082 732,993
Tyco International Ltd. 23,738 848,396
-----------
1,581,389
-----------
INSURANCE (4.1%)
ACE, Ltd. 22,378 956,660
American Financial Group, Inc. 4,777 149,568
Aon Corp. 18,492 441,219
Fidelity National Financial, Inc. 4,262 194,646
First American Corp. 28,529 1,002,509
Hartford Financial Services Group, Inc. (The) 469 32,506
Lincoln National Corp. 8,953 417,926
</Table>
<Table>
<Caption>
SHARES VALUE
INSURANCE (CONTINUED)
St. Paul Travelers Cos., Inc. (The) 5,487 $ 203,403
W.R. Berkley Corp. 10,536 496,983
-----------
3,895,420
-----------
INTERNET SOFTWARE & SERVICES (1.4%)
EarthLink, Inc. (a) 78,897 908,894
United Online, Inc. (a) 27,549 317,640
VeriSign, Inc. (a) 2,052 68,783
-----------
1,295,317
-----------
IT SERVICES (1.8%)
CheckFree Corp. (a) 1,860 70,829
Computer Sciences Corp. (a) 22,290 1,256,487
Sabre Holdings Corp. Class A 16,167 358,261
-----------
1,685,577
-----------
LEISURE EQUIPMENT & PRODUCTS (1.0%)
Eastman Kodak Co. 29,985 967,016
-----------
MACHINERY (0.6%)
Cummins, Inc. 4,707 394,400
SPX Corp. 5,337 213,800
-----------
608,200
-----------
MEDIA (4.5%)
Regal Entertainment Group Class A 20,626 427,990
Time Warner, Inc. (a) 95,496 1,856,442
Viacom, Inc. Class B 10,042 365,428
Walt Disney Co. (The) 58,356 1,622,297
-----------
4,272,157
-----------
METALS & MINING (0.9%)
Phelps Dodge Corp. 7,209 713,114
United States Steel Corp. 3,132 160,515
-----------
873,629
-----------
MULTILINE RETAIL (2.6%)
Federated Department Stores, Inc. 13,332 770,456
Kmart Holding Corp. (a) 4,813 476,246
May Department Stores Co. 43,289 1,272,697
-----------
2,519,399
-----------
MULTI-UTILITIES & UNREGULATED POWER (0.5%)
Constellation Energy Group, Inc. 7,209 315,106
Duke Energy Corp. 1,673 42,377
National Fuel Gas Co. 2,745 77,793
-----------
435,276
-----------
OFFICE ELECTRONICS (0.1%)
Xerox Corp. (a) 3,464 58,923
-----------
OIL & GAS (8.1%)
VChevronTexaco Corp. 84,005 4,411,103
ConocoPhillips 9,010 782,338
ExxonMobil Corp. 22,693 1,163,243
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 235
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------
OIL & GAS (CONTINUED)
Occidental Petroleum Corp. 6,769 $ 395,039
Sunoco, Inc. 11,152 911,230
-----------
7,662,953
-----------
PAPER & FOREST PRODUCTS (2.1%)
Georgia-Pacific Corp. 14,888 558,002
Louisiana-Pacific Corp. 31,291 836,721
Weyerhaeuser Co. 9,022 606,459
-----------
2,001,182
-----------
PHARMACEUTICALS (9.3%)
Bristol-Myers Squibb Co. 52,224 1,337,979
VJohnson & Johnson 50,857 3,225,351
Kos Pharmaceuticals, Inc. (a) 6,694 251,962
Merck & Co., Inc. 58,849 1,891,407
VPfizer, Inc. 80,656 2,168,840
-----------
8,875,539
-----------
REAL ESTATE (2.4%)
Apartment Investment & Management Co. Class A 1,907 73,496
CBL & Associates Properties, Inc. 17,052 1,301,920
Colonial Properties Trust 6,245 245,241
Equity Office Properties Trust 13,876 404,069
Trizec Properties, Inc. 8,566 162,069
Vornado Realty Trust 1,200 91,356
-----------
2,278,151
-----------
ROAD & RAIL (0.5%)
Burlington Northern Santa Fe Corp. 3,253 153,899
CSX Corp. 1,783 71,463
Norfolk Southern Corp. 3,257 117,871
Union Pacific Corp. 2,170 145,932
-----------
489,165
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.1%)
Freescale Semiconductor, Inc. Class B (a) 7,525 138,159
VIntel Corp. 120,393 2,815,992
-----------
2,954,151
-----------
SOFTWARE (2.0%)
Microsoft Corp. 71,021 1,896,971
-----------
SPECIALTY RETAIL (0.5%)
Barnes & Noble, Inc. (a) 11,526 371,944
Charming Shoppes, Inc. (a) 3,961 37,114
GameStop Corp. Class B (a) 4,480 100,397
-----------
509,455
-----------
</Table>
<Table>
<Caption>
SHARES VALUE
THRIFTS & MORTGAGE FINANCE (2.2%)
VCountrywide Financial Corp. 51,560 $ 1,908,236
Flagstar Bancorp, Inc. 2,574 58,172
Fremont General Corp. 4,369 110,011
-----------
2,076,419
-----------
TOBACCO (2.1%)
Altria Group, Inc. 16,340 998,374
Reynolds American, Inc. 13,275 1,043,415
-----------
2,041,789
-----------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
Nextel Communications, Inc. Class A (a) 8,375 251,250
-----------
Total Common Stocks
(Cost $86,140,458) 94,220,826
-----------
CONVERTIBLE PREFERRED STOCKS (0.4%)
- --------------------------------------------------------------------------
AUTOMOBILES (0.2%)
Ford Motor Co. Capital Trust II
6.5% 3,150 166,289
General Motors Corp.
5.25% Series B 3,691 85,151
-----------
251,440
-----------
OFFICE ELECTRONICS (0.2%)
Xerox Corp.
6.25% 1,250 184,762
-----------
Total Convertible Preferred Stocks
(Cost $384,871) 436,202
-----------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (0.5%)
- ---------------------------------------------------------------------------
TIME DEPOSIT (0.5%)
Bank of New York Cayman
1.50% due 1/3/05 $453,000 453,000
-----------
Total Short-Term Investment
(Cost $453,000) 453,000
-----------
</Table>
MainStay VP American Century
M- 236 Income & Growth Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
SHARES VALUE
WARRANTS (0.0%) (B)
- ---------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
Lucent Technologies, Inc. (a) 284 $ 449
-----------
Total Warrants
(Cost $0) 449
-----------
Total Investments
(Cost $86,978,329) (c) 99.9% 95,110,477(d)
Cash and Other Assets,
Less Liabilities 0.1 88,360
-------- -----------
Net Assets 100.0% $95,198,837
======== ===========
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) The cost for federal income tax purposes is $88,120,599.
(d) At December 31, 2004 net unrealized appreciation was
$6,989,878, 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 $11,113,415 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $4,123,537.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 237
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $86,978,329) $95,110,477
Cash 5,993
Receivables:
Dividends and interest 140,469
Fund shares sold 58,859
Other assets 218
-----------
Total assets 95,316,016
-----------
LIABILITIES:
Payables:
Adviser 39,349
Professional 28,093
Administrator 15,739
Shareholder communication 13,931
Custodian 8,109
Fund shares redeemed 4,999
NYLIFE Distributors 3,660
Accrued expenses 3,299
-----------
Total liabilities 117,179
-----------
Net assets $95,198,837
===========
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share) 200
million shares authorized
Initial Class $ 66,734
Service Class 16,312
Additional paid-in capital 92,105,481
Accumulated net realized loss
on investments (5,121,838)
Net unrealized appreciation
on investments 8,132,148
-----------
Net assets $95,198,837
===========
INITIAL CLASS
Net assets applicable to outstanding shares $76,525,817
===========
Shares of capital stock outstanding 6,673,378
===========
Net asset value per share outstanding $ 11.47
===========
SERVICE CLASS
Net assets applicable to outstanding shares $18,673,020
===========
Shares of capital stock outstanding 1,631,223
===========
Net asset value per share outstanding $ 11.45
===========
</Table>
MainStay VP American Century
M- 238 Income & Growth Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 2,304,181
Interest 1,474
-----------
Total income 2,305,655
-----------
EXPENSES:
Advisory 409,074
Administration 163,630
Custodian 47,638
Shareholder communication 44,089
Professional 43,384
Distribution and service -- Service Class 24,708
Directors 7,902
Portfolio pricing 6,351
Miscellaneous 14,854
-----------
Total expenses 761,630
-----------
Net investment income 1,544,025
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments 7,591,845
Net change in unrealized appreciation on
investments 1,028,852
-----------
Net realized and unrealized gain
on investments 8,620,697
-----------
Net increase in net assets resulting from
operations $10,164,722
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $82.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 239
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 1,544,025 $ 918,919
Net realized gain (loss) on
investments 7,591,845 (1,967,874)
Net change in unrealized
appreciation (depreciation) on
investments 1,028,852 16,920,056
---------------------------
Net increase in net assets resulting
from operations 10,164,722 15,871,101
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (1,258,248) (871,258)
Service Class (279,124) (48,213)
---------------------------
Total dividends to shareholders (1,537,372) (919,471)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 7,880,743 11,256,503
Service Class 13,725,900 3,871,091
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Initial Class 1,258,248 871,258
Service Class 279,124 48,213
---------------------------
23,144,015 16,047,065
Cost of shares redeemed:
Initial Class (9,559,375) (15,357,671)
Service Class (709,479) (97,938)
---------------------------
(10,268,854) (15,455,609)
---------------------------
Increase in net assets derived
from
capital share transactions 12,875,161 591,456
---------------------------
Net increase in net assets 21,502,511 15,543,086
NET ASSETS:
Beginning of year 73,696,326 58,153,240
---------------------------
End of year $ 95,198,837 $ 73,696,326
===========================
</Table>
MainStay VP American Century
M- 240 Income & Growth Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
---------------------------------------------------- ---------------------------
JUNE 13,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 10.35 $ 8.14 $ 10.24 $ 11.28 $ 12.74 $ 10.34 $ 9.26
------- ------- ------- ------- ------- ------- ------
Net investment income 0.19(c) 0.14(b) 0.10 0.08 0.07 0.18(c) 0.07(b)
Net realized and unrealized
gain (loss) on investments 1.12 2.20 (2.10) (1.04) (1.44) 1.11 1.14
------- ------- ------- ------- ------- ------- ------
Total from investment
operations 1.31 2.34 (2.00) (0.96) (1.37) 1.29 1.21
------- ------- ------- ------- ------- ------- ------
Less dividends and
distributions:
From net investment income (0.19) (0.13) (0.10) (0.08) (0.07) (0.18) (0.13)
From net realized gain on
investments -- -- -- -- (0.02) -- --
------- ------- ------- ------- ------- ------- ------
Total dividends and
distributions (0.19) (0.13) (0.10) (0.08) (0.09) (0.18) (0.13)
------- ------- ------- ------- ------- ------- ------
Net asset value at end of
period $ 11.47 $ 10.35 $ 8.14 $ 10.24 $ 11.28 $ 11.45 $10.34
======= ======= ======= ======= ======= ======= ======
Total investment return 12.65% 28.69% (19.52%) (8.50%) (10.73%) 12.38% 13.10%(d)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.92%(c) 1.51% 1.09% 0.81% 0.66% 1.67%(c) 1.26%+(e)
Expenses 0.90% 0.94% 0.92% 0.88% 0.90% 1.15% 1.19%+
Portfolio turnover rate 72% 79% 71% 61% 59% 72% 79%
Net assets at end of period
(in 000's) $76,526 $69,598 $58,153 $71,000 $75,189 $18,673 $4,099
</Table>
<Table>
(a) Commencement of Operations.
(b) Per share data based on average shares outstanding during
the period.
(c) Included in net investment income per share and the ratio of
net investment income to average net assets are $0.05 per
share and 0.26%, respectively, resulting from a special
one-time dividend from Microsoft Corp. that paid $3.00 per
share.
(d) Total return is not annualized.
(e) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 241
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (98.2%)+
- ----------------------------------------------------------------------------
AEROSPACE & DEFENSE (4.0%)
Boeing Co. (The) 32,000 $ 1,656,640
VUnited Technologies Corp. 20,500 2,118,675
-----------
3,775,315
-----------
AUTO COMPONENTS (0.5%)
Johnson Controls, Inc. 7,900 501,176
-----------
BEVERAGES (0.5%)
Coca-Cola Co. (The) 10,900 453,767
-----------
CAPITAL MARKETS (6.0%)
VGoldman Sachs Group, Inc. (The) 19,100 1,987,164
Merrill Lynch & Co., Inc. 23,400 1,398,618
VMorgan Stanley 40,600 2,254,112
-----------
5,639,894
-----------
CHEMICALS (1.5%)
Dow Chemical Co. (The) 18,400 910,984
E.I. Du pont de Nemours & Co. 10,000 490,500
-----------
1,401,484
-----------
COMMERCIAL BANKS (9.0%)
VBank of America Corp. 65,812 3,092,506
PNC Financial Services Group, Inc. (The) 8,400 482,496
SunTrust Banks, Inc. 6,400 472,832
U.S. Bancorp 42,500 1,331,100
VWachovia Corp. 40,900 2,151,340
WellsFargo & Co. 14,400 894,960
-----------
8,425,234
-----------
COMMUNICATIONS EQUIPMENT (1.0%)
Nokia Corp. ADR (b) 59,000 924,530
-----------
COMPUTERS & PERIPHERALS (1.5%)
Hewlett-Packard Co. 22,700 476,019
International Business Machines Corp. 9,300 916,794
-----------
1,392,813
-----------
DIVERSIFIED FINANCIAL SERVICES (6.3%)
VCitigroup, Inc. 70,346 3,389,270
VJPMorgan Chase & Co. 65,400 2,551,254
-----------
5,940,524
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES (4.8%)
ALLTEL Corp. 13,900 816,764
Sprint Corp. (FON Group) 68,200 1,694,770
Verizon Communications, Inc. 48,782 1,976,159
-----------
4,487,693
-----------
ELECTRIC UTILITIES (4.3%)
Dominion Resources, Inc. 6,900 467,406
Edison International 15,900 509,277
Entergy Corp. 12,100 817,839
Exelon Corp. 22,000 969,540
PG&E Corp. (a) 14,500 482,560
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRIC UTILITIES (CONTINUED)
PPL Corp. 9,300 $ 495,504
TXU Corp. 4,400 284,064
-----------
4,026,190
-----------
ELECTRICAL EQUIPMENT (0.5%)
Emerson Electric Co. 7,000 490,700
-----------
ENERGY EQUIPMENT & SERVICES (0.9%)
Schlumberger Ltd. 13,200 883,740
-----------
FOOD & STAPLES RETAILING (0.7%)
Safeway, Inc. (a) 32,900 649,446
-----------
FOOD PRODUCTS (1.3%)
General Mills, Inc. 10,000 497,100
Kraft Foods, Inc. Class A 20,700 737,127
-----------
1,234,227
-----------
HEALTH CARE EQUIPMENT & SUPPLIES (0.9%)
Boston Scientific Corp. (a) 24,000 853,200
-----------
HEALTH CARE PROVIDERS & SERVICES (2.4%)
Caremark Rx, Inc. (a) 20,200 796,486
Medco Health Solutions, Inc. (a) 15,200 632,320
PacifiCare Health Systems, Inc. (a) 4,200 237,384
Wellpoint, Inc. (a) 5,500 632,500
-----------
2,298,690
-----------
HOTELS, RESTAURANTS & LEISURE (1.0%)
McDonald's Corp. 29,900 958,594
-----------
HOUSEHOLD DURABLES (0.9%)
Koninklijke Philips Electronics NV ADR (b) 17,200 455,800
Newell Rubbermaid, Inc. 17,600 425,744
-----------
881,544
-----------
HOUSEHOLD PRODUCTS (1.5%)
Colgate-Palmolive Co. 18,300 936,228
Kimberly-Clark Corp. 6,800 447,508
-----------
1,383,736
-----------
INDUSTRIAL CONGLOMERATES (5.5%)
VGeneral Electric Co. 74,400 2,715,600
VTyco International Ltd. 70,000 2,501,800
-----------
5,217,400
-----------
INSURANCE (5.8%)
ACE, Ltd. 5,700 243,675
Allstate Corp. (The) 10,700 553,404
American International Group, Inc. 18,458 1,212,137
Genworth Financial, Inc. Class A 34,500 931,500
Hartford Financial Services Group, Inc. (The) 12,300 852,513
Prudential Financial, Inc. 30,000 1,648,800
-----------
5,442,029
-----------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's top 10 largest holdings, excluding
short-term investments. May be subject to change daily.
</Table>
MainStay VP Dreyfus Large Company
M- 242 Value Portfolio The notes to the financial statements are an integral
part of, and should be read in conjunction with, the financial statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------
IT SERVICES (3.1%)
Automatic Data Processing, Inc. 30,000 $ 1,330,500
DST Systems, Inc. (a) 20,200 1,052,824
SunGard Data Systems, Inc. (a) 17,200 487,276
-----------
2,870,600
-----------
MACHINERY (0.6%)
Eaton Corp. 8,400 607,824
-----------
MEDIA (9.3%)
Clear Channel Communications, Inc. 43,800 1,466,862
Liberty Media Corp. Class A (a) 131,780 1,446,944
Liberty Media International, Inc. Class A (a) 8,804 407,009
News Corp. Ltd. (The) ADR (b) 40,400 753,864
Omnicom Group, Inc. 21,000 1,770,720
Time Warner, Inc. (a) 75,700 1,471,608
Viacom, Inc. Class B 38,300 1,393,737
-----------
8,710,744
-----------
MULTILINE RETAIL (0.5%)
Dollar General Corp. 22,400 465,248
-----------
OFFICE ELECTRONICS (0.3%)
Xerox Corp. (a) 15,300 260,253
-----------
OIL & GAS (10.5%)
Apache Corp. 11,600 586,612
BP PLC ADR (b) 21,800 1,273,120
ChevronTexaco Corp. 20,400 1,071,204
ConocoPhillips 18,000 1,562,940
VExxonMobil Corp. 80,682 4,135,759
Total SA ADR (b) 11,400 1,252,176
-----------
9,881,811
-----------
PAPER & FOREST PRODUCTS (1.5%)
Bowater, Inc. 10,600 466,082
International Paper Co. 22,400 940,800
-----------
1,406,882
-----------
PHARMACEUTICALS (0.9%)
Pfizer, Inc. 14,200 381,838
Schering-Plough Corp. 23,800 496,944
-----------
878,782
-----------
ROAD & RAIL (0.3%)
Union Pacific Corp. 3,600 242,100
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.5%)
Fairchild Semiconductor International, Inc. (a) 27,800 452,028
-----------
SOFTWARE (3.2%)
Microsoft Corp. 70,474 1,882,361
Oracle Corp. (a) 81,300 1,115,436
-----------
2,997,797
-----------
</Table>
<Table>
<Caption>
SHARES VALUE
SPECIALTY RETAIL (0.7%)
Advanced Auto Parts, Inc. (a) 14,000 $ 611,520
-----------
TEXTILES, APPAREL & LUXURY GOODS (0.4%)
Jones Apparel Group, Inc. 11,500 420,555
-----------
THRIFTS & MORTGAGE FINANCE (4.3%)
Countrywide Financial Corp. 13,800 510,738
Fannie Mae 11,200 797,552
Freddie Mac 20,100 1,481,370
PMI Group, Inc. (The) 28,900 1,206,575
-----------
3,996,235
-----------
TOBACCO (0.8%)
Altria Group, Inc. 12,500 763,750
-----------
WIRELESS TELECOMMUNICATION SERVICES (0.5%)
Vodafone Group PLC ADR (b) 17,900 490,102
-----------
Total Common Stocks
(Cost $81,136,474) 92,318,157
-----------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (1.5%)
- ----------------------------------------------------------------------------
FEDERAL AGENCY (1.5%)
Federal Home Loan Bank
1.25%, due 1/3/05 $1,457,000 1,456,899
-----------
Total Short-Term Investment
(Cost $1,456,899) 1,456,899
-----------
Total Investments
(Cost $82,593,373) (c) 99.7% 93,775,056(d)
Cash and Other Assets Less Liabilities 0.3 241,819
---------- -----------
Net Assets 100.0% $94,016,875
========== ===========
</Table>
<Table>
(a) Non-income producing security.
(b) ADR -- American Depositary Receipt.
(c) The cost for federal income tax purposes is $82,727,239.
(d) At December 31, 2004 net unrealized appreciation was
$11,047,817, 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 $12,023,762 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $975,945.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 243
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value (identified
cost $82,593,373) $93,775,056
Cash 175
Receivables:
Investment securities sold 378,224
Dividends and interest 127,313
Fund shares sold 68,234
Other assets 222
-----------
Total assets 94,349,224
-----------
LIABILITIES:
Payables:
Investment securities purchased 193,097
Adviser 47,003
Fund shares redeemed 27,118
Administrator 15,668
Shareholder communication 14,330
NYLIFE Distributors 4,568
Custodian 3,043
Accrued expenses 27,522
-----------
Total liabilities 332,349
-----------
Net assets $94,016,875
===========
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share) 200
million shares authorized
Initial Class $ 63,710
Service Class 20,045
Additional paid-in capital 87,071,478
Accumulated undistributed net investment income 7,148
Accumulated net realized loss on investments (4,327,189)
Net unrealized appreciation on investments 11,181,683
-----------
Net assets $94,016,875
===========
INITIAL CLASS
Net assets applicable to outstanding shares $71,542,784
===========
Shares of capital stock outstanding 6,371,037
===========
Net asset value per share outstanding $ 11.23
===========
SERVICE CLASS
Net assets applicable to outstanding shares $22,474,091
===========
Shares of capital stock outstanding 2,004,505
===========
Net asset value per share outstanding $ 11.21
===========
</Table>
MainStay VP Dreyfus Large Company
M- 244 Value Portfolio The notes to the financial statements are an integral
part of, and should be read in conjunction with, the financial statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 1,642,296
Interest 29,012
-----------
Total income 1,671,308
-----------
EXPENSES:
Advisory 497,312
Administration 165,771
Shareholder communication 46,270
Professional 40,085
Distribution and service -- Service Class 38,161
Custodian 18,697
Directors 7,788
Portfolio pricing 3,122
Miscellaneous 14,546
-----------
Total expenses 831,752
-----------
Net investment income 839,556
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 4,931,134
Net change in unrealized appreciation on
investments 3,361,854
-----------
Net realized and unrealized gain on investments 8,292,988
-----------
Net increase in net assets resulting from
operations $ 9,132,544
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$24,625.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 245
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 839,556 $ 462,495
Net realized gain (loss) on
investments 4,931,134 (162,229)
Net change in unrealized
appreciation on investments 3,361,854 13,469,188
---------------------------
Net increase in net assets resulting
from operations 9,132,544 13,769,454
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (663,415) (437,804)
Service Class (168,993) (36,919)
---------------------------
Total dividends to shareholders (832,408) (474,723)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 12,018,097 12,652,974
Service Class 16,607,867 5,625,147
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Initial Class 663,415 437,804
Service Class 168,993 36,919
---------------------------
29,458,372 18,752,844
Cost of shares redeemed:
Initial Class (9,953,587) (13,712,644)
Service Class (2,049,202) (49,107)
---------------------------
(12,002,789) (13,761,751)
---------------------------
Increase in net assets derived
from capital share transactions 17,455,583 4,991,093
---------------------------
Net increase in net assets 25,755,719 18,285,824
NET ASSETS:
Beginning of year 68,261,156 49,975,332
---------------------------
End of year $ 94,016,875 $ 68,261,156
===========================
Accumulated undistributed net
investment income at end of year $ 7,148 $ --
===========================
</Table>
MainStay VP Dreyfus Large Company
M- 246 Value Portfolio The notes to the financial statements are an integral
part of, and should be read in conjunction with, the financial statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------------------------------ ---------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 10.18 $ 8.01 $ 10.46 $ 11.29 $ 10.84 $ 10.17 $ 8.97
------- ------- ------- ------- ------- ------- ------
Net investment income 0.11 0.07(b) 0.06 0.07 0.07 0.09 0.03(b)
Net realized and unrealized
gain (loss) on investments 1.04 2.17 (2.45) (0.56) 0.64 1.04 1.24
------- ------- ------- ------- ------- ------- ------
Total from investment
operations 1.15 2.24 (2.39) (0.49) 0.71 1.13 1.27
------- ------- ------- ------- ------- ------- ------
Less dividends and
distributions:
From net investment income (0.10) (0.07) (0.06) (0.07) (0.07) (0.09) (0.07)
From net realized gain on
investments -- -- -- (0.27) (0.19) 0.00 --
------- ------- ------- ------- ------- ------- ------
Total dividends and
distributions (0.10) (0.07) (0.06) (0.34) (0.26) (0.09) (0.07)
------- ------- ------- ------- ------- ------- ------
Net asset value at end of
period $ 11.23 $ 10.18 $ 8.01 $ 10.46 $ 11.29 $ 11.21 $10.17
======= ======= ======= ======= ======= ======= ======
Total investment return 11.37% 27.95% (22.86%) (4.51%) 6.59% 11.09% 14.13%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.04% 0.87% 0.63% 0.80% 0.78% 0.79% 0.62%+(d)
Expenses 0.96% 0.99% 0.98% 0.99% 1.01% 1.21% 1.24%+
Portfolio turnover rate 75% 73% 65% 74% 159% 75% 73%
Net assets at end of period
(in 000's) $71,543 $62,229 $49,975 $59,220 $45,278 $22,474 $6,033
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Total Return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 247
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (99.8%)+
- ------------------------------------------------------------------------------
BEVERAGES (2.6%)
VCoca-Cola Co. (The) 92,100 $ 3,834,123
------------
BIOTECHNOLOGY (4.7%)
Amgen, Inc. (a) 41,800 2,681,470
Chiron Corp. (a) 68,350 2,278,105
Genzyme Corp. (a) 36,400 2,113,748
------------
7,073,323
------------
CAPITAL MARKETS (1.7%)
Goldman Sachs Group, Inc. (The) 24,450 2,543,778
------------
COMMUNICATIONS EQUIPMENT (5.4%)
Cisco Systems, Inc. (a) 160,300 3,093,790
Nokia Corp. ADR (b) 107,000 1,676,690
Nortel Networks Corp. (a) 410,550 1,432,819
QUALCOMM, Inc. 43,850 1,859,240
------------
8,062,539
------------
COMPUTERS & PERIPHERALS (6.4%)
VDell, Inc. (a) 172,900 7,286,006
EMC Corp. (a) 147,800 2,197,786
------------
9,483,792
------------
DIVERSIFIED FINANCIAL SERVICES (3.3%)
Citigroup, Inc. 66,633 3,210,378
JPMorgan Chase & Co. 45,400 1,771,054
------------
4,981,432
------------
ELECTRICAL EQUIPMENT (1.7%)
Emerson Electric Co. 36,200 2,537,620
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.2%)
Symbol Technologies, Inc. 186,000 3,217,800
------------
ENERGY EQUIPMENT & SERVICES (1.1%)
ENSCO International, Inc. 51,450 1,633,023
------------
FOOD & STAPLES RETAILING (2.5%)
Wal-Mart Stores, Inc. 63,550 3,356,711
------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.1%)
Zimmer Holdings, Inc. (a) 20,050 1,606,406
------------
HEALTH CARE PROVIDERS & SERVICES (1.6%)
Caremark Rx, Inc. (a) 60,100 2,369,743
------------
HOTELS, RESTAURANTS & LEISURE (5.3%)
VHarrah's Entertainment, Inc. 56,950 3,809,385
VMcDonald's Corp. 127,600 4,090,856
------------
7,900,241
------------
</Table>
<Table>
<Caption>
SHARES VALUE
HOUSEHOLD DURABLES (1.3%)
Tempur-Pedic International, Inc. (a) 89,450 $ 1,896,340
------------
INDUSTRIAL CONGLOMERATES (3.1%)
VGeneral Electric Co. 127,850 4,666,525
------------
INSURANCE (1.5%)
American International Group, Inc. 34,750 2,282,032
------------
INTERNET & CATALOG RETAIL (4.2%)
VeBay, Inc. (a) 54,050 6,284,934
------------
INTERNET SOFTWARE & SERVICES (3.0%)
VYahoo!, Inc. (a) 119,800 4,514,064
------------
IT SERVICES (2.9%)
Accenture Ltd. Class A (a) 54,450 1,470,150
CheckFree Corp. (a) 41,400 1,576,512
First Data Corp. 30,100 1,280,454
------------
4,327,116
------------
MEDIA (7.8%)
Comcast Corp. Class A (a) 61,150 2,008,166
Dreamworks Animation SKG, Inc.(a) 7,600 285,076
EchoStar Communications Corp. Class A 72,550 2,411,562
Time Warner, Inc. (a) 144,100 2,801,304
Viacom, Inc. Class B 52,650 1,915,933
Walt Disney Co. (The) 78,800 2,190,640
------------
11,612,681
------------
MULTILINE RETAIL (2.0%)
Target Corp. 58,000 3,011,940
------------
PHARMACEUTICALS (8.3%)
Abbott Laboratories 46,950 2,190,218
Allergan, Inc. 23,150 1,876,771
Johnson & Johnson 48,600 3,082,212
VPfizer, Inc. 195,300 5,251,617
------------
12,400,818
------------
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term investments.
May be subject to change daily.
</Table>
MainStay VP Eagle Asset Management
M- 248 Growth Equity Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (18.0%)
Altera Corp. (a) 59,150 $ 1,224,405
Applied Materials, Inc. (a) 170,950 2,923,245
VBroadcom Corp. Class A (a) 153,950 4,969,506
Cascade Microtech, Inc. (a) 2,000 26,840
Entegris, Inc. (a) 206,850 2,058,158
Fairchild Semiconductor International, Inc. (a) 144,000 2,341,440
Intel Corp. 157,500 3,683,925
Maxim Integrated Products, Inc. 73,750 3,126,263
National Semiconductor Corp. 141,800 2,545,310
Texas Instruments, Inc. 96,850 2,384,447
Ultra Clean Holdings, Inc. (a) 232,550 1,409,253
------------
26,692,792
------------
SOFTWARE (5.6%)
VMicrosoft Corp. 200,600 5,358,026
Symantec Corp. (a) 113,500 2,923,760
------------
8,281,786
------------
SPECIALTY RETAIL (1.4%)
Home Depot, Inc. (The) 49,150 2,100,671
------------
THRIFTS & MORTGAGE FINANCE (1.1%)
Fannie Mae 23,300 1,659,193
------------
Total Investments (Cost $139,255,168) (c) 99.8% 148,331,423(d)
Cash and Other Assets, Less Liabilities 0.2% 259,754
----------- ------------
Net Assets 100.0% $148,591,177
=========== ============
</Table>
<Table>
(a) Non-Income producing security.
(b) ADR -- American Depositary Receipt.
(c) The cost for federal income tax purposes is
$141,334,847.
(d) At December 31, 2004 net unrealized depreciation was
$6,996,576, 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 $11,330,357 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $4,333,781.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 249
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value
(identified cost $139,255,168) $ 148,331,423
Cash 428,321
Receivables:
Investment securities sold 2,524,370
Dividends 70,584
Fund shares sold 2,773
Other assets 421
-------------
Total assets 151,357,892
-------------
LIABILITIES:
Payables:
Investment securities purchased 2,518,613
Fund shares redeemed 98,642
Adviser 62,497
Administrator 24,999
Custodian 4,643
NYLIFE Distributors 3,787
Accrued expenses 53,534
-------------
Total liabilities 2,766,715
-------------
Net assets $ 148,591,177
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized
Initial Class $ 117,299
Service Class 16,705
Additional paid-in capital 254,975,203
Accumulated net realized loss on investments (115,594,285)
Net unrealized appreciation on investments 9,076,255
-------------
Net assets $ 148,591,177
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 130,090,919
=============
Shares of capital stock outstanding 11,729,853
=============
Net asset value per share outstanding $ 11.09
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 18,500,258
=============
Shares of capital stock outstanding 1,670,514
=============
Net asset value per share outstanding $ 11.07
=============
</Table>
MainStay VP Eagle Asset Management
M- 250 Growth Equity Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 1,566,333
Interest 7,885
------------
Total income 1,574,218
------------
EXPENSES:
Advisory 755,577
Administration 302,231
Shareholder communication 79,272
Professional 46,163
Distribution and service -- Service Class 34,163
Custodian 25,365
Directors 12,506
Miscellaneous 66,989
------------
Total expenses 1,322,266
Fees paid indirectly (a) (45,910)
------------
Net expenses 1,276,356
------------
Net investment income 297,862
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 1,139,652
Net change in unrealized appreciation on
investments (6,081,667)
------------
Net realized and unrealized loss on
investments (4,942,015)
------------
Net decrease in net assets resulting from
operations $ (4,644,153)
============
</Table>
- ------------
(a) New York Life Investment Management LLC has directed certain portfolio
trades to brokers who paid a portion of the expenses of the Portfolio for
the year ended December 31, 2004. The Portfolio's miscellaneous expenses
were reduced by $45,910 under this agreement.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 251
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 297,862 $ 220,769
Net realized gain on investments 1,139,652 10,629,970
Net change in unrealized
appreciation (depreciation) on
investments (6,081,667) 22,421,255
---------------------------
Net increase (decrease) in net
assets resulting from operations (4,644,153) 33,271,994
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (290,421) (235,253)
Service Class (7,018) (6,121)
---------------------------
Total dividends to shareholders (297,439) (241,374)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 6,933,206 18,755,875
Service Class 13,209,555 7,216,238
Net asset value of shares issued to
shareholders in reinvestment of dividends:
Initial Class 290,421 235,253
Service Class 7,018 6,121
---------------------------
20,440,200 26,213,487
Cost of shares redeemed:
Initial Class (26,323,623) (17,048,711)
Service Class (2,120,454) (187,372)
---------------------------
(28,444,077) (17,236,083)
---------------------------
Increase (decrease) in net
assets
derived from capital share
transactions (8,003,877) 8,977,404
---------------------------
Net increase (decrease) in net
assets (12,945,469) 42,008,024
NET ASSETS:
Beginning of year 161,536,646 119,528,622
---------------------------
End of year $148,591,177 $161,536,646
===========================
</Table>
MainStay VP Eagle Asset Management
M- 252 Growth Equity Portfolio The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------------------------------- -----------------------------
JUNE 6,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 11.38 $ 8.90 $ 12.41 $ 14.87 $ 18.55 $ 11.37 $10.18
-------- -------- -------- -------- -------- ------- ------
Net investment income (loss) 0.02 0.02(b) 0.01 (0.01)(b) (0.02)(b) 0.00(c) (0.00)(b)(c)
Net realized and unrealized
gain (loss) on investments (0.29) 2.48 (3.51) (2.45) (1.69) (0.30) 1.20
-------- -------- -------- -------- -------- ------- ------
Total from investment
operations (0.27) 2.50 (3.50) (2.46) (1.71) (0.30) 1.20
-------- -------- -------- -------- -------- ------- ------
Less dividends and
distributions:
From net investment income (0.02) (0.02) (0.01) -- -- (0.00)(c) (0.01)
From net realized gain on
investments -- -- -- -- (1.97) -- --
-------- -------- -------- -------- -------- ------- ------
Total dividends and
distributions (0.02) (0.02) (0.01) -- (1.97) 0.00(c) (0.01)
-------- -------- -------- -------- -------- ------- ------
Net asset value at end of
period $ 11.09 $ 11.38 $ 8.90 $ 12.41 $ 14.87 $ 11.07 $11.37
======== ======== ======== ======== ======== ======= ======
Total investment return (2.32%) 28.05% (28.21%) (16.56%) (9.97%) (2.57%) 11.83%(d)
Ratios (to average net
assets)/
Supplemental Data:
Net investment income
(loss) 0.22% 0.17% 0.07% (0.10%) (0.19%) (0.03%) (0.08%)+(e)
Expenses 0.85%# 0.83% 0.81% 0.80% 0.80% 1.10%# 1.08%+
Portfolio turnover rate 117% 160% 168% 172% 363% 117% 160%
Net assets at end of period
(in 000's) $130,091 $154,082 $119,529 $180,447 $218,190 $18,500 $7,455
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Less than one cent per share.
(d) Total Return is not annualized.
(e) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
# Includes fees paid indirectly which amounted to 0.03% of
average net assets for the year ended December 31, 2004.
+ Annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 253
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (97.0%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (3.7%)
VArmor Holdings, Inc. (a) 15,000 $ 705,300
Curtiss-Wright Corp. 4,700 269,827
Engineered Support Systems, Inc. 6,150 364,203
Hexcel Corp. (a) 27,200 394,400
Moog, Inc. Class A (a) 5,200 235,820
-----------
1,969,550
-----------
AIR FREIGHT & LOGISTICS (2.3%)
VEGL, Inc. (a) 23,400 699,426
Forward Air Corp. (a) 11,500 514,050
-----------
1,213,476
-----------
AUTO COMPONENTS (0.4%)
Commercial Vehicle Group, Inc. (a) 9,800 213,934
-----------
BIOTECHNOLOGY (3.0%)
Abgenix, Inc. (a) 27,300 282,282
Affymetrix, Inc. (a) 14,400 526,320
Cell Therapeutics, Inc. (a) 42,300 344,322
DOV Pharmaceutical, Inc. (a) 11,700 211,185
Vion Pharmaceuticals, Inc. (a) 49,600 232,624
-----------
1,596,733
-----------
CHEMICALS (0.6%)
Mosaic Co. (The) (a) 20,700 337,824
-----------
COMMERCIAL BANKS (6.2%)
Cathay General Bancorp 15,000 562,500
CoBiz, Inc. 6,600 133,980
East West Bancorp, Inc. 10,900 457,364
First BanCorp. 7,500 476,325
Nara Bancorp, Inc. 7,400 157,398
Silicon Valley Bancshares (a) 13,200 591,624
Southwest Bancorp. of Texas, Inc. 18,700 435,523
Texas Regional Bancshares, Inc. Class A 14,040 458,827
-----------
3,273,541
-----------
COMMERCIAL SERVICES & SUPPLIES (7.8%)
51job, Inc. (a) 4,700 244,259
Arbitron, Inc. (a) 5,500 215,490
Bright Horizons Family Solutions, Inc. (a) 7,700 498,652
Charles River Associates, Inc. (a) 6,500 304,005
Corporate Executive Board Co. (The) 8,500 568,990
Healthcare Services Group, Inc. 11,750 244,870
Heidrick & Struggles International, Inc. (a) 8,400 287,868
Navigant Consulting, Inc. (a) 22,100 587,860
VResources Connection, Inc. (a) 14,600 792,926
</Table>
<Table>
<Caption>
SHARES VALUE
COMMERCIAL SERVICES & SUPPLIES (CONTINUED)
Strayer Education, Inc. 2,200 $ 241,538
Universal Technical Institute, Inc. (a) 3,900 148,668
-----------
4,135,126
-----------
COMMUNICATIONS EQUIPMENT (1.0%)
Plantronics, Inc. 9,200 381,524
Sierra Wireless (a) 7,600 134,368
-----------
515,892
-----------
COMPUTERS & PERIPHERALS (0.9%)
Advanced Digital Information Corp. (a) 24,300 243,486
Avid Technology, Inc. (a) 3,600 222,300
-----------
465,786
-----------
CONSTRUCTION & ENGINEERING (1.0%)
Dycom Industries, Inc. (a) 17,700 540,204
-----------
DIVERSIFIED FINANCIAL SERVICES (0.5%)
Piper Jaffray Cos., Inc. (a) 5,400 258,930
-----------
ELECTRICAL EQUIPMENT (0.5%)
Ultralife Batteries, Inc. (a) 14,200 276,190
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS (3.4%)
Cognex Corp. 9,200 256,680
Plexus Corp. (a) 20,400 265,404
RAE Systems, Inc. (a) 12,100 88,330
Rogers Corp. (a) 7,100 306,010
ScanSource, Inc. (a) 3,600 223,776
Sypris Solutions, Inc. 12,200 186,782
Trimble Navigation Ltd. (a) 14,400 475,776
-----------
1,802,758
-----------
ENERGY EQUIPMENT & SERVICES (3.1%)
Cal Dive International, Inc. (a) 12,700 517,525
Hydril (a) 6,900 314,019
Input/Output, Inc. (a) 25,500 225,420
Offshore Logistics, Inc. (a) 6,700 217,549
Unit Corp. (a) 8,800 336,248
-----------
1,610,761
-----------
FOOD & STAPLES RETAILING (1.5%)
Performance Food Group Co. (a) 9,500 255,645
United Natural Foods, Inc. (a) 16,400 510,040
-----------
765,685
-----------
FOOD PRODUCTS (0.5%)
Ralcorp Holdings, Inc. 6,700 280,931
-----------
+ Percentages indicated are based on Portfolio net assets.
V Portfolio's 10 largest holdings. May be subject to change daily.
</Table>
MainStay VP Lord Abbett
M- 254 Developing Growth Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (5.3%)
American Medical Systems Holdings, Inc. (a) 10,900 $ 455,729
ArthroCare Corp. (a) 16,500 528,990
Bio-Rad Laboratories, Inc. Class A (a) 4,600 263,902
VIntegra LifeSciences Holdings (a) 19,300 712,749
Molecular Devices Corp. (a) 10,000 201,000
NuVasive, Inc. (a) 16,000 164,000
Sybron Dental Specialties, Inc. (a) 13,600 481,168
-----------
2,807,538
-----------
HEALTH CARE PROVIDERS & SERVICES (6.4%)
VAMERIGROUP Corp. (a) 9,900 749,034
VCentene Corp. (a) 26,700 756,945
Molina Healthcare, Inc. (a) 800 37,104
SFBC International, Inc. (a) 9,900 391,050
Sierra Health Services, Inc. (a) 11,200 617,232
Symbion, Inc. (a) 15,600 344,448
WellCare Health Plans, Inc. (a) 14,500 471,250
-----------
3,367,063
-----------
HOTELS, RESTAURANTS & LEISURE (4.9%)
P.F. Chang's China Bistro, Inc. (a) 10,000 563,500
RARE Hospitality International, Inc. (a) 14,600 465,156
VScientific Games Corp. Class A (a) 27,600 657,984
Shuffle Master, Inc. (a) 11,000 518,100
Sonic Corp. (a) 12,400 378,200
-----------
2,582,940
-----------
INTERNET & CATALOG RETAIL (3.2%)
Arbinet Holdings, Inc. (a) 4,600 114,310
Audible, Inc. (a) 9,100 237,055
Blue Nile, Inc. (a) 9,400 259,628
Overstock.com, Inc. (a) 7,700 531,300
RedEnvelope, Inc. (a) 9,400 114,868
SINA Corp. (a) 13,900 445,634
-----------
1,702,795
-----------
INTERNET SOFTWARE & SERVICES (2.9%)
Akamai Technologies, Inc. (a) 21,700 282,751
Blue Coat Systems, Inc. (a) 9,100 169,351
Digitas, Inc. (a) 43,300 413,515
eCollege.com (a) 8,100 92,016
InfoSpace, Inc. (a) 7,000 332,850
Openwave Systems, Inc. (a) 14,300 221,078
-----------
1,511,561
-----------
IT SERVICES (4.1%)
CACI International, Inc. Class A (a) 7,100 483,723
Forrester Research, Inc. (a) 15,320 274,841
Kanbay International, Inc. (a) 9,500 297,350
Niku Corp. (a) 3,900 78,624
</Table>
<Table>
<Caption>
SHARES VALUE
IT SERVICES (CONTINUED)
RightNow Technologies, Inc. (a) 1,500 $ 24,225
Sapient Corp. (a) 54,700 432,677
SRA International, Inc. Class A (a) 8,700 558,540
-----------
2,149,980
-----------
LEISURE EQUIPMENT & PRODUCTS (0.8%)
Marvel Enterprises, Inc. (a) 20,900 428,032
-----------
MACHINERY (2.9%)
CLARCOR, Inc. 7,500 410,775
VJoy Global, Inc. 14,700 638,421
Manitowoc Co., Inc. (The) 4,000 150,600
Nordson Corp. 8,000 320,560
-----------
1,520,356
-----------
MEDIA (0.5%)
Greenfield Online, Inc. (a) 10,900 239,691
-----------
METALS & MINING (1.9%)
Coeur d'Alene Mines Corp. (a) 81,200 319,116
Foundation Coal Holdings, Inc. (a) 16,000 368,960
Steel Dynamics, Inc. 8,200 310,616
-----------
998,692
-----------
OIL & GAS (1.5%)
Bill Barrett Corp. (a) 6,300 201,537
KCS Energy, Inc. (a) 22,900 338,462
Penn Virginia Corp. 6,600 267,762
-----------
807,761
-----------
PERSONAL PRODUCTS (0.5%)
Nu Skin Enterprises, Inc. Class A 10,700 271,566
-----------
PHARMACEUTICALS (4.4%)
Bone Care International, Inc. (a) 11,000 306,350
Bradley Pharmaceuticals, Inc. (a) 2,200 42,680
K-V Pharmaceutical Co. Class A (a) 25,700 566,685
Kos Pharmaceuticals, Inc. (a) 12,000 451,680
Medicis Pharmaceutical Corp. Class A 8,600 301,946
Noven Pharmaceuticals, Inc. (a) 23,500 400,910
PRA International (a) 10,700 265,146
-----------
2,335,397
-----------
REAL ESTATE (0.8%)
Jones Lang LaSalle, Inc. (a) 11,400 426,474
-----------
ROAD & RAIL (1.3%)
VLandstar System, Inc. (a) 9,100 670,124
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (8.4%)
ATMI, Inc. (a) 12,400 279,372
Cymer, Inc. (a) 6,900 203,826
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 255
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2004 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
FormFactor, Inc. (a) 12,000 $ 325,680
Microsemi Corp. (a) 14,900 258,664
O2Micro International Ltd. (a) 18,600 212,784
PortalPlayer, Inc. (a) 11,400 281,352
Power Integrations, Inc. (a) 9,600 189,888
RF Micro Devices, Inc. (a) 48,200 329,688
Semtech Corp. (a) 17,100 373,977
Sigmatel, Inc. (a) 6,700 238,051
Silicon Image, Inc. (a) 29,400 483,924
Silicon Laboratories, Inc. (a) 7,200 254,232
Skyworks Solutions, Inc. (a) 33,900 319,677
Varian Semiconductor Equipment Associates, Inc.
(a) 13,100 482,735
Zoran Corp. (a) 15,500 179,490
-----------
4,413,340
-----------
SOFTWARE (5.2%)
Altiris, Inc. (a) 7,200 255,096
Blackboard, Inc. (a) 9,700 143,657
VKronos, Inc. (a) 12,950 662,134
MicroStrategy, Inc. (a) 5,500 331,375
SS&C Technologies, Inc. 11,200 231,280
TIBCO Software, Inc. (a) 43,600 581,624
Wind River Systems, Inc. (a) 18,000 243,900
Witness Systems, Inc. (a) 17,000 296,820
-----------
2,745,886
-----------
SPECIALTY RETAIL (2.3%)
Aeropostale, Inc. (a) 10,700 314,901
Cache, Inc. (a) 10,000 180,200
Guess?, Inc. (a) 19,000 238,450
Jos. A. Bank Clothiers, Inc. (a) 8,600 243,380
Pacific Sunwear of California, Inc. (a) 9,800 218,148
-----------
1,195,079
-----------
</Table>
<Table>
<Caption>
SHARES VALUE
TEXTILES, APPAREL & LUXURY GOODS (2.8%)
Fossil, Inc. (a) 13,550 $ 347,422
Quiksilver, Inc. (a) 19,700 586,863
Warnaco Group, Inc. (The) (a) 24,800 535,680
-----------
1,469,965
-----------
THRIFTS & MORTGAGE FINANCE (0.5%)
Commercial Capital Bancorp, Inc. 10,900 252,662
-----------
Total Common Stocks
(Cost $45,117,532) 51,154,223
-----------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (4.2%)
- -----------------------------------------------------------------------------
TIME DEPOSIT (4.2%)
Bank of New York Cayman
1.50%, due 1/3/05 $2,196,000 2,196,000
-----------
Total Short-Term Investment
(Cost $2,196,000) 2,196,000
-----------
Total Investments
(Cost $47,313,532) (b) 101.2% 53,350,223(c)
Liabilities in Excess of Cash and Other Assets (1.2) (648,417)
---------- -----------
Net Assets 100.0% $52,701,806
========== ===========
</Table>
<Table>
(a) Non-income producing security.
(b) The cost for federal income tax purposes is $47,505,624.
(c) At December 31, 2004 net unrealized appreciation was
$5,844,599 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 $7,173,314 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $1,328,715.
</Table>
MainStay VP Lord Abbett
M- 256 Developing Growth Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2004
<Table>
ASSETS:
Investment in securities, at value (identified
cost $47,313,532) $53,350,223
Cash 2,130
Receivables:
Investment securities sold 1,129,091
Fund shares sold 80,983
Dividends and interest 4,357
Other assets 126
-----------
Total assets 54,566,910
-----------
LIABILITIES:
Payables:
Investment securities purchased 1,751,211
Fund shares redeemed 35,464
Adviser 26,410
Administrator 8,803
Custodian 7,803
NYLIFE Distributors 3,297
Accrued expenses 32,116
-----------
Total liabilities 1,865,104
-----------
Net assets $52,701,806
===========
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share) 200
million shares authorized
Initial Class $ 40,342
Service Class 17,812
Additional paid-in capital 54,319,517
Accumulated net realized loss on investments (7,712,556)
Net unrealized appreciation on investments 6,036,691
-----------
Net assets $52,701,806
===========
INITIAL CLASS
Net assets applicable to outstanding shares $36,603,866
===========
Shares of capital stock outstanding 4,034,234
===========
Net asset value per share outstanding $ 9.07
===========
SERVICE CLASS
Net assets applicable to outstanding shares $16,097,940
===========
Shares of capital stock outstanding 1,781,178
===========
Net asset value per share outstanding $ 9.04
===========
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 257
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 72,584
Interest 15,813
-------------
Total income 88,397
-------------
EXPENSES:
Advisory 280,929
Administration 93,643
Custodian 43,304
Professional 35,081
Distribution and service -- Service Class 25,256
Shareholder communication 22,673
Directors 5,482
Portfolio pricing 5,060
Miscellaneous 18,909
-------------
Total expenses 530,337
Fees paid indirectly (b) (5,212)
-------------
Net expenses 525,125
=============
Net investment loss (436,728)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 1,747,640
Net change in unrealized appreciation on
investments 1,540,393
-------------
Net realized and unrealized gain on
investments 3,288,033
-------------
Net increase in net assets resulting from
operations $ 2,851,305
=============
</Table>
<Table>
(a) Dividends recorded net of foreign withholding taxes in
the amount of $83.
(b) New York Life Investment Management LLC has directed
certain portfolio trades to brokers who paid a portion of
the expenses of the Portfolio for the year ended December
31, 2004. The Portfolio's miscellaneous expenses were
reduced by $5,212 under this agreement.
</Table>
MainStay VP Lord Abbett
M- 258 Developing Growth Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (436,728) $ (307,738)
Net realized gain (loss) on
investments 1,747,640 (290,004)
Net change in unrealized appreciation
(depreciation) on investments 1,540,393 10,267,407
-------------------------
Net increase in net assets resulting
from operations 2,851,305 9,669,665
-------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 4,702,029 12,625,133
Service Class 11,445,887 4,366,776
-------------------------
16,147,916 16,991,909
Cost of shares redeemed:
Initial Class (8,050,906) (6,314,813)
Service Class (833,605) (97,683)
-------------------------
(8,884,511) (6,412,496)
-------------------------
Increase in net assets derived
from capital share transactions 7,263,405 10,579,413
-------------------------
Net increase in net assets 10,114,710 20,249,078
NET ASSETS:
Beginning of year 42,587,096 22,338,018
-------------------------
End of year $52,701,806 $42,587,096
=========================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
M- 259
FINANCIAL HIGHLIGHTS SELECT PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
---------------------------------------------------- ---------------------------
JUNE 5,
2003(A)
YEAR ENDED THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002 2001 2000 2004 2003
Net asset value at beginning
of period $ 8.57 $ 6.19 $ 8.71 $ 9.40 $ 11.94 $ 8.56 $ 7.20
------- ------- ------- ------- ------- ------- ------
Net investment loss (b) (0.07) (0.07) (0.07) (0.07) (0.07) (0.09) (0.06)
Net realized and unrealized
gain (loss) on investments 0.57 2.45 (2.45) (0.62) (2.19) 0.57 1.42
------- ------- ------- ------- ------- ------- ------
Total from investment
operations 0.50 2.38 (2.52) (0.69) (2.26) 0.48 1.36
------- ------- ------- ------- ------- ------- ------
Less distributions:
From net realized gain on
investments -- -- -- -- (0.28) -- --
------- ------- ------- ------- ------- ------- ------
Net asset value at end of
period $ 9.07 $ 8.57 $ 6.19 $ 8.71 $ 9.40 $ 9.04 $ 8.56
======= ======= ======= ======= ======= ======= ======
Total investment return 5.86% 38.49% (28.98%) (7.34%) (19.08%) 5.60% 18.83%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment loss (0.88%) (1.01%) (0.92%) (0.83%) (0.68%) (1.13%) (1.26%)+(d)
Expenses 1.08%# 1.19% 1.10% 1.08% 1.07% 1.33%# 1.44%+
Portfolio turnover rate 129% 103% 62% 49% 51% 129% 103%
Net assets at end of period
(in 000's) $36,604 $38,146 $22,338 $31,243 $36,015 $16,098 $4,441
</Table>
<Table>
(a) Commencement of Operations.
(b) Per Share data based on average shares outstanding during
the period.
(c) Total Return is not annualized.
(d) Represents income earned for the year by the Initial Class
share less service fee of 0.25%.
# Includes fees paid indirectly which amounted to 0.01% of
average net assets for the year ended December 31, 2004.
+ Annualized.
</Table>
MainStay VP Lord Abbett
M- 260 Developing Growth Portfolio The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND BUSINESS:
MainStay VP Series Fund, Inc. (the "Fund") was incorporated under Maryland law
on June 3, 1983. The Fund is registered under the Investment Company Act of
1940, as amended ("Investment Company Act"), as an open-end diversified
management investment company.
The Portfolios commenced operations on the dates indicated below:
<Table>
<Caption>
COMMENCEMENT
OF OPERATIONS PORTFOLIOS
July 2, 2001 Mid Cap Core, Mid Cap Growth, Mid Cap
Value (formerly Equity Income
Portfolio) and Small Cap Growth
Portfolios
---------------------------------------------------------
May 1, 1998 American Century Income & Growth,
Dreyfus Large Company Value, Eagle
Asset Management Growth Equity and
Lord Abbett Developing Growth
Portfolios
---------------------------------------------------------
October 1, 1996 Convertible Portfolio
---------------------------------------------------------
May 1, 1995 High Yield Corporate Bond,
International Equity and Value
Portfolios
---------------------------------------------------------
January 29, 1993 Capital Appreciation, Cash Management,
Government, S&P 500 Index (formerly
Indexed Equity Portfolio) and Total
Return Portfolios
---------------------------------------------------------
January 23, 1984 Bond and Common Stock (formerly Growth
Equity Portfolio) Portfolios
</Table>
The Portfolios (each separately a "Portfolio") are separate Portfolios of the
Fund. Shares of the Portfolios are currently offered only to New York Life
Insurance and Annuity Corporation ("NYLIAC"), a wholly-owned subsidiary of New
York Life Insurance Company ("New York Life"). NYLIAC allocates shares of the
Portfolios to, among others, NYLIAC Variable Annuity Separate Accounts-I, II and
III, VUL Separate Account-I and CSVUL Separate Account-I (collectively "Separate
Accounts"). The Separate Accounts are used to fund flexible premium deferred
variable annuity and variable life insurance policies.
On May 13, 2003, the Fund's Board of Directors adopted a Multiple Class Plan
under which the existing shares of each of the Fund's Portfolios, except the
Cash Management Portfolio, were re-classified as Initial Class shares, and a
second class of shares, the Service Class, was established. The classes differ
in that, pursuant to a plan adopted in accordance with Rule 12b-1 under the
Investment Company Act, Service Class shares pay a combined distribution and
service fee of 0.25% of average daily net assets to the distributor of its
shares. Effective June 2, 2003, new shareholders of the Portfolios are permitted
to invest only in the Service Class shares, however, existing Initial Class
shareholders are permitted to continue investing in the Initial Class shares.
The Service Class of each Portfolio commenced operations on the dates indicated
below:
<Table>
<Caption>
COMMENCEMENT
OF OPERATIONS PORTFOLIOS
June 13, 2003 American Century Income & Growth
Portfolio
---------------------------------------------------------
June 6, 2003 Eagle Asset Management Growth Equity
Portfolio
---------------------------------------------------------
June 5, 2003 Capital Appreciation, Common Stock,
Convertible, International Equity, Mid
Cap Core, Mid Cap Growth, Mid Cap
Value, S&P 500 Index, Small Cap
Growth, Dreyfus Large Company Value
and Lord Abbett Developing Growth
Portfolios
---------------------------------------------------------
June 4, 2003 Bond, Government, High Yield Corporate
Bond, Total Return and Value
Portfolios
</Table>
The investment objectives for each of the Portfolios of the Fund are as follows:
BOND: to seek the highest income over the long term consistent with preservation
of principal.
CAPITAL APPRECIATION: to seek long-term growth of capital. Dividend income, if
any, is an incidental consideration.
CASH MANAGEMENT: to seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity.
COMMON STOCK: to seek long-term growth of capital, with income as a secondary
consideration.
CONVERTIBLE: to seek capital appreciation together with current income.
GOVERNMENT: to seek a high level of current income, consistent with safety of
principal.
HIGH YIELD CORPORATE BOND: to maximize current income through investment in a
diversified portfolio of high yield, high risk debt securities which are
ordinarily in the lower rating categories of recognized rating agencies (that
is, rated Baa to B by Moody's or BBB to B by S&P). Capital appreciation is a
secondary objective.
INTERNATIONAL EQUITY: to seek long-term growth of capital by investing in a
portfolio consisting primarily of non-U.S. equity securities. Current income is
a secondary objective.
MID CAP CORE: to seek long-term growth of capital.
MID CAP GROWTH: to seek long-term growth of capital.
MID CAP VALUE: to realize maximum long-term total return from a combination of
capital appreciation and income.
S&P 500 INDEX: to seek to provide investment results that correspond to the
total return performance (and reflect reinvestment of dividends) of publicly
traded common stocks represented by the S&P 500 Index.
www.mainstayfunds.com M- 261
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SMALL CAP GROWTH: to seek long-term capital appreciation.
TOTAL RETURN: to realize current income consistent with reasonable opportunity
for future growth of capital and income.
VALUE: to realize maximum long-term total return from a combination of capital
growth and income.
AMERICAN CENTURY INCOME & GROWTH: to seek dividend growth, current income and
capital appreciation.
DREYFUS LARGE COMPANY VALUE: to seek capital appreciation.
EAGLE ASSET MANAGEMENT GROWTH EQUITY: to seek growth through long-term capital
appreciation.
LORD ABBETT DEVELOPING GROWTH: to seek long-term growth of capital through a
diversified and actively-managed portfolio consisting of developing growth
companies, many of which are traded over the counter.
High Yield Corporate Bond Portfolio invests primarily in high yield bonds
(sometimes called "junk bonds"), which are generally considered speculative
because they present a greater risk of loss, including default, than higher
quality debt securities. These securities pay a premium--a high interest rate or
yield--because of the increased risk of loss. These securities can also be
subject to greater price volatility.
The ability of issuers of debt securities held by the Portfolios to meet their
obligations may be affected by economic developments in a specific industry or
region.
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. 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.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
Each Portfolio prepares its financial statements in accordance with generally
accepted accounting principles and follows the significant accounting policies
described below:
(A) SECURITIES VALUATION. Equity securities are valued at the latest quoted
sales prices as of the close of trading on the New York Stock Exchange
(generally 4:00 p.m. Eastern time) on the valuation date; such securities not
traded on the valuation date are valued at the mean of the latest quoted bid and
asked prices. Prices are taken from the primary market in which each security
trades. Debt securities are valued at prices supplied by a pricing agent or
brokers selected by the Fund's Administrator, whose prices reflect broker/dealer
supplied valuations and electronic data processing techniques, if such prices
are deemed by the Fund's Administrator to be representative of market values at
the regular close of business of the Exchange. Options and futures contracts are
valued at the last sale price on the market where such options or futures
contracts are principally traded. Foreign currency forward contracts are valued
at their fair market values determined on the basis of the mean between the last
current bid and asked prices based on dealer or exchange quotations. Temporary
cash investments acquired over 60 days to maturity are valued using the latest
bid prices or using valuations based on a matrix system (which considers such
factors as security prices, yields, maturities, and ratings), both as furnished
by independent pricing services. Other temporary cash investments are valued at
amortized cost, which approximates market value. Portfolio securities of Cash
Management Portfolio are valued at their amortized cost. Securities for which
market quotations are not readily available are valued by methods deemed by the
Board of Directors to represent fair value. Reasons for which securities may be
valued in this manner include, but are not limited to, trading for a security
has been halted or suspended, a security has been de-listed from a national
exchange, or trading on a security's primary market is temporarily closed at a
time when under normal conditions it would be open. At December 31, 2004, the
High Yield Corporate Bond and Convertible Portfolios held securities with values
of $3,540,554 and $66 respectively, that were valued in such manner.
Certain events may occur between the time that foreign markets close, on which
securities held by the International Equity Portfolio principally trade, and the
time at which the Portfolio's NAVs are calculated. These events may include, but
are not limited to, situations relating to a single issue in a market sector,
significant fluctuations in U.S. or foreign markets, natural disasters, armed
conflicts, governmental actions or other developments not tied directly to the
securities markets. Should the Administrator or Adviser/Sub-Advisers conclude
that such events may have affected the accuracy of the last price reported on
the local foreign market, the Administrator or Adviser/Sub-Adviser may, pursuant
to procedures adopted by the Portfolio's Board of Directors, adjust the value of
the local price to reflect the impact on the price of such securities as a
result of such events.
(B) SECURITY TRANSACTIONS AND INVESTMENT INCOME. Each Portfolio records
security transactions on the trade date. Realized gains and losses on security
transactions are determined using the identified cost method. Dividend income is
recognized on the ex-dividend date and interest income is accrued as earned.
Discounts and premiums on securities, other than short-term securities,
purchased for all Portfolios are accreted and amortized, respectively, on the
constant yield method
M- 262 MainStay VP Series Fund, Inc.
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 and premiums on
short-term securities are accreted and amortized, respectively, on the straight
line method.
Investment income and realized and unrealized gains and losses on investments of
each Portfolio are allocated to separate classes of shares based upon their
relative net assets on the date the income is earned or realized and unrealized
gains and losses are incurred.
(C) 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 Portfolio records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Portfolio's basis in the contract. The High Yield Corporate Bond and
International Equity Portfolios enter into foreign currency forward contracts in
order to hedge their foreign currency denominated investments and receivables
and payables against adverse movements in future foreign exchange rates.
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
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation on forward contracts reflects the Portfolio's
exposure at valuation date to credit loss in the event of a counterparty's
failure to perform its obligations. (See Note 7)
(D) 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. The Portfolio
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 Portfolio records a
realized gain or loss equal to the difference between the proceeds from (or cost
of) the closing transaction and the Portfolio's basis in the contract. The S&P
500 Index Portfolio invests in stock index futures contracts to gain full
exposure to changes in stock market prices to fulfill its investment objectives.
The 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 the Portfolio's involvement in open futures positions. Risks arise
from the possible imperfect correlation in movements in the price of futures
contracts and the underlying hedged assets, and the possible inability of
counterparties to meet the terms of their contracts. However, the Portfolio's
activities in futures contracts are conducted through regulated exchanges which
minimize counterparty credit risks.
(E) REPURCHASE AGREEMENTS. The Portfolios' custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to determine that the
value, including accrued interest, exceeds the repurchase price. In the event of
the seller's default of the obligation to repurchase, the Portfolio has the
right to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
(F) FOREIGN CURRENCY TRANSACTIONS. The books and records of the Portfolios 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) purchases and sales of investment securities, income and expenses -- at the
date of such transactions.
The assets and liabilities of High Yield Corporate Bond and International Equity
Portfolios are presented at the exchange rates and market values at the end of
the year. The realized and unrealized changes in net assets arising from
fluctuations in exchange rates and market prices of securities are not
separately presented. Accordingly, gains and losses from foreign currency
transactions are included in the reported net realized and unrealized gains
(losses) on investment transactions.
Net realized gain (loss) on foreign currency transactions represents net gains
and losses on foreign currency forward contracts, net currency gains or losses
realized as a result of differences between the amounts of securities sale
proceeds or purchase cost, dividends, interest and withholding taxes recorded on
the Portfolio's books and the U.S. dollar equivalent amount actually received or
paid.
www.mainstayfunds.com M- 263
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Net currency gains or losses from valuing foreign currency denominated assets
and liabilities, other than investments, at valuation date exchange rates are
reflected in unrealized foreign exchange gains or losses. (See Note 7)
(G) MORTGAGE DOLLAR ROLLS. Certain of the Portfolios may enter into mortgage
dollar roll ("MDR") transactions in which they sell mortgage-backed securities
("MBS") to a counterparty from whom they simultaneously agree to buy a similar
security on a delayed delivery basis. The MDR transactions of the Portfolios 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 Portfolios 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 Portfolios
maintain a segregated account containing securities from the respective
portfolios 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 Portfolios at the end of the roll could be inferior to what
was initially sold to the counterparty.
(H) SECURITIES LENDING. The Portfolios may lend their securities to
broker-dealers and financial institutions. The loans are collateralized by cash
or securities at least equal at all times to the market value of the securities
loaned. The Portfolios 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 Portfolios receive compensation for lending
their securities in the form of fees or they retain a portion of interest on the
investment of any cash received as collateral. The Portfolios also continue 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 Portfolios. (See Note 7)
(I) PURCHASED AND WRITTEN OPTIONS. Certain Portfolios 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 canceled 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, in exchange for the premium, a Portfolio foregoes 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 Portfolio, 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. A call option may be covered by the call writer's
owning the underlying security throughout the option period. A call option may
also be covered by the call writer's maintaining liquid assets valued at greater
than the exercise price of the call written, in a segregated account with its
custodian. When writing a covered call option, the Portfolios, in return for the
premium on the option, give up the opportunity to profit from a price increase
in the underlying securities above the exercise price, but, as long as the
obligation as a writer continues, have retained the risk of loss should the
price of the underlying security decline. After writing a put option, a
Portfolio may incur a loss equal to the difference between the exercise price of
the option and the sum of the market value of the underlying security plus the
premium received from the sale of the option.
Certain Portfolios may purchase call and put options on their portfolio
securities or foreign currencies. A Portfolio may purchase call options to
protect against an increase in the price of the security or foreign currency it
anticipates purchasing. A Portfolio may purchase put options on its securities
or foreign currencies to protect against a decline in the value of the security
or foreign currency or to close out covered written put positions. Risks may
arise from an imperfect correlation between the change in market value of the
securities or foreign currencies held by the Portfolio and the prices of options
relating to the securities or foreign currencies purchased or sold by the
Portfolio 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. (See Note 7)
(J) LOAN PARTICIPATIONS, COMMITMENTS AND BRIDGE LOANS. The High Yield Corporate
Bond and Total Refund Portfolios invest in loan commitments, loan participations
and bridge loans. Loan commitments, loan participations and bridge loans are
agreements to make money available to a borrower in a specified amount, at a
specified rate and within a specified time. The Portfolio records an investment
when the borrower withdraws money and records interest as earned. The unfunded
amounts are recorded in memorandum accounts. The Portfolio assumes the credit
risk of the Borrower, the Selling Participant and any other persons
interpositioned between the Portfolio and the Borrower ("Intermediate
Participants").
(K) FEDERAL INCOME TAXES. Each of the Portfolios is treated as a separate
entity for federal income tax purposes. The Fund'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 Portfolio within the allowable time limits. Therefore, no federal income or
excise tax provision is required.
M- 264 MainStay VP Series Fund, Inc.
Investment income received by a Portfolio from foreign sources may be subject to
foreign income taxes. These foreign income taxes are withheld at the source.
(L) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. For Cash Management Portfolio, dividends are
declared daily and paid monthly and capital gain distributions, if any, are
declared and paid annually. Each of the other Portfolios intends to declare and
pay, as a dividend, substantially all of their net investment income and net
realized gains no less frequently than once a year. Income dividends and capital
gain distributions are determined in accordance with federal income 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.
(M) EXPENSES. Expenses with respect to the Fund are allocated to the individual
Portfolios in proportion to the net assets of the respective Portfolios when the
expenses are incurred except where direct allocations of expenses can be made.
Expenses (other than expenses incurred under the Distribution and Service Plan)
are allocated to separate classes of shares based upon their relative net assets
on the date the expenses are accrued. The expenses borne by the Fund, including
those of related parties to the Fund, are shown on each Portfolio's Statement of
Operations.
(N) USE OF ESTIMATES. The preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America
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.
NOTE 3 -- FEES AND RELATED PARTY TRANSACTIONS:
(A) INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATION FEES. New York Life
Investment Management LLC ("NYLIM"), an indirect wholly-owned subsidiary of New
York Life, serves as investment adviser to the Fund under an Investment Advisory
Agreement. Bond, Common Stock, Mid Cap Core and S&P 500 Index Portfolios are
advised by NYLIM. MacKay Shields, a registered investment adviser and an
indirect wholly-owned subsidiary of New York Life, serves as sub-adviser to
Capital Appreciation, Cash Management, Convertible, Government, High Yield
Corporate Bond, International Equity, Mid Cap Growth, Mid Cap Value, Small Cap
Growth, Total Return and Value Portfolios, under a Sub-Advisory Agreement with
NYLIM. Pursuant to a Sub-Advisory Agreement with NYLIM, American Century
Investment Management, Inc. serves as sub-adviser to the American Century Income
& Growth Portfolio; The Dreyfus Corporation serves as sub-adviser to the Dreyfus
Large Company Value Portfolio; Eagle Asset Management, Inc. serves as
sub-adviser to the Eagle Asset Management Growth Equity Portfolio; and Lord
Abbett & Co. serves as sub-adviser to the Lord Abbett Developing Growth
Portfolio.
NYLIM also serves as administrator for the Fund. NYLIM provides offices and
conducts clerical, recordkeeping and bookkeeping services, and keeps most of the
financial and accounting records required to be maintained by the Portfolios.
The Fund, on behalf of each Portfolio, paid the Adviser and Administrator a
monthly fee for the services performed and the facilities furnished at an
approximate annual rate of the average daily net assets of each Portfolio as
follows:
<Table>
<Caption>
ADVISER ADMINISTRATOR
Bond Portfolio 0.25% 0.20%
- ---------------------------------------------------------
Capital Appreciation Portfolio 0.36% 0.20%
- ---------------------------------------------------------
Cash Management Portfolio 0.25% 0.20%
- ---------------------------------------------------------
Common Stock Portfolio 0.25% 0.20%
- ---------------------------------------------------------
Convertible Portfolio 0.36% 0.20%
- ---------------------------------------------------------
Government Portfolio 0.30% 0.20%
- ---------------------------------------------------------
High Yield Corporate Bond
Portfolio 0.30% 0.20%
- ---------------------------------------------------------
International Equity Portfolio 0.60% 0.20%
- ---------------------------------------------------------
Mid Cap Core Portfolio 0.85%* 0.00%
- ---------------------------------------------------------
Mid Cap Growth Portfolio 0.75%* 0.00%
- ---------------------------------------------------------
Mid Cap Value Portfolio 0.70%* 0.00%
- ---------------------------------------------------------
S&P 500 Index Portfolio** 0.10% 0.20%
- ---------------------------------------------------------
Small Cap Growth Portfolio*** 1.00%* 0.00%
- ---------------------------------------------------------
Total Return Portfolio 0.32% 0.20%
- ---------------------------------------------------------
Value Portfolio 0.36% 0.20%
- ---------------------------------------------------------
American Century Income &
Growth Portfolio 0.50% 0.20%
- ---------------------------------------------------------
Dreyfus Large Company Value
Portfolio 0.60% 0.20%
- ---------------------------------------------------------
Eagle Asset Management Growth
Equity Portfolio 0.50% 0.20%
- ---------------------------------------------------------
Lord Abbett Developing Growth
Portfolio 0.60% 0.20%
- ---------------------------------------------------------
</Table>
* This fee reflects Management fees, which includes both Advisory fees and
Administrative fees.
** Effective January 1, 2005, the Fund will pay the Adviser 0.10% of the
Portfolio's average daily net assets up to $1 billion and 0.075% on assets
in excess of $1 billion.
*** Effective January 1, 2005, the Fund pays the Adviser a monthly fee at an
annual rate of 0.90% of the average daily net assets.
www.mainstayfunds.com M- 265
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Pursuant to the terms of the Sub-Advisory Agreements between NYLIM and the
sub-advisers, NYLIM pays the sub-advisers a monthly fee at an annual rate of
average daily net assets of that Portfolio as follows:
<Table>
Capital Appreciation Portfolio 0.36%
- ----------------------------------------------------------
Cash Management Portfolio 0.25%
- ----------------------------------------------------------
Convertible Portfolio 0.36%
- ----------------------------------------------------------
Government Portfolio 0.30%
- ----------------------------------------------------------
High Yield Corporate Bond Portfolio 0.30%
- ----------------------------------------------------------
International Equity Portfolio 0.60%
- ----------------------------------------------------------
Mid Cap Growth Portfolio 0.38%
- ----------------------------------------------------------
Mid Cap Value Portfolio 0.35%
- ----------------------------------------------------------
Small Cap Growth Portfolio 0.50%
- ----------------------------------------------------------
Total Return Portfolio 0.32%
- ----------------------------------------------------------
Value Portfolio 0.36%
- ----------------------------------------------------------
American Century Income & Growth Portfolio 0.40%*
- ----------------------------------------------------------
Dreyfus Large Company Value Portfolio 0.45%**
- ----------------------------------------------------------
Eagle Asset Management Growth Equity Portfolio 0.40%***
- ----------------------------------------------------------
Lord Abbett Developing Growth Portfolio 0.50%
- ----------------------------------------------------------
</Table>
* On assets up to $100 million; 0.35% on assets from $100 million to $200
million; 0.30% on assets over $200 million.
** On assets up to $250 million; 0.40% on assets over $250 million.
*** On assets up to $200 million; 0.30% on assets over $200 million.
NYLIM has voluntarily agreed to assume the operating expenses of Mid Cap Core,
Mid Cap Growth, Mid Cap Value and Small Cap Growth Portfolios, which on an
annualized basis exceed the percentages of average daily net assets indicated
below. Also listed below are the amounts NYLIM reimbursed the Portfolios for the
year ended December 31, 2004. It was not necessary for NYLIM to reimburse Mid
Cap Growth Portfolio and Mid Cap Value Portfolio for expenses for the year ended
December 31, 2004. This agreement may be terminated by NYLIM at any time. The
amounts of expense reimbursements/waivers for the period will not be repaid to
the Adviser or Subadviser in subsequent fiscal years.
<Table>
<Caption>
EXPENSE AMOUNT OF
CAP REIMBURSEMENT
Mid Cap Core Portfolio 0.98% $ 64,736
- -------------------------------------------------------
Mid Cap Growth Portfolio 0.97% --
- -------------------------------------------------------
Mid Cap Value Portfolio 0.89% --
- -------------------------------------------------------
Small Cap Growth Portfolio 0.95% 245,558
- -------------------------------------------------------
</Table>
In addition, effective January 1, 2005, NYLIM has voluntarily agreed to waive
its advisory fee for Dreyfus Large Company Value Portfolio by 0.05%. In
addition, NYLIM has voluntarily agreed to assume the operating expenses of the
Lord Abbett Developing Growth Portfolio to the extent that they exceed 1.15% of
the average daily net assets of the Portfolio.
(B) PAYMENTS BY AFFILIATES. In July 2004 it was determined that the Fund's SAI
contained inconsistent non-fundamental restrictions for certain Portfolios
addressing investments in shares of other investment companies including money
market funds and whether advisory fees would be charged in connection with such
investments. NYLIM conducted a review of the Portfolios' transactions in money
market funds and concluded that the inconsistency did not impact any Portfolio's
NAV by $0.01 or more. NYLIM reimbursed the Portfolios affected as follows:
Capital Appreciation $33,656, Cash Management $399, Convertible $17,587,
Government $6,228, High Yield Corporate Bond $58,744, Total Return $27,480, and
Value $12,191. NYLIM has reimbursed each Portfolio. A supplement to the Fund's
SAI was filed July 19, 2004 to reflect the August 1998 approval of each
Portfolio's ability to purchase the securities of other investment companies as
permitted by the Investment Company Act of 1940. Additionally, it was also
determined that the International Equity Portfolio had not complied with a
non-fundamental restriction that permitted investments in money market funds
with the deduction of advisory fees on investments in such shares. NYLIM
determined that the Portfolio's investment in money market funds from February
2000 - July 2000 without applying advisory fees properly resulted in an
overcharge to the Portfolio in the amount of $26,489. MacKay Shields waived this
amount, plus interest for a total of $26,819, to the Portfolio. These amounts
are included in the Statement of Operations as a waiver/reimbursement from the
Adviser. These reimbursements had no material impact on expense or the net
investment income ratios included in the Financial Highlights, except for 0.02%,
respectively, in the International Equity Portfolio.
NYLIM also determined that the Common Stock Portfolio had not complied with a
non-fundamental restriction with respect to investing in other investment
companies, since March 3, 2004. NYLIM has liquidated these investments and has
calculated the net loss to the Portfolio to be $160,608. NYLIM has reimbursed
this amount to the Portfolio. Additionally, the Adviser or Subadviser reimbursed
the International Equity, Mid Cap Core and Total Return Portfolios in the amount
of $25,426, $990 and $765 for a loss incurred due to a trading error.
These amounts are included in the Statement of Operations for the year ended
December 31, 2004 as net increase from payment by affiliate for loss on the
disposal of investment in violation of restrictions. These amounts had no
material effect on the total returns of the Portfolios.
M- 266 MainStay VP Series Fund, Inc.
(C) DISTRIBUTOR. NYLIFE Distributors Inc. ("NYLIFE Distributors"), an indirect
wholly-owned subsidiary of New York Life, serves as distributor (the
"Distributor") to the Service Class shares of all Portfolios offering such
shares, pursuant to a Distribution and Service Agreement.
(D) DISTRIBUTION AND SERVICE FEES. With respect to the Service Class shares of
all Portfolios, except Cash Management Portfolio, the Fund has adopted a
Distribution and Service Plan in accordance with the provisions of Rule 12b-1
under the Investment Company Act. Under the Distribution and Service Plan, the
Distributor has agreed to provide, through its affiliates or independent third
parties, various distribution-related, shareholder and administrative support
services to Service Class shareholders. For its services, the Distributor is
entitled to a combined distribution and service fee accrued daily and paid
monthly at an annual rate of 0.25% of the average daily net assets attributable
to the Service Class of each Portfolio.
(E) NON-INTERESTED DIRECTORS FEES. Non-Interested Directors are paid an annual
retainer of $35,000, $3,000 for each Board meeting attended, $2,000 for each
Audit Committee meeting attended and $1,500 for each Valuation and Nominating
Committee meeting attended, plus reimbursement for travel and other
out-of-pocket expenses. The Audit Committee Chair receives an additional annual
retainer of $12,000. The Fund allocates directors fees in proportion to the net
assets of the respective Portfolios.
(F) CAPITAL. At December 31, 2004, NYLIAC was the beneficial owner of shares of
the following Portfolios with net asset values and percentages of net assets as
follows:
<Table>
Mid Cap Core Portfolio $11,469,374 6.7%
- -------------------------------------------------------
Mid Cap Growth Portfolio 11,188,812 5.7
- -------------------------------------------------------
Mid Cap Value Portfolio 12,355,897 3.7
- -------------------------------------------------------
Small Cap Growth Portfolio 10,499,677 6.5
- -------------------------------------------------------
Lord Abbett Developing Growth
Portfolio 6,709,746 12.7
- -------------------------------------------------------
</Table>
(G) OTHER. Fees for the cost of legal services provided to the Fund by the
Office of the General Counsel of NYLIM are charged to the Portfolios in
proportion to the net assets of the respective Portfolio. For the year ended
December 31, 2004 these fees, which are included in Professional fees shown on
the Statement of Operations, are as follows:
<Table>
Bond Portfolio $18,492
- -----------------------------------------------------------
Capital Appreciation Portfolio 37,465
- -----------------------------------------------------------
Cash Management Portfolio 12,861
- -----------------------------------------------------------
Common Stock Portfolio 34,842
- -----------------------------------------------------------
Convertible Portfolio 13,597
- -----------------------------------------------------------
Government Portfolio 12,557
- -----------------------------------------------------------
High Yield Corporate Bond Portfolio 50,158
- -----------------------------------------------------------
International Equity Portfolio 6,316
- -----------------------------------------------------------
Mid Cap Core Portfolio 4,781
- -----------------------------------------------------------
Mid Cap Growth Portfolio 6,238
- -----------------------------------------------------------
Mid Cap Value Portfolio 10,045
- -----------------------------------------------------------
S&P 500 Index Portfolio 52,357
- -----------------------------------------------------------
Small Cap Growth Portfolio 5,466
- -----------------------------------------------------------
Total Return Portfolio 21,441
- -----------------------------------------------------------
Value Portfolio 20,783
- -----------------------------------------------------------
American Century Income & Growth Portfolio 3,291
- -----------------------------------------------------------
Dreyfus Large Company Value Portfolio 3,341
- -----------------------------------------------------------
Eagle Asset Management Growth Equity Portfolio 5,681
- -----------------------------------------------------------
Lord Abbett Developing Growth Portfolio 1,879
- -----------------------------------------------------------
</Table>
NOTE 4 -- RESTRICTED SECURITIES:
A restricted security is a security which has been purchased through a private
offering and cannot be resold to the general public without prior registration
under the Securities Act of 1933. The High Yield Corporate Bond and Total Return
Portfolios do not have the right to demand that such securities be registered.
Disposal of these securities may involve time-consuming negotiations and
expenses, and prompt sale at an acceptable price may be difficult.
HIGH YIELD CORPORATE BOND PORTFOLIO
Restricted securities held at December 31, 2004:
<Table>
<Caption>
PRINCIPAL
DATE(S) OF AMOUNT/ 12/31/04 PERCENT OF
SECURITY ACQUISITION SHARES COST VALUE NET ASSETS
Amkor Technology, Inc.
2nd Lien Term Loan
6.86%, due 10/27/10 10/29/04 $ 5,000,000 $ 5,000,000 $ 5,208,335 0.4%
- --------------------------------------------------------------------------------------------------------------------------------
Calpine Gilroy, L.P.
10.00%, due 9/30/14 11/26/03 5,113,119 5,125,755 5,113,119 0.4
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M- 267
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HIGH YIELD CORPORATE BOND PORTFOLIO (CONTINUED)
Restricted securities held at December 31, 2004 (continued):
<Table>
<Caption>
PRINCIPAL
DATE(S) OF AMOUNT/ 12/31/04 PERCENT OF
SECURITY ACQUISITION SHARES COST VALUE NET ASSETS
Colorado Prime Corp.
Preferred Stock 5/6/97-11/10/99 1,395 $ 5,090,593 $ 14 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
Globix Corp.
Common Stock 10/15/02 236,469 $ 59,922 $ 611,864 0.0%(a)
- --------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The)
Bank debt, Term Loan
7.03%, due 3/31/06 2/25/04-3/11/04 $ 4,800,000 4,787,622 4,860,000 0.3
2nd Lien Note
11.00%, due 3/1/11 3/12/04 10,945,000 10,885,153 12,723,563 0.9
- --------------------------------------------------------------------------------------------------------------------------------
Graham Packaging Co., Inc.
Term Loan C
6.813%, due 4/7/12 10/1/04 1,000,000 1,000,000 1,024,500 0.1
- --------------------------------------------------------------------------------------------------------------------------------
Haights Cross Communications, Inc.
Preferred Stock
16.00%, Class B 1/22/04 91,000 4,233,413 4,777,500 0.3
Warrants 1/22/04 91 1 1 0.0(a)
Warrants, Preferred Class A 1/22/04 86,850 869 868 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
Jostens IH Corp.
Secured Term Loan C
4.67%, due 10/4/11 10/8/04 1,000,000 1,000,000 1,006,429 0.1
- --------------------------------------------------------------------------------------------------------------------------------
Mirant Corp.
Bank debt, Revolver 5
4.65%, due 7/15/05 12/19/03 1,262,754 1,059,276 956,536 0.0(a)
Bank debt, Revolver 1
4.75%, due 1/15/05 4/21/03 1,480,000 1,226,193 1,042,660 0.1
- --------------------------------------------------------------------------------------------------------------------------------
Morris Material Handling, Inc.
Common Stock 3/11/99-10/30/01 9,371 4,919 49,666 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
NEON Communications, Inc.
Common Stock 9/11/03 367,043 325,137 458,804 0.0(a)
Convertible Preferred Stock
12.00% 12/3/03 39,998 445,581 449,977 0.0(a)
Warrants 9/11/03 367,043 325,137 3,670 0.0(a)
Warrants, Class A 12/3/02 200,064 2,001 250,080 0.0(a)
Warrants, Redeemable Preferred 12/3/02 240,062 2,401 2,401 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
North Atlantic Trading Co. Inc.
Common Stock 4/21/04 2,418 24 24 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
Pacific & Atlantic (Holdings), Inc.
Convertible Preferred Stock
7.50%, Class A 5/21/98-10/30/03 14,496 145 145 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
Qwest Corp.
Bank debt, Term Loan
6.95%, due 6/30/10 6/12/03 4,250,000 4,144,574 4,347,750 0.3
- --------------------------------------------------------------------------------------------------------------------------------
Skilled Healthcare Group, Inc.
Common Stock 9/4/03 1,691 17 27,056 0.0(a)
- --------------------------------------------------------------------------------------------------------------------------------
$ 44,718,733 $42,914,962 2.9%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(a) Less than one tenth of a percent.
M- 268 MainStay VP Series Fund, Inc.
TOTAL RETURN PORTFOLIO
Restricted security held at December 31, 2004:
<Table>
<Caption>
DATE OF PRINCIPAL 12/31/04 PERCENT OF
SECURITY ACQUISITION AMOUNT COST VALUE NET ASSETS
Goodyear Tire & Rubber Co. (The)
11.00%, due 3/1/11 6/23/04 $ 160,000 $ 174,811 $ 186,000 0.0%(a)
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(a) Less than one tenth of a percent.
NOTE 5 -- FEDERAL INCOME TAX:
The following table discloses the current year reclassifications between
accumulated undistributed net investment income (loss), accumulated
undistributed net realized gain (loss) on investments, accumulated undistributed
net realized gain (loss) on foreign currency transactions and paid-in capital
arising from permanent differences; net assets at December 31, 2004, are not
affected.
<Table>
<Caption>
ACCUMULATED
UNDISTRIBUTED
ACCUMULATED NET REALIZED
ACCUMULATED UNDISTRIBUTED GAIN (LOSS)
UNDISTRIBUTED NET REALIZED ON FOREIGN
NET INVESTMENT GAIN (LOSS) ON CURRENCY ADDITIONAL
INCOME (LOSS) INVESTMENTS TRANSACTIONS PAID-IN CAPITAL
Bond Portfolio $ 785,450 $ (785,450) $ 0 $ 0
Common Stock Portfolio (68,398) 68,398 0 0
Convertible Portfolio 346,519 (339,738) 0 (6,781)
Eagle Asset Management Growth Equity Portfolio (423) 3,979 0 (3,556)
Government Portfolio 944,069 (944,069) 0 0
High Yield Corporate Bond Portfolio 2,692,203 0 (2,692,203) 0
International Equity Portfolio 224,531 (3,437) (224,531) 3,437
Mid Cap Growth Portfolio 569,901 0 0 (569,901)
Mid Cap Value Portfolio 97,454 (97,454) 0 0
S&P 500 Index Portfolio (105,666) 105,666 0 0
Small Cap Growth Portfolio 883,108 0 0 (883,108)
Total Return Portfolio 64,047 (62,435) (1,612) 0
American Century Income & Growth Portfolio (6,653) 21,588 0 (14,935)
Lord Abbett Developing Growth Portfolio 436,728 0 0 (436,728)
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
The reclassifications for the Portfolios are primarily due to foreign currency
gain (loss), reclassification of distributions, paydown gain (loss), real estate
investment trusts gain (loss), premium amortization adjustments and net
operating losses.
Dividends to shareholders from net investment income and distributions to
shareholders from net realized gains shown in the Statement of Changes in Net
Assets for the year ended December 31, 2004 and December 31, 2003 represent
tax-based distributions of ordinary income and net long-term capital gain,
respectively, except for the Portfolios for which the tax components of the
distributions are shown below.
<Table>
<Caption>
2004 2003
--------------------------------------- ---------------------------------------
TAX-BASED TAX-BASED TAX-BASED TAX-BASED
DISTRIBUTIONS FROM DISTRIBUTIONS FROM DISTRIBUTIONS FROM DISTRIBUTIONS FROM
ORDINARY INCOME LONG-TERM GAINS ORDINARY INCOME LONG-TERM GAINS
Bond Portfolio $ 21,786,414 $ 433,360 $ 23,137,251 $ 9,893,531
Cash Management Portfolio 2,966,632 0 3,042,267 0
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M- 269
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 2004, the components of accumulated gain (loss) on a tax
basis were as follows:
<Table>
<Caption>
ACCUMULATED UNREALIZED TOTAL
ORDINARY CAPITAL AND APPRECIATION ACCUMULATED
INCOME OTHER LOSSES (DEPRECIATION)(A) GAIN (LOSS)(B)
Bond Portfolio $ 230 $ 0 $ 5,638,753 $ 5,638,983
Capital Appreciation Portfolio 36,366 (274,459,971) 182,796,098 (91,627,507)
Cash Management Portfolio 186 0 0 186
Common Stock Portfolio 20,370 (19,970,485) 66,934,221 46,984,106
Convertible Portfolio 1,550,474 (21,342,145) 24,193,503 4,401,832
Government Portfolio 13,079 (4,433,346) 2,636,744 (1,783,523)
High Yield Corporate Bond Portfolio 782,675 (118,016,974) 87,476,896 (29,757,403)
International Equity Portfolio 656,189 1,006,358 38,152,752 39,815,299
Mid Cap Core Portfolio 4,845,002 881,921 25,824,596 31,551,519
Mid Cap Growth Portfolio 0 (3,267,021) 48,162,069 44,895,048
Mid Cap Value Portfolio 57,116 5,022,070 50,155,653 55,234,839
S&P 500 Index Portfolio 126,715 (83,793,051) 208,376,308 124,709,972
Small Cap Growth Portfolio 0 2,401,910 25,475,089 27,876,999
Total Return Portfolio 54,570 (14,364,516) 52,536,994 38,227,048
Value Portfolio 52,501 (23,461,365) 75,946,337 52,537,473
American Century Income & Growth Portfolio 0 (3,979,568) 6,989,878 3,010,310
Dreyfus Large Company Value Portfolio 7,148 (4,193,323) 11,047,817 6,861,642
Eagle Asset Management Growth Equity Portfolio 0 (113,514,606) 6,996,576 (106,518,030)
Lord Abbett Developing Growth Portfolio 0 (7,520,464) 5,844,599 (1,675,865)
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
(a) The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily due to wash sale loss deferrals, premium
amortization, real estate investment trust, and other basis adjustments and
mark-to-market of futures contracts.
(b) The difference between book-basis and tax-basis components of accumulated
gain/(loss) is attributable primarily to Interest Write-Offs and
Post-October loss deferrals.
At December 31, 2004, 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
Portfolio through the years indicated. To the extent that these loss
carryforwards are used to offset future capital gains, it is probable that the
capital gains so offset will not be distributed to shareholders. Additionally,
as shown in the table below, certain Portfolios intend to elect, to the extent
provided by regulations, to treat certain qualifying capital losses that arose
after October 31, 2004 as if they arose on January 1, 2005.
<Table>
<Caption>
CAPITAL LOSS CAPITAL LOSS
AVAILABLE AMOUNT DEFERRED
THROUGH (000'S) (000'S)
Capital Appreciation 2009 $117,230
Portfolio 2010 97,959
2011 21,298
2012 37,973
- --------------------------------------------------------------
$274,460 $ 0
- --------------------------------------------------------------
Common Stock
Portfolio 2010 $ 19,970
- --------------------------------------------------------------
$ 19,970 $ 0
- --------------------------------------------------------------
Convertible Portfolio 2009 $ 5,710
2010 15,632
- --------------------------------------------------------------
$ 21,342 $ 0
- --------------------------------------------------------------
</Table>
<Table>
<Caption>
CAPITAL LOSS CAPITAL LOSS
AVAILABLE AMOUNT DEFERRED
THROUGH (000'S) (000'S)
Government Portfolio 2007 $ 323
2008 1,870
2012 2,240
- --------------------------------------------------------------
$ 4,433 $ 0
- --------------------------------------------------------------
High Yield Corporate 2009 $ 31,452
Bond Portfolio 2010 24,586
2011 61,979
- --------------------------------------------------------------
$118,017 $ 0
- --------------------------------------------------------------
Mid Cap Growth
Portfolio 2010 $ 407
2011 2,860
- --------------------------------------------------------------
$ 3,267 $ 0
- --------------------------------------------------------------
S&P 500 Index 2010 $ 66,906
Portfolio 2011 14,322
2012 1,933
- --------------------------------------------------------------
$ 83,161 $ 633
- --------------------------------------------------------------
Total Return
Portfolio 2010 $ 14,365
- --------------------------------------------------------------
$ 14,365 $ 0
- --------------------------------------------------------------
Value Portfolio 2010 $ 14,975
2011 8,486
- --------------------------------------------------------------
$ 23,461 $ 0
- --------------------------------------------------------------
American Century
Income & Growth 2010 $ 830
Portfolio 2011 3,150
- --------------------------------------------------------------
$ 3,980 $ 0
- --------------------------------------------------------------
</Table>
M- 270 MainStay VP Series Fund, Inc.
<Table>
<Caption>
CAPITAL LOSS CAPITAL LOSS
AVAILABLE AMOUNT DEFERRED
THROUGH (000'S) (000'S)
Dreyfus Large
Company Value 2010 $ 3,139
Portfolio 2011 1,054
- --------------------------------------------------------------
$ 4,193 $ 0
- --------------------------------------------------------------
Eagle Asset
Management 2009 $ 74,767
Growth Equity 2010 37,086
Portfolio 2012 294
- --------------------------------------------------------------
$112,147 $ 1,368
- --------------------------------------------------------------
Lord Abbett 2008 $ 1,595
Developing Growth 2009 1,418
Portfolio 2010 3,082
2011 1,425
- --------------------------------------------------------------
$ 7,520 $ 0
- --------------------------------------------------------------
</Table>
The Common Stock, Convertible, High Yield Corporate Bond, International Equity,
Mid Cap Growth, Mid Cap Value, Small Cap Growth, Total Return, Value, American
Century Income & Growth, Dreyfus Large Company Value and Lord Abbett Developing
Growth Portfolios utilized $152,021,350, $13,841,755, $24,046,843, $6,757,715,
$4,714,096, $2,503,257, $7,397,l76, $19,894,123, $31,465,931, $7,076,490,
$4,943,295 and $1,811,823 respectively, of capital loss carryforwards during the
year ended December 31, 2004.
NOTE 6 -- COMMITMENTS AND CONTINGENCIES:
As of December 31, 2004, the following Portfolios had unfunded loan commitments
pursuant to the following loan agreements:
HIGH YIELD CORPORATE BOND PORTFOLIO
<Table>
<Caption>
UNFUNDED
BORROWER COMMITMENT
Intelsat Bridge Loan, due 3/16/05 $ 6,985,000
- --------------------------------------------------------
LNR Property Corp. 12,305,000
- --------------------------------------------------------
Mirant Corp., due 7/17/05 454,852
- --------------------------------------------------------
Warner Chilcott Bridge Loan, due 7/5/05 9,000,000
- --------------------------------------------------------
$28,744,852
- --------------------------------------------------------
</Table>
TOTAL RETURN PORTFOLIO
<Table>
<Caption>
UNFUNDED
BORROWER COMMITMENT
Intelsat Bridge Loan, due 3/16/05 $ 140,000
- --------------------------------------------------------
$ 140,000
- --------------------------------------------------------
</Table>
These commitments are available until the maturity date of the respective
security.
NOTE 7 -- PORTFOLIO SECURITIES LOANED, FOREIGN CURRENCY FORWARD CONTRACTS,
FOREIGN CURRENCY AND WRITTEN OPTIONS:
As of December 31, 2004, the following Portfolios had securities on loan and
received collateral as follows:
<Table>
<Caption>
MARKET
VALUE OF
SECURITIES CASH NON-CASH
PORTFOLIO ON LOAN COLLATERAL COLLATERAL
Capital Appreciation $ 19,925,394 $ 20,527,195 $ --
- -----------------------------------------------------------------
Convertible 40,647,144 41,657,176 --
- -----------------------------------------------------------------
Government 49,474,223 51,172,863 100,154
- -----------------------------------------------------------------
High Yield 103,425,725 108,651,656 --
- -----------------------------------------------------------------
International Equity 8,373,357 8,742,217 --
- -----------------------------------------------------------------
Small Cap Growth 16,576,961 17,902,529 --
- -----------------------------------------------------------------
Total Return 16,068,006 16,448,875 --
- -----------------------------------------------------------------
Value 28,780,145 29,910,384 --
- -----------------------------------------------------------------
</Table>
The cash collateral received for securities on loan was used to purchase highly
liquid short-term investments in accordance with the securities lending
procedures of the Portfolios. Non-cash collateral consists of U.S. Treasury
Securities. Securities purchased with collateral received are valued at
amortized cost which approximate market value.
www.mainstayfunds.com M- 271
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 2004, the following Portfolio had foreign currency forward
contracts:
INTERNATIONAL EQUITY PORTFOLIO
<Table>
<Caption>
CONTRACT CONTRACT UNREALIZED
AMOUNT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
Foreign Currency Sale Contracts
Swiss Francs vs. Japanese Yen, expiring 3/7/05 CF 7,916,098 Y 684,980,000 (269,075)
- -----------------------------------------------------------------------------------------------------------
Singapore Dollar vs. Japanese Yen, expiring 2/7/05 S$ 5,988,000 Y 383,854,320 83,840
- -----------------------------------------------------------------------------------------------------------
<Caption>
CONTRACT CONTRACT
AMOUNT AMOUNT
PURCHASED SOLD
Foreign Currency Buy Contracts
Australian Dollar vs. U.S. Dollar, expiring 5/9/05 A$ 2,040,320 $ 1,425,000 159,288
- -----------------------------------------------------------------------------------------------------------
Net unrealized depreciation on foreign currency forward
contracts: $ (25,947)
- -----------------------------------------------------------------------------------------------------------
</Table>
As of December 31, 2004, the following Portfolios had foreign currency:
HIGH YIELD CORPORATE BOND PORTFOLIO
<Table>
<Caption>
CURRENCY COST VALUE
Euro E 49,007 $66,521 $66,612
- -----------------------------------------------------
Pound Sterling L 952 1,831 1,828
- -----------------------------------------------------
$68,352 $68,440
- -----------------------------------------------------
</Table>
INTERNATIONAL EQUITY PORTFOLIO
<Table>
<Caption>
CURRENCY COST VALUE
Australian Dollar A$ 3,669,241 $ 2,690,501 $ 2,876,318
Danish Krone DKK 2,653,071 484,677 484,796
Euro E 809,282 1,073,999 1,100,017
Japanese Yen Y 691,928,957 6,362,654 6,752,503
Pound Sterling L 2,963,119 5,537,973 5,688,897
Singapore Dollars S$ 4,923,097 2,957,316 3,015,864
Swiss Francs CF 111,259 88,260 97,845
- -------------------------------------------------------------
$19,195,380 $20,016,240
- -------------------------------------------------------------
</Table>
As of December 31, 2004, the following Portfolio had transactions in written
options:
TOTAL RETURN PORTFOLIO
<Table>
<Caption>
NUMBER OF
CONTRACTS PREMIUM
Options outstanding at December 31,
2003 0 $ 0
- ----------------------------------------------------------
Options -- written (103) (17,200)
- ----------------------------------------------------------
Options outstanding at December 31,
2004 (103) $(17,200)
- ----------------------------------------------------------
</Table>
VALUE PORTFOLIO
<Table>
<Caption>
NUMBER OF
CONTRACTS PREMIUM
Options outstanding at December
31, 2003 (638) $ (62,202)
- ---------------------------------------------------------
Options -- written (1,300) (201,402)
- ---------------------------------------------------------
Options -- buybacks 659 103,461
- ---------------------------------------------------------
Options -- exercised 331 46,172
- ---------------------------------------------------------
Options -- expired 638 62,202
- ---------------------------------------------------------
Options outstanding at December
31, 2004 (310) $ (51,769)
- ---------------------------------------------------------
</Table>
NOTE 8 -- LINE OF CREDIT:
The Portfolios, except Cash Management Portfolio, maintain a line of credit of
$160,000,000 with a syndicate of banks in order to secure a source of funds for
temporary purposes to meet unanticipated or excessive shareholder redemption
requests. These Portfolios pay a commitment fee, at an annual rate of 0.075% 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 among
the Portfolios 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 this line of credit during the year ended December
31, 2004.
M- 272 MainStay VP Series Fund, Inc.
NOTE 9 -- OTHER MATTERS:
NYLIM and mutual funds that NYLIM advises have received requests for information
from various government authorities and regulatory bodies regarding market
timing, late trading, operations, fees, expenses, and other matters. NYLIM and
the funds it advises are cooperating fully in responding to these requests. To
date, substantially all of the costs associated with these and other regulatory
matters have been incurred by NYLIM. Except as described below, neither NYLIM
nor the funds advised by it have any reason to believe that they have been
targeted as the subject of any governmental or regulatory enforcement action.
The SEC Staff has raised concerns relating to a guarantee provided to
shareholders of the MainStay Equity Index Fund and the fees and expenses of that
Fund, as well as the related guarantee disclosure to Fund shareholders.
Discussions have been held with the SEC concerning a possible resolution of this
matter. These discussions are continuing, but there can be no assurance at this
time as to the outcome of these efforts.
www.mainstayfunds.com M- 273
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 -- PURCHASES AND SALES OF SECURITIES (IN 000'S):
During the year ended December 31, 2004, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<Table>
<Caption>
BOND CAPITAL APPRECIATION COMMON STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------- -------------------- -----------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES
U.S. Government securities $1,271,960 $1,235,200 $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------
All others 299,433 321,458 329,151 414,190 1,355,554 1,348,058
- ------------------------------------------------------------------------------------------------------
Total $1,571,393 $1,556,658 $329,151 $414,190 $1,355,554 $1,348,058
- ------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MID CAP CORE MID CAP GROWTH MID CAP VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- ------------------- -------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES
U.S. Government securities $ -- $ -- $ -- $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------
All others 278,211 198,440 133,512 71,498 154,902 57,856
- ----------------------------------------------------------------------------------------------
Total $278,211 $198,440 $133,512 $71,498 $154,902 $57,856
- ----------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AMERICAN CENTURY DREYFUS EAGLE ASSET MANAGEMENT
INCOME & GROWTH LARGE COMPANY VALUE GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------- ----------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES
U.S. Government securities $ -- $ -- $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------
All others 72,003 59,216 78,169 59,963 175,477 182,231
- ------------------------------------------------------------------------------------------------
Total $72,003 $59,216 $78,169 $59,963 $175,477 $182,231
- ------------------------------------------------------------------------------------------------
</Table>
NOTE 11 -- CAPITAL SHARE TRANSACTIONS (IN 000'S):
Transactions in capital shares for the years ended December 31, 2004 and
December 31, 2003 were as follows:
<Table>
<Caption>
BOND PORTFOLIO CAPITAL APPRECIATION PORTFOLIO
------------------------------------------------ ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------------------ ------------------------------------------------
JUNE 4, 2003* JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
Shares sold 1,122 3,160 5,540 1,407 1,247 1,592 2,349 757
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 1,466 207 2,374 92 104 2 98 1
- ---------------------------------------------------------------------------------------------------------------------------------
2,588 3,367 7,914 1,499 1,351 1,594 2,447 758
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (7,126) (185) (6,831) (36) (7,015) (101) (5,159) (5)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (4,538) 3,182 1,083 1,463 (5,664) 1,493 (2,712) 753
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
* Commencement of Operations.
M- 274 MainStay VP Series Fund, Inc.
<Table>
<Caption>
HIGH YIELD
CONVERTIBLE GOVERNMENT CORPORATE BOND INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------ -------------------- -------------------- --------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
$ -- $ -- $361,150 $368,588 $ -- $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------
365,772 341,933 12,288 14,994 501,822 433,287 144,748 67,486
- ---------------------------------------------------------------------------------------------
$365,772 $341,933 $373,438 $383,582 $501,822 $433,287 $144,748 $ 67,486
- ---------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
S&P 500 INDEX SMALL CAP GROWTH TOTAL RETURN VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------ -------------------- -------------------- --------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
$ -- $ -- $ -- $ -- $234,329 $223,452 $ -- $ --
- ---------------------------------------------------------------------------------------------
94,932 38,008 176,749 134,839 373,126 402,189 505,090 390,941
- ---------------------------------------------------------------------------------------------
$ 94,932 $ 38,008 $176,749 $134,839 $607,455 $625,641 $505,090 $390,941
- ---------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
LORD ABBETT
DEVELOPING GROWTH
PORTFOLIO
- ---------------------------
PURCHASES SALES
$ -- $ --
- ---------------------------
64,713 58,019
- ---------------------------
$ 64,713 $ 58,019
- ---------------------------
</Table>
<Table>
<Caption>
CASH MANAGEMENT PORTFOLIO COMMON STOCK PORTFOLIO
- --------------------------------- -------------------------------------------------
INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS
-------------------------------------------------
JUNE 5, 2003*
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2004 2003 2003
567,129 939,341 4,875 1,098 1,834 545
- -------------------------------------------------------------------------------------
2,967 3,042 600 19 433 5
- -------------------------------------------------------------------------------------
570,096 942,383 5,475 1,117 2,267 550
- -------------------------------------------------------------------------------------
(621,403) (1,100,735) (6,554) (48) (5,018) (8)
- -------------------------------------------------------------------------------------
(51,307) (158,352) (1,079) 1,069 (2,751) 542
- -------------------------------------------------------------------------------------
<Caption>
CONVERTIBLE PORTFOLIO
- --- ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS
------------------------------------------------
JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003
2,677 4,705 5,694 2,182
- -----------------------------------------------------
490 116 562 42
- -----------------------------------------------------
3,167 4,821 6,256 2,224
- -----------------------------------------------------
(4,236) (247) (1,857) (34)
- -----------------------------------------------------
(1,069) 4,574 4,399 2,190
- -----------------------------------------------------
</Table>
www.mainstayfunds.com M- 275
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- CAPITAL SHARE TRANSACTIONS (IN 000'S) (CONTINUED):
<Table>
<Caption>
GOVERNMENT PORTFOLIO HIGH YIELD CORPORATE BOND PORTFOLIO
------------------------------------------------ ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------------------ ------------------------------------------------
JUNE 4, 2003* JUNE 4, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
Shares sold 1,516 2,838 9,239 1,264 9,966 18,337 28,223 8,108
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 1,076 149 1,575 57 7,845 1,799 7,865 536
- ---------------------------------------------------------------------------------------------------------------------------------
2,592 2,987 10,814 1,321 17,811 20,136 36,088 8,644
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (10,142) (470) (16,499) (60) (18,361) (650) (11,843) (173)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (7,550) 2,517 (5,685) 1,261 (550) 19,486 24,245 8,471
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MID CAP GROWTH PORTFOLIO MID CAP VALUE PORTFOLIO
------------------------------------------------ -------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------------------ -------------------------------------------------
JUNE 5, 2003* JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
Shares sold 3,522 4,689 5,787 1,827 7,826 4,834 4,051 1,635
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions -- -- -- -- 337 97 113 13
- ----------------------------------------------------------------------------------------------------------------------------------
3,522 4,689 5,787 1,827 8,163 4,931 4,164 1,648
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (1,407) (440) (483) (52) (764) (70) (975) (14)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 2,115 4,249 5,304 1,775 7,399 4,861 3,189 1,634
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
TOTAL RETURN PORTFOLIO VALUE PORTFOLIO
------------------------------------------------ ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------------------ ------------------------------------------------
JUNE 4, 2003* JUNE 4, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
Shares sold 620 1,617 1,696 765 9,001 2,532 2,419 999
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 527 34 611 12 375 32 380 12
- ---------------------------------------------------------------------------------------------------------------------------------
1,147 1,651 2,307 777 9,376 2,564 2,799 1,011
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (4,753) (137) (4,064) (16) (2,938) (140) (2,661) (6)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (3,606) 1,514 (1,757) 761 6,438 2,424 138 1,005
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
* Commencement of Operations.
M- 276 MainStay VP Series Fund, Inc.
<Table>
<Caption>
INTERNATIONAL EQUITY PORTFOLIO MID CAP CORE PORTFOLIO
- ---------------------------------------------------- ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
- ---------------------------------------------------- ------------------------------------------------
JUNE 5, 2003* JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
5,534 2,920 21,236 748 4,947 2,429 2,032 815
- -------------------------------------------------------------------------------------------------------
107 27 125 11 239 76 18 2
- -------------------------------------------------------------------------------------------------------
5,641 2,947 21,361 759 5,186 2,505 2,050 817
- -------------------------------------------------------------------------------------------------------
(1,121) (51) (19,981) (4) (447) (60) (447) (5)
- -------------------------------------------------------------------------------------------------------
4,520 2,896 1,380 755 4,739 2,445 1,603 812
- -------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
S&P 500 INDEX PORTFOLIO SMALL CAP GROWTH PORTFOLIO
- ---------------------------------------------------- ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
- ---------------------------------------------------- ------------------------------------------------
JUNE 5, 2003* JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
3,343 4,329 4,377 1,752 1,861 3,940 5,047 1,563
- -------------------------------------------------------------------------------------------------------
799 80 656 19 -- -- -- --
- -------------------------------------------------------------------------------------------------------
4,142 4,409 5,033 1,771 1,861 3,940 5,047 1,563
- -------------------------------------------------------------------------------------------------------
(5,251) (103) (4,970) (9) (1,209) (223) (890) (115)
- -------------------------------------------------------------------------------------------------------
(1,109) 4,306 63 1,762 652 3,717 4,157 1,448
- -------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AMERICAN CENTURY INCOME & GROWTH PORTFOLIO DREYFUS LARGE COMPANY VALUE PORTFOLIO
- ----------------------------------------------------- ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
- ----------------------------------------------------- ------------------------------------------------
JUNE 13, 2003* JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
738 1,278 1,254 402 1,150 1,593 1,443 594
- --------------------------------------------------------------------------------------------------------
109 24 84 4 59 15 43 4
- --------------------------------------------------------------------------------------------------------
847 1,302 1,338 406 1,209 1,608 1,486 598
- --------------------------------------------------------------------------------------------------------
(899) (67) (1,754) (10) (953) (196) (1,609) (5)
- --------------------------------------------------------------------------------------------------------
(52) 1,235 (416) 396 256 1,412 (123) 593
- --------------------------------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M- 277
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- CAPITAL SHARE TRANSACTIONS (IN 000'S) (CONTINUED):
<Table>
<Caption>
EAGLE ASSET MANAGEMENT
GROWTH EQUITY PORTFOLIO LORD ABBETT DEVELOPING GROWTH PORTFOLIO
------------------------------------------------ ------------------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------------------ ------------------------------------------------
JUNE 6, 2003* JUNE 5, 2003*
YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2003 2004 2003 2003
Shares sold 637 1,216 1,883 672 546 1,361 1,658 531
- --------------------------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 26 --(a) 21 1 -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
663 1,216 1,904 673 546 1,361 1,658 531
- --------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (2,473) (201) (1,793) (17) (963) (99) (817) (12)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,810) 1,015 111 656 (417) 1,262 841 519
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
* Commencement of Operations.
(a) Less than one thousand.
M- 278 MainStay VP Series Fund, Inc.
REPORT OF INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Shareholders of
MainStay VP Series Fund, 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 Bond Portfolio, Capital
Appreciation Portfolio, Cash Management Portfolio, Common Stock Portfolio
(formerly Growth Equity Portfolio), Convertible Portfolio, Government Portfolio,
High Yield Corporate Bond Portfolio, International Equity Portfolio, Mid Cap
Core Portfolio, Mid Cap Growth Portfolio, Mid Cap Value Portfolio (formerly
Equity Income Portfolio), S&P 500 Index Portfolio (formerly Indexed Equity
Portfolio), Small Cap Growth Portfolio, Total Return Portfolio, Value Portfolio,
American Century Income and Growth Portfolio, Dreyfus Large Company Value
Portfolio, Eagle Asset Management Growth Equity Portfolio and Lord Abbett
Developing Growth Portfolio (constituting MainStay VP Series Fund, Inc.,
hereafter referred to as the "Fund") at December 31, 2004, the results of each
of their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, 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 Fund's 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 the
standards of the Public Company Accounting Oversight Board (United States).
Those standards 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 December 31, 2004 by
correspondence with the custodians and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 17, 2005
www.mainstayfunds.com M- 279
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that New York Life Investment
Management LLC (NYLIM) uses to vote proxies related to the Fund's securities is
available without charge, upon request, (i) by calling 1-800-598-2019 and (ii)
on the Securities and Exchange Commission's ("SEC") website at www.sec.gov.
The Funds are required to file with the SEC its proxy voting records for each
Portfolio for the 12-month period ending June 30 on Form N-PX. The most recent
Form N-PX or relevant Portfolio proxy voting record is available free of charge
upon request by calling 1-800-598-2019 or on the SEC's website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
Each Fund is required to file its complete schedule of portfolio holdings with
the SEC for its first and third fiscal quarters on Form N-Q. The Fund's Forms
N-Q will be available without charge, on the SEC's website at www.sec.gov and
may be available by calling NYLIM at 1-800-598-2019. You can also obtain copies
of Form N-Q by (i) visiting the SEC's Public Reference Room in Washington, DC
(information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); (ii) sending your request and a duplicating fee to the
SEC's Public Reference Room, Washington, DC 20549-0102; or (iii) sending your
request electronically to publicinfo@sec.gov.
M- 280 MainStay VP Series Fund, Inc.
FORM N-CSR
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, Registrant had adopted
a code of ethics (the "Code") that applies to Registrant's principal executive
office ("PEO") and principal financial officer ("PFO"). There were no amendments
to the Code during the period covered by the report. The Registrant did not
grant any waivers, including implicit waivers, from any provisions of the Code
to the PEO of PFO during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors has determined that the registrant has at least one
"audit committee financial expert" (as defined in Item 3 of Form N-CSR) serving
on its Audit Committee. The Audit Committee financial expert is Roman Weil. Mr.
Weil is "independent" within the meaning of that term used in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES. The aggregate fees billed for each of the last two fiscal
years for professional services rendered by PricewaterhouseCoopers LLP ("PwC")
for the audit of the MainStay VP Series Fund, Inc. ("Fund") annual financial
statements or services that are normally provided by PwC in connection with
statutory and regulatory filings or engagements for those fiscal years are
$656,000 for 2003 and $640,000 for 2004.
(b) AUDIT-RELATED FEES. The aggregate fees billed in each of the last two
fiscal years for assurance and related services by PwC that are reasonably
related to the performance of the audit of the Fund's financial statements and
are not reported under paragraph (a) of this Item are $0 for 2003 and $0 for
2004.
(c) TAX FEES. The aggregate fees billed in each of the last two fiscal
years for professional services rendered by PWC for tax compliance, tax advice,
and tax planning are $117,850 for 2003 and $149,650 for 2004.
(d) ALL OTHER FEES. The aggregate fees billed in each of the last two
fiscal years for products and services provided by PWC, other than the services
reported in paragraphs (a) through (c) of this Item are $6,000 for 2003 and $0
for 2004.
(e)(1) Audit Committee Policies Regarding Pre-Approval of Services.
The registrant's pre-approval policies and procedures described in
paragraph (c)(7) of Rule 2-01 of Regulation S-X are addressed in the
Pre-Approval Policies and Procedures, as approved by the Audit Committee of the
Fund, on December 2, 2004.
(e)(2) With respect to the services described in paragraphs (b) through
(d) of this Item 4, no amount was approved by the Audit Committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than fifty percent of PwC's engagement to audit the Fund's
financial statements for the fiscal year ended December 31, 2004 was
attributable to work performed by persons other than PwC's full-time, permanent
employees.
(g) All non-audit fees billed by PwC for the fiscal years ended December
31, 2003 and December 31, 2004 are disclosed in paragraph (b) through (d) above.
The aggregate non-audit fees billed by PwC for services rendered to the Fund's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant was approximately $0 for 2003 and $0
for 2004.
(h) The Fund's Audit Committee has considered whether the provision of
non-audit services that were rendered to the registrant's investment adviser
(not including any sub-adviser whose role is primarily portfolio management and
is subcontracted with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDITED COMMITTEE OF LISTED REGISTRANTS.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES AND AFFILIATED Purchasers.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a meeting held on August 16-17, 2004 the Nominating Committee of the
MainStay VP Series Fund, Inc. revised its policies for considering Board Member
candidates. The Committee may now consider nominations from owners of variable
life insurance and variable annuity contracts that have selected the Registrant
as an investment option ("Contract Owners"). Each eligible Contract Owner may
submit no more than one candidate each calendar year, and recommendations should
be forwarded to the attention of the Fund's Secretary.
A Contract Owner's submission to the Secretary of the Fund must include:
(a) contact information for the nominating Contract Owner; (b) a certification
from the nominating Contract Owner
which provides the number of shares which the person or group has: (i) sole
power to vote or direct the vote; (ii) shared power to dispose or direct the
disposition of such shares. In addition the certification shall provide that the
shares have been held continuously for at least two years as of the date of the
nomination; (c) the candidate's contact information and the number of applicable
Fund shares owned by the candidate; (d) all information regarding the candidate
that would be required to be disclosed in solicitation of proxies for elections
of directors required by Regulation 14A under the Securities Exchange Act of
1934, as amended; and (e) a notarized letter executed by the candidate, stating
his or her intention to serve as a candidate and be named in the Fund's proxy
statement , if so designated by the Nominating Committee and the Fund's Board.
It shall be in the Nominating Committee's sole discretion whether to seek
corrections of a deficient submission or to exclude a candidate from
consideration.
ITEM 10. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the Disclosure Controls and Procedures (as defined
in Rule 30a-2(c) under the Investment Company Act of 1940) (the "Disclosure
Controls") as of a date within 90 days prior to the filing date (the "Filing
Date") of this Form N-CSR (the "Report"), the Registrant's principal executive
officer and financial officer have concluded that the Disclosure Controls are
reasonably designed to ensure that information required to be disclosed by the
Registrant in the Report is recorded, processed, summarized and reported by the
Filing Date, including ensuring that information required to be disclosed in the
Report is accumulated and communicated to the Registrant's management, including
the Registrant's principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no significant changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of 1940) that occurred during the registrant's second fiscal half-year that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) The code of ethics referenced in Item 2 of this Report is filed as an
exhibit to this filing.
(a)(2) The certifications required by Rule 30a-2(b) of the Investment Company
Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are filed as
exhibits to this filing.
(b) The certifications required by Rule 30a-2(b) of the Investment Company Act
of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are furnished as
exhibits to this filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MAINSTAY VP SERIES FUND, INC.
By: /s/ Gary E. Wendlandt
GARY E. WENDLANDT
CHAIRMAN
Date: March 11, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/Gary E. Wendlandt
GARY E. WENDLANDT
CHAIRMAN
Date: March 11, 2005
By: /s/ Patrick J. Farrell
PATRICK J. FARRELL
TREASURER AND
CHIEF FINANCIAL AND ACCOUNTING OFFICER
Date: March 11, 2005
EXHIBIT INDEX
(a) The code of ethics referenced in Item 2 of this Report is filed
as an exhibit to this filing.
(b)(1) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2 under the Investment
Company Act of 1940.
(b)(2) Certification of principal executive officer and principal
financial officer as required by Section 906 of the Sarbanes-Oxley
Act of 2002.