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.
169 Lackawanna Avenue
Parsippany, NJ 07054
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 576-7000
Date of fiscal year end: 12/31
Date of reporting period: 12/31/06
FORM N-CSR
Item 1. Reports to Stockholders.
[INSERT REPORT HERE]
(MAINSTAY INVESTMENTS LOGO)
MAINSTAY VP SERIES FUND, INC.
NOT A PART OF THE
ANNUAL REPORT
A MESSAGE FROM
THE PRESIDENT
For stock and bond investors, 2006 was generally a positive year. Most major
U.S. stock market indexes posted double-digit returns, and value stocks
outperformed growth stocks at all capitalization levels. Of course, past
performance is no guarantee of future results.
A healthy economy, lower unemployment, strong corporate profits and increased
merger and acquisition activity all contributed to the stock market's positive
results. International stocks benefited from ongoing economic expansion, low
interest rates and favorable earnings trends. As a group, international stocks
outpaced U.S. equities.
Although higher yields hurt bond prices, all major segments of the domestic bond
market generated positive total returns. Emerging-market debt also provided
strong performance, and domestic high-yield bonds advanced, despite tight
spreads for most of the year.
The Federal Open Market Committee (FOMC), which had been tightening monetary
policy since mid-2004, continued to do so at its January 2006 meeting. In
February, Dr. Ben Bernanke succeeded Dr. Alan Greenspan as chairman of the
Federal Reserve Board. Under the new leadership, the FOMC continued its
incremental tightening policy at the next three meetings. The federal funds
target rate reached 5.25% in June 2006 and stayed at that level for the
remainder of the year.
The rate hikes in the first half of 2006 reflected inflation concerns, prompted
in part by rising oil prices. Fortunately, oil prices peaked in July and
moderated through the remainder of the year, allowing the FOMC to move to the
sidelines and observe how the economy responded to earlier tightening moves.
Meanwhile, the housing market continued to cool, which shifted investors'
attention from inflation risk to the possibility of a recession. This concern
was reflected in the Treasury yield curve, which inverted when short-term yields
rose with the targeted federal funds rate while longer-term yields remained more
stable. At year-end 2006, the slope of the Treasury yield curve remained
relatively shallow.
Although volatility is unavoidable, each Portfolio of MainStay VP Series Fund,
Inc., pursues its investment objective with a well-defined approach. Using time-
tested investment principles, our Portfolio Managers pursue solid performance
within the risk management guidelines of their respective Portfolios.
We are pleased to inform our shareholders that on June 30, 2006, New York Life
Investment Management LLC closed a definitive merger agreement with
Institutional Capital Corporation (ICAP), a premier value-equity institutional
investment firm based in Chicago, Illinois. In July 2006, ICAP began serving as
Portfolio Manager of MainStay VP Basic Value Portfolio, and effective November
10, 2006, the name of the Portfolio was changed to MainStay VP ICAP Select
Equity Portfolio.
The reports that follow provide more information and detail about the
securities, markets and management decisions that contributed to the performance
of your investments in 2006. We are pleased that you have chosen to invest with
MainStay VP Series Fund, Inc., and we look forward to serving your investment
needs for many years to come.
Sincerely yours,
- -s- Christopher O. Blunt
Christopher O. Blunt
President
MainStay VP Series Fund, Inc.
January 2007
Not part of the Annual Report
SEC File Nos. 002-86082
811-03833-01
MAINSTAY VP SERIES FUND, INC.
Supplement dated August 23, 2006 ("Supplement")
to the Prospectus dated May 1, 2006 ("Prospectus"), as supplemented July 5, 2006
This Supplement updates certain information contained in the above-dated
Prospectus for MainStay VP Series Fund, Inc. ("Fund"). You may obtain copies of
the Prospectuses and the Statements of Additional Information free of charge,
upon request, by calling toll-free 1-800-598-2019, or by writing to New York
Life Insurance and Annuity Corporation, 51 Madison Avenue, New York, NY 10010.
1. PORTFOLIO MANAGER CHANGES
Christopher Harms and Devon McCormick have each resigned as portfolio
managers to various Portfolios of the Fund. Therefore, all references to
Christopher Harms and Devon McCormick in the prospectus are hereby deleted.
a. The "PORTFOLIO MANAGERS" section on page A-64 of the prospectus is
revised to amend the portfolio manager listing for the affected
portfolios as follows:
CASH MANAGEMENT PORTFOLIO -- Claude Athaide and Gary Goodenough
CONSERVATIVE ALLOCATION PORTFOLIO -- Tony Elavia
GOVERNMENT PORTFOLIO -- Joseph Portera and Gary Goodenough
GROWTH ALLOCATION PORTFOLIO -- Tony Elavia
MODERATE ALLOCATION PORTFOLIO -- Tony Elavia
MODERATE GROWTH ALLOCATION PORTFOLIO -- Tony Elavia
TOTAL RETURN PORTFOLIO -- Gary Goodenough, Joseph Portera, Richard A.
Rosen and Edmund C. Spelman
b. The "PORTFOLIO MANAGER BIOGRAPHIES" section beginning on page A-64 is
amended to delete the biographies of Christopher Harms and Devon
McComick.
2. ASSET ALLOCATION PORTFOLIOS
The Fund's Board of Directors has authorized the MainStay VP Asset
Allocation Portfolios to invest in affiliated MainStay mutual funds as
underlying investment options.
Not part of the Annual Report
a. The tables that appear on pages A-5 and A-6 of the prospectus,
illustrating each Asset Allocation Portfolio's target allocations among
asset classes, are revised as follows:
MAINSTAY VP CONSERVATIVE ALLOCATION
<Table>
<Caption>
------------------------------------------------------------------------------------
TARGET
ASSET CLASS ALLOCATION PORTFOLIO/FUND NAME
------------------------------------------------------------------------------------
Domestic Equity 35% MainStay VP Basic Value Portfolio
------------------------------------------------
MainStay VP Capital Appreciation Portfolio
------------------------------------------------
MainStay VP Common Stock Portfolio
------------------------------------------------
MainStay VP Developing Growth Portfolio
------------------------------------------------
MainStay VP Income & Growth Portfolio
------------------------------------------------
MainStay VP Large Cap Growth Portfolio
------------------------------------------------
MainStay All Cap Growth Fund
------------------------------------------------
MainStay All Cap Value Fund
------------------------------------------------
MainStay Growth Equity Fund
------------------------------------------------
MainStay ICAP Equity Fund*
------------------------------------------------------------------------------------
International Equity 5% MainStay VP International Equity Portfolio
------------------------------------------------------------------------------------
Fixed Income 60% MainStay VP Bond Portfolio
------------------------------------------------
MainStay VP Convertible Portfolio
------------------------------------------------
MainStay VP Floating Rate Portfolio
------------------------------------------------
MainStay Diversified Income Fund
------------------------------------------------
MainStay Indexed Bond Fund
------------------------------------------------------------------------------------
<Caption>
-------------------- ------------------------------------------------
ASSET CLASS PORTFOLIO/FUND NAME
-------------------- ------------------------------------------------
Domestic Equity MainStay VP Mid Cap Core Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Growth Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Value Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP S&P 500 Index Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Small Cap Growth Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Value Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay Large Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay MAP Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Mid Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Small Cap Value Fund
------------------------------------------------------------------------------------
International Equity MainStay ICAP International Fund*
------------------------------------------------------------------------------------
Fixed Income MainStay VP Government Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP High Yield Corporate Bond Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Cash Management Portfolio
------------------------------------------------ ----------------------------------
- --------------
MainStay Short Term Bond Fund
------------------------------------------------ ----------------------------------
- --------------
------------------------------------------------------------------------------------
</Table>
MAINSTAY VP MODERATE ALLOCATION
<Table>
<Caption>
------------------------------------------------------------------------------------
TARGET
ASSET CLASS ALLOCATION PORTFOLIO NAME
------------------------------------------------------------------------------------
Domestic Equity 50% MainStay VP Basic Value
------------------------------------------------
MainStay VP Capital Appreciation
------------------------------------------------
MainStay VP Common Stock
------------------------------------------------
MainStay VP Developing Growth
------------------------------------------------
MainStay VP Income & Growth
------------------------------------------------
MainStay VP Large Cap Growth
------------------------------------------------
MainStay All Cap Growth Fund
------------------------------------------------
MainStay All Cap Value Fund
------------------------------------------------
MainStay Growth Equity Fund
------------------------------------------------
MainStay ICAP Equity Fund*
------------------------------------------------------------------------------------
International Equity 10% MainStay VP International Equity
------------------------------------------------------------------------------------
Fixed Income 40% MainStay VP Bond
------------------------------------------------
MainStay VP Convertible
------------------------------------------------
MainStay VP Floating Rate
------------------------------------------------
MainStay Diversified Income Fund
------------------------------------------------
MainStay Indexed Bond Fund
------------------------------------------------------------------------------------
<Caption>
-------------------- ------------------------------------------------
ASSET CLASS PORTFOLIO NAME
-------------------- ------------------------------------------------
Domestic Equity MainStay VP Mid Cap Core
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Growth
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Value
------------------------------------------------ ----------------------------------
- --------------
MainStay VP S&P 500 Index
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Small Cap Growth
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Value
------------------------------------------------ ----------------------------------
- --------------
MainStay Large Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay MAP Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Mid Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Small Cap Value Fund
------------------------------------------------------------------------------------
International Equity MainStay ICAP International Fund*
------------------------------------------------------------------------------------
Fixed Income MainStay VP Government
------------------------------------------------ ----------------------------------
- --------------
MainStay VP High Yield Corporate Bond
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Cash Management
------------------------------------------------ ----------------------------------
- --------------
MainStay Short Term Bond Fund
------------------------------------------------ ----------------------------------
- --------------
------------------------------------------------------------------------------------
</Table>
Not part of the Annual Report
MAINSTAY VP MODERATE GROWTH ALLOCATION
<Table>
<Caption>
------------------------------------------------------------------------------------
TARGET
ASSET CLASS ALLOCATION PORTFOLIO NAME
------------------------------------------------------------------------------------
Domestic Equity 65% MainStay VP Basic Value
------------------------------------------------
MainStay VP Capital Appreciation
------------------------------------------------
MainStay VP Common Stock
------------------------------------------------
MainStay VP Developing Growth
------------------------------------------------
MainStay VP Income & Growth
------------------------------------------------
MainStay VP Large Cap Growth
------------------------------------------------
MainStay All Cap Growth Fund
------------------------------------------------
MainStay All Cap Value Fund
------------------------------------------------
MainStay Growth Equity Fund
------------------------------------------------
MainStay ICAP Equity Fund*
------------------------------------------------------------------------------------
International Equity 15% MainStay VP International Equity
------------------------------------------------------------------------------------
Fixed Income 20% MainStay VP Bond
------------------------------------------------
MainStay VP Convertible
------------------------------------------------
MainStay VP Floating Rate
------------------------------------------------
MainStay Diversified Income Fund
------------------------------------------------
MainStay Indexed Bond Fund
------------------------------------------------------------------------------------
<Caption>
-------------------- ------------------------------------------------
ASSET CLASS PORTFOLIO NAME
-------------------- ------------------------------------------------
Domestic Equity MainStay VP Mid Cap Core
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Growth
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Value
------------------------------------------------ ----------------------------------
- --------------
MainStay VP S&P 500 Index
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Small Cap Growth
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Value
------------------------------------------------ ----------------------------------
- --------------
MainStay Large Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay MAP Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Mid Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Small Cap Value Fund
------------------------------------------------------------------------------------
International Equity MainStay ICAP International Fund*
------------------------------------------------------------------------------------
Fixed Income MainStay VP Government
------------------------------------------------ ----------------------------------
- --------------
MainStay VP High Yield Corporate Bond
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Cash Management
------------------------------------------------ ----------------------------------
- --------------
MainStay Short Term Bond Fund
------------------------------------------------ ----------------------------------
- --------------
------------------------------------------------------------------------------------
</Table>
* These funds will become available for use as underlying investment
options on or about 8/31/06.
MAINSTAY VP GROWTH ALLOCATION
<Table>
<Caption>
------------------------------------------------------------------------------------
TARGET
ASSET CLASS ALLOCATION PORTFOLIO NAME
------------------------------------------------------------------------------------
Domestic Equity 80% MainStay VP Basic Value
------------------------------------------------
MainStay VP Capital Appreciation
------------------------------------------------
MainStay VP Common Stock
------------------------------------------------
MainStay VP Developing Growth
------------------------------------------------
MainStay VP Income & Growth
------------------------------------------------
MainStay VP Large Cap Growth
------------------------------------------------
MainStay All Cap Growth Fund
------------------------------------------------
MainStay All Cap Value Fund
------------------------------------------------
MainStay Growth Equity Fund
------------------------------------------------
MainStay ICAP Equity Fund*
------------------------------------------------------------------------------------
International Equity 20% MainStay VP International Equity
------------------------------------------------------------------------------------
Fixed Income 0% MainStay VP Cash Management
------------------------------------------------------------------------------------
<Caption>
-------------------- ------------------------------------------------
ASSET CLASS PORTFOLIO NAME
-------------------- ------------------------------------------------
Domestic Equity MainStay VP Mid Cap Core
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Growth
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Mid Cap Value
------------------------------------------------ ----------------------------------
- --------------
MainStay VP S&P 500 Index
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Small Cap Growth
------------------------------------------------ ----------------------------------
- --------------
MainStay VP Value
------------------------------------------------ ----------------------------------
- --------------
MainStay Large Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay MAP Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Mid Cap Opportunity Fund
------------------------------------------------ ----------------------------------
- --------------
MainStay Small Cap Value Fund
------------------------------------------------------------------------------------
International Equity MainStay ICAP International Fund*
------------------------------------------------------------------------------------
Fixed Income
------------------------------------------------------------------------------------
</Table>
Percentages represent target allocations -- actual allocation percentages
may vary up to +/-10%.
b. The following information is inserted on page A-6 of the prospectus
under the section entitled "Investment in affiliated underlying
portfolios."
Not part of the Annual Report
The name of each MainStay mutual fund in which the Asset Allocation
Portfolios may invest, its respective investment objective and primary
investments are as follows:
<Table>
<Caption>
-----------------------------------------------------------------------------------
UNDERLYING EQUITY FUNDS INVESTMENT OBJECTIVE
-----------------------------------------------------------------------------------
Seeks long-term growth of capital. Dividend
income, if any, is a consideration incidental
to the Fund's objective of growth of capital.
MainStay All Cap Growth Fund
-----------------------------------------------------------------------------------
Seeks maximum long-term total return from a
combination of capital growth and income.
MainStay All Cap Value Fund
-----------------------------------------------------------------------------------
Seeks long-term growth of capital.
MainStay Growth Equity Fund
-----------------------------------------------------------------------------------
Seeks a superior total return with only a
moderate degree of risk.
MainStay ICAP Equity Fund*
-----------------------------------------------------------------------------------
Seeks a superior total return with income as a
secondary objective.
MainStay ICAP International Fund*
-----------------------------------------------------------------------------------
<Caption>
--------------------------------- -----------------------------------------------
UNDERLYING EQUITY FUNDS PRIMARY INVESTMENTS
--------------------------------- -----------------------------------------------
Securities with growth characteristics across
the entire range of market capitalizations as
described by the Russell 3000(R) Growth Index
MainStay All Cap Growth Fund
-----------------------------------------------------------------------------------
Securities with value characteristics across
the entire range of market capitalizations as
described by the Russell 3000(R) Value Index
MainStay All Cap Value Fund
-----------------------------------------------------------------------------------
Large capitalization stocks that the Fund's
manager believes will provide an opportunity
for achieving superior portfolio returns over
the long term
MainStay Growth Equity Fund
-----------------------------------------------------------------------------------
U.S. dollar-denominated equity securities of
companies with market capitalizations of at
least $2 billion
MainStay ICAP Equity Fund*
-----------------------------------------------------------------------------------
Equity securities of foreign companies with
market capitalizations of at least $2 billion
MainStay ICAP International Fund*
-----------------------------------------------------------------------------------
</Table>
* These funds will become available for use as underlying investment
options on or about 8/31/06.
<Table>
<Caption>
-----------------------------------------------------------------------------------
UNDERLYING EQUITY FUNDS INVESTMENT OBJECTIVE
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Seeks high total return
MainStay Large Cap Opportunity
Fund
-----------------------------------------------------------------------------------
Seeks long-term appreciation of capital. The
Fund also seeks to earn income, but this is a
secondary objective
MainStay MAP Fund
-----------------------------------------------------------------------------------
Seeks high total return
MainStay Mid Cap Opportunity Fund
-----------------------------------------------------------------------------------
Seeks long-term capital appreciation by
investing primarily in securities of small-cap
companies
MainStay Small Cap Value Fund
-----------------------------------------------------------------------------------
<Caption>
--------------------------------- -----------------------------------------------
UNDERLYING EQUITY FUNDS PRIMARY INVESTMENTS
--------------------------------- -----------------------------------------------
-----------------------------------------------------------------------------------
Common and preferred stock of large companies
with market capitalizations, at the time of the
investment, similar to the companies in the
Russell 1000 Index
MainStay Large Cap Opportunity
Fund
-----------------------------------------------------------------------------------
Equity-type, domestic securities, including
common stocks, as well as securities
convertible into, or exchangeable for, common
stocks.
MainStay MAP Fund
-----------------------------------------------------------------------------------
Common and preferred stock of companies with
market capitalizations that, at the time of
investment, are similar to the companies in the
Russell Midcap(R) Index, the S&P Midcap 400(R)
Index or a universe selected from the smallest
800 companies of the largest 1,000 companies,
ranked by market capitalization.
MainStay Mid Cap Opportunity Fund
-----------------------------------------------------------------------------------
Companies at the time of investment comparable
to companies in the Russell 2000(R) Value Index
and invests primarily in common stocks and
securities convertible into common stock.
MainStay Small Cap Value Fund
-----------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
-----------------------------------------------------------------------------------
UNDERLYING FIXED INCOME FUNDS INVESTMENT OBJECTIVE
-----------------------------------------------------------------------------------
Seeks to provide current income and competitive
overall return by investing primarily in
domestic and foreign debt securities.
MainStay Diversified Income Fund
-----------------------------------------------------------------------------------
Seeks to provide investment results that
correspond to the total return performance of
fixed income securities in the aggregate, as
represented by the BIG Index.
MainStay Indexed Bond Fund
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Seeks to maximize total return, consistent with
liquidity, preservation of capital and
investment in short-term debt securities.
MainStay Short Term Bond
-----------------------------------------------------------------------------------
<Caption>
--------------------------------- -----------------------------------------------
UNDERLYING FIXED INCOME FUNDS PRIMARY INVESTMENTS
--------------------------------- -----------------------------------------------
Diversified portfolio of domestic and foreign
debt or debt-related securities issued by
government and corporate issuers
MainStay Diversified Income Fund
-----------------------------------------------------------------------------------
Fixed income securities in the BIG Index. The
BIG Index includes investment grade corporate
bonds, US dollar-denominated foreign
securities, US Treasury or agency issues,
mortgage related securities and other
securities.
MainStay Indexed Bond Fund
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Diversified portfolio of debt securities,
including securities with special features,
which have price characteristics similar to
debt securities
MainStay Short Term Bond
-----------------------------------------------------------------------------------
</Table>
PLEASE RETAIN THIS SUPPLEMENT FOR YOUR FUTURE REFERENCE
Not part of the Annual Report
(MAINSTAY INVESTMENTS LOGO)
MAINSTAY VP SERIES FUND, INC.
MainStay VP Annual Report
December 31, 2006
The views expressed in this report and the information about
each Portfolio's holdings are for the period covered by this
report and are subject to change thereafter.
This page intentionally left blank
TABLE OF CONTENTS
<Table>
Index Definitions M-2
- ----------------------------------------------------------------------------------
MainStay VP Balanced Portfolio M-4
- ----------------------------------------------------------------------------------
MainStay VP Bond Portfolio M-20
- ----------------------------------------------------------------------------------
MainStay VP Capital Appreciation Portfolio M-38
- ----------------------------------------------------------------------------------
MainStay VP Cash Management Portfolio M-50
- ----------------------------------------------------------------------------------
MainStay VP Common Stock Portfolio M-62
- ----------------------------------------------------------------------------------
MainStay VP Conservative Allocation Portfolio M-78
- ----------------------------------------------------------------------------------
MainStay VP Convertible Portfolio M-88
- ----------------------------------------------------------------------------------
MainStay VP Developing Growth Portfolio M-104
- ----------------------------------------------------------------------------------
MainStay VP Floating Rate Portfolio M-118
- ----------------------------------------------------------------------------------
MainStay VP Government Portfolio M-135
- ----------------------------------------------------------------------------------
MainStay VP Growth Allocation Portfolio M-150
- ----------------------------------------------------------------------------------
MainStay VP High Yield Corporate Bond Portfolio M-160
- ----------------------------------------------------------------------------------
MainStay VP ICAP Select Equity Portfolio
(formerly MainStay Basic Value Portfolio) M-182
- ----------------------------------------------------------------------------------
MainStay VP Income & Growth Portfolio M-194
- ----------------------------------------------------------------------------------
MainStay VP International Equity Portfolio M-208
- ----------------------------------------------------------------------------------
MainStay VP Large Cap Growth Portfolio M-224
- ----------------------------------------------------------------------------------
MainStay VP Mid Cap Core Portfolio M-238
- ----------------------------------------------------------------------------------
MainStay VP Mid Cap Growth Portfolio M-254
- ----------------------------------------------------------------------------------
MainStay VP Mid Cap Value Portfolio M-268
- ----------------------------------------------------------------------------------
MainStay VP Moderate Allocation Portfolio M-280
- ----------------------------------------------------------------------------------
MainStay VP Moderate Growth Allocation Portfolio M-290
- ----------------------------------------------------------------------------------
MainStay VP S&P 500 Index Portfolio M-300
- ----------------------------------------------------------------------------------
MainStay VP Small Cap Growth Portfolio M-318
- ----------------------------------------------------------------------------------
MainStay VP Total Return Portfolio M-332
- ----------------------------------------------------------------------------------
MainStay VP Value Portfolio M-356
- ----------------------------------------------------------------------------------
Notes to Financial Statements M-370
- ----------------------------------------------------------------------------------
Report of Independent Public Accounting Firm M-393
- ----------------------------------------------------------------------------------
Proxy Voting Policies and Procedures M-394
- ----------------------------------------------------------------------------------
Shareholder Reports and Quarterly Portfolio Disclosure M-394
- ----------------------------------------------------------------------------------
Special Meeting of Shareholders M-395
- ----------------------------------------------------------------------------------
Directors and Officers M-396
- ----------------------------------------------------------------------------------
Approval of Management and Subadvisory Agreements M-399
</Table>
www.mainstayfunds.com M-1
INDEX DEFINITIONS
THE INFORMATION BELOW IS AN EXPLANATION OF THE VARIOUS INDICES, SERVICE
PROVIDERS AND REFERENCE RATES CITED THROUGHOUT THE PORTFOLIO INVESTMENT AND
PERFORMANCE COMPARISONS AND THE PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
SECTIONS THAT FOLLOW FROM PAGE M-4 THROUGH M-369. 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. RESULTS
DO NOT REFLECT FEES, EXPENSES OR TAXES. SECURITIES IN EACH PORTFOLIO WILL NOT
PRECISELY MATCH THOSE IN THE INDEX, AND AS A RESULT, PERFORMANCE OF THE
PORTFOLIO WILL DIFFER.
BALANCED COMPOSITE INDEX consists of the Russell Midcap(R) Value Index and the
Merrill Lynch Corporate and Government 1-10 Years Bond Index weighted 60%/40%.
CONSERVATIVE ALLOCATION BENCHMARK is an unmanaged index that uses different
weightings from three well-known indices which represent three asset classes.
U.S. stocks (35% weighted) are represented by the S&P 500(R) Index;
international stocks (5% weighted) are represented by the Morgan Stanley Capital
International Europe, Australasia and Far East Index--the MSCI EAFE(R) Index;
and U.S. bonds (60% weighted) are represented by the Lehman Brothers(R)
Aggregate Bond Index.
CREDIT SUISSE 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.
CREDIT SUISSE LEVERAGED LOAN INDEX is an unmanaged index that represents
tradable, senior-secured, U.S. dollar denominated non-investment-grade loans.
CREDIT SUISSE LIQUID US CORPORATE INDEX is an unmanaged index that tracks the
liquid, tradable portion of the U.S. corporate-bond market. The index consists
of fixed-rate, non-zero-coupon bonds with a minimum issue size of $250 million.
The index does not include floating-rate instruments or index-linked bonds.
GROWTH ALLOCATION BENCHMARK is an unmanaged index that uses different weightings
from two well-known indices which represent two asset classes. U.S. stocks (80%
weighted) are represented by the S&P 500(R) Index and international stocks (20%
weighted) are represented by the Morgan Stanley Capital International Europe,
Australasia and Far East Index--the MSCI EAFE(R) Index.
LEHMAN BROTHERS(R) AGGREGATE BOND INDEX is an unmanaged index that contains 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 Lehman Brothers(R) Aggregate
Bond 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 that consists of
U.S. government and agency issues as well as investment-grade fixed-rate debt
securities.
LIBOR--LONDON INTERBANK OFFERED RATE is the rate that the most creditworthy
international banks dealing in Eurodollars charge each other for large loans.
LIBOR is usually the base rate for other large Eurodollar loans to less
creditworthy corporate and government borrowers.
LIPPER INC. is an independent monitor of fund performance. 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.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE (L-VIPPAS) ranks
portfolios that invest in separate accounts of insurance companies. Rankings are
based on total returns with dividends and capital gains reinvested. Results do
not reflect any deduction of sales charges.
MERRILL LYNCH ALL US CONVERTIBLE SECURITIES INDEX is a
market-capitalization-weighted index of domestic corporate convertible
securities. 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 & GOVERNMENT 1-10 YEARS BOND INDEX is a
market-capitalization-weighted index that is made up of U.S. government and
fixed-coupon domestic investment-grade corporate bonds.
MERRILL LYNCH CORPORATE AND GOVERNMENT MASTER INDEX is an unmanaged index that
consists of issues of the U.S. government and its agencies as well as
investment-grade corporate securities.
MODERATE ALLOCATION BENCHMARK is an unmanaged index that uses different
weightings from three well-known indices which represent three asset classes.
U.S. stocks (50% weighted) are represented by the S&P 500(R) Index;
international stocks (10% weighted) are represented by the Morgan Stanley
Capital International Europe, Australasia and Far East--the MSCI EAFE(R) Index;
and U.S. bonds (40% weighted) are represented by the Lehman Brothers(R)
Aggregate Bond Index.
M-2
MODERATE GROWTH ALLOCATION BENCHMARK is an unmanaged index that uses different
weightings from three well-known indices which represent three asset classes.
U.S. stocks (65% weighted) are represented by the S&P 500(R) Index;
international stocks (15% weighted) are represented by the Morgan Stanley
Capital International Europe, Australasia and Far East Index--the MSCI EAFE(R)
Index; and U.S. bonds (20% weighted) are represented by the Lehman Brothers(R)
Aggregate Bond Index.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST INDEX
(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 June 2006, 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
capitali-
zation.
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.
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.
RUSSELL 2000(R) INDEX is an unmanaged index that measures the performance of the
2,000 smallest companies in the Russell 3000(R) Index.
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.
RUSSELL 2000(R) VALUE INDEX is an unmanaged index that measures the performance
of those Russell 2000(R) companies with lower price-to-book ratios and lower
forecasted growth values.
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 is an unmanaged
index that measures the performance of the 2,500 smallest companies in the
Russell 3000(R) Index.
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.
RUSSELL MIDCAP(R) INDEX is an unmanaged index that measures the performance of
the 800 smallest companies in the Russell 1000(R) Index.
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 higher forecasted growth values. The stocks are also members of the
Russell 1000(R) Growth Index.
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.
"S&P 500(R)" is a registered trademark of the McGraw-Hill Companies, Inc., and
has been licensed for use. Standard & Poor's does not sponsor, endorse, sell or
promote the Portfolios in this report. The S&P 500(R) Index is an unman-aged
index and is widely regarded as the standard for measuring large-cap U.S.
stock-market performance.
S&P 500/CITIGROUP VALUE INDEX is an unmanaged index of stocks representing
approximately half of the market capitalization of the stocks in the S&P 500(R)
Index. On a growth-value spectrum, stocks in the S&P 500/Citigroup Value Index
have been identified as falling either wholly or partially within the value half
of the spectrum, based on multiple factors.
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.
TOTAL RETURN CORE COMPOSITE INDEX is an unmanaged index that consists 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 consists 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 BALANCED PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- --------------------------------------------
After Portfolio operating
expenses 10.70% 9.92%
</Table>
(with sales charges)
<Table>
<Caption>
MERRILL LYNCH
CORPORATE &
MAINSTAY VP GOVERNMENT 1-
BALANCED BALANCED 10-YEAR BOND RUSSELL MIDCAP
PORTFOLIO COMPOSITE INDEX INDEX INDEX S&P 500 INDEX
----------- --------------- ------------- -------------- -------------
5/2/05 10000 10000 10000 10000 10000
10581 10930 10132 11665 10929
12/31/06 11713 12413 10547 13446 12655
</Table>
SERVICE CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- --------------------------------------------
After Portfolio operating
expenses 10.42% 9.60%
</Table>
(with sales charges)
<Table>
<Caption>
MERRILL LYNCH
CORPORATE AND
MAINSTAY VP GOVERNMENT 1-
BALANCED BALANCED 10-YEAR BOND RUSSELL MIDCAP
PORTFOLIO COMPOSITE INDEX INDEX INDEX S&P 500 INDEX
----------- --------------- ------------- -------------- -------------
5/2/05 10000 10000 10000 10000 10000
10555 10930 10132 11665 10929
12/31/06 11655 12413 10547 13446 12655
</Table>
<Table>
<Caption>
ONE SINCE
BENCHMARK PERFORMANCE YEAR INCEPTION
Balanced Composite Index* 13.57% 13.81%
Merrill Lynch Corporate & Government 1-10 Years Bond Index* 4.10 3.26
Russell Midcap Index* 15.26 19.44
S&P 500(R) Index* 15.79 15.17
</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.
* 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 Balanced Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP BALANCED PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,075.75 $4.45 $1,020.75 $4.33
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,074.50 $5.75 $1,019.50 $5.60
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.85% for Initial Class and 1.10% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-5
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(COMPOSITION PIE CHART)
<Table>
Common Stocks 57.4
Corporate Bonds 38.9
Short-Term Investments (collateral from securities lending 10.1
is 10.1%)*
Investment Company 1.1
Yankee Bonds 0.3
Liabilities in Excess of Cash and Other Assets (7.8)
</Table>
* Includes 1.3% of Short-Term Investment Company Securities.
See Portfolio of Investments on page M-9 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. iShares Russell 1000 Index Fund
2. ALLTEL Corp., 7.00%, due 7/1/12
3. CIGNA Corp.
4. IAC/InterActiveCorp
5. Lehman Brothers Holdings, Inc., 7.875%, due
8/15/10
6. U.S. Bank N.A., 6.30%, due 2/4/14
7. NRG Energy, Inc.
8. Entergy Corp.
9. CenturyTel, Inc.
10. Clorox Co. (The)
</Table>
M-6 MainStay VP Balanced Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Tony Elavia and Joan Sabella of New
York Life Investment Management LLC.
HOW DID MAINSTAY VP BALANCED PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Balanced Portfolio returned
10.70% for Initial Class shares and 10.42% for Service Class shares. Both share
classes underperformed the 11.67% return of the average Lipper* Variable
Products Mixed-Asset Target Allocation Growth Portfolio for the same period.
Both share classes also underperformed the 15.79% return of the S&P 500(R)
Index,* the Portfolio's broad-based securities-market index, as well as the
13.57% return of the Balanced Composite Index* for the year ended December 31,
2006. The Balanced Composite Index is a blended benchmark designed to represent
the asset classes in which the Portfolio invests.
WHAT ACCOUNTED FOR THE RELATIVE PERFORMANCE OF THE EQUITY PORTION OF THE
PORTFOLIO?
The relative performance of the equity portion of the Portfolio was primarily
the result of stock selection in the financials and consumer staples sectors.
WHAT WERE THE STRONGEST-PERFORMING SECTORS IN THE EQUITY PORTION OF THE
PORTFOLIO IN 2006?
In absolute terms, the three strongest-performing sectors in the equity portion
of the Portfolio were materials, information technology and industrials. The
weakest-performing sectors were energy, health care and consumer staples.
IN 2006, WHICH INDIVIDUAL STOCKS WERE THE STRONGEST POSITIVE CONTRIBUTORS TO THE
PORTFOLIO'S PERFORMANCE AND WHICH STOCKS WERE PARTICULARLY WEAK.
The three strongest positive contributors to the Portfolio's absolute
performance were ExxonMobil, Hewlett-Packard and Swift Transportation. The three
stocks that most significantly detracted from absolute performance were
UnumProvident, Progressive and Sunoco.
WERE THERE ANY SIGNIFICANT PURCHASES OR SALES IN THE EQUITY PORTION OF THE
PORTFOLIO DURING THE YEAR?
Among the stocks that fit the Portfolio's proprietary purchase criteria in 2006
were Duke Energy and Steel Dynamics. Stocks that were sold during the year
included Swift Transportation and Friedman Billings Ramsey.
HOW DID THE PORTFOLIO'S SECTOR WEIGHTINGS CHANGE DURING 2006?
Weighting changes in the Portfolio result from the Portfolio's proprietary
quantitative security selection process. During the year, the Portfolio's
weightings relative to the Russell Midcap(R) Value Index,* the equity component
of the Balanced Composite Index,* substantially decreased in energy. The
Portfolio's weightings increased in industrials and materials.
HOW WAS THE EQUITY PORTION OF THE PORTFOLIO POSITIONED RELATIVE TO THE RUSSELL
MIDCAP(R) VALUE INDEX* AT YEAR-END?
As of December 31, 2006, the equity portion of the Portfolio held a moderately
overweighted position in health care, which hurt performance. The Portfolio was
also substantially underweighted in utilities, which also detracted from
performance.
WHAT FACTORS INFLUENCED THE BOND PORTION OF THE PORTFOLIO IN 2006?
The Federal Open Market Committee raised the federal funds target rate from
4.25% to 5.25% during the year, with the last 25-basis-point increase at the
June 2006 meeting. (A basis point is one-hundredth of a percentage point.) While
there was an upward sloping yield curve for part of the year, the yield curve
was inverted at year-end with the three-month Treasury bill yielding more than
the 10-year Treasury bond.
The Portfolio is subject to market, interest-rate, credit and maturity risks.
The Portfolio can invest in foreign securities, which 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. 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 Portfolio's use of securities lending presents the risk of
default by the borrower, which may also result in a loss to the Portfolio. The
Portfolio invests in mid-cap stocks which may be more volatile and less liquid
than the securities of larger companies.
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
HOW DID THE PORTFOLIO'S BOND INVESTMENTS AFFECT THE PORTFOLIO'S RELATIVE RETURN?
The fixed-income portion of the Portfolio added to the Fund's relative return.
The outperformance relative to the Merrill Lynch Corporate & Government 1-10
Years Index,* the fixed-income portion of the Balanced Composite Index,* was a
result of yield-curve positioning. Consistent with the Portfolio's investment
style, the Portfolio maintains duration of three to five years and a laddered
maturity schedule. All bonds are investment grade at date of purchase. There
were no single events that affected performance.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP BALANCED PORTFOLIO ON THIS PAGE AND THE PRECEDING
PAGES HAS NOT BEEN AUDITED.
M-8 MainStay VP Balanced Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (57.4%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.8%)
Northrop Grumman Corp. 16,414 $ 1,111,228
Raytheon Co. 21,667 1,144,018
United Technologies Corp. 17,281 1,080,408
------------
3,335,654
------------
AGRICULTURE (1.2%)
Reynolds American, Inc. (a) 11,610 760,107
UST, Inc. 24,345 1,416,879
------------
2,176,986
------------
APPAREL (0.3%)
Jones Apparel Group, Inc. 14,238 475,976
------------
AUTO MANUFACTURERS (0.4%)
Ford Motor Co. (a) 101,819 764,661
------------
AUTO PARTS & EQUIPMENT (0.6%)
Autoliv, Inc. 18,921 1,140,936
------------
BANKS (4.3%)
Bank of America Corp. 21,598 1,153,117
Bank of New York Co., Inc. (The) 31,912 1,256,375
Commerce Bancshares, Inc. 24,886 1,204,731
First Citizens BancShares, Inc. Class A 360 72,950
M&T Bank Corp. 11,864 1,449,306
National City Corp. (a) 31,552 1,153,541
State Street Corp. 9,698 654,033
U.S. Bancorp (a) 33,666 1,218,373
------------
8,162,426
------------
BEVERAGES (0.4%)
PepsiAmericas, Inc. 37,429 785,260
------------
BUILDING MATERIALS (0.5%)
Masco Corp. (a) 29,731 888,065
------------
COMMERCIAL SERVICES (0.4%)
Quanta Services, Inc. (a)(b) 17,515 344,520
United Rentals, Inc. (a)(b) 15,242 387,604
------------
732,124
------------
COMPUTERS (1.4%)
Hewlett-Packard Co. 30,245 1,245,792
International Business Machines Corp. 13,571 1,318,423
------------
2,564,215
------------
COSMETICS & PERSONAL CARE (0.6%)
Colgate-Palmolive Co. 669 43,646
Procter & Gamble Co. (The) 18,054 1,160,331
------------
1,203,977
------------
</Table>
<Table>
<Caption>
SHARES VALUE
DIVERSIFIED FINANCIAL SERVICES (6.3%)
A.G. Edwards, Inc. 19,605 $ 1,240,800
Bear Stearns Cos., Inc. (The) 7,730 1,258,289
CIT Group, Inc. 22,494 1,254,490
Citigroup, Inc. 22,793 1,269,570
Countrywide Financial Corp. 199 8,448
Goldman Sachs Group, Inc. (The) 6,989 1,393,257
Janus Capital Group, Inc. 12,681 273,783
JPMorgan Chase & Co. (a) 24,269 1,172,193
Lehman Brothers Holdings, Inc. 16,416 1,282,418
Merrill Lynch & Co., Inc. 14,888 1,386,073
Morgan Stanley 16,332 1,329,915
------------
11,869,236
------------
ELECTRIC (3.2%)
American Electric Power Co., Inc. 16,513 703,124
Duke Energy Corp. 35,735 1,186,759
V Entergy Corp. 16,928 1,562,793
V NRG Energy, Inc. (a)(b) 28,473 1,594,773
PG&E Corp. 622 29,439
Wisconsin Energy Corp. 22,208 1,053,992
------------
6,130,880
------------
ELECTRICAL COMPONENTS & EQUIPMENT (0.6%)
Emerson Electric Co. 26,014 1,146,437
------------
ELECTRONICS (0.1%)
Avnet, Inc. (a)(b) 10,280 262,448
------------
ENVIRONMENTAL CONTROL (1.2%)
Republic Services, Inc. 28,315 1,151,571
Waste Management, Inc. 30,750 1,130,678
------------
2,282,249
------------
FOOD (1.1%)
General Mills, Inc. 21,144 1,217,894
Kraft Foods, Inc. Class A (a) 26,503 946,157
------------
2,164,051
------------
FOREST PRODUCTS & PAPER (0.1%)
MeadWestvaco Corp. 9,077 272,855
------------
HEALTH CARE--SERVICES (0.6%)
Aetna, Inc. 28,226 1,218,799
------------
</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.
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-9
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HOUSEHOLD PRODUCTS & WARES (1.4%)
V Clorox Co. (The) 23,927 $ 1,534,917
Kimberly-Clark Corp. 17,027 1,156,985
------------
2,691,902
------------
INSURANCE (10.1%)
Allstate Corp. (The) 18,717 1,218,664
Ambac Financial Group, Inc. 10,172 906,020
American Financial Group, Inc. 14,194 509,707
Assurant, Inc. (a) 16,533 913,448
V CIGNA Corp. 14,183 1,866,057
Genworth Financial, Inc. Class A 30,932 1,058,184
Lincoln National Corp. 18,051 1,198,586
Loews Corp. 22,418 929,674
Nationwide Financial Services, Inc. Class A 7,708 417,774
Old Republic International Corp. 48,915 1,138,741
PMI Group, Inc. (The) (a) 31,080 1,466,044
Principal Financial Group, Inc. 19,919 1,169,245
Prudential Financial, Inc. 15,268 1,310,910
Radian Group, Inc. 22,521 1,214,107
SAFECO Corp. 17,537 1,096,939
StanCorp Financial Group, Inc. 28,295 1,274,690
Torchmark Corp. 22,993 1,466,034
------------
19,154,824
------------
INTERNET (1.3%)
Expedia, Inc. (b) 34,715 728,321
V IAC/InterActiveCorp (a)(b) 48,113 1,787,879
------------
2,516,200
------------
IRON & STEEL (1.8%)
Nucor Corp. 18,177 993,555
Reliance Steel & Aluminum Co. 23,143 911,371
Steel Dynamics, Inc. 43,970 1,426,827
------------
3,331,753
------------
MACHINERY--DIVERSIFIED (0.8%)
Deere & Co. 13,418 1,275,649
Flowserve Corp. (b) 6,528 329,468
------------
1,605,117
------------
MEDIA (1.9%)
CBS Corp. Class B (a) 38,045 1,186,243
Clear Channel Communications, Inc. 35,164 1,249,729
Gannett Co., Inc. 19,269 1,165,004
------------
3,600,976
------------
METAL FABRICATE & HARDWARE (0.5%)
Commercial Metals Co. 34,598 892,628
------------
MISCELLANEOUS--MANUFACTURING (0.4%)
SPX Corp. 12,940 791,410
------------
</Table>
<Table>
<Caption>
SHARES VALUE
OFFICE & BUSINESS EQUIPMENT (0.1%)
IKON Office Solutions, Inc. 6,958 $ 113,902
------------
OIL & GAS (2.4%)
Anadarko Petroleum Corp. 24,339 1,059,233
Devon Energy Corp. 17,126 1,148,812
ExxonMobil Corp. 16,608 1,272,671
Sunoco, Inc. 16,613 1,035,987
W&T Offshore, Inc. 1,705 52,378
------------
4,569,081
------------
PHARMACEUTICALS (2.3%)
AmerisourceBergen Corp. 31,908 1,434,584
King Pharmaceuticals, Inc. (b) 27,699 440,968
Merck & Co., Inc. 26,492 1,155,051
Pfizer, Inc. 39,527 1,023,749
Watson Pharmaceuticals, Inc. (b) 9,773 254,391
------------
4,308,743
------------
REAL ESTATE INVESTMENT TRUSTS (1.1%)
Annaly Capital Management, Inc. 78,798 1,096,080
New Century Financial Corp. (a) 29,618 935,633
------------
2,031,713
------------
RETAIL (2.6%)
AutoNation, Inc. (b) 51,214 1,091,882
Circuit City Stores, Inc. 41,815 793,649
Dillard's, Inc. Class A (a) 40,721 1,424,013
OfficeMax, Inc. 28,700 1,424,955
United Auto Group, Inc. 7,917 186,604
------------
4,921,103
------------
SAVINGS & LOANS (0.7%)
Astoria Financial Corp. 43,253 1,304,510
------------
SEMICONDUCTORS (0.4%)
Rambus, Inc. (a)(b) 42,703 808,368
------------
SOFTWARE (0.6%)
Fair Isaac Corp. 25,622 1,041,534
------------
TELECOMMUNICATIONS (1.7%)
V CenturyTel, Inc. 35,494 1,549,668
Crown Castle International Corp. (b) 18,542 598,907
Leap Wireless International, Inc. (b) 3,419 203,328
Polycom, Inc. (b) 30,731 949,895
------------
3,301,798
------------
TOYS, GAMES & HOBBIES (0.8%)
Mattel, Inc. 65,705 1,488,875
------------
</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.
M-10 MainStay VP Balanced 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)
- -----------------------------------------------------------------------------
x
TRANSPORTATION (1.2%)
Burlington Northern Santa Fe Corp. 584 $ 43,105
CSX Corp. 2,462 84,767
Laidlaw International, Inc. 34,434 1,047,827
Union Pacific Corp. 12,067 1,110,405
------------
2,286,104
------------
TRUCKING & LEASING (0.2%)
GATX Corp. 7,236 313,536
------------
Total Common Stocks
(Cost $95,837,950) 108,651,312
------------
INVESTMENT COMPANY (1.1%)
- -----------------------------------------------------------------------------
V iShares Russell 1000 Index Fund (a)(c) 26,000 1,996,540
------------
Total Investment Company
(Cost $1,977,342) 1,996,540
------------
PRINCIPAL
AMOUNT
x
LONG-TERM CORPORATE BONDS (39.2%)
CORPORATE BONDS (38.9%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.4%)
United Technologies Corp.
7.125%, due 11/15/10 $ 775,000 825,213
------------
AGRICULTURE (0.5%)
Altria Group, Inc.
7.00%, due 11/4/13 900,000 977,864
------------
BANKS (7.0%)
Bank of America Corp.
7.125%, due 10/15/11 550,000 591,925
7.75%, due 8/15/15 550,000 632,772
7.80%, due 2/15/10 700,000 751,675
Bank of New York Co., Inc. (The)
7.30%, due 12/1/09 550,000 579,301
Bank One Corp.
7.875%, due 8/1/10 847,000 918,750
Bankers Trust Corp.
7.50%, due 11/15/15 247,000 278,411
First Union National Bank
7.875%, due 2/15/10 900,000 967,145
HSBC Holdings PLC
7.50%, due 7/15/09 1,300,000 1,370,040
Mellon Bank N.A.
7.625%, due 9/15/07 160,000 162,325
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
BANKS (CONTINUED)
Mellon Funding Corp.
6.70%, due 3/1/08 $ 950,000 $ 961,621
SunTrust Banks, Inc.
6.25%, due 6/1/08 200,000 201,786
7.75%, due 5/1/10 600,000 645,046
U.S. Bank N.A.
5.70%, due 12/15/08 700,000 706,322
V 6.30%, due 2/4/14 1,550,000 1,634,470
Wachovia Bank N.A.
7.80%, due 8/18/10 800,000 860,522
Wachovia Corp.
6.375%, due 1/15/09 125,000 127,749
6.375%, due 2/1/09 75,000 76,291
Wells Fargo & Co.
6.25%, due 4/15/08 125,000 126,448
Wells Fargo Bank N.A.
6.45%, due 2/1/11 100,000 104,432
7.55%, due 6/21/10 1,350,000 1,446,916
------------
13,143,947
------------
BEVERAGES (0.8%)
Anheuser-Busch Cos., Inc.
5.375%, due 9/15/08 (a) 100,000 99,789
6.00%, due 4/15/11 600,000 615,379
9.00%, due 12/1/09 600,000 658,685
Coca-Cola Co. (The)
5.75%, due 3/15/11 125,000 127,788
------------
1,501,641
------------
BUILDING MATERIALS (0.1%)
Masco Corp.
5.75%, due 10/15/08 150,000 150,571
------------
CHEMICALS (1.1%)
Dow Chemical Co. (The)
6.125%, due 2/1/11 350,000 359,796
E.I. du Pont de Nemours & Co.
6.75%, due 9/1/07 325,000 327,603
6.875%, due 10/15/09 925,000 965,683
Praxair, Inc.
6.50%, due 3/1/08 325,000 329,280
------------
1,982,362
------------
COMMUNICATIONS EQUIPMENT (0.3%)
Motorola, Inc.
8.00%, due 11/1/11 500,000 553,283
------------
</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-11
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
COMPUTERS (1.4%)
Computer Sciences Corp.
7.375%, due 6/15/11 $ 350,000 $ 372,306
Hewlett-Packard Co.
5.50%, due 7/1/07 200,000 200,219
International Business Machines Corp.
6.45%, due 8/1/07 900,000 905,433
7.50%, due 6/15/13 1,100,000 1,226,901
------------
2,704,859
------------
COSMETICS & PERSONAL CARE (1.0%)
Avon Products, Inc.
7.15%, due 11/15/09 650,000 680,467
Kimberly-Clark Corp.
7.10%, due 8/1/07 925,000 933,940
Procter & Gamble Co. (The)
6.875%, due 9/15/09 250,000 260,822
------------
1,875,229
------------
DIVERSIFIED FINANCIAL SERVICES (11.9%)
Bear Stearns Cos., Inc. (The)
6.75%, due 12/15/07 438,000 443,385
7.625%, due 12/7/09 1,100,000 1,171,024
Boeing Capital Corp.
7.375%, due 9/27/10 800,000 857,682
Caterpillar Financial Services Corp.
5.50%, due 3/15/16 250,000 250,138
CIT Group, Inc.
6.875%, due 11/1/09 1,100,000 1,144,364
7.75%, due 4/2/12 700,000 771,755
Citicorp
7.25%, due 9/1/08 300,000 308,867
Citigroup, Inc.
6.50%, due 1/18/11 600,000 627,778
7.25%, due 10/1/10 500,000 532,907
Countrywide Home Loans, Inc.
5.50%, due 2/1/07 300,000 300,014
6.25%, due 4/15/09 300,000 305,392
Credit Suisse First Boston USA, Inc.
6.125%, due 11/15/11 100,000 103,545
6.50%, due 6/1/08 1,089,000 1,106,582
General Electric Capital Corp.
6.875%, due 11/15/10 500,000 528,639
7.375%, due 1/19/10 725,000 768,467
8.125%, due 4/1/08 300,000 310,126
8.625%, due 6/15/08 100,000 104,453
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
Goldman Sachs Group, Inc. (The)
5.70%, due 9/1/12 $ 250,000 $ 254,609
6.875%, due 1/15/11 300,000 317,571
7.35%, due 10/1/09 1,325,000 1,397,758
Series B
7.80%, due 1/28/10 125,000 134,061
Household Financial Corp.
6.45%, due 2/1/09 200,000 204,276
HSBC Finance Corp.
6.375%, due 8/1/10 125,000 129,258
7.00%, due 5/15/12 500,000 539,093
John Deere Capital Corp.
6.00%, due 2/15/09 500,000 506,706
7.00%, due 3/15/12 850,000 909,616
JPMorgan Chase & Co.
6.00%, due 1/15/09 400,000 405,688
6.75%, due 8/15/08 300,000 306,182
7.00%, due 11/15/09 390,000 408,267
7.875%, due 6/15/10 375,000 405,863
Lehman Brothers Holdings, Inc.
6.625%, due 1/18/12 375,000 396,221
7.00%, due 2/1/08 100,000 101,690
7.875%, due 11/1/09 150,000 160,385
V 7.875%, due 8/15/10 1,607,000 1,735,105
Merrill Lynch & Co., Inc.
Series C
3.09%, due 3/24/09 (d) 300,000 285,897
6.05%, due 5/16/16 200,000 207,008
6.375%, due 10/15/08 350,000 356,251
7.00%, due 4/27/08 1,150,000 1,174,896
Morgan Stanley
5.80%, due 4/1/07 200,000 200,133
6.75%, due 4/15/11 700,000 739,880
8.00%, due 6/15/10 400,000 434,716
Pitney Bowes Credit Corp.
5.75%, due 8/15/08 175,000 176,000
Prudential Funding LLC
6.60%, due 5/15/08 (e) 550,000 557,641
UBS Paine Webber Group, Inc.
6.55%, due 4/15/08 204,000 206,211
Wells Fargo Financial, Inc.
5.875%, due 8/15/08 225,000 226,773
------------
22,512,873
------------
ELECTRIC (0.4%)
Consolidated Edison Co. of New York
7.50%, due 9/1/10 660,000 707,071
------------
ELECTRICAL COMPONENTS & EQUIPMENT (0.6%)
Emerson Electric Co.
7.125%, due 8/15/10 1,082,000 1,147,910
------------
</Table>
M-12 MainStay VP Balanced 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)
- -----------------------------------------------------------------------------
x
ELECTRONICS (0.1%)
Honeywell, Inc.
7.125%, due 4/15/08 $ 175,000 $ 178,488
------------
FOOD (2.9%)
Campbell Soup Co.
5.875%, due 10/1/08 450,000 453,586
6.75%, due 2/15/11 750,000 787,694
H.J. Heinz Finance Co.
6.625%, due 7/15/11 700,000 728,062
Kellogg Co.
Series B
6.60%, due 4/1/11 750,000 786,526
Kraft Foods, Inc.
5.25%, due 6/1/07 400,000 399,687
6.25%, due 6/1/12 650,000 675,221
Nabisco, Inc.
7.55%, due 6/15/15 800,000 907,277
Sysco International Co.
6.10%, due 6/1/12 (a) 125,000 129,252
Unilever Capital Corp.
7.125%, due 11/1/10 650,000 690,446
------------
5,557,751
------------
HAND & MACHINE TOOLS (0.4%)
Black & Decker Corp.
7.125%, due 6/1/11 800,000 842,877
------------
HOUSEHOLD PRODUCTS & WARES (0.2%)
Clorox Co. (The)
6.125%, due 2/1/11 275,000 282,495
------------
INSURANCE (0.1%)
GE Global Insurance Holding Corp.
7.50%, due 6/15/10 250,000 266,796
------------
MACHINERY--CONSTRUCTION & MINING (0.7%)
Caterpillar, Inc.
6.55%, due 5/1/11 400,000 418,748
7.25%, due 9/15/09 884,000 928,150
------------
1,346,898
------------
MACHINERY--DIVERSIFIED (0.3%)
Deere & Co.
7.85%, due 5/15/10 450,000 484,207
------------
MEDIA (0.7%)
Gannett Co., Inc.
5.50%, due 4/1/07 425,000 424,572
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MEDIA (CONTINUED)
Walt Disney Co. (The)
5.375%, due 6/1/07 $ 275,000 $ 275,185
6.375%, due 3/1/12 650,000 681,223
------------
1,380,980
------------
MISCELLANEOUS--MANUFACTURING (0.5%)
Honeywell International, Inc.
6.125%, due 11/1/11 200,000 207,184
7.50%, due 3/1/10 775,000 826,379
------------
1,033,563
------------
OIL & GAS (1.2%)
ConocoPhillips
6.375%, due 3/30/09 500,000 511,210
8.75%, due 5/25/10 900,000 997,271
Texaco Capital, Inc.
8.625%, due 6/30/10 320,000 357,684
Vastar Resources, Inc.
6.50%, due 4/1/09 350,000 359,070
------------
2,225,235
------------
OIL & GAS SERVICES (0.1%)
Baker Hughes, Inc.
6.00%, due 2/15/09 205,000 207,589
------------
PHARMACEUTICALS (0.1%)
Abbott Laboratories
5.40%, due 9/15/08 200,000 200,620
------------
RETAIL (2.4%)
J.C. Penney Co., Inc.
8.00%, due 3/1/10 800,000 851,779
Lowe's Cos., Inc.
8.25%, due 6/1/10 250,000 273,206
Nordstrom, Inc.
5.625%, due 1/15/09 175,000 175,827
Target Corp.
5.50%, due 4/1/07 300,000 300,046
6.35%, due 1/15/11 200,000 208,117
7.50%, due 8/15/10 900,000 966,281
Wal-Mart Stores, Inc.
6.875%, due 8/10/09 1,000,000 1,041,826
7.25%, due 6/1/13 700,000 770,176
------------
4,587,258
------------
SOFTWARE (0.1%)
Oracle Corp.
6.91%, due 2/15/07 100,000 100,143
------------
</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-13
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (3.6%)
V ALLTEL Corp.
7.00%, due 7/1/12 $1,800,000 $ 1,870,009
AT&T Corp.
7.30%, due 11/15/11 1,200,000 1,299,211
BellSouth Capital Funding Corp.
7.75%, due 2/15/10 850,000 906,156
BellSouth Telecommunications, Inc.
5.875%, due 1/15/09 200,000 201,821
GTE California, Inc.
Series H
7.65%, due 3/15/07 175,000 175,620
New York Telephone Co.
6.00%, due 4/15/08 175,000 176,104
Southwestern Bell Telephone Corp.
7.00%, due 7/1/15 350,000 376,191
Verizon Global Funding Corp.
7.25%, due 12/1/10 1,050,000 1,119,254
7.375%, due 9/1/12 550,000 601,328
------------
6,725,694
------------
Total Corporate Bonds
(Cost $74,150,766) 73,503,417
------------
YANKEE BONDS (0.3%) (F)
- -----------------------------------------------------------------------------
BANKS (0.2%)
Barclays Bank PLC
7.40%, due 12/15/09 450,000 476,586
------------
OIL & GAS (0.1%)
Pan American Energy LLC
6.75%, due 2/1/07 125,000 125,109
------------
Total Yankee Bonds
(Cost $603,922) 601,695
------------
Total Long-Term Corporate Bonds
(Cost $74,754,688) 74,105,112
------------
SHORT-TERM INVESTMENTS (10.1%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (2.3%)
Barton Capital LLC
5.298%, due 1/4/07 (g) 355,578 355,578
Charta LLC
5.314%, due 1/11/07 (g) 364,271 364,271
Ciesco, Inc.
5.305%, due 1/10/07 (g) 475,405 475,405
Compass Securitization LLC
5.324%, due 1/18/07 (g) 485,695 485,695
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Fairway Finance Corp.
5.301%, due 1/8/07 (g) $ 364,271 $ 364,271
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (g) 359,276 359,276
Greyhawk Funding LLC
5.305%, due 1/5/07 (g) 356,273 356,273
Jupiter Securitization Corp.
5.324%, due 1/18/07 (g) 364,271 364,271
Liberty Street Funding Co.
5.325%, due 1/29/07 (g) 121,424 121,424
Old Line Funding LLC
5.303%, due 1/9/07 (g) 475,938 475,938
Ranger Funding LLC
5.308%, due 1/30/07 (g) 364,271 364,271
Sheffield Receivables Corp.
5.336%, due 1/16/07 (g) 364,271 364,271
------------
Total Commercial Paper
(Cost $4,450,944) 4,450,944
------------
<Caption>
SHARES
INVESTMENT COMPANY (1.3%)
BGI Institutional Money Market Fund (g) 2,536,472 2,536,472
------------
Total Investment Company
(Cost $2,536,472) 2,536,472
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $121,497
(Collateralized by various Corporate
Bonds and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$120,268 and a Market Value of
$125,722) (g) $ 121,424 121,424
------------
Total Repurchase Agreement
(Cost $121,424) 121,424
------------
TIME DEPOSITS (6.4%)
Abbey National PLC
5.34%, due 1/2/07 (g) 1,457,086 1,457,086
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (g) 971,391 971,391
Bank of America Corp.
5.27%, due 1/19/07 (d)(g) 971,391 971,391
</Table>
M-14 MainStay VP Balanced 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)
- -----------------------------------------------------------------------------
TIME DEPOSITS (CONTINUED)
Bank of Montreal
5.30%, due 1/26/07 (g) $ 607,119 $ 607,119
Barclays
5.32%, due 1/18/07 (g) 801,397 801,397
Calyon
5.31%, due 2/12/07 (g) 971,391 971,391
Citigroup
5.325%, due 3/22/07 (g) 849,967 849,967
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (g) 922,821 922,821
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (g) 971,391 971,391
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (g) 898,536 898,536
Rabobank Nederland
5.29%, due 3/6/07 (g) 728,543 728,543
Standard Chartered Bank
5.29%, due 1/10/07 (g) 971,391 971,391
UBS AG
5.285%, due 1/12/07 (g) 971,391 971,391
------------
Total Time Deposits
(Cost $12,093,815) 12,093,815
------------
Total Short-Term Investments
(Cost $19,202,655) 19,202,655
------------
Total Investments
(Cost $191,772,635) (h) 107.8% 203,955,619(i)
Liabilities in Excess of
Cash and Other Assets (7.8) (14,803,085)
---------- ------------
Net Assets 100.0% $189,152,534
========== ============
</Table>
<Table>
(a) Represents a security, or a portion thereof, which is out on
loan.
(b) Non-income producing security.
(c) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(d) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(e) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(f) Yankee Bond--dollar-denominated bond issued in the United
States by a foreign bank or corporation.
(g) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(h) The cost for federal income tax purposes is $191,995,860.
(i) At December 31, 2006 net unrealized appreciation was
$11,959,759, 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 $13,889,228 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $1,929,469.
</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-15
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost
$191,772,635) including $18,617,871 market
value of securities loaned $203,955,619
Cash 2,979,678
Receivables:
Dividends and interest 1,490,632
Fund shares sold 174,829
Other assets 376
-------------
Total assets 208,601,134
-------------
LIABILITIES:
Securities lending collateral 19,202,655
Payables:
Manager (See Note 3) 119,124
Professional fees 39,078
NYLIFE Distributors (See Note 3) 36,842
Shareholder communication 27,648
Fund shares redeemed 10,607
Custodian 3,042
Directors 250
Accrued expenses 9,354
-------------
Total liabilities 19,448,600
-------------
Net assets $189,152,534
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 12,073
Service Class 156,464
Additional paid-in capital 176,896,287
Accumulated net realized loss on investments
and futures transactions (95,274)
Net unrealized appreciation on investments 12,182,984
-------------
Net assets $189,152,534
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 13,576,740
=============
Shares of capital stock outstanding 1,207,273
=============
Net asset value per share outstanding $ 11.25
=============
SERVICE CLASS
Net assets applicable to outstanding shares $175,575,794
=============
Shares of capital stock outstanding 15,646,405
=============
Net asset value per share outstanding $ 11.22
=============
</Table>
M-16 MainStay VP Balanced 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 3,106,798
Dividends 1,803,411
Income from securities loaned--net 26,128
------------
Total income 4,936,337
------------
EXPENSES:
Manager (See Note 3) 1,189,338
Distribution and service--Service Class
(See Note 3) 366,587
Professional fees 72,682
Shareholder communication 39,935
Custodian 26,378
Directors 8,771
Miscellaneous 4,280
------------
Total expenses 1,707,971
------------
Net investment income 3,228,366
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FUTURES:
Net realized gain (loss) on:
Security transactions 1,729,850
Futures transactions (4,467)
------------
Net realized gain on investments and futures
transactions 1,725,383
------------
Net change in unrealized appreciation on
investments transactions 11,004,627
------------
Net realized and unrealized gain on investments
and futures transactions 12,730,010
------------
Net increase in net assets resulting from
operations $15,958,376
============
</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-17
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2006 AND THE PERIOD MAY 2, 2005 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 3,228,366 $ 815,436
Net realized gain on
investments and
futures transactions 1,725,383 462,892
Net change in unrealized
appreciation on investments 11,004,627 1,178,357
---------------------------
Net increase in net assets
resulting from operations 15,958,376 2,456,685
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (262,359) (77,208)
Service Class (3,033,416) (745,871)
From net realized gain on investments:
Initial Class (127,368) (36,452)
Service Class (1,650,445) (394,232)
---------------------------
Total dividends and
distributions to
shareholders (5,073,588) (1,253,763)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 3,681,557 9,404,575
Service Class 71,559,836 105,304,902
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 389,727 113,660
Service Class 4,683,861 1,140,103
---------------------------
80,314,981 115,963,240
Cost of shares redeemed:
Initial Class (1,046,908) (78,497)
Service Class (16,127,238) (1,960,754)
---------------------------
(17,174,146) (2,039,251)
Increase in net assets
derived from capital share
transactions 63,140,835 113,923,989
---------------------------
Net increase in net assets 74,025,623 115,126,911
NET ASSETS:
Beginning of period 115,126,911 --
---------------------------
End of period $189,152,534 $115,126,911
===========================
</Table>
M-18 MainStay VP Balanced 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
------------------------------ ------------------------------
MAY 2, MAY 2,
YEAR 2005(A) YEAR 2005(A)
ENDED THROUGH ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
Net asset value at beginning
of period $ 10.46 $10.00 $ 10.44 $ 10.00
------------ ------------ ------------ ------------
Net investment income 0.22 0.11 0.20 0.08
Net realized and unrealized
gain on investments 0.90 0.47 0.89 0.48
------------ ------------ ------------ ------------
Total from investment
operations 1.12 0.58 1.09 0.56
------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment income (0.22) (0.08) (0.20) (0.08)
From net realized gain on
investments (0.11) (0.04) (0.11) (0.04)
------------ ------------ ------------ ------------
Total dividends and
distributions (0.33) (0.12) (0.31) (0.12)
------------ ------------ ------------ ------------
Net asset value at end of
period $ 11.25 $10.46 $ 11.22 $ 10.44
============ ============ ============ ============
Total investment return 10.70% 5.81%(b) 10.42% 5.55%(b)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 2.26% 2.05%+ 2.01% 1.80%+
Net expenses 0.85% 1.00%+ 1.10% 1.25%+
Portfolio turnover rate 45% 76% 45% 76%
Net assets at end of period
(in 000's) $13,577 $9,707 $175,576 $105,420
</Table>
<Table>
(a) Commencement of operations.
(b) Total return is not annualized.
+ 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-19
MAINSTAY VP BOND PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 4.55% 4.94% 6.05%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MERRILL LYNCH CORPORATE
MAINSTAY VP BOND LEHMAN BROTHERS & GOVERNMENT MASTER
PORTFOLIO AGGREGATE BOND INDEX INDEX
---------------- -------------------- -----------------------
12/31/96 10000 10000 10000
10965 10965 10978
11964 11918 12024
11781 11820 11777
12938 13194 13184
14138 14308 14294
15478 15776 15859
16178 16423 16579
16840 17136 17267
17208 17552 17702
12/31/06 17991 18313 18379
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 4.29% 4.67% 5.78%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MERRILL LYNCH CORPORATE
MAINSTAY VP BOND LEHMAN BROTHERS & GOVERNMENT MASTER
PORTFOLIO AGGREGATE BOND INDEX INDEX
---------------- -------------------- -----------------------
12/31/96 10000 10000 10000
10937 10965 10978
11903 11918 12024
11691 11820 11777
12807 13194 13184
13959 14308 14294
15245 15776 15859
15896 16423 16579
16505 17136 17267
16817 17552 17702
12/31/06 17539 18313 18379
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Lehman Brothers(R) Aggregate Bond Index* 4.33% 5.06% 6.24%
Merrill Lynch Corporate & Government Master Index* 3.83 5.16 6.28
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 4.91% and 6.03% for the Initial Class and 4.65%
and 5.77% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-20 MainStay VP Bond Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP BOND PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,053.30 $2.69 $1,022.40 $2.65
- --------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,052.05 $3.98 $1,021.15 $3.92
- --------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.52% for Initial Class and 0.77% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-21
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government & Federal Agencies 53.2
Corporate Bonds 26.9
Short-Term Investments (collateral from securities lending 10.4
is 8.7%)
Mortgage-Backed Securities 8.2
Asset-Backed Securities 4.7
Foreign Bonds 3.0
Yankee Bonds 0.8
Liabilities in Excess of Cash and Other Assets (7.2)
</Table>
See Portfolio of Investments on page M-25 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security), 5.00%, due 8/1/35
2. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security), 5.00%, due 10/1/36
3. United States Treasury Note, 4.625%, due
11/15/16
4. Federal National Mortgage Association (Mortgage
Pass-Through Security), 5.50%, due 11/1/35
5. United States Treasury Note, 4.875%, due 4/30/08
6. Federal Home Loan Bank, 3.625%, due 11/14/08
7. Morgan Stanley Capital I, 4.80%, due 1/13/41
8. Federal National Mortgage Association (Mortgage
Pass-Through Security), 5.50%, due 8/1/35
9. United States Treasury Note, 4.625%, due
11/30/08
10. United States Treasury Note, 4.00%, due 3/15/10
</Table>
M-22 MainStay VP Bond Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Donald F. Serek, Thomas Volpe, Jr., and
Michael J. Pagano of New York Life Investment Management LLC.
HOW DID MAINSTAY VP BOND PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Bond Portfolio returned 4.55%
for Initial Class shares and 4.29% for Service Class shares. Both share classes
outperformed the 4.22% return of the average Lipper* Variable Products Corporate
Debt Funds A Rated Portfolio for the same period. Initial Class shares
outperformed--and Service Class shares underperformed--the 4.33% return of the
Lehman Brothers(R) Aggregate Bond Index,* the Portfolio's broad-based
securities-market index, for the year ended December 31, 2006.
WHAT FACTORS ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
Overweight positions in investment-grade credit, mortgage-backed securities and
asset-backed securities contributed positively to the Portfolio's relative
performance. During 2006, the Portfolio also received a distribution from an
outstanding class action lawsuit.
WHAT WAS THE PORTFOLIO'S DURATION STRATEGY IN 2006?
The Portfolio generally maintained a neutral to modestly short duration compared
with that of its benchmark.
HOW DID THE TREASURY YIELD CURVE CHANGE DURING 2006?
In 2006, the Treasury yield curve reshaped several times, and Treasury yields
rose across the maturity spectrum. Short-term yields rose the most, causing the
yield curve to invert for issues with maturities of five years or less and to
flatten for issues with longer maturities.
WHAT MARKET FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE DURING THE YEAR?
The Portfolio benefited from an overweighted position in credit throughout 2006.
Credit spreads tightened to multiyear lows in the first half of 2006. After
slightly widening during the third quarter, credit spreads tightened once again
and ended the year a few basis points tighter than where they began. (A basis
point is one-hundredth of a percentage point.)
Strong credit-market technicals and fundamentals contributed to our decision to
overweight the credit sector. The bid for credit domestically and
internationally was resilient. Stronger-than-anticipated corporate earnings
reinforced our view.
WHICH SECTORS WERE THE STRONGEST PERFORMERS FOR THE PORTFOLIO AND WHICH ONES
WERE THE WEAKEST?
The Portfolio's largest holdings by asset class were corporate bonds, mortgage
pass-through securities and U.S. Treasurys. Corporate bonds enhanced returns
because of tightened spreads. Mortgage pass-through securities also performed
well because of low volatility and foreign buying. Returns on all fixed-income
assets were hurt by the increase in Treasury yields.
WERE THERE ANY SIGNIFICANT CHANGES IN THE PORTFOLIO'S SECTOR WEIGHTINGS DURING
2006?
We reduced the Portfolio's overweight position in credit during the second and
third quarters of 2006 when credit appeared to have reached full valuation. As
the Treasury curve flattened, we reduced our exposure to longer-maturity credit.
When third quarter corporate earnings came in stronger than anticipated, we
increased the Portfolio's overweight position in credit once again.
Funds that invest in bonds are subject to interest-rate, credit and inflation
risk and can lose principal value when interest rates rise. A portion of income
may be subject to state and local taxes or the alternative minimum tax.
Investments in loan participation interests are subject to the risk that there
may not be a readily available market, which in some cases could result in the
Portfolio disposing of such securities at a substantial discount from face value
or holding such securities until maturity. 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 Portfolio's use of investment practices
such as mortgage dollar rolls presents certain risks. The principal risk of
mortgage dollar roll transactions is that the security the Portfolio receives at
the end of the transaction may be worth less than the security the Portfolio
sold to the same counterparty at the beginning of the transaction.
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-23
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE LEHMAN BROTHERS AGGREGATE BOND
INDEX* AT THE END OF 2006?
As of December 31, 2006, the Portfolio maintained overweight positions relative
to the Lehman
Brothers(R) Aggregate Bond Index* in investment-grade credit, mortgage
pass-through securities, asset-backed securities and commercial mortgage-backed
securities. At year-end, the Portfolio was underweighted in U.S. Treasurys in
relation to the benchmark.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP BOND PORTFOLIO ON THIS PAGE AND THE PRECEDING
PAGES HAS NOT BEEN AUDITED.
M-24 MainStay VP Bond Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (96.8%)+
ASSET-BACKED SECURITIES (4.7%)
- ------------------------------------------------------------------------------
AUTOMOBILE (0.2%)
Drive Auto Receivables Trust
Series 2005-3, Class A4
5.09%, due 6/17/13 (a) $ 1,000,000 $ 994,485
------------
CREDIT CARDS (1.3%)
Chase Issuance Trust
Series 2005, Class A-10
4.65%, due 12/17/12 2,750,000 2,715,511
MBNA Credit Card Master Note Trust
Series 2005, Class A-6
4.50%, due 1/15/13 4,000,000 3,931,797
------------
6,647,308
------------
HOME EQUITY (3.2%)
Ameriquest Mortgage Securities, Inc.
Series 2003-13, Class AF6
5.094%, due 1/25/34 1,977,000 1,946,885
Centex Home Equity
Series 2004-B, Class AF4
4.122%, due 1/25/32 1,234,420 1,202,229
Citicorp Residential Mortgage Securities, Inc.
Series 2006-1, Class A3
5.706%, due 7/25/36 1,000,000 1,001,708
Countrywide Asset-Backed Certificates
Series 2006-S8, Class A3
5.555%, due 4/25/36 2,000,000 1,986,172
Series 2006-S5, Class A3
5.762%, due 6/25/35 2,000,000 2,003,308
Equity One ABS, Inc.
Series 2003-4, Class AF6
4.833%, due 10/25/34 1,500,000 1,479,263
JPMorgan Mortgage Acquisition Corp.
Series 2006-WF1, Class A6
6.00%, due 7/25/36 1,000,000 1,018,576
Morgan Stanley Mortgage Loan Trust
Series 2006-17XS, Class A3A
5.651%, due 10/25/46 2,000,000 2,000,000
Residential Asset Mortgage Products, Inc.
Series 2003-RZ5, Class A7
4.97%, due 9/25/33 1,000,000 981,856
Residential Asset Securities Corp.
Series 2003-KS9, Class AI6
4.71%, due 11/25/33 1,211,272 1,177,124
Saxon Asset Securities Trust
Series 2003-1, Class AF5
4.955%, due 6/25/33 1,357,771 1,342,591
------------
16,139,712
------------
Total Asset-Backed Securities
(Cost $23,898,889) 23,781,505
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (26.9%)
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.6%)
Northrop Grumman Space & Mission Systems Corp.
Series D
6.38%, due 5/19/08 $ 1,600,000 $ 1,615,509
Raytheon Co.
6.40%, due 12/15/18 1,175,000 1,257,258
------------
2,872,767
------------
AUTO MANUFACTURERS (0.2%)
DaimlerChrysler N.A. Holding Corp.
8.00%, due 6/15/10 1,000,000 1,071,365
------------
BANKS (3.3%)
Bank of America Corp.
5.42%, due 3/15/17 (a) 2,000,000 1,970,620
5.75%, due 8/15/16 1,000,000 1,020,626
Keybank N.A.
5.45%, due 3/3/16 1,000,000 993,393
Mellon Financial Corp.
6.40%, due 5/14/11 1,125,000 1,169,934
Mercantile-Safe Deposit & Trust Co.
5.70%, due 11/15/11 750,000 762,495
National City Bank
5.25%, due 12/15/16 (a) 1,000,000 978,946
National City Corp.
3.20%, due 4/1/08 1,000,000 971,755
Popular North America, Inc.
5.20%, due 12/12/07 3,000,000 2,990,055
SunTrust Bank
5.20%, due 1/17/17 875,000 851,889
Wachovia Bank N.A.
4.875%, due 2/1/15 1,650,000 1,587,574
Wells Fargo & Co.
6.375%, due 8/1/11 1,000,000 1,047,216
Wells Fargo Bank N.A.
5.75%, due 5/16/16 1,500,000 1,536,250
5.95%, due 8/26/36 1,250,000 1,279,300
------------
17,160,053
------------
BEVERAGES (0.4%)
Coca-Cola Enterprises, Inc.
6.75%, due 1/15/38 2,000,000 2,206,990
------------
</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.
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-25
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ------------------------------------------------------------------------------
BUILDING MATERIALS (0.2%)
Masco Corp.
5.75%, due 10/15/08 $ 925,000 $ 928,523
------------
DIVERSIFIED FINANCIAL SERVICES (5.3%)
American General Finance Corp.
5.375%, due 9/1/09 1,000,000 1,001,686
Associates Corp. of North America
6.95%, due 11/1/18 2,000,000 2,240,214
Capital One Bank
4.25%, due 12/1/08 1,000,000 980,261
CIT Group, Inc.
7.75%, due 4/2/12 2,000,000 2,205,014
Countrywide Financial Corp.
6.25%, due 5/15/16 2,000,000 2,038,464
Erac USA Finance Co.
6.80%, due 2/15/08 (a) 485,000 489,873
General Electric Capital Corp.
6.00%, due 6/15/12 3,500,000 3,623,098
Goldman Sachs Group, Inc. (The)
5.70%, due 9/1/12 2,000,000 2,036,872
HSBC Finance Corp.
4.75%, due 7/15/13 4,750,000 4,605,890
JPMorgan Chase & Co.
4.60%, due 1/17/11 2,000,000 1,951,770
Lehman Brothers Holdings, Inc.
5.75%, due 7/18/11 725,000 739,172
Morgan Stanley
6.75%, due 4/15/11 2,000,000 2,113,944
Pricoa Global Funding I
4.625%, due 6/25/12 (a) 2,700,000 2,593,814
Residential Capital Corp.
6.375%, due 6/30/10 750,000 758,728
------------
27,378,800
------------
ELECTRIC (3.4%)
Arizona Public Service Co.
5.50%, due 9/1/35 1,275,000 1,139,580
Carolina Power & Light Co.
6.125%, due 9/15/33 500,000 517,375
Cleveland Electric Illuminating Co. (The)
5.65%, due 12/15/13 1,000,000 996,674
Commonwealth Edison Co.
5.40%, due 12/15/11 3,525,000 3,497,181
Consumers Energy Co.
Series C
4.25%, due 4/15/08 210,000 206,803
Dominion Resources, Inc.
Series D
5.125%, due 12/15/09 4,225,000 4,198,032
Niagara Mohawk Power Corp.
7.75%, due 10/1/08 750,000 777,223
Pacific Gas & Electric Co.
6.05%, due 3/1/34 500,000 504,287
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRIC (CONTINUED)
Pepco Holdings, Inc.
6.45%, due 8/15/12 $ 2,125,000 $ 2,203,138
Public Service Co. of New Mexico
4.40%, due 9/15/08 500,000 490,839
Public Service Electric & Gas Co.
6.375%, due 5/1/08 3,125,000 3,160,934
------------
17,692,066
------------
FOOD (2.1%)
Corn Products International, Inc.
8.25%, due 7/15/07 4,200,000 4,248,157
Delhaize America, Inc.
8.125%, due 4/15/11 1,000,000 1,078,756
Kellogg Co.
Series B
6.60%, due 4/1/11 2,000,000 2,097,402
Kroger Co. (The)
7.70%, due 6/1/29 1,000,000 1,125,139
Safeway, Inc.
6.50%, due 3/1/11 2,125,000 2,198,444
------------
10,747,898
------------
GAS (0.2%)
Atmos Energy Corp.
4.00%, due 10/15/09 1,000,000 962,000
------------
HOME BUILDERS (0.2%)
Lennar Corp.
Series B
5.125%, due 10/1/10 1,100,000 1,075,116
------------
INSURANCE (2.0%)
American International Group, Inc.
6.25%, due 5/1/36 2,000,000 2,124,958
ASIF Global Financing XVIII
3.85%, due 11/26/07 (a) 1,575,000 1,553,892
CIGNA Corp.
7.00%, due 1/15/11 500,000 525,432
Hartford Financial Services Group, Inc. (The)
5.55%, due 8/16/08 2,000,000 2,007,896
Principal Financial Group, Inc.
6.05%, due 10/15/36 1,250,000 1,279,575
Principal Life Income Funding Trust
5.20%, due 11/15/10 1,000,000 997,727
Prudential Financial, Inc.
5.70%, due 12/14/36 1,750,000 1,703,403
------------
10,192,883
------------
LODGING (0.2%)
Harrah's Operating Co., Inc.
5.625%, due 6/1/15 1,000,000 857,648
------------
</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.
M-26 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)
- ------------------------------------------------------------------------------
x
MEDIA (1.4%)
Belo Corp.
8.00%, due 11/1/08 $ 3,000,000 $ 3,112,449
Comcast Cable Communications Holdings, Inc.
8.375%, due 3/15/13 2,100,000 2,392,036
Comcast Corp.
6.45%, due 3/15/37 1,275,000 1,275,688
Walt Disney Co. (The)
7.00%, due 3/1/32 500,000 577,381
------------
7,357,554
------------
OIL & GAS (1.0%)
Enterprise Products Operating, L.P.
Series B
6.875%, due 3/1/33 3,375,000 3,524,053
Motiva Enterprises LLC
5.20%, due 9/15/12 (a) 600,000 592,481
Pemex Project Funding Master Trust
Series Reg S
5.75%, due 12/15/15 875,000 868,875
------------
4,985,409
------------
PHARMACEUTICALS (0.7%)
Bristol-Myers Squibb Co.
5.875%, due 11/15/36 2,000,000 1,968,056
Eli Lilly & Co.
4.50%, due 3/15/18 1,500,000 1,382,898
------------
3,350,954
------------
PIPELINES (0.3%)
Duke Capital LLC
7.50%, due 10/1/09 1,476,000 1,553,010
------------
REAL ESTATE (0.2%)
Regency Centers, L.P.
7.95%, due 1/15/11 750,000 812,645
------------
REAL ESTATE INVESTMENT TRUSTS (1.9%)
Archstone-Smith Operating Trust
5.25%, due 5/1/15 500,000 490,589
AvalonBay Communities, Inc.
6.625%, due 9/15/11 1,000,000 1,050,576
Federal Realty Investment Trust
5.65%, due 6/1/16 1,000,000 995,839
Hospitality Properties Trust
5.125%, due 2/15/15 1,000,000 950,041
Liberty Property, L.P.
8.50%, due 8/1/10 500,000 547,911
New Plan Excel Realty Trust
5.25%, due 9/15/15 500,000 478,657
ProLogis
5.625%, due 11/15/16 500,000 496,266
Rouse Co. (The)
3.625%, due 3/15/09 1,000,000 946,464
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
Simon Property Group, L.P.
5.25%, due 12/1/16 $ 3,000,000 $ 2,923,143
United Dominion Realty Trust, Inc.
4.30%, due 7/1/07 1,000,000 993,956
------------
9,873,442
------------
RETAIL (1.0%)
Federated Department Stores, Inc.
6.30%, due 4/1/09 1,000,000 1,016,669
Home Depot, Inc.
5.875%, due 12/16/36 2,400,000 2,355,178
J.C. Penney Co., Inc.
8.00%, due 3/1/10 420,000 447,184
Yum! Brands, Inc.
8.875%, due 4/15/11 1,000,000 1,121,771
------------
4,940,802
------------
SAVINGS & LOANS (0.1%)
Washington Mutual Bank
5.95%, due 5/20/13 500,000 508,228
------------
TELECOMMUNICATIONS (1.8%)
CenturyTel, Inc.
Series F
6.30%, due 1/15/08 3,092,000 3,112,522
Motorola, Inc.
7.625%, due 11/15/10 649,000 698,800
SBC Communications, Inc.
5.10%, due 9/15/14 1,500,000 1,456,424
Sprint Capital Corp.
8.375%, due 3/15/12 1,250,000 1,389,228
8.75%, due 3/15/32 1,750,000 2,106,319
Verizon Global Funding Corp.
7.75%, due 12/1/30 575,000 674,462
------------
9,437,755
------------
TRUCKING & LEASING (0.4%)
TTX Co.
5.00%, due 4/1/12 (a) 2,050,000 2,003,276
------------
Total Corporate Bonds
(Cost $138,552,870) 137,969,184
------------
FOREIGN BONDS (3.0%)
- ------------------------------------------------------------------------------
BANKS (0.2%)
Nordea Bank Sweden AB
5.25%, due 11/30/12 (a) 800,000 794,836
------------
BEVERAGES (0.4%)
Diageo Capital PLC
5.125%, due 1/30/12 2,350,000 2,320,653
------------
DIVERSIFIED FINANCIAL SERVICES (0.6%)
AMVESCAP PLC
5.90%, due 1/15/07 3,000,000 3,000,282
------------
</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-27
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN BONDS (CONTINUED)
- ------------------------------------------------------------------------------
INVESTMENT COMPANY (0.3%)
Temasek Financial I, Ltd.
4.50%, due 9/21/15 (a) $ 1,750,000 $ 1,660,463
------------
MEDIA (0.2%)
Thomson Corp. (The)
5.75%, due 2/1/08 1,000,000 1,002,995
------------
REGIONAL GOVERNMENT (0.8%)
Province of Ontario
5.50%, due 10/1/08 4,000,000 4,022,920
------------
TELECOMMUNICATIONS (0.5%)
Telecom Italia Capital S.A.
4.00%, due 1/15/10 375,000 358,085
6.00%, due 9/30/34 875,000 793,595
Telefonica Europe B.V.
7.75%, due 9/15/10 500,000 537,022
Vodafone Group PLC
7.75%, due 2/15/10 1,000,000 1,065,683
------------
2,754,385
------------
Total Foreign Bonds
(Cost $15,721,424) 15,556,534
------------
MORTGAGE-BACKED SECURITIES (8.2%)
- ------------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (8.2%)
Banc of America Commercial Mortgage, Inc.
Series 2006-6, Class A2
5.309%, due 10/10/45 3,500,000 3,508,056
Series 2006-4, Class A3A
5.60%, due 7/10/46 1,000,000 1,015,631
Series 2006-2, Class AAB
5.723%, due 5/10/45 (b) 2,000,000 2,053,094
Bear Stearns Adjustable Rate
Mortgage Trust
Series 2005-8, Class A4
5.096%, due 8/25/35 (a)(b) 500,000 486,373
Bear Stearns Commercial
Mortgage Securities
Series 2006-PW11, Class A3
5.458%, due 3/11/39 (b) 1,000,000 1,012,013
Series 2006-PW11, Class A4
5.458%, due 3/11/39 (b) 1,500,000 1,523,249
Series 2006-PW11, Class AM
5.458%, due 3/11/39 (b) 500,000 506,488
Series 2006-PW13, Class A3
5.518%, due 9/11/41 1,000,000 1,010,629
Series 2006-PW13, Class A4
5.54%, due 9/11/41 1,000,000 1,014,452
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (CONTINUED)
Bear Stearns Commercial
Mortgage Securities (continued)
Series 2006-PW12, Class AAB
5.686%, due 9/11/38 (b) $ 1,000,000 $ 1,024,365
Credit Suisse Mortgage
Capital Certificates
Series 2006-C1, Class AM
5.556%, due 2/15/39 (b) 5,000,000 5,076,548
JPMorgan Chase Commercial
Mortgage Securities Corp.
Series 2006-CB17, Class A4
5.429%, due 12/12/43 2,500,000 2,512,679
Series 2006-CB16, Class A3B
5.579%, due 5/12/45 1,000,000 1,010,392
LB-UBS Commercial Mortgage Trust
Series 2006-C4, Class AAB
5.874%, due 6/15/32 (b) 1,225,000 1,269,893
Merrill Lynch Mortgage Trust
Series 2005-MKB2, Class A4
5.204%, due 9/12/42 (b) 1,000,000 990,391
Series 2005-LC1, Class A3
5.289%, due 1/12/44 (b) 2,500,000 2,498,373
Morgan Stanley Capital I
Series 2004-HQ3, Class A4
V 4.80%, due 1/13/41 10,000,000 9,697,200
Series 2006-HQ9, Class AM
5.773%, due 7/12/44 (b) 1,000,000 1,028,542
Structured Adjustable Rate
Mortgage Loan Trust
Series 2006-8, Class 4A3
5.75%, due 9/25/36 (b) 1,000,000 993,920
TBW Mortgage Backed Pass
Through Certificates
Series 2006-6, Class A2B
5.66%, due 1/25/37 2,000,000 2,000,000
Wachovia Bank Commercial
Mortgage Trust
Series 2006-C29, Class AM
5.339%, due 11/15/48 2,000,000 1,988,881
------------
Total Mortgage-Backed Securities
(Cost $41,884,616) 42,221,169
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (53.2%)
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (3.8%)
2.625%, due 2/16/07 5,000,000 4,984,540
V 3.625%, due 11/14/08 10,000,000 9,749,670
3.75%, due 8/15/07 5,000,000 4,954,505
------------
19,688,715
------------
FEDERAL HOME LOAN BANK
(COLLATERALIZED MORTGAGE OBLIGATION) (0.9%)
Series VN-2015, Class A
5.46%, due 11/27/15 4,407,931 4,405,177
------------
</Table>
M-28 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 (0.3%)
5.50%, due 9/25/13 $ 1,500,000 $ 1,496,639
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (15.5%)
4.00%, due 1/1/21 2,765,535 2,600,552
4.50%, due 8/1/20 7,491,263 7,221,003
4.50%, due 11/1/20 908,506 875,730
4.50%, due 3/1/21 1,858,523 1,791,474
4.50%, due 4/1/21 188,377 181,521
4.50%, due 11/1/21 1,091,003 1,051,294
4.50%, due 5/1/35 228,038 213,691
4.50%, due 8/1/35 471,570 441,901
4.50%, due 10/1/35 494,304 463,205
5.00%, due 10/1/20 1,765,024 1,734,172
5.00%, due 12/1/20 5,491,225 5,395,237
5.00%, due 1/1/21 901,288 885,384
5.00%, due 5/1/21 1,607,785 1,579,681
5.00%, due 7/1/35 234,163 226,018
V 5.00%, due 8/1/35 16,251,037 15,685,778
V 5.00%, due 10/1/36 14,854,511 14,331,508
5.454%, due 1/1/36 (b) 6,730,837 6,712,009
5.50%, due 12/1/18 1,528,667 1,531,265
5.50%, due 9/1/21 2,749,873 2,747,754
5.50%, due 1/1/36 219,830 217,446
5.50%, due 10/1/36 999,999 988,854
5.50%, due 12/1/36 500,000 494,427
6.00%, due 8/1/21 2,452,289 2,485,293
6.00%, due 12/1/35 66,052 66,555
6.00%, due 8/1/36 5,900,000 5,943,636
6.50%, due 7/1/17 292,330 299,082
6.50%, due 11/1/35 1,211,445 1,235,084
6.50%, due 1/1/36 818,932 834,253
7.00%, due 1/1/33 1,320,624 1,357,650
------------
79,591,457
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (0.4%)
5.25%, due 8/1/12 2,000,000 2,009,724
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (15.6%)
4.00%, due 10/1/20 1,005 946
4.50%, due 12/1/19 13,446 12,987
4.50%, due 9/1/20 119,986 115,762
4.50%, due 9/1/35 2,907,442 2,725,366
5.00%, due 1/1/21 1,432,566 1,408,239
5.00%, due 2/1/21 891,427 876,254
5.00%, due 5/1/21 387,265 380,674
5.00%, due 5/1/33 89 86
5.00%, due 4/1/36 137 132
5.00%, due 5/1/36 3,122,672 3,014,680
5.389%, due 1/1/36 (b) 1,915,977 1,907,853
5.50%, due 5/1/16 962,164 965,320
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (CONTINUED)
5.50%, due 6/1/35 $ 3,842,649 $ 3,798,760
5.50%, due 7/1/35 3,830,577 3,786,826
V 5.50%, due 8/1/35 9,424,617 9,316,972
5.50%, due 10/1/35 1,464,394 1,447,669
V 5.50%, due 11/1/35 12,002,874 11,865,782
5.50%, due 12/1/35 1,872,991 1,851,599
5.50%, due 5/1/36 1,948,467 1,925,531
5.50%, due 8/1/36 2,487,111 2,457,835
5.50%, due 10/1/36 3,469,325 3,428,489
5.50%, due 12/1/36 1,489,825 1,472,289
5.964%, due 7/1/36 (b) 979,280 984,469
6.00%, due 2/1/14 441,192 448,075
6.00%, due 1/1/36 5,368,590 5,404,955
6.00%, due 6/1/36 3,880,536 3,906,810
6.00%, due 7/1/36 1,906,435 1,919,343
6.00%, due 8/1/36 97,559 98,219
6.00%, due 9/1/36 3,912,339 3,938,829
6.00%, due 10/15/36 962,387 975,806
6.00%, due 11/1/36 1,998,057 2,011,585
6.50%, due 11/1/09 222,173 223,607
6.50%, due 10/1/27 48,614 49,829
6.50%, due 1/1/28 253,898 260,680
6.50%, due 7/1/35 579,130 590,169
6.50%, due 3/1/36 945,250 963,072
6.50%, due 9/1/36 4,370,246 4,452,643
7.00%, due 2/1/27 344,465 355,649
7.00%, due 1/1/28 340,336 351,482
7.00%, due 4/1/31 67,334 69,288
7.50%, due 7/1/28 168,876 176,341
------------
79,940,902
------------
FREDDIE MAC
(COLLATERALIZED MORTGAGE OBLIGATION) (0.5%)
Series R005, Class AB
5.50%, due 12/15/18 2,684,719 2,676,850
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(COLLATERALIZED MORTGAGE OBLIGATION) (2.5%)
Series 2003-96, Class C
4.396%, due 1/16/24 3,000,000 2,937,658
Series 2005-87, Class B
5.116%, due 1/16/28 (b) 5,000,000 4,962,418
Series 2002-35, Class D
6.287%, due 1/16/27 (b) 5,000,000 5,211,676
------------
13,111,752
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (3.0%)
5.00%, due 9/15/35 3,466,761 3,371,928
5.50%, due 7/15/35 1,673,952 1,666,307
5.50%, due 8/15/35 803,118 799,451
5.50%, due 5/15/36 981,740 977,021
5.50%, due 7/15/36 2,494,415 2,482,425
5.50%, due 11/15/36 999,001 994,199
</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-29
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- ------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (CONTINUED)
6.00%, due 1/15/36 $ 2,598,716 $ 2,634,950
6.50%, due 1/15/36 1,524,631 1,564,289
6.50%, due 3/15/36 761,417 781,223
7.00%, due 7/15/31 163,409 168,874
9.00%, due 4/15/26 127,529 137,891
------------
15,578,558
------------
UNITED STATES TREASURY BONDS (2.3%)
4.50%, due 2/15/36 (c) 5,456,000 5,188,318
5.375%, due 2/15/31 (c) 5,000,000 5,355,860
6.25%, due 8/15/23 (c) 1,000,000 1,151,016
------------
11,695,194
------------
UNITED STATES TREASURY NOTES (8.4%)
3.375%, due 2/15/08 (c) 2,800,000 2,751,109
V 4.00%, due 3/15/10 (c) 8,150,000 7,979,037
V 4.625%, due 11/30/08 (c) 9,040,000 9,007,159
V 4.625%, due 11/15/16 (c) 13,025,000 12,939,530
V 4.875%, due 4/30/08 10,300,000 10,290,339
------------
42,967,174
------------
Total U.S. Government & Federal Agencies
(Cost $273,871,894) 273,162,142
------------
YANKEE BONDS (0.8%)(D)
- ------------------------------------------------------------------------------
BEVERAGES (0.3%)
Molson Coors Capital Finance ULC
4.85%, due 9/22/10 1,500,000 1,469,966
------------
INSURANCE (0.3%)
ACE, Ltd.
6.00%, due 4/1/07 1,750,000 1,751,811
------------
INVESTMENT COMPANY (0.2%)
SIUK PLC
8.23%, due 2/1/27 750,000 780,561
------------
Total Yankee Bonds
(Cost $4,005,163) 4,002,338
------------
Total Long-Term Bonds
(Cost $497,934,856) 496,692,872
------------
SHORT-TERM INVESTMENTS (10.4%)
- ------------------------------------------------------------------------------
FEDERAL AGENCY (1.7%)
Federal Farm Credit Bank
4.85%, due 1/2/07 8,980,000 8,978,790
------------
Total Federal Agency
(Cost $8,978,790) 8,978,790
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (2.0%)
Barton Capital LLC
5.298%, due 1/4/07 (e) $ 824,707 $ 824,707
Charta LLC
5.314%, due 1/11/07 (e) 844,870 844,870
Ciesco, Inc.
5.305%, due 1/10/07 (e) 1,102,627 1,102,627
Compass Securitization LLC
5.324%, due 1/18/07 (e) 1,126,493 1,126,493
Fairway Finance Corp.
5.301%, due 1/8/07 (e) 844,870 844,870
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (e) 833,282 833,282
Greyhawk Funding LLC
5.305%, due 1/5/07 (e) 826,318 826,318
Jupiter Securitization Corp.
5.324%, due 1/18/07 (e) 844,870 844,870
Liberty Street Funding Co.
5.325%, due 1/29/07 (e) 281,623 281,623
Old Line Funding LLC
5.303%, due 1/9/07 (e) 1,103,861 1,103,861
Ranger Funding LLC
5.308%, due 1/30/07 (e) 844,870 844,870
Sheffield Receivables Corp.
5.336%, due 1/16/07 (e) 844,870 844,870
------------
Total Commercial Paper
(Cost $10,323,261) 10,323,261
------------
<Caption>
SHARES
x
INVESTMENT COMPANY (1.1%)
BGI Institutional Money
Market Fund (e) 5,882,944 5,882,944
------------
Total Investment Company
(Cost $5,882,944) 5,882,944
------------
PRINCIPAL
AMOUNT
x
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $281,793 (Collateralized by
various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$278,942 and a Market Value
of $291,593) (e) $ 281,623 281,623
------------
Total Repurchase Agreement
(Cost $281,623) 281,623
------------
</Table>
M-30 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
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
TIME DEPOSITS (5.5%)
Abbey National PLC
5.34%, due 1/2/07 (e) $ 3,379,478 $ 3,379,478
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (e) 2,252,986 2,252,986
Bank of America Corp.
5.27%, due 1/19/07 (b) (e) 2,252,986 2,252,986
Bank of Montreal
5.30%, due 1/26/07 (e) 1,408,116 1,408,116
Barclays
5.32%, due 1/18/07 (e) 1,858,713 1,858,713
Calyon
5.31%, due 2/12/07 (e) 2,252,986 2,252,986
Citigroup
5.325%, due 3/22/07 (e) 1,971,362 1,971,362
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (e) 2,140,336 2,140,336
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (e) 2,252,986 2,252,986
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (e) 2,084,012 2,084,012
Rabobank Nederland
5.29%, due 3/6/07 (e) 1,689,739 1,689,739
Standard Chartered Bank
5.29%, due 1/10/07 (e) 2,252,986 2,252,986
UBS AG
5.285%, due 1/12/07 (e) 2,252,986 2,252,986
------------
Total Time Deposits
(Cost $28,049,672) 28,049,672
------------
Total Short-Term Investments
(Cost $53,516,290) 53,516,290
------------
Total Investments
(Cost $551,451,146) (f) 107.2% 550,209,162(g)
Liabilities in Excess of
Cash and Other Assets (7.2) (36,717,217)
----------- ------------
Net Assets 100.0% $513,491,945
=========== ============
</Table>
<Table>
(a) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(b) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(c) Represents a security, or a portion thereof, which is out on
loan.
(d) Yankee Bond--dollar-denominated bond issued in the United
States by a foreign bank or corporation.
(e) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(f) The cost for federal income tax purposes is $551,489,360.
(g) At December 31, 2006 net unrealized depreciation was
$1,280,198, based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized appreciation
for all investments on which there was an excess of market
value over cost of $2,745,652 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $4,025,850.
</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-31
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost
$551,451,146) including $43,520,448 market
value of securities loaned $550,209,162
Cash 5,317
Receivables:
Dividends and interest 4,259,582
Investment securities sold 2,815,171
Fund shares sold 1,258,619
Other assets 1,295
-------------
Total assets 558,549,146
-------------
LIABILITIES:
Securities lending collateral 44,537,500
Payables:
Fund shares redeemed 148,690
Adviser (See Note 3) 108,141
Shareholder communication 89,537
Administrator (See Note 3) 86,513
Professional fees 56,698
NYLIFE Distributors (See Note 3) 21,816
Custodian 4,413
Directors 707
Accrued expenses 3,186
-------------
Total liabilities 45,057,201
-------------
Net assets $513,491,945
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 301,549
Service Class 76,253
Additional paid-in capital 496,587,004
Accumulated undistributed net investment
income 22,228,200
Accumulated net realized loss on investments (4,459,077)
Net unrealized depreciation on investments (1,241,984)
-------------
Net assets $513,491,945
=============
INITIAL CLASS
Net assets applicable to outstanding shares $410,139,454
=============
Shares of capital stock outstanding 30,154,887
=============
Net asset value per share outstanding $ 13.60
=============
SERVICE CLASS
Net assets applicable to outstanding shares $103,352,491
=============
Shares of capital stock outstanding 7,625,279
=============
Net asset value per share outstanding $ 13.55
=============
</Table>
M-32 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 OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $24,656,976
Income from securities loaned--net 148,277
------------
Total income 24,805,253
------------
EXPENSES:
Advisory (See Note 3) 1,197,537
Administration (See Note 3) 958,030
Distribution and service--Service Class
(See Note 3) 241,056
Shareholder communication 129,617
Professional fees 106,854
Custodian 50,357
Directors 27,147
Miscellaneous 23,566
------------
Total expenses 2,734,164
------------
Net investment income 22,071,089
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (2,377,123)
Net change in unrealized appreciation on
investments 1,948,426
------------
Net realized and unrealized loss on investments (428,697)
------------
Net increase in net assets resulting from
operations $21,642,392
============
</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-33
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 22,071,089 $ 18,724,029
Net realized gain (loss) on
investments (2,377,123) 182,082
Net change in unrealized
appreciation (depreciation) on
investments 1,948,426 (8,874,165)
---------------------------
Net increase in net assets
resulting from operations 21,642,392 10,031,946
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (4,799,733) (12,199,238)
Service Class (1,023,785) (2,763,426)
---------------------------
Total dividends to shareholders (5,823,518) (14,962,664)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 102,429,445 12,598,504
Service Class 19,049,448 32,641,073
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 4,799,733 12,199,238
Service Class 1,023,785 2,763,426
---------------------------
127,302,411 60,202,241
Cost of shares redeemed:
Initial Class (87,345,751) (64,610,877)
Service Class (10,282,879) (5,427,254)
---------------------------
(97,628,630) (70,038,131)
Increase (decrease) in net assets
derived from capital share
transactions 29,673,781 (9,835,890)
---------------------------
Net increase (decrease) in net
assets 45,492,655 (14,766,608)
NET ASSETS:
Beginning of year 467,999,290 482,765,898
---------------------------
End of year $513,491,945 $467,999,290
===========================
Accumulated undistributed net
investment income at end of year $ 22,228,200 $ 5,822,678
===========================
</Table>
M-34 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.
This page intentionally left blank
www.mainstayfunds.com M-35
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 13.16 $ 13.31 $ 13.41 $ 13.73 $ 13.11
-------- -------- -------- -------- --------
Net investment income 0.58 0.53(b) 0.47 0.52(b) 0.60
Net realized and unrealized gain (loss) on
investments 0.02 (0.24) 0.08 0.10 0.64
-------- -------- -------- -------- --------
Total from investment operations 0.60 0.29 0.55 0.62 1.24
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income (0.16) (0.44) (0.50) (0.59) (0.61)
From net realized gain on investments -- -- (0.15) (0.35) (0.01)
-------- -------- -------- -------- --------
Total dividends and distributions (0.16) (0.44) (0.65) (0.94) (0.62)
-------- -------- -------- -------- --------
Net asset value at end of period $ 13.60 $ 13.16 $ 13.31 $ 13.41 $ 13.73
======== ======== ======== ======== ========
Total investment return 4.55% 2.18%(e) 4.09% 4.52% 9.48%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 4.66% 3.96% 3.36% 3.75% 4.93%
Net expenses 0.52% 0.36% 0.54% 0.54% 0.52%
Expenses (before reimbursement) 0.52% 0.51% 0.54% 0.54% 0.52%
Portfolio turnover rate 166%(h) 277%(h) 335% 149% 76%
Net assets at end of period (in 000's) $410,139 $377,607 $421,046 $485,033 $481,740
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
2.03% and 1.77% for the Initial Class and Service Class, respectively for the year ended
December 31, 2005.
(f) Less than one tenth of a percent.
(g) Represents income earned for the year by the Initial Class shares less service fee of
0.25%.
(h) The portfolio turnover not including mortgage dollar rolls is 147% and 161% for the years
ended December 31, 2006 and 2005, respectively.
+ Annualized.
</Table>
M-36 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.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
----------------------------------------------------
JUNE 4,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 13.12 $ 13.29 $ 13.40 $ 14.33
-------- ------- ------- ------------
0.57 0.50(b) 0.46 0.28(b)
0.00(c) (0.25) 0.05 (0.28)
-------- ------- ------- ------------
0.57 0.25 0.51 0.00(c)
-------- ------- ------- ------------
(0.14) (0.42) (0.47) (0.58)
-- -- (0.15) (0.35)
-------- ------- ------- ------------
(0.14) (0.42) (0.62) (0.93)
-------- ------- ------- ------------
$ 13.55 $ 13.12 $ 13.29 $ 13.40
======== ======= ======= ============
4.29% 1.89%(e) 3.83% 0.00%(d)(f)
4.41% 3.71% 3.11% 3.50%+(g)
0.77% 0.61% 0.79% 0.79%+
0.77% 0.76% 0.79% 0.79%+
166%(h) 277%(h) 335% 149%
$103,352 $90,392 $61,720 $19,603
</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-37
MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 4.45% 0.71% 4.27%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CAPITAL RUSSELL 1000 GROWTH
APPRECIATION PORTFOLIO S&P 500 INDEX INDEX
---------------------- ------------- -------------------
12/31/96 10000 10000 10000
12349 13336 13049
17058 17148 18100
21393 20756 24101
19101 18866 18697
14666 16624 14878
10145 12950 10730
12883 16664 13922
13419 18478 14799
14547 19385 15577
12/31/06 15194 22447 16991
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 4.19% 0.45% 4.00%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CAPITAL RUSSELL 1000 GROWTH
APPRECIATION PORTFOLIO S&P 500 INDEX INDEX
---------------------- ------------- -------------------
12/31/96 10000 10000 10000
12316 13336 13049
16969 17148 18100
21224 20756 24101
18896 18866 18697
14473 16624 14878
9986 12950 10730
12651 16664 13922
13144 18478 14799
14209 19385 15577
12/31/06 14804 22447 16991
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Russell 1000(R) Growth Index* 9.07% 2.69% 5.44%
S&P 500(R) Index* 15.79 6.19 8.42
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 0.66% and 4.25% for the Initial Class and 0.41%
and 3.98% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/97 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 Capital Appreciation Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CAPITAL APPRECIATION
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,052.70 $3.21 $1,021.90 $3.16
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,051.45 $4.50 $1,020.65 $4.43
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.62% for Initial Class and 0.87% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-39
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 98.5
Short-Term Investments (collateral from securities lending 5.6
is 3.2%)
Liabilities in Excess of Cash and Other Assets (4.1)
</Table>
See Portfolio of Investments on page M-42 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Microsoft Corp.
2. Apple Computer, Inc.
3. Coach, Inc.
4. Thermo Fisher Scientific, Inc.
5. Danaher Corp.
6. Kohl's Corp.
7. Weatherford International, Ltd.
8. General Electric Co.
9. Praxair, Inc.
10. WellPoint, Inc.
</Table>
M-40 MainStay VP Capital Appreciation Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Edmund C. Spelman of MacKay Shields LLC.
HOW DID MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO PERFORM RELATIVE TO ITS PEERS
AND ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Capital Appreciation Portfolio
returned 4.45% for Initial Class shares and 4.19% for Service Class shares. Both
share classes underperformed the 6.31% return of the average Lipper* Variable
Products Large-Cap Growth Portfolio for the same period. Both share classes
underperformed the 9.07% return of the Russell 1000(R) Growth Index,* the
Portfolio's broad-based securities-market index, for the year ended December 31,
2006.
WHAT FACTORS AFFECTED THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
The Portfolio's relative performance resulted from a combination of adverse
stock selection and sector weightings.
WHICH PORTFOLIO HOLDINGS WERE STRONG PERFORMERS IN 2006 AND WHICH STOCKS WERE
PARTICULARLY WEAK?
Among the Portfolio's strongest-performing stocks during 2006 were Research In
Motion, Morgan Stanley and Kohl's. Each of these stocks strongly outperformed
the Russell 1000(R) Growth Index* during the year.
Among the Portfolio's greatest detractors were Intel, UnitedHealth Group and BJ
Services. Omnicare was also particularly weak.
IN 2006, WHICH PORTFOLIO SECTORS WERE STRONG PERFORMERS AND WHICH WERE WEAK?
The Portfolio's top three sectors on an absolute basis during 2006 were
materials, industrials and consumer discretionary. Materials and industrials
sector holdings had a largely neutral impact on the Portfolio's relative
performance. The Portfolio's consumer discretionary holdings, however,
underperformed sector-related stocks in the Russell 1000(R) Growth Index,* and
the Portfolio's overweighted position in the sector detracted from relative
performance.
The Portfolio's positions in the consumer staples, financials and information
technology sectors all detracted from the Portfolio's performance relative to
the Russell 1000(R) Growth Index,* as did consumer discretionary and health care
holdings.
HOW DID THE PORTFOLIO'S WEIGHTINGS AFFECT PERFORMANCE IN 2006?
The Portfolio was market-weighted in the materials sector at year-end, and the
Portfolio's materials holdings rose slightly less than sector-related stocks in
the Russell 1000(R) Growth Index.* The Portfolio's overweighted position in the
consumer discretionary sector detracted from relative performance, and
individual stock selection in the sector caused the Portfolio's consumer
discretionary holdings to underperform consumer discretionary stocks in the
Russell 1000(R) Growth Index.*
With such underperforming health care stocks as UnitedHealth Group and Omnicare,
the Portfolio's modestly overweighted health care position detracted from
relative performance. The Portfolio was under-weighted relative to the Russell
1000(R) Growth Index* in consumer staples, financials and information
technology, and Portfolio holdings within these sectors detracted from
performance relative to the benchmark.
HOW WAS THE PORTFOLIO POSITIONED AT THE END OF 2006?
We believe that it's nearly impossible to predict the movement of macroeconomic
factors that can influence the price of equities, such as the direction of
interest rates or the price of oil. For this reason, we continued to focus
keenly on the fundamental trends of the stocks the Portfolio holds, as well as
those of other stocks we monitor closely. At year-end 2006, the stocks in the
Portfolio continued to exhibit above-average revenue and earnings growth and had
price-to-earnings multiples that we felt were generally reasonable.
The principal risk of growth stocks is that investors expect growth companies to
increase their earnings at a certain rate that is generally higher than the rate
expected for nongrowth companies. If these expectations are not met, the market
price of the stock may decline significantly, even if earnings showed an
absolute increase.
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.
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.
INFORMATION ABOUT MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO ON THIS PAGE AND
THE PRECEDING PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-41
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (98.5%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (4.4%)
L-3 Communications Holdings, Inc. 171,200 $ 14,000,736
Precision Castparts Corp. 49,500 3,874,860
United Technologies Corp. 275,100 17,199,252
------------
35,074,848
------------
AIR FREIGHT & LOGISTICS (1.9%)
FedEx Corp. 143,400 15,576,108
------------
AUTOMOBILES (1.8%)
Harley-Davidson, Inc. (a) 200,700 14,143,329
------------
BEVERAGES (1.7%)
PepsiCo, Inc. 219,100 13,704,705
------------
BIOTECHNOLOGY (4.9%)
Amgen, Inc. (b) 163,000 11,134,530
Genentech, Inc. (b) 154,900 12,567,037
Gilead Sciences, Inc. (b) 234,200 15,206,606
------------
38,908,173
------------
CAPITAL MARKETS (3.5%)
Ameriprise Financial, Inc. 82,000 4,469,000
Lehman Brothers Holdings, Inc. 123,400 9,640,008
Morgan Stanley 172,000 14,005,960
------------
28,114,968
------------
CHEMICALS (2.4%)
V Praxair, Inc. 321,900 19,098,327
------------
COMMUNICATIONS EQUIPMENT (6.0%)
Cisco Systems, Inc. (b) 431,100 11,781,963
Corning, Inc. (b) 756,400 14,152,244
Motorola, Inc. 739,600 15,206,176
Research In Motion, Ltd. (b) 51,200 6,542,336
------------
47,682,719
------------
COMPUTERS & PERIPHERALS (4.6%)
V Apple Computer, Inc. (b) 275,200 23,347,968
EMC Corp. (b) 999,500 13,193,400
------------
36,541,368
------------
CONSUMER FINANCE (3.1%)
American Express Co. 269,600 16,356,632
Capital One Financial Corp. 110,400 8,480,928
------------
24,837,560
------------
DIVERSIFIED FINANCIAL SERVICES (2.5%)
Bank of America Corp. 219,700 11,729,783
JPMorgan Chase & Co. 165,200 7,979,160
------------
19,708,943
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (9.5%)
Baker Hughes, Inc. 243,800 $ 18,202,108
BJ Services Co. (a) 398,300 11,678,156
ENSCO International, Inc. 183,600 9,191,016
Transocean, Inc. (b) 216,100 17,480,329
V Weatherford International, Ltd. (b) 461,600 19,290,264
------------
75,841,873
------------
HEALTH CARE PROVIDERS & SERVICES (7.1%)
Caremark Rx, Inc. 173,300 9,897,163
Coventry Health Care, Inc. (b) 164,500 8,233,225
Quest Diagnostics, Inc. 174,900 9,269,700
UnitedHealth Group, Inc. 207,400 11,143,602
V WellPoint, Inc. (b) 231,400 18,208,866
------------
56,752,556
------------
HOUSEHOLD DURABLES (1.3%)
Harman International Industries, Inc. 107,000 10,690,370
------------
INDUSTRIAL CONGLOMERATES (2.4%)
V General Electric Co. 514,400 19,140,824
------------
INSURANCE (1.7%)
Prudential Financial, Inc. 156,900 13,471,434
------------
INTERNET SOFTWARE & SERVICES (1.3%)
Akamai Technologies, Inc. (a)(b) 201,400 10,698,368
------------
LIFE SCIENCES TOOLS & SERVICES (2.8%)
V Thermo Fisher Scientific, Inc. (a)(b) 487,200 22,065,288
------------
MACHINERY (3.5%)
Caterpillar, Inc. 136,400 8,365,412
V Danaher Corp. 273,800 19,834,072
------------
28,199,484
------------
MEDIA (4.7%)
Comcast Corp. Class A (b) 320,500 13,566,765
News Corp. Class A 489,300 10,510,164
Omnicom Group, Inc. 128,500 13,433,390
------------
37,510,319
------------
MULTILINE RETAIL (4.4%)
V Kohl's Corp. (a)(b) 288,400 19,735,212
Target Corp. 266,600 15,209,530
------------
34,944,742
------------
</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.
M-42 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>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (1.9%)
Apache Corp. 89,000 $ 5,919,390
Peabody Energy Corp. 220,500 8,910,405
------------
14,829,795
------------
PHARMACEUTICALS (2.2%)
Johnson & Johnson 272,100 17,964,042
------------
ROAD & RAIL (1.3%)
Norfolk Southern Corp. 214,500 10,787,205
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (4.1%)
Intel Corp. 804,200 16,285,050
Linear Technology Corp. 140,600 4,262,992
National Semiconductor Corp. 526,100 11,942,470
------------
32,490,512
------------
SOFTWARE (5.2%)
Autodesk, Inc. (b) 110,600 4,474,876
BEA Systems, Inc. (b) 543,500 6,837,230
V Microsoft Corp. 1,025,800 30,630,387
------------
41,942,493
------------
SPECIALTY RETAIL (4.0%)
Bed Bath & Beyond, Inc. (b) 300,900 11,464,290
Best Buy Co., Inc. 233,500 11,485,865
Lowe's Cos., Inc. (a) 277,900 8,656,585
------------
31,606,740
------------
TEXTILES, APPAREL & LUXURY GOODS (4.3%)
V Coach, Inc. (b) 528,500 22,704,360
NIKE, Inc. Class B 119,100 11,794,473
------------
34,498,833
------------
Total Common Stocks
(Cost $576,142,335) 786,825,926
------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (5.6%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (3.1%)
Barton Capital LLC
5.298%, due 1/4/07 (c) $ 478,138 478,138
Charta LLC
5.314%, due 1/11/07 (c) 489,827 489,827
Ciesco, Inc.
5.305%, due 1/10/07 (c) 639,267 639,267
Compass Securitization LLC
5.324%, due 1/18/07 (c) 653,103 653,103
Fairway Finance Corp.
5.301%, due 1/8/07 (c) 489,827 489,827
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (c) 483,110 483,110
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Goldman Sachs Group, Inc.
5.29%, due 1/11/07 $4,805,000 $ 4,797,939
Greyhawk Funding LLC
5.305%, due 1/5/07 (c) 479,072 479,072
Jupiter Securitization Corp.
5.324%, due 1/18/07 (c) 489,827 489,827
Liberty Street Funding Co.
5.325%, due 1/29/07 (c) 163,276 163,276
Old Line Funding LLC
5.303%, due 1/9/07 (c) 639,982 639,982
Prudential Funding LLC
5.26%, due 1/3/07 6,695,000 6,693,044
Ranger Funding LLC
5.308%, due 1/30/07 (c) 489,827 489,827
Sheffield Receivables Corp.
5.336%, due 1/16/07 (c) 489,827 489,827
Toyota Motor Credit Co.
5.27%, due 1/3/07 7,450,000 7,447,819
------------
Total Commercial Paper
(Cost $24,923,885) 24,923,885
------------
<Caption>
SHARES
INVESTMENT COMPANY (0.4%)
BGI Institutional Money Market Fund (c) 3,410,736 3,410,736
------------
Total Investment Company
(Cost $3,410,736) 3,410,736
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.0%)++
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $163,374 (Collateralized by
various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$161,721 and a Market Value
of $169,056) (c) $ 163,276 163,276
------------
Total Repurchase Agreement
(Cost $163,276) 163,276
------------
</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.
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-43
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
TIME DEPOSITS (2.1%)
Abbey National PLC
5.34%, due 1/2/07 (c) $1,959,310 $ 1,959,310
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (c) 1,306,207 1,306,207
Bank of America Corp.
5.27%, due 1/19/07 (c)(d) 1,306,207 1,306,207
Bank of Montreal
5.30%, due 1/26/07 (c) 816,379 816,379
Barclays
5.32%, due 1/18/07 (c) 1,077,620 1,077,620
Calyon
5.31%, due 2/12/07 (c) 1,306,207 1,306,207
Citigroup
5.325%, due 3/22/07 (c) 1,142,931 1,142,931
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (c) 1,240,896 1,240,896
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (c) 1,306,207 1,306,207
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (c) 1,208,241 1,208,241
Rabobank Nederland
5.29%, due 3/6/07 (c) 979,655 979,655
Standard Chartered Bank
5.29%, due 1/10/07 (c) 1,306,207 1,306,207
UBS AG
5.285%, due 1/12/07 (c) 1,306,207 1,306,207
------------
Total Time Deposits
(Cost $16,262,274) 16,262,274
------------
Total Short-Term Investments
(Cost $44,760,171) 44,760,171
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Total Investments
(Cost $620,902,506) (e) $ 104.1% $831,586,097(f)
Liabilities in Excess of
Cash and Other Assets (4.1) (32,501,742)
---------- ------------
Net Assets 100.0% $799,084,355
========== ============
</Table>
<Table>
++ Less than one tenth of a percent.
(a) Represents a security, or a portion thereof, which is out on
loan.
(b) Non-income producing security.
(c) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(d) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(e) The cost for federal income tax purposes is $621,156,273.
(f) At December 31, 2006 net unrealized appreciation was
$210,429,824, 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 $214,418,812 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $3,988,988.
</Table>
M-44 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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value
(identified cost
$620,902,506) including $24,993,226 market
value of securities loaned $ 831,586,097
Cash 12,009
Receivables:
Investment securities sold 3,194,881
Dividends and interest 427,602
Fund shares sold 113,098
Other assets 2,489
-------------
Total assets 835,336,176
-------------
LIABILITIES:
Securities lending collateral 25,821,369
Payables:
Investment securities purchased 9,475,096
Fund shares redeemed 345,616
Adviser (See Note 3) 247,781
Administrator (See Note 3) 137,656
Shareholder communication 133,081
Professional fees 71,189
NYLIFE Distributors (See Note 3) 13,074
Custodian 2,536
Directors 1,175
Accrued expenses 3,248
-------------
Total liabilities 36,251,821
-------------
Net assets $ 799,084,355
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 304,353
Service Class 25,188
Additional paid-in capital 788,669,292
Accumulated undistributed net investment
income 945,648
Accumulated net realized loss on investments (201,543,717)
Net unrealized appreciation on investments 210,683,591
-------------
Net assets $ 799,084,355
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 738,277,962
=============
Shares of capital stock outstanding 30,435,310
=============
Net asset value per share outstanding $ 24.26
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 60,806,393
=============
Shares of capital stock outstanding 2,518,769
=============
Net asset value per share outstanding $ 24.14
=============
</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-45
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 5,815,079
Interest 447,645
Income from securities loaned--net 51,679
------------
Total income 6,314,403
------------
EXPENSES:
Advisory (See Note 3) 3,025,911
Administration (See Note 3) 1,681,061
Shareholder communication 215,966
Professional fees 162,281
Distribution and service--Service Class
(See Note 3) 149,671
Directors 50,176
Custodian 28,491
Miscellaneous 54,342
------------
Total expenses 5,367,899
------------
Net investment income 946,504
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 38,084,005
Net change in unrealized appreciation on
investments (3,391,242)
------------
Net realized and unrealized gain on investments 34,692,763
------------
Net increase in net assets resulting from
operations $35,639,267
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $870.
M-46 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 CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 946,504 $ 2,875,948
Net realized gain on
investments 38,084,005 36,095,366
Net change in unrealized
appreciation on investments (3,391,242) 30,015,617
-----------------------------
Net increase in net assets
resulting from operations 35,639,267 68,986,931
-----------------------------
Dividends to shareholders:
From net investment income:
Initial Class (2,776,284) (35,887)
Service Class (100,520) --
-----------------------------
Total dividends to
shareholders (2,876,804) (35,887)
-----------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 38,080,728 16,944,467
Service Class 8,577,662 11,952,375
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 2,776,284 35,887
Service Class 100,520 --
-----------------------------
49,535,194 28,932,729
Cost of shares redeemed:
Initial Class (168,842,878) (174,917,415)
Service Class (8,859,427) (5,922,760)
-----------------------------
(177,702,305) (180,840,175)
Decrease in net assets
derived from capital share
transactions (128,167,111) (151,907,446)
-----------------------------
Net decrease in net assets (95,404,648) (82,956,402)
NET ASSETS:
Beginning of year 894,489,003 977,445,405
-----------------------------
End of year $ 799,084,355 $ 894,489,003
=============================
Accumulated undistributed net
investment income at end of
year $ 945,648 $ 2,875,948
=============================
</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-47
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 23.31 $ 21.51 $ 20.70 $ 16.33 $ 23.64
-------- -------- -------- ---------- --------
Net investment income (loss) 0.05 0.07 (b) 0.05 0.04(b) 0.02
Net realized and unrealized
gain (loss) on investments 0.99 1.73 0.81 4.37 (7.31)
-------- -------- -------- ---------- --------
Total from investment
operations 1.04 1.80 0.86 4.41 (7.29)
-------- -------- -------- ---------- --------
Less dividends:
From net investment income (0.09) (0.00)(c) (0.05) (0.04) (0.02)
-------- -------- -------- ---------- --------
Net asset value at end of
period $ 24.26 $ 23.31 $ 21.51 $ 20.70 $ 16.33
======== ======== ======== ========== ========
Total investment return 4.45% 8.41%(e) 4.16% 26.99% (30.83%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income (loss) 0.13% 0.33% 0.24% 0.20% 0.11%
Net expenses 0.62% 0.37% 0.65% 0.64% 0.64%
Expenses (before
reimbursement) 0.62% 0.60% 0.65% 0.64% 0.64%
Portfolio turnover rate 28% 22% 34% 26% 72%
Net assets at end of period
(in 000's) $738,278 $835,933 $929,227 $1,011,538 $842,410
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
8.16% and 7.88% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(f) Represents income earned for the year by the Initial Class share less service fee of
0.25%.
+ Annualized.
</Table>
M-48 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 SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
- -------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 23.21 $ 21.47 $ 20.68 $ 18.43
------- ------- ------- ------------
(0.03) 0.02(b) 0.02 0.01(b)
1.00 1.72 0.79 2.27
------- ------- ------- ------------
0.97 1.74 0.81 2.28
------- ------- ------- ------------
(0.04) -- (0.02) (0.03)
------- ------- ------- ------------
$ 24.14 $ 23.21 $ 21.47 $ 20.68
======= ======= ======= ============
4.19% 8.10%(e) 3.90% 12.36%(d)
(0.12%) 0.08% (0.01%) (0.05%)+(f)
0.87% 0.62% 0.90% 0.89%+
0.87% 0.85% 0.90% 0.89%+
28% 22% 34% 26%
$60,806 $58,556 $48,218 $15,582
</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-49
MAINSTAY VP CASH MANAGEMENT PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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.
AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE
PORTFOLIO SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO.
INITIAL CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 4.57% 2.07% 3.54%
7-DAY CURRENT YIELD: 4.83%(2)
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CASH MANAGEMENT LIPPER MONEY MARKET FUND
PORTFOLIO INDEX
--------------------------- ------------------------
12/31/96 10000 10000
10525 10514
11070 11050
11605 11574
12308 12262
12781 12728
12954 12896
13040 12976
13151 13077
13540 13425
12/31/06 14159 14030
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Lipper Money Market Fund Index* 4.51% 1.97% 3.44%
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 2.03% and 3.52% for the Initial Class for the
five-year and ten-year periods, respectively.
2. As of 12/31/06, MainStay VP Cash Management Portfolio had an effective 7-day
yield of 4.88% and a current yield of 4.83%. 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-50 MainStay VP Cash Management Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CASH MANAGEMENT PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,024.20 $2.65 $1,022.40 $2.65
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of 0.52%
multiplied by the average account value over the period, divided by 365 and
multiplied by 184 (to reflect the one-half year period).
www.mainstayfunds.com M-51
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Commercial Paper 42.6
Federal Agencies 38.5
Corporate Bonds 9.7
Medium-Term Notes 9.6
Asset-Backed Security 0.3
Liabilities in Excess of Cash and Other Assets (0.7)
</Table>
See Portfolio of Investments on page M-55 for specific holdings within these
categories.
M-52 MainStay VP Cash Management Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Claude Athaide, Ph.D., CFA, of MacKay
Shields LLC.
HOW DID MAINSTAY VP CASH MANAGEMENT PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK IN 2006?
For the seven-day period ended December 31, 2006, MainStay VP Cash Management
Portfolio Initial Class shares provided a current yield of 4.83% and an
effective yield of 4.88%. For the year ended December 31, 2006, MainStay VP Cash
Management Port-folio returned 4.57% for Initial Class shares. The Portfolio
outperformed the 4.55% return of the average Lipper* Variable Products Money
Market Portfolio over the same period. The Portfolio also outperformed the 4.51%
of the Lipper Money Market Fund Index,* the Portfolio's broad-based securities-
market index, for the year ended December 31, 2006.
WHAT FACTORS CONTRIBUTED TO THE PORTFOLIO'S PERFORMANCE DURING 2006?
The progress of the economy affects the money market. According to the Bureau of
Economic Analysis, the economy grew at a robust 5.6% seasonally adjusted annual
rate in the first quarter of 2006. Since then, growth has moderated, in part
because of the slowdown in the housing sector. Real gross domestic product (GDP)
increased at a seasonally adjusted annual rate of 2.6% in the second quarter,
2.0% in the third quarter and, according to advance estimates, 3.5% in the
fourth quarter.
Residential investment declined at a 19.2% seasonally adjusted annual rate in
the fourth quarter, the fifth consecutive quarter in which the sector made a
neg-ative contribution to GDP growth. Although growth early in the fourth
quarter of 2006 was sluggish, consumer spending picked up in November and
December. Warmer weather also boosted construction activity, which helped GDP
advance in the fourth quarter.
DID FEDERAL RESERVE ACTION INFLUENCE INTEREST RATE MOVEMENTS?
At the end of 2005, the federal funds target rate was 4.25%. The Federal Open
Market Committee met eight times during 2006 and raised the federal funds target
rate by 25 basis points at each of the first four of these meetings, bringing
the target rate to 5.25% in June 2006. (A basis point is one-hundredth of a
percentage point.) The monetary tightening trend, which began in 2004, was
continued under the leadership of Dr. Ben Bernanke, who succeeded Dr. Alan
Greenspan as chairman of the Federal Reserve Board in February 2006. Since June,
the Federal Open Market Committee has left the federal funds target rate
unchanged, citing, among other reasons, a need to observe the impact of prior
rate increases on the economy.
HOW DID TREASURY YIELDS VARY OVER THE COURSE OF THE YEAR?
Robust economic growth in the first quarter and a string of higher-than-expected
monthly inflation data helped Treasury yields across the maturity spectrum climb
above 5% in the spring of 2006. The decel-eration in economic growth during the
summer prompted a sharp decline in yields and raised investors' expectations of
interest rate cuts. These expectations receded when strength was observed in
consumer spending.
At year-end 2006, the yield on the three-month Treasury bill was 5.01%, or 93
basis points higher than it was a year earlier. Three-month LIBOR(1) was 5.36%
at year-end 2006, up from 4.54% at the end of 2005.
1. The London interbank offered rate (LIBOR) is a floating interest rate that is
widely used as a base rate in bank, corporate and government lending
agreements.
An investment in the Portfolio is not insured by the Federal Deposit Insurance
Corporation or any other government agency. Although this Portfolio seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Portfolio. The Portfolio can invest in foreign
securities, which 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. The
Portfolio may invest in derivatives, which may increase the volatility of the
Portfolio and may result in a loss to the Portfolio.
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-53
HOW DID THE PORTFOLIO INVEST DURING 2006?
The Portfolio invested in securities issued by the U.S. Treasury and
government-sponsored agencies, such as Fannie Mae, Freddie Mac, the Federal Home
Loan Bank (FHLB) and Tennessee Valley Authority (TVA). The Portfolio also held
tier-1 securities issued by finance, insurance brokerage and industrial
companies, as well as by banks and bank holding companies. Tier-1 securities are
generally those money market instruments rated in the highest category by at
least two nationally recognized statistical rating organizations.
HOW DID FEDERAL OPEN MARKET COMMITTEE ACTION AFFECT THE PORTFOLIO?
Portfolio returns were strengthened by the Federal Open Market Committee's
decision to raise rates from 4.25% to 5.25%, as lower-yielding investments
matured and were reinvested in higher-yielding securities.
WHAT WAS THE PORTFOLIO'S AVERAGE MATURITY AT YEAR-END?
As of December 31, 2006, the average maturity of the Portfolio was approximately
61 days.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP CASH MANAGEMENT PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-54 MainStay VP Cash Management Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
SHORT-TERM INVESTMENTS (100.7%)+
- -----------------------------------------------------------------------------
ASSET-BACKED SECURITY (0.3%)
USAA Auto Owner Trust
Series 2006-3, Class A1
5.405%, due 8/15/07 $ 925,679 $ 925,679
------------
COMMERCIAL PAPER (42.6%)
Abbey National North America LLC
5.19%, due 4/20/07 3,000,000 2,952,857
5.23%, due 2/5/07 3,500,000 3,482,203
5.24%, due 3/7/07 2,650,000 2,624,928
Abbott Laboratories
5.18%, due 1/9/07 (a) 3,325,000 3,321,173
5.19%, due 1/23/07 (a) 2,300,000 2,292,705
ABN-AMRO N.A. Finance, Inc.
5.16%, due 4/5/07 3,500,000 3,452,843
Allianz Finance Corp.
5.22%, due 2/6/07 (a) 3,500,000 3,481,730
American General Finance Corp.
5.16%, due 5/10/07 3,600,000 3,533,436
Bankamerica Corp.
5.25%, due 3/20/07 6,700,000 6,623,788
Barclays U.S. Funding Corp.
5.235%, due 3/5/07 3,500,000 3,467,936
5.25%, due 2/2/07 3,000,000 2,986,000
ChevronTexaco Funding Corp.
5.19%, due 2/13/07 2,900,000 2,882,023
5.22%, due 2/12/07 3,500,000 3,478,685
Dexia Delaware LLC
5.24%, due 1/18/07 3,500,000 3,491,339
5.24%, due 3/13/07 3,500,000 3,463,829
HBOS Treasury Services PLC
5.24%, due 3/6/07 3,500,000 3,467,395
5.25%, due 3/21/07 1,360,000 1,344,332
ING U.S. Funding LLC
5.19%, due 4/5/07 3,500,000 3,452,569
5.205%, due 3/19/07 3,500,000 3,461,035
5.21%, due 4/19/07 1,000,000 984,370
KfW International Finance, Inc.
5.17%, due 3/13/07 (a) 3,500,000 3,464,313
Lloyds Bank PLC
5.24%, due 1/29/07 3,500,000 3,485,735
MetLife Funding, Inc.
5.21%, due 2/14/07 3,500,000 3,477,713
5.23%, due 1/16/07 3,500,000 3,492,373
National Australia Funding Delaware, Inc.
5.24%, due 3/19/07 (a) 3,400,000 3,361,894
5.25%, due 3/19/07 (a) 3,600,000 3,559,575
</Table>
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
COMMERCIAL PAPER (CONTINUED)
Nationwide Building Society
5.245%, due 3/6/07 (a) $3,500,000 $ 3,467,364
5.27%, due 1/8/07 (a) 2,250,000 2,247,695
Nestle Capital Corp.
5.19%, due 2/28/07 (a) 2,000,000 1,983,277
5.21%, due 1/9/07 (a) 3,500,000 3,495,948
Private Export Funding Corp.
5.22%, due 1/25/07 (a) 2,600,000 2,590,952
5.22%, due 2/8/07 (a) 1,300,000 1,292,837
5.26%, due 2/15/07 (a) 3,000,000 2,980,275
Prudential Funding LLC
5.20%, due 3/12/07 2,275,000 2,251,997
5.22%, due 3/22/07 3,900,000 3,854,760
Ranger Funding Co. LLC
5.25%, due 1/5/07 (a) 2,350,000 2,348,629
Royal Bank of Canada
5.245%, due 2/1/07 3,500,000 3,484,192
5.245%, due 2/2/07 3,500,000 3,483,682
Societe Generale North America, Inc.
5.05%, due 4/20/07 3,500,000 3,445,190
5.22%, due 3/1/07 2,750,000 2,726,474
5.24%, due 3/1/07 3,000,000 2,974,237
Svenska Handelsbanken AB
5.23%, due 3/8/07 3,500,000 3,466,441
5.245%, due 2/14/07 3,500,000 3,477,563
Toyota Motor Credit Corp.
5.17%, due 4/24/07 3,600,000 3,541,579
5.20%, due 3/5/07 2,700,000 2,675,430
UBS Finance Delaware LLC
5.145%, due 3/26/07 3,050,000 3,013,385
5.22%, due 1/8/07 4,820,000 4,815,108
5.22%, due 3/8/07 1,300,000 1,287,559
------------
149,991,353
------------
CORPORATE BONDS (9.7%)
BP Capital Markets PLC
2.625%, due 3/15/07 2,700,000 2,686,228
Harvard University
8.125%, due 4/15/07 6,235,000 6,282,104
HBOS Treasury Services PLC
3.625%, due 7/23/07 (a) 3,500,000 3,467,341
International Business Machines Corp.
6.45%, due 8/1/07 1,900,000 1,911,555
Morgan Stanley
5.50%, due 11/9/07 (b) 3,500,000 3,504,520
5.512%, due 1/12/07 (b) 3,000,000 3,000,113
Pfizer, Inc.
2.50%, due 3/15/07 3,675,000 3,655,057
Wachovia Bank N.A.
5.327%, due 3/30/07 (b) 3,000,000 2,999,807
</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-55
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
Wells Fargo & Co.
5.423%, due 9/28/07 (b) $3,500,000 $ 3,502,829
5.426%, due 3/23/07 (b) 3,000,000 3,000,725
------------
34,010,279
------------
FEDERAL AGENCIES (38.5%)
International Bank for Reconstruction &
Development (Discount Notes)
5.155%, due 1/2/07 3,100,000 3,099,556
Federal Home Loan Bank
5.08%, due 2/22/07 5,600,000 5,599,910
Federal Home Loan Mortgage Corporation
5.235%, due 6/19/07 (b) 4,300,000 4,300,000
5.35%, due 11/21/07 3,500,000 3,500,000
Federal Home Loan Bank
(Discount Note)
5.12%, due 1/24/07 3,500,000 3,488,551
Federal Home Loan Mortgage Corporation
(Discount Notes)
5.06%, due 1/30/07 3,725,000 3,709,816
5.06%, due 2/6/07 4,900,000 4,875,206
5.07%, due 3/27/07 1,725,000 1,704,350
5.07%, due 4/10/07 1,200,000 1,183,269
5.08%, due 3/20/07 3,700,000 3,659,275
5.081%, due 1/31/07 525,000 522,777
5.09%, due 2/20/07 2,675,000 2,656,089
5.10%, due 4/3/07 2,300,000 2,270,023
5.10%, due 5/22/07 1,950,000 1,911,049
5.11%, due 4/13/07 3,500,000 3,449,326
5.115%, due 2/16/07 3,400,000 3,377,778
5.12%, due 1/31/07 2,200,000 2,190,613
5.12%, due 3/9/07 3,000,000 2,971,414
5.13%, due 1/26/07 2,900,000 2,889,669
5.135%, due 1/23/07 3,900,000 3,887,761
5.137%, due 1/26/07 3,000,000 2,989,298
5.14%, due 1/25/07 3,500,000 3,488,007
Federal National Mortgage Association
(Discount Notes)
5.049%, due 2/9/07 3,000,000 2,983,589
5.05%, due 3/7/07 5,500,000 5,449,851
5.08%, due 2/21/07 3,000,000 2,978,410
5.08%, due 2/28/07 4,400,000 4,363,989
</Table>
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
FEDERAL AGENCIES (CONTINUED)
Federal National Mortgage Association
(Discount Notes) (continued)
5.08%, due 4/18/07 $3,000,000 $ 2,954,703
5.08%, due 5/9/07 1,200,000 1,178,325
5.09%, due 2/23/07 4,175,000 4,143,714
5.09%, due 4/11/07 3,000,000 2,957,583
5.09%, due 5/2/07 3,500,000 3,440,122
5.09%, due 5/9/07 1,825,000 1,791,971
5.10%, due 3/14/07 975,000 965,055
5.10%, due 4/25/07 2,000,000 1,967,700
5.11%, due 2/14/07 3,700,000 3,676,891
5.11%, due 3/21/07 1,425,000 1,409,021
5.12%, due 1/11/07 3,500,000 3,495,022
5.12%, due 1/22/07 3,000,000 2,991,040
5.13%, due 1/8/07 4,700,000 4,695,312
5.13%, due 1/17/07 3,500,000 3,492,020
5.13%, due 1/19/07 1,550,000 1,531,226
5.14%, due 1/10/07 4,775,000 4,768,864
5.14%, due 3/21/07 2,400,000 2,372,929
5.15%, due 2/7/07 4,200,000 4,177,769
------------
135,508,843
------------
MEDIUM-TERM NOTES (9.6%)
American General Finance Corp.
Series H
4.50%, due 11/15/07 3,500,000 3,476,853
Bayerische Landesbank/NY
5.396%, due 6/25/07 (b) 3,300,000 3,300,718
General Electric Capital Corp.
5.19%, due 4/4/07 3,200,000 3,157,096
5.43%, due 1/3/08 (b) 3,500,000 3,503,712
Goldman Sachs Group, Inc.
Series B
5.476%, due 5/11/07 (b) 3,300,000 3,301,132
5.497%, due 7/2/07 (b) 3,500,000 3,502,991
International Business Machines Corp.
5.363%, due 6/28/07 (b) 3,500,000 3,500,775
Merrill Lynch & Co., Inc.
Series C
5.48%, due 4/26/07 (b) 3,000,000 3,001,164
Wachovia Corp.
Series E
5.445%, due 11/8/07 (b) 3,500,000 3,503,517
</Table>
M-56 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)
- -----------------------------------------------------------------------------
MEDIUM-TERM NOTES (CONTINUED)
Wal-Mart Stores, Inc.
5.26%, due 3/28/07 (b) $3,500,000 $ 3,499,564
------------
33,747,522
------------
Total Short-Term Investments
(Amortized Cost $354,183,676) (c) 100.7% 354,183,676
Liabilities in Excess of
Cash and Other Assets (0.7) (2,431,008)
---------- ------------
Net Assets 100.0% $351,752,668
========== ============
</Table>
<Table>
(a) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(b) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(c) The cost stated also represents the aggregate cost for
federal income tax purposes.
</Table>
The table below sets forth the diversification of the Cash Management Portfolio
investments by industry.
INDUSTRY DIVERSIFICATION
<Table>
<Caption>
AMORTIZED
COST PERCENT+
Automobile $ 925,679 0.3%
Banks 86,313,903 24.6
Commercial Services 6,283,476 1.8
Computers 5,412,490 1.5
Diversified Financial Services 6,660,838 1.9
Finance--Auto Loans 6,217,009 1.8
Finance--Consumer Loans 7,010,074 2.0
Finance--Investment Banker/Broker 24,209,241 6.8
Finance--Mortgage Loan/Banker 5,715,059 1.6
Finance--Other Services 10,316,907 2.9
Federal Agencies 132,409,289 37.7
Insurance 3,481,730 1.0
Multi-National 3,099,556 0.9
Oil & Gas 9,046,960 2.6
Pharmaceuticals 9,268,116 2.6
Retail Trade 3,499,548 1.0
Special Purpose Entity 34,313,801 9.7
------------ ----------
354,183,676 100.7
Liabilities in Excess of
Cash and Other Assets (2,431,008) (0.7)
------------ ----------
Net Assets $351,752,668 100.0%
============ ==========
</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-57
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value
(amortized cost $354,183,676) $354,183,676
Cash 30,855
Receivables:
Fund shares sold 853,783
Interest 728,333
Other assets 829
-------------
Total assets 355,797,476
-------------
LIABILITIES:
Payables:
Fund shares redeemed 3,728,300
Adviser (See Note 3) 73,654
Shareholder communication 67,245
Administrator (See Note 3) 58,923
Professional fees 44,693
Custodian 1,176
Directors 518
Accrued expenses 3,131
Dividend payable 67,168
-------------
Total liabilities 4,044,808
-------------
Net assets $351,752,668
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
700 million shares authorized $ 3,517,627
Additional paid-in capital 348,239,713
Accumulated undistributed net investment
income 237
Accumulated net realized loss on investments (4,909)
-------------
Net assets applicable to outstanding shares $351,752,668
=============
Shares of capital stock outstanding 351,762,668
=============
Net asset value per share outstanding $ 1.00
=============
</Table>
M-58 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 OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $17,121,338
------------
EXPENSES:
Advisory (See Note 3) 852,744
Administration (See Note 3) 682,195
Shareholder communication 93,574
Professional fees 92,964
Directors 18,764
Custodian 12,931
Miscellaneous 15,645
------------
Total expenses 1,768,817
------------
Net investment income 15,352,521
------------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (4,909)
------------
Net increase in net assets resulting from
operations $15,347,612
============
</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-59
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 15,352,521 $ 8,844,731
Net realized gain (loss) on
investments (4,909) 6,379
-----------------------------
Net increase in net assets
resulting from operations 15,347,612 8,851,110
-----------------------------
Dividends to shareholders:
From net investment income (15,357,386) (8,844,731)
-----------------------------
Capital share transactions:
Net proceeds from sale of
shares 438,354,578 258,807,221
Net asset value of shares
issued
to shareholders in
reinvestment
of dividends 15,357,386 8,844,731
-----------------------------
453,711,964 267,651,952
Cost of shares redeemed (408,850,006) (269,417,403)
-----------------------------
Increase (decrease) in net
assets derived from
capital share transactions 44,861,958 (1,765,451)
-----------------------------
Net increase (decrease) in
net assets 44,852,184 (1,759,072)
NET ASSETS:
Beginning of year 306,900,484 308,659,556
-----------------------------
End of year $ 351,752,668 $ 306,900,484
=============================
Accumulated undistributed net
investment income at end of
year $ 237 $ --
=============================
</Table>
M-60 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.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.04 0.03 0.01 0.01 0.01
Net realized and unrealized gain (loss) on
investments (0.00)(a) 0.00(a) 0.00(a) 0.00(a) 0.00(a)
-------- -------- -------- -------- --------
Total from investment operations 0.04 0.03 0.01 0.01 0.01
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income (0.04) (0.03) (0.01) (0.01) (0.01)
From net realized gain on investments -- -- (0.00)(a) (0.00)(a) (0.00)(a)
-------- -------- -------- -------- --------
Total dividends and distributions (0.04) (0.03) (0.01) (0.01) (0.01)
-------- -------- -------- -------- --------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return 4.57% 2.96%(b) 0.85% 0.67% 1.36%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 4.50% 2.91% 0.83% 0.67% 1.33%
Net expenses 0.52% 0.30% 0.55% 0.55% 0.55%
Expenses (before waiver/reimbursement) 0.52% 0.50% 0.55% 0.55% 0.55%
Net assets at end of year (in 000's) $351,753 $306,900 $308,660 $359,974 $518,348
</Table>
<Table>
(a) Less than one cent per share.
(b) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
2.76% for the year ended December 31, 2005.
</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-61
MAINSTAY VP COMMON STOCK PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 16.47% 5.89% 8.33%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP COMMON
STOCK PORTFOLIO RUSSELL 1000 INDEX S&P 500 INDEX
------------------ ------------------ -------------
12/31/96 10000 10000 10000
12675 13285 13336
16045 16875 17148
20853 20404 20756
20157 18815 18866
16713 16473 16624
12659 12906 12950
15998 16763 16664
17741 18675 18478
19108 19845 19385
12/31/06 22254 22914 22447
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 16.18% 5.62% 8.06%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP COMMON
STOCK PORTFOLIO RUSSELL 1000 INDEX S&P 500 INDEX
------------------ ------------------ -------------
12/31/96 10000 10000 10000
12646 13285 13336
15972 16875 17148
20709 20404 20756
19971 18815 18866
16517 16473 16624
12480 12906 12950
15733 16763 16664
17404 18675 18478
18690 19845 19385
12/31/06 21714 22914 22447
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Russell 1000(R) Index* 15.46% 6.82% 8.64%
S&P 500(R) Index* 15.79 6.19 8.42
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 5.85% and 8.31% for the Initial Class and 5.59%
and 8.05% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-62 MainStay VP Common Stock Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP COMMON STOCK PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,131.10 $2.79 $1,022.40 $2.65
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,129.85 $4.13 $1,021.15 $3.92
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.52% for Initial Class and 0.77% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-63
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 98.8
Short-Term Investments (collateral from securities lending 7.0
is 7.0%)*
Investment Company 0.9
Liabilities in Excess of Cash and Other Assets (6.7)
</Table>
* Includes 0.9% of Short-Term Investment Company Securities.
See Portfolio of Investments on page M-66 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. ExxonMobil Corp.
2. Citigroup, Inc.
3. BellSouth Corp.
4. Microsoft Corp.
5. General Electric Co.
6. Pfizer, Inc
7. Cisco Systems, Inc.
8. Chevron Corp.
9. International Business Machines Corp.
10. Procter & Gamble Co. (The)
</Table>
M-64 MainStay VP Common Stock Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Harvey Fram, CFA, of New York Life
Investment Management LLC.
HOW DID MAINSTAY VP COMMON STOCK PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Common Stock Portfolio
returned 16.47% for Initial Class shares and 16.18% for Service Class shares.
Both share classes outperformed the 13.31% return of the average Lipper*
Variable Products Large-Cap Core Portfolio for the same period. Both share
classes also outperformed the 15.79% return of the S&P 500(R) Index,* the
Portfolio's broad-based securities-market index, for the year ended December 31,
2006.
WHAT ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
The Portfolio's relative performance resulted primarily from stock selection
across several sectors, including information technology, telecommunication
services, materials and industrials.
IN 2006, WHICH OF THE PORTFOLIO'S SECTORS WERE PARTICULARLY STRONG AND WHICH
SECTORS DETRACTED FROM PERFORMANCE?
The Portfolio sector with the strongest absolute performance was
telecommunication services. Materials was the second-strongest sector, followed
by energy. Materials and energy holdings benefited from commodity prices, which
were generally higher. The Portfolio sectors with the weakest absolute
performance were health care, information technology and financials.
IN 2006, WHICH STOCKS WERE THE STRONGEST PERFORMERS FOR THE PORTFOLIO AND WHICH
STOCKS WERE THE WEAKEST?
ExxonMobil, BellSouth and Cisco Systems provided the strongest positive
contributions to absolute performance. The Portfolio's weakest holdings on an
absolute basis included Intel, Dell and Amgen.
WERE THERE ANY SIGNIFICANT PURCHASES OR SALES DURING THE YEAR?
During 2006, the Portfolio purchased Mattel and Avaya. The Portfolio sold
Textron and Peabody Energy. Because of the large number of Portfolio holdings,
no single security is likely to have a significant impact on Portfolio results.
DID THE PORTFOLIO'S SECTOR WEIGHTINGS CHANGE SIGNIFICANTLY DURING 2006?
During the year, the Portfolio's weightings relative to the S&P 500(R) Index*
increased substantially in the consumer discretionary and financials sectors.
The Portfolio's weightings decreased in the utilities and industrials sectors.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE BENCHMARK AT THE END OF THE
YEAR?
As of December 31, 2006, the Portfolio was moderately overweight in the
financials and consumer discretionary sectors, which helped performance. The
Portfolio was moderately underweight in the industrials sector, which hurt
performance.
The principal risk of growth stocks is that investors expect growth companies to
increase their earnings at a certain rate that is generally higher than the rate
expected for nongrowth companies. If these expectations are not met, the market
price of the stock may decline significantly, even if earnings showed an
absolute increase. The principal risk of investing in value stocks is that they
may never reach what the portfolio manager believes is their full value or they
may even go down in value.
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.
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.
INFORMATION ABOUT MAINSTAY VP COMMON STOCK PORTFOLIO ON THIS PAGE AND PRECEDING
PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-65
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (98.8%)+
- -------------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.7%)
Boeing Co. (The) 139,009 $ 12,349,560
Lockheed Martin Corp. 86,937 8,004,290
Northrop Grumman Corp. 21,092 1,427,928
Raytheon Co. 109,601 5,786,933
--------------
27,568,711
--------------
AIR FREIGHT & LOGISTICS (0.0%)++
United Parcel Service, Inc. Class B 634 47,537
--------------
AIRLINES (0.1%)
Southwest Airlines Co. 48,573 744,138
--------------
AUTO COMPONENTS (0.1%)
ArvinMeritor, Inc. 17,262 314,686
BorgWarner, Inc. 6,960 410,779
Goodyear Tire & Rubber Co. (The) (a)(b) 11,016 231,226
Lear Corp. (b) 12,361 365,020
Modine Manufacturing Co. 4,098 102,573
--------------
1,424,284
--------------
AUTOMOBILES (1.1%)
Ford Motor Co. (b) 460,425 3,457,792
General Motors Corp. (b) 91,836 2,821,202
Harley-Davidson, Inc. (b) 64,000 4,510,080
Thor Industries, Inc. (b) 2,173 95,590
--------------
10,884,664
--------------
BEVERAGES (0.5%)
Coca-Cola Co. (The) 24,442 1,179,326
Coca-Cola Enterprises, Inc. 17,120 349,590
Molson Coors Brewing Co. Class B 11,184 854,905
Pepsi Bottling Group, Inc. (The) 28,698 887,055
PepsiAmericas, Inc. 6,664 139,811
PepsiCo, Inc. 29,720 1,858,986
--------------
5,269,673
--------------
BIOTECHNOLOGY (0.0%)++
Amgen, Inc. (a) 4,673 319,213
--------------
BUILDING PRODUCTS (0.3%)
Masco Corp. (b) 97,235 2,904,409
--------------
CAPITAL MARKETS (4.2%)
A.G. Edwards, Inc. 16,156 1,022,513
Ameriprise Financial, Inc. 59,573 3,246,729
Bank of New York Co., Inc. (The) 213,713 8,413,881
Charles Schwab Corp. (The) 252,624 4,885,748
Federated Investors, Inc. Class B 5,403 182,513
Franklin Resources, Inc. 29,984 3,303,337
Goldman Sachs Group, Inc. (The) 25,355 5,054,519
</Table>
<Table>
<Caption>
SHARES VALUE
CAPITAL MARKETS (CONTINUED)
Janus Capital Group, Inc. 19,085 $ 412,045
Jefferies Group, Inc. 6,207 166,472
Lehman Brothers Holdings, Inc. 9,062 707,923
Merrill Lynch & Co., Inc. 41,803 3,891,859
Morgan Stanley 63,649 5,182,938
Northern Trust Corp. 45,726 2,775,111
Nuveen Investments, Inc. Class A 2,400 124,512
Raymond James Financial, Inc. 19,341 586,226
SEI Investments Co. 9,581 570,644
T. Rowe Price Group, Inc. (b) 39,795 1,741,827
Waddell & Reed Financial, Inc. Class A 12,780 349,661
--------------
42,618,458
--------------
CHEMICALS (0.8%)
Albemarle Corp. 9,635 691,793
Ashland, Inc. 7,431 514,077
Eastman Chemical Co. 11,714 694,757
FMC Corp. 4,798 367,287
Hercules, Inc. (a) 13,883 268,081
International Flavors & Fragrances, Inc. 5,696 280,015
Lyondell Chemical Co. 51,554 1,318,236
Monsanto Co. 48,943 2,570,976
PPG Industries, Inc. 10,209 655,520
Sensient Technologies Corp. 11,301 278,005
Valspar Corp. 7,992 220,899
--------------
7,859,646
--------------
COMMERCIAL BANKS (2.7%)
Associated Banc-Corp. 20,086 700,600
Bank of Hawaii Corp. 3,124 168,540
BB&T Corp. 31,122 1,367,189
City National Corp. 6,136 436,883
Comerica, Inc. 39,380 2,310,818
Commerce Bancorp, Inc. (b) 16,837 593,841
Cullen/Frost Bankers, Inc. 3,549 198,105
Fifth Third Bancorp (b) 70,822 2,898,744
First Horizon National Corp. 15,056 629,040
FirstMerit Corp. 6,598 159,276
Huntington Bancshares, Inc. 28,846 685,093
National City Corp. (b) 110,433 4,037,430
PNC Financial Services Group, Inc. 30,711 2,273,842
Regions Financial Corp. 88,312 3,302,869
SVB Financial Group (a) 4,213 196,410
Synovus Financial Corp. 19,284 594,526
TCF Financial Corp. 11,633 318,977
Wachovia Corp. 30,163 1,717,783
Wells Fargo & Co. 133,027 4,730,440
</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.
M-66 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)
- -------------------------------------------------------------------------------
COMMERCIAL BANKS (CONTINUED)
Westamerica Bancorp 3,803 $ 192,546
--------------
27,512,952
--------------
COMMERCIAL SERVICES & SUPPLIES (0.4%)
Banta Corp. 752 27,373
ChoicePoint, Inc. (a) 3,355 132,120
Deluxe Corp. 12,640 318,528
Dun & Bradstreet Corp. (The) (a) 10,887 901,335
Equifax, Inc. 5,141 208,725
Korn/Ferry International (a)(b) 10,643 244,363
Manpower, Inc. 814 60,993
R.R. Donnelley & Sons Co. 19,888 706,820
Waste Management, Inc. 44,663 1,642,259
--------------
4,242,516
--------------
COMMUNICATIONS EQUIPMENT (3.2%)
Avaya, Inc. (a) 111,540 1,559,329
V Cisco Systems, Inc. (a) 734,043 20,061,395
Dycom Industries, Inc. (a) 9,105 192,298
Motorola, Inc. 474,847 9,762,854
Polycom, Inc. (a) 21,549 666,080
UTStarcom, Inc. (a)(b) 25,971 227,246
--------------
32,469,202
--------------
COMPUTERS & PERIPHERALS (4.7%)
Dell, Inc. (a) 443,300 11,122,397
Hewlett-Packard Co. 381,103 15,697,633
Imation Corp. 1,399 64,956
V International Business Machines Corp. 190,682 18,524,756
Lexmark International, Inc. Class A (a) 24,474 1,791,497
McDATA Corp. Class A (a) 28,963 160,745
Palm, Inc. (a)(b) 9,131 128,656
Western Digital Corp. (a) 8,104 165,808
--------------
47,656,448
--------------
CONSTRUCTION & ENGINEERING (0.1%)
Granite Construction, Inc. 8,306 417,958
Quanta Services, Inc. (a)(b) 22,794 448,358
--------------
866,316
--------------
CONSUMER FINANCE (1.0%)
American Express Co. 46,178 2,801,619
AmeriCredit Corp. (a) 30,003 755,176
Capital One Financial Corp. 81,464 6,258,064
--------------
9,814,859
--------------
CONTAINERS & PACKAGING (0.2%)
Pactiv Corp. (a) 33,597 1,199,077
Sonoco Products Co. 18,130 690,028
--------------
1,889,105
--------------
DIVERSIFIED CONSUMER SERVICES (0.3%)
Apollo Group, Inc. Class A (a)(b) 34,004 1,325,136
</Table>
<Table>
<Caption>
SHARES VALUE
DIVERSIFIED CONSUMER SERVICES (CONTINUED)
Career Education Corp. (a) 23,194 $ 574,747
Corinthian Colleges, Inc. (a) 20,976 285,903
DeVry, Inc. 9,604 268,912
ITT Educational Services, Inc. (a) 7,425 492,797
Regis Corp. 10,936 432,409
Sotheby's Holdings, Inc. Class A 1,704 52,858
--------------
3,432,762
--------------
DIVERSIFIED FINANCIAL SERVICES (5.4%)
Bank of America Corp. 238,150 12,714,829
CBOT Holdings, Inc. Class A (a)(b) 10,869 1,646,327
V Citigroup, Inc. 514,252 28,643,836
JPMorgan Chase & Co. (b) 243,327 11,752,694
--------------
54,757,686
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES (4.8%)
V BellSouth Corp. 570,931 26,896,559
CenturyTel, Inc. 28,433 1,241,385
Cincinnati Bell, Inc. (a) 22,580 103,191
Citizens Communications Co. 78,322 1,125,487
Embarq Corp. 36,417 1,914,078
Qwest Communications
International, Inc. (a)(b) 338,111 2,829,989
Verizon Communications, Inc. 389,881 14,519,168
Windstream Corp. 42,710 607,336
--------------
49,237,193
--------------
ELECTRIC UTILITIES (1.1%)
Allegheny Energy, Inc. (a) 19,930 914,986
Duke Energy Corp. 56,424 1,873,841
Edison International 40,126 1,824,930
Entergy Corp. 50,916 4,700,565
Great Plains Energy, Inc. (b) 19,578 622,580
IDACORP, Inc. 5,246 202,758
Pepco Holdings, Inc. 23,140 601,871
Progress Energy, Inc. 18,370 901,600
--------------
11,643,131
--------------
ELECTRICAL EQUIPMENT (0.2%)
American Power Conversion Corp. 6,741 206,207
Cooper Industries, Ltd. Class A 14,509 1,312,049
Thomas & Betts Corp. (a) 11,098 524,713
--------------
2,042,969
--------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.1%)
Plexus Corp. (a) 2,825 67,461
Symbol Technologies, Inc. 15,697 234,513
Tech Data Corp. (a) 13,423 508,329
Tektronix, Inc. 3,204 93,461
Vishay Intertechnology, Inc. (a) 5,598 75,797
--------------
979,561
--------------
ENERGY EQUIPMENT & SERVICES (0.9%)
Halliburton Co. 251,417 7,806,498
</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-67
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (CONTINUED)
Patterson-UTI Energy, Inc. (b) 10,080 $ 234,158
Tidewater, Inc. 14,305 691,790
--------------
8,732,446
--------------
FOOD & STAPLES RETAILING (0.6%)
Kroger Co. (The) 21,890 505,002
Safeway, Inc. 63,143 2,182,222
SUPERVALU, Inc. 13,051 466,573
Wal-Mart Stores, Inc. 61,824 2,855,032
--------------
6,008,829
--------------
FOOD PRODUCTS (1.7%)
Archer-Daniels-Midland Co. 79,090 2,527,716
Campbell Soup Co. 47,715 1,855,636
ConAgra Foods, Inc. 125,001 3,375,027
General Mills, Inc. 86,022 4,954,867
H.J. Heinz Co. 60,493 2,722,790
J.M. Smucker Co. (The) 14,031 680,083
McCormick & Co., Inc. 8,177 315,305
Sara Lee Corp. 46,143 785,815
--------------
17,217,239
--------------
GAS UTILITIES (0.2%)
Equitable Resources, Inc. 14,865 620,614
National Fuel Gas Co. 10,280 396,191
Nicor, Inc. (b) 10,861 508,295
ONEOK, Inc. 13,535 583,629
Peoples Energy Corp. 3,227 143,827
--------------
2,252,556
--------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.1%)
Advanced Medical Optics, Inc. (a)(b) 5,494 193,389
Biomet, Inc. 2,420 99,873
DENTSPLY International, Inc. 3,318 99,042
Edwards Lifesciences Corp. (a) 10,676 502,199
Zimmer Holdings, Inc. (a) 7,583 594,356
--------------
1,488,859
--------------
HEALTH CARE PROVIDERS & SERVICES (5.1%)
Aetna, Inc. 133,175 5,750,497
AmerisourceBergen Corp. 49,438 2,222,732
Apria Healthcare Group, Inc. (a) 10,357 276,014
Cardinal Health, Inc. 99,725 6,425,282
Caremark Rx, Inc. 28,167 1,608,617
CIGNA Corp. 9,488 1,248,336
Coventry Health Care, Inc. (a) 38,899 1,946,895
Humana, Inc. (a) 40,409 2,235,022
Laboratory Corp. of America Holdings (a)(b) 28,718 2,109,911
Lincare Holdings, Inc. (a) 12,150 484,056
Manor Care, Inc. (b) 8,943 419,606
McKesson Corp. 73,083 3,705,308
</Table>
<Table>
<Caption>
SHARES VALUE
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
Quest Diagnostics, Inc. 24,918 $ 1,320,654
UnitedHealth Group, Inc. 235,849 12,672,167
WellPoint, Inc. (a) 122,358 9,628,351
--------------
52,053,448
--------------
HOTELS, RESTAURANTS & LEISURE (0.8%)
Bob Evans Farms, Inc. 8,138 278,482
Brinker International, Inc. 30,440 918,070
CBRL Group, Inc. 1,291 57,785
Darden Restaurants, Inc. 32,910 1,321,995
Harrah's Entertainment, Inc. 7,230 598,066
McDonald's Corp. 106,414 4,717,333
Wendy's International, Inc. 8,826 292,052
--------------
8,183,783
--------------
HOUSEHOLD DURABLES (0.6%)
American Greetings Corp. Class A 14,184 338,572
Black & Decker Corp. 17,727 1,417,628
Blyth, Inc. 6,317 131,078
Furniture Brands International, Inc. (b) 2,987 48,479
Lennar Corp. Class A 25,294 1,326,923
Mohawk Industries, Inc. (a)(b) 6,582 492,729
Newell Rubbermaid, Inc. 16,699 483,436
Snap-on, Inc. 14,254 679,061
Stanley Works (The) 7,501 377,225
Tupperware Brands Corp. 14,632 330,830
--------------
5,625,961
--------------
HOUSEHOLD PRODUCTS (1.9%)
Energizer Holdings, Inc. (a) 12,245 869,273
V Procter & Gamble Co. (The) 280,470 18,025,807
--------------
18,895,080
--------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (1.0%)
AES Corp. (The) (a) 161,781 3,565,653
TXU Corp. 112,777 6,113,641
--------------
9,679,294
--------------
INDUSTRIAL CONGLOMERATES (3.5%)
V General Electric Co. 635,350 23,641,374
Teleflex, Inc. 9,749 629,395
Tyco International, Ltd. 377,215 11,467,336
--------------
35,738,105
--------------
INSURANCE (8.1%)
ACE, Ltd. 79,559 4,818,889
AFLAC, Inc. 121,331 5,581,226
Allstate Corp. (The) 150,388 9,791,763
Ambac Financial Group, Inc. 10,867 967,924
American Financial Group, Inc. 16,998 610,398
American International Group, Inc. 112,459 8,058,812
Aon Corp. (b) 76,730 2,711,638
Brown & Brown, Inc. 10,502 296,261
Chubb Corp. (The) 100,444 5,314,492
</Table>
M-68 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)
Everest Re Group, Ltd. 1,941 $ 190,432
First American Corp. 23,649 962,041
Genworth Financial, Inc. Class A 110,947 3,795,497
Hartford Financial Services
Group, Inc. (The) 73,667 6,873,868
HCC Insurance Holdings, Inc. 27,243 874,228
Horace Mann Educators Corp. 10,410 210,282
Lincoln National Corp. 8,537 566,857
Loews Corp. 110,652 4,588,738
Mercury General Corp. 8,697 458,593
MetLife, Inc. (b) 169,034 9,974,696
Old Republic International Corp. 56,217 1,308,732
Principal Financial Group, Inc. 65,892 3,867,860
Progressive Corp. (The) 4,029 97,582
Protective Life Corp. 17,080 811,300
SAFECO Corp. 27,497 1,719,937
StanCorp Financial Group, Inc. 13,300 599,165
Torchmark Corp. 12,164 775,577
UnumProvident Corp. 83,752 1,740,367
W.R. Berkley Corp. 41,158 1,420,363
XL Capital, Ltd. Class A (b) 44,117 3,177,306
--------------
82,164,824
--------------
INTERNET & CATALOG RETAIL (0.1%)
IAC/InterActiveCorp (a)(b) 13,845 514,480
--------------
INTERNET SOFTWARE & SERVICES (0.3%)
Google, Inc. Class A (a) 2,988 1,375,914
VeriSign, Inc. (a) 59,873 1,439,946
--------------
2,815,860
--------------
IT SERVICES (2.0%)
Acxiom Corp. 16,571 425,046
Automatic Data Processing, Inc. 111,110 5,472,168
BISYS Group, Inc. (The) (a) 25,741 332,316
Computer Sciences Corp. (a) 41,960 2,239,405
Convergys Corp. (a) 33,953 807,402
CSG Systems International, Inc. (a) 11,697 312,661
Electronic Data Systems Corp. 126,607 3,488,023
Fidelity National Information Services, Inc. 23,669 948,890
First Data Corp. 186,096 4,749,170
Fiserv, Inc. (a) 12,451 652,681
MoneyGram International, Inc. 12,806 401,596
Sabre Holdings Corp. Class A 22,079 704,099
SRA International, Inc. Class A (a) 5,036 134,663
--------------
20,668,120
--------------
LEISURE EQUIPMENT & PRODUCTS (0.6%)
Brunswick Corp. 20,859 665,402
Eastman Kodak Co. (b) 70,249 1,812,424
Hasbro, Inc. 39,888 1,086,948
</Table>
<Table>
<Caption>
SHARES VALUE
LEISURE EQUIPMENT & PRODUCTS (CONTINUED)
Mattel, Inc. 92,597 $ 2,098,248
--------------
5,663,022
--------------
LIFE SCIENCES TOOLS & SERVICES (0.3%)
Applera Corp.-Applied BioSystems Group 27,543 1,010,553
Thermo Fisher Scientific, Inc. (a) 44,544 2,017,398
Waters Corp. (a) 9,454 462,962
--------------
3,490,913
--------------
MACHINERY (1.0%)
AGCO Corp. (a) 22,233 687,889
Cummins, Inc. (b) 12,862 1,520,031
Dover Corp. 6,228 305,297
Eaton Corp. 31,969 2,402,151
Illinois Tool Works, Inc. 9,212 425,502
ITT Corp. 17,101 971,679
Nordson Corp. 2,083 103,796
Oshkosh Truck Corp. 8,964 434,037
PACCAR, Inc. (b) 37,757 2,450,429
Parker-Hannifin Corp. (b) 7,440 571,987
Terex Corp. (a) 3,134 202,394
--------------
10,075,192
--------------
MEDIA (3.7%)
Belo Corp. Class A 21,489 394,968
CBS Corp. Class B 190,881 5,951,670
Clear Channel Communications, Inc. 35,352 1,256,410
Comcast Corp. Class A (a) 202,631 8,577,370
DIRECTV Group, Inc. (The) (a) 47,782 1,191,683
Entercom Communications Corp. 6,760 190,497
Gannett Co., Inc. 7,192 434,828
Harte-Hanks, Inc. 9,306 257,869
John Wiley & Sons, Inc. Class A 4,071 156,611
Lee Enterprises, Inc. 5,622 174,619
McGraw-Hill Cos., Inc. (The) 86,128 5,858,427
Meredith Corp. 3,537 199,310
Omnicom Group, Inc. 41,993 4,389,948
Scholastic Corp. (a) 5,415 194,074
Time Warner, Inc. 3,383 73,682
Univision Communications, Inc. Class A (a)(b) 19,772 700,324
Valassis Communications, Inc. (a) 7,351 106,590
Walt Disney Co. (The) 221,503 7,590,908
--------------
37,699,788
--------------
METALS & MINING (1.4%)
Freeport-McMoRan Copper & Gold, Inc. Class B (b) 48,044 2,677,492
Nucor Corp. 75,340 4,118,084
Phelps Dodge Corp. 37,399 4,477,408
Steel Dynamics, Inc. 19,375 628,719
United States Steel Corp. 29,975 2,192,372
</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-69
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------------------------
METALS & MINING (CONTINUED)
Worthington Industries, Inc. 6,709 $ 118,883
--------------
14,212,958
--------------
MULTILINE RETAIL (2.3%)
Big Lots, Inc. (a)(b) 26,714 612,285
Dillard's, Inc. Class A (b) 9,210 322,074
Dollar Tree Stores, Inc. (a)(b) 25,024 753,222
Federated Department Stores, Inc. 132,367 5,047,154
J.C. Penney Co., Inc. (b) 54,856 4,243,660
Kohl's Corp. (a) 80,035 5,476,795
Nordstrom, Inc. 55,875 2,756,873
Saks, Inc. 16,929 301,675
Sears Holdings Corp. (a)(b) 20,712 3,478,166
--------------
22,991,904
--------------
MULTI-UTILITIES (0.2%)
Alliant Energy Corp. 7,290 275,343
KeySpan Corp. 13,835 569,725
OGE Energy Corp. 22,253 890,120
--------------
1,735,188
--------------
OIL, GAS & CONSUMABLE FUELS (9.6%)
Anadarko Petroleum Corp. 69,658 3,031,516
V Chevron Corp. 266,887 19,624,201
ConocoPhillips 29,874 2,149,434
V ExxonMobil Corp. 557,033 42,685,439
Kinder Morgan, Inc. 8,462 894,857
Marathon Oil Corp. 87,530 8,096,525
Noble Energy, Inc. 43,060 2,112,954
Occidental Petroleum Corp. 166,826 8,146,114
Overseas Shipholding Group, Inc. 7,207 405,754
Pioneer Natural Resources Co. 15,134 600,668
Plains Exploration & Production Co. (a)(b) 18,769 892,091
Sunoco, Inc. 27,422 1,710,036
Valero Energy Corp. 149,634 7,655,275
--------------
98,004,864
--------------
PAPER & FOREST PRODUCTS (0.1%)
Louisiana-Pacific Corp. 25,629 551,792
--------------
PERSONAL PRODUCTS (0.5%)
Avon Products, Inc. 108,874 3,597,197
Estee Lauder Cos., Inc. (The) Class A (b) 31,535 1,287,259
--------------
4,884,456
--------------
PHARMACEUTICALS (5.0%)
Barr Pharmaceuticals, Inc. (a) 9,846 493,482
Forest Laboratories, Inc. (a) 67,978 3,439,687
Johnson & Johnson 134,375 8,871,438
King Pharmaceuticals, Inc. (a) 59,512 947,431
Merck & Co., Inc. 316,941 13,818,628
Mylan Laboratories, Inc. (b) 51,583 1,029,597
</Table>
<Table>
<Caption>
SHARES VALUE
PHARMACEUTICALS (CONTINUED)
V Pfizer, Inc. 811,862 $ 21,027,226
Watson Pharmaceuticals, Inc. (a) 24,929 648,902
--------------
50,276,391
--------------
REAL ESTATE INVESTMENT TRUSTS (0.6%)
Apartment Investment & Management Co. Class A 23,800 1,333,276
Equity Office Properties Trust 64,333 3,098,921
Highwoods Properties, Inc. 3,352 136,628
Hospitality Properties Trust 2,285 108,606
New Plan Excel Realty Trust (b) 12,684 348,556
Plum Creek Timber Co., Inc. 5,471 218,019
Potlatch Corp. 3,553 155,692
Rayonier, Inc. 4,714 193,510
--------------
5,593,208
--------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (0.0%)++
CB Richard Ellis Group, Inc. Class A (a) 5,632 186,982
--------------
ROAD & RAIL (0.0%)++
Avis Budget Group, Inc. 6,268 135,953
Ryder System, Inc. 1,217 62,140
YRC Worldwide, Inc. (a)(b) 7,065 266,562
--------------
464,655
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.0%)
Agere Systems, Inc. (a) 401 7,687
Altera Corp. (a) 87,721 1,726,349
Analog Devices, Inc. 14,310 470,370
Applied Materials, Inc. 346,660 6,395,877
Atmel Corp. (a) 104,641 633,078
Intel Corp. 192,098 3,889,985
Lam Research Corp. (a)(b) 16,816 851,226
LSI Logic Corp. (a) 24,045 216,405
Micron Technology, Inc. (a) 155,959 2,177,188
National Semiconductor Corp. 73,914 1,677,848
Novellus Systems, Inc. (a)(b) 26,390 908,344
Teradyne, Inc. (a)(b) 48,062 719,008
Xilinx, Inc. 46,998 1,119,022
--------------
20,792,387
--------------
SOFTWARE (4.8%)
BMC Software, Inc. (a) 50,113 1,613,639
CA, Inc. 74,931 1,697,187
Cadence Design Systems, Inc. (a)(b) 25,863 463,206
Compuware Corp. (a) 89,256 743,502
Fair Isaac Corp. 9,395 381,907
Intuit, Inc. (a) 70,686 2,156,630
Jack Henry & Associates, Inc. 4,891 104,667
McAfee, Inc. (a) 29,610 840,332
Mentor Graphics Corp. (a) 9,756 175,901
V Microsoft Corp. 846,522 25,277,147
Oracle Corp. (a) 576,944 9,888,820
</Table>
M-70 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)
- -------------------------------------------------------------------------------
SOFTWARE (CONTINUED)
Sybase, Inc. (a) 22,000 $ 543,400
Symantec Corp. (a)(b) 238,669 4,976,249
--------------
48,862,587
--------------
SPECIALTY RETAIL (2.0%)
Abercrombie & Fitch Co. Class A 13,366 930,675
Aeropostale, Inc. (a) 11,824 365,007
Alberto-Culver Co. 7,388 158,473
American Eagle Outfitters, Inc. 48,893 1,525,951
AnnTaylor Stores Corp. (a) 17,765 583,403
AutoNation, Inc. (a) 37,332 795,918
AutoZone, Inc. (a) 6,429 742,935
Barnes & Noble, Inc. 12,519 497,129
Best Buy Co., Inc. 27,702 1,362,661
Charming Shoppes, Inc. (a) 27,796 376,080
Claire's Stores, Inc. 17,389 576,271
Gap, Inc. (The) 131,317 2,560,682
Office Depot, Inc. (a) 69,152 2,639,532
OfficeMax, Inc. 18,141 900,701
Payless ShoeSource, Inc. (a) 16,090 528,074
RadioShack Corp. (b) 33,058 554,713
Rent-A-Center, Inc. (a) 12,680 374,187
Ross Stores, Inc. 13,025 381,633
Sherwin-Williams Co. (The) 27,569 1,752,837
TJX Cos., Inc. (The) 109,785 3,126,677
--------------
20,733,539
--------------
TEXTILES, APPAREL & LUXURY GOODS (0.6%)
Hanesbrands, Inc. (a) 5,862 138,460
Jones Apparel Group, Inc. 27,528 920,261
Liz Claiborne, Inc. 14,796 643,034
NIKE, Inc. Class B 25,798 2,554,776
Polo Ralph Lauren Corp. 5,700 442,662
Timberland Co. Class A (a) 6,273 198,101
VF Corp. 18,983 1,558,125
--------------
6,455,419
--------------
THRIFTS & MORTGAGE FINANCE (1.2%)
Countrywide Financial Corp. 10,654 452,262
Fannie Mae 74,143 4,403,353
MGIC Investment Corp. 3,479 217,577
PMI Group, Inc. (The) 6,551 309,011
Radian Group, Inc. 17,378 936,848
Washington Mutual, Inc. 137,607 6,259,742
--------------
12,578,793
--------------
TOBACCO (1.7%)
Altria Group, Inc. 152,159 13,058,285
Reynolds American, Inc. (b) 26,054 1,705,755
</Table>
<Table>
<Caption>
SHARES VALUE
TOBACCO (CONTINUED)
Universal Corp. 6,348 $ 311,115
UST, Inc. 39,322 2,288,540
--------------
17,363,695
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
ALLTEL Corp. 47,387 2,865,966
--------------
Total Common Stocks
(Cost $870,844,473) 1,003,708,016
--------------
INVESTMENT COMPANY (0.9%)
- -------------------------------------------------------------------------------
S&P 500 Index--SPDR Trust Series 1 (b)(c) 63,790 9,040,319
--------------
Total Investment Company
(Cost $9,026,785) 9,040,319
--------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (7.0%)
- -------------------------------------------------------------------------------
COMMERCIAL PAPER (1.6%)
Barton Capital LLC
5.298%, due 1/4/07 (d) $1,311,223 1,311,223
Charta LLC
5.314%, due 1/11/07 (d) 1,343,280 1,343,280
Ciesco, Inc.
5.305%, due 1/10/07 (d) 1,753,095 1,753,095
Compass Securitization LLC
5.324%, due 1/18/07 (d) 1,791,040 1,791,040
Fairway Finance Corp.
5.301%, due 1/8/07 (d) 1,343,280 1,343,280
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (d) 1,324,857 1,324,857
Greyhawk Funding LLC
5.305%, due 1/5/07 (d) 1,313,784 1,313,784
Jupiter Securitization Corp.
5.324%, due 1/18/07 (d) 1,343,280 1,343,280
Liberty Street Funding Co.
5.325%, due 1/29/07 (d) 447,760 447,760
Old Line Funding LLC
5.303%, due 1/9/07 (d) 1,755,057 1,755,057
Ranger Funding LLC
5.308%, due 1/30/07 (d) 1,343,280 1,343,280
Sheffield Receivables Corp.
5.336%, due 1/16/07 (d) 1,343,280 1,343,280
--------------
Total Commercial Paper
(Cost $16,413,216) 16,413,216
--------------
</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-71
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
SHARES VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------
INVESTMENT COMPANY (0.9%)
BGI Institutional Money Market Fund (d) 9,353,442 $ 9,353,442
--------------
Total Investment Company
(Cost $9,353,442) 9,353,442
--------------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $448,029 (Collateralized by
various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$443,497 and a Market
Value of $463,611) (d) $ 447,760 447,760
--------------
Total Repurchase Agreement
(Cost $447,760) 447,760
--------------
TIME DEPOSITS (4.4%)
Abbey National PLC
5.34%, due 1/2/07 (d) 5,373,119 5,373,119
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (d) 3,582,079 3,582,079
Bank of America Corp.
5.27%, due 1/19/07 (d)(e) 3,582,079 3,582,079
Bank of Montreal
5.30%, due 1/26/07 (d) 2,238,800 2,238,800
Barclays
5.32%, due 1/18/07 (d) 2,955,216 2,955,216
Calyon
5.31%, due 2/12/07 (d) 3,582,079 3,582,079
Citigroup
5.325%, due 3/22/07 (d) 3,134,320 3,134,320
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (d) 3,402,975 3,402,975
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (d) $3,582,079 $ 3,582,079
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (d) 3,313,423 3,313,423
Rabobank Nederland
5.29%, due 3/6/07 (d) 2,686,560 2,686,560
Standard Chartered Bank
5.29%, due 1/10/07 (d) 3,582,079 3,582,079
UBS AG
5.285%, due 1/12/07 (d) 3,582,079 3,582,079
--------------
Total Time Deposits
(Cost $44,596,887) 44,596,887
--------------
Total Short-Term Investments
(Cost $70,811,305) 70,811,305
--------------
Total Investments
(Cost $950,682,563) (f) 106.7% 1,083,559,640(g)
Liabilities in Excess of
Cash and Other Assets (6.7) (67,761,305)
---------- --------------
Net Assets 100.0% $1,015,798,335
========== ==============
</Table>
<Table>
++ Less than one tenth of a percent.
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(d) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(e) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(f) The cost for federal income tax purposes is $959,112,550.
(g) At December 31, 2006 net unrealized appreciation was
$124,447,090, 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 $138,012,948 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $13,565,858.
</Table>
M-72 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, 2006
<Table>
ASSETS:
Investment in securities, at value
(identified cost
$950,682,563) including $68,575,387 market
value of securities loaned $1,083,559,640
Cash 4,338,054
Receivables:
Investment securities sold 25,907,769
Fund shares sold 1,845,540
Dividends and interest 1,560,873
Other assets 2,593
--------------
Total assets 1,117,214,469
--------------
LIABILITIES:
Securities lending collateral 70,811,305
Payables:
Investment securities purchased 29,280,521
Fund shares redeemed 659,872
Adviser (See Note 3) 214,058
Shareholder communication 176,776
Administrator (See Note 3) 171,246
Professional fees 77,775
NYLIFE Distributors (See Note 3) 13,593
Custodian 6,311
Directors 1,389
Accrued expenses 3,288
--------------
Total liabilities 101,416,134
--------------
Net assets $1,015,798,335
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 387,939
Service Class 26,684
Additional paid-in capital 802,522,600
Accumulated undistributed net investment
income 12,600,818
Accumulated undistributed net realized gain
on investments 67,383,217
Net unrealized appreciation on investments 132,877,077
--------------
Net assets $1,015,798,335
==============
INITIAL CLASS
Net assets applicable to outstanding shares $ 950,660,050
==============
Shares of capital stock outstanding 38,793,898
==============
Net asset value per share outstanding $ 24.51
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 65,138,285
==============
Shares of capital stock outstanding 2,668,398
==============
Net asset value per share outstanding $ 24.41
==============
</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-73
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 17,587,339
Income from securities loaned--net 88,329
Interest 61,502
-------------
Total income 17,737,170
-------------
EXPENSES:
Advisory (See Note 3) 2,373,432
Administration (See Note 3) 1,898,745
Shareholder communication 273,032
Professional fees 176,699
Distribution and service--Service Class
(See Note 3) 137,546
Custodian 71,589
Directors 55,078
Miscellaneous 51,728
-------------
Total expenses 5,037,849
-------------
Net investment income 12,699,321
-------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments 73,415,555
Net change in unrealized appreciation on
investments 60,164,819
-------------
Net realized and unrealized gain on
investments 133,580,374
-------------
Net increase in net assets resulting from
operations $146,279,695
=============
</Table>
M-74 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, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 12,699,321 $ 14,331,992
Net realized gain on
investments 73,415,555 51,120,445
Net change in unrealized
appreciation on investments 60,164,819 1,069,341
------------------------------
Net increase in net assets
resulting from operations 146,279,695 66,521,778
------------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (5,180,449) (8,478,545)
Service Class (257,581) (384,818)
From net realized gain on investments:
Initial Class (20,476,722) (10,179,883)
Service Class (1,408,786) (557,684)
------------------------------
Total dividends and
distributions to
shareholders (27,323,538) (19,600,930)
------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 107,290,786 9,627,760
Service Class 14,134,600 13,817,383
Net asset value of shares
issued
to shareholders in
reinvestment
of dividends and
distributions:
Initial Class 25,657,171 18,658,428
Service Class 1,666,367 942,502
------------------------------
148,748,924 43,046,073
Cost of shares redeemed:
Initial Class (157,581,986) (133,600,382)
Service Class (4,744,323) (2,619,383)
------------------------------
(162,326,309) (136,219,765)
Decrease in net assets
derived from capital share
transactions (13,577,385) (93,173,692)
------------------------------
Net increase (decrease) in
net assets 105,378,772 (46,252,844)
NET ASSETS:
Beginning of year 910,419,563 956,672,407
------------------------------
End of year $1,015,798,335 $ 910,419,563
==============================
Accumulated undistributed net
investment income at end of
year $ 12,600,818 $ 5,435,254
==============================
</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-75
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 21.62 $ 20.52 $ 18.75 $ 14.98 $ 19.99
-------- -------- -------- -------- --------
Net investment income 0.31(b) 0.33(b) 0.28(c) 0.17(b) 0.16
Net realized and unrealized gain (loss) on
investments 3.26 1.25 1.77 3.78 (5.01)
-------- -------- -------- -------- --------
Total from investment operations 3.57 1.58 2.05 3.95 (4.85)
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income (0.14) (0.22) (0.28) (0.18) (0.16)
From net realized gain on investments (0.54) (0.26) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (0.68) (0.48) (0.28) (0.18) (0.16)
-------- -------- -------- -------- --------
Net asset value at end of period $ 24.51 $ 21.62 $ 20.52 $ 18.75 $ 14.98
======== ======== ======== ======== ========
Total investment return 16.47% 7.70%(d) 10.90% 26.37% (24.25%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.35% 1.58% 1.44%(c) 1.05% 0.89%
Net expenses 0.52% 0.30% 0.53% 0.52% 0.51%
Expenses (before reimbursement) 0.52% 0.50% 0.53% 0.52% 0.51%
Portfolio turnover rate 90% 83% 151% 72% 120%
Net assets at end of period (in 000's) $950,660 $863,109 $923,660 $864,373 $731,686
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
7.49% and 7.22% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(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>
M-76 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.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
- -----------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 21.56 $ 20.49 $ 18.74 $ 16.45
------- ------- ------- ------------
0.25(b) 0.28(b) 0.24(c) 0.07(b)
3.24 1.23 1.75 2.38
------- ------- ------- ------------
3.49 1.51 1.99 2.45
------- ------- ------- ------------
(0.10) (0.18) (0.24) (0.16)
(0.54) (0.26) -- --
------- ------- ------- ------------
(0.64) (0.44) (0.24) (0.16)
------- ------- ------- ------------
$ 24.41 $ 21.56 $ 20.49 $ 18.74
======= ======= ======= ============
16.18% 7.39%(d) 10.62% 14.93%(e)
1.11% 1.33% 1.19%(c) 0.80%+(f)
0.77% 0.55% 0.78% 0.77%+
0.77% 0.75% 0.78% 0.77%+
90% 83% 151% 72%
$65,138 $47,311 $33,013 $10,146
</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-77
MAINSTAY VP CONSERVATIVE ALLOCATION PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 8.20%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
CONSERVATIVE LEHMAN BROTHERS CONSERVATIVE
ALLOCATION MSCI EAFE AGGREGATE BOND ALLOCATION
PORTFOLIO S&P 500 INDEX INDEX INDEX BENCHMARK
------------ ------------- --------- --------------- ------------
2/13/06 10000 10000 10000 10000 10000
12/31/06 10820 11386 12152 10457 10859
</Table>
SERVICE CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 7.97%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
CONSERVATIVE LEHMAN BROTHERS CONSERVATIVE
ALLOCATION MSCI EAFE AGGREGATE BOND ALLOCATION
PORTFOLIO S&P 500 INDEX INDEX INDEX BENCHMARK
------------ ------------- --------- --------------- ------------
2/13/06 10000 10000 10000 10000 10000
12/31/06 10797 11386 12152 10457 10859
</Table>
<Table>
<Caption>
SINCE
BENCHMARK PERFORMANCE INCEPTION
Conservative Allocation Benchmark* 8.59%
S&P 500(R) Index* 13.86
MSCI EAFE(R) Index* 21.52
Lehman Brothers(R) Aggregate Bond Index* 4.57
</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.
* 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 Conservative Allocation Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CONSERVATIVE ALLOCATION
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,079.55 $1.31 $1,023.75 $1.28
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,078.30 $2.62 $1,022.50 $2.55
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.25% for Initial Class and 0.50% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period). The expense ratio does not include the
fees and expenses associated with investments made in Underlying Funds; such
fees and expenses are reflected as a reduction in the Portfolio's gross
return.
www.mainstayfunds.com M-79
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Affiliated Investment Companies 99.6
Cash and Other Assets, Less Liabilities 0.4
</Table>
See Portfolio of Investments on page M-83 for specific holdings within these
categories.
M-80 MainStay VP Conservative Allocation Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Tony Elavia of New York Life Investment
Management LLC.
HOW DID MAINSTAY VP CONSERVATIVE ALLOCATION PORTFOLIO PERFORM RELATIVE TO ITS
PEERS AND ITS BENCHMARK FROM FEBRUARY 13 THROUGH DECEMBER 31, 2006?
From February 13 through December 31, 2006, MainStay VP Conservative Allocation
Portfolio returned 8.20% for Initial Class shares and 7.97% for Service Class
shares. Both share classes outperformed the 6.93% return of the average Lipper*
Variable Products Mixed-Asset Target Allocation Conservative Portfolio(1) for
the same period. Both share classes underperformed the 13.86% return of the S&P
500(R) Index,* the Portfolio's broad-based securities-market index, as well as
the 8.59% return of the Conservative Allocation Benchmark* from February 13
through December 31, 2006. The Conservative Allocation Benchmark is a blended
benchmark designed to represent the asset classes in which the Portfolio
invests.
WERE THERE ANY CHANGES IN THE WAY THE PORTFOLIO WAS MANAGED DURING THE REPORTING
PERIOD?
During the reporting period, Devon McCormick resigned as portfolio manager of
the Portfolio. Also during the reporting period, the Board of Directors
authorized MainStay VP Asset Allocation Portfolios to invest in affiliated
MainStay mutual funds as underlying investment options.
HOW WAS THE PORTFOLIO ALLOCATED AMONG THE UNDERLYING INVESTMENT OPTIONS?
Throughout the summer and into the fall, we emphasized underlying investment
options with larger average capitalizations and a stronger growth orientation.
We believed that the market's capitalization and style preferences had become a
bit distorted in recent years. During the last six months of 2006, the style
bias had little impact on the performance of the Portfolio, but the orientation
toward larger capitalizations began to benefit returns.
WERE THERE ANY SPECIFIC CHANGES IN THE PORTFOLIO'S ALLOCATIONS DURING THE
REPORTING PERIOD?
One recent change has been a gradual migration out of MainStay VP Common Stock
Portfolio and into MainStay VP ICAP Select Equity Portfolio(2) and MainStay VP
Large Cap Growth Portfolio. Although the shift detracted from performance
through December 31, 2006, the overall impact was slight.
We also elected to split the Portfolio's exposure to international equities
evenly between MainStay VP International Portfolio and MainStay ICAP
International Fund. Since MainStay ICAP International Fund did not become
available until September 1, 2006, the impact of the move, though negative, has
been very mild.
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS HELD BY THE
PORTFOLIO HAD THE HIGHEST TOTAL RETURNS AND WHICH HAD THE LOWEST?
In terms of total return, MainStay VP International Equity Portfolio was by far
the best-performing underlying investment option held by the Portfolio. MainStay
VP ICAP Select Equity Portfolio followed at some distance, and MainStay VP
Income & Growth Portfolio was the third-best performer.
1. Performance for Initial Class and Service Class shares and the Portfolio's
benchmark, the S&P 500(R) Index,* as well as the Conservative Allocation
Index* are calculated from inception (2/13/06) through 12/31/06. Performance
for the average Lipper* Variable Products Mixed-Asset Allocation Conservative
Portfolio is calculated from 2/8/06 through 12/31/06.
2. During the reporting period, The Dreyfus Corporation was terminated as
subadvisor of MainStay VP Basic Value Portfolio and replaced by Institutional
Capital LLC (ICAP). Effective 11/10/06, MainStay VP Basic Value Portfolio's
name was changed to MainStay VP ICAP Select Equity Portfolio.
The Portfolio's performance depends on the advisor's skill in determining the
asset-class allocations and the mix of underlying investment options as well as
the performance of these underlying investment options. The underlying
investment options' performance may be lower than the performance of the asset
class or classes the underlying investment options were selected to represent.
The Portfolio is indirectly subject to the investment risks of each underlying
investment option held. Principal risks of the underlying investment options are
described below.
MainStay VP Conservative Allocation Portfolio is a "fund of funds" that invests
in other MainStay VP Portfolios and other MainStay mutual funds. The cost of
investing in the Portfolio may be higher than the cost of investing in a mutual
fund that invests directly in individual stocks and bonds. By investing in the
Portfolio, clients will indirectly bear fees and expenses charged by the
underlying investment options in which the Portfolio invests in addition to the
Portfolio's direct fees and expenses. In addition, the use of a fund-of- funds
structure could affect the timing, amount and character of distributions to the
client and may increase taxes payable by the client.
The Portfolio may invest more than 25% of its assets in one underlying
investment option, which may significantly affect the net asset value of the
Portfolio.
- - Stocks and bonds can decline because of adverse issuer, market, regulatory or
economic developments.
- - High-yield securities carry higher risks, and some of the underlying
investment options' investments have speculative characteristics and present a
greater risk of loss than higher-quality debt securities. High-yield
securities can also be subject to greater price volatility.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
* 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-81
Among underlying investment options held by the Portfolio, MainStay VP Small Cap
Growth Portfolio had the lowest total return, followed by MainStay VP Developing
Growth Portfolio and MainStay VP Capital Appreciation Portfolio.
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS MADE THE
GREATEST POSITIVE CONTRIBUTIONS TO THE PORTFOLIO'S PERFORMANCE AND WHICH ONES
DETRACTED?
A sizable average allocation to MainStay VP Common Stock Portfolio was among the
strongest positive contributors to the Portfolio's performance on an absolute
basis and relative to the Conservative Allocation Benchmark.* A large position
in MainStay Indexed Bond Fund also accounted for much of the Fund's return,
although that holding had little impact on performance relative to the
benchmark.
Although none of the Portfolio's underlying investment options generated
negative returns, a position in MainStay VP Large Cap Growth Portfolio was the
most noteworthy detractor from the Portfolio's performance relative to the
Conservative Allocation Benchmark.*
WHAT FACTORS INFLUENCED PERFORMANCE IN THE FIXED-INCOME PORTION OF THE PORTFOLIO
DURING THE REPORTING PERIOD?
A strategic blend of fixed-income investments similar to the bond component of
the benchmark was established at the inception of the Portfolio and has been
maintained ever since. During the reporting period, fixed-income returns tended
to improve with investments made further down the credit spectrum. The Portfolio
maintains small, strategic exposures to MainStay VP Floating Rate Portfolio and
MainStay VP High Yield Corporate Bond Portfolio, and the latter fared well
during the reporting period. The Portfolio's much larger allocation to MainStay
VP Bond Fund resulted in modest returns only a shade better than inflation or
cash.
- - Stocks of small companies may be subject to higher price volatility,
significantly lower trading volume and greater spreads between bid and ask
prices than stocks of larger companies. Furthermore, small-cap companies may
be more vulnerable to adverse business or market developments and may have
product lines that are more limited than those of larger-capitalization
companies.
- - Stocks of mid-cap companies may be more volatile and less liquid than the
securities of larger companies.
- - 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.
- - When interest rates rise, the prices of fixed-income securities in the
underlying investment options will generally fall. On the other hand, when
interest rates fall, the prices of fixed-income securities in the underlying
investment options will generally rise.
- - Underlying Floating-Rate Portfolios are generally considered to have
speculative characteristics. These underlying investment options may involve
risk of default on principal and interest and risks associated with collateral
impairment, nondiversification, borrower industry concentration and limited
liquidity.
- - AN INVESTMENT IN THE UNDERLYING CASH MANAGEMENT PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE UNDERLYING
CASH MANAGEMENT PORTFOLIO SEEKS TO MAINTAIN A VALUE OF $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO. THIS COULD OCCUR BECAUSE
OF HIGHLY UNUSUAL MARKET CONDITIONS OR A SUDDEN COLLAPSE IN THE
CREDITWORTHINESS OF A COMPANY ONCE BELIEVED TO BE AN ISSUER OF HIGH-QUALITY,
SHORT-TERM SECURITIES.
Before making an investment in the Portfolio, you should consider all the risks
associated with it.
Not all investment divisions are available under all policies.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
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.
* 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.
INFORMATION ABOUT MAINSTAY VP CONSERVATIVE ALLOCATION PORTFOLIO ON THIS PAGE AND
THE PRECEDING PAGES HAS NOT BEEN AUDITED.
M-82 MainStay VP Conservative Allocation Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
AFFILIATED INVESTMENT COMPANIES (99.6%)+
- ---------------------------------------------------------------------------
EQUITY FUNDS (39.7%)
MainStay ICAP Equity Fund Class I 35,838 $ 1,613,792
MainStay ICAP International Fund Class I 41,888 1,637,412
MainStay VP Capital Appreciation Portfolio Initial
Class 37,648 913,235
MainStay VP Common Stock Portfolio Initial Class 233,919 5,732,270
MainStay VP ICAP Select Equity Portfolio Initial
Class 476,639 6,556,032
MainStay VP International Equity Portfolio Initial
Class 88,242 1,648,317
MainStay VP Large Cap Growth Portfolio Initial
Class 527,010 6,531,385
MainStay VP S&P 500 Index Portfolio Initial Class 55,606 1,612,958
-----------
26,245,401
-----------
FIXED INCOME FUNDS (59.9%)
MainStay VP Bond Portfolio Initial Class (a) 2,185,188 29,720,952
MainStay VP Floating Rate Portfolio Initial Class 499,285 4,922,806
MainStay VP High Yield Corporate
Bond Portfolio Initial Class 473,068 4,989,613
-----------
39,633,371
-----------
Total Affiliated Investment Companies
(Cost $63,522,197) (b) 99.6% 65,878,772(c)
Cash and Other Assets,
Less Liabilities 0.4 243,475
--------- -----------
Net Assets 100.0% $66,122,247
========= ===========
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
(a) The Portfolio's ownership exceeds 5% of the outstanding
shares of the underlying Portfolio/Fund.
(b) The cost for federal income tax purposes is $63,586,158.
(c) At December 31, 2006 net unrealized appreciation was
$2,292,614 based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized appreciation
for all investments on which there was an excess of market
value over cost of $2,357,021 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $64,407.
</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-83
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in affiliated investment companies,
at value (identified cost $63,522,197) $65,878,772
Cash 916,741
Receivables:
Fund shares sold 289,358
Interest 1,096
Unamortized offering costs 1,633
Other assets 2
------------
Total assets 67,087,602
------------
LIABILITIES:
Payables:
Investment securities purchased 916,741
Professional fees 19,791
NYLIFE Distributors (See Note 3) 12,839
Shareholder communication 6,546
Manager (See Note 3) 4,396
Custodian 1,954
Directors 64
Accrued expenses 3,024
------------
Total liabilities 965,355
------------
Net assets $66,122,247
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 1,386
Service Class 60,602
Additional paid-in capital 63,499,780
Undistributed net investment income 5,451
Undistributed net realized gain on investments 198,453
Net unrealized appreciation on investments 2,356,575
------------
Net assets $66,122,247
============
INITIAL CLASS
Net assets applicable to outstanding shares $ 1,480,079
============
Shares of capital stock outstanding 138,609
============
Net asset value per share outstanding $ 10.68
============
SERVICE CLASS
Net assets applicable to outstanding shares $64,642,168
============
Shares of capital stock outstanding 6,060,227
============
Net asset value per share outstanding $ 10.67
============
</Table>
M-84 MainStay VP Conservative Allocation 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 PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividend distributions from affiliated
investment companies $ 680,850
Interest 8,428
-----------
Total income 689,278
-----------
EXPENSES:
Distribution and service--Service Class (See
Note 3) 68,313
Professional fees 32,367
Custodian 17,684
Offering 16,512
Shareholder communication 7,528
Directors 1,597
Miscellaneous 3,301
-----------
Total expenses before waiver 147,302
Expense waiver from Manager (See Note 3) (8,917)
-----------
Net expenses 138,385
-----------
Net investment income 550,893
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on:
Affiliated investment company transactions 128,868
Capital gain distributions from affiliated
investment company transactions 313,471
-----------
Net realized gain on investments 442,339
-----------
Net unrealized appreciation on investments 2,356,575
-----------
Net realized and unrealized gain on investments 2,798,914
-----------
Net increase in net assets resulting from
operations $3,349,807
===========
</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-85
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
<Caption>
2006
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 550,893
Net realized gain on
investments 442,339
Net unrealized appreciation
on investments 2,356,575
-----------
Net increase in net assets
resulting from operations 3,349,807
-----------
Dividends and distributions to
shareholders:
From net investment income:
Initial Class (15,388)
Service Class (601,944)
From net realized gain on investments:
Initial Class (4,117)
Service Class (179,391)
-----------
Total dividends and
distributions to
shareholders (800,840)
-----------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 1,488,907
Service Class 66,540,677
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 19,505
Service Class 781,335
-----------
68,830,424
Cost of shares redeemed:
Initial Class (85,240)
Service Class (5,171,904)
-----------
(5,257,144)
Increase in net assets
derived from capital share
transactions 63,573,280
-----------
Net increase in net assets 66,122,247
NET ASSETS:
Beginning of period --
-----------
End of period $66,122,247
===========
Undistributed net investment
income at end of period $ 5,451
===========
</Table>
M-86 MainStay VP Conservative Allocation 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
------------- -------------
FEBRUARY 13, FEBRUARY 13,
2006(A) 2006(A)
THROUGH THROUGH
DECEMBER 31, DECEMBER 31,
2006 2006
Net asset value at beginning of period $ 10.00 $ 10.00
------------- -------------
Net investment income 0.19(b) 0.18(b)
Net realized and unrealized gain on
investments 0.63 0.62
------------- -------------
Total from investment operations 0.82 0.80
------------- -------------
Less dividends and distributions:
From net investment income (0.11) (0.10)
From net realized gain on investments (0.03) (0.03)
------------- -------------
Total dividends and distributions (0.14) (0.13)
------------- -------------
Net asset value at end of period $ 10.68 $ 10.67
============= =============
Total investment return 8.20%(c) 7.97%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 2.04%+ 1.96%+
Net expenses 0.25%+ 0.50%+
Expenses (before waiver) 0.28%+ 0.53%+
Portfolio turnover rate 23% 23%
Net assets at end of period (in 000's) $ 1,480 $64,642
</Table>
<Table>
(a) Commencement of operations.
(b) Per share based on average shares outstanding during the period.
(c) Total return is not annualized.
+ 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-87
MAINSTAY VP CONVERTIBLE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -------------------------------------------------------
After Portfolio operating
expenses 10.44% 7.05% 8.38%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CONVERTIBLE MERRILL LYNCH ALL US CONVERTIBLE
PORTFOLIO SECURITES INDEX
----------------------- --------------------------------
12/31/96 10000 10000
11542 11957
12060 13025
17124 18177
16264 16359
15910 15633
14652 14291
17910 18171
19004 19917
20256 20119
12/31/06 22371 22701
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -------------------------------------------------------
After Portfolio operating
expenses 10.16% 6.79% 8.12%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP CONVERTIBLE MERRILL LYNCH ALL US CONVERTIBLE
PORTFOLIO SECURITIES INDEX
----------------------- --------------------------------
12/31/96 10000 10000
11515 11957
12002 13025
17003 18177
16113 16359
15724 15633
14446 14291
17614 18171
18645 19917
19822 20119
12/31/06 21837 22701
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Merrill Lynch All US Convertible Securities Index* 12.83% 7.75% 8.54%
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 7.03% and 8.38% for the Initial Class and 6.77%
and 8.12% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-88 MainStay VP Convertible Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP CONVERTIBLE PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,065.25 $3.28 $1,021.85 $3.21
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,064.00 $4.58 $1,020.60 $4.48
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.63% for Initial Class, 0.88% for Service Class) multiplied by the average
account value over the period, divided by 365 and multiplied by 184 (to
reflect the one-half year period).
www.mainstayfunds.com M-89
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Convertible Bonds 75.3
Short-Term Investments (collateral from securities lending 13.8
is 10.8%)*
Convertible Preferred Stocks 11.9
Common Stocks 7.4
Investment Company 1.3
Liabilities in Excess of Cash and Other Assets (9.7)
</Table>
* Includes 1.4% of Short-Term Investment Company Securities.
See Portfolio of Investments on page M-93 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Schlumberger, Ltd., Series A, 1.50%, due 6/1/23
2. Merrill Lynch & Co., Inc. (zero coupon), due
3/13/32
3. Cameron International Corp., 1.50%, due 5/15/24
4. Walt Disney Co. (The), 2.125%, due 4/15/23
5. Hilton Hotels Corp., 3.375%, due 4/15/23
6. Chesapeake Energy Corp., 4.50%
7. Diamond Offshore Drilling, Inc., 1.50%, due
4/15/31
8. EMC Corp., 1.75%, due 12/1/11
9. Lehman Brothers Holdings, Inc., Series WFMI
(Whole Foods Market, Inc.), 1.25%, due 8/5/12
10. Credit Suisse USA, Inc. (Hewlett-Packard Co.),
1.00%, due 3/23/11
</Table>
M-90 MainStay VP Convertible Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Edward Silverstein and Edmund C.
Spelman of MacKay Shields LLC.
HOW DID MAINSTAY VP CONVERTIBLE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Convertible Portfolio returned
10.44% for Initial Class shares and 10.16% for Service Class shares. Both share
classes underperformed the 10.88% return of the average Lipper* Convertible
Securities Portfolio for the same period. Both share classes underperformed the
12.83% return of the Merrill Lynch All US Convertible Securities Index,* the
Portfolio's broad-based securities-market index, for the year ended December 31,
2006.
WHAT FACTORS AFFECTED THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
The Merrill Lynch All Convertible Securities Index* has a very large weighting
in the convertible preferred shares of Ford and General Motors. The Portfolio's
underweight position in the auto sector hurt performance relative to the peer
group and the Index. In addition, the Portfolio's underweight position in
lower-credit-quality bonds, which were the standout performers in the Merrill
Lynch All Convertible Securities Index,* also hurt the Portfolio's relative
performance.
IN 2006, WHICH SECTORS AND SECURITIES WERE THE STRONGEST PERFORMERS FOR THE
PORTFOLIO?
The Portfolio saw its strongest absolute gains from the large-cap oil services
sector. Convertible bond holdings of oil services giant Schlumberger and oil and
gas equipment maker Cameron International both benefited from rapid sales and
earnings growth in a strong market for exploration and production.
Financial services companies provided the Portfolio's second-strongest sector
results. Convertible bonds
of Merrill Lynch and Affiliated Managers Group strengthened the Portfolio's
performance. Both companies benefited from the relative strength of the equity
markets, and Merrill Lynch was helped by
low interest rates and strong merger and acquisition activity.
Lodging was the Portfolio's third-strongest sector in absolute terms. A large
investment in the convertible bonds of Hilton Hotels performed extremely well
in 2006, tracking the substantial rise in the common stock of Hilton Hotels. The
company benefited from a strong, steady increase in room rates and occupancy
throughout the year.
Fisher Scientific International, a leading supplier of laboratory equipment and
supplies, was also a strong performer. The company advanced on several
consecutive quarters of positive organic sales growth, earnings growth and free
cash flow. The company
is close to consummating a potentially synergistic merger with Thermo-Electron
Corp., a leading manufacturer of laboratory equipment and instruments.
WHICH SECTORS AND SECURITIES WERE WEAK PERFORMERS IN 2006?
The worst-performing Portfolio sector in 2006 in terms of absolute dollars lost
was media. Sirius Satellite Radio and Yahoo! were particularly weak performers.
Sirius's common stock and convertible bonds declined as investors became
increasingly concerned about the company's continuing losses from operations.
Yahoo! shares and convertible bonds declined on disappointing earnings reports
and a loss of market share to the company's rival, Google.
The Portfolio's second-worst-performing sector was health care, specifically
generic and biotech pharmaceuticals. Teva Pharmaceutical shares and convertible
bonds fell on hints of increasing price pressure on generic manufacturers.
Genentech's common stock fell on slower-than-expected sales growth for key
products and new-application hurdles for the company's breakthrough anticancer
drug, Avastin.
Retail was the Portfolio's third-weakest-performing sector. Whole Foods Markets'
common stock was down sharply in 2006 on slowing same-stores sales and increased
competition. We continue to hold these bonds, as we believe that Whole Foods is
a well-managed company with strong potential.
Issuers of convertible securities may not be as financially strong as those
issuing securities with higher credit ratings and may be more vulnerable to
changes in the economy. If an issuer stops making interest payments, principal
payments or both on its convertible securities, these securities may become
worthless and the Portfolio could lose its entire investment in them. 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
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-91
WHAT WERE SOME OF THE SECURITIES THE PORTFOLIO PURCHASED IN 2006?
We initiated a position in WESCO International, a distributor of electrical and
industrial maintenance supplies, to take advantage of the company's rapidly
increasing sales and earnings. We also initiated a significant position in
Microsoft common stock, which was selling at very low historical and absolute
valuations, despite tremendous free cash flow, cash on the balance sheet and a
soon-to-be-released operating-system upgrade.
We sold the Portfolio's convertible-bond holding in Yahoo! after the company
reported several disappointing quarterly results. We disposed of our holding of
the convertible bonds of Inco, a leading miner of nickel, after the company
received several merger offers that drove the share price to a level we felt was
fully valued.
HOW DID THE PORTFOLIO'S SECTOR WEIGHTINGS CHANGE DURING 2006?
The Portfolio's consumer discretionary weighting increased with the market value
of holdings in Ford and General Motors and with a new position in auto parts
manufacturer ArvinMeritor. The Portfolio's health care weighting increased with
advances at Fisher Scientific International and with the addition of a position
in Amgen. The Portfolio's weightings in industrials and information technology
also increased.
We decreased the Portfolio's energy weighting in December on the belief that
mild weather could lead to a sell-off. We reduced the Portfolio's
telecommunication services weighting by selling convertible bonds of Verizon and
NII International. The Portfolio's weightings in consumer staples, financials
and utilities were little changed during the 12-month period.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE MERRILL LYNCH ALL US
CONVERTIBLE SECURITIES INDEX* AT YEAR-END?
As of December 31, 2006, the Portfolio was significantly overweight in energy
and consumer staples. On the same date, the Portfolio was underweight in
information technology, where we found valuations fairly high and fundamentals
less than stellar. Other sectors were relatively close to the benchmark, with
consumer discretionary, health care, financials, telecommunication services,
industrials and materials slightly underweight and utilities slightly
overweight.
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.
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.
INFORMATION ABOUT MAINSTAY VP CONVERTIBLE PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-92 MainStay VP Convertible Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONVERTIBLE SECURITIES (87.2%)+
CONVERTIBLE BONDS (75.3%)
- ------------------------------------------------------------------------------
ADVERTISING (0.8%)
Interpublic Group of Cos., Inc.
4.50%, due 3/15/23 (a) $ 2,340,000 $ 2,784,600
------------
AEROSPACE & DEFENSE (2.4%)
L-3 Communications Corp.
3.00%, due 8/1/35 (b) 4,360,000 4,599,800
Orbital Sciences Corp.
2.438%, due 1/15/27 (b) 1,910,000 1,938,650
Triumph Group, Inc.
2.625%, due 10/1/26 (b) 1,981,000 2,297,960
------------
8,836,410
------------
AIRLINES (0.7%)
AMR Corp.
4.50%, due 2/15/24 1,575,000 2,397,937
------------
AUTO PARTS & EQUIPMENT (0.4%)
ArvinMeritor, Inc.
4.625%, due 3/1/26
(zero coupon), beginning 3/1/16 (b) 1,190,000 1,343,212
------------
BANKS (1.1%)
U.S. Bancorp
3.893%, due 12/11/35 (a)(c) 3,900,000 3,964,350
------------
BIOTECHNOLOGY (3.3%)
Amgen, Inc.
0.125%, due 2/1/11 (b) 6,610,000 6,477,800
0.125%, due 2/1/11 (a) 2,365,000 2,317,700
Citigroup Funding, Inc. (Genentech, Inc.)
0.50%, due 2/3/11 (d) 3,720,000 3,409,380
------------
12,204,880
------------
COMPUTERS (7.1%)
Cadence Design Systems, Inc.
1.375%, due 12/15/11 (b) 1,785,000 1,811,775
1.50%, due 12/15/13 (a)(b) 955,000 968,131
V Credit Suisse USA, Inc.
(Hewlett-Packard Co.)
1.00%, due 3/23/11 (d) 7,360,000 8,264,544
Electronic Data Systems Corp.
3.875%, due 7/15/23 5,170,000 5,512,512
V EMC Corp.
1.75%, due 12/1/11 (b) 8,920,000 9,287,950
------------
25,844,912
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DISTRIBUTION & WHOLESALE (3.9%)
Costco Wholesale Corp.
(zero coupon), due 8/19/17 (a) $ 6,440,000 $ 7,760,200
WESCO International, Inc.
1.75%, due 11/15/26 (b) 5,365,000 5,204,050
2.625%, due 10/15/25 (b) 805,000 1,250,769
------------
14,215,019
------------
DIVERSIFIED FINANCIAL SERVICES (6.0%)
Affiliated Managers Group, Inc.
(zero coupon), due 5/7/21 2,750,000 5,053,125
V Merrill Lynch & Co., Inc.
(zero coupon), due 3/13/32 10,275,000 13,683,217
SLM Corp.
5.327%, due 7/25/35 (c) 3,365,000 3,357,933
------------
22,094,275
------------
ELECTRIC (0.7%)
PG&E Corp.
9.50%, due 6/30/10 725,000 2,473,156
------------
ELECTRONICS (3.4%)
Fisher Scientific International, Inc.
2.50%, due 10/1/23 2,760,000 5,464,800
3.25%, due 3/1/24 (a) 5,515,000 7,162,606
------------
12,627,406
------------
ENVIRONMENTAL CONTROL (1.5%)
Waste Connections, Inc.
3.75%, due 4/1/26 (b) 1,790,000 1,906,350
3.75%, due 4/1/26 (a) 3,435,000 3,658,275
------------
5,564,625
------------
FOOD (2.5%)
V Lehman Brothers Holdings, Inc.
(Whole Foods Market, Inc.) Series WFMI
1.25%, due 8/5/12 (d) 10,800,000 9,230,760
------------
HEALTH CARE--PRODUCTS (3.2%)
Henry Schein, Inc.
3.00%, due 8/15/34 4,510,000 5,479,650
Medtronic, Inc.
1.625%, due 4/15/13 (b) 5,960,000 6,384,650
------------
11,864,300
------------
</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.
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, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONVERTIBLE BONDS (CONTINUED)
- ------------------------------------------------------------------------------
HEALTH CARE--SERVICES (0.9%)
Health Management Associates, Inc.
4.375%, due 8/1/23 $ 3,340,000 $ 3,410,975
------------
HOUSEHOLD PRODUCTS & WARES (1.2%)
Church & Dwight Co., Inc.
5.25%, due 8/15/33 2,980,000 4,306,100
------------
INTERNET (1.2%)
Amazon.com, Inc.
4.75%, due 2/1/09 3,640,000 3,589,950
At Home Corp.
4.75%, due 12/15/07 (e)(f)(g) 2,335,418 234
Priceline.com, Inc.
0.50%, due 9/30/11 (a)(b) 725,000 866,375
------------
4,456,559
------------
LODGING (3.3%)
V Hilton Hotels Corp.
3.375%, due 4/15/23 7,625,000 12,066,562
------------
MEDIA (5.5%)
Liberty Media Corp.
3.50%, due 1/15/31 6,120,000 6,135,300
Sirius Satellite Radio, Inc.
2.50%, due 2/15/09 (a) 1,615,000 1,677,581
V Walt Disney Co. (The)
2.125%, due 4/15/23 10,245,000 12,498,900
------------
20,311,781
------------
MINING (0.9%)
Century Aluminum Co.
1.75%, due 8/1/24 1,080,000 1,703,700
Coeur d'Alene Mines Corp.
1.25%, due 1/15/24 1,480,000 1,406,000
------------
3,109,700
------------
OIL & GAS (5.0%)
Devon Energy Corp.
4.90%, due 8/15/08 3,180,000 4,420,200
V Diamond Offshore Drilling, Inc.
1.50%, due 4/15/31 6,155,000 10,071,119
Pride International, Inc.
3.25%, due 5/1/33 3,170,000 3,998,162
------------
18,489,481
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
OIL & GAS SERVICES (7.9%)
V Cameron International Corp.
1.50%, due 5/15/24 $ 8,385,000 $ 13,468,406
V Schlumberger, Ltd.
Series A
1.50%, due 6/1/23 8,800,000 15,565,000
------------
29,033,406
------------
PHARMACEUTICALS (7.3%)
ALZA Corp.
(zero coupon), due 7/28/20 (a) 5,525,000 5,041,563
Sepracor, Inc.
(zero coupon), due 10/15/24 4,270,000 4,616,938
Teva Pharmaceutical Finance Co. B.V.
0.375%, due 11/15/22 1,315,000 1,905,106
Series D
1.75%, due 2/1/26 3,335,000 3,089,044
Teva Pharmaceutical Finance LLC
0.25%, due 2/1/24 2,630,000 2,708,900
Watson Pharmaceuticals, Inc.
1.75%, due 3/15/23 4,035,000 3,742,463
Wyeth
5.109%, due 1/15/24 (a)(c) 5,140,000 5,605,684
------------
26,709,698
------------
SEMICONDUCTORS (2.5%)
Diodes, Inc.
2.25%, due 10/1/26 2,093,000 2,001,431
Intel Corp.
2.95%, due 12/15/35 (b) 3,655,000 3,326,050
Lehman Brothers Holdings, Inc.
0.25%, due 6/23/11 (h) 3,705,000 3,663,875
------------
8,991,356
------------
TELECOMMUNICATIONS (2.6%)
AudioCodes, Ltd.
2.00%, due 11/9/24 (a)(b)(i) 905,000 813,369
2.00%, due 11/9/24 2,040,000 1,833,450
NII Holdings, Inc.
2.75%, due 8/15/25 (b) 2,520,000 3,657,150
2.75%, due 8/15/25 1,315,000 1,908,394
Time Warner Telecom, Inc.
2.375%, due 4/1/26 1,185,000 1,496,063
------------
9,708,426
------------
Total Convertible Bonds
(Cost $249,042,954) 276,039,886
------------
<Caption>
SHARES
CONVERTIBLE PREFERRED STOCKS (11.9%)
- ------------------------------------------------------------------------------
AIRLINES (0.4%)
Continental Airlines Finance Trust II
6.00% (k) 32,800 1,443,200
------------
</Table>
M-94 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>
SHARES VALUE
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
AUTO MANUFACTURERS (1.2%)
Ford Motor Co. Capital Trust II
6.50% 74,100 $ 2,534,220
General Motors Corp.
5.25% Series B 101,200 2,144,428
------------
4,678,648
------------
CHEMICALS (1.5%)
Celanese Corp.
4.25% 152,400 5,486,400
------------
DIVERSIFIED FINANCIAL SERVICES (0.8%)
Citigroup Funding, Inc.
5.02% (j) 92,200 2,979,904
------------
ELECTRIC (1.6%)
NRG Energy, Inc.
5.75% 21,700 5,856,288
------------
INSURANCE (2.0%)
MetLife, Inc.
6.375% (k) 240,200 7,345,316
------------
MINING (0.5%)
Freeport-McMoRan Copper & Gold, Inc.
5.50% 1,400 1,829,275
------------
OIL & GAS (3.1%)
V Chesapeake Energy Corp.
4.50% (a) 118,300 11,327,225
------------
TELECOMMUNICATIONS (0.8%)
Lucent Technologies Capital Trust I
7.75% (k) 2,775 2,867,269
------------
Total Convertible Preferred Stocks
(Cost $41,696,665) 43,813,525
------------
Total Convertible Securities
(Cost $290,739,619) 319,853,411
------------
COMMON STOCKS (7.4%)
- ------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.4%)
Citigroup, Inc. 27,974 1,558,152
------------
ELECTRIC (0.5%)
AES Corp. (The) (k) 83,600 1,842,544
------------
ENGINEERING & CONSTRUCTION (0.9%)
McDermott International, Inc. (k) 61,950 3,150,777
------------
</Table>
<Table>
<Caption>
SHARES VALUE
IRON & STEEL (0.2%)
Allegheny Technologies, Inc. 8,300 $ 752,644
------------
MEDIA (0.4%)
News Corp. Class A 74,100 1,591,668
------------
OIL & GAS (0.9%)
ExxonMobil Corp. 25,200 1,931,076
Hess Corp. 29,000 1,437,530
------------
3,368,606
------------
OIL & GAS SERVICES (1.4%)
Baker Hughes, Inc. 19,700 1,470,802
Input/Output, Inc. (a)(k) 59,500 810,985
Tidewater, Inc. 59,300 2,867,748
------------
5,149,535
------------
PIPELINES (0.6%)
National Fuel Gas Co. 51,300 1,977,102
------------
SOFTWARE (2.1%)
Microsoft Corp. 259,000 7,733,740
------------
Total Common Stocks
(Cost $22,397,525) 27,124,768
------------
INVESTMENT COMPANY (1.3%)
- ------------------------------------------------------------------------------
S&P 500 Index--SPDR Trust Series 1 (a)(l) 32,100 4,549,212
------------
Total Investment Company
(Cost $3,387,350) 4,549,212
------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (13.8%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (5.5%)
Barton Capital LLC
5.298%, due 1/4/07 (m) $ 731,514 731,514
Charta LLC
5.314%, due 1/11/07 (m) 749,398 749,398
Ciesco, Inc.
5.305%, due 1/10/07 (m) 978,028 978,028
Compass Securitization LLC
5.324%, due 1/18/07 (m) 999,197 999,197
Fairway Finance Corp.
5.301%, due 1/8/07 (m) 749,398 749,398
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (m) 739,120 739,120
Greyhawk Funding LLC
5.305%, due 1/5/07 (m) 732,942 732,942
Jupiter Securitization Corp.
5.324%, due 1/18/07 (m) 749,398 749,398
</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, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Liberty Street Funding Co.
5.325%, due 1/29/07 (m) $ 249,799 $ 249,799
Old Line Funding LLC
5.303%, due 1/9/07 (m) 979,123 979,123
Prudential Funding LLC
5.26%, due 1/3/07 3,920,000 3,918,854
Rabobank USA Financial Corp.
5.28%, due 1/3/07 7,295,000 7,292,860
Ranger Funding LLC
5.308%, due 1/30/07 (m) 749,398 749,398
Sheffield Receivables Corp.
5.336%, due 1/16/07 (m) 749,398 749,398
------------
Total Commercial Paper
(Cost $20,368,427) 20,368,427
------------
<Caption>
SHARES
INVESTMENT COMPANY (1.4%)
BGI Institutional Money Market Fund (m) 5,218,161 5,218,161
------------
Total Investment Company
(Cost $5,218,161) 5,218,161
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $249,950 (Collateralized by various
Corporate Bonds and a U.S. Treasury Note, with rates between
5.00%-8.96% and maturity dates between 8/15/09-12/29/49, with
a Principal Amount of
$247,421 and a Market Value of $258,642) (m) $ 249,799 249,799
------------
Total Repurchase Agreement
(Cost $249,799) 249,799
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (6.8%)
Abbey National PLC
5.34%, due 1/2/07 (m) $ 2,997,592 $ 2,997,592
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (m) 1,998,395 1,998,395
Bank of America Corp.
5.27%, due 1/19/07 (c)(m) 1,998,395 1,998,395
Bank of Montreal
5.30%, due 1/26/07 (m) 1,248,997 1,248,997
Barclays
5.32%, due 1/18/07 (m) 1,648,675 1,648,675
Calyon
5.31%, due 2/12/07 (m) 1,998,395 1,998,395
Citigroup
5.325%, due 3/22/07 (m) 1,748,595 1,748,595
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (m) 1,898,475 1,898,475
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (m) 1,998,395 1,998,395
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (m) 1,848,515 1,848,515
Rabobank Nederland
5.29%, due 3/6/07 (m) 1,498,796 1,498,796
Standard Chartered Bank
5.29%, due 1/10/07 (m) 1,998,394 1,998,394
UBS AG
5.285%, due 1/12/07 (m) 1,998,395 1,998,395
------------
Total Time Deposits
(Cost $24,880,014) 24,880,014
------------
Total Short-Term Investments
(Cost $50,716,401) 50,716,401
------------
Total Investments
(Cost $367,240,895) (n) 109.7% 402,243,792(o)
Liabilities in Excess of
Cash and Other Assets (9.7) (35,549,385)
----------- ------------
Net Assets 100.0% $366,694,407
=========== ============
</Table>
M-96 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>
(a) Represents a security, or a portion thereof, which is out on
loan.
(b) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(c) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(d) Synthetic Convertible--An equity-linked security issued by
an entity other than the issuer of the underlying equity
instrument.
(e) Issue in default.
(f) Issuer in bankruptcy.
(g) Fair valued security. The total market value of the security
at December 31, 2006 is $234, which reflects 0.0% of the
Portfolio's net assets.
(h) Synthetic Convertible--An equity-linked security issued by
an entity other than the issuer of the underlying equity
instrument. The underlying equity investment represents a
basket of securities comprised of Analog Devices, Inc.,
Applied Materials, Inc., Broadcom Corp., Intel Corp., Linear
Technology Corp., Marvell Technology, Maxim Integrated,
Motorola, Inc., STMicroelectronics N.V. and Texas
Instruments, Inc.
(i) Illiquid security. The total market value of the security at
December 31, 2006 is $813,369, which represents 0.2% of the
Portfolio's net asset.
(j) Variable rate securities that may be tendered back to the
issuer at any time prior to maturity at par.
(k) Non-income producing security.
(l) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(m) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(n) The cost for federal income tax purposes is $371,711,546.
(o) At December 31, 2006 net unrealized appreciation was
$30,532,246, based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized appreciation
for all investments on which there was an excess of market
value over cost of $36,608,494 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $6,076,248.
</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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $367,240,895) including $38,026,238
market value of securities loaned $402,243,792
Cash 3,237
Receivables:
Investment securities sold 11,277,479
Dividends and interest 1,557,138
Fund shares sold 19,428
Other assets 1,030
-------------
Total assets 415,102,104
-------------
LIABILITIES:
Securities lending collateral 39,504,687
Payables:
Investment securities purchased 8,439,584
Fund shares redeemed 142,215
Adviser (See Note 3) 113,029
Administrator (See Note 3) 62,794
Shareholder communication 58,886
Professional fees 55,682
NYLIFE Distributors (See Note 3) 25,670
Custodian 1,452
Directors 518
Accrued expenses 3,180
-------------
Total liabilities 48,407,697
-------------
Net assets $366,694,407
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 193,049
Service Class 94,813
Additional paid-in capital 317,775,880
Accumulated undistributed net investment
income 6,386,131
Accumulated undistributed net realized gain on
investments 7,241,637
Net unrealized appreciation on investments 35,002,897
-------------
Net assets $366,694,407
=============
INITIAL CLASS
Net assets applicable to outstanding shares $246,179,343
=============
Shares of capital stock outstanding 19,304,898
=============
Net asset value per share outstanding $ 12.75
=============
SERVICE CLASS
Net assets applicable to outstanding shares $120,515,064
=============
Shares of capital stock outstanding 9,481,338
=============
Net asset value per share outstanding $ 12.71
=============
</Table>
M-98 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 OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 5,868,164
Dividends 2,889,185
Income from securities loaned--net 114,410
------------
Total income 8,871,759
------------
EXPENSES:
Advisory (See Note 3) 1,314,854
Administration (See Note 3) 730,475
Distribution and service--Service Class
(See Note 3) 275,160
Professional fees 119,738
Shareholder communication 89,383
Directors 20,560
Custodian 18,022
Miscellaneous 18,917
------------
Total expenses 2,587,109
------------
Net investment income 6,284,650
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 15,143,809
Net change in unrealized appreciation on
investments 14,501,524
------------
Net realized and unrealized gain on investments 29,645,333
------------
Net increase in net assets resulting from
operations $35,929,983
============
</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
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 6,284,650 $ 6,460,084
Net realized gain on
investments 15,143,809 21,206,968
Net change in unrealized
appreciation on investments 14,501,524 (5,633,150)
---------------------------
Net increase in net assets
resulting from operations 35,929,983 22,033,902
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (5,809,661) (3,943,479)
Service Class (2,642,254) (1,299,254)
---------------------------
Total dividends to
shareholders (8,451,915) (5,242,733)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 6,406,438 6,521,145
Service Class 21,488,472 23,954,515
Net asset value of shares
issued
to shareholders in
reinvestment
of dividends:
Initial Class 5,809,661 3,943,479
Service Class 2,642,254 1,299,254
---------------------------
36,346,825 35,718,393
Cost of shares redeemed:
Initial Class (47,816,580) (52,462,180)
Service Class (9,451,538) (7,956,264)
---------------------------
(57,268,118) (60,418,444)
Decrease in net assets
derived from capital share
transactions (20,921,293) (24,700,051)
---------------------------
Net increase (decrease) in
net assets 6,556,775 (7,908,882)
NET ASSETS:
Beginning of year 360,137,632 368,046,514
---------------------------
End of year $366,694,407 $360,137,632
===========================
Accumulated undistributed net
investment income at end of
year $ 6,386,131 $ 8,042,487
===========================
</Table>
M-100 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.
This page intentionally left blank
www.mainstayfunds.com M-101
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 11.82 $ 11.26 $ 10.82 $ 9.04 $ 10.11
-------- -------- -------- -------- --------
Net investment income 0.22(b) 0.21(b) 0.21 0.27(b) 0.28
Net realized and unrealized gain (loss) on
investments 1.02 0.53 0.45 1.74 (1.08)
-------- -------- -------- -------- --------
Total from investment operations 1.24 0.74 0.66 2.01 (0.80)
-------- -------- -------- -------- --------
Less dividends:
From net investment income (0.31) (0.18) (0.22) (0.23) (0.27)
-------- -------- -------- -------- --------
Net asset value at end of period $ 12.75 $ 11.82 $ 11.26 $ 10.82 $ 9.04
======== ======== ======== ======== ========
Total investment return 10.44% 6.59%(c) 6.11% 22.23% (7.91%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.80% 1.87% 1.94% 2.71% 2.97%
Net expenses 0.63% 0.53% 0.66% 0.67% 0.67%
Expenses (before reimbursement) 0.63% 0.62% 0.66% 0.67% 0.67%
Portfolio turnover rate 76% 100% 108% 76% 95%
Net assets at end of period (in 000's) $246,179 $262,352 $291,995 $292,043 $204,263
</Table>
<Table>
(a) Commencement of operations.
(b) Per share data based on average shares outstanding during the period.
(c) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
6.50% and 6.24% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(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-102 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.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
- -------------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 11.80 $ 11.24 $ 10.81 $ 9.95
-------- ------- ------- ------------
0.19(b) 0.19(b) 0.20 0.14(b)
1.00 0.53 0.43 0.94
-------- ------- ------- ------------
1.19 0.72 0.63 1.08
-------- ------- ------- ------------
(0.28) (0.16) (0.20) (0.22)
-------- ------- ------- ------------
$ 12.71 $ 11.80 $ 11.24 $ 10.81
======== ======= ======= ============
10.16% 6.32%(c) 5.85% 10.84%(d)
1.55% 1.62% 1.69% 2.46%+(e)
0.88% 0.78% 0.91% 0.92%+
0.88% 0.87% 0.91% 0.92%+
76% 100% 108% 76%
$120,515 $97,786 $76,052 $23,672
</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
MAINSTAY VP DEVELOPING GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 12.64% 5.61% 2.12%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP DEVELOPING RUSSELL 2000 GROWTH
GROWTH PORTFOLIO S&P 500 INDEX INDEX
---------------------- ------------- -------------------
5/1/98 10000 10000 10000
9210 11171 8993
12176 13522 12868
9852 12291 9982
9130 10830 9061
6484 8437 6319
8979 10857 9386
9506 12038 10729
10651 12629 11174
12/31/06 11997 14624 12666
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 12.36% 5.34% 1.86%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP DEVELOPING RUSSELL 2000 GROWTH
GROWTH PORTFOLIO INDEX S&P 500 INDEX
---------------------- ------------------- -------------
5/1/98 10000 10000 10000
9195 8993 11171
12123 12868 13522
9783 9982 12291
9043 9061 10830
6406 6319 8437
8850 9386 10857
9345 10729 12038
10441 11174 12629
12/31/06 11732 12666 14624
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
Russell 2000(R) Growth Index* 13.35% 6.93% 2.76%
S&P 500(R) Index* 15.79 6.19 4.48
</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 figures shown for the five-year and since-inception periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 5.59% and 2.11% for the Initial Class and 5.33%
and 1.85% for the Service Class for the five-year and since-inception
periods, respectively.
2. 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-104 MainStay VP Developing Growth Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP DEVELOPING GROWTH
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,035.70 $4.93 $1,020.20 $4.89
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,034.45 $6.20 $1,018.95 $6.16
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.96% for Initial Class, 1.21% for Service Class) multiplied by the average
account value over the period, divided by 365 and multiplied by 184 (to
reflect the one-half year period).
www.mainstayfunds.com M-105
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 97.8
Short-Term Investments (collateral from securities lending 31.8
is 31.8%)
Liabilities in Excess of Cash and Other Assets (29.6)
</Table>
See Portfolio of Investments on page M-109 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Priceline.com, Inc.
2. Daktronics, Inc.
3. Chipotle Mexican Grill, Inc. Class A
4. Nuance Communications, Inc.
5. VistaPrint, Ltd.
6. TeleTech Holdings, Inc.
7. IntercontinentalExchange, Inc.
8. Strayer Education, Inc.
9. FactSet Research Systems, Inc.
10. Equinix, Inc.
</Table>
M-106 MainStay VP Developing Growth Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager F. Thomas O'Halloran, CFA, of Lord,
Abbett & Co. LLC.
HOW DID MAINSTAY VP DEVELOPING GROWTH PORTFOLIO PERFORM RELATIVE TO ITS PEERS
AND ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Developing Growth Portfolio
returned 12.64% for Initial Class shares and 12.36% for Service Class shares.
Both share classes outperformed the 11.12% return of the average Lipper*
Variable Products Small-Cap Growth Portfolio for the same period. Both share
classes underperformed the 13.35% return of the Russell 2000(R) Growth Index,*
the Portfolio's broad-based securities-market index, for the year ended December
31, 2006.
WHAT ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
The largest detractors from the Portfolio's performance relative to the Russell
2000(R) Growth Index* were stock selection in the industrials and health care
sectors as well as an underweight position in the materials sector. The
financials sector was a strong contributor to performance, adding value through
both stock selection and an overweight position relative to the Russell 2000(R)
Growth Index.* Stock selection in the consumer discretionary sector also helped
the Portfolio.
IN 2006, WHICH PORTFOLIO SECTORS WERE PARTIC-
ULARLY STRONG AND WHICH SECTORS DETRACTED FROM PERFORMANCE?
The financials sector was the Portfolio's strongest sector on an absolute and
relative basis. Financial stocks benefited from strong equity markets.
Telecommunication services provided the second-strongest sector performance on
an absolute basis. Consumer discretionary was also a strong performer relative
to the Russell 2000(R) Growth Index.*
The materials sector was the weakest performer on both an absolute and relative
basis, but the Portfolio's weighting in the sector was very low. Consumer
staples was also a weak performer on both an absolute and relative basis. The
industrials sector
was a weak performer relative to the benchmark.
IN 2006, WHICH INDIVIDUAL STOCKS PROVIDED THE STRONGEST ABSOLUTE PERFORMANCE FOR
THE PORTFOLIO AND WHICH STOCKS WERE THE WEAKEST PERFORMERS?
IntercontinentalExchange, an electronic energy marketplace, rose throughout the
second half of the year, as it agreed to acquire the New York Board of Trade.
Daktronics, a digital billboard provider, benefited from swift demand for the
company's products and positive earnings reports. International Securities
Exchange Holdings, an electronic exchange for equity options, benefited from
another year of rapidly increasing options trading.
Monolithic Power Systems, a semiconductor producer, declined significantly
during the year as competitive concerns mounted. Netflix, an online movie-rental
service provider, suffered from investor concerns about the effect of increasing
competition on gross margins. Nektar Therapeutics, a biopharmaceutical company,
was hurt by the slow rollout of its new inhaled insulin product, Exubera.
DID THE PORTFOLIO MAKE ANY SIGNIFICANT PURCHASES OR SALES DURING 2006?
IntercontinentalExchange shares benefited in 2006 as options trading volumes hit
record levels. We purchased and took profits in the company's shares
opportunistically throughout the year.
The Portfolio initiated a new position in Baidu.com, the leading search engine
in China. We purchased and took profits in the company's shares
opportunistically throughout the year.
Hologic is a medical-imaging-systems producer that focuses on the health care
needs of women. The Portfolio's entire position in the stock was sold during the
year.
We decreased the Portfolio's position in International Securities Exchange
Holdings by taking profits from this strong performer.
Because the Portfolio is actively managed, its holdings and the weightings of
particular issuers or particular sectors as a percentage of Portfolio assets are
subject to change. Sectors may include many industries. 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 principal risk of
growth stocks is that investors expect growth companies to increase their
earnings at a certain rate that is generally higher than the rate expected for
nongrowth companies. If these expectations are not met, the market price of the
stock may decline significantly, even if earnings showed an absolute increase.
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-107
WERE THERE ANY SIGNIFICANT SECTOR-WEIGHTING CHANGES DURING 2006?
During the year, the Portfolio's weightings relative to the Russell 2000(R)
Growth Index* increased in the information technology and consumer discretionary
sectors and decreased in the financials and energy sectors.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO ITS BENCHMARK AT YEAR-END?
As of December 31, 2006, the Portfolio sectors that were most significantly
overweighted relative to the Russell 2000(R) Growth Index* were information
technology and consumer discretionary. The sectors that were most significantly
underweighted were industrials and consumer staples. These overweighted and
underweighted positions all detracted slightly from the Portfolio's performance
during the year.
* 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.
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. Information provided
in this report should not be considered a recommendation to purchase or sell
securities.
INFORMATION ABOUT MAINSTAY VP DEVELOPING GROWTH PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-108 MainStay VP Developing Growth Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (97.8%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.8%)
BE Aerospace, Inc. (a) 19,000 $ 487,920
------------
AIRLINES (1.6%)
Allegiant Travel Co. (a) 17,300 485,438
JetBlue Airways Corp. (a)(b) 32,800 465,760
------------
951,198
------------
AUTO COMPONENTS (0.5%)
LKQ Corp. (a) 12,600 289,674
------------
BIOTECHNOLOGY (3.4%)
Alexion Pharmaceuticals, Inc. (a) 10,100 407,939
Applera Corp.--Celera Group (a) 34,200 478,458
BioMarin Pharmaceuticals, Inc. (a)(b) 26,400 432,696
Digene Corp. (a) 9,600 460,032
Myriad Genetics, Inc. (a)(b) 7,600 237,880
------------
2,017,005
------------
CAPITAL MARKETS (4.6%)
Cohen & Steers, Inc. 12,200 490,074
Jefferies Group, Inc. 13,100 351,342
KBW, Inc. (a) 19,800 581,922
Penson Worldwide, Inc. (a) 26,400 723,624
Thomas Weisel Partners Group, Inc. (a)(b) 28,900 609,790
------------
2,756,752
------------
COMMERCIAL BANKS (1.6%)
PrivateBancorp, Inc. 11,200 466,256
Prosperity Bancshares, Inc. 6,700 231,217
Western Alliance Bancorp (a) 6,800 236,436
------------
933,909
------------
COMMERCIAL SERVICES & SUPPLIES (4.3%)
CRA International, Inc. (a) 8,800 461,120
Geo Group, Inc. (The) (a) 9,700 363,944
Innerworkings, Inc. (a)(b) 20,600 328,776
PeopleSupport, Inc. (a) 24,900 524,145
V TeleTech Holdings, Inc. (a) 38,200 912,216
------------
2,590,201
------------
COMMUNICATIONS EQUIPMENT (1.8%)
NETGEAR, Inc. (a) 20,700 543,375
Oplink Communications, Inc. (a) 24,600 505,776
------------
1,049,151
------------
COMPUTERS & PERIPHERALS (2.3%)
Rackable Systems, Inc. (a)(b) 20,900 647,273
Synaptics, Inc. (a) 24,600 730,374
------------
1,377,647
------------
CONSTRUCTION & ENGINEERING (0.7%)
Infrasource Services, Inc. (a) 20,200 439,754
------------
</Table>
<Table>
<Caption>
SHARES VALUE
DIVERSIFIED CONSUMER SERVICES (3.6%)
Capella Education Co. (a) 7,600 $ 184,300
Coinstar, Inc. (a) 15,100 461,607
New Oriental Education & Technology Group, Inc.
ADR (a)(c) 17,000 570,180
V Strayer Education, Inc. (b) 8,500 901,425
------------
2,117,512
------------
DIVERSIFIED FINANCIAL SERVICES (2.5%)
V IntercontinentalExchange, Inc. (a) 8,400 906,360
International Securities Exchange Holdings, Inc. 8,700 407,073
NewStar Financial, Inc. (a) 8,000 147,600
------------
1,461,033
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.7%)
Cbeyond, Inc. (a)(b) 10,100 308,959
NeuStar, Inc. Class A (a) 21,400 694,216
------------
1,003,175
------------
ELECTRIC UTILITIES (1.1%)
ITC Holdings Corp. 16,600 662,340
------------
ELECTRICAL EQUIPMENT (2.3%)
Evergreen Solar, Inc. (a)(b) 35,400 267,978
First Solar, Inc. (a) 18,200 542,360
Regal-Beloit Corp. 10,300 540,853
------------
1,351,191
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (4.1%)
Color Kinetics, Inc. (a)(b) 19,800 422,730
V Daktronics, Inc. (b) 27,700 1,020,745
IPG Photonics Corp. (a) 9,400 225,600
SunPower Corp. Class A (a)(b) 21,500 799,155
------------
2,468,230
------------
ENERGY EQUIPMENT & SERVICES (3.0%)
Cal Dive International, Inc. (a) 41,000 514,550
Dril-Quip, Inc. (a) 10,700 419,012
Superior Energy Services, Inc. (a) 13,100 428,108
TETRA Technologies, Inc. (a) 17,700 452,766
------------
1,814,436
------------
HEALTH CARE EQUIPMENT & SUPPLIES (6.4%)
Align Technology, Inc. (a)(b) 33,100 462,407
DJO, Inc. (a) 9,800 419,636
IntraLase Corp. (a)(b) 17,900 400,602
</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.
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, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (CONTINUED)
xMentor Corp. (b) 14,400 $ 703,728
Mindray Medical
International, Ltd., ADR (a)(c) 11,800 282,256
NuVasive, Inc. (a) 20,800 480,480
Volcano Corp. (a) 27,100 444,169
Zoll Medical Corp. (a) 10,500 611,520
------------
3,804,798
------------
HEALTH CARE PROVIDERS & SERVICES (1.8%)
AMN Healthcare Services, Inc. (a) 21,300 586,602
Bio-Reference Laboratories, Inc. (a) 21,400 481,286
------------
1,067,888
------------
HEALTH CARE TECHNOLOGY (4.6%)
Allscripts Healthcare Solutions, Inc. (a)(b) 29,500 796,205
Phase Forward, Inc. (a) 49,500 741,510
Vital Images, Inc. (a) 22,100 769,080
WebMD Health Corp. Class A (a)(b) 11,300 452,226
------------
2,759,021
------------
HOTELS, RESTAURANTS & LEISURE (2.6%)
V Chipotle Mexican Grill, Inc. Class A (a)(b) 16,200 923,400
Ctrip.com International, Ltd., ADR (b)(c) 9,700 606,056
------------
1,529,456
------------
INTERNET & CATALOG RETAIL (4.0%)
Gmarket, Inc., ADR (a)(b)(c) 5,600 134,176
V Priceline.com, Inc. (a)(b) 23,700 1,033,557
Shutterfly, Inc. (a)(b) 19,900 286,560
V VistaPrint, Ltd. (a) 27,700 917,147
------------
2,371,440
------------
INTERNET SOFTWARE & SERVICES (11.9%)
aQuantive, Inc. (a) 15,600 384,696
Baidu.com, ADR (a)(b)(c) 7,100 800,312
DealerTrack Holdings, Inc. (a) 20,900 614,878
Digital River, Inc. (a) 15,300 853,587
V Equinix, Inc. (a)(b) 11,500 869,630
Knot, Inc. (The) (a)(b) 25,600 671,744
Liquidity Services, Inc. (a) 24,700 425,087
SINA Corp. (a)(b) 23,600 677,320
Sohu.com, Inc. (a) 26,900 645,600
Vocus, Inc. (a) 24,000 403,200
WebEx Communications, Inc. (a) 20,500 715,245
------------
7,061,299
------------
IT SERVICES (1.3%)
ExlService Holdings, Inc. (a) 13,900 292,456
Heartland Payment Systems, Inc. (b) 10,800 305,100
Isilon Systems, Inc. (a) 6,300 173,880
------------
771,436
------------
</Table>
<Table>
<Caption>
SHARES VALUE
LIFE SCIENCES TOOLS & SERVICES (2.2%)
Advanced Magnetics, Inc. (a) 7,100 $ 424,012
Illumina, Inc. (a)(b) 13,600 534,616
Nektar Therapeutics (a)(b) 21,900 333,099
------------
1,291,727
------------
MACHINERY (3.2%)
Force Protection, Inc. (a)(b) 25,700 447,437
Gardner Denver, Inc. (a) 13,200 492,492
Kaydon Corp. 12,400 492,776
Watts Water Technologies, Inc. Class A 11,400 468,654
------------
1,901,359
------------
MEDIA (0.9%)
Morningstar, Inc. (a) 12,000 540,600
------------
METALS & MINING (0.7%)
Century Aluminum Co. (a) 9,900 442,035
------------
OIL, GAS & CONSUMABLE FUELS (0.9%)
VeraSun Energy Corp. (a)(b) 27,900 551,025
------------
PHARMACEUTICALS (1.7%)
Medicis Pharmaceutical Corp. Class A (b) 21,000 737,730
Penwest Pharmaceuticals Co. (a)(b) 18,100 300,822
------------
1,038,552
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.3%)
Atheros Communications, Inc. (a) 15,400 328,328
Varian Semiconductor Equipment Associates, Inc.
(a) 17,550 798,876
Volterra Semiconductor Corp. (a)(b) 15,500 232,500
------------
1,359,704
------------
SOFTWARE (6.4%)
Concur Technologies, Inc. (a) 23,600 378,544
V FactSet Research Systems, Inc. 15,500 875,440
V Nuance Communications, Inc. (a)(b) 80,400 921,384
Shanda Interactive
Entertainment, Ltd., ADR (a)(c) 23,600 511,412
THQ, Inc. (a)(b) 25,300 822,756
Transaction Systems Architects, Inc. (a) 8,800 286,616
------------
3,796,152
------------
SPECIALTY RETAIL (3.2%)
Dick's Sporting Goods, Inc. (a)(b) 14,900 729,951
Hibbett Sporting Goods, Inc. (a) 4,800 146,544
J. Crew Group, Inc. (a) 11,400 439,470
Zumiez, Inc. (a)(b) 21,000 620,340
------------
1,936,305
------------
TEXTILES, APPAREL & LUXURY GOODS (3.8%)
Crocs, Inc. (a)(b) 10,700 462,240
Heelys, Inc. (a)(b) 13,900 446,329
</Table>
M-110 MainStay VP 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)
- -----------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (CONTINUED)
xUnder Armour, Inc. Class A (a)(b) 14,800 $ 746,660
Volcom, Inc. (a) 20,700 612,099
------------
2,267,328
------------
Total Common Stocks
(Cost $51,890,394) 58,261,253
------------
PRINCIPAL
AMOUNT
x
SHORT-TERM INVESTMENTS (31.8%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (7.4%)
Barton Capital LLC
5.298%, due 1/4/07 (d) $ 350,776 350,776
Charta LLC
5.314%, due 1/11/07 (d) 359,352 359,352
Ciesco, Inc.
5.305%, due 1/10/07 (d) 468,985 468,985
Compass Securitization LLC
5.324%, due 1/18/07 (d) 479,136 479,136
Fairway Finance Corp.
5.301%, due 1/8/07 (d) 359,352 359,352
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (d) 354,423 354,423
Greyhawk Funding LLC
5.305%, due 1/5/07 (d) 351,461 351,461
Jupiter Securitization Corp.
5.324%, due 1/18/07 (d) 359,352 359,352
Liberty Street Funding Co.
5.325%, due 1/29/07 (d) 119,784 119,784
Old Line Funding LLC
5.303%, due 1/9/07 (d) 469,510 469,510
Ranger Funding LLC
5.308%, due 1/30/07 (d) 359,352 359,352
Sheffield Receivables Corp.
5.336%, due 1/16/07 (d) 359,352 359,352
------------
Total Commercial Paper
(Cost $4,390,835) 4,390,835
------------
SHARES
x
INVESTMENT COMPANY (4.2%)
BGI Institutional Money Market Fund (d) 2,502,216 2,502,216
------------
Total Investment Company
(Cost $2,502,216) 2,502,216
------------
PRINCIPAL
AMOUNT VALUE
x
REPURCHASE AGREEMENT (0.2%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $119,856
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$118,644 and a Market Value
of $124,024) (d) $ 119,784 $ 119,784
------------
Total Repurchase Agreement
(Cost $119,784) 119,784
------------
TIME DEPOSITS (20.0%)
Abbey National PLC
5.34%, due 1/2/07 (d) 1,437,407 1,437,407
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (d) 958,271 958,271
Bank of America Corp.
5.27%, due 1/19/07 (d)(e) 958,271 958,271
Bank of Montreal
5.30%, due 1/26/07 (d) 598,919 598,919
Barclays
5.32%, due 1/18/07 (d) 790,574 790,574
Calyon
5.31%, due 2/12/07 (d) 958,271 958,271
Citigroup
5.325%, due 3/22/07 (d) 838,487 838,487
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (d) 910,358 910,358
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (d) 958,271 958,271
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (d) 886,401 886,401
Rabobank Nederland
5.29%, due 3/6/07 (d) 718,703 718,703
Standard Chartered Bank
5.29%, due 1/10/07 (d) 958,271 958,271
UBS AG
5.285%, due 1/12/07 (d) 958,271 958,271
------------
Total Time Deposits
(Cost $11,930,475) 11,930,475
------------
Total Short-Term Investments
(Cost $18,943,310) 18,943,310
------------
Total Investments
(Cost $70,833,704) (f) 129.6% 77,204,563(g)
Liabilities in Excess of
Cash and Other Assets (29.6) (17,627,239)
---------- ------------
Net Assets 100.0% $ 59,577,324
========== ============
</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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<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) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(f) The cost for federal income tax purposes is $71,304,882.
(g) At December 31, 2006 net unrealized appreciation was
$5,899,681, 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 $6,614,382 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $714,701.
</Table>
M-112 MainStay VP 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, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost
$70,833,704) including $18,270,059 market
value of securities loaned $77,204,563
Cash 1,331,462
Receivables:
Fund shares sold 41,420
Dividends and interest 35,229
Other assets 160
------------
Total assets 78,612,834
------------
LIABILITIES:
Securities lending collateral 18,943,310
Payables:
Adviser (See Note 3) 30,597
Professional fees 24,732
Administrator (See Note 3) 10,199
Shareholder communication 10,012
NYLIFE Distributors (See Note 3) 6,786
Fund shares redeemed 3,987
Custodian 2,687
Directors 80
Accrued expenses 3,120
------------
Total liabilities 19,035,510
------------
Net assets $59,577,324
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 24,255
Service Class 28,034
Additional paid-in capital 49,920,640
Accumulated net realized gain on investments 3,233,536
Net unrealized appreciation on investments 6,370,859
------------
Net assets $59,577,324
============
INITIAL CLASS
Net assets applicable to outstanding shares $27,772,300
============
Shares of capital stock outstanding 2,425,455
============
Net asset value per share outstanding $ 11.45
============
SERVICE CLASS
Net assets applicable to outstanding shares $31,805,024
============
Shares of capital stock outstanding 2,803,397
============
Net asset value per share outstanding $ 11.35
============
</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
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Income from securities loaned--net $ 183,425
Dividends 101,921
Interest 82,358
-----------
Total income 367,704
-----------
EXPENSES:
Advisory (See Note 3) 357,530
Administration (See Note 3) 119,177
Distribution and service--Service Class
(See Note 3) 73,623
Professional fees 49,913
Custodian 29,599
Shareholder communication 9,793
Directors 1,794
Miscellaneous 10,190
-----------
Total expenses before reimbursement 651,619
Fees paid indirectly (See Note 3(A)) (5,844)
-----------
Net expenses 645,775
-----------
Net investment loss (278,071)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 6,490,812
Net change in unrealized appreciation on
investments (496,617)
-----------
Net realized and unrealized gain on investments 5,994,195
-----------
Net increase in net assets resulting from
operations $5,716,124
===========
</Table>
M-114 MainStay VP 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, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss $ (278,071) $ (326,951)
Net realized gain on
investments 6,490,812 4,455,283
Net change in unrealized
appreciation on investments (496,617) 830,785
---------------------------
Net increase in net assets
resulting from operations 5,716,124 4,959,117
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 9,585,472 1,746,384
Service Class 12,114,019 6,709,583
---------------------------
21,699,491 8,455,967
Cost of shares redeemed:
Initial Class (12,294,514) (13,305,002)
Service Class (6,152,803) (2,202,862)
---------------------------
(18,447,317) (15,507,864)
Increase (decrease) in net
assets derived from
capital share transactions 3,252,174 (7,051,897)
---------------------------
Net increase (decrease) in
net assets 8,968,298 (2,092,780)
NET ASSETS:
Beginning of year 50,609,026 52,701,806
---------------------------
End of year $ 59,577,324 $ 50,609,026
===========================
</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
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 10.17 $ 9.07 $ 8.57 $ 6.19 $ 8.71
------- ------- ------- ------- -------
Net investment loss (b) (0.04) (0.05) (0.07) (0.07) (0.07)
Net realized and unrealized
gain (loss) on investments 1.32 1.15 0.57 2.45 (2.45)
------- ------- ------- ------- -------
Total from investment
operations 1.28 1.10 0.50 2.38 (2.52)
------- ------- ------- ------- -------
Net asset value at end of
period $ 11.45 $ 10.17 $ 9.07 $ 8.57 $ 6.19
======= ======= ======= ======= =======
Total investment return 12.64% 12.04%(d) 5.86% 38.49% (28.98%)
Ratios (to average net
assets)/Supplemental Data:
Net investment loss (0.34%) (0.59%) (0.88%) (1.01%) (0.92%)
Net expenses 0.96%# 0.90%# 1.08%# 1.19% 1.10%
Expenses (before
reimbursement) 0.97%# 1.03%# 1.09%# 1.19% 1.10%
Portfolio turnover rate 228% 130% 129% 103% 62%
Net assets at end of period
(in 000's) $27,772 $27,614 $36,604 $38,146 $22,338
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
11.94% and 11.64% for the Initial Class and Service Class, respectively, for the year
ended December 31, 2005.
(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 0.01%, 0.02% and 0.01% of average net
assets for the years ended December 31, 2006, 2005 and 2004, respectively.
+ Annualized.
</Table>
M-116 MainStay VP Developing 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>
SERVICE CLASS
- -----------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 10.10 $ 9.04 $ 8.56 $ 7.20
------- ------- ------- ------------
(0.07) (0.08) (0.09) (0.06)
1.32 1.14 0.57 1.42
------- ------- ------- ------------
1.25 1.06 0.48 1.36
------- ------- ------- ------------
$ 11.35 $ 10.10 $ 9.04 $ 8.56
======= ======= ======= ============
12.36% 11.73%(d) 5.60% 18.83%(c)
(0.59%) (0.84%) (1.13%) (1.26%)+(e)
1.21%# 1.15%# 1.33%# 1.44%+
1.22%# 1.28%# 1.34%# 1.44%+
228% 130% 129% 103%
$31,805 $22,995 $16,098 $4,441
</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
MAINSTAY VP FLOATING RATE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -------------------------------------------
After Portfolio operating
expenses 5.99% 4.84%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP FLOATING RATE CREDIT SUISSE LEVERAGED LOAN
PORTFOLIO INDEX
------------------------- ----------------------------
5/2/05 10000 10000
10210 10392
12/31/06 10822 11154
</Table>
SERVICE CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE SINCE
TOTAL RETURNS YEAR INCEPTION
- -------------------------------------------
After Portfolio operating
expenses 5.73% 4.57%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP FLOATING RATE CREDIT SUISSE LEVERAGED LOAN
PORTFOLIO INDEX
------------------------- ----------------------------
5/2/05 10000 10000
10191 10392
12/31/06 10775 11154
</Table>
<Table>
<Caption>
ONE SINCE
BENCHMARK PERFORMANCE YEAR INCEPTION
Credit Suisse Leveraged Loan Index* 7.33% 6.75%
</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.
* 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-118 MainStay VP Floating Rate Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP FLOATING RATE PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,035.10 $3.59 $1,021.50 $3.57
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,033.85 $4.87 $1,020.25 $4.84
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.70% for Initial Class and 0.95% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-119
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Floating-Rate Loans 86.9
Short-Term Investments 7.6
Foreign Floating Rate Loans 5.0
Corporate Bond 0.2
Cash and Other Assets, Less Liabilities 0.3
</Table>
See Portfolio of Investments on page M-122 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. CB Richard Ellis Services, Inc., Term Loan B,
6.857%, due 12/20/13
2. Idearc, Inc., Term Loan B, 7.35%, due 11/17/14
3. Georgia-Pacific Corp., Term Loan B, 7.356%, due
12/20/12
4. Penn National Gaming, Inc., Term Loan B, 7.132%,
due 10/3/12
5. Accellent, Inc., Term Loan, 7.37%, due 11/22/12
6. Michaels Stores, Inc., Term Loan B, 8.375%, due
10/31/13
7. Celanese AG, Dollar Term Loan, 7.114%, due
4/6/11
8. Mosaic Co. (The), New Term Loan B, 7.117%, due
12/1/13
9. Windstream Corp., Tranche B Term Loan, 7.12%,
due 7/17/13
10. Cedar Fair, L.P., U.S. Term Loan, 7.85%, due
8/30/12
</Table>
M-120 MainStay VP Floating Rate Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Anthony Malloy and Robert Dial of New
York Life Investment Management LLC.
HOW DID MAINSTAY VP FLOATING RATE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK FOR THE YEAR ENDED DECEMBER 31, 2006?
For the year ended December 31, 2006, MainStay VP Floating Rate Portfolio
returned 5.99% for Initial Class shares and 5.73% for Service Class shares. Both
share classes underperformed the 6.19% return of the average Lipper* Loan
Participation Portfolio for the same period. Both share classes underperformed
the 7.33% return of the Credit Suisse Leveraged Loan Index,* the Portfolio's
broad-based securities-market index, for the year ended December 31, 2006.
WHAT FACTORS AFFECTED THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
The Portfolio's performance lagged the Credit Suisse Leveraged Loan Index*
primarily because of the Portfolio's cash position and ongoing operating
expenses that are not present in a market index. The Portfolio must maintain
cash balances to meet potential daily redemptions, while the Index does not
record cash balances, as it does not have to accommodate inflows or loan
repayments. The Portfolio also lagged the Credit Suisse Leveraged Loan Index*
because we intentionally underweighted riskier credits, including unrated loans
and loans rated CCC and below.(1)
WHAT ARE SOME CHARACTERISTICS OF THE LOANS IN THE PORTFOLIO?
The Portfolio invests in floating-rate loans that have an effective duration of
less than three months. The floating-rate loans may have final maturities of
seven to nine years but have underlying interest-rate contracts typically linked
to LIBOR(2) that reset every 30, 60, 90 or 180 days. As of December 31, 2006,
the weighted average reset figure for the Portfolio was 46 days. This means that
as short-term interest rates increase, the Portfolio "catches up" within 46
days, on average, and thus increases the yield it pays to investors.
WHAT WERE THE PORTFOLIO'S LARGEST INDUSTRY CONCENTRATIONS, AND HOW DID THE
PORTFOLIO'S WEIGHTINGS DIFFER FROM THOSE OF THE BENCHMARK?
The largest industry concentrations in the Portfolio were in chemicals, business
services, health care and diversified media. Among these concentrated positions,
the Portfolio was overweighted relative to the Credit Suisse Leveraged Loan
Index* in chemicals and business services. Issuers in the chemicals sector
typically have significant collateral, and many issuers in business services
enjoy recurring revenue streams and consistent free cash flow profiles. The
Portfolio was approximately market-weighted in health care and diversified
media.
WERE THERE ANY SIGNIFICANTLY UNDERWEIGHTED POSITIONS?
As of December 31, 2006, the Portfolio was significantly underweighted relative
to the Credit Suisse Leveraged Loan Index* in loans rated CCC and below and in
unrated loans. On that date, the Portfolio's allocation to loans rated CCC and
below was 0.40%, compared with the Index's allocation of 2.81%; the Portfolio
held 0.53% of its assets in unrated loans, compared with the Index's allocation
of 11.35%.
1. Debt rated CCC by Standard & Poor's is deemed by Standard & Poor's to be
currently vulnerable to nonpayment and is dependent upon favorable business,
financial and economic conditions for the obligor. It is the opinion of
Standard & Poor's that in the event of adverse business, financial or
economic conditions, the obligor is not likely to have the capacity 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 of the Portfolio.
2. London interbank offer rates (LIBOR) are floating interest rates that are
widely used as reference rates in bank, corporate and government lending
agreements.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP FLOATING RATE PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-121
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM INVESTMENTS (92.1%)+
CORPORATE BOND (0.2%)
- -----------------------------------------------------------------------------
PACKAGING & CONTAINERS (0.2%)
Berry Plastics Holding Corp.
8.875%, due 9/15/14 (a) $ 500,000 $ 507,500
------------
Total Corporate Bond
(Cost $500,000) 507,500
------------
FLOATING RATE LOANS (86.9%)(B)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.9%)
Hexcel Corp.
Tranche B Term Loan
7.125%, due 3/1/12 1,631,986 1,631,986
Spirit Aerosystems, Inc.
Term Loan B
7.11%, due 12/31/11 1,693,573 1,695,161
Transdigm, Inc.
Term Loan
7.366%, due 6/23/13 1,000,000 1,006,000
Vought Aircraft Industries, Inc.
Term Loan
7.88%, due 12/22/11 992,857 998,648
------------
5,331,795
------------
AUTOMOBILE (1.9%)
Ford Motor Co.
Term Loan B
8.36%, due 12/16/13 1,750,000 1,751,094
Goodyear Tire & Rubber Co. (The)
2nd Lien Term Loan
8.14%, due 4/30/10 1,500,000 1,516,875
Key Automotive Group
Term Loan B
8.856%, due 6/29/10 979,510 985,632
TRW Automotive, Inc.
Tranche B Term Loan
7.188%, due 6/30/12 1,099,183 1,095,577
------------
5,349,178
------------
BEVERAGE, FOOD & TOBACCO (4.1%)
American Seafoods Group LLC
Term Loan A
7.114%, due 9/30/11 778,372 775,453
BF Bolthouse Holdco LLC
1st Lien Term Loan
7.625%, due 12/17/12 843,625 843,098
2nd Lien Term Loan
10.864%, due 12/16/13 170,000 170,850
Commonwealth Brands, Inc.
New Term Loan
7.688%, due 12/22/12 1,427,396 1,435,604
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
BEVERAGE, FOOD & TOBACCO (CONTINUED)
Constellation Brands, Inc.
New Term Loan B
6.875%, due 6/5/13 $1,261,667 $ 1,265,696
Culligan International Co.
Term Loan
7.10%, due 9/30/11 1,373,594 1,374,883
Del Monte Corp.
Term Loan B
6.963%, due 2/8/12 995,000 995,533
Dole Food Co., Inc.
Credit Link Deposit
5.244%, due 4/12/13 139,535 138,392
Tranche C Term Loan
7.46%, due 4/12/13 1,038,663 1,030,152
Tranche B Term Loan
7.546%, due 4/12/13 311,599 309,046
Michael Foods, Inc.
Term Loan B1
7.35%, due 11/21/10 1,767,778 1,769,988
Reddy Ice Group, Inc.
Term Loan
7.122%, due 8/12/12 1,500,000 1,499,062
------------
11,607,757
------------
BROADCASTING & ENTERTAINMENT (6.6%)
Charter Communications Operating LLC
Replacement Term Loan
8.005%, due 4/28/13 1,940,000 1,951,580
CSC Holdings, Inc.
Incremental Term Loan
7.123%, due 3/29/13 1,992,500 1,992,665
DirectTV Holdings LLC
Term Loan B
6.85%, due 4/13/13 1,984,887 1,985,790
Entravision Communications Corp.
Term Loan
6.87%, due 3/29/13 989,950 989,125
Gray Television, Inc.
Term Loan B
6.875%, due 11/22/12 992,481 989,822
Incremental Term Loan
6.88%, due 11/22/12 990,000 987,348
Insight Midwest Holdings LLC
Initial Term Loan
7.61%, due 4/7/14 1,988,763 2,000,821
</Table>
+ Percentages indicated are based on Fund net assets.
V Among the Fund's 10 largest holdings, excluding short-term investments. May be
subject to change daily.
M-122 MainStay VP Floating Rate 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
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
BROADCASTING & ENTERTAINMENT (CONTINUED)
Mediacom Broadband Group
(FKA MCC Iowa)
Tranche D1 Term Loan
7.175%, due 1/31/15 $2,000,000 $ 1,990,626
Nexstar Broadcasting, Inc.
Mission Term Loan B
7.114%, due 10/1/12 1,024,226 1,020,385
Nexstar Term Loan B
7.114%, due 10/1/12 970,542 966,902
Patriot Media & Communications CNJ LLC
Term Loan B
7.37%, due 3/31/13 957,143 961,929
Raycom TV Broadcasting, Inc.
Tranche B Term Loan
6.875%, due 8/28/13 989,615 982,193
UPC Broadband Holding B.V.
Term Loan J2
7.64%, due 4/1/13 1,000,000 1,000,000
Term Loan K2
7.64%, due 12/31/13 1,000,000 1,000,000
------------
18,819,186
------------
BUILDINGS & REAL ESTATE (3.0%)
Armstrong World Industries, Inc.
Term Loan
7.10%, due 10/2/13 1,000,000 1,001,500
V CB Richard Ellis Services, Inc.
Term Loan B
6.857%, due 12/20/13 3,000,000 3,000,939
Gables GP, Inc.
Term Loan
7.10%, due 3/30/07 44,737 44,746
General Growth Properties, Inc.
Tranche A1 Term Loan
6.60%, due 2/24/10 2,000,000 1,986,924
LNR Property Corp.
Initial Tranche B Term Loan
8.12%, due 7/12/11 500,000 501,458
Macerich Partnership, L.P.
Term Loan
6.875%, due 4/26/10 1,000,000 998,750
Stile Acquisition Corp.
Canadian Term Loan
7.38%, due 4/6/13 489,599 479,386
U.S. Term Loan
7.38%, due 4/6/13 490,433 480,203
------------
8,493,906
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CARGO TRANSPORT (2.1%)
Horizon Lines LLC
Tranche C Term Loan
7.62%, due 7/7/11 $1,781,691 $ 1,785,032
Oshkosh Truck Corp.
Term Loan B
7.35%, due 12/6/13 2,000,000 2,001,876
Pacer International, Inc.
Term Loan
6.938%, due 6/10/10 1,099,436 1,093,938
RailAmerica, Inc.
U.S. Term Loan
7.375%, due 9/29/11 1,002,227 1,003,480
------------
5,884,326
------------
CHEMICALS, PLASTICS & RUBBER (8.0%)
Basell AF S.A.R.L.
Facility B2 US
7.60%, due 8/1/13 833,333 842,187
Facility B4 US
7.60%, due 8/1/13 166,667 168,438
Facility C2 US
8.35%, due 8/1/14 833,333 841,927
Facility C4 US
8.35%, due 8/1/14 166,667 168,386
V Celanese AG
Dollar Term Loan
7.114%, due 4/6/11 2,175,089 2,180,154
Gentek, Inc.
1st Lien Term Loan
7.362%, due 2/28/11 1,984,848 1,987,020
Hercules, Inc.
Term Loan B
6.87%, due 10/8/10 1,438,619 1,436,821
Hexion Specialty Chemicals, Inc.
Term Loan C1
7.875%, due 5/5/13 1,638,969 1,636,237
Term Loan C2
7.875%, due 5/5/13 355,138 354,546
Huntsman International LLC
Term B Dollar Facility
7.10%, due 8/16/12 1,141,233 1,141,392
INEOS Group Holdings, Ltd.
Tranche A4 Term Loan
7.611%, due 12/17/12 900,000 902,700
Tranche B2 Term Loan
7.611%, due 12/16/13 247,500 249,769
Tranche C2 Term Loan
8.111%, due 12/16/14 247,500 249,769
ISP Chemco, Inc.
Term Loan
7.408%, due 2/15/13 1,989,975 1,991,529
</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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
CHEMICALS, PLASTICS & RUBBER (CONTINUED)
Lyondell Chemical Co.
Term Loan
7.121%, due 8/16/13 $1,496,250 $ 1,502,094
V Mosaic Co. (The)
New Term Loan B
7.117%, due 12/1/13 2,000,000 2,015,000
Nalco Co.
Term Loan B
7.177%, due 11/4/10 842,730 845,412
Polymer Group, Inc.
Term Loan
7.613%, due 11/22/12 992,481 992,481
Rockwood Specialties Group, Inc.
Tranche E Term Loan
7.376%, due 7/30/12 1,984,899 1,993,087
Texas Petrochemicals L.P.
Letter of Credit
5.374%, due 12/29/08 312,500 315,039
Term Loan B
7.938%, due 6/27/13 932,818 940,398
------------
22,754,386
------------
CONTAINERS, PACKAGING & GLASS (3.2%)
Altivity Packaging LLC
Delayed Draw 1st Lien Term Loan
7.608%, due 6/30/13 258,443 260,898
1st Lien Term Loan
7.61%, due 6/30/13 863,744 871,086
2nd Lien Term Loan
10.349%, due 12/30/13 284,091 286,506
Delayed Draw 2nd Lien
10.35%, due 12/30/13 90,909 91,773
Berry Plastics Corp.
Term Loan B
7.124%, due 9/20/13 598,500 599,622
Covalence Specialty Materials Corp.
Term Loan C
7.375%, due 5/20/13 966,571 965,967
Crown Americas LLC
Term B Dollar Loan
7.124%, due 11/15/12 1,980,000 1,983,712
Graham Packaging Holdings Co.
Incremental Term Loan B
7.687%, due 10/7/11 496,203 498,861
Term Loan B
7.725%, due 10/7/11 984,925 990,201
Graphic Packaging International, Inc.
Term Loan C
7.894%, due 8/8/10 951,307 961,160
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONTAINERS, PACKAGING & GLASS (CONTINUED)
Smurfit-Stone Container Enterprises, Inc.
Deposit Fund Commitment
4.729%, due 11/1/10 $ 319,471 $ 321,214
Tranche B Term Loan
7.625%, due 11/1/11 820,823 825,300
Tranche C Term Loan
7.625%, due 11/1/11 378,791 380,642
Tranche C1 Term Loan
7.625%, due 11/1/11 66,711 67,037
------------
9,103,979
------------
DIVERSIFIED NATURAL RESOURCES, PRECIOUS METALS & MINERALS (0.9%)
V Georgia-Pacific Corp.
Term Loan B
7.356%, due 12/20/12 2,481,215 2,492,242
------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING (2.3%)
Aearo Technologies, Inc.
1st Lien Term Loan
7.864%, due 3/22/13 992,500 999,944
EnerSys Capital, Inc.
Term Loan
7.419%, due 3/17/11 994,898 999,872
Invensys International Holdings, Ltd.
Tranche A Term Loan
7.398%, due 1/15/11 1,421,220 1,429,215
Term A Bonding
7.62%, due 12/15/10 828,780 833,441
Mueller Group, Inc.
Term Loan B
7.373%, due 10/3/12 1,748,997 1,757,197
Walter Industries, Inc.
Term Loan
7.331%, due 10/3/12 552,681 552,957
------------
6,572,626
------------
DIVERSIFIED/CONGLOMERATE SERVICE (3.9%)
Affiliated Computer Services, Inc.
Term Loan B
7.35%, due 3/20/13 1,487,487 1,491,104
American Reprographics Co. LLC
Term Loan C
7.119%, due 6/18/09 1,197,285 1,195,789
Coinmach Corp.
Term Loan B1
7.875%, due 12/19/12 1,493,947 1,506,086
Dealer Computer Services, Inc.
1st Lien Term Loan
7.85%, due 10/26/12 1,745,625 1,754,041
2nd Lien Term Loan
10.85%, due 10/26/13 250,000 252,891
</Table>
M-124 MainStay VP Floating Rate 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
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
DIVERSIFIED/CONGLOMERATE SERVICE (CONTINUED)
Fidelity National Information Solutions, Inc.
Term Loan B
7.10%, due 3/8/13 $1,426,612 $ 1,426,414
SunGard Data Systems, Inc.
Term Loan
7.875%, due 2/11/13 1,973,697 1,991,198
VeriFone, Inc.
Term Loan B
7.12%, due 10/31/13 1,500,000 1,502,344
------------
11,119,867
------------
ECOLOGICAL (2.5%)
Allied Waste Industries, Inc.
Tranche A Credit-Linked Deposit
5.334%, due 1/15/12 529,730 530,613
Term Loan B
7.158%, due 1/15/12 1,194,560 1,195,521
Duratek, Inc.
Term Loan B
7.63%, due 6/7/13 298,424 299,916
EnergySolutions LLC
Synthetic Letter of Credit
7.60%, due 6/7/13 31,447 31,604
Term Loan
7.63%, due 6/7/13 659,019 662,314
IESI Corp.
Term Loan
7.124%, due 1/20/12 2,000,000 1,998,750
Synagro Technologies, Inc.
Term Loan B
7.626%, due 6/21/12 857,143 855,536
Term Loan DDTL
7.626%, due 6/21/12 142,857 142,857
Wastequip, Inc.
Delayed Draw Term Loan
7.60%, due 7/15/11 66,667 66,333
Tranche B Term Loan
7.60%, due 7/15/11 926,333 921,702
2nd Lien Term Loan
10.85%, due 7/13/12 500,000 502,500
------------
7,207,646
------------
ELECTRONICS (1.7%)
Advanced Micro Devices, Inc.
Tranche B1 Term Loan
7.62%, due 12/31/13 886,494 890,594
Freescale Semiconductor, Inc.
Term Loan B
7.369%, due 11/29/13 1,000,000 1,005,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRONICS (CONTINUED)
Sanmina-SCI Corp.
Term Loan B
7.88%, due 1/31/08 $1,000,000 $ 1,002,750
Sensata Technologies Finance Co. LLC
Term Loan
7.13%, due 4/26/13 1,990,000 1,976,008
------------
4,874,352
------------
FINANCE (2.5%)
Brand Services, Inc.
Term Loan
7.604%, due 1/16/12 1,974,960 1,976,194
Hertz Corp. (The)
Letter of Credit
5.365%, due 12/21/12 222,433 223,824
Tranche B Term Loan
7.362%, due 12/21/12 1,767,264 1,778,310
Rental Services Corp.
1st Lien Term Loan
7.114%, due 11/30/12 1,496,250 1,502,485
2nd Lien Term Loan
8.86%, due 12/2/13 500,000 504,219
United Rentals, Inc.
Tranche B Credit Linked Deposit
6.00%, due 2/14/11 338,268 339,607
Initial Term Loan
7.35%, due 2/14/11 745,093 748,042
------------
7,072,681
------------
GROCERY (1.4%)
BI-LO LLC
Term Loan
9.352%, due 6/30/11 869,565 872,463
Giant Eagle, Inc.
Term Loan
6.871%, due 11/7/12 495,000 494,846
Roundy's Supermarkets, Inc.
Term Loan
8.37%, due 11/3/11 495,000 498,836
SUPERVALU, Inc.
Term Loan B
7.10%, due 6/1/12 1,985,000 1,988,176
------------
3,854,321
------------
HEALTHCARE, EDUCATION & CHILDCARE (8.5%)
V Accellent, Inc.
Term Loan
7.37%, due 11/22/12 2,483,696 2,477,487
AGA Medical Corp.
Tranche B Term Loan
7.37%, due 4/28/13 916,105 914,387
</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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
HEALTHCARE, EDUCATION & CHILDCARE (CONTINUED)
Alliance Imaging, Inc.
Tranche C1 Term Loan
7.921%, due 12/29/11 $1,408,152 $ 1,412,024
AMR HoldCo., Inc./Emcare Holdco., Inc.
Term Loan
7.381%, due 2/10/12 912,275 912,275
Aveta Holdings LLC
New Term Loan Namm
7.60%, due 8/22/11 18,939 18,844
Term Loan MMM
7.60%, due 8/22/11 145,040 144,496
Term Loan Namm
7.60%, due 8/22/11 34,127 33,999
Term Loan PHMC
7.60%, due 8/22/11 118,864 118,269
Term Loan PHMC Namm
7.60%, due 8/22/11 3,302 3,285
Community Health Systems, Inc.
Incremental Term Loan
7.11%, due 2/29/12 498,750 498,906
Term Loan
7.12%, due 8/19/11 1,987,297 1,987,919
Concentra Operating Corp.
Term Loan
7.619%, due 9/30/11 664,247 665,700
DaVita, Inc.
Term Loan B
7.422%, due 10/5/12 1,256,681 1,262,739
Fresenius Medical Care Holdings, Inc.
Term Loan
6.74%, due 3/31/13 1,488,750 1,480,273
Gentiva Health Services, Inc.
Term Loan B
7.669%, due 3/31/13 929,348 930,220
HCA, Inc.
Term Loan A
7.864%, due 11/16/12 1,000,000 1,003,281
Term Loan B
8.114%, due 11/18/13 1,000,000 1,010,962
HealthSouth Corp.
Term Loan B
8.62%, due 3/10/13 995,000 1,000,942
LifePoint Hospitals, Inc.
Term Loan B
6.975%, due 4/15/12 1,376,340 1,370,146
Quintiles Transnational Corp.
Term Loan B
7.36%, due 3/31/13 992,500 991,011
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
HEALTHCARE, EDUCATION & CHILDCARE (CONTINUED)
Rural/Metro Operating Co. LLC
Letter of Credit Facility Deposits
5.20%, due 3/4/11 $ 411,765 $ 412,794
Select Medical Corp.
Term Loan B
7.113%, due 2/24/12 980,031 960,798
US Oncology, Inc.
Term Loan B
7.624%, due 8/20/11 1,994,752 2,000,985
Vanguard Health Holding Co. LLC
Replacement Term Loan
7.614%, due 9/23/11 987,562 988,180
VWR International, Inc.
Term Loan B
7.63%, due 4/7/11 1,000,000 1,001,875
Warner Chilcott Corp.
Dovonex Delayed Draw Term Loan
7.614%, due 1/18/12 103,896 104,156
Tranche C Term Loan
7.614%, due 1/18/12 129,814 130,347
Tranche B Term Loan
7.617%, due 1/18/12 472,825 474,767
------------
24,311,067
------------
HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER PRODUCTS (1.4%)
Jarden Corp.
Term Loan B2
7.114%, due 1/24/12 888,371 886,816
Sealy Mattress Co.
Term Loan E
7.099%, due 8/25/12 821,429 819,888
Simmons Co.
Tranche D Term Loan
7.121%, due 12/19/11 1,853,659 1,863,507
Sunbeam Corp. (Canada), Ltd.
Term Loan
7.114%, due 1/24/12 486,435 485,016
------------
4,055,227
------------
HOTELS, MOTELS, INNS & GAMING (2.3%)
Boyd Gaming Corp.
Term Loan
6.864%, due 6/30/11 1,989,796 1,988,138
V Penn National Gaming, Inc.
Term Loan B
7.132%, due 10/3/12 2,481,200 2,491,745
</Table>
M-126 MainStay VP Floating Rate 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
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
HOTELS, MOTELS, INNS & GAMING (CONTINUED)
Venetian Casino Resort LLC/Las Vegas Sands, Inc.
Delayed Draw Term Loan B
7.12%, due 6/15/11 $ 341,880 $ 342,982
Term Loan B
7.12%, due 6/15/11 1,658,120 1,663,460
------------
6,486,325
------------
INSURANCE (0.7%)
USI Holdings Corp.
Tranche B Term Loan
7.688%, due 3/24/11 2,000,000 2,000,000
------------
LEISURE, AMUSEMENT, MOTION PICTURES, ENTERTAINMENT (4.5%)
Affinity Group, Inc.
Term Loan
7.85%, due 6/24/09 496,794 497,415
AMC Entertainment, Inc.
Term Loan
7.475%, due 1/26/13 992,500 998,289
Bombardier Recreational Products, Inc.
Term Loan
7.88%, due 6/28/13 1,500,000 1,499,062
V Cedar Fair, L.P.
U.S. Term Loan
7.85%, due 8/30/12 1,990,000 2,008,408
Cinemark USA, Inc.
Term Loan
7.38%, due 10/5/13 1,995,000 2,004,143
Easton-Bell Sports, Inc.
Tranche B Term Loan
7.10%, due 3/16/12 1,985,000 1,981,691
Metro-Goldwyn-Mayer Studios, Inc.
Tranche B Term Loan
8.614%, due 4/8/12 992,500 982,397
Oceania Cruises, Inc.
Term Loan
(zero coupon), due 11/16/12 500,000 503,750
Regal Cinemas Corp.
Term Loan
7.114%, due 10/27/13 460,196 458,717
Six Flags Theme Parks, Inc.
Tranche B1 Term Loan
8.62%, due 6/30/09 984,810 994,505
WMG Acquisition Corp.
Term Loan
7.373%, due 2/28/11 988,157 990,998
------------
12,919,375
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MACHINERY (1.7%)
Colfax Corp.
New Term Loan B
7.375%, due 11/30/11 $ 497,482 $ 499,969
Flowserve Corp.
Term Loan B
6.875%, due 8/10/12 1,955,717 1,952,967
Generac CCMP Acquisition Corp.
Term Loan B
7.82%, due 11/11/13 1,500,000 1,504,688
RBS Global, Inc.
Term Loan B
7.875%, due 7/19/13 967,213 968,825
------------
4,926,449
------------
MINING, STEEL, IRON & NON-PRECIOUS METALS (0.9%)
Aleris International, Inc.
New Term Loan B
8.125%, due 12/21/11 997,500 1,001,864
Magnum Coal Co.
Funded Letter of Credit
8.60%, due 3/21/13 90,909 90,795
Term Loan
8.62%, due 3/21/13 902,273 901,145
Novelis Corp.
U.S. Term Loan B1
7.62%, due 1/9/12 456,150 456,720
Novelis, Inc.
Canadian Term Loan B2
7.62%, due 1/9/12 262,632 262,960
------------
2,713,484
------------
OIL & GAS (1.6%)
Babcock & Wilcox Co. (The)
Synthetic Letter of Credit
8.114%, due 2/22/12 805,872 808,894
Dresser Rand Group, Inc.
Term Loan B1
7.355%, due 10/29/11 338,774 340,468
Dresser, Inc.
Term B1 Loan
8.125%, due 10/31/13 721,338 726,447
EPCO Holdings, Inc.
Institutional Term Loan C
7.374%, due 8/18/10 980,155 984,880
Regency Gas Services LLC
Term Loan B
7.86%, due 8/15/13 83,333 83,359
Targa Resources, Inc.
Synthetic Letter of Credit
7.617%, due 10/31/12 291,106 292,152
Term Loan
7.624%, due 10/31/12 1,197,781 1,202,085
------------
4,438,285
------------
</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-127
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
PERSONAL & NONDURABLE CONSUMER PRODUCTS (2.3%)
ACCO Brands Corp.
U.S. Term Loan
7.098%, due 8/17/12 $ 795,000 $ 796,243
JohnsonDiversey, Inc.
New Term Loan B
7.87%, due 12/16/11 1,507,143 1,517,504
Mega Bloks, Inc.
Term Loan B
7.188%, due 7/26/12 987,500 986,266
Solo Cup Co.
Term Loan B1
8.87%, due 2/27/11 632,244 635,800
Spectrum Brands, Inc.
Term Loan
8.616%, due 2/6/12 806,403 808,564
Visant Corp.
Term Loan C
7.372%, due 12/21/11 1,749,743 1,756,305
------------
6,500,682
------------
PERSONAL TRANSPORTATION (0.7%)
United Airlines, Inc.
Tranche B Term Loan
9.12%, due 2/1/12 1,741,250 1,752,754
Delayed Draw Term Loan
9.125%, due 2/1/12 248,750 250,393
------------
2,003,147
------------
PRINTING & PUBLISHING (4.9%)
Cenveo Corp.
Term Loan B
7.365%, due 6/21/13 997,500 998,747
Dex Media East LLC
Term Loan B
6.868%, due 5/8/09 929,942 927,089
Dex Media West LLC
Tranche B1 Term Loan
6.876%, due 3/9/10 1,211,569 1,208,540
Hanley Wood LLC
Delayed Draw Term Loan
7.61%, due 8/1/12 206,257 206,085
Closing Date Term Loan
7.618%, due 8/1/12 1,726,835 1,725,397
V Idearc, Inc.
Term Loan B
7.35%, due 11/17/14 2,500,000 2,512,500
Medianews Group, Inc.
Term Loan C
7.10%, due 8/2/13 497,500 497,293
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
PRINTING & PUBLISHING (CONTINUED)
Merrill Communications LLC
Term Loan
7.606%, due 5/15/11 $1,987,487 $ 1,991,214
New Publishing Acquisition, Inc.
Tranche B Term Loan
7.63%, due 8/5/12 1,127,009 1,127,479
Nielsen Finance LLC
Dollar Term Loan
8.125%, due 8/9/13 1,500,000 1,509,792
R.H. Donnelley, Inc.
Tranche D2 Term Loan
6.865%, due 6/30/11 1,160,037 1,155,848
------------
13,859,984
------------
RETAIL STORE (3.3%)
Eddie Bauer, Inc.
Term Loan B
9.60%, due 6/21/11 457,500 455,975
Eye Care Centers of America, Inc.
Term Loan B
7.933%, due 3/1/12 1,271,916 1,272,711
Jean Coutu Group (PJC), Inc. (The)
Term Loan B
7.938%, due 7/30/11 1,729,295 1,730,993
V Michaels Stores, Inc.
Term Loan B
8.375%, due 10/31/13 2,447,917 2,461,686
Neiman Marcus Group, Inc. (The)
Term Loan B
7.602%, due 4/6/13 1,856,173 1,868,208
Petco Animal Supplies, Inc.
Term Loan B
8.10%, due 10/25/13 1,588,292 1,595,836
------------
9,385,409
------------
TELECOMMUNICATIONS (2.4%)
Centennial Cellular Operating Co. LLC
Term Loan
7.614%, due 2/9/11 1,430,632 1,439,871
Madison River Capital LLC
Term Loan B1
7.62%, due 7/29/12 990,476 991,714
MetroPCS Wireless, Inc.
Term Loan B
7.875%, due 11/4/13 997,500 1,000,825
PanAmSat Corp.
Term Loan B2
7.872%, due 1/3/14 1,500,000 1,513,959
</Table>
M-128 MainStay VP Floating Rate 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
FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
V Windstream Corp.
Tranche B Term Loan
7.12%, due 7/17/13 $2,000,000 $ 2,010,938
------------
6,957,307
------------
TEXTILES & LEATHER (0.8%)
Springs Windows Fashions LLC
Term Loan B
8.125%, due 12/31/12 495,000 497,166
St. Johns Knits International, Inc.
Term Loan B
9.35%, due 3/23/12 1,140,279 1,131,727
William Carter Co. (The)
Term Loan
6.87%, due 7/14/12 746,202 744,336
------------
2,373,229
------------
UTILITIES (4.9%)
AES Corp.
Term Loan
7.125%, due 4/30/08 1,000,000 1,000,625
Boston Generating LLC
Synthetic Letter of Credit
5.241%, due 12/20/13 172,414 173,276
1st Lien Term Loan
7.60%, due 12/20/13 1,279,310 1,286,706
Revolving Credit Commitment
7.616%, due 12/20/13 48,276 48,517
Cogentrix Delaware Holdings, Inc.
Term Loan
6.87%, due 4/14/12 1,211,718 1,210,961
Coleto Creek Power, L.P.
Synthetic Letter of Credit
5.267%, due 6/28/13 579,618 576,720
Term Loan
8.114%, due 6/28/13 1,164,530 1,158,708
Covanta Energy Corp.
Funded Letter of Credit
5.35%, due 6/24/12 663,107 668,081
Tranche C Term Loan
7.615%, due 6/24/12 473,996 477,551
Term Loan
7.62%, due 6/24/12 255,156 254,518
InfrastruX Group, Inc.
Delayed Draw Term Loan
8.259%, due 11/5/12 (c) 934,023 937,525
KGen LLC
Tranche A Term Loan
7.975%, due 8/5/11 764,362 763,407
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
UTILITIES (CONTINUED)
LSP Gen Finance Co. LLC
1st Lien Term Loan
7.114%, due 5/6/13 $ 921,591 $ 921,975
Delayed Draw 1st Lien Term Loan
7.114%, due 5/6/13 39,649 39,666
2nd Lien Term Loan
8.864%, due 5/5/14 500,000 505,417
Midwest Generation LLC
Term Loan B
6.911%, due 4/27/11 495,789 495,944
Mirant North America LLC
Term Loan
7.10%, due 1/3/13 1,486,241 1,483,056
NRG Energy, Inc.
Credit Link Deposit
7.364%, due 2/1/13 278,495 279,753
Term Loan B
7.364%, due 2/1/13 1,517,082 1,524,667
------------
13,807,073
------------
Total Floating Rate Loans
(Cost $247,731,506) 247,275,291
------------
FOREIGN FLOATING RATE LOANS (5.0%)(B)
- -----------------------------------------------------------------------------
AUTOMOBILE (0.5%)
Tenneco, Inc.
Tranche B1 Credit Link Deposit
7.349%, due 12/10/10 458,895 460,759
Term Loan B
7.36%, due 12/10/10 1,041,105 1,045,335
------------
1,506,094
------------
BROADCASTING & ENTERTAINMENT (0.4%)
VTR Globalcom S.A.
Term Loan B
8.372%, due 9/19/14 (d) 1,000,000 987,500
------------
CARGO TRANSPORT (0.4%)
Laidlaw International, Inc.
Canadian Term Loan B
7.11%, due 7/31/13 249,375 250,726
Term Loan B
7.11%, due 7/31/13 748,125 752,178
------------
1,002,904
------------
CHEMICALS, PLASTICS & RUBBER (1.6%)
Brenntag Holding GmbH and Co.
Acquisition Term Loan
8.08%, due 1/20/14 392,727 395,182
Term Loan B2
8.08%, due 1/20/14 1,607,273 1,620,835
</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-129
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN FLOATING RATE LOANS (CONTINUED)
- -----------------------------------------------------------------------------
CHEMICALS, PLASTICS & RUBBER (CONTINUED)
Invista B.V.
Tranche B1 Term Loan
6.875%, due 4/29/11 $1,321,285 $ 1,317,982
Tranche B2 Term Loan
6.875%, due 4/29/11 607,165 605,647
Lucite International US Finco, Ltd.
Term Loan B1
8.10%, due 7/8/13 (c) 736,756 741,821
------------
4,681,467
------------
FINANCE (0.5%)
Ashtead Group PLC
Term Loan
7.125%, due 8/31/11 1,500,000 1,493,438
------------
PRINTING & PUBLISHING (0.5%)
Yell Group PLC
Term Loan B1
7.35%, due 10/27/12 1,500,000 1,508,738
------------
RETAIL STORE (0.4%)
Dollarama Group, L.P.
Replacement Term Loan B
7.376%, due 11/18/11 987,537 989,388
------------
TELECOMMUNICATIONS (0.7%)
Intelsat Subsidiary Holding Co.
Tranche B Term Loan
7.622%, due 7/3/13 1,993,696 2,007,154
------------
Total Foreign Floating Rate Loans
(Cost $14,189,099) 14,176,683
------------
Total Long-Term Investments
(Cost $262,420,605) 261,959,474
------------
SHORT-TERM INVESTMENTS (7.6%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (5.1%)
Bank of America Corp.
5.27%, due 1/9/07 1,000,000 998,682
Goldman Sachs Group, Inc.
5.23%, due 1/4/07 2,000,000 1,998,838
International Lease Finance Corp.
5.245%, due 1/18/07 3,000,000 2,992,132
New Jersey Natural Gas
5.25%, due 1/9/07 3,000,000 2,996,063
Swedish Export Credit Corp.
5.25%, due 1/8/07 1,300,000 1,298,483
United Parcel Service, Inc.
5.17%, due 1/10/07 1,000,000 998,564
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Washington Gas Light
5.33%, due 1/16/07 $3,080,000 $ 3,072,704
------------
Total Commercial Paper
(Cost $14,355,466) 14,355,466
------------
REPURCHASE AGREEMENT (2.5%)
Wachovia Capital Markets LLC
5.25%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $7,238,220 (Collateralized
by various U.S.
Government agencies
with rates between 3.50%-4.00% and
maturity dates between 7/13/07-9/24/09,
with a Principal Amount of
$7,415,000 and a Market Value
of $7,382,133) 7,234,000 7,234,000
------------
Total Repurchase Agreement
(Cost $7,234,000) 7,234,000
------------
Total Short-Term Investments
(Cost $21,589,466) 21,589,466
------------
Total Investments
(Cost $284,010,071) (e) 99.7% 283,548,940(f)
Cash and Other Assets,
Less Liabilities 0.3 875,674
---------- ------------
Net Assets 100.0% $284,424,614
========== ============
</Table>
<Table>
(a) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(b) Floating Rate Loan--generally pays interest at rates which
are periodically re-determined at a margin above the London
Inter-Bank Offered Rate ("LIBOR") or other short-term rates.
The rate shown is the rate(s) in effect at December 31,
2006. Floating Rate Loans are generally considered
restrictive in that the Fund is ordinarily contractually
obligated to receive consent from the Agent Bank and/or
borrower prior to disposition of a Floating Rate Loan.
(c) This security has additional commitments and contingencies.
Principal amount and value exclude unfunded commitment.
(d) Illiquid security. The total market value of the security at
December 31, 2006 is $987,500, which represents 0.4% of the
Portfolio's net assets.
(e) The cost stated also represents the aggregate cost for
federal tax purposes.
(f) At December 31, 2006 net unrealized depreciation was
$461,131, 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 $365,274 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $826,405.
</Table>
M-130 MainStay VP Floating Rate 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, 2006
<Table>
ASSETS:
Investment in securities, at value
(identified cost $284,010,071) $283,548,940
Cash 3,559,076
Unrealized appreciation on unfunded
commitments 2,023
Receivables:
Interest 1,932,443
Investment securities sold 503,125
Fund shares sold 333,703
Other assets 9,824
-------------
Total assets 289,889,134
-------------
LIABILITIES:
Payables:
Investment securities purchased 5,028,187
Manager (See Note 3) 141,560
Fund shares redeemed 123,116
Professional fees 78,914
NYLIFE Distributors (See Note 3) 48,314
Shareholder communication 38,273
Custodian 1,912
Directors 369
Accrued expenses 3,114
Dividend payable 761
-------------
Total liabilities 5,464,520
-------------
Net assets $284,424,614
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 52,302
Service Class 236,167
Additional paid-in capital 285,137,381
Accumulated undistributed net investment
income 4,255
Accumulated net realized loss on investments (546,383)
Net unrealized depreciation on investments (461,131)
Net unrealized appreciation on unfunded
commitments 2,023
-------------
Net assets $284,424,614
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 51,568,695
=============
Shares of capital stock outstanding 5,230,243
=============
Net asset value per share outstanding $ 9.86
=============
SERVICE CLASS
Net assets applicable to outstanding shares $232,855,919
=============
Shares of capital stock outstanding 23,616,710
=============
Net asset value per share outstanding $ 9.86
=============
</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-131
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $14,453,940
------------
EXPENSES:
Manager (See Note 3) 1,223,792
Distribution and service--Service Class
(See Note 3) 417,507
Professional fees 113,118
Shareholder communication 50,465
Directors 11,648
Custodian 4,579
Miscellaneous 20,518
------------
Total expenses 1,841,627
------------
Net investment income 12,612,313
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND UNFUNDED
COMMITMENTS:
Net realized loss on investments (254,589)
Net change in unrealized appreciation on
investments and unfunded commitments (607,065)
------------
Net realized and unrealized loss on investments
and unfunded commitments (861,654)
------------
Net increase in net assets resulting from
operations $11,750,659
============
</Table>
M-132 MainStay VP Floating Rate 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, 2006 AND THE PERIOD MAY 2, 2005 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 12,612,313 $ 2,260,856
Net realized loss on
investments (254,589) (291,794)
Net change in unrealized
appreciation on investments
and unfunded commitments (607,065) 147,957
---------------------------
Net increase in net assets
resulting from operations 11,750,659 2,117,019
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (2,353,230) (680,097)
Service Class (10,254,828) (1,581,357)
---------------------------
Total dividends to
shareholders (12,608,058) (2,261,454)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 29,098,552 24,736,600
Service Class 164,048,774 96,482,238
Net asset value of shares
issued
to shareholders in
reinvestment
of dividends:
Initial Class 2,352,315 680,097
Service Class 10,254,828 1,581,357
---------------------------
205,754,469 123,480,292
Cost of shares redeemed:
Initial Class (4,783,055) (338,807)
Service Class (33,276,965) (5,409,486)
---------------------------
(38,060,020) (5,748,293)
Increase in net assets
derived from capital share
transactions 167,694,449 117,731,999
---------------------------
Net increase in net assets 166,837,050 117,587,564
NET ASSETS:
Beginning of period 117,587,564 --
---------------------------
End of period $284,424,614 $117,587,564
===========================
Accumulated undistributed net
investment income at end of
period $ 4,255 $ --
===========================
</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-133
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS SERVICE CLASS
------------------------------ ------------------------------
MAY 2, MAY 2,
YEAR 2005(A) YEAR 2005(A)
ENDED THROUGH ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
Net asset value at beginning of period $ 9.91 $ 10.00 $ 9.91 $ 10.00
------------ ------------ ------------ ------------
Net investment income 0.62 0.32 0.60 0.31
Net realized and unrealized loss on
investments (0.05) (0.09) (0.05) (0.09)
------------ ------------ ------------ ------------
Total from investment operations 0.57 0.23 0.55 0.22
------------ ------------ ------------ ------------
Less dividends:
From net investment income (0.62) (0.32) (0.60) (0.31)
------------ ------------ ------------ ------------
Net asset value at end of period $ 9.86 $ 9.91 $ 9.86 $ 9.91
============ ============ ============ ============
Total investment return 5.99% 2.10%(b) 5.73% 1.91%(b)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 6.37% 4.76%+ 6.12% 4.51%+
Net expenses 0.70% 0.84%+ 0.95% 1.09%+
Portfolio turnover rate 6% 11% 6% 11%
Net assets at end of period (in 000's) $51,569 $25,060 $232,856 $92,528
</Table>
<Table>
(a) Commencement of operations.
(b) Total return is not annualized.
+ Annualized.
</Table>
M-134 MainStay VP Floating Rate Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
MAINSTAY VP GOVERNMENT PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 4.06% 4.26% 5.63%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP GOVERNMENT LEHMAN BROTHERS GOVERNMENT
PORTFOLIO BOND INDEX
---------------------- --------------------------
12/31/96 10000 10000
10948 10959
11933 12038
11725 11770
13158 13328
14032 14292
15414 15935
15704 16310
16226 16878
16612 17325
12/31/06 17286 17927
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 3.80% 3.99% 5.36%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP GOVERNMENT LEHMAN BROTHERS GOVERNMENT
PORTFOLIO BOND INDEX
---------------------- --------------------------
12/31/96 10000 10000
10921 10959
11873 12038
11638 11770
13028 13328
13858 14292
15185 15935
15433 16310
15907 16878
16238 17325
12/31/06 16856 17927
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Lehman Brothers(R) Government Bond Index* 3.48% 4.64% 6.01%
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 4.23% and 5.61% for the Initial Class and 3.97%
and 5.35% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-135
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP GOVERNMENT PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
VALUE (BASED
ENDING ACCOUNT ON HYPOTHETICAL
BEGINNING VALUE (BASED ON EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT ACTUAL RETURNS PAID RETURN AND PAID
VALUE AND EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,046.05 $2.94 $1,022.15 $2.91
- ----------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,044.80 $4.23 $1,020.90 $4.18
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.57% for Initial Class and 0.82% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
M-136 MainStay VP Government Portfolio
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government & Federal Agencies 88.2
Short-Term Investments (collateral from securities lending 17.9
is 17.3%)
Mortgage-Backed Securities 4.5
Asset-Backed Securities 3.2
Corporate Bonds 1.7
Municipal Bond 0.5
Liabilities in Excess of Cash and Other Assets (16.0)
</Table>
See Portfolio of Investments on page M-140 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. United States Treasury Note, 4.375%, due
11/15/08
2. Federal National Mortgage Association (Mortgage
Pass-Through Security), 4.50%, due 7/1/18
3. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security), 5.50%, due 1/1/33
4. Federal National Mortgage Association (Mortgage
Pass-Through Security), 5.50%, due 6/1/33
5. United States Treasury Bond, 6.25%, due 5/15/30
6. Federal National Mortgage Association (Mortgage
Pass-Through Security), 4.50%, due 11/1/18
7. Federal Home Loan Mortgage Corporation (Mortgage
Pass-Through Security), 5.00%, due 6/1/33
8. Federal National Mortgage Association (Mortgage
Pass-Through Security), 5.00%, due 11/1/17
9. United States Treasury Bond, 6.875%, due 8/15/25
10. Government National Mortgage Association
(Mortgage Pass-Through Security), 5.00%, due
4/15/34
</Table>
www.mainstayfunds.com M-137
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Gary Goodenough and Joseph Portera of
MacKay Shields LLC.
HOW DID MAINSTAY VP GOVERNMENT PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING THE YEAR ENDED DECEMBER 31, 2006?
For the year ended December 31, 2006, MainStay VP Government Portfolio returned
4.06% for Initial Class shares and 3.80% for Service Class shares. Both share
classes outperformed the 2.81% return of the average Lipper* Variable Products
General U.S. Government Portfolio over the same period. Both share classes also
outperformed the 3.48% return of the Lehman Brothers(R) Government Bond Index,*
the Portfolio's broad-based securities-market index, for the year ended December
31, 2006.
WHAT ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
The Portfolio was positioned for higher rates, tighter spreads, lower
interest-rate volatility and a steeper Treasury yield-curve, and the market
moved in each of these directions except for the last. We positioned the
Portfolio by adjusting duration, sector weightings and issue selection. By
taking prudent weighting and issue-selection risks, we were able to strengthen
the Portfolio's risk-to-duration positioning, which was an important contributor
to Portfolio's total return in 2006.
HOW DID FEDERAL RESERVE ACTION AFFECT THE GOVERNMENT BOND MARKET IN 2006?
The Federal Open Market Committee (FOMC) raised the federal funds target rate by
25 basis points at each of its first four meetings in 2006, bringing the target
rate to 5.25% in June. (A basis point is one-hundredth of a percentage point.)
The monetary tightening trend, which began in 2004, was continued under the
leadership of Dr. Ben Bernanke, who succeeded Dr. Alan Greenspan as chairman of
the Federal Reserve Board in February 2006. Since June, the Federal Open Market
Committee has left the federal funds target rate unchanged, citing, among other
reasons, a need to observe the impact of prior rate increases on the economy.
Treasury yields rose moderately in 2006 for maturities of five years and longer.
Shorter maturities, were more volatile and tracked the federal funds target rate
as it moved 100 basis points higher. At year-end, the slope of the Treasury
yield curve remained relatively flat. This shape was due to a variety of
factors: projections of a cooler economy, Federal Reserve efforts to contain
inflation expectations and active buying of longer-dated assets by pension
funds, central banks and other liquidity buyers.
HOW WAS THE PORTFOLIO AFFECTED BY THESE FORCES?
Our analysis suggests that the Portfolio's exposure to longer-maturity Treasurys
was less than many of its peers. While this positioning might have detracted
from relative performance when the yield curve flattened between its two- and
30-year points, other Portfolio characteristics were more than able to
compensate. The Portfolio's duration posture, for example, made the Portfolio
less sensitive than the median portfolio to higher interest rates, which helped
relative performance. To introduce incremental yield, we maintained overweighted
positions in agency debentures and mortgage-backed securities at the expense of
underweighting Treasurys. We substituted higher-yielding subordinated agency
debt and callable agency debentures for senior, noncallable agency debt. The
callable agency debentures did especially well in an environment characterized
by lower interest-rate volatility.
HOW DID YOUR MORTGAGE-BACKED SECURITIES STRATEGY HELP THE PORTFOLIO'S
PERFORMANCE IN 2006?
During the year, the Portfolio benefited from our decision to overweight
mortgage-backed securities that are less prone to extension risk, or the risk
that duration will extend as interest rates rise. Examples include
mortgage-backed securities collateralized by 15-year loans and balloon loans.
The Portfolio also benefited from an underweight position in mortgage-backed
securities guaranteed by Ginnie Mae. We found the rich valuations of Ginnie Maes
difficult to justify relative to similar securities guaranteed by Fannie Mae and
Freddie Mac. Investors appeared to agree with our valuation concerns, and
overseas demand for Ginnie Maes also waned as the U.S. dollar weakened.
Investments in the Portfolio are not guaranteed, even though some of the
Portfolio's holdings are guaranteed by the U.S. govern
ment or its agencies or instrumentalities. The Portfolio may invest in
derivatives, such as mortgage-related and asset-backed securi
ties, which may increase the volatility of the Portfolio's net asset value and
may result in a loss to the Portfolio. The Portfolio's use of investment
practices such as mortgage dollar rolls and when-issued transactions also
presents certain risks.
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-138 MainStay VP Government Portfolio
We bought interest-only mortgage pass-through strips for the Portfolio to
capture a slowdown in housing price appreciation. Typically, when homeowners
feel less inclined to cash out equity in their homes, prepayments tend to
decrease, which can have a positive effect on interest-only pass-through strips.
To fund the trade, we sold the Portfolio's positions in higher-coupon (7% and
7.5%) mortgage-backed securities.
WERE THERE OTHER FACTORS THAT CONTRIBUTED TO THE PORTFOLIO'S RELATIVE
PERFORMANCE?
Spreads of asset-backed securities, commercial mortgage-backed securities and
investment-grade corporate bonds were well-contained during 2006. As a result,
the Portfolio's modestly overweighted positions in these sectors outperformed
duration-matched Treasurys that may have substituted for them in the median
fund.
Trading between sectors was limited in 2006, and the modest turnover held the
Portfolio's transaction costs in check.
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.
INFORMATION ABOUT MAINSTAY VP GOVERNMENT PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-139
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (98.1%)+
ASSET-BACKED SECURITIES (3.2%)
- ------------------------------------------------------------------------------
COMMERCIAL BANKS (0.3%)
Structured Asset Investment Loan Trust
Series 2006-3, Class A4
5.41%, due 6/25/36 (a) $ 810,000 $ 810,823
------------
CONSUMER LOANS (0.7%)
Atlantic City Electric Transition Funding LLC
Series 2002-1, Class A4
5.55%, due 10/20/23 1,650,000 1,684,493
------------
CREDIT CARDS (0.3%)
Chase Issuance Trust
Series 2006-C4, Class C4
5.64%, due 1/15/14 (a)(b) 855,000 855,000
------------
DIVERSIFIED FINANCIAL SERVICES (1.1%)
Countrywide Asset-Backed Certificates
Series 2005-13, Class 3AV1
5.44%, due 4/25/36 (a) 556,080 556,156
Massachusetts RRB Special Purpose Trust
Series 2001-1, Class A
6.53%, due 6/1/15 2,084,787 2,178,777
------------
2,734,933
------------
ELECTRIC (0.2%)
Public Service New Hampshire Funding LLC
Pass-Through Certificates
Series 2002-1, Class A
4.58%, due 2/1/10 500,975 498,810
------------
HOME EQUITY (0.6%)
Citicorp Residential Mortgage Securities, Inc.
Series 2006-3, Class A3
5.61%, due 11/25/36 665,000 664,752
Series 2006-1, Class A3
5.706%, due 7/25/36 900,000 901,537
------------
1,566,289
------------
Total Asset-Backed Securities
(Cost $8,021,889) 8,150,348
------------
CORPORATE BONDS (1.7%)
- ------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.1%)
Residential Capital Corp.
6.50%, due 4/17/13 340,000 344,568
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRIC (0.7%)
Kiowa Power Partners LLC
Series B
5.737%, due 3/30/21 (c) $ 2,000,000 $ 1,936,240
------------
INSURANCE (0.4%)
Fund American Cos., Inc.
5.875%, due 5/15/13 1,000,000 994,025
------------
MEDIA (0.5%)
TCI Communications, Inc.
8.75%, due 8/1/15 1,060,000 1,253,752
------------
Total Corporate Bonds
(Cost $4,659,107) 4,528,585
------------
MORTGAGE-BACKED SECURITIES (4.5%)
- ------------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (4.5%)
Banc of America Commercial Mortgage, Inc.
Series 2005-5, Class A2
5.001%, due 10/10/45 1,630,000 1,616,851
Citigroup Commercial Mortgage Trust
Series 2005-EMG, Class A1
4.154%, due 9/20/51 (c) 1,071,309 1,051,917
Series 2004-C2, Class A5
4.733%, due 10/15/41 (c) 3,000,000 2,890,033
Citigroup Mortgage Loan Trust, Inc.
Series 2006-AR6, Class 1A1
6.096%, due 8/25/36 (a) 1,917,916 1,921,522
Commercial Mortgage Pass-Through Certificates
Series 2006-C7, Class A4
5.769%, due 6/10/46 530,000 549,207
Credit Suisse Mortgage Capital Certificates
Series 2006-C4, Class AJ
5.538%, due 9/15/39 (a) 1,320,000 1,329,113
</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.
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.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MORTGAGE-BACKED SECURITIES (CONTINUED)
- ------------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (CONTINUED)
Four Times Square Trust
Series 2006-4TS, Class A
5.401%, due 12/13/28 (c) $ 530,000 $ 523,735
GS Mortgage Securities Corp. II
Series 2001-ROCK, Class A1
6.22%, due 5/3/18 (c) 1,647,004 1,674,929
------------
Total Mortgage-Backed Securities
(Cost $11,735,645) 11,557,307
------------
MUNICIPAL BOND (0.5%)
- ------------------------------------------------------------------------------
TEXAS (0.5%)
Harris County Texas Industrial Development Corp.
Solid Waste Deer Park
5.683%, due 3/1/23 (a) 1,280,000 1,279,936
------------
Total Municipal Bond
(Cost $1,295,507) 1,279,936
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (88.2%)
- ------------------------------------------------------------------------------
FANNIE MAE
(COLLATERALIZED MORTGAGE OBLIGATIONS) (0.9%)
Series 2006-B1, Class AB
6.00%, due 6/25/16 2,383,249 2,388,261
------------
FANNIE MAE GRANTOR TRUST
(COLLATERALIZED MORTGAGE OBLIGATIONS) (2.2%)
Series 2003-T1, Class B
4.491%, due 11/25/12 2,660,000 2,574,873
Series 1998-M6, Class A2
6.32%, due 8/15/08 (d) 3,099,560 3,134,189
------------
5,709,062
------------
FANNIE MAE STRIP
(COLLATERALIZED MORTGAGE OBLIGATIONS) (0.2%)
Series 360, Class 2, IO
5.00%, due 8/1/35 (e) 2,315,621 555,489
Series 361, Class 2, IO
6.00%, due 10/1/35 (e) 494,093 96,164
------------
651,653
------------
FEDERAL HOME LOAN BANK (3.3%)
5.125%, due 8/14/13 3,725,000 3,755,739
5.50%, due 7/15/36 4,600,000 4,799,888
------------
8,555,627
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FEDERAL HOME LOAN MORTGAGE CORPORATION (3.4%)
3.625%, due 9/15/08 $ 3,530,000 $ 3,448,468
4.75%, due 11/17/15 1,395,000 1,372,133
5.25%, due 11/5/12 4,100,000 4,059,594
------------
8,880,195
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (12.7%)
3.00%, due 8/1/10 1,961,307 1,885,184
4.319%, due 3/1/35 (a) 186,458 183,562
5.00%, due 1/1/20 3,741,038 3,679,592
V 5.00%, due 6/1/33 7,304,576 7,062,155
5.00%, due 8/1/33 3,552,490 3,433,793
5.00%, due 5/1/36 2,743,591 2,646,994
5.50%, due 1/1/21 3,039,930 3,037,460
V 5.50%, due 1/1/33 10,890,448 10,786,277
------------
32,715,017
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (36.5%)
3.354%, due 4/1/34 (a) 2,493,217 2,501,678
V 4.50%, due 7/1/18 11,268,951 10,897,634
V 4.50%, due 11/1/18 8,186,386 7,916,642
V 5.00%, due 11/1/17 6,998,997 6,902,350
5.00%, due 9/1/20 799,661 786,149
5.00%, due 1/1/36 5,758,164 5,560,900
5.00%, due 2/1/36 2,603,747 2,514,548
5.50%, due 11/1/17 4,615,706 4,626,721
5.50%, due 6/1/19 2,555,738 2,557,577
5.50%, due 11/1/19 2,499,750 2,501,549
5.50%, due 4/1/21 5,900,304 5,899,262
V 5.50%, due 6/1/33 9,388,606 9,292,901
5.50%, due 12/1/33 4,880,348 4,830,599
5.50%, due 6/1/34 2,587,485 2,559,745
6.00%, due 12/1/16 355,930 361,228
6.00%, due 1/1/33 1,530,253 1,544,218
6.00%, due 3/1/33 1,971,613 1,988,237
6.00%, due 9/1/34 221,710 223,372
6.00%, due 9/1/35 3,620,371 3,646,199
6.00%, due 10/1/35 511,784 515,361
6.00%, due 4/1/36 5,780,674 5,821,077
6.00%, due 6/1/36 6,083,721 6,124,913
6.00%, due 11/1/36 3,844,335 3,870,364
6.50%, due 10/1/31 525,473 537,957
6.50%, due 7/1/32 260,916 266,896
------------
94,248,077
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(COLLATERALIZED MORTGAGE OBLIGATION) (1.3%)
Series 2006-32, Class A
5.079%, due 1/16/30 3,267,445 3,252,443
------------
</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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- ------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (4.2%)
V 5.00%, due 4/15/34 $ 6,533,765 $ 6,358,670
6.00%, due 8/15/32 1,142,849 1,160,516
6.00%, due 10/15/32 1,590,674 1,615,062
6.50%, due 7/15/28 198,222 203,968
6.50%, due 8/15/28 274,915 282,882
6.50%, due 7/15/32 1,147,261 1,178,691
------------
10,799,789
------------
HVIDE VAN OMMEREN TANKERS LLC (1.8%)
Series I
7.54%, due 12/14/23 (f) 2,299,000 2,386,339
Series II
7.54%, due 12/14/23 (f) 2,279,000 2,365,579
------------
4,751,918
------------
OVERSEAS PRIVATE INVESTMENT CORP. (1.2%)
5.142%, due 12/15/23 (f) 3,100,000 3,062,211
------------
TENNESSEE VALLEY AUTHORITY (1.6%)
4.65%, due 6/15/35 (f) 4,395,000 4,034,900
------------
UNITED STATES TREASURY BONDS (6.8%)
V 6.25%, due 5/15/30 (g) 6,660,000 7,933,725
V 6.875%, due 8/15/25 (g) 5,305,000 6,567,426
8.75%, due 8/15/20 (g) 2,160,000 2,986,200
------------
17,487,351
------------
UNITED STATES TREASURY NOTES (12.1%)
2.00%, due 7/15/14 T.I.P. (h) 3,213,420 3,118,900
3.875%, due 2/15/13 (g) 880,000 842,222
V 4.375%, due 11/15/08 (g) 27,550,000 27,328,305
------------
31,289,427
------------
Total U.S. Government & Federal Agencies
(Cost $229,609,058) 227,825,931
------------
Total Long-Term Bonds
(Cost $255,321,206) 253,342,107
------------
SHORT-TERM INVESTMENTS (17.9%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (4.0%)
Barton Capital LLC
5.298%, due 1/4/07 (i) 829,754 829,754
Charta LLC
5.314%, due 1/11/07 (i) 850,040 850,040
Ciesco, Inc.
5.305%, due 1/10/07 (i) 1,109,375 1,109,375
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Compass Securitization LLC
5.324%, due 1/18/07 (i) $ 1,133,387 $ 1,133,387
Fairway Finance Corp.
5.301%, due 1/8/07 (i) 850,040 850,040
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (i) 838,382 838,382
Greyhawk Funding LLC
5.305%, due 1/5/07 (i) 831,374 831,374
Jupiter Securitization Corp.
5.324%, due 1/18/07 (i) 850,040 850,040
Liberty Street Funding Co.
5.325%, due 1/29/07 (i) 283,347 283,347
Old Line Funding LLC
5.303%, due 1/9/07 (i) 1,110,617 1,110,617
Ranger Funding LLC
5.308%, due 1/30/07 (i) 850,040 850,040
Sheffield Receivables Corp.
5.336%, due 1/16/07 (i) 850,040 850,040
------------
Total Commercial Paper
(Cost $10,386,436) 10,386,436
------------
FEDERAL AGENCY (0.6%)
Federal Home Loan Bank
4.80%, due 1/3/07 1,395,000 1,394,628
------------
Total Federal Agency
(Cost $1,394,628) 1,394,628
------------
<Caption>
SHARES
INVESTMENT COMPANY (2.3%)
BGI Institutional Money Market Fund (i) 5,918,945 5,918,945
------------
Total Investment Company
(Cost $5,918,945) 5,918,945
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $283,517
(Collateralized by various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$280,649 and a Market Value
of $293,377) (i) $ 283,347 283,347
------------
Total Repurchase Agreement
(Cost $283,347) 283,347
------------
</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.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
TIME DEPOSITS (10.9%)
Abbey National PLC
5.34%, due 1/2/07 (i) $ 3,400,160 $ 3,400,160
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (i) 2,266,773 2,266,773
Bank of America Corp.
5.27%, due 1/19/07 (a)(i) 2,266,773 2,266,773
Bank of Montreal
5.30%, due 1/26/07 (i) 1,416,733 1,416,733
Barclays
5.32%, due 1/18/07 (i) 1,870,088 1,870,088
Calyon
5.31%, due 2/12/07 (i) 2,266,773 2,266,773
Citigroup
5.325%, due 3/22/07 (i) 1,983,427 1,983,427
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (i) 2,153,435 2,153,435
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (i) 2,266,773 2,266,773
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (i) 2,096,765 2,096,765
Rabobank Nederland
5.29%, due 3/6/07 (i) 1,700,080 1,700,080
Standard Chartered Bank
5.29%, due 1/10/07 (i) 2,266,773 2,266,773
UBS AG
5.285%, due 1/12/07 (i) 2,266,772 2,266,772
------------
Total Time Deposits
(Cost $28,221,325) 28,221,325
------------
Total Short-Term Investments
(Cost $46,204,681) 46,204,681
------------
Total Investments
(Cost $301,525,887) (j) 116.0% 299,546,788(k)
Liabilities in Excess of
Cash and Other Assets (16.0) (41,207,494)
----------- ------------
Net Assets 100.0% $258,339,294
=========== ============
</Table>
<Table>
(a) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(b) Fair valued security. The total market value of these
securities at December 31, 2006 is $855,000, which reflects
0.3% of the Portfolio's net assets.
(c) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(d) ACES--Alternative Credit Enhancement Structure.
(e) Collateralized Mortgage Obligation Interest Only Strip--Pays
a fixed or variable rate of interest based on mortgage loans
or mortgage pass-through securities. The principal amount of
the underlying pool represents the notional amount on which
the current interest is calculated. The value of these
stripped securities may be particularly sensitive to changes
in prevailing interest rates and are typically more
sensitive to changes in prepayment rates than traditional
mortgage-backed securities.
(f) United States Government Guaranteed Security.
(g) Represents a security, or a portion thereof, which is out on
loan.
(h) Treasury Inflation Protected Security--Pays a fixed rate of
interest on a principal amount that is continuously adjusted
for inflation based on the Consumer Price Index-Urban
Consumers.
(i) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(j) The cost for federal income tax purposes is $301,537,254.
(k) At December 31, 2006, net unrealized depreciation was
$1,990,466 based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized appreciation
for all investments on which there was an excess of market
value over cost of $1,318,802 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $3,309,268.
</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
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $301,525,887) including $43,479,723
market value of securities loaned $299,546,788
Cash 2,194,952
Receivables:
Dividends and interest 1,611,458
Fund shares sold 86,466
Other assets 795
-------------
Total assets 303,440,459
-------------
LIABILITIES:
Securities lending collateral 44,810,053
Payables:
Fund shares redeemed 72,463
Adviser (See Note 3) 66,597
Professional fees 44,853
Administrator (See Note 3) 44,398
Shareholder communication 43,036
NYLIFE Distributors (See Note 3) 14,584
Custodian 1,633
Directors 383
Accrued expenses 3,165
-------------
Total liabilities 45,101,165
-------------
Net assets $258,339,294
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 174,436
Service Class 63,919
Additional paid-in capital 254,194,657
Accumulated undistributed net investment
income 12,142,051
Accumulated net realized loss on investments (6,256,670)
Net unrealized depreciation on investments (1,979,099)
-------------
Net assets $258,339,294
=============
INITIAL CLASS
Net assets applicable to outstanding shares $189,235,390
=============
Shares of capital stock outstanding 17,443,617
=============
Net asset value per share outstanding $ 10.85
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 69,103,904
=============
Shares of capital stock outstanding 6,391,948
=============
Net asset value per share outstanding $ 10.81
=============
</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.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $13,620,520
Income from securities loaned--net 26,608
------------
Total income 13,647,128
------------
EXPENSES:
Advisory (See Note 3) 815,875
Administration (See Note 3) 543,916
Distribution and service--Service Class (See
Note 3) 159,486
Professional fees 90,574
Shareholder communication 61,671
Custodian 17,141
Directors 15,400
Miscellaneous 15,310
------------
Total expenses 1,719,373
------------
Net investment income 11,927,755
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (1,337,433)
Net change in unrealized depreciation on
investments (202,229)
------------
Net realized and unrealized loss on investments (1,539,662)
------------
Net increase in net assets resulting from
operations $10,388,093
============
</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
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 11,927,755 $ 11,262,012
Net realized gain (loss) on
investments (1,337,433) 110,787
Net change in unrealized
depreciation on investments (202,229) (4,415,424)
---------------------------
Net increase in net assets
resulting from operations 10,388,093 6,957,375
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (1,954,291) (7,357,565)
Service Class (591,701) (1,752,105)
---------------------------
Total dividends to
shareholders (2,545,992) (9,109,670)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 7,676,692 11,001,160
Service Class 16,484,058 23,621,763
Net asset value of shares issued to
shareholders in reinvestment of dividends:
Initial Class 1,954,291 7,357,565
Service Class 591,701 1,752,105
---------------------------
26,706,742 43,732,593
Cost of shares redeemed:
Initial Class (57,832,391) (61,155,695)
Service Class (8,129,342) (6,431,249)
---------------------------
(65,961,733) (67,586,944)
Decrease in net assets
derived from capital share
transactions (39,254,991) (23,854,351)
---------------------------
Net decrease in net assets (31,412,890) (26,006,646)
NET ASSETS:
Beginning of year 289,752,184 315,758,830
---------------------------
End of year $258,339,294 $289,752,184
===========================
Accumulated undistributed net
investment income at end of
year $ 12,142,051 $ 2,545,057
===========================
</Table>
M-146 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.
This page intentionally left blank
www.mainstayfunds.com M-147
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 10.53 $ 10.63 $ 10.73 $ 11.05 $ 10.35
---------- -------- -------- -------- --------
Net investment income 0.47(b) 0.40(b) 0.45 0.36(b) 0.31
Net realized and unrealized gain (loss) on
investments (0.04) (0.15) (0.09) (0.15) 0.71
---------- -------- -------- -------- --------
Total from investment operations 0.43 0.25 0.36 0.21 1.02
---------- -------- -------- -------- --------
Less dividends:
From net investment income (0.11) (0.35) (0.46) (0.53) (0.32)
---------- -------- -------- -------- --------
Net asset value at end of period $ 10.85 $ 10.53 $ 10.63 $ 10.73 $ 11.05
========== ======== ======== ======== ========
Total investment return 4.06% 2.38%(c) 3.33% 1.88% 9.85%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 4.45% 3.75% 3.63% 3.25% 3.94%
Net expenses 0.57% 0.43% 0.59% 0.59% 0.59%
Expenses (before reimbursement) 0.57% 0.56% 0.59% 0.59% 0.59%
Portfolio turnover rate 83%(f) 171%(f) 113% 106% 146%
Net assets at end of period (in 000's) $189,235 $231,485 $275,674 $359,332 $432,816
</Table>
<Table>
(a) Commencement of operations.
(b) Per share data based on average shares outstanding during the period.
(c) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
2.23% and 1.97% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(d) Total Return is not annualized.
(e) Represents income earned for the year by the Class share less service fee of 0.25%.
(f) The portfolio turnover rate not including dollar rolls is 46% and 50% for the year ended
December 31, 2006 and year ended December 31, 2005, respectively.
+ Annualized.
</Table>
M-148 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.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
- -----------------------------------------------------------------------------
JUNE 4,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 10.50 $ 10.61 $ 10.72 $ 11.42
------- ------- ------- ------------
0.45(b) 0.38(b) 0.44 0.21(b)
(0.05) (0.16) (0.11) (0.39)
------- ------- ------- ------------
0.40 0.22 0.33 (0.18)
------- ------- ------- ------------
(0.09) (0.33) (0.44) (0.52)
------- ------- ------- ------------
$ 10.81 $ 10.50 $ 10.61 $ 10.72
======= ======= ======= ============
3.80% 2.08%(c) 3.07% (1.63%)(d)
4.20% 3.50% 3.38% 3.00%+(e)
0.82% 0.68% 0.84% 0.84%+
0.82% 0.81% 0.84% 0.84%+
83%(f) 171%(f) 113% 106%
$69,104 $58,267 $40,085 $13,521
</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
MAINSTAY VP GROWTH ALLOCATION PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 12.42%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
GROWTH ALLOCATION GROWTH ALLOCATION
PORTFOLIO S&P 500 INDEX MSCI EAFE INDEX BENCHMARK
----------------- ------------- --------------- -----------------
2/13/06 10000 10000 10000 10000
12/31/06 11242 11386 12152 11538
</Table>
SERVICE CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 12.18%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
GROWTH ALLOCATION GROWTH ALLOCATION
PORTFOLIO S&P 500 INDEX MSCI EAFE INDEX BENCHMARK
----------------- ------------- --------------- -----------------
2/13/06 10000 10000 10000 10000
12/31/06 11218 11386 12152 11538
</Table>
<Table>
<Caption>
SINCE
BENCHMARK PERFORMANCE INCEPTION
Growth Allocation Benchmark* 15.38%
S&P 500(R) Index* 13.86
MSCI EAFE(R) Index* 21.52
</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.
* 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-150 MainStay VP Growth Allocation Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP GROWTH ALLOCATION
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,118.10 $1.28 $1,023.80 $1.22
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,116.95 $2.61 $1,022.55 $2.50
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.24% for Initial Class and 0.49% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period). The expense ratio does not include the
fees and expenses associated with investments made in Underlying Funds; such
fees and expenses are reflected as a reduction in the Portfolio's gross
return.
www.mainstayfunds.com M-151
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Affiliated Investment Companies 99.7
Cash and Other Assets, Less Liabilities 0.3
</Table>
See Portfolio of Investments on page M-155 for specific holdings within these
categories.
M-152 MainStay VP Growth Allocation Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Tony Elavia of New York Life Investment
Management LLC.
HOW DID MAINSTAY VP GROWTH ALLOCATION PORTFOLIO PERFORM RELATIVE TO ITS PEERS
AND ITS BENCHMARK FROM FEBRUARY 13 THROUGH DECEMBER 31, 2006?
From February 13 through December 31, 2006, MainStay VP Growth Allocation
Portfolio returned 12.42% for Initial Class shares and 12.18% for Service Class
shares. Both share classes outperformed the 11.75% return of the average Lipper*
Variable Products Multi-Cap Core Portfolio(1) for the same period. Both share
classes underperformed the 13.86% return of the S&P 500(R) Index,* the
Portfolio's broad-based securities-market index, as well as the 15.38% return of
the Growth Allocation Benchmark* from February 13 through December 31, 2006. The
Growth Allocation Benchmark is a blended benchmark designed to represent the
asset classes in which the Portfolio invests.
WERE THERE ANY CHANGES IN THE WAY THE PORTFOLIO WAS MANAGED DURING THE REPORTING
PERIOD?
During the reporting period, Devon McCormick resigned as portfolio manager of
the Portfolio. Also during the reporting period, the Board of Directors
authorized MainStay VP Asset Allocation Portfolios to invest in affiliated
MainStay mutual funds as underlying investment options.
HOW WAS THE PORTFOLIO ALLOCATED AMONG THE UNDERLYING INVESTMENT OPTIONS?
Throughout the summer and into the fall, we emphasized underlying investment
options with larger average capitalizations and a stronger growth orientation.
We believed that the market's capitalization and style preferences had become a
bit distorted in recent years. During the last six months of 2006, the style
bias had little impact on the performance of the Portfolio, but the orientation
toward larger capitalizations began to benefit returns.
WERE THERE ANY SPECIFIC CHANGES IN THE PORTFOLIO'S ALLOCATIONS DURING THE
REPORTING PERIOD?
One recent change has been a gradual migration out of MainStay VP Common Stock
Portfolio and into MainStay ICAP Select Equity Portfolio,(2) MainStay VP Large
Cap Growth Portfolio and MainStay Growth Equity Fund. Although the shift
detracted from performance through December 31, 2006, the overall impact was
slight.
We also elected to split the Portfolio's exposure to international equities
evenly between MainStay VP International Portfolio and MainStay ICAP
International Fund. Since MainStay ICAP International Fund did not become
available until September 1, 2006,
1. Performance for Initial Class and Service Class shares and the Portfolio's
benchmark, the S&P 500(R) Index,* as well as the Growth Allocation
Benchmark,* are calculated from inception (2/13/06) through 12/31/06.
Performance for the average Lipper* Variable Products Multi-Cap Core
Portfolio is calculated from 2/8/06 through 12/31/06.
2. During the reporting period, The Dreyfus Corporation was terminated as
subadvisor of MainStay VP Basic Value Portfolio and replaced by Institutional
Capital LLC (ICAP). Effective 11/10/06, MainStay VP Basic Value Portfolio's
name was changed to MainStay VP ICAP Select Equity Portfolio.
The Portfolio's performance depends on the advisor's skill in determining the
asset-class allocations and the mix of underlying investment options as well as
the performance of these underlying investment options. The underlying
investment options' performance may be lower than the performance of the asset
class or classes the underlying investment options were selected to represent.
The Portfolio is indirectly subject to the investment risks of each underlying
investment option held. Principal risks of the underlying investment options are
described below.
MainStay VP Growth Allocation Portfolio is a "fund of funds" that invests in
other MainStay VP Portfolios and other MainStay mutual funds. The cost of
investing in the Portfolio may be higher than the cost of investing in a mutual
fund that invests directly in individual stocks and bonds. By investing in the
Portfolio, clients will indirectly bear fees and expenses charged by the
underlying investment options in which the Portfolio invests in addition to the
Portfolio's direct fees and expenses. In addition, the use of a fund-of-funds
structure could affect the timing, amount and character of distributions to the
client and may increase taxes payable by the client.
The Portfolio may invest more than 25% of its assets in one underlying
investment option, which may significantly affect the net asset value of the
Portfolio.
- - Stocks and bonds can decline because of adverse issuer, market, regulatory or
economic developments.
- - The principal risk of growth stocks is that investors expect growth companies
to increase their earnings at a certain rate that is generally higher than the
rate expected for nongrowth companies. If these expectations are not met, the
market price of the stock may decline significantly, even if earnings showed
an absolute increase.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
* 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-153
the impact of the move, though negative, has been very mild.
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS HELD BY THE
PORTFOLIO HAD THE HIGHEST TOTAL RETURNS AND WHICH HAD THE LOWEST?
In terms of total return, MainStay VP International Equity Portfolio was by far
the best-performing underlying investment option held by the Portfolio. MainStay
VP ICAP Select Equity Portfolio followed at some distance, and MainStay VP
Income & Growth Portfolio was the third-best performer.
Among underlying investment options held by the Portfolio, MainStay VP Small Cap
Growth Portfolio had the lowest total return, followed by MainStay VP Developing
Growth Portfolio and MainStay VP Capital Appreciation Portfolio.
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS MADE THE
GREATEST POSITIVE CONTRIBUTIONS TO THE PORTFOLIO'S PERFORMANCE AND WHICH
DETRACTED?
The Portfolio's position in MainStay VP International Equity Portfolio was the
strongest positive contributor to the Portfolio's performance during the
reporting period. A sizable average allocation to MainStay VP Common Stock
Portfolio also had a positive impact on the Portfolio's performance on an
absolute basis and relative to the Growth Allocation Benchmark.*
Although none of the Portfolio's underlying investment options generated
negative returns, a position in MainStay VP Large Cap Growth Portfolio was the
most noteworthy detractor from the Portfolio's performance relative to the
Growth Allocation Benchmark.*
- - High-yield securities carry higher risks, and some of the underlying
investment options' investments have speculative characteristics and present a
greater risk of loss than higher-quality debt securities. High-yield
securities can also be subject to greater price volatility.
- - Stocks of small companies may be subject to higher price volatility,
significantly lower trading volume and greater spreads between bid and ask
prices than stocks of larger companies. Furthermore, small-cap companies may
be more vulnerable to adverse business or market developments and may have
product lines that are more limited than those of larger-capitalization
companies.
- - There are additional risks associated with investing in mid-cap securities.
Stocks of mid-cap companies may be more volatile and less liquid than the
securities of larger companies.
- - 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.
- - AN INVESTMENT IN THE UNDERLYING CASH MANAGEMENT PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE UNDERLYING
CASH MANAGEMENT PORTFOLIO SEEKS TO MAINTAIN A VALUE OF $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO. THIS COULD OCCUR BECAUSE
OF HIGHLY UNUSUAL MARKET CONDITIONS OR A SUDDEN COLLAPSE IN THE
CREDITWORTHINESS OF A COMPANY ONCE BELIEVED TO BE AN ISSUER OF HIGH-QUALITY,
SHORT-TERM SECURITIES.
Before making an investment in the Portfolio, you should consider all the risks
associated with it.
Not all investment divisions are available under all policies.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP GROWTH ALLOCATION PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-154 MainStay VP Growth Allocation Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
AFFILIATED INVESTMENT COMPANIES (99.2%)+
- ---------------------------------------------------------------------------
EQUITY FUNDS (99.2%)
MainStay Growth Equity Fund Class I (a) 215,705 $ 2,407,267
MainStay ICAP Equity Fund Class I 114,737 5,166,600
MainStay ICAP International Fund Class I 207,628 8,116,185
MainStay VP Capital Appreciation Portfolio Initial
Class 131,045 3,178,798
MainStay VP Common Stock Portfolio Initial Class 840,882 20,606,143
MainStay VP ICAP Select Equity Portfolio Initial
Class (a) 1,016,782 13,985,539
MainStay VP International Equity Portfolio Initial
Class 436,091 8,145,924
MainStay VP Large Cap Growth Portfolio Initial
Class (a) 1,458,727 18,078,428
MainStay VP S&P 500 Index Portfolio Initial Class 53,291 1,545,795
-----------
Total Affiliated Investment Companies
(Cost $76,668,520)(b) 99.2% 81,230,679(c)
Cash and Other Assets,
Less Liabilities 0.8 675,542
--------- -----------
Net Assets 100.0% $81,906,221
========= ===========
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
(a) The Portfolio's ownership exceeds 5% of the outstanding
shares of the underlying Portfolio/Fund.
(b) The cost for federal income tax purposes is $76,975,067.
(c) At December 31, 2006 net unrealized appreciation was
$4,255,612, 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 $4,438,835 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $183,223.
</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
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in affiliated investment companies,
at value (identified cost $76,668,520) $81,230,679
Cash 632,613
Receivables:
Fund shares sold 812,055
Interest 1,425
Unamortized offering costs 1,633
Other assets 3
------------
Total assets 82,678,408
------------
LIABILITIES:
Payables:
Investment securities purchased 632,613
Fund shares redeemed 89,668
Professional fees 20,227
NYLIFE Distributors (See Note 3) 14,923
Shareholder communication 7,876
Custodian 1,988
Manager (See Note 3) 1,792
Directors 77
Accrued expenses 3,023
------------
Total liabilities 772,187
------------
Net assets $81,906,221
============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share) 200
million shares authorized:
Initial Class $ 6,590
Service Class 67,303
Additional paid-in capital 76,692,334
Undistributed net investment income 5,818
Undistributed net realized gain on investments 572,017
Net unrealized appreciation on investments 4,562,159
------------
Net assets $81,906,221
============
INITIAL CLASS
Net assets applicable to outstanding shares $ 7,312,217
============
Shares of capital stock outstanding 658,991
============
Net asset value per share outstanding $ 11.10
============
SERVICE CLASS
Net assets applicable to outstanding shares $74,594,004
============
Shares of capital stock outstanding 6,730,330
============
Net asset value per share outstanding $ 11.08
============
</Table>
M-156 MainStay VP Growth Allocation 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 PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividend distributions from affiliated
investment companies $ 393,462
Interest 10,136
-----------
Total income 403,598
-----------
EXPENSES:
Distribution and service--Service Class (See
Note 3) 76,126
Professional fees 32,897
Offering 16,512
Custodian 16,316
Shareholder communication 8,899
Directors 1,833
Miscellaneous 3,322
-----------
Total expenses 155,905
-----------
Net investment income 247,693
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on:
Affiliated investment company transactions 187,353
Capital gain distributions from affiliated
investment companies 1,110,588
-----------
Net realized gain on investments 1,297,941
-----------
Net unrealized appreciation on investments 4,562,159
-----------
Net realized and unrealized gain on investments 5,860,100
-----------
Net increase in net assets resulting from
operations $6,107,793
===========
</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 CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
<Caption>
2006
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 247,693
Net realized gain on investments 1,297,941
Net unrealized appreciation on investments 4,562,159
-----------
Net increase in net assets resulting from
operations 6,107,793
-----------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (52,032)
Service Class (450,441)
From net realized gain on investments:
Initial Class (42,861)
Service Class (433,977)
-----------
Total dividends and distributions to
shareholders (979,311)
-----------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 6,898,131
Service Class 71,531,868
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 94,893
Service Class 884,418
-----------
79,409,310
Cost of shares redeemed:
Initial Class (168,260)
Service Class (2,463,311)
-----------
(2,631,571)
Increase in net assets derived from capital
share transactions 76,777,739
-----------
Net increase in net assets 81,906,221
NET ASSETS:
Beginning of period --
-----------
End of period $81,906,221
===========
Undistributed net investment income at end of
period $ 5,818
===========
</Table>
M-158 MainStay VP Growth Allocation 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
------------- -------------
FEBRUARY 13, FEBRUARY 13,
2006(A) 2006(A)
THROUGH THROUGH
DECEMBER 31, DECEMBER 31,
2006 2006
Net asset value at beginning of period $ 10.00 $ 10.00
------------- -------------
Net investment income 0.08(b) 0.07(b)
Net realized and unrealized gain on
investments 1.17 1.15
------------- -------------
Total from investment operations 1.25 1.22
------------- -------------
Less dividends and distributions:
From net investment income (0.08) (0.07)
From net realized gain on investments (0.07) (0.07)
------------- -------------
Total dividends and distributions (0.15) (0.14)
------------- -------------
Net asset value at end of period $ 11.10 $ 11.08
============= =============
Total investment return 12.42%(c) 12.18%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 0.90%+ 0.72%+
Net expenses 0.24%+ 0.49%+
Portfolio turnover rate 61% 61%
Net assets at end of period (in 000's) $ 7,312 $74,594
</Table>
<Table>
(a) Commencement of operations.
(b) Per share data based on average shares outstanding during the period.
(c) Total return is not annualized.
+ 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-159
MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 12.04% 12.59% 8.87%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP HIGH YIELD
CORPORATE BOND PORTFOLIO CREDIT SUISSE HIGH YIELD INDEX
------------------------ ------------------------------
12/31/96 10000 10000
11303 11263
11604 11328
13094 11700
12326 11091
12932 11734
13197 12098
17997 15478
20286 17328
20883 17720
12/31/06 23397 19832
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 11.76% 12.31% 8.61%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP HIGH YIELD
CORPORATE BOND PORTFOLIO CREDIT SUISSE HIGH YIELD INDEX
------------------------ ------------------------------
12/31/96 10000 10000
11276 11263
11550 11328
13003 11700
12213 11091
12783 11734
13017 12098
17708 15478
19911 17328
20441 17720
12/31/06 22845 19832
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Credit Suisse High Yield Index* 11.91% 11.07% 7.09%
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 12.57% and 8.86% for the Initial Class and
12.30% and 8.60% for the Service Class for the five-year and ten-year
periods, respectively.
2. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-160 MainStay VP High Yield Corporate Bond Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP HIGH YIELD CORPORATE BOND
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
VALUE (BASED
ENDING ACCOUNT ON HYPOTHETICAL
BEGINNING VALUE (BASED ON EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT ACTUAL RETURNS PAID RETURN AND PAID
VALUE AND EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,084.90 $2.94 $1,022.20 $2.85
- ----------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,083.65 $4.25 $1,020.95 $4.13
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.56% for Initial Class, 0.81% for Service Class) multiplied by the average
account value over the period, divided by 365 and multiplied by 184 (to
reflect the one-half year period).
www.mainstayfunds.com M-161
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Corporate Bonds 66.7
Short-Term Investments (collateral from securities lending 14.4
is 3.5%)
Foreign Bonds 7.2
Loan Assignments & Participations 6.7
Convertible Bonds 1.8
Preferred Stocks 1.4
Yankee Bonds 1.4
Common Stocks 0.9
Asset-Backed Securities 0.7
Convertible Preferred Stocks 0.5
Warrants* 0.0
Liabilities in Excess of Cash and Other Assets (1.7)
</Table>
* Less than one tenth of a percent.
See Portfolio of Investments on page M-165 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. General Motors Acceptance Corp., 8.00%, due
11/1/31
2. Calpine Corp., 8.50%, due 7/15/10
3. INVISTA, 9.25%, due 5/1/12
4. Sovereign Real Estate Investment Corp., 12.00%
5. General Motors Acceptance Corp., 6.75%, due
12/1/14
6. Goodyear Tire & Rubber Co. (The), 11.25%, due
3/1/11
7. AES Corp. (The), 9.00%, due 5/15/15
8. American Real Estate Partners, L.P./American
Real Estate Finance Corp., 7.125%, due 2/15/13
9. Jean Coutu Group PJC, Inc. (The), 8.50%, due
8/1/14
10. Nortel Networks Corp., 4.25%, due 9/1/08
</Table>
M-162 MainStay VP High Yield Corporate Bond Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager J. Matthew Philo, CFA, of MacKay Shields
LLC.
HOW DID MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO PERFORM RELATIVE TO ITS
PEERS AND ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP High Yield Corporate Bond
Portfolio returned 12.04% for Initial Class shares and 11.76% for Service Class
shares. Both share classes outperformed the 9.96% return of the average Lipper*
Variable Products High Current Yield Portfolio for the same period. Initial
Class shares outperformed--and Service Class shares underperformed--the 11.91%
return of the Credit Suisse High Yield Index,* the Portfolio's broad-based
securities-market index, for the year ended December 31, 2006.
WHAT ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
The Portfolio's performance resulted from positive credit selection, which was
partially offset by our defensive positioning in relatively higher-quality
credits and by a higher-than-normal cash position throughout the year. The
Portfolio benefited from its holdings in airline bonds, which showed dramatic
performance in the last two months of 2006.
HOW DID YOU POSITION THE PORTFOLIO DURING 2006?
Since we are bottom-up investors, traditional fixed-income strategies such as
yield curve positioning, maturity structure and duration management are not the
focal point of our investment process. We do, however, typically seek to
maintain a duration within 10% of the benchmark, which helped manage the
duration risk of the Portfolio.
While the most speculative part of the market was rewarded in 2006, we limited
our investments in higher-risk high-yield bonds. Yield spreads were relatively
tight, and we believed that any shock to the market could cause riskier assets
to underperform. Since we did not feel adequately compensated for taking on
additional risk, we focused on high-yield securities with risk-to-compensation
ratios that we felt were more reasonable.
HOW DID THE PORTFOLIO'S AIRLINE BONDS PERFORM IN 2006?
During the year, the performance of airline bonds varied inversely with the
price of oil. As oil prices rose the Portfolio's airline holdings lost value and
vice versa. Delta Air Lines and Northwest Airlines attempted to lower their cost
structures as they continued to work through the bankruptcy process. Bond prices
for these issuers were buoyed by investor hopes that the companies would
eventually emerge from bankruptcy. In November 2006, an unsolicited bid for
Delta Air Lines by US Airways Group raised expectations of industry
consolidation and resulted in strong performance for the industry as a whole.
WHAT ABOUT AUTOMOTIVE BONDS?
The Portfolio remained underweighted in auto-related bonds. General Motors and
Ford have a large amount of outstanding debt, and these companies have a major
market influence. In light of recent strains within the auto industry, however,
we remain cautious about the longer-term operating prospects of U.S. automakers.
Over the course of the year, the Portfolio added a small weighting in Ford and
continued to hold a position in General Motor's finance arm, GMAC (General
Motors Acceptance Corp.). The investment in GMAC performed well, when GM sold a
majority stake in its subsidiary to a consortium led by hedge fund Cerberus
Partners. The sale of GMAC and a subsequent ratings upgrade of the GMAC's debt
were positive developments for bond holders.
WHAT OTHER MARKET FORCES AFFECTED THE PORTFOLIO'S PERFORMANCE IN 2006?
Merger and acquisition activity was among the strongest influences on the
high-yield market in 2006. Whether transactions had a positive or negative
impact on the Portfolio, however, depended on the deal. Purchases by
investment-grade companies that led to bond tenders often lifted prices. Prices
of existing bonds tended to decline, however, when a
High-yield debt 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. Investments in loan participation interests
are subject to the risk that there may not be a readily available market, which
in some cases could result in the Portfolio disposing of such securities at a
substantial discount from face value or holding such securities until maturity.
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.
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-163
private equity group would purchase a company and announce an increased debt
load. One of the largest deals that had a negative impact on the Portfolio was
the acquisition of hospital company HCA by Columbia Healthcare.
DID THE PORTFOLIO MAKE ANY SIGNIFICANT PURCHASES OR SALES DURING 2006?
The Portfolio continued to have bonds tendered by their issuers during the year.
In a tender, the bond-holder receives cash prior to maturity, in line with the
bond's call provisions. Mark IV Industries has had good operating performance
and the company's bonds were tendered in June, which benefited the Portfolio's
performance. The Portfolio's position in HCA had the opposite effect, when
increased leverage reduced the value of the company's bonds.
Throughout the year, we increased the credit quality of the Portfolio by
purchasing bonds of higher quality than those that were sold or tendered.
HOW DID THE PORTFOLIO SHIFT ITS QUALITY DURING 2006?
The Portfolio has lowered its exposure to bonds that are typically rated B- or
CCC by Standard & Poor's (or low B or Caa by Moody's)(1) and have less asset
coverage and free cash flow than bonds in our lower-risk categories. At the same
time, we have increased the Portfolio's weighting among bonds that are typically
rated B by the rating agencies and have average asset coverage and free cash
flow. In our opinion, the latter bonds provided the most attractive risk/return
relative to the market. As a result, the Portfolio was significantly overweight
relative to the market in the middle tier of the high-yield quality spectrum and
significantly underweight in lower-quality bonds.
1. 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. Debt rated CCC by Standard & Poor's is deemed by Standard &
Poor's to be currently vulnerable to nonpayment and is dependent upon
favorable business, financial and economic conditions for the obligor. It is
the opinion of Standard & Poor's that in the event of adverse business,
financial or economic conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the obligation. The ratings from
AA to CCC may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories. Bonds rated B by
Moody's Investors Service are ones that, in Moody's opinion, 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. Bonds rated Caa by
Moody's Investors Service are deemed by Moody's to be of poor standing. Such
issues may be in default or, according to Moody's, elements of danger with
respect to principal or interest may be present. Moody's applies numerical
modifiers, 1, 2 and 3, in each generic rating classified from Aa through Caa.
The modifier 1 indicates that the issue ranks in the higher end of its
generic rating category; the modifier 2 indicates a midrange ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. 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.
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.
INFORMATION ABOUT MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO ON THIS PAGE
AND THE PRECEDING PAGES HAS NOT BEEN AUDITED.
M-164 MainStay VP High Yield Corporate Bond Portfolio
PORTFOLIO OF INVESTMENTS(+++) DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (84.5%)+
ASSET-BACKED SECURITIES (0.7%)
- ---------------------------------------------------------------------------------
ELECTRIC (0.6%)
AES Eastern Energy, L.P.
Series 1999-A
9.00%, due 1/2/17 $ 7,669,726 $ 8,590,093
--------------
ENTERTAINMENT (0.1%)
United Artists Theatre Circuit, Inc.
Series 1995-A
9.30%, due 7/1/15 (a)(b) 1,066,329 959,696
--------------
Total Asset-Backed Securities
(Cost $8,462,757) 9,549,789
--------------
CONVERTIBLE BONDS (1.8%)
- ---------------------------------------------------------------------------------
AIRLINES (0.1%)
Delta Air Lines, Inc.
8.00%, due 6/3/23 (c)(d) 2,560,000 1,715,200
--------------
INSURANCE (0.2%)
Conseco, Inc.
3.50%, due 9/30/35
(zero coupon), beginning 9/30/10 (c) 3,120,000 3,096,600
--------------
INTERNET (0.0%)++
At Home Corp.
0.525%, due 12/28/18 (a)(b)(d)(e) 1,869,975 187
4.75%, due 12/15/07 (b)(d)(e) 9,032,054 903
--------------
1,090
--------------
MEDIA (0.0%)++
Adelphia Communications Corp.
6.00%, due 2/15/07 (d) 1,760,000 1,056
--------------
TELECOMMUNICATIONS (1.5%)
CIENA Corp.
3.75%, due 2/1/08 6,855,000 6,666,487
Lucent Technologies, Inc.
8.00%, due 8/1/31 4,140,000 4,160,700
V Nortel Networks Corp.
4.25%, due 9/1/08 11,965,000 11,635,962
--------------
22,463,149
--------------
Total Convertible Bonds
(Cost $27,746,044) 27,277,095
--------------
CORPORATE BONDS (66.7%)
- ---------------------------------------------------------------------------------
ADVERTISING (0.6%)
Lamar Media Corp. Class B
6.625%, due 8/15/15 1,945,000 1,927,981
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ADVERTISING (CONTINUED)
R.H. Donnelley, Inc.
10.875%, due 12/15/12 $ 2,555,000 $ 2,784,950
Vertis, Inc.
9.75%, due 4/1/09 4,500,000 4,635,000
--------------
9,347,931
--------------
AEROSPACE & DEFENSE (0.8%)
BE Aerospace, Inc.
8.875%, due 5/1/11 (f) 2,685,000 2,778,975
Sequa Corp.
8.875%, due 4/1/08 7,275,000 7,493,250
9.00%, due 8/1/09 1,815,000 1,942,050
--------------
12,214,275
--------------
AGRICULTURE (1.0%)
Reynolds American, Inc.
7.625%, due 6/1/16 7,760,000 8,221,984
7.75%, due 6/1/18 5,610,000 5,955,307
--------------
14,177,291
--------------
AIRLINES (2.5%)
Delta Air Lines, Inc.
8.30%, due 12/15/29 (d)(e) 15,230,000 10,204,100
Series B
9.25%, due 12/27/07 (d) 3,395,000 2,249,187
9.25%, due 3/15/22 (d) 2,450,000 1,623,125
9.75%, due 5/15/21 (d) 350,000 231,875
10.00%, due 8/15/08 (d) 2,630,000 1,742,375
10.375%, due 2/1/11 (d) 5,180,000 3,444,700
10.375%, due 12/15/22 (d) 3,275,000 2,169,687
Northwest Airlines, Inc.
7.875%, due 3/15/08 (d) 1,340,000 1,259,600
8.70%, due 3/15/07 (d) 155,000 146,475
9.875%, due 3/15/07 (d) 5,550,000 5,355,750
10.00%, due 2/1/09 (d) 8,396,500 7,934,692
--------------
36,361,566
--------------
APPAREL (0.4%)
Unifi, Inc.
11.50%, due 5/15/14 (c) 5,685,000 5,230,200
--------------
AUTO PARTS & EQUIPMENT (2.7%)
American Tire Distributors, Inc.
10.75%, due 4/1/13 (f) 1,030,000 965,625
Collins & Aikman Products Co.
12.875%, due 8/15/12 (c)(d)(e) 9,075,000 11,344
FleetPride Corp.
11.50%, due 10/1/14 (c) 5,665,000 5,665,000
</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.
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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT (CONTINUED)
Goodyear Tire & Rubber Co. (The)
6.375%, due 3/15/08 $ 5,057,000 $ 5,038,036
8.50%, due 3/15/07 1,380,000 1,381,725
V 11.25%, due 3/1/11 12,845,000 14,193,725
Lear Corp.
8.50%, due 12/1/13 (c) 2,725,000 2,643,250
8.75%, due 12/1/16 (c) 2,725,000 2,633,031
Tenneco Automotive, Inc.
8.625%, due 11/15/14 (f) 5,290,000 5,395,800
10.25%, due 7/15/13 2,070,000 2,266,650
--------------
40,194,186
--------------
BANKS (0.3%)
Fremont General Corp.
Series B
7.875%, due 3/17/09 4,845,000 4,796,550
--------------
BEVERAGES (0.2%)
Constellation Brands, Inc.
7.25%, due 9/1/16 3,145,000 3,231,487
--------------
BUILDING MATERIALS (1.1%)
Compression Polymers Corp.
10.50%, due 7/1/13 4,755,000 4,844,156
12.39%, due 7/1/12 (g) 625,000 637,500
Dayton Superior Corp.
10.75%, due 9/15/08 4,860,000 5,078,700
Panolam Industries International, Inc.
10.75%, due 10/1/13 (c)(f) 3,725,000 3,920,562
U.S. Concrete, Inc.
8.375%, due 4/1/14 1,825,000 1,783,937
--------------
16,264,855
--------------
CHEMICALS (2.2%)
Equistar Chemicals, L.P.
7.55%, due 2/15/26 2,400,000 2,280,000
10.125%, due 9/1/08 3,545,000 3,766,562
10.625%, due 5/1/11 7,700,000 8,200,500
Millennium America, Inc.
7.625%, due 11/15/26 3,150,000 2,874,375
Mosaic Global Holdings, Inc.
7.625%, due 12/1/16 (c) 1,640,000 1,699,450
Reichhold Industries, Inc.
9.00%, due 8/15/14 (c) 2,105,000 2,062,900
Terra Capital, Inc.
12.875%, due 10/15/08 8,515,000 9,494,225
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CHEMICALS (CONTINUED)
Tronox Worldwide LLC/Tronox Finance Corp.
9.50%, due 12/1/12 $ 2,325,000 $ 2,447,062
--------------
32,825,074
--------------
COAL (0.1%)
Peabody Energy Corp.
7.375%, due 11/1/16 845,000 899,925
7.875%, due 11/1/26 785,000 843,875
--------------
1,743,800
--------------
COMMERCIAL SERVICES (2.9%)
Cardtronics, Inc.
9.25%, due 8/15/13 (f) 3,415,000 3,594,287
Chemed Corp.
8.75%, due 2/24/11 4,395,000 4,548,825
El Comandante Capital Corp.
11.75%, due 12/15/07 (a)(b)(d) 2,412,000 3,111,480
Great Lakes Dredge & Dock Corp.
7.75%, due 12/15/13 (f) 2,530,000 2,466,750
iPayment, Inc.
9.75%, due 5/15/14 3,030,000 3,113,325
Knowledge Learning Corp., Inc.
7.75%, due 2/1/15 (c) 3,370,000 3,226,775
Language Line, Inc.
11.125%, due 6/15/12 5,005,000 5,205,200
Phoenix Color Corp.
11.00%, due 2/1/09 2,475,000 2,428,594
Protection One Alarm Monitoring, Inc.
Series B
8.125%, due 1/15/09 4,945,000 4,821,375
Service Corp. International
7.375%, due 10/1/14 2,145,000 2,241,525
7.625%, due 10/1/18 2,210,000 2,342,600
Vertrue, Inc.
9.25%, due 4/1/14 5,770,000 6,058,500
--------------
43,159,236
--------------
COMPUTERS (1.1%)
SunGard Data Systems, Inc.
3.75%, due 1/15/09 3,475,000 3,283,875
4.875%, due 1/15/14 1,030,000 906,400
9.125%, due 8/15/13 6,825,000 7,166,250
10.25%, due 8/15/15 (f) 4,125,000 4,403,437
--------------
15,759,962
--------------
CONSTRUCTION & ENGINEERING (0.4%)
Amsted Industries, Inc.
10.25%, due 10/15/11 (c) 5,800,000 6,206,000
--------------
</Table>
M-166 MainStay VP High Yield 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)
- ---------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (10.1%)
Alamosa Delaware, Inc.
11.00%, due 7/31/10 $ 4,130,000 $ 4,462,816
American Real Estate Partners, L.P./ American Real
Estate Finance Corp.
V 7.125%, due 2/15/13 13,150,000 13,215,750
8.125%, due 6/1/12 6,705,000 6,922,912
Cedar Brakes II LLC
9.875%, due 9/1/13 (c) 7,616,444 8,435,592
Chukchansi Economic Development Authority
8.00%, due 11/15/13 (c) 2,105,000 2,186,569
Ford Motor Credit Co.
7.375%, due 10/28/09 5,185,000 5,196,044
7.875%, due 6/15/10 1,600,000 1,613,290
General Motors Acceptance Corp.
V 6.75%, due 12/1/14 (f) 14,005,000 14,384,998
V 8.00%, due 11/1/31 25,870,000 29,700,519
Idearc, Inc.
8.00%, due 11/15/16 (c) 6,445,000 6,541,675
LaBranche & Co., Inc.
9.50%, due 5/15/09 5,555,000 5,832,750
11.00%, due 5/15/12 6,135,000 6,610,462
MXEnergy Holdings, Inc.
13.018%, due 8/1/11 (c)(g) 3,850,000 3,734,500
Rainbow National Services LLC
8.75%, due 9/1/12 (c) 2,940,000 3,090,675
10.375%, due 9/1/14 (c) 10,280,000 11,423,650
Regency Energy Partners, L.P./Regency Energy
Finance Corp.
8.375%, due 12/15/13 (c) 5,355,000 5,368,387
Sally Holdings LLC
9.25%, due 11/15/14 (c) 3,430,000 3,494,312
10.50%, due 11/15/16 (c)(f) 610,000 622,200
Ucar Finance, Inc.
10.25%, due 2/15/12 4,185,000 4,409,944
UGS Corp.
10.00%, due 6/1/12 2,945,000 3,210,050
Vanguard Health Holding Co. I LLC
(zero coupon), due 10/1/15
11.25%, beginning 10/1/09 (f) 3,210,000 2,471,700
Vanguard Health Holding Co. II LLC
9.00%, due 10/1/14 5,965,000 6,039,562
--------------
148,968,357
--------------
ELECTRIC (3.2%)
V AES Corp. (The)
9.00%, due 5/15/15 (c) 12,760,000 13,717,000
Calpine Corp.
V 8.50%, due 7/15/10 (c)(d) 19,027,000 20,311,322
9.875%, due 12/1/11 (c)(d) 2,255,000 2,452,312
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRIC (CONTINUED)
NRG Energy, Inc.
7.25%, due 2/1/14 $ 4,775,000 $ 4,810,812
7.375%, due 2/1/16 345,000 346,725
PSE&G Energy Holdings LLC
8.625%, due 2/15/08 4,066,000 4,177,815
Reliant Energy Mid-Atlantic Power Holdings LLC
Series C
9.681%, due 7/2/26 1,190,000 1,416,100
Western Resources, Inc.
7.125%, due 8/1/09 855,000 883,739
--------------
48,115,825
--------------
ELECTRONICS (0.5%)
Fisher Scientific International, Inc.
6.125%, due 7/1/15 7,160,000 7,078,433
--------------
ENERGY--ALTERNATE SOURCES (0.0%)++
Salton Sea Funding Corp.
Series E
8.30%, due 5/30/11 (a) 2,621 2,770
--------------
ENTERTAINMENT (1.0%)
Gaylord Entertainment Co.
6.75%, due 11/15/14 1,025,000 1,017,312
8.00%, due 11/15/13 4,890,000 5,073,375
Isle of Capri Casinos, Inc.
9.00%, due 3/15/12 1,295,000 1,353,275
Jacobs Entertainment Co.
9.75%, due 6/15/14 3,920,000 3,978,800
Mohegan Tribal Gaming Authority
6.375%, due 7/15/09 1,460,000 1,460,000
Warner Music Group
7.375%, due 4/15/14 2,240,000 2,217,600
--------------
15,100,362
--------------
ENVIRONMENTAL CONTROL (0.5%)
Geo Sub Corp.
11.00%, due 5/15/12 7,575,000 7,309,875
--------------
FOOD (1.4%)
Chiquita Brands International, Inc.
7.50%, due 11/1/14 9,670,000 8,848,050
Pinnacle Foods Holding Corp.
8.25%, due 12/1/13 4,750,000 4,862,812
Swift & Co.
10.125%, due 10/1/09 6,250,000 6,359,375
--------------
20,070,237
--------------
</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-167
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER (2.5%)
Bowater, Inc.
9.375%, due 12/15/21 $ 4,650,000 $ 4,650,000
9.50%, due 10/15/12 90,000 93,150
Georgia-Pacific Corp.
7.00%, due 1/15/15 (c) 1,615,000 1,610,962
7.125%, due 1/15/17 (c) 6,065,000 6,049,837
7.375%, due 12/1/25 1,310,000 1,277,250
7.75%, due 11/15/29 4,930,000 4,917,675
8.00%, due 1/15/24 6,345,000 6,440,175
8.875%, due 5/15/31 8,150,000 8,618,625
Georgia-Pacific Corp./Timber Group
7.25%, due 6/1/28 4,180,000 4,054,600
--------------
37,712,274
--------------
GAS (0.3%)
Colorado Interstate Gas Co.
5.95%, due 3/15/15 3,920,000 3,867,723
--------------
HAND & MACHINE TOOLS (0.1%)
Thermadyne Holdings Corp.
9.25%, due 2/1/14 (f) 1,590,000 1,474,725
--------------
HEALTH CARE--PRODUCTS (0.4%)
Hanger Orthopedic Group, Inc.
10.25%, due 6/1/14 4,885,000 5,043,762
Universal Hospital Services, Inc.
10.125%, due 11/1/11 1,185,000 1,264,987
--------------
6,308,749
--------------
HEALTH CARE--SERVICES (1.4%)
Alliance Imaging, Inc.
7.25%, due 12/15/12 (f) 2,440,000 2,318,000
Ameripath, Inc.
10.50%, due 4/1/13 6,505,000 7,041,662
HCA, Inc.
6.30%, due 10/1/12 410,000 375,150
8.75%, due 9/1/10 120,000 125,100
9.25%, due 11/15/16 (c) 6,725,000 7,204,156
Skilled Healthcare Group, Inc.
11.00%, due 1/15/14 (c) 2,930,000 3,223,000
--------------
20,287,068
--------------
HOLDING COMPANIES--DIVERSIFIED (0.2%)
ESI Tractebel Acquisition Corp.
Class B
7.99%, due 12/30/11 2,297,000 2,357,363
--------------
HOUSEHOLD PRODUCTS & WARES (0.4%)
ACCO Brands Corp.
7.625%, due 8/15/15 6,575,000 6,459,937
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
INSURANCE (0.5%)
Crum & Forster Holdings Corp.
10.375%, due 6/15/13 $ 6,810,000 $ 7,371,825
Lumbermens Mutual Casualty
8.45%, due 12/1/97 (c)(d) 555,000 1,387
9.15%, due 7/1/26 (c)(d) 12,235,000 30,587
--------------
7,403,799
--------------
IRON & STEEL (0.5%)
Allegheny Ludlum Corp.
6.95%, due 12/15/25 4,420,000 4,508,400
Allegheny Technologies, Inc.
8.375%, due 12/15/11 1,390,000 1,487,300
United States Steel Corp.
9.75%, due 5/15/10 645,000 686,119
--------------
6,681,819
--------------
LEISURE TIME (0.4%)
Town Sports International, Inc.
(zero coupon), due 2/1/14
11.00%, beginning 2/1/09 6,000,000 5,227,500
9.625%, due 4/15/11 415,000 438,344
--------------
5,665,844
--------------
LODGING (2.2%)
Boyd Gaming Corp.
6.75%, due 4/15/14 725,000 723,187
7.75%, due 12/15/12 5,500,000 5,685,625
Mandalay Resort Group
9.50%, due 8/1/08 2,965,000 3,113,250
10.25%, due 8/1/07 290,000 296,888
MGM Mirage, Inc.
8.50%, due 9/15/10 2,826,000 3,023,820
9.75%, due 6/1/07 3,155,000 3,194,438
MTR Gaming Group, Inc.
9.00%, due 6/1/12 (c) 3,410,000 3,495,250
Series B
9.75%, due 4/1/10 260,000 274,300
Park Place Entertainment Corp.
8.875%, due 9/15/08 3,470,000 3,617,475
9.375%, due 2/15/07 3,125,000 3,132,813
Resort International Hotel/Casino
11.50%, due 3/15/09 1,995,000 2,057,344
San Pasqual Casino
8.00%, due 9/15/13 (c) 1,815,000 1,864,913
Starwood Hotels & Resorts Worldwide, Inc.
7.375%, due 5/1/07 1,935,000 1,942,904
--------------
32,422,207
--------------
MEDIA (1.9%)
Dex Media East LLC
12.125%, due 11/15/12 2,095,000 2,307,119
</Table>
M-168 MainStay VP High Yield 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)
- ---------------------------------------------------------------------------------
MEDIA (CONTINUED)
MediaNews Group, Inc.
6.875%, due 10/1/13 $ 1,615,000 $ 1,461,575
Morris Publishing Group LLC
7.00%, due 8/1/13 5,825,000 5,519,188
Paxson Communications Corp.
8.624%, due 1/15/12 (c)(g) 5,310,000 5,376,375
11.624%, due 1/15/13 (c)(g) 9,055,000 9,168,188
Ziff Davis Media, Inc.
11.371%, due 5/1/12 (g) 4,035,000 3,838,294
--------------
27,670,739
--------------
METAL FABRICATE & HARDWARE (0.9%)
Jarden Corp.
9.75%, due 5/1/12 (f) 3,405,000 3,600,788
Metals USA, Inc.
11.125%, due 12/1/15 2,125,000 2,334,844
Mueller Group, Inc.
10.00%, due 5/1/12 2,499,000 2,717,663
Neenah Foundary Co.
9.50%, due 1/1/17 (c) 5,355,000 5,381,775
--------------
14,035,070
--------------
MISCELLANEOUS--MANUFACTURING (0.8%)
Clarke American Corp.
11.75%, due 12/15/13 4,890,000 5,232,300
RBS Global, Inc./Rexnord Corp.
9.50%, due 8/1/14 (c) 6,765,000 7,035,600
--------------
12,267,900
--------------
OIL & GAS (5.4%)
Chaparral Energy, Inc.
8.50%, due 12/1/15 5,480,000 5,452,600
Chesapeake Energy Corp.
6.50%, due 8/15/17 11,390,000 11,133,725
6.625%, due 1/15/16 2,440,000 2,424,750
6.875%, due 11/15/20 1,095,000 1,075,838
Forest Oil Corp.
8.00%, due 12/15/11 4,675,000 4,862,000
Hilcorp Energy I, L.P./Hilcorp Finance Co.
9.00%, due 6/1/16 (c) 3,935,000 4,161,263
10.50%, due 9/1/10 (c) 2,526,000 2,702,820
Mariner Energy, Inc.
7.50%, due 4/15/13 5,585,000 5,417,450
Newfield Exploration Co.
6.625%, due 4/15/16 345,000 343,275
Parker Drilling Co.
9.625%, due 10/1/13 6,770,000 7,421,613
Petroquest Energy, Inc.
10.375%, due 5/15/12 1,265,000 1,331,413
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
OIL & GAS (CONTINUED)
Pogo Producing Co.
6.875%, due 10/1/17 $ 8,550,000 $ 8,165,250
Pride International, Inc.
7.375%, due 7/15/14 2,770,000 2,860,025
Stone Energy Corp.
6.75%, due 12/15/14 3,750,000 3,581,250
Venoco, Inc.
8.75%, due 12/15/11 3,500,000 3,456,250
Vintage Petroleum, Inc.
8.25%, due 5/1/12 7,205,000 7,561,222
Whiting Petroleum Corp.
7.00%, due 2/1/14 4,305,000 4,294,238
7.25%, due 5/1/13 3,115,000 3,122,788
--------------
79,367,770
--------------
OIL & GAS SERVICES (0.6%)
Allis-Chalmers Energy, Inc.
9.00%, due 1/15/14 (c) 4,305,000 4,326,525
Complete Production Services, Inc.
8.00%, due 12/15/16 (c) 4,715,000 4,832,875
--------------
9,159,400
--------------
PACKAGING & CONTAINERS (1.5%)
Berry Plastics Holding Corp.
8.875%, due 9/15/14 (c) 3,500,000 3,552,500
Owens-Brockway Glass Container, Inc.
7.75%, due 5/15/11 2,060,000 2,116,650
8.25%, due 5/15/13 1,200,000 1,240,500
8.75%, due 11/15/12 640,000 678,400
8.875%, due 2/15/09 8,302,000 8,488,795
Owens-Illinois, Inc.
8.10%, due 5/15/07 6,805,000 6,822,013
--------------
22,898,858
--------------
PIPELINES (3.6%)
ANR Pipeline Co.
7.375%, due 2/15/24 395,000 442,816
8.875%, due 3/15/10 1,315,000 1,379,553
9.625%, due 11/1/21 8,075,000 10,715,735
El Paso Corp.
7.80%, due 8/1/31 1,145,000 1,250,913
El Paso Natural Gas Co.
7.50%, due 11/15/26 1,435,000 1,608,285
7.625%, due 8/1/10 3,975,000 4,153,875
El Paso Production Holding Co.
7.75%, due 6/1/13 6,825,000 7,140,656
MarkWest Energy Partners, L.P./ MarkWest Energy
Finance Corp.
Series B
6.875%, due 11/1/14 2,050,000 1,978,250
8.50%, due 7/15/16 (c) 6,065,000 6,307,600
</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, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
PIPELINES (CONTINUED)
Northwest Pipeline Corp.
7.125%, due 12/1/25 $ 2,195,000 $ 2,225,181
Pacific Energy Partners, L.P./Pacific Energy
Finance Corp.
7.125%, due 6/15/14 3,475,000 3,566,080
Southern Natural Gas Co.
7.35%, due 2/15/31 1,335,000 1,469,496
Tennessee Gas Pipeline Co.
7.625%, due 4/1/37 9,515,000 10,695,279
--------------
52,933,719
--------------
REAL ESTATE (1.9%)
Crescent Real Estate Equities, L.P.
7.50%, due 9/15/07 8,265,000 8,295,994
Host Hotels & Resorts, L.P.
6.875%, due 11/1/14 (c) 2,145,000 2,171,813
Host Marriott L.P.
Series Q
6.75%, due 6/1/16 730,000 730,913
Omega Healthcare Investors, Inc.
7.00%, due 4/1/14 9,130,000 9,198,475
Trustreet Properties, Inc.
7.50%, due 4/1/15 6,700,000 7,236,000
--------------
27,633,195
--------------
RETAIL (1.7%)
Harry & David Holdings, Inc.
9.00%, due 3/1/13 3,035,000 2,960,643
Michaels Stores, Inc.
10.00%, due 11/1/14 (c) 1,440,000 1,497,600
Rite Aid Corp.
7.50%, due 1/15/15 4,170,000 4,128,300
Star Gas Partners, L.P./Star Gas Finance Co.
Series B
10.25%, due 2/15/13 9,150,000 9,550,312
Toys "R" Us, Inc.
7.625%, due 8/1/11 8,040,000 7,396,800
--------------
25,533,655
--------------
SEMICONDUCTORS (0.6%)
Freescale Semiconductor, Inc.
8.875%, due 12/15/14 (c) 6,415,000 6,390,944
MagnaChip Semiconductor S.A.
8.61%, due 12/15/11 (g) 2,690,000 2,313,400
--------------
8,704,344
--------------
SOFTWARE (0.4%)
SS&C Technologies, Inc.
11.75%, due 12/1/13 5,405,000 5,864,425
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TELECOMMUNICATIONS (4.3%)
Centennial Cellular Operating Co./ Centennial
Communications Corp.
10.125%, due 6/15/13 $ 5,765,000 $ 6,211,788
Dobson Cellular Systems, Inc.
8.375%, due 11/1/11 (f) 1,105,000 1,164,394
8.375%, due 11/1/11 (c) 2,470,000 2,602,763
9.875%, due 11/1/12 3,215,000 3,504,350
GCI, Inc.
7.25%, due 2/15/14 2,150,000 2,133,875
Lucent Technologies, Inc.
5.50%, due 11/15/08 (f) 1,745,000 1,727,550
6.45%, due 3/15/29 12,215,000 11,268,338
6.50%, due 1/15/28 985,000 908,663
PanAmSat Corp.
9.00%, due 8/15/14 1,880,000 1,985,750
9.00%, due 6/15/16 (c) 3,660,000 3,875,025
Qwest Communications International, Inc.
7.25%, due 2/15/11 1,265,000 1,293,463
Series B
7.50%, due 2/15/14 8,560,000 8,816,800
Qwest Corp.
5.625%, due 11/15/08 300,000 300,375
7.20%, due 11/10/26 1,645,000 1,657,338
7.25%, due 9/15/25 920,000 945,300
7.50%, due 10/1/14 1,655,000 1,754,300
8.875%, due 3/15/12 4,820,000 5,368,275
8.875%, due 6/1/31 4,860,000 5,066,550
Ubiquitel Operating Co.
9.875%, due 3/1/11 2,465,000 2,662,200
--------------
63,247,097
--------------
TEXTILES (1.0%)
V INVISTA
9.25%, due 5/1/12 (c) 14,065,000 15,084,713
--------------
TRUCKING & LEASING (0.2%)
Interpool, Inc.
6.00%, due 9/1/14 3,845,000 3,537,400
--------------
Total Corporate Bonds
(Cost $944,365,622) 986,738,065
--------------
FOREIGN BONDS (7.2%)
- ---------------------------------------------------------------------------------
BUILDING MATERIALS (0.1%)
Ainsworth Lumber Co., Ltd.
9.364%, due 4/1/13 (g) 2,400,000 1,908,000
--------------
</Table>
M-170 MainStay VP High Yield 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
FOREIGN BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
CHEMICALS (0.2%)
Nova Chemicals Corp.
8.502%, due 11/15/13 (g) $ 2,195,000 $ 2,195,000
--------------
COMMERCIAL SERVICES (0.2%)
Quebecor World, Inc.
9.75%, due 1/15/15 (c) 3,060,000 3,079,125
--------------
DIVERSIFIED FINANCIAL SERVICES (0.5%)
Digicel, Ltd.
9.25%, due 9/1/12 (c) 3,910,000 4,173,925
Galaxy Entertainment Finance Co., Ltd.
9.875%, due 12/15/12 (c) 2,695,000 2,887,019
--------------
7,060,944
--------------
ELECTRONICS (0.8%)
NXP B.V./NXP Funding LLC
7.875%, due 10/15/14 (c) 5,435,000 5,618,431
9.50%, due 10/15/15 (c) 5,960,000 6,109,000
--------------
11,727,431
--------------
FOREST PRODUCTS & PAPER (0.1%)
Bowater Canada Finance
7.95%, due 11/15/11 1,830,000 1,793,400
--------------
INSURANCE (0.2%)
Lindsey Morden Group, Inc.
Series B
7.00%, due 6/16/08 C$ 3,813,000 2,828,320
--------------
MEDIA (1.4%)
CanWest Media, Inc.
8.00%, due 9/15/12 $ 4,946,920 5,163,348
Nielsen Finance LLC/
Nielsen Finance Co.
10.00%, due 8/1/14 (c) 1,635,000 1,771,931
Quebecor Media, Inc.
7.75%, due 3/15/16 6,345,000 6,479,831
Shaw Communications, Inc.
7.50%, due 11/20/13 C$ 5,470,000 5,115,199
Sun Media Corp.
7.625%, due 2/15/13 $ 2,330,000 2,362,038
--------------
20,892,347
--------------
PHARMACEUTICALS (0.1%)
Angiotech Pharmaceuticals, Inc.
7.75%, due 4/1/14 (c) 2,200,000 1,914,000
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
RETAIL (1.0%)
Jafra Cosmetics International, Inc./ Distribuidora
Comerical
Jafra S.A. de C.V.
10.75%, due 5/15/11 $ 2,305,000 $ 2,463,469
V Jean Coutu Group PJC, Inc. (The)
8.50%, due 8/1/14 (f) 11,910,000 11,984,438
--------------
14,447,907
--------------
TELECOMMUNICATIONS (2.3%)
Inmarsat Finance PLC
(zero coupon), due 11/15/12
10.375%, beginning 11/15/08 6,585,000 6,066,431
Intelsat Subsidiary Holding Co., Ltd.
8.25%, due 1/15/13 6,000,000 6,090,000
10.484%, due 1/15/12 (g) 2,910,000 2,935,463
Millicom International Cellular S.A.
10.00%, due 12/1/13 8,880,000 9,679,200
Nortel Networks, Ltd.
10.75%, due 7/15/16 (c) 5,795,000 6,338,281
Satelites Mexicanos S.A. de C.V.
14.11%, due 11/30/11 (g) 2,800,000 2,961,000
--------------
34,070,375
--------------
TRANSPORTATION (0.3%)
Grupo Transportacion Ferroviaria Mexicana S.A. de
C.V.
12.50%, due 6/15/12 4,005,000 4,325,400
--------------
Total Foreign Bonds
(Cost $101,831,591) 106,242,249
--------------
LOAN ASSIGNMENTS & PARTICIPATIONS (6.7%) (H)
- ---------------------------------------------------------------------------------
AUTO MANUFACTURERS (0.6%)
Navistar International Corp.
Delayed Draw Term Loan
10.365%, due 3/7/09 8,666,667 8,780,417
--------------
AUTO PARTS & EQUIPMENT (0.0%)++
Goodyear Tire & Rubber Co. (The)
2nd Lien Term Loan
8.14%, due 4/30/10 700,000 707,875
--------------
CHEMICALS (0.5%)
Talecris Biotherapeutics, Inc.
1st Lien Term Loan
10.50%, due 12/6/13 2,420,000 2,429,075
2nd Lien Term Loan
13.50%, due 12/6/14 4,845,000 4,851,056
--------------
7,280,131
--------------
</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-171
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LOAN ASSIGNMENTS & PARTICIPATIONS (CONTINUED)
- ---------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.1%)
Graham Packaging Holdings Co.
2nd Lien Term Loan
9.625%, due 4/7/12 $ 714,286 $ 720,179
--------------
HEALTH CARE-SERVICES (0.7%)
HCA, Inc.
Term Loan B
8.114%, due 11/17/13 10,225,000 10,337,086
--------------
MEDIA (0.7%)
Fidelity National Information Solutions, Inc.
Term Loan B
7.10%, due 3/9/13 865,000 864,880
Nielsen Finance LLC
Dollar Term Loan
8.125%, due 8/6/13 9,715,000 9,778,420
--------------
10,643,300
--------------
MINING (0.7%)
Aleris International, Inc.
New Term Loan B
8.125%, due 12/19/13 3,630,000 3,645,881
BHM Technologies LLC
1st Lien Term Loan
8.437%, due 7/23/13 7,056,439 6,783,002
--------------
10,428,883
--------------
PHARMACEUTICALS (0.3%)
Warner Chilcott Corp.
Dovonex Delayed Draw Term Loan
7.614%, due 1/18/12 623,375 757,093
Tranche C Term Loan
7.614%, due 1/18/12 778,885 753,569
Tranche B Term Loan
7.617%, due 1/18/12 2,836,953 2,744,747
--------------
4,255,409
--------------
REAL ESTATE (1.1%)
LNR Property Corp.
Term Loan A1
8.12%, due 7/12/09 915,000 916,144
Initial Tranche B Term Loan
8.12%, due 7/12/11 8,260,000 8,284,094
Term Loan A2
8.37%, due 7/12/09 915,000 910,997
Rental Services Corp.
2nd Lien Term Loan
8.86%, due 11/27/10 3,595,000 3,625,335
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REAL ESTATE (CONTINUED)
Riverdeep Interactive Learning USA, Inc.
Bridge Loan
11.066%, due 12/20/07 $ 2,835,000 $ 2,820,825
--------------
16,557,395
--------------
RETAIL (1.2%)
Michaels Stores, Inc.
Term Loan B
8.375%, due 10/31/13 7,353,542 7,394,905
Neiman Marcus Group, Inc. (The)
Term Loan B
7.602%, due 4/6/13 4,746,835 4,777,614
Toys "R" Us (Delaware), Inc.
Term Loan
10.349%, due 1/9/13 5,870,000 5,889,259
--------------
18,061,778
--------------
SOFTWARE (0.5%)
SunGard Data Systems, Inc.
Term Loan
7.875%, due 2/11/13 7,525,400 7,592,128
--------------
TELECOMMUNICATIONS (0.3%)
Qwest Corp.
Term Loan B
6.95%, due 6/30/10 4,250,000 4,340,313
--------------
Total Loan Assignments & Participations
(Cost $98,979,181) 99,704,894
--------------
YANKEE BONDS (1.4%) (I)
- ---------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER (0.6%)
Abitibi-Consolidated, Inc.
8.85%, due 8/1/30 2,665,000 2,185,300
Smurfit Capital Funding PLC
7.50%, due 11/20/25 5,970,000 5,701,350
--------------
7,886,650
--------------
INSURANCE (0.6%)
Fairfax Financial Holdings, Ltd.
7.375%, due 4/15/18 (f) 3,015,000 2,781,338
7.75%, due 7/15/37 (f) 135,000 123,525
8.25%, due 10/1/15 95,000 93,575
8.30%, due 4/15/26 (f) 5,865,000 5,835,675
--------------
8,834,113
--------------
</Table>
M-172 MainStay VP High Yield 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
YANKEE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
TELECOMMUNICATIONS (0.2%)
Rogers Cantel, Inc.
9.75%, due 6/1/16 $ 2,560,000 $ 3,212,800
--------------
Total Yankee Bonds
(Cost $16,858,314) 19,933,563
--------------
Total Long-Term Bonds
(Cost $1,198,243,509) 1,249,445,655
--------------
<Caption>
SHARES
COMMON STOCKS (0.9%)
- ---------------------------------------------------------------------------------
AGRICULTURE (0.0%)++
North Atlantic Trading Co., Inc. (a)(b)(j)(k) 2,418 24
--------------
BUILDING MATERIALS (0.0%)++
Ainsworth Lumber Co., Ltd. (f) 50,600 412,390
--------------
ELECTRIC (0.0%)++
Dynegy, Inc. Class A (j) 1,023 7,407
--------------
INTERNET (0.2%)
Globix Corp. (b)(j)(k) 949,786 2,892,098
--------------
RETAIL (0.3%)
Star Gas Partners, L.P. (j) 1,115,314 3,925,905
--------------
SOFTWARE (0.1%)
QuadraMed Corp. (a)(j) 519,325 1,433,337
QuadraMed Corp. (a)(j) 106,427 293,739
--------------
1,727,076
--------------
TELECOMMUNICATIONS (0.3%)
Loral Space & Communications, Ltd. (f)(j) 110,800 4,511,776
Remote Dynamics, Inc. (j) 72,541 225
--------------
4,512,001
--------------
Total Common Stocks
(Cost $11,332,047) 13,476,901
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
CONVERTIBLE PREFERRED STOCKS (0.5%)
- ---------------------------------------------------------------------------------
INTERNET (0.0%)++
Globix Corp.
6.00% (a)(b)(j)(k) 107,873 $ 351,936
--------------
SOFTWARE (0.5%)
QuadraMed Corp.
5.50% (a)(c)(j) 278,000 6,950,000
--------------
Total Convertible Preferred Stocks
(Cost $6,941,789) 7,301,936
--------------
PREFERRED STOCKS (1.4%)
- ---------------------------------------------------------------------------------
COMMERCIAL SERVICES (0.0%)++
Colorado Prime Corp. (a)(b)(k) 1,395 14
--------------
MEDIA (0.3%)
Haights Cross Communications, Inc.
16.00% (a)(k) 99,800 4,091,800
Ziff Davis Holdings, Inc.
10.00% (a)(b)(j) 674 60,660
--------------
4,152,460
--------------
REAL ESTATE INVESTMENT TRUSTS (1.0%)
Sovereign Real Estate Investment Corp.
V 12.00% (c) 9,450 14,718,375
--------------
TELECOMMUNICATIONS (0.1%)
Loral Skynet Corp.
12.00% Series A (f)(l) 10,387 2,150,109
--------------
Total Preferred Stocks
(Cost $22,618,872) 21,020,958
--------------
<Caption>
NUMBER OF
WARRANTS
WARRANTS (0.0%)++
- ---------------------------------------------------------------------------------
INTERNET (0.0%)++
Ziff Davis Holdings, Inc.
Strike Price $0.001
Expire 8/12/12 (b)(j) 123,640 1,236
--------------
</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-173
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
NUMBER OF
WARRANTS VALUE
WARRANTS (CONTINUED)
- ---------------------------------------------------------------------------------
MEDIA (0.0%)++
Haights Cross Communications, Inc.
Strike Price $0.001
Expire 8/12/12 (a)(b)(j)(k) 104 $ 1
Preferred Class A
Strike Price $0.001
Expire 8/12/12 (a)(b)(j)(k) 97,772 978
--------------
979
--------------
Total Warrants
(Cost $2,140) 2,215
--------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (14.4%)
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER (11.5%)
Abbey National N.A. LLC
5.26%, due 1/26/07 $ 15,000,000 14,945,208
American General Finance Corp.
5.26%, due 1/9/07 19,720,000 19,696,950
Barton Capital LLC
5.298%, due 1/4/07 (m) 972,413 972,413
Charta LLC
5.314%, due 1/11/07 (m) 996,187 996,187
Ciesco, Inc.
5.305%, due 1/10/07 (m) 1,300,109 1,300,109
Compass Securitization LLC
5.324%, due 1/18/07 (m) 1,328,249 1,328,249
Emerson Electric Co.
5.25%, due 1/12/07 (c) 6,490,000 6,479,589
Fairway Finance Corp.
5.301%, due 1/8/07 (m) 996,187 996,187
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (m) 982,524 982,524
Greyhawk Funding LLC
5.305%, due 1/5/07 (m) 974,312 974,312
ING U.S. Funding LLC
5.26%, due 1/23/07 15,005,000 14,956,767
Jupiter Securitization Corp.
5.324%, due 1/18/07 (m) 996,187 996,187
Liberty Street Funding Co.
5.325%, due 1/29/07 (m) 332,062 332,062
Minnesota Mining & Manufacturing Co.
5.19%, due 1/3/07 9,205,000 9,202,346
Morgan Stanley
5.27%, due 1/17/07 16,925,000 16,885,358
Old Line Funding LLC
5.303%, due 1/9/07 (m) 1,301,564 1,301,564
Prudential Funding
5.25%, due 1/10/07 12,270,000 12,253,895
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Ranger Funding LLC
5.308%, due 1/30/07 (m) $ 996,187 $ 996,187
Sheffield Receivables Corp.
5.336%, due 1/16/07 (m) 996,187 996,187
Svenska Handelsbanken
5.26%, due 1/8/07 11,770,000 11,757,962
Toyota Motor Credit Co.
5.23%, due 1/4/07 16,320,000 16,312,887
5.27%, due 1/3/07 13,640,000 13,636,006
5.27%, due 1/4/07 1,150,000 1,149,495
UBS Finance (Delaware) LLC
5.26%, due 1/11/07 19,955,000 19,925,844
--------------
Total Commercial Paper
(Cost $169,374,475) 169,374,475
--------------
<Caption>
SHARES
INVESTMENT COMPANIES (0.7%)
BGI Institutional Money Market Fund (m) 6,936,586 6,936,586
Merrill Lynch Funds--Premier Institutional Money
Market Fund 3,614,368 3,614,368
--------------
Total Investment Companies
(Cost $10,550,954) 10,550,954
--------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.0%)++
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $332,262
(Collateralized by various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$328,901 and a Market
Value of $343,817) (m) $ 332,062 332,062
--------------
Total Repurchase Agreement
(Cost $332,062) 332,062
--------------
TIME DEPOSITS (2.2%)
Abbey National PLC
5.34%, due 1/2/07 (m) 3,984,747 3,984,747
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (m) 2,656,498 2,656,498
Bank of America Corp.
5.27%, due 1/19/07 (g)(m) 2,656,498 2,656,498
</Table>
M-174 MainStay VP High Yield 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
SHORT-TERM INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------
TIME DEPOSITS (CONTINUED)
Bank of Montreal
5.30%, due 1/26/07 (m) $ 1,660,312 $ 1,660,312
Barclays
5.32%, due 1/18/07 (m) 2,191,611 2,191,611
Calyon
5.31%, due 2/12/07 (m) 2,656,498 2,656,498
Citigroup
5.325%, due 3/22/07 (m) 2,324,436 2,324,436
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (m) 2,523,673 2,523,673
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (m) 2,656,498 2,656,498
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (m) 2,457,261 2,457,261
Rabobank Nederland
5.29%, due 3/6/07 (m) 1,992,374 1,992,374
Standard Chartered Bank
5.29%, due 1/10/07 (m) 2,656,498 2,656,498
UBS AG
5.285%, due 1/12/07 (m) 2,656,498 2,656,498
--------------
Total Time Deposits
(Cost $33,073,402) 33,073,402
--------------
Total Short-Term Investments
(Cost $213,330,893) 213,330,893
--------------
Total Investments
(Cost $1,452,469,250) (n) 101.7% 1,504,578,558(o)
Liabilities in Excess of
Cash and Other Assets (1.7) (24,751,406)
------------ --------------
Net Assets 100.0% $1,479,827,152
============ ==============
</Table>
<Table>
++ Less than one tenth of a percent.
+++ Fifty percent of the Fund's liquid assets are maintained to
cover "senior securities transactions" which may include,
but are not limited to, forwards, TBA's, options and
futures. This percentage is marked-to-market daily against
the value of the Fund's "senior securities" holdings to
ensure proper coverage for these transactions.
(a) Illiquid security. The total market value of these
securities at December 31, 2006 is $17,256,622, which
represents 1.2% of the Portfolio's net assets.
(b) Fair valued security. The total market value of these
securities at December 31, 2006 is $7,379,213, which
reflects 0.5% of the Portfolio's net assets.
(c) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(d) Issue in default.
(e) Issuer in bankruptcy.
(f) Represents a security, or a portion thereof, which is out on
loan.
(g) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(h) Floating Rate Loan--generally pays interest at rates which
are periodically re-determined at a margin above the London
Inter-Bank Offered Rate ("LIBOR") or other short-term rates.
The rate shown is the rate(s) in effect at December 31,
2006. Floating Rate Loans are generally considered
restrictive in that the Portfolio is ordinarily
contractually obligated to receive consent from the Agent
Bank and/or borrower prior to disposition of a Floating Rate
Loan.
(i) Yankee Bond--dollar-denominated bond issued in the United
States by a foreign bank or corporation.
(j) Non-income producing security.
(k) Restricted security. (See Note 2)
(l) PIK ("Payment in Kind")--interest or dividend payment is
made with additional securities.
(m) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(n) The cost for federal income tax purposes is $1,454,909,880.
(o) At December 31, 2006 net unrealized appreciation was
$49,668,678, 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 $76,507,667 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $26,838,989.
The following abbreviations are used in the above portfolio:
C$--Canadian Dollar
</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-175
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value
(identified cost
$1,452,469,250) including $51,286,810
market
value of securities loaned $1,504,578,558
Cash denominated in foreign currencies
(identified cost $253,055) 291,819
Cash 101,584
Receivables:
Dividends and interest 21,610,313
Investment securities sold 5,936,264
Fund shares sold 1,316,504
Other assets 163,378
Unrealized appreciation on foreign currency
forward contracts 131,757
--------------
Total assets 1,534,130,177
--------------
LIABILITIES:
Securities lending collateral 52,514,218
Payables:
Fund shares redeemed 562,414
Adviser (See Note 3) 374,034
Administrator (See Note 3) 249,375
Shareholder communication 225,998
Professional fees 129,185
NYLIFE Distributors (See Note 3) 106,191
Custodian 4,935
Directors 2,029
Accrued expenses 10,533
Unrealized depreciation on foreign currency
forward contracts 124,113
--------------
Total liabilities 54,303,025
--------------
Net assets $1,479,827,152
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
300 million shares authorized:
Initial Class $ 919,577
Service Class 485,267
Additional paid-in capital 1,421,558,895
Accumulated undistributed net investment
income 96,599,048
Accumulated net realized loss on investments
and foreign currency transactions (91,893,481)
Net unrealized appreciation on investments 52,109,308
Net unrealized appreciation on translation
of other assets and liabilities in foreign
currencies and foreign currency forward
contracts 48,538
--------------
Net assets $1,479,827,152
==============
INITIAL CLASS
Net assets applicable to outstanding shares $ 969,910,216
==============
Shares of capital stock outstanding 91,957,712
==============
Net asset value per share outstanding $ 10.55
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 509,916,936
==============
Shares of capital stock outstanding 48,526,717
==============
Net asset value per share outstanding $ 10.51
==============
</Table>
M-176 MainStay VP High Yield 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $107,324,559
Dividends (a) 1,496,914
Income from securities loaned--net 375,813
-------------
Total income 109,197,286
-------------
EXPENSES:
Advisory (See Note 3) 4,220,067
Administration (See Note 3) 2,813,378
Distribution and service--Service Class
(See Note 3) 1,096,724
Shareholder communication 357,977
Professional fees 237,248
Directors 83,198
Custodian 60,073
Miscellaneous 87,870
-------------
Total expenses 8,956,535
-------------
Net investment income 100,240,751
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Security transactions 5,834,535
Foreign currency transactions (215,688)
-------------
Net realized gain on investments and foreign
currency transactions 5,618,847
-------------
Net change in unrealized appreciation
(depreciation) on:
Security transactions 54,593,216
Translation of other assets and liabilities
in foreign currencies and foreign currency
forward contracts (251,643)
-------------
Net change in unrealized appreciation on
investments and foreign currency
transactions 54,341,573
-------------
Net realized and unrealized gain on
investments and foreign currency
transactions 59,960,420
-------------
Net increase in net assets resulting from
operations $160,201,171
=============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $7,081.
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-177
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 100,240,751 $ 104,800,291
Net realized gain on
investments and foreign
currency transactions 5,618,847 26,159,335
Net change in unrealized
appreciation (depreciation)
on investments and foreign
currency transactions 54,341,573 (91,039,436)
-------------------------------
Net increase in net assets
resulting from operations 160,201,171 39,920,190
-------------------------------
Dividends to shareholders:
From net investment income:
Initial Class (18,078,649) (60,080,345)
Service Class (8,667,497) (22,813,901)
-------------------------------
Total dividends to
shareholders (26,746,146) (82,894,246)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 55,692,632 63,138,174
Service Class 91,111,967 139,706,081
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 18,078,649 60,080,345
Service Class 8,667,497 22,813,901
-------------------------------
173,550,745 285,738,501
Cost of shares redeemed:
Initial Class (218,528,042) (237,602,067)
Service Class (31,669,989) (25,910,877)
-------------------------------
(250,198,031) (263,512,944)
Increase (decrease) in net
assets derived
from capital share
transactions (76,647,286) 22,225,557
-------------------------------
Net increase (decrease) in
net assets 56,807,739 (20,748,499)
NET ASSETS:
Beginning of year 1,423,019,413 1,443,767,912
-------------------------------
End of year $1,479,827,152 $1,423,019,413
===============================
Accumulated undistributed net
investment income at end of
year $ 96,599,048 $ 22,948,203
===============================
</Table>
M-178 MainStay VP High Yield Corporate Bond Portfolio The notes to the
financial statements are an integral part of, and should be read in conjunction
with, the financial statements.
This page intentionally left blank
www.mainstayfunds.com M-179
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 9.59 $ 9.90 $ 9.41 $ 7.39 $ 8.09
-------- ---------- ---------- ---------- --------
Net investment income 0.72 (b) 0.73(b) 0.70 0.75(b) 0.85
Net realized and unrealized
gain (loss) on investments 0.44 (0.46) 0.47 1.93 (0.67)
Net realized and unrealized
gain (loss) on foreign
currency transactions (0.00)(c) 0.02 0.02 0.01 (0.02)
-------- ---------- ---------- ---------- --------
Total from investment
operations 1.16 0.29 1.19 2.69 0.16
-------- ---------- ---------- ---------- --------
Less dividends:
From net investment income (0.20) (0.60) (0.70) (0.67) (0.86)
-------- ---------- ---------- ---------- --------
Net asset value at end of
period $ 10.55 $ 9.59 $ 9.90 $ 9.41 $ 7.39
======== ========== ========== ========== ========
Total investment return 12.04% 2.94%(d) 12.72% 36.37% 2.05%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 7.20% 7.39% 7.40% 8.51% 10.44%
Net expenses 0.56% 0.45% 0.59% 0.60% 0.60%
Expenses (before
reimbursement) 0.56% 0.55% 0.59% 0.60% 0.60%
Portfolio turnover rate 48% 45% 39% 43% 49%
Net assets at end of period
(in 000's) $969,910 $1,022,911 $1,167,527 $1,114,766 $696,500
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
2.85% and 2.58% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(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>
M-180 MainStay VP High Yield 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 SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
- ----------------------------------------------------------
JUNE 4,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 9.56 $ 9.88 $ 9.40 $ 8.69
-------- -------- -------- ------------
0.69(b) 0.71(b) 0.68 0.44(b)
0.44 (0.47) 0.47 0.92
(0.00)(c) 0.02 0.02 0.00(c)
-------- -------- -------- ------------
1.13 0.26 1.17 1.36
-------- -------- -------- ------------
(0.18) (0.58) (0.69) (0.65)
-------- -------- -------- ------------
$ 10.51 $ 9.56 $ 9.88 $ 9.40
======== ======== ======== ============
11.76% 2.66%(d) 12.44% 15.66%(e)
6.95% 7.14% 7.15% 8.26%+(f)
0.81% 0.70% 0.84% 0.85%+
0.81% 0.80% 0.84% 0.85%+
48% 45% 39% 43%
$509,917 $400,109 $276,241 $79,608
</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-181
MAINSTAY VP ICAP SELECT EQUITY PORTFOLIO
(FORMERLY MAINSTAY VP BASIC VALUE PORTFOLIO)
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 19.31% 6.70% 5.14%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP ICAP SELECT EQUITY
PORTFOLIO S&P 500/CITIGROUP VALUE INDEX
------------------------------ -----------------------------
5/1/98 10000 10000
10283 10160
10975 11452
11698 12149
11171 10726
8618 8489
11026 11188
12279 12945
12947 13699
12/31/06 15447 16548
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 19.00% 6.44% 4.88%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP ICAP SELECT EQUITY
PORTFOLIO S&P 500/CITIGROUP VALUE INDEX
------------------------------ -----------------------------
5/1/98 10000 10000
10266 10160
10929 11452
11621 12149
11069 10726
8518 8489
10872 11188
12078 12945
12707 13699
12/31/06 15122 16548
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
- -----------------------------------------------------------------------------------
S&P 500(R)/Citigroup Value Index* 20.80% 9.06% 5.98%
</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 figures shown for the five-year and since-inception periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 6.68% and 5.13% for the Initial Class and 6.42%
and 4.87% for the Service Class for the five-year and since-inception
periods, respectively.
2. 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 6/3/03 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-182 MainStay VP ICAP Select Equity Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP ICAP SELECT EQUITY
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,136.20 $4.74 $1,020.60 $4.48
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,134.95 $6.08 $1,019.35 $5.75
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.88% for Initial Class and 1.13% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-183
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 97.7
Short-Term Investments (collateral from securities lending 2.8
is 2.7%)
Liabilities in Excess of Cash and Other Assets (0.5)
</Table>
See Portfolio of Investments on page M-187 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. General Electric Co.
2. Novartis AG, ADR
3. McDonald's Corp.
4. St. Paul Travelers Cos., Inc. (The)
5. American International Group, Inc.
6. Citigroup, Inc.
7. JPMorgan Chase & Co.
8. Bank of America Corp.
9. Altria Group, Inc.
10. Dominion Resources, Inc.
</Table>
M-184 MainStay VP ICAP Select Equity Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Robert H. Lyon and Jerrod K. Senser,
CFA, of Institutional Capital LLC (ICAP).
WERE THERE ANY SIGNIFICANT CHANGES IN THE MANAGEMENT OF MAINSTAY VP ICAP SELECT
EQUITY PORTFOLIO IN 2006?
On July 5, 2006, Institutional Capital LLC replaced The Dreyfus Corporation as
subadvisor to the Portfolio. ICAP served under an interim subadvisory agreement
until September 28, 2006, when shareholders approved the new subadvisory
agreement. ICAP uses a team approach with a primarily large-cap, value-oriented
investment style. On October 31, 2006, the Portfolio added the S&P 500(R) Index
as its secondary benchmark index. Effective November 10, 2006, the name of the
Portfolio was changed from MainStay VP Basic Value Portfolio to MainStay VP ICAP
Select Equity Portfolio.
HOW DID MAINSTAY VP ICAP SELECT EQUITY PORTFOLIO PERFORM RELATIVE TO ITS PEERS
AND ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP ICAP Select Equity Portfolio
returned 19.31% for Initial Class shares and 19.00% for Service Class shares.
Initial Class shares outperformed--and Service Class shares marginally
underperformed--the 19.01% return of the average Lipper Variable Products
Large-Cap Value Portfolio for the same period. Both share classes underperformed
the 20.80% return of the S&P 500/Citigroup Value Index,* the Portfolio's
broad-based securities-market index, for the year ended December 31, 2006. Both
share classes outperformed the 15.79% return of the S&P 500(R) Index, the
Portfolio's secondary benchmark, over the same period.
WHAT FACTORS ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
This commentary covers the period from July 5, 2006, through December 31, 2006.
Stock selection was the primary reason for the Portfolio's performance relative
to the S&P 500/Citigroup Value Index* for this period and for the year. The
strongest-contributing sectors to the Portfolio's performance relative to the
S&P 500/Citigroup Value Index* in terms of total effect were consumer
discretionary, health care and information technology.
DURING THE PERIOD ICAP SUBADVISED THE PORTFOLIO, WHICH SECTORS IN THE PORTFOLIO
PROVIDED THE STRONGEST RELATIVE PERFORMANCE AND WHICH SECTORS WERE THE WEAKEST?
The Portfolio's strongest-performing sectors relative to the S&P 500/Citigroup
Value Index were the consumer discretionary, information technology and health
care sectors. Stock-specific catalysts drove the performance of stocks in these
sectors.
Telecommunication services, materials and energy were weak performers in
relation to the primary benchmark. Merger-related issues and weaker-than-
expected subscriber growth weighed heavily on Sprint Nextel and detracted from
the Portfolio's telecommunication services sector return. Energy stocks trailed
the broader market in the second half of the year because of declining oil
prices.
DURING THE PORTION OF 2006 IN WHICH ICAP SUBADVISED THE PORTFOLIO, WHICH
INDIVIDUAL HOLDINGS WERE THE STRONGEST CONTRIBUTORS TO THE PORTFOLIO'S
PERFORMANCE AND WHICH WERE THE WEAKEST?
The strongest individual contributors to the Portfolio's absolute performance
included McDonald's, InterContinental Hotels Group and ExxonMobil. The weakest
contributors were Norfolk Southern, Halliburton and Sprint Nextel.
The principal risk of investing in value stocks is that they may never reach
what the Portfolio Manager believes is their full value or they may even go down
in value. 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.
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
Portfolio may purchase securities that are made available in IPOs (initial
public offerings). The securities purchased in IPOs can be very volatile, and
the effect on the Portfolio's performance depends on a variety of factors. The
Portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the Portfolio's gains or losses.
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-185
WERE THERE ANY SIGNIFICANT PURCHASES OR SALES DURING THE PORTION OF THE
REPORTING PERIOD ICAP SUBADVISED THE PORTFOLIO?
In the portion of 2006 during which ICAP subadvised the Portfolio, we initiated
a new position in Hess, a global integrated oil company. Hess trades at a
discount to its peers because of poor historical operating performance and a
strategy driven by offshore exploration. We believed that the stock's discount
might close as Hess continued to fix its operating problems. We also established
a new position in Imperial Chemical Industries, a U.K.-based specialty chemical
company. The company substantially improved profitability and pared down noncore
businesses to realize shareholder value. Divestitures have strengthened the
company's balance sheet, and further asset restructuring is possible.
Significant sales included Abbott Laboratories, which reached its target price,
and Aon, which showed slower-than-expected margin improvement.
WERE THERE ANY SIGNIFICANT WEIGHTING CHANGES DURING THE PORTION OF 2006 IN WHICH
ICAP MANAGED THE PORTFOLIO?
Under our watch, the Portfolio decreased its weighting in the telecommunication
services sector and increased its weighting in the health care sector.
HOW WAS THE PORTFOLIO POSITIONED AT THE END OF 2006?
As of December 31, 2006, the Portfolio was underweight relative to the S&P
500/Citigroup Value Index* in the financials sector and overweight in the energy
sector.
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.
* 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.
INFORMATION ABOUT MAINSTAY VP ICAP SELECT EQUITY PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-186 MainStay VP ICAP Select Equity Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (97.7%)+
- -----------------------------------------------------------------------------
CHEMICALS (2.3%)
Imperial Chemical Industries PLC,
Sponsored ADR (a)(b) 118,050 $ 4,182,511
------------
COMMUNICATIONS EQUIPMENT (1.9%)
Motorola, Inc. 167,250 3,438,660
------------
COMPUTERS & PERIPHERALS (3.1%)
Hewlett-Packard Co. 139,950 5,764,540
------------
CONTAINERS & PACKAGING (2.6%)
Temple-Inland, Inc. 103,700 4,773,311
------------
DIVERSIFIED FINANCIAL SERVICES (14.2%)
V Bank of America Corp. 162,300 8,665,197
V Citigroup, Inc. 156,500 8,717,050
V JPMorgan Chase & Co. 180,350 8,710,905
------------
26,093,152
------------
ELECTRIC UTILITIES (1.4%)
Entergy Corp. 27,450 2,534,184
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.0%)
Agilent Technologies, Inc. (c) 103,700 3,613,945
------------
ENERGY EQUIPMENT & SERVICES (3.0%)
Halliburton Co. 176,696 5,486,411
------------
FOOD & STAPLES RETAILING (5.2%)
CVS Corp. 75,150 2,322,886
Wal-Mart Stores, Inc. 157,250 7,261,805
------------
9,584,691
------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.6%)
Baxter International, Inc. 145,000 6,726,550
------------
HOTELS, RESTAURANTS & LEISURE (8.4%)
InterContinental Hotels Group PLC, ADR (a) 251,600 6,352,900
V McDonald's Corp. 205,250 9,098,732
------------
15,451,632
------------
INDUSTRIAL CONGLOMERATES (10.1%)
V General Electric Co. 278,250 10,353,683
Textron, Inc. (b) 86,900 8,148,613
------------
18,502,296
------------
INSURANCE (9.5%)
V American International Group, Inc. 121,950 8,738,937
V St. Paul Travelers Cos., Inc. (The) 163,450 8,775,631
------------
17,514,568
------------
</Table>
<Table>
<Caption>
SHARES VALUE
MULTILINE RETAIL (1.6%)
Target Corp. 50,650 $ 2,889,583
------------
MULTI-UTILITIES (4.6%)
V Dominion Resources, Inc. 100,750 8,446,880
------------
OIL, GAS & CONSUMABLE FUELS (11.0%)
ExxonMobil Corp. 96,500 7,394,795
Hess Corp. (b) 145,800 7,227,306
Total S.A., Sponsored ADR (a) 77,850 5,598,972
------------
20,221,073
------------
PHARMACEUTICALS (5.5%)
V Novartis AG, ADR (a) 175,650 10,089,336
------------
ROAD & RAIL (3.0%)
CSX Corp. 160,700 5,532,901
------------
TOBACCO (4.7%)
V Altria Group, Inc. 100,200 8,599,164
------------
Total Common Stocks
(Cost $160,508,124) 179,445,388
------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (2.8%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (0.6%)
Barton Capital LLC
5.298%, due 1/4/07 (d) $ 94,279 94,279
Charta LLC
5.314%, due 1/11/07 (d) 96,584 96,584
Ciesco, Inc.
5.305%, due 1/10/07 (d) 126,051 126,051
Compass Securitization LLC
5.324%, due 1/18/07 (d) 128,779 128,779
Fairway Finance Corp.
5.301%, due 1/8/07 (d) 96,584 96,584
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (d) 95,260 95,260
Greyhawk Funding LLC
5.305%, due 1/5/07 (d) 94,463 94,463
Jupiter Securitization Corp.
5.324%, due 1/18/07 (d) 96,584 96,584
Liberty Street Funding Co.
5.325%, due 1/29/07 (d) 32,195 32,195
Old Line Funding LLC
5.303%, due 1/9/07 (d) 126,192 126,192
</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.
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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Ranger Funding LLC
5.308%, due 1/30/07 (d) $ 96,584 $ 96,584
Sheffield Receivables Corp.
5.336%, due 1/16/07 (d) 96,584 96,584
------------
Total Commercial Paper
(Cost $1,180,139) 1,180,139
------------
<Caption>
SHARES
INVESTMENT COMPANY (0.4%)
BGI Institutional Money Market Fund (d) 672,529 672,529
------------
Total Investment Company
(Cost $672,529) 672,529
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.0%)++
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $32,214
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note, with rates between
5.00%-8.96% and maturity dates between
8/15/09-12/29/49, with a Principal Amount of
$31,888 and a Market Value of $33,334) (d) $ 32,195 32,195
------------
Total Repurchase Agreement
(Cost $32,195) 32,195
------------
TIME DEPOSITS (1.8%)
Abbey National PLC
5.34%, due 1/2/07 (d) 386,337 386,337
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (d) 257,558 257,558
Bank of America Corp.
5.27%, due 1/19/07 (d)(e) 257,558 257,558
Bank of Montreal
5.30%, due 1/26/07 (d) 160,974 160,974
Barclays
5.32%, due 1/18/07 (d) 212,485 212,485
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Calyon
5.31%, due 2/12/07 (d) $ 257,558 $ 257,558
Citigroup
5.325%, due 3/22/07 (d) 225,363 225,363
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (d) 244,680 244,680
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (d) 257,558 257,558
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (d) 238,241 238,241
Rabobank Nederland
5.29%, due 3/6/07 (d) 193,168 193,168
Standard Chartered Bank
5.29%, due 1/10/07 (d) 257,558 257,558
UBS AG
5.285%, due 1/12/07 (d) 257,557 257,557
------------
Total Time Deposits
(Cost $3,206,595) 3,206,595
------------
Total Short-Term Investments
(Cost $5,091,458) 5,091,458
------------
Total Investments
(Cost $165,599,582) (f) 100.5% 184,536,846(g)
Liabilities in Excess of
Cash and Other Assets (0.5) (997,343)
---------- ------------
Net Assets 100.0% $183,539,503
========== ============
</Table>
<Table>
++ Less than one tenth of a percent.
(a) ADR--American Depositary Receipt.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) Non-income producing security.
(d) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(e) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(f) The cost for federal income tax purposes is $165,848,646.
(g) At December 31, 2006 net unrealized appreciation was
$18,688,200, 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 $19,194,924 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $506,724.
</Table>
M-188 MainStay VP ICAP Select 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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $165,599,582) including $4,935,828
market value of securities loaned $184,536,846
Cash 9,171,356
Receivables:
Investment securities sold 622,864
Dividends and interest 337,549
Fund shares sold 240,311
Other assets 270
-------------
Total assets 194,909,196
-------------
LIABILITIES:
Securities lending collateral 5,091,458
Payables:
Investment securities purchased 5,858,067
Fund shares redeemed 231,793
Adviser (See Note 3) 82,824
Shareholder communication 33,592
Administrator (See Note 3) 30,117
Professional fees 27,859
NYLIFE Distributors (See Note 3) 9,413
Custodian 1,410
Directors 208
Accrued expenses 2,952
-------------
Total liabilities 11,369,693
-------------
Net assets $183,539,503
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 99,741
Service Class 33,804
Additional paid-in capital 151,295,990
Accumulated undistributed net investment
income 1,692,110
Accumulated undistributed net realized gain on
investments 11,480,594
Net unrealized appreciation on investments 18,937,264
-------------
Net assets $183,539,503
=============
INITIAL CLASS
Net assets applicable to outstanding shares $137,190,873
=============
Shares of capital stock outstanding 9,974,098
=============
Net asset value per share outstanding $ 13.75
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 46,348,630
=============
Shares of capital stock outstanding 3,380,428
=============
Net asset value per share outstanding $ 13.71
=============
</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 OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 2,689,220
Interest 122,329
Income from securities loaned--net 10,961
------------
Total income 2,822,510
------------
EXPENSES:
Advisory (See Note 3) 713,964
Administration (See Note 3) 237,988
Professional fees 87,836
Distribution and service--Service Class
(See Note 3) 83,158
Shareholder communication 36,348
Custodian 16,841
Directors 6,516
Miscellaneous 13,171
------------
Total expenses before waiver/reimbursement 1,195,822
Fees paid indirectly (See Note 3(A)) (6,894)
Expense waiver from Manager (See Note 3) (59,495)
------------
Net expenses 1,129,433
------------
Net investment income 1,693,077
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments 11,561,105
Net change in unrealized appreciation on
investments 10,123,381
------------
Net realized and unrealized gain on investments 21,684,486
------------
Net increase in net assets resulting from
operations $23,377,563
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$11,253.
M-190 MainStay VP ICAP Select 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 CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 1,693,077 $ 1,215,323
Net realized gain on
investments 11,561,105 6,065,191
Net change in unrealized
appreciation on investments 10,123,381 (2,367,800)
---------------------------
Net increase in net assets
resulting from operations 23,377,563 4,912,714
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (343,871) (614,555)
Service Class (52,831) (212,181)
From net realized gain on investments:
Initial Class (628,453) (683,777)
Service Class (212,661) (293,622)
---------------------------
Total dividends and
distributions to
shareholders (1,237,816) (1,804,135)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 67,392,133 4,086,907
Service Class 15,323,000 8,109,720
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 972,324 1,298,332
Service Class 265,492 505,803
---------------------------
83,952,949 14,000,762
Cost of shares redeemed:
Initial Class (14,129,398) (12,483,781)
Service Class (3,712,585) (3,353,645)
---------------------------
(17,841,983) (15,837,426)
Increase (decrease) in net
assets derived from
capital share transactions 66,110,966 (1,836,664)
---------------------------
Net increase in net assets 88,250,713 1,271,915
NET ASSETS:
Beginning of year 95,288,790 94,016,875
---------------------------
End of year $183,539,503 $ 95,288,790
===========================
Accumulated undistributed net
investment income at end of
period $ 1,692,110 $ 395,735
===========================
</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
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 11.61 $ 11.23 $ 10.18 $ 8.01 $ 10.46
-------- ------- ------- ------- -------
Net investment income 0.19(b) 0.15(b) 0.11 0.07(b) 0.06
Net realized and unrealized gain (loss) on
investments 2.04 0.46 1.04 2.17 (2.45)
-------- ------- ------- ------- -------
Total from investment operations 2.23 0.61 1.15 2.24 (2.39)
-------- ------- ------- ------- -------
Less dividends and distributions:
From net investment income (0.03) (0.11) (0.10) (0.07) (0.06)
From net realized gain on investments (0.06) (0.12) -- -- --
-------- ------- ------- ------- -------
Total dividends and distributions (0.09) (0.23) (0.10) (0.07) (0.06)
-------- ------- ------- ------- -------
Net asset value at end of period $ 13.75 $ 11.61 $ 11.23 $ 10.18 $ 8.01
======== ======= ======= ======= =======
Total investment return 19.31% 5.44%(e) 11.37% 27.95% (22.86%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.50% 1.35% 1.04% 0.87% 0.63%
Net expenses 0.88%# 0.77%# 0.96% 0.99% 0.98%
Expenses (before waiver/reimbursement) 0.94%# 0.91%# 0.96% 0.99% 0.98%
Portfolio turnover rate 130% 55% 75% 73% 65%
Net assets at end of period (in 000's) $137,191 $66,657 $71,543 $62,229 $49,975
</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%.
(e) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
5.36% and 5.14% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2006.
# Includes fees paid indirectly which amounted to less than 0.01% and 0.01% of the average
net assets for the years ended December 31, 2006 and 2005, respectively.
+ Annualized.
</Table>
M-192 MainStay VP ICAP Select 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>
SERVICE CLASS
- -------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 11.59 $ 11.21 $ 10.17 $ 8.97
------- ------- ------- ------------
0.15(b) 0.13(b) 0.09 0.03(b)
2.05 0.46 1.04 1.24
------- ------- ------- ------------
2.20 0.59 1.13 1.27
------- ------- ------- ------------
(0.02) (0.09) (0.09) (0.07)
(0.06) (0.12) -- --
------- ------- ------- ------------
(0.08) (0.21) (0.09) (0.07)
------- ------- ------- ------------
$ 13.71 $ 11.59 $ 11.21 $10.17
======= ======= ======= ============
19.00% 5.21%(e) 11.09% 14.13%(c)
1.23% 1.10% 0.79% 0.62%+(d)
1.13%# 1.02%# 1.21% 1.24%+
1.19%# 1.16%# 1.21% 1.24%+
130% 55% 75% 73%
$46,349 $28,632 $22,474 $6,033
</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
MAINSTAY VP INCOME & GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 16.86% 7.38% 4.81%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP INCOME & GROWTH
PORTFOLIO S&P 500 INDEX
--------------------------- -------------
5/1/98 10000 10000
10960 11171
12888 13522
11505 12291
10527 10830
8472 8437
10903 10857
12283 12038
12859 12629
12/31/06 15028 14624
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 16.57% 7.12% 4.55%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP INCOME & GROWTH
PORTFOLIO S&P 500 INDEX
--------------------------- -------------
5/1/98 10000 10000
10942 11171
12835 13522
11429 12291
10431 10830
8374 8437
10752 10857
12083 12038
12623 12629
12/31/06 14715 14624
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
- -----------------------------------------------------------------------------------
S&P 500(R) Index* 15.79% 6.19% 4.48%
</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 figures shown for the five-year and since-inception periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 7.36% and 4.80% for the Initial Class and 7.11%
and 4.54% for the Service Class for the five-year and since-inception
periods, respectively.
2. 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-194 MainStay VP Income & Growth Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP INCOME AND GROWTH
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
VALUE (BASED
ENDING ACCOUNT ON HYPOTHETICAL
BEGINNING VALUE (BASED ON EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT ACTUAL RETURNS PAID RETURN AND PAID
VALUE AND EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,138.85 $4.37 $1,020.95 $4.13
- ----------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,137.60 $5.71 $1,019.70 $5.40
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.81% for Initial Class and 1.06% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-195
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 100.3
Short-Term Investments (collateral from securities lending 11.0
is 11.0%)
Liabilities in Excess of Cash and Other Assets (11.3)
</Table>
See Portfolio of Investments on page M-198 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. ExxonMobil Corp.
2. International Business Machines Corp.
3. Citigroup, Inc.
4. Bank of America Corp.
5. Morgan Stanley
6. Chevron Corp.
7. Washington Mutual, Inc.
8. Pfizer, Inc.
9. Hewlett-Packard Co.
10. Goldman Sachs Group, Inc. (The)
</Table>
M-196 MainStay VP Income & Growth Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Kurt Borgwardt, CFA, Lynette Pang, John
Schniedwind, CFA, and Zili Zhang of American Century Investment Management, Inc.
HOW DID MAINSTAY VP INCOME & GROWTH PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Income & Growth Portfolio
returned 16.86% for Initial Class shares and 16.57% for Service Class shares.
Both share classes underperformed the 17.30% return of the average Lipper*
Variable Products Multi-Cap Value Portfolio for the same period. Both share
classes outperformed the 15.79% return of the S&P 500(R) Index,* the Portfolio's
broad-based securities-market index, for the year ended December 31, 2006.
WHAT ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
A combination of favorable sector allocation, positive stock selection and a
slight tilt toward value helped the Portfolio outperform the S&P 500(R) Index*
in 2006.
WHICH SECTORS CONTRIBUTED THE MOST TO THE PORTFOLIO'S OUTPERFORMANCE OF THE S&P
500(R) INDEX* IN 2006?
The Portfolio's holdings in the health care and energy sectors had the biggest
positive impact on performance relative to the S&P 500(R) Index.* Stock
selection in the pharmaceuticals and health care providers & services industries
added value, as did an overweight position in life sciences tools & services.
The Portfolio's outperformance in the energy sector was driven by an emphasis on
oil, gas & consumable fuels stocks, which produced the best returns in the
sector.
Stock selection in the industrials sector, especially among machinery
manufacturers, also enhanced results relative to the Index.
WHICH OF THE PORTFOLIO'S SECTORS DETRACTED THE MOST FROM RELATIVE PERFORMANCE IN
2006?
The Portfolio's consumer staples and consumer discretionary holdings
underperformed their counterparts in the S&P 500(R) Index.* Stock selection in
the automobiles and auto components industries, along with an underweight
position in media shares, weakened results in the consumer discretionary sector.
The weakness in consumer staples resulted primarily from stock selection among
food products companies.
Information technology stocks also detracted from relative performance. Four of
the Portfolio's ten greatest detractors from relative performance were
technology stocks.
IN 2006, WHAT WERE THE PORTFOLIO'S BEST AND WORST INDIVIDUAL PERFORMERS ON AN
ABSOLUTE BASIS?
Energy stocks posted the highest total returns in
the Portfolio, and two of them--energy producers ExxonMobil and Chevron--topped
the list of best contributors to absolute performance. Computers & peripherals
provider International Business Machines was also one of the top contributors to
the Portfolio's performance.
The worst contribution to the Portfolio's absolute performance came from
semiconductor manufacturer Intel, followed by paper & forest products company
Louisiana-Pacific and Internet services provider EarthLink.
WHAT WERE THE MOST SIGNIFICANT PURCHASES AND SALES FOR THE PORTFOLIO IN 2006?
Changes to the Portfolio are driven by our stock selection process, which
employs a balanced set of growth and value criteria to find stocks that strike a
balance between downside protection and upside potential. This process led us to
establish significant positions in financial services providers Goldman Sachs
Group and Lehman Brothers Holdings, as well as packaged food supplier General
Mills.
In 2006, we eliminated positions in pharmaceutical giant Bristol-Myers Squibb
and property & casualty insurer Loews.
WERE ANY SECTORS OVERWEIGHTED OR UNDERWEIGHTED RELATIVE TO THE S&P 500(R)
INDEX?*
The Portfolio typically maintains relatively neutral sector weightings compared
with the Index, focusing instead on individual stock selection. In 2006,
however, the Portfolio held modestly overweight positions in the financials and
energy sectors, with corresponding underweights in the industrials and consumer
staples sectors.
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.
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.
www.mainstayfunds.com M-197
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (100.3%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.1%)
Lockheed Martin Corp. (a) 2,633 $ 242,420
Northrop Grumman Corp. 29,817 2,018,611
Raytheon Co. 2,608 137,702
------------
2,398,733
------------
AIR FREIGHT & LOGISTICS (1.1%)
FedEx Corp. 2,957 321,189
United Parcel Service, Inc. Class B 12,071 905,084
------------
1,226,273
------------
AIRLINES (0.1%)
Southwest Airlines Co. 9,408 144,131
------------
AUTO COMPONENTS (1.8%)
ArvinMeritor, Inc. 47,879 872,834
Magna International, Inc. Class A (a) 14,754 1,188,435
------------
2,061,269
------------
BEVERAGES (0.1%)
Coca-Cola Enterprises, Inc. 1,161 23,708
Pepsi Bottling Group, Inc. (The) 2,751 85,033
------------
108,741
------------
BIOTECHNOLOGY (1.2%)
Amgen, Inc. (b) 15,383 1,050,813
Cephalon, Inc. (a)(b) 2,357 165,956
ImClone Systems, Inc. (a)(b) 3,699 98,985
------------
1,315,754
------------
BUILDING PRODUCTS (0.3%)
USG Corp. (a)(b) 7,142 391,382
------------
CAPITAL MARKETS (6.7%)
V Goldman Sachs Group, Inc. (The) 12,874 2,566,432
Lehman Brothers Holdings, Inc. 11,143 870,491
Merrill Lynch & Co., Inc. 2,721 253,325
V Morgan Stanley 47,776 3,890,400
------------
7,580,648
------------
CHEMICALS (2.3%)
Celanese Corp. Class A 10,389 268,867
Eastman Chemical Co. 1,941 115,121
Georgia Gulf Corp. 4,874 94,117
Lyondell Chemical Co. 59,192 1,513,539
Westlake Chemical Corp. (a) 18,218 571,681
------------
2,563,325
------------
COMMERCIAL BANKS (0.2%)
Comerica, Inc. 3,677 215,766
------------
</Table>
<Table>
<Caption>
SHARES VALUE
COMMERCIAL SERVICES & SUPPLIES (0.5%)
John H. Harland Co. 5,929 $ 297,636
Labor Ready, Inc. (b) 4,233 77,591
R.R. Donnelley & Sons Co. 5,296 188,220
------------
563,447
------------
COMMUNICATIONS EQUIPMENT (0.5%)
Cisco Systems, Inc. (b) 6,540 178,738
Motorola, Inc. 17,778 365,516
------------
544,254
------------
COMPUTERS & PERIPHERALS (7.6%)
V Hewlett-Packard Co. 66,816 2,752,151
Imation Corp. 967 44,898
V International Business Machines Corp. 56,833 5,521,326
Lexmark International, Inc. Class A (b) 3,489 255,395
------------
8,573,770
------------
CONSUMER FINANCE (0.1%)
Capital One Financial Corp. 707 54,312
------------
CONTAINERS & PACKAGING (0.2%)
Temple-Inland, Inc. 4,511 207,641
------------
DISTRIBUTORS (0.3%)
Building Materials Holding Corp. (a) 14,567 359,659
------------
DIVERSIFIED FINANCIAL SERVICES (9.3%)
V Bank of America Corp. 72,896 3,891,917
V Citigroup, Inc. 95,949 5,344,359
JPMorgan Chase & Co. (a) 27,648 1,335,398
------------
10,571,674
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (3.4%)
AT&T, Inc. (a) 46,734 1,670,741
Embarq Corp. 835 43,888
Verizon Communications, Inc. 55,952 2,083,653
------------
3,798,282
------------
ELECTRIC UTILITIES (0.4%)
FirstEnergy Corp. 4,836 291,176
Progress Energy, Inc. 2,729 133,939
------------
425,115
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (1.0%)
Arrow Electronics, Inc. (b) 9,755 307,770
Nam Tai Electronics, Inc. 11,567 175,703
Tech Data Corp. (b) 2,301 87,139
Vishay Intertechnology, Inc. (b) 43,734 592,158
------------
1,162,770
------------
</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.
M-198 MainStay VP 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)
- -----------------------------------------------------------------------------
(x
ENERGY EQUIPMENT & SERVICES (0.2%)
Grey Wolf, Inc. (b) 37,926 $ 260,172
------------
FOOD & STAPLES RETAILING (1.0%)
Pantry, Inc. (The) (b) 476 22,296
SUPERVALU, Inc. 31,200 1,115,400
------------
1,137,696
------------
FOOD PRODUCTS (1.1%)
ConAgra Foods, Inc. 1,792 48,384
Del Monte Foods Co. 8,978 99,027
General Mills, Inc. 15,118 870,797
Seaboard Corp. 160 282,400
------------
1,300,608
------------
GAS UTILITIES (0.5%)
Nicor, Inc. 1,765 82,602
UGI Corp. 19,454 530,705
------------
613,307
------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.8%)
Becton, Dickinson & Co. 13,595 953,689
------------
HEALTH CARE PROVIDERS & SERVICES (2.9%)
Aetna, Inc. 3,587 154,887
AMERIGROUP Corp. (a)(b) 14,908 535,048
AmerisourceBergen Corp. 2,326 104,577
Apria Healthcare Group, Inc. (b) 7,830 208,670
Humana, Inc. (b) 12,410 686,397
McKesson Corp. 24,836 1,259,185
Molina Healthcare, Inc. (b) 998 32,445
WellCare Health Plans, Inc. (b) 3,817 262,991
------------
3,244,200
------------
HOTELS, RESTAURANTS & LEISURE (1.0%)
Darden Restaurants, Inc. (a) 9,691 389,287
McDonald's Corp. 17,129 759,329
------------
1,148,616
------------
HOUSEHOLD DURABLES (1.7%)
Lennar Corp. Class A 7,438 390,198
Newell Rubbermaid, Inc. 15,104 437,261
NVR, Inc. (a)(b) 710 457,950
Tupperware Brands Corp. 27,631 624,737
------------
1,910,146
------------
HOUSEHOLD PRODUCTS (2.1%)
Kimberly-Clark Corp. 31,318 2,128,058
Procter & Gamble Co. (The) 3,083 198,144
------------
2,326,202
------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.6%)
TXU Corp. 13,108 710,585
------------
</Table>
<Table>
<Caption>
SHARES VALUE
INDUSTRIAL CONGLOMERATES (0.7%)
General Electric Co. 5,359 $ 199,408
Tyco International, Ltd. 18,234 554,314
------------
753,722
------------
INSURANCE (4.2%)
ACE, Ltd. 32,017 1,939,270
American Financial Group, Inc. 3,292 118,216
American International Group, Inc. 1,823 130,636
Arch Capital Group, Ltd. (b) 8,974 606,732
Aspen Insurance Holdings, Ltd. 4,889 128,874
Axis Capital Holdings, Ltd. 10,325 344,545
Chubb Corp. (The) 7,154 378,518
Endurance Specialty Holdings, Ltd. 24,606 900,088
PartnerRe, Ltd. (a) 2,824 200,589
Zenith National Insurance Corp. 1,051 49,302
------------
4,796,770
------------
INTERNET & CATALOG RETAIL (0.5%)
Expedia, Inc. (a)(b) 27,808 583,412
------------
INTERNET SOFTWARE & SERVICES (1.1%)
EarthLink, Inc. (b) 90,069 639,490
RealNetworks, Inc. (b) 11,700 127,998
United Online, Inc. (a) 37,616 499,541
------------
1,267,029
------------
IT SERVICES (1.8%)
Accenture, Ltd. Class A 27,606 1,019,490
Acxiom Corp. 15,534 398,447
Computer Sciences Corp. (a)(b) 10,941 583,921
------------
2,001,858
------------
LEISURE EQUIPMENT & PRODUCTS (0.6%)
Eastman Kodak Co. 2,085 53,793
Hasbro, Inc. 5,769 157,205
Mattel, Inc. 18,678 423,244
------------
634,242
------------
LIFE SCIENCES TOOLS & SERVICES (0.9%)
Applera Corp.-Applied BioSystems Group 28,524 1,046,546
------------
MACHINERY (1.9%)
Cummins, Inc. 17,786 2,101,950
------------
MEDIA (1.0%)
CBS Corp. Class B 15,418 480,733
Idearc, Inc. (b) 2,797 80,134
Liberty Media Holding Corp. Class A (b) 711 69,664
Regal Entertainment Group Class A (a) 4,086 87,114
Walt Disney Co. (The) 11,193 383,584
------------
1,101,229
------------
</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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
METALS & MINING (2.6%)
Freeport-McMoRan Copper &
Gold, Inc. Class B (a) 8,295 $ 462,280
IPSCO, Inc. 3,871 363,371
Nucor Corp. 3,146 171,960
Phelps Dodge Corp. 8,591 1,028,515
Quanex Corp. 5,138 177,723
Steel Dynamics, Inc. 12,700 412,115
United States Steel Corp. 5,043 368,845
------------
2,984,809
------------
MULTILINE RETAIL (0.7%)
Big Lots, Inc. (b) 10,224 234,334
Federated Department Stores, Inc. 14,049 535,688
------------
770,022
------------
MULTI-UTILITIES (0.5%)
PG&E Corp. 3,188 150,888
Vectren Corp. 14,072 397,956
------------
548,844
------------
OIL, GAS & CONSUMABLE FUELS (13.1%)
V Chevron Corp. 40,584 2,984,142
ConocoPhillips 31,030 2,232,609
EnCana Corp. 3,325 152,784
V ExxonMobil Corp. 80,465 6,166,033
Marathon Oil Corp. 14,987 1,386,298
Occidental Petroleum Corp. 15,626 763,018
Sunoco, Inc. 6,392 398,605
Tesoro Corp. 5,198 341,872
Valero Energy Corp. 9,158 468,523
------------
14,893,884
------------
PHARMACEUTICALS (7.1%)
Biovail Corp. (a) 41,601 880,277
Johnson & Johnson 24,357 1,608,049
King Pharmaceuticals, Inc. (b) 26,732 425,573
Merck & Co., Inc. 51,320 2,237,552
V Pfizer, Inc. 106,918 2,769,176
ViroPharma, Inc. (b) 11,183 163,719
------------
8,084,346
------------
REAL ESTATE INVESTMENT TRUSTS (1.9%)
CBL & Associates
Properties, Inc. (a) 24,126 1,045,862
iStar Financial, Inc. 22,108 1,057,205
------------
2,103,067
------------
ROAD & RAIL (0.8%)
Burlington Northern
Santa Fe Corp. 4,195 309,633
CSX Corp. 4,472 153,971
</Table>
<Table>
<Caption>
SHARES VALUE
ROAD & RAIL (CONTINUED)
Norfolk Southern Corp. 4,272 $ 214,839
Union Pacific Corp. 2,870 264,097
------------
942,540
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.8%)
Amkor Technology, Inc. (a)(b) 24,780 231,445
Lam Research Corp. (b) 4,024 203,695
National Semiconductor Corp. 8,902 202,075
OmniVision Technologies, Inc. (a)(b) 19,353 264,168
Texas Instruments, Inc. 1,304 37,555
------------
938,938
------------
SOFTWARE (1.8%)
BMC Software, Inc. (b) 492 15,842
Microsoft Corp. 64,279 1,919,371
Sybase, Inc. (b) 4,526 111,792
------------
2,047,005
------------
SPECIALTY RETAIL (1.4%)
AutoNation, Inc. (b) 13,739 292,915
Barnes & Noble, Inc. 15,590 619,079
Group 1 Automotive, Inc. 13,578 702,254
------------
1,614,248
------------
TEXTILES, APPAREL & LUXURY GOODS (0.1%)
Brown Shoe Co., Inc. 3,191 152,338
------------
THRIFTS & MORTGAGE FINANCE (4.8%)
Corus Bankshares, Inc. (a) 18,303 422,250
Countrywide Financial Corp. 18,572 788,381
FirstFed Financial Corp. (a)(b) 635 42,526
IndyMac Bancorp, Inc. (a) 27,840 1,257,254
V Washington Mutual, Inc. 64,153 2,918,320
------------
5,428,731
------------
TOBACCO (0.1%)
Altria Group, Inc. 1,408 120,835
------------
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
Sprint Nextel Corp. 46,765 883,391
------------
Total Common Stocks
(Cost $97,683,142) 113,671,923
------------
<Caption>
PRINCIPAL
AMOUNT
(x
SHORT-TERM INVESTMENTS (11.0%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (2.5%)
Barton Capital LLC
5.298%, due 1/4/07 (c) $ 230,759 230,759
Charta LLC
5.314%, due 1/11/07 (c) 236,400 236,400
</Table>
M-200 MainStay VP 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>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Ciesco, Inc.
5.305%, due 1/10/07 (c) $ 308,522 $ 308,522
Compass Securitization LLC
5.324%, due 1/18/07 (c) 315,200 315,200
Fairway Finance Corp.
5.301%, due 1/8/07 (c) 236,400 236,400
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (c) 233,158 233,158
Greyhawk Funding LLC
5.305%, due 1/5/07 (c) 231,209 231,209
Jupiter Securitization Corp.
5.324%, due 1/18/07 (c) 236,400 236,400
Liberty Street Funding Co.
5.325%, due 1/29/07 (c) 78,800 78,800
Old Line Funding LLC
5.303%, due 1/9/07 (c) 308,868 308,868
Ranger Funding LLC
5.308%, due 1/30/07 (c) 236,400 236,400
Sheffield Receivables Corp.
5.336%, due 1/16/07 (c) 236,400 236,400
------------
Total Commercial Paper
(Cost $2,888,516) 2,888,516
------------
<Caption>
SHARES
(x
INVESTMENT COMPANY (1.5%)
BGI Institutional Money Market Fund (c) 1,646,087 1,646,087
------------
Total Investment Company
(Cost $1,646,087) 1,646,087
------------
PRINCIPAL
AMOUNT
(x
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $78,848 (Collateralized by
various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$78,050 and a Market Value
of $81,590) (c) $ 78,800 78,800
------------
Total Repurchase Agreement
(Cost $78,800) 78,800
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (6.9%)
Abbey National PLC
5.34%, due 1/2/07 (c) $ 945,601 $ 945,601
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (c) 630,401 630,401
Bank of America Corp.
5.27%, due 1/19/07 (c)(d) 630,401 630,401
Bank of Montreal
5.30%, due 1/26/07 (c) 394,000 394,000
Barclays
5.32%, due 1/18/07 (c) 520,080 520,080
Calyon
5.31%, due 2/12/07 (c) 630,401 630,401
Citigroup
5.325%, due 3/22/07 (c) 551,601 551,601
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (c) 598,881 598,881
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (c) 630,401 630,401
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (c) 583,121 583,121
Rabobank Nederland
5.29%, due 3/6/07 (c) 472,800 472,800
Standard Chartered Bank
5.29%, due 1/10/07 (c) 630,401 630,401
UBS AG
5.285%, due 1/12/07 (c) 630,401 630,401
------------
Total Time Deposits
(Cost $7,848,490) 7,848,490
------------
Total Short-Term Investments
(Cost $12,461,893) 12,461,893
------------
Total Investments
(Cost $110,145,035) (e) 111.3% 126,133,816(f)
Liabilities in Excess of
Cash and Other Assets (11.3) (12,785,492)
---------- ------------
Net Assets 100.0% $113,348,324
========== ============
</Table>
<Table>
(a) Represents a security, or a portion thereof, which is out on
loan.
(b) Non-income producing security.
(c) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(d) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(e) The cost for federal income tax purposes is $110,873,374.
(f) At December 31, 2006 net unrealized appreciation was
$15,260,442, 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 $16,363,124 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $1,102,682.
</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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost
$110,145,035) including $12,038,194 market
value of securities loaned $126,133,816
Cash 697,122
Receivables:
Dividends and interest 129,679
Investment securities sold 18,231
Fund shares sold 16,850
Other assets 302
-------------
Total assets 126,996,000
-------------
LIABILITIES:
Securities lending collateral 12,461,893
Payables:
Fund shares redeemed 1,052,443
Adviser (See Note 3) 47,520
Professional fees 32,155
Administrator (See Note 3) 19,233
Shareholder communication 17,867
NYLIFE Distributors (See Note 3) 8,880
Custodian 4,394
Directors 162
Accrued expenses 3,129
-------------
Total liabilities 13,647,676
-------------
Net assets $113,348,324
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 52,147
Service Class 31,183
Additional paid-in capital 91,414,736
Accumulated undistributed net investment
income 1,713,404
Accumulated undistributed net realized gain on
investments 4,148,073
Net unrealized appreciation on investments 15,988,781
-------------
Net assets $113,348,324
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 71,025,070
=============
Shares of capital stock outstanding 5,214,678
=============
Net asset value per share outstanding $ 13.62
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 42,323,254
=============
Shares of capital stock outstanding 3,118,265
=============
Net asset value per share outstanding $ 13.57
=============
</Table>
M-202 MainStay VP 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 2,691,373
Income from securities loaned--net 21,675
Interest 9,657
------------
Total income 2,722,705
------------
EXPENSES:
Advisory (See Note 3) 543,295
Administration (See Note 3) 219,242
Distribution and service--Service Class
(See Note 3) 91,935
Professional fees 66,140
Custodian 34,686
Shareholder communication 17,597
Directors 5,444
Miscellaneous 5,976
------------
Total expenses 984,315
------------
Net investment income 1,738,390
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 5,231,471
Net change in unrealized appreciation on
investments 10,307,359
------------
Net realized and unrealized gain on investments 15,538,830
------------
Net increase in net assets resulting from
operations $17,277,220
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $2,270.
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
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 1,738,390 $ 1,808,281
Net realized gain on
investments 5,231,471 5,389,727
Net change in unrealized
appreciation on investments 10,307,359 (2,450,726)
---------------------------
Net increase in net assets
resulting from operations 17,277,220 4,747,282
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (423,414) (840,417)
Service Class (185,083) (319,127)
From net realized gain on investments:
Initial Class (890,987) --
Service Class (525,526) --
---------------------------
Total dividends and
distributions to
shareholders (2,025,010) (1,159,544)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 10,176,664 7,142,282
Service Class 8,210,641 14,440,851
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 1,314,401 840,417
Service Class 710,609 319,127
---------------------------
20,412,315 22,742,677
Cost of shares redeemed:
Initial Class (24,375,277) (13,306,594)
Service Class (4,224,466) (1,939,116)
---------------------------
(28,599,743) (15,245,710)
Increase (decrease) in net
assets derived from
capital share transactions (8,187,428) 7,496,967
---------------------------
Net increase in net assets 7,064,782 11,084,705
NET ASSETS:
Beginning of year 106,283,542 95,198,837
---------------------------
End of year $113,348,324 $106,283,542
===========================
Accumulated undistributed net
investment income at end of
year $ 1,713,404 $ 607,734
===========================
</Table>
M-204 MainStay VP Income & Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
This page intentionally left blank
www.mainstayfunds.com M-205
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 11.87 $ 11.47 $ 10.35 $ 8.14 $ 10.24
------- ------- ------- ------- -------
Net investment income 0.21(b) 0.21(b) 0.19(c) 0.14(b) 0.10
Net realized and unrealized gain (loss) on
investments 1.80 0.33 1.12 2.20 (2.10)
------- ------- ------- ------- -------
Total from investment operations 2.01 0.54 1.31 2.34 (2.00)
------- ------- ------- ------- -------
Less dividends and distributions:
From net investment income (0.08) (0.14) (0.19) (0.13) (0.10)
From net realized gain on investments (0.18) -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions (0.26) (0.14) (0.19) (0.13) (0.10)
------- ------- ------- ------- -------
Net asset value at end of period $ 13.62 $ 11.87 $ 11.47 $ 10.35 $ 8.14
======= ======= ======= ======= =======
Total investment return 16.86% 4.69%(d) 12.65% 28.69% (19.52%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.67% 1.82% 1.92%(c) 1.51% 1.09%
Net expenses 0.81% 0.75% 0.90% 0.94% 0.92%
Expenses (before reimbursement) 0.81% 0.84% 0.90% 0.94% 0.92%
Portfolio turnover rate 68% 77% 72% 79% 71%
Net assets at end of period (in 000's) $71,025 $73,787 $76,526 $69,598 $58,153
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
4.60% and 4.40% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(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>
M-206 MainStay VP 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 SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
---------------------------------------------------------------------------------
JUNE 13,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 11.84 $ 11.45 $ 10.34 $ 9.26
------- ------- ------- ------------
0.18(b) 0.20(b) 0.18(c) 0.07(b)
1.79 0.31 1.11 1.14
------- ------- ------- ------------
1.97 0.51 1.29 1.21
------- ------- ------- ------------
(0.06) (0.12) (0.18) (0.13)
(0.18) -- -- --
------- ------- ------- ------------
(0.24) (0.12) (0.18) (0.13)
------- ------- ------- ------------
$ 13.57 $ 11.84 $ 11.45 $10.34
======= ======= ======= ============
16.57% 4.47%(d) 12.38% 13.10%(e)
1.42% 1.57% 1.67%(c) 1.26%+(f)
1.06% 1.00% 1.15% 1.19%+
1.06% 1.09% 1.15% 1.19%+
68% 77% 72% 79%
$42,323 $32,497 $18,673 $4,099
</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
MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 31.33% 15.64% 9.22%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP INTERNATIONAL
EQUITY PORTFOLIO MSCI EAFE INDEX
------------------------- ---------------
12/31/96 10000 10000
10517 10178
12948 12213
16580 15506
13585 13309
11680 10455
11165 8789
14514 12180
17031 14646
18392 16629
12/31/06 24154 21009
</Table>
------ MainStay VP International Equity Portfolio -- MSCI EAFE Index
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 31.00% 15.36% 8.95%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP INTERNATIONAL
EQUITY PORTFOLIO MSCI EAFE INDEX
------------------------- ---------------
12/31/96 10000 10000
10492 10178
12885 12213
16459 15506
13455 13309
11540 10455
11003 8789
14270 12180
16703 14646
17996 16629
12/31/06 23575 21009
</Table>
------ MainStay VP International Equity Portfolio -- MSCI EAFE Index
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
- -------------------------------------------------------------------------------
MSCI EAFE(R) Index* 26.34% 14.98% 7.71%
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 15.63% and 9.21% for the Initial Class and
15.35% and 8.95% for the Service Class for the five-year and ten-year
periods, respectively.
2. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-208 MainStay VP International Equity Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP INTERNATIONAL EQUITY
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,185.70 $5.07 $1,020.40 $4.69
- ----------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,184.45 $6.44 $1,019.15 $5.95
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.92% for Initial Class, 1.17% for Service Class) multiplied by the average
account value over the period, divided by 365 and multiplied by 184 (to
reflect the one-half year period).
www.mainstayfunds.com M-209
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(COMPOSITION PIE CHART)
<Table>
Common Stocks 92.2
Short-Term Investments (collateral from securities lending 10.4
is 9.8%)
Warrants 3.6
Liabilities in Excess of Cash and Other Assets (6.2)
</Table>
See Portfolio of Investments on page M-213 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Tesco PLC
2. Mediaset S.p.A.
3. Ryanair Holdings PLC
4. TNT N.V.
5. Nestle S.A. Registered
6. Reed Elsevier N.V.
7. Banco Popular Espanol S.A.
8. Diageo PLC(+)
9. Novartis AG(+)
10. Hannover Rueckversicherung AG
</Table>
+ Security trades on more than one exchange.
M-210 MainStay VP International Equity Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Rupal J. Bhansali of MacKay Shields LLC.
HOW DID MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO PERFORM RELATIVE TO ITS PEERS
AND ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP International Equity Portfolio
returned 31.33% for Initial Class shares and 31.00% for Service Class shares.
Both share classes outperformed the 24.35% return of the average Lipper*
Variable Products International Core Portfolio for the same period. Both share
classes outperformed the 26.34% return of the Morgan Stanley Capital
International EAFE(R) Index,* the Portfolio's broad-based securities-market
index, for the year ended December 31, 2006.
WHAT FACTORS AFFECTED THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
We attribute the Portfolio's outperformance to our bottom-up investment
approach, which pointed the Portfolio to out-of-favor companies with quality
balance sheets and high returns on invested capital. We remained focused on the
analysis of individual business models, and we attempted to invest in quality
companies. Our security selection is based on reasonable valuations rather than
market perceptions. This approach directed the Portfolio toward high-
dividend-yielding companies in media, utilities and consumer staples at the
expense of investments in industrials, materials and telecommunication services.
DURING 2006, WHICH INDUSTRY GROUPS MADE THE STRONGEST POSITIVE CONTRIBUTION TO
THE PORTFOLIO'S RELATIVE PERFORMANCE AND WHICH INDUSTRY GROUPS WERE WEAK?(1)
Diversified financials and banks were the strongest-contributing industry groups
to the Portfolio's performance because of security selection. These industry
groups have done well as assets under management have increased and interest
rates have risen. Although the real estate industry group was also strong, the
Portfolio's lack of participation detracted from relative performance. Our
fundamental analysis guided us to other higher-quality holdings. In addition,
stretched valuations and a rising rate environment suggested that real estate
was not the place to invest in 2006.
The insurance industry group and food, beverage & tobacco were laggards in 2006.
Food and beverage companies disappointed, primarily because of increased costs
and pressure on margins from competition. Insurance lagged because a few
specific names underperformed on concerns over earnings expectations.
WHICH INDIVIDUAL HOLDINGS WERE THE STRONGEST PERFORMERS AND WHICH WERE THE
WEAKEST IN 2006?
The strongest contributors to the Portfolio's performance were Banco Popular,
Man Group, Deutsche Boerse and UBS AG, all of which benefited from increased and
strong activity in the equity market.
The weakest performers in the Portfolio were Loblaw, Nestle, Aflac and Swiss Re.
These are high-quality companies in the retail, food and insurance segments,
respectively.
WERE THERE ANY SIGNIFICANT PURCHASES OR SALES DURING 2006?
During the year, the Portfolio initiated a new position in Nokian Renkaat, a
Finnish based manufacturer of automobile tires. The company provides top-quality
winter tires to the European marketplace. Puma, a German based footwear and
apparel manufacturer, was added to the Portfolio later in the year. Puma is a
growth company with room for margin improvement. In addition, the Portfolio
added to its position in Mediaset, an Italian media concern that underperformed
because of Italy's election results.
Significant sales included Australian Gas and Light. The Portfolio benefited
when Alinta Limited approached Australian Gas and Light in a hostile takeover
attempt and the shares rallied past what we considered their intrinsic value. We
significantly reduced the Portfolio's position in HongKong Electric Holdings.
The natural monopoly was facing new challenges in its next regulatory review.
Man Group, a U.K.-based financial company specializing in fund
1. Information about industry groups and regional exposure is for informational
purposes only. The Portfolio uses a bottom-up stock selection process that
evaluates each stock on its individual merits. Decisions are not driven by
top-down macroeconomic, regional or industry-group evaluations.
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.
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-211
management, was entirely sold from the Portfolio when the stock surpassed our
best-case scenario and valuations became much too high.
DID THE PORTFOLIO HAVE ANY OVERWEIGHTED OR UNDERWEIGHTED INDUSTRY GROUPS AT THE
END OF 2006?
As of December 31, 2006, the Portfolio was overweighted in industry groups such
as technology hardware & equipment, transportation, food & staples retailing and
utilities, with a small overweight in health care. At year-end, the Portfolio
was underweighted in the telecommunication services, materials, real estate and
energy industry groups. The Portfolio ended 2006 with a market weighting in
automobiles & components.
WERE THERE GEOGRAPHIC REGIONS THAT WERE EMPHASIZED IN THE PORTFOLIO?
We found investments in Europe and Asia to be more compelling than those in
Japan. As a result, the Portfolio was underweight in Japan during 2006. The
degree of underweighting, however, continued to decrease as the quality
businesses we identified corrected to valuations we found more compelling.
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.
INFORMATION ABOUT MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO ON THIS PAGE AND
THE PRECEDING PAGES HAS NOT BEEN AUDITED.
M-212 MainStay VP International Equity Portfolio
PORTFOLIO OF INVESTMENTS+++ DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (92.2%)+
- ----------------------------------------------------------------------------
BELGIUM (0.2%)
Barco N.V. (electronic equipment & instruments) 13,701 $ 1,247,934
------------
CANADA (2.2%)
Bank of Montreal
(commercial banks) 13,000 769,198
Cognos, Inc. (software) (a) 9,700 412,155
Loblaw Cos., Ltd. (food &
staples retailing) (b) 277,500 11,610,192
------------
12,791,545
------------
FINLAND (3.5%)
Nokian Renkaat Oyj (auto components) (b) 429,101 8,791,068
TietoEnator Oyj (IT Services) (b) 338,900 10,933,599
------------
19,724,667
------------
FRANCE (2.6%)
BNP Paribas S.A.
(commercial banks) 56,394 6,152,706
Neopost S.A.
(office electronics) 9,200 1,155,545
Total S.A. (oil, gas &
consumable fuels) 106,000 7,646,918
------------
14,955,169
------------
GERMANY (8.0%)
Allianz SE (insurance) 11,200 2,288,058
Bayerische Motoren Werke
AG (automobiles) 244,829 14,061,845
V Hannover Rueckversicherung
AG (insurance) (a) 333,835 15,459,015
Muenchener
Rueckversicherungs--
Gesellschaft AG
Registered (insurance) 19,926 3,430,478
Puma AG Rudolf Dassler Sport (textiles, apparel &
luxury goods) 22,320 8,711,478
Rational AG (household durables) 1,200 223,590
Siemens AG (industrial conglomerates) (b) 19,000 1,884,583
------------
46,059,047
------------
GREECE (0.9%)
OPAP S.A. (hotels,
restaurants & leisure) 136,621 5,280,547
------------
</Table>
<Table>
<Caption>
SHARES VALUE
HONG KONG (3.0%)
Esprit Holdings, Ltd.
(specialty retail) 1,169,000 $ 13,052,679
HongKong Electric Holdings, Ltd.
(electric utilities) 493,000 2,414,834
Yue Yuen Industrial Holdings, Ltd. (textiles,
apparel & luxury goods) 549,500 1,744,938
------------
17,212,451
------------
IRELAND (1.3%)
Bank of Ireland
(commercial banks) 312,820 7,226,416
------------
ITALY (11.7%)
Assicurazioni Generali
S.p.A. (insurance) 193,500 8,498,145
Enel S.p.A. (electric utilities) (b) 1,140,150 11,762,005
ENI S.p.A. (oil, gas & consumable fuels) (b) 216,600 7,285,314
ENI S.p.A., Sponsored ADR (oil, gas & consumable
fuels) (c) 11,250 756,900
V Mediaset S.p.A. (media) 1,944,885 23,080,436
Snam Rete Gas S.p.A.
(gas utilities) 2,203,665 12,501,204
Terna S.p.A. (electric utilities) 829,492 2,811,338
------------
66,695,342
------------
JAPAN (6.2%)
Acom Co., Ltd.
(consumer finance) (b) 21,610 726,356
Canon, Inc.
(office electronics) 166,050 9,348,641
Canon, Inc., Sponsored ADR
(office electronics) (c) 33,166 1,876,864
FamilyMart Co., Ltd. (food & staples retailing) 23,400 637,082
Keyence Corp. (electronic equipment & instruments) 1,800 446,048
OBIC Co., Ltd. (IT Services) 16,400 3,394,244
RICOH Co., Ltd. (office electronics) 461,700 9,427,595
Takeda Pharmaceutical Co., Ltd. (pharmaceuticals) 136,600 9,377,942
Tokyo Gas Co., Ltd. (gas utilities) (b) 69,000 367,018
------------
35,601,790
------------
NETHERLANDS (6.5%)
V Reed Elsevier N.V. (media) 1,025,255 17,485,771
SNS Reaal (diversified financial services) 28,400 615,951
V TNT N.V. (air freight & logistics) 447,742 19,256,143
------------
37,357,865
------------
</Table>
+ Percentages indicated are based on Portfolio net assets.
V Among the Portfolio's 10 largest holdings, excluding short-term investments.
One of the ten largest holdings may be security traded on more than one
exchange. May be subject to change daily.
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, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------
NORWAY (0.5%)
Tandberg Television ASA (communications equipment)
(a)(b) 235,000 $ 2,947,299
------------
SINGAPORE (1.9%)
DBS Group Holdings, Ltd.
(commercial banks) 296,000 4,361,597
Venture Corp., Ltd. (electronic equipment &
instruments) 742,000 6,531,051
------------
10,892,648
------------
SPAIN (3.1%)
V Banco Popular Espanol S.A.
(commercial banks) 946,330 17,151,556
Enagas (gas utilities) 24,000 558,223
------------
17,709,779
------------
SWEDEN (4.1%)
Assa Abloy AB Class B
(building products) 275,000 5,985,291
Munters AB (machinery) 13,400 620,484
Svenska Handelsbanken Class A (commercial banks) 146,200 4,420,628
Telefonaktiebolaget LM Ericsson
Class B (communications equipment) 1,095,600 4,425,002
Telefonaktiebolaget LM Ericsson, Sponsored ADR
(communications equipment) (b)(c) 205,500 8,267,265
------------
23,718,670
------------
SWITZERLAND (11.7%)
Logitech International S.A. Registered (computers
& peripherals) (a)(b) 244,400 6,987,396
V Nestle S.A. Registered
(food products) 53,571 19,036,720
V Novartis AG Registered
(pharmaceuticals) 145,180 8,370,041
V Novartis AG, ADR
(pharmaceuticals) (c) 135,400 7,777,376
Roche Holding AG Genusscheine (pharmaceuticals) 81,366 14,590,456
Swiss Reinsurance (insurance) 120,600 10,253,722
------------
67,015,711
------------
UNITED KINGDOM (22.1%)
ARM Holdings PLC
(semiconductors & semiconductor equipment) 409,500 1,008,265
BP PLC, Sponsored ADR (oil, gas & consumable
fuels) (c) 226,700 15,211,570
</Table>
<Table>
<Caption>
SHARES VALUE
UNITED KINGDOM (CONTINUED)
V Diageo PLC (beverages) 702,629 $ 13,791,870
V Diageo PLC, Sponsored ADR (beverages) (b)(c) 30,678 2,433,072
GlaxoSmithKline PLC, ADR (pharmaceuticals) (b)(c) 119,900 6,325,924
ICAP PLC (capital markets) 60,000 562,142
Lloyds TSB Group PLC
(commercial banks) 843,457 9,438,259
Lloyds TSB Group PLC, Sponsored ADR (commercial
banks) (b)(c) 35,465 1,607,628
Provident Financial PLC
(consumer finance) 973,176 13,366,932
Rolls-Royce Group PLC
(aerospace & defense) (a) 476,130 4,174,205
Royal Bank of Scotland Group PLC (commercial
banks) 168,000 6,555,854
Royal Dutch Shell PLC Class A, ADR
(oil, gas & consumable fuels) (c) 40,600 2,874,074
Scottish & Southern Energy PLC
(electric utilities) 144,060 4,383,360
Smith & Nephew PLC (health care equipment &
supplies) 793,694 8,283,102
V Tesco PLC (food & staples retailing) 3,156,799 25,002,195
Vodafone Group PLC, ADR (wireless
telecommunication services) (b)(c) 422,624 11,740,495
------------
126,758,947
------------
UNITED STATES (2.7%)
AFLAC, Inc. (insurance) (b) 330,028 15,181,288
------------
Total Common Stocks
(Cost $423,763,518) 528,377,115
------------
<Caption>
NUMBER OF
WARRANTS
WARRANTS (3.6%)
- ----------------------------------------------------------------------------
IRELAND (3.6%)
V Ryanair Holdings PLC
Strike Price E0.000001
Expire 3/21/08 (airlines) (a)(d) 1,467,773 20,613,422
------------
Total Warrants
(Cost $11,001,499) 20,613,422
------------
</Table>
M-214 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 (10.4%)
- ----------------------------------------------------------------------------
COMMERCIAL PAPER (2.8%)
UNITED STATES (2.8%)
Barton Capital LLC
5.298%, due 1/4/07 (capital markets) (e) $1,044,725 $ 1,044,725
Charta LLC
5.314%, due 1/11/07 (capital markets) (e) 1,070,267 1,070,267
Ciesco, Inc.
5.305%, due 1/10/07 (capital markets) (e) 1,396,790 1,396,790
Compass Securitization LLC
5.324%, due 1/18/07 (capital markets) (e) 1,427,023 1,427,023
Fairway Finance Corp.
5.301%, due 1/8/07 (capital markets) (e) 1,070,267 1,070,267
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (capital markets) (e) 1,055,589 1,055,589
Greyhawk Funding LLC
5.305%, due 1/5/07 (capital markets) (e) 1,046,766 1,046,766
Jupiter Securitization Corp.
5.324%, due 1/18/07 (capital markets) (e) 1,070,267 1,070,267
Liberty Street Funding Co.
5.325%, due 1/29/07 (capital markets) (e) 356,756 356,756
Old Line Funding LLC
5.303%, due 1/9/07 (capital markets) (e) 1,398,353 1,398,353
Rabobank USA Financial Corp.
5.25%, due 1/3/07
(capital markets) 2,835,000 2,833,346
Ranger Funding LLC
5.308%, due 1/30/07 (capital markets) (e) 1,070,267 1,070,267
Sheffield Receivables Corp.
5.336%, due 1/16/07 (capital markets) (e) 1,070,267 1,070,267
------------
Total Commercial Paper
(Cost $15,910,683) 15,910,683
------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (1.3%)
UNITED STATES (1.3%)
BGI Institutional Money Market Fund (capital
markets) (e) 7,452,417 $ 7,452,417
------------
Total Investment Company
(Cost $7,452,417) 7,452,417
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.1%)
UNITED STATES (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $356,970
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note, with rates between
5.00%-8.96% and maturity dates between
8/15/09-12/29/49, with a Principal Amount of
$353,359 and a Market Value of $369,385) (capital
markets) (e) $ 356,756 356,756
------------
Total Repurchase Agreement
(Cost $356,756) 356,756
------------
TIME DEPOSITS (6.2%)
UNITED STATES (6.2%)
Abbey National PLC
5.34%, due 1/2/07
(capital markets) (e) 4,281,069 4,281,069
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07
(capital markets) (e) 2,854,045 2,854,045
Bank of America Corp.
5.27%, due 1/19/07
(capital markets) (e)(f) 2,854,045 2,854,045
Bank of Montreal
5.30%, due 1/26/07
(capital markets) (e) 1,783,778 1,783,778
Barclays
5.32%, due 1/18/07
(capital markets) (e) 2,354,587 2,354,587
Calyon
5.31%, due 2/12/07
(capital markets) (e) 2,854,045 2,854,045
Citigroup
5.325%, due 3/22/07
(capital markets) (e) 2,497,290 2,497,290
</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, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ----------------------------------------------------------------------------
TIME DEPOSITS (CONTINUED)
UNITED STATES (CONTINUED)
Credit Suisse First Boston Corp.
5.30%, due 1/12/07
(capital markets) (e) $2,711,343 $ 2,711,343
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07
(capital markets) (e) 2,854,045 2,854,045
Lloyds TSB Bank PLC
5.29%, due 2/21/07
(capital markets) (e) 2,639,992 2,639,992
Rabobank Nederland
5.29%, due 3/6/07
(capital markets) (e) 2,140,534 2,140,534
Standard Chartered Bank
5.29%, due 1/10/07
(capital markets) (e) 2,854,045 2,854,045
UBS AG
5.285%, due 1/12/07
(capital markets) (e) 2,854,045 2,854,045
------------
Total Time Deposits
(Cost $35,532,863) 35,532,863
------------
Total Short-Term Investments
(Cost $59,252,719) 59,252,719
------------
Total Investments
(Cost $494,017,736) (g) 106.2% 608,243,256(h)
Liabilities in Excess of
Cash and Other Assets (6.2) (35,350,088)
--------- ------------
Net Assets 100.0% $572,893,168
========= ============
</Table>
<Table>
+++ Fifty percent of the Fund's assets are maintained to cover
"senior securities transactions" which may include, but are
not limited to, forwards, TBA's, options and futures. This
percentage is marked-to-market daily against the value of
the Fund's "senior securities" holdings to ensure proper
coverage for these transactions.
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) ADR--American Depositary Receipt.
(d) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(e) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(f) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(g) The cost for federal income tax purposes is $494,613,727.
(h) At December 31, 2006 net unrealized appreciation for
securities was $113,629,529, 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 $115,515,787 and
aggregate gross unrealized depreciation for all investments
on which there was an excess of cost over market value of
$1,886,258.
The following abbreviations are used in the above portfolio:
E--Euro
</Table>
M-216 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.
The table below sets forth the diversification of MainStay VP International
Equity Portfolio investments by industry.
INDUSTRY DIVERSIFICATION
<Table>
<Caption>
VALUE PERCENT+
Aerospace & Defense $ 4,174,205 0.7%
Air Freight & Logistics 19,256,143 3.4
Airlines 20,613,422 3.6
Auto Components 8,791,068 1.5
Automobiles 14,061,845 2.5
Beverages 16,224,942 2.8
Building Products 5,985,291 1.1
Capital Markets 59,814,861 10.4
Commercial Banks 57,683,842 10.1
Communications Equipment 15,639,566 2.7
Computers & Peripherals 6,987,396 1.2
Consumer Finance 14,093,288 2.5
Diversified Financial Services 615,951 0.1
Electric Utilities 21,371,537 3.7
Electronic Equipment & Instruments 8,225,033 1.4
Food & Staples Retailing 37,249,469 6.5
Food Products 19,036,720 3.3
Gas Utilities 13,426,445 2.4
Health Care Equipment & Supplies 8,283,102 1.5
Hotels, Restaurants & Leisure 5,280,547 0.9
Household Durables 223,590 0.0*
Industrial Conglomerates 1,884,583 0.3
Insurance 55,110,706 9.6
IT Services 14,327,843 2.5
Machinery 620,484 0.1
Media 40,566,207 7.1
Office Electronics 21,808,645 3.8
Oil, Gas & Consumable Fuels 33,774,776 5.9
Pharmaceuticals 46,441,739 8.1
Semiconductors & Semiconductor Equipment 1,008,265 0.2
Software 412,155 0.1
Specialty Retail 13,052,679 2.3
Textiles, Apparel & Luxury Goods 10,456,416 1.8
Wireless Telecommunication Services 11,740,495 2.1
------------ ----------
608,243,256 106.2
Liabilities in Excess of
Cash and Other Assets (35,350,088) (6.2)
------------ ----------
Net Assets $572,893,168 100.0%
============ ==========
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
* Less than one tenth of a percent
</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
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $494,017,736) including $53,767,428
market value of securities loaned $608,243,256
Cash denominated in foreign currencies
(identified cost $26,745,331) 26,691,432
Cash 969
Receivables:
Fund shares sold 856,626
Investment securities sold 674,250
Dividends and interest 567,633
Other assets 3,679
Unrealized appreciation on foreign currency
forward contracts 1,283,007
-------------
Total assets 638,320,852
-------------
LIABILITIES:
Securities lending collateral 56,419,373
Payables:
Investment securities purchased 5,136,867
Adviser (See Note 3) 283,546
Administrator (See Note 3) 94,515
Shareholder communication 74,663
Professional fees 57,985
NYLIFE Distributors (See Note 3) 44,349
Custodian 18,836
Fund shares redeemed 3,096
Directors 679
Accrued expenses 3,180
Unrealized depreciation on foreign currency
forward contracts 3,290,595
-------------
Total liabilities 65,427,684
-------------
Net assets $572,893,168
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 190,253
Service Class 116,998
Additional paid-in capital 415,386,855
Accumulated undistributed net investment
income 4,239,574
Accumulated undistributed net realized gain on
investments and foreign currency
transactions 40,791,275
Net unrealized appreciation on investments 114,225,520
Net unrealized depreciation on translation of
other assets and liabilities in foreign
currencies and foreign currency forward
contracts (2,057,307)
-------------
Net assets $572,893,168
=============
INITIAL CLASS
Net assets applicable to outstanding shares $355,382,456
=============
Shares of capital stock outstanding 19,025,341
=============
Net asset value per share outstanding $ 18.68
=============
SERVICE CLASS
Net assets applicable to outstanding shares $217,510,712
=============
Shares of capital stock outstanding 11,699,831
=============
Net asset value per share outstanding $ 18.59
=============
</Table>
M-218 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 11,126,581
Income from securities loaned--net 320,516
Interest 166,758
-------------
Total income 11,613,855
-------------
EXPENSES:
Advisory (See Note 3) 2,586,193
Administration (See Note 3) 862,065
Distribution and service--Service Class
(See Note 3) 377,727
Custodian 220,412
Professional fees 111,922
Shareholder communication 107,944
Directors 22,775
Miscellaneous 39,420
-------------
Total expenses 4,328,458
-------------
Net investment income 7,285,397
-------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Security transactions 41,011,877
Foreign currency transactions (2,145,423)
-------------
Net realized gain on investments and foreign
currency transactions 38,866,454
-------------
Net change in unrealized appreciation on:
Security transactions 75,431,947
Translation of other assets and liabilities
in foreign currencies and foreign currency
forward contracts (2,212,960)
-------------
Net change in unrealized appreciation on
investments and foreign currency
transactions 73,218,987
-------------
Net realized and unrealized gain on
investments and foreign currency
transactions 112,085,441
-------------
Net increase in net assets resulting from
operations $119,370,838
=============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$997,490.
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
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 7,285,397 $ 6,742,317
Net realized gain on
investments and foreign
currency transactions 38,866,454 15,497,585
Net change in unrealized
appreciation on investments
and foreign currency
transactions 73,218,987 267,398
---------------------------
Net increase in net assets
resulting from operations 119,370,838 22,507,300
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (916,099) (3,527,827)
Service Class (373,431) (1,533,660)
From net realized gain on investments:
Initial Class (3,251,402) (8,733,003)
Service Class (1,996,239) (4,162,714)
---------------------------
Total dividends and
distributions to
shareholders (6,537,171) (17,957,204)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 108,551,689 43,472,142
Service Class 75,776,425 49,732,470
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 4,167,501 12,260,830
Service Class 2,369,670 5,696,374
---------------------------
190,865,285 111,161,816
Cost of shares redeemed:
Initial Class (50,390,538) (14,739,510)
Service Class (5,383,962) (2,583,415)
---------------------------
(55,774,500) (17,322,925)
Increase in net assets
derived from capital share
transactions 135,090,785 93,838,891
---------------------------
Net increase in net assets 247,924,452 98,388,987
NET ASSETS:
Beginning of year 324,968,716 226,579,729
---------------------------
End of year $572,893,168 $324,968,716
===========================
Accumulated undistributed net
investment income at end of
year $ 4,239,574 $ 389,130
===========================
</Table>
M-220 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.
This page intentionally left blank
www.mainstayfunds.com M-221
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 14.39 $ 14.11 $ 12.13 $ 9.48 $ 10.06
-------- -------- -------- ------- -------
Net investment income 0.29(b) 0.36(b) 0.19(b) 0.17(b) 0.11
Net realized and unrealized
gain (loss) on investments 4.38 0.90 1.84 2.61 (0.63)
Net realized and unrealized
gain (loss) on foreign
currency transactions (0.16) (0.13) 0.07 0.06 0.08
-------- -------- -------- ------- -------
Total from investment
operations 4.51 1.13 2.10 2.84 (0.44)
-------- -------- -------- ------- -------
Less dividends and
distributions:
From net investment income (0.05) (0.24) (0.12) (0.19) (0.14)
From net realized gain on
investments (0.17) (0.61) -- -- --
-------- -------- -------- ------- -------
Total dividends and
distributions (0.22) (0.85) (0.12) (0.19) (0.14)
-------- -------- -------- ------- -------
Net asset value at end of
period $ 18.68 $ 14.39 $ 14.11 $ 12.13 $ 9.48
======== ======== ======== ======= =======
Total investment return 31.33% 7.99%(e) 17.34% 30.00% (4.41%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.79% 2.52% 1.53% 1.67% 1.06%
Net expenses 0.92% 0.87% 0.99% 1.07% 1.11%
Expenses (before
reimbursement) 0.92% 0.91% 0.99% 1.07% 1.11%
Portfolio turnover rate 44% 54% 49% 105% 102%
Net assets at end of period
(in 000's) $355,382 $219,867 $175,172 $95,754 $61,763
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
7.95% and 7.71% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(f) Represents income earned for the year by the Initial Class shares less service fee of
0.25%.
+ Annualized.
</Table>
M-222 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>
SERVICE CLASS
- ---------------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 14.35 $ 14.08 $ 12.12 $ 10.40
-------- --------------- --------------- ---------------
0.25(b) 0.33(b) 0.15(b) 0.00(b)(c)
4.35 0.90 1.84 1.85
(0.16) (0.13) 0.07 0.06
-------- --------------- --------------- ---------------
4.44 1.10 2.06 1.91
-------- --------------- --------------- ---------------
(0.03) (0.22) (0.10) (0.19)
(0.17) (0.61) -- --
-------- --------------- --------------- ---------------
(0.20) (0.83) (0.10) (0.19)
-------- --------------- --------------- ---------------
$ 18.59 $ 14.35 $ 14.08 $ 12.12
======== =============== =============== ===============
31.00% 7.74%(e) 17.05% 18.31%(d)
1.50% 2.27% 1.28% 1.42%+(f)
1.17% 1.12% 1.24% 1.32%+
1.17% 1.16% 1.24% 1.32%+
44% 54% 49% 105%
$217,511 $105,102 $ 51,408 $ 9,146
</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-223
MAINSTAY VP LARGE CAP GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ---------------------------------------------------------
After Portfolio operating
expenses 7.24% 0.10% 4.56%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP LARGE CAP RUSSELL 1000 GROWTH
GROWTH PORTFOLIO INDEX S&P 500 INDEX
--------------------- ------------------- -------------
5/1/98 10000 10000 10000
11785 11881 11171
19504 15821 13522
17561 12273 12291
14653 9766 10830
10520 7043 8437
13471 9138 10857
13158 9714 12038
13731 10225 12629
12/31/06 14725 11153 14624
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ---------------------------------------------------------
After Portfolio operating
expenses 6.97% -0.15% 4.29%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP LARGE CAP RUSSELL 1000 GROWTH
GROWTH PORTFOLIO INDEX S&P 500 INDEX
--------------------- ------------------- -------------
5/1/98 10000 10000 10000
11765 11881 11171
19416 15821 13522
17426 12273 12291
14504 9766 10830
10387 7043 8437
13269 9138 10857
12928 9714 12038
13459 10225 12629
12/31/06 14398 11153 14624
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
Russell 1000(R) Growth Index* 9.07% 2.69% 1.27%
S&P 500(R) Index* 15.79 6.19 4.48
</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 figures shown for the five-year and since-inception periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 0.07% and 4.54% for the Initial Class and
-0.17% and 4.28% for the Service Class for the five-year and since-inception
periods, respectively.
2. 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-224 MainStay VP Large Cap Growth Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP LARGE CAP GROWTH PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,073.75 $4.13 $1,021.05 $4.02
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,072.50 $5.43 $1,019.80 $5.29
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.79% for Initial Class and 1.04% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-225
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 97.7
Short-Term Investments (collateral from securities lending 8.8
is 8.8%)
Liabilities in Excess of Cash and Other Assets (6.5)
</Table>
See Portfolio of Investments on page M-229 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Cisco Systems, Inc.
2. General Electric Co.
3. Goldman Sachs Group, Inc. (The)
4. Schlumberger, Ltd.
5. Procter & Gamble Co. (The)
6. America Movil S.A. de C.V. Class L, ADR
7. Franklin Resources, Inc.
8. Google, Inc., Class A
9. QUALCOMM, Inc.
10. Danaher Corp.
</Table>
M-226 MainStay VP Large Cap Growth Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Clark J. Winslow, Justin H. Kelly and
R. Bart Wear of Winslow Capital Management Inc.
HOW DID MAINSTAY VP LARGE CAP GROWTH PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Large Cap Growth Portfolio
returned 7.24% for Initial Class shares and 6.97% for Service Class shares. Both
share classes outperformed the 6.31% return of the average Lipper* Variable
Products Large-Cap Growth Portfolio for the same period. Both share classes
underperformed the 9.07% return of the Russell 1000(R) Growth Index,* the
Portfolio's broad-based securities-market index, for the year ended
December 31, 2006.
WHAT FACTORS ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE DURING 2006?
Volatility caused the vast majority of managers to underperform the Russell
1000(R) Growth Index for 2006. Strength in the Portfolio's telecommunications
and energy holdings was offset by weakness in the health care sector and
underperformance in information technology.
DURING 2006, WHICH SECTORS BENEFITTED THE PORTFOLIO'S PERFORMANCE RELATIVE TO
THE RUSSELL 1000(R) GROWTH INDEX AND WHICH DETRACTED FROM PERFORMANCE?
Favorable stock selection made telecommunications, energy and financials the
Portfolio's three strongest sectors relative to the Russell 1000(R) Growth
Index.* The three worst sectors in relation to the index were health care,
information technology and consumer discretionary. Stock-option issues had a
negative impact on health care and information technology stocks alike. Although
the Portfolio's consumer discretionary holdings outperformed the benchmark, an
underweight position detracted from relative results.
WHICH INDIVIDUAL STOCKS WERE THE STRONGEST CONTRIBUTORS TO THE PORTFOLIO'S
PERFORMANCE AND WHICH STOCKS DETRACTED FROM PERFORMANCE?
The three greatest positive contributions to absolute performance came from
Goldman Sachs Group, America Movil and Cisco Systems. Upside earnings surprises
drove all three of these stocks higher. Merrill Lynch also had a positive impact
on the Portfolio. The company was a major beneficiary of stronger capital
markets and improving merger and acquisition activity.
The three greatest detractors from absolute performance were UnitedHealth Group,
Yahoo! and eBay. UnitedHealth Group suffered from stock-option issues, and
Yahoo! and eBay declined on slower earnings growth.
DID THE PORTFOLIO MAKE ANY SIGNIFICANT PURCHASES OR SALES DURING 2006?
We sold UnitedHealth Group because of issues related to stock-option practices
and the departure of the chief executive officer. We sold Yahoo! because of
disappointment over the company's slowing growth.
The Portfolio benefited nicely from the purchase of Cisco Systems, which rose
substantially, and from a
new position in Comcast, which advanced on greater public acceptance of the
company's combined service offering of video, Internet access and telephony.
WERE THERE ANY SIGNIFICANT CHANGES IN THE PORTFOLIO'S SECTOR WEIGHTINGS DURING
2006?
During the first half of 2006 we reduced the Portfolio's consumer discretionary
sector weighting relative to the benchmark because of concerns about the impact
of rising energy prices and higher interest rates on consumer spending.
Stock-option issues
and slowing growth among various medical-device
providers led us to reduce the Portfolio's health care weighting.
During 2006, we increased the Portfolio's weighting in financials to take
advantage of improved capital markets and a rising stock market, which benefited
some leading asset managers.
The principal risk of growth stocks is that investors expect growth companies to
increase their earnings at a certain rate that is generally higher than the rate
expected for nongrowth companies. If these expectations are not met, the market
price of the stock may decline significantly, even if earnings showed an
absolute increase.
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-227
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE BENCHMARK AT YEAR-END?
As of December 31, 2006, the Portfolio was considerably overweight in
telecommunication services, which added nicely to performance because of growing
cell phone use in Latin America. The Portfolio was significantly underweight in
the consumer discretionary sector, which detracted from performance because the
combination of high employment and declining energy prices helped strengthen
consumer spending.
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.
INFORMATION ABOUT MAINSTAY VP LARGE CAP GROWTH PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-228 MainStay VP Large Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (97.7%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (3.9%)
Rockwell Collins, Inc. 41,200 $ 2,607,548
United Technologies Corp. 97,400 6,089,448
------------
8,696,996
------------
BIOTECHNOLOGY (3.2%)
Genentech, Inc. (a) 46,100 3,740,093
Gilead Sciences, Inc. (a) 52,700 3,421,811
------------
7,161,904
------------
CAPITAL MARKETS (8.5%)
V Franklin Resources, Inc. 58,400 6,433,928
V Goldman Sachs Group, Inc. (The) 38,600 7,694,910
Merrill Lynch & Co., Inc. 28,400 2,644,040
T. Rowe Price Group, Inc. 44,400 1,943,388
------------
18,716,266
------------
CHEMICALS (2.2%)
Ecolab, Inc. (b) 44,300 2,002,360
Monsanto Co. 53,100 2,789,343
------------
4,791,703
------------
COMMUNICATIONS EQUIPMENT (8.1%)
V Cisco Systems, Inc. (a) 333,800 9,122,754
Corning, Inc. (a) 137,100 2,565,141
V QUALCOMM, Inc. 167,100 6,314,709
------------
18,002,604
------------
COMPUTERS & PERIPHERALS (5.4%)
Apple Computer, Inc. (a) 63,900 5,421,276
Hewlett-Packard Co. 81,400 3,352,866
Network Appliance, Inc. (a) 79,700 3,130,616
------------
11,904,758
------------
CONSUMER FINANCE (4.4%)
American Express Co. 79,100 4,798,997
SLM Corp. 102,300 4,989,171
------------
9,788,168
------------
DIVERSIFIED FINANCIAL SERVICES (2.8%)
Chicago Mercantile Exchange Holdings, Inc. (b) 7,900 4,027,025
IntercontinentalExchange, Inc. (a) 20,100 2,168,790
------------
6,195,815
------------
ELECTRICAL EQUIPMENT (0.8%)
Emerson Electric Co. 41,000 1,806,870
------------
ENERGY EQUIPMENT & SERVICES (7.5%)
Baker Hughes, Inc. 50,400 3,762,864
National-Oilwell Varco, Inc. (a) 58,900 3,603,502
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (CONTINUED)
V Schlumberger, Ltd. 112,500 $ 7,105,500
Weatherford International, Ltd. (a) 49,700 2,076,963
------------
16,548,829
------------
FOOD & STAPLES RETAILING (3.1%)
CVS Corp. 81,000 2,503,710
Walgreen Co. 97,300 4,465,097
------------
6,968,807
------------
HEALTH CARE EQUIPMENT & SUPPLIES (2.6%)
Alcon, Inc. (b) 34,000 3,800,180
Intuitive Surgical, Inc. (a)(b) 21,000 2,013,900
------------
5,814,080
------------
HEALTH CARE PROVIDERS & SERVICES (2.2%)
Quest Diagnostics, Inc. 48,300 2,559,900
WellPoint, Inc. (a) 28,500 2,242,665
------------
4,802,565
------------
HOUSEHOLD PRODUCTS (3.1%)
V Procter & Gamble Co. (The) 108,700 6,986,149
------------
INDUSTRIAL CONGLOMERATES (3.5%)
V General Electric Co. 207,800 7,732,238
------------
INTERNET SOFTWARE & SERVICES (2.9%)
V Google, Inc. Class A (a) 13,800 6,354,624
------------
IT SERVICES (3.1%)
Mastercard, Inc. Class A (b) 23,200 2,284,968
Paychex, Inc. 116,200 4,594,548
------------
6,879,516
------------
LIFE SCIENCES TOOLS & SERVICES (1.1%)
Thermo Fisher Scientific, Inc. (a)(b) 53,400 2,418,486
------------
MACHINERY (2.8%)
V Danaher Corp. 86,500 6,266,060
------------
MEDIA (2.0%)
Comcast Corp. Class A (a) 103,600 4,338,768
------------
MULTILINE RETAIL (2.6%)
Kohl's Corp. (a) 33,700 2,306,091
Target Corp. 59,600 3,400,180
------------
5,706,271
------------
OIL, GAS & CONSUMABLE FUELS (2.4%)
XTO Energy, Inc. 111,900 5,264,895
------------
</Table>
+ Percentages indicated are based on Fund net assets.
V Among the Fund's 10 largest holdings, excluding short-term investments. May be
subject to change daily.
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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
PHARMACEUTICALS (3.0%)
Allergan, Inc. 28,700 $ 3,436,538
Wyeth 61,200 3,116,304
------------
6,552,842
------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (0.9%)
CB Richard Ellis Group, Inc. Class A (a) 58,600 1,945,520
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.7%)
Applied Materials, Inc. 57,400 1,059,030
Marvell Technology Group, Ltd. (a)(b) 124,200 2,383,398
NVIDIA Corp. (a) 71,900 2,661,019
------------
6,103,447
------------
SOFTWARE (4.8%)
Adobe Systems, Inc. (a) 28,100 1,155,472
Microsoft Corp. 165,200 4,932,872
Oracle Corp. (a) 84,100 1,441,474
Salesforce.com, Inc. (a) 84,300 3,072,735
------------
10,602,553
------------
SPECIALTY RETAIL (0.6%)
CarMax, Inc. (a) 23,300 1,249,579
------------
TEXTILES, APPAREL & LUXURY GOODS (1.3%)
Coach, Inc. (a) 64,900 2,788,104
------------
TRADING COMPANIES & DISTRIBUTORS (1.2%)
Fastenal Co. (b) 71,900 2,579,772
------------
WIRELESS TELECOMMUNICATION SERVICES (5.0%)
V America Movil S.A. de C.V. Class L, ADR (c) 143,800 6,502,636
NII Holdings, Inc. (a)(b) 72,300 4,659,012
------------
11,161,648
------------
Total Common Stocks
(Cost $192,826,428) 216,129,837
------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (8.8%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (2.0%)
Barton Capital LLC
5.298%, due 1/4/07 (d) $ 362,527 362,527
Charta LLC
5.314%, due 1/11/07 (d) 371,390 371,390
Ciesco, Inc.
5.305%, due 1/10/07 (d) 484,695 484,695
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Compass Securitization LLC
5.324%, due 1/18/07 (d) $ 495,186 $ 495,186
Fairway Finance Corp.
5.301%, due 1/8/07 (d) 371,390 371,390
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (d) 366,296 366,296
Greyhawk Funding LLC
5.305%, due 1/5/07 (d) 363,235 363,235
Jupiter Securitization Corp.
5.324%, due 1/18/07 (d) 371,390 371,390
Liberty Street Funding Co.
5.325%, due 1/29/07 (d) 123,796 123,796
Old Line Funding LLC
5.303%, due 1/9/07 (d) 485,238 485,238
Ranger Funding LLC
5.308%, due 1/30/07 (d) 371,390 371,390
Sheffield Receivables Corp.
5.336%, due 1/16/07 (d) 371,390 371,390
------------
Total Commercial Paper
(Cost $4,537,923) 4,537,923
------------
<Caption>
SHARES
INVESTMENT COMPANY (1.2%)
BGI Institutional Money Market Fund (d) 2,586,037 2,586,037
------------
Total Investment Company
(Cost $2,586,037) 2,586,037
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.0%)++
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $123,871
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note, with rates between
5.00%-8.96% and maturity dates between
8/15/09-12/29/49, with a Principal Amount of
$122,618 and a Market Value of $128,179) (d) $ 123,797 123,797
------------
Total Repurchase Agreement
(Cost $123,797) 123,797
------------
TIME DEPOSITS (5.6%)
Abbey National PLC
5.34%, due 1/2/07 (d) 1,485,559 1,485,559
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (d) 990,372 990,372
</Table>
M-230 MainStay VP Large 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>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
TIME DEPOSITS (CONTINUED)
Bank of America Corp.
5.27%, due 1/19/07 (d)(e) $ 990,372 $ 990,372
Bank of Montreal
5.30%, due 1/26/07 (d) 618,983 618,983
Barclays
5.32%, due 1/18/07 (d) 817,057 817,057
Calyon
5.31%, due 2/12/07 (d) 990,372 990,372
Citigroup
5.325%, due 3/22/07 (d) 866,576 866,576
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (d) 940,854 940,854
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (d) 990,372 990,372
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (d) 916,095 916,095
Rabobank Nederland
5.29%, due 3/6/07 (d) 742,779 742,779
Standard Chartered Bank
5.29%, due 1/10/07 (d) 990,372 990,372
UBS AG
5.285%, due 1/12/07 (d) 990,372 990,372
------------
Total Time Deposits
(Cost $12,330,135) 12,330,135
------------
Total Short-Term Investments
(Cost $19,577,892) 19,577,892
------------
Total Investments
(Cost $212,404,320) (f) 106.5% 235,707,729(g)
Liabilities in Excess of
Cash and Other Assets (6.5) (14,459,337)
---------- ------------
Net Assets 100.0% $221,248,392
========== ============
</Table>
<Table>
++ Less than one tenth of a percent.
(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) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(f) The cost for federal income tax purposes is $213,057,616.
(g) At December 31, 2006, net unrealized appreciation was
$22,650,113, 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 $25,000,211 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $2,350,098.
</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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value
(identified cost $212,404,320) including
$19,012,640 market value of securities
loaned $ 235,707,729
Cash 5,912,150
Receivables:
Fund shares sold 342,755
Dividends and interest 151,979
Other assets 386
-------------
Total assets 242,114,999
-------------
LIABILITIES:
Securities lending collateral 19,577,892
Payables:
Investment securities purchased 1,068,865
Adviser (See Note 3) 88,703
Administrator (See Note 3) 36,948
Professional fees 33,458
Shareholder communication 29,340
Fund shares redeemed 18,640
NYLIFE Distributors (See Note 3) 8,240
Custodian 1,119
Directors 275
Accrued expenses 3,127
-------------
Total liabilities 20,866,607
-------------
Net assets $ 221,248,392
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 146,577
Service Class 32,108
Additional paid-in capital 311,111,740
Accumulated undistributed net investment
income 45,570
Accumulated net realized loss on investments (113,391,012)
Net unrealized appreciation on investments 23,303,409
-------------
Net assets $ 221,248,392
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 181,656,725
=============
Shares of capital stock outstanding 14,657,664
=============
Net asset value per share outstanding $ 12.39
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 39,591,667
=============
Shares of capital stock outstanding 3,210,806
=============
Net asset value per share outstanding $ 12.33
=============
</Table>
M-232 MainStay VP Large 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 1,223,182
Interest 236,355
Income from securities loaned--net 15,749
------------
Total income 1,475,286
------------
EXPENSES:
Advisory (See Note 3) 854,356
Administration (See Note 3) 341,764
Professional fees 78,329
Distribution and service--Service Class
(See Note 3) 77,943
Shareholder communication 72,630
Custodian 13,185
Directors 8,515
Miscellaneous 21,110
------------
Total expenses before waiver/reimbursement 1,467,832
Expense waiver from Manager (See Note 3) (25,627)
Fees paid indirectly (See Note 3(A)) (12,573)
------------
Net expenses 1,429,632
------------
Net investment income 45,654
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investments (1,230,431)
Net change in unrealized appreciation on
investments 13,315,626
------------
Net realized and unrealized gain on investments 12,085,195
------------
Net increase in net assets resulting from
operations $12,130,849
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $6,764.
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
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 45,654 $ 259,802
Net realized gain (loss) on
investments (1,230,431) 3,433,704
Net change in unrealized
appreciation on investments 13,315,626 911,528
---------------------------
Net increase in net assets
resulting from operations 12,130,849 4,605,034
---------------------------
Dividends to shareholders:
From net investment income:
Initial Class (249,423) (3,756)
Service Class (6,707) --
---------------------------
Total dividends to
shareholders (256,130) (3,756)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 105,027,870 4,285,313
Service Class 17,758,996 6,874,172
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 249,423 3,756
Service Class 6,707 --
---------------------------
123,042,996 11,163,241
Cost of shares redeemed:
Initial Class (42,000,295) (29,450,710)
Service Class (3,296,586) (3,277,428)
---------------------------
(45,296,881) (32,728,138)
Increase (decrease) in net
assets derived from
capital share transactions 77,746,115 (21,564,897)
---------------------------
Net increase (decrease) in
net assets 89,620,834 (16,963,619)
NET ASSETS:
Beginning of year 131,627,558 148,591,177
---------------------------
End of year $221,248,392 $131,627,558
===========================
Accumulated undistributed net
investment income at end of
year $ 45,570 $ 256,046
===========================
</Table>
M-234 MainStay VP Large Cap Growth Portfolio The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
This page intentionally left blank
www.mainstayfunds.com M-235
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 11.57 $ 11.09 $ 11.38 $ 8.90 $ 12.41
-------- -------- -------- -------- --------
Net investment income (loss) 0.01(c) 0.02(c) 0.02 0.02(c) 0.01
Net realized and unrealized gain (loss) on
investments 0.83 0.46 (0.29) 2.48 (3.51)
-------- -------- -------- -------- --------
Total from investment operations 0.84 0.48 (0.27) 2.50 (3.50)
-------- -------- -------- -------- --------
Less dividends:
From net investment income (0.02) (0.00)(b) (0.02) (0.02) (0.01)
-------- -------- -------- -------- --------
Net asset value at end of period $ 12.39 $ 11.57 $ 11.09 $ 11.38 $ 8.90
======== ======== ======== ======== ========
Total investment return 7.24% 4.35%(d) (2.32%) 28.05% (28.21%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income (loss) 0.07% 0.28% 0.22% 0.17% 0.07%
Net expenses 0.79%# 0.64%# 0.85%# 0.83% 0.81%
Expenses (before waiver/reimbursement) 0.81%# 0.79%# 0.88%# 0.83% 0.81%
Portfolio turnover rate 96% 205% 117% 160% 168%
Net assets at end of period (in 000's) $181,657 $108,635 $130,091 $154,082 $119,529
</Table>
<Table>
(a) Commencement of operations.
(b) Less than one cent per share.
(c) Per share data based on average shares during the period.
(d) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
4.20% and 3.98% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(e) Total return is not annualized.
(f) 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%, less than 0.01% and 0.03% of
average net assets for the years ended December 31, 2006, 2005 and 2004, respectively.
+ Annualized.
</Table>
M-236 MainStay VP Large 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>
SERVICE CLASS
---------------------------------------------------
JUNE 6,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 11.53 $ 11.07 $ 11.37 $10.18
------- ------- ------- ------------
(0.02)(c) 0.00(b)(c) 0.00(b) (0.00)(b)(c)
0.82 0.46 (0.30) 1.20
------- ------- ------- ------------
0.80 0.46 (0.30) 1.20
------- ------- ------- ------------
(0.00)(b) -- (0.00)(b) (0.01)
------- ------- ------- ------------
$ 12.33 $ 11.53 $ 11.07 $11.37
======= ======= ======= ============
6.97% 4.10%(d) (2.57%) 11.83%(e)
(0.18%) 0.03% (0.03%) (0.08%)+(f)
1.04%# 0.89%# 1.10%# 1.08%+
1.06%# 1.04%# 1.13%# 1.08%+
96% 205% 117% 160%
$39,592 $22,993 $18,500 $7,455
</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
MAINSTAY VP MID CAP CORE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ----------------------------------------------------
After Portfolio operating
expenses 14.96% 13.94% 11.35%
</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
13574 13585
15726 15304
12/31/06 18079 17640
</Table>
SERVICE CLASS(1) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ----------------------------------------------------
After Portfolio operating
expenses 14.67% 13.66% 11.07%
</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
13456 13585
15550 15304
12/31/06 17832 17640
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
Russell Midcap(R) Index* 15.26% 12.88% 10.87%
</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-238 MainStay VP Mid Cap Core Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MID CAP CORE PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,093.05 $4.91 $1,020.35 $4.74
- ----------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,091.80 $6.22 $1,019.10 $6.01
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.93% for Initial Class and 1.18% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-239
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 98.8
Short-Term Investments (collateral from securities lending 13.3
is 13.3%)*
Investment Companies 0.9
Liabilities in Excess of Cash and Other Assets (13.0)
</Table>
* Includes 1.8% of Short-Term Investment Company Securities.
See Portfolio of Investments on page M-242 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Entergy Corp.
2. Harley-Davidson, Inc.
3. J.C. Penney Co., Inc.
4. Liberty Media Holding Corp. Class A
5. Electronic Data Systems Corp.
6. ConAgra Foods, Inc.
7. AES Corp. (The)
8. Northern Trust Corp.
9. Masco Corp.
10. Ameriprise Financial, Inc.
</Table>
M-240 MainStay VP Mid Cap Core Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Harvey Fram, CFA, of New York Life
Investment Management LLC.
HOW DID MAINSTAY VP MID CAP CORE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING THE YEAR ENDED DECEMBER 31, 2006?
For the year ended December 31, 2006, MainStay VP Mid Cap Core Portfolio
returned 14.96% for Initial Class shares and 14.67% for Service Class shares.
Both share classes outperformed the 12.84% return of the average Lipper*
Variable Products Mid-Cap Core Portfolio over the same period. Both share
classes underperformed the 15.26% return of the Russell Midcap(R) Index, the
Portfolio's broad-based securities-market index, for the year ended
December 31, 2006.
WHAT FACTORS AFFECTED THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
The Portfolio's relative performance resulted primarily from stock selection
among consumer discretionary, industrial and technology stocks.
IN 2006, WHICH SECTORS WERE STRONG PERFORMERS FOR THE PORTFOLIO AND WHICH
SECTORS WERE WEAK?
In absolute terms, the Portfolio's three strongest-performing sectors were
telecommunications, consumer staples and materials. The three weakest-
performing sectors were health care, energy and technology.
IN 2006, WHICH INDIVIDUAL PORTFOLIO HOLDINGS MADE THE STRONGEST CONTRIBUTIONS TO
ABSOLUTE PERFORMANCE AND WHICH DETRACTED THE MOST?
The three Portfolio stocks that made the strongest individual contributions to
performance were Kerr-McGee, Freescale Semiconductor and Archer-Daniels-
Midland. Kerr-McGee was acquired by Anadarko Petroleum in 2006, and Freescale
Semiconductor agreed to a buyout. The three weakest contributors to the
Portfolio's performance were Moody's, Jabil Circuit and Sunoco.
WERE THERE ANY SIGNIFICANT PURCHASES AND SALES DURING THE REPORTING PERIOD?
Two stocks purchased during the year were
Continental Airlines and Dolby Laboratories. Stocks sold during 2006 included
Ameritrade Holdings and Nucor.
WERE THERE ANY MEANINGFUL CHANGES IN THE PORTFOLIO'S SECTOR WEIGHTINGS DURING
2006?
The Portfolio's weighting in the consumer discretionary sector substantially
increased during 2006, while the Portfolio's weightings in energy and utilities
substantially decreased.
WERE THERE ANY OVERWEIGHTED OR UNDERWEIGHTED SECTORS AT YEAR-END?
As of December 31, 2006, the Portfolio was moderately overweighted in consumer
discretionary, which helped performance. On the same date, the Portfolio was
moderately underweighted in energy, which also helped performance.
Investors should note that portfolios that invest in companies with market
capitalizations below $10 billion involve additional risks. The securities of
these companies are generally less established and may be more volatile and less
liquid than the securities of larger companies.
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.
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.
INFORMATION ABOUT MAINSTAY VP MID CAP CORE PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-241
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (98.8%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.3%)
L-3 Communications Holdings, Inc. 12,589 $ 1,029,528
------------
AIRLINES (1.6%)
AMR Corp. (a) 50,601 1,529,668
Continental Airlines, Inc. Class B (a)(b) 28,101 1,159,166
Southwest Airlines Co. 42,745 654,853
UAL Corp. (a) 18,271 803,924
US Airways Group, Inc. (a)(b) 19,451 1,047,436
------------
5,195,047
------------
AUTO COMPONENTS (0.1%)
Autoliv, Inc. 6,128 369,518
------------
AUTOMOBILES (1.3%)
Ford Motor Co. (b) 92,277 693,000
V Harley-Davidson, Inc. (b) 51,513 3,630,121
------------
4,323,121
------------
BEVERAGES (0.5%)
Molson Coors Brewing Co. Class B 15,426 1,179,163
Pepsi Bottling Group, Inc. (The) 20,637 637,890
------------
1,817,053
------------
BUILDING PRODUCTS (1.0%)
V Masco Corp. (b) 105,884 3,162,755
------------
CAPITAL MARKETS (4.0%)
A.G. Edwards, Inc. 18,827 1,191,561
Affiliated Managers Group, Inc. (a)(b) 10,032 1,054,664
American Capital Strategies, Ltd. (b) 12,207 564,696
V Ameriprise Financial, Inc. 57,602 3,139,309
BlackRock, Inc. (b) 1,463 222,230
Janus Capital Group, Inc. 31,709 684,597
Jefferies Group, Inc. 13,151 352,710
V Northern Trust Corp. 52,458 3,183,676
Raymond James Financial, Inc. 29,006 879,172
SEI Investments Co. 9,423 561,234
T. Rowe Price Group, Inc. 30,255 1,324,261
------------
13,158,110
------------
CHEMICALS (2.4%)
Albemarle Corp. 12,561 901,880
Ashland, Inc. 10,833 749,427
Celanese Corp. Class A 24,321 629,428
Eastman Chemical Co. 12,255 726,844
FMC Corp. 6,651 509,134
Huntsman Corp. (a) 13,528 256,626
Lyondell Chemical Co. 69,369 1,773,765
PPG Industries, Inc. 20,249 1,300,188
Rohm & Haas Co. (b) 12,217 624,533
</Table>
<Table>
<Caption>
SHARES VALUE
CHEMICALS (CONTINUED)
Valhi, Inc. 205 $ 5,326
Valspar Corp. 7,532 208,185
Westlake Chemical Corp. 4,373 137,225
------------
7,822,561
------------
COMMERCIAL BANKS (2.3%)
BancorpSouth, Inc. 5,860 157,165
Bank of Hawaii Corp. 1,271 68,570
Comerica, Inc. 48,539 2,848,269
Commerce Bancorp, Inc. (b) 13,998 493,709
Commerce Bancshares, Inc. 10,511 508,838
Cullen/Frost Bankers, Inc. 9,637 537,937
First Horizon National Corp. 18,476 771,927
Regions Financial Corp. 17,779 664,935
TCF Financial Corp. 22,454 615,689
TD Banknorth, Inc. 2,115 68,272
UnionBanCal Corp. 8,022 491,348
Whitney Holding Corp. 9,860 321,633
------------
7,548,292
------------
COMMERCIAL SERVICES & SUPPLIES (2.2%)
Aramark Corp. Class B 14,141 473,016
Corrections Corp. of America (a) 19,240 870,225
Covanta Holding Corp. (a) 36,458 803,534
Dun & Bradstreet Corp. (The) (a) 20,093 1,663,499
Equifax, Inc. 31,642 1,284,665
Manpower, Inc. 10,916 817,936
R.R. Donnelley & Sons Co. 24,808 881,676
Republic Services, Inc. 2,453 99,764
Steelcase, Inc. Class A 24,688 448,334
------------
7,342,649
------------
COMMUNICATIONS EQUIPMENT (0.6%)
Avaya, Inc. (a) 147,755 2,065,615
------------
COMPUTERS & PERIPHERALS (0.9%)
Lexmark International, Inc. Class A (a) 33,073 2,420,944
NCR Corp. (a) 13,839 591,756
------------
3,012,700
------------
CONSTRUCTION & ENGINEERING (0.3%)
Quanta Services, Inc. (a)(b) 26,630 523,812
URS Corp. (a) 9,987 427,943
------------
951,755
------------
CONSTRUCTION MATERIALS (0.1%)
Eagle Materials, Inc. 4,241 183,338
------------
</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.
M-242 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)
- -----------------------------------------------------------------------------
CONSUMER FINANCE (0.3%)
AmeriCredit Corp. (a)(b) 28,907 $ 727,589
First Marblehead Corp. (The) (b) 7,797 426,106
------------
1,153,695
------------
CONTAINERS & PACKAGING (0.6%)
Pactiv Corp. (a) 44,494 1,587,991
Sonoco Products Co. 8,499 323,472
------------
1,911,463
------------
DIVERSIFIED CONSUMER SERVICES (0.7%)
Apollo Group, Inc. Class A (a) 10,303 401,508
Career Education Corp. (a) 7,225 179,036
ITT Educational Services, Inc. (a) 3,481 231,034
Service Corp. International 74,688 765,552
ServiceMaster Co. (The) 46,433 608,737
------------
2,185,867
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (2.4%)
CenturyTel, Inc. 37,163 1,622,537
Citizens Communications Co. 103,917 1,493,287
Embarq Corp. 47,655 2,504,747
Qwest Communications International, Inc. (a)(b) 264,245 2,211,731
------------
7,832,302
------------
ELECTRIC UTILITIES (2.5%)
Allegheny Energy, Inc. (a) 12,773 586,408
Edison International 38,440 1,748,251
V Entergy Corp. 40,477 3,736,837
Great Plains Energy, Inc. (b) 18,610 591,798
Pepco Holdings, Inc. 28,554 742,690
Progress Energy, Inc. 17,344 851,244
------------
8,257,228
------------
ELECTRICAL EQUIPMENT (0.2%)
American Power Conversion Corp. 7,291 223,032
Thomas & Betts Corp. (a) 8,305 392,660
------------
615,692
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.7%)
AVX Corp. (b) 16,178 239,273
Dolby Laboratories, Inc. Class A (a) 5,239 162,514
Mettler-Toledo International, Inc. (a) 10,025 790,471
Molex, Inc. 5,972 188,894
Symbol Technologies, Inc. 15,486 231,361
Tech Data Corp. (a) 17,811 674,503
------------
2,287,016
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (0.5%)
SEACOR Holdings, Inc. (a)(b) 5,516 $ 546,856
Tidewater, Inc. 17,049 824,490
Todco (a) 9,422 321,950
------------
1,693,296
------------
FOOD & STAPLES RETAILING (0.7%)
Safeway, Inc. 50,421 1,742,550
SUPERVALU, Inc. 15,111 540,218
------------
2,282,768
------------
FOOD PRODUCTS (2.4%)
Campbell Soup Co. 38,894 1,512,588
V ConAgra Foods, Inc. 122,412 3,305,124
Corn Products International, Inc. 23,279 804,057
H.J. Heinz Co. 35,311 1,589,348
J.M. Smucker Co. (The) 18,620 902,511
------------
8,113,628
------------
GAS UTILITIES (0.9%)
Energen Corp. 11,770 552,484
Equitable Resources, Inc. 20,518 856,627
National Fuel Gas Co. 13,283 511,927
ONEOK, Inc. 19,362 834,889
UGI Corp. 14,024 382,575
------------
3,138,502
------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.3%)
Biomet, Inc. 5,187 214,068
Edwards Lifesciences Corp. (a) 10,031 471,858
IDEXX Laboratories, Inc. (a) 2,463 195,316
------------
881,242
------------
HEALTH CARE PROVIDERS & SERVICES (5.2%)
AmerisourceBergen Corp. 62,623 2,815,530
CIGNA Corp. 13,366 1,758,565
Coventry Health Care, Inc. (a) 51,125 2,558,806
Express Scripts, Inc. (a) 4,116 294,706
Humana, Inc. (a) 48,310 2,672,026
Laboratory Corp. of America Holdings (a)(b) 38,958 2,862,244
Lincare Holdings, Inc. (a) 7,068 281,589
Manor Care, Inc. (b) 11,046 518,278
Quest Diagnostics, Inc. 47,399 2,512,147
Sierra Health Services, Inc. (a) 4,147 149,458
WellCare Health Plans, Inc. (a) 10,460 720,694
------------
17,144,043
------------
HEALTH CARE TECHNOLOGY (0.3%)
Emdeon Corp. (a)(b) 87,765 1,087,408
WebMD Health Corp. Class A (a)(b) 1,071 42,861
------------
1,130,269
------------
HOTELS, RESTAURANTS & LEISURE (1.0%)
Brinker International, Inc. 30,001 904,830
Darden Restaurants, Inc. 22,543 905,552
</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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (CONTINUED)
Harrah's Entertainment, Inc. 7,477 $ 618,497
MGM Mirage (a) 2,568 147,275
OSI Restaurant Partners, Inc. 2,798 109,682
Station Casinos, Inc. 1,011 82,568
Wendy's International, Inc. 19,825 656,009
------------
3,424,413
------------
HOUSEHOLD DURABLES (1.8%)
Black & Decker Corp. 18,032 1,442,019
Jarden Corp. (a)(b) 12,188 424,021
Leggett & Platt, Inc. 22,858 546,306
Lennar Corp. Class A 23,198 1,216,967
NVR, Inc. (a)(b) 1,062 684,990
Snap-on, Inc. 18,596 885,913
Stanley Works (The) 13,818 694,907
------------
5,895,123
------------
HOUSEHOLD PRODUCTS (0.4%)
Energizer Holdings, Inc. (a) 18,352 1,302,808
------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (2.0%)
V AES Corp. (The) (a) 147,229 3,244,927
Mirant Corp. (a) 91,774 2,897,305
NRG Energy, Inc. (a) 10,645 596,226
------------
6,738,458
------------
INDUSTRIAL CONGLOMERATES (0.2%)
Teleflex, Inc. 9,845 635,593
------------
INSURANCE (8.5%)
Alleghany Corp. (a) 1,551 563,944
Ambac Financial Group, Inc. 29,341 2,613,403
American Financial Group, Inc. 27,308 980,630
Aon Corp. (b) 61,546 2,175,036
Assurant, Inc. (b) 41,261 2,279,670
Brown & Brown, Inc. 26,501 747,593
CNA Financial Corp. (a) 7,790 314,093
Conseco, Inc. (a)(b) 48,498 968,990
First American Corp. 27,439 1,116,219
HCC Insurance Holdings, Inc. 35,146 1,127,835
Markel Corp. (a) 3,093 1,484,949
Mercury General Corp. 4,498 237,180
Nationwide Financial Services, Inc. Class A 15,463 838,095
Old Republic International Corp. 73,546 1,712,151
Philadelphia Consolidated Holding Corp. (a) 17,614 784,880
Protective Life Corp. 22,350 1,061,625
Reinsurance Group of America, Inc. 9,298 517,899
SAFECO Corp. 38,126 2,384,781
Torchmark Corp. 24,839 1,583,735
</Table>
<Table>
<Caption>
SHARES VALUE
INSURANCE (CONTINUED)
Transatlantic Holdings, Inc. 8,588 $ 533,315
Unitrin, Inc. 15,198 761,572
UnumProvident Corp. 71,511 1,485,999
W.R. Berkley Corp. 51,622 1,781,475
------------
28,055,069
------------
INTERNET & CATALOG RETAIL (1.2%)
Expedia, Inc. (a) 57,443 1,205,154
IAC/InterActiveCorp (a)(b) 29,601 1,099,973
Liberty Media Corp. Interactive Class A (a) 71,899 1,550,861
------------
3,855,988
------------
INTERNET SOFTWARE & SERVICES (0.4%)
VeriSign, Inc. (a) 60,338 1,451,129
------------
IT SERVICES (4.7%)
Acxiom Corp. 26,135 670,363
Computer Sciences Corp. (a)(b) 53,973 2,880,539
Convergys Corp. (a) 44,896 1,067,627
V Electronic Data Systems Corp. 121,821 3,356,169
Fidelity National Information Services, Inc. 39,246 1,573,372
Fiserv, Inc. (a) 42,441 2,224,757
Hewitt Associates, Inc. Class A (a) 18,445 474,959
Mastercard, Inc. Class A (b) 14,399 1,418,158
MoneyGram International, Inc. 12,688 397,896
Sabre Holdings Corp. Class A 34,347 1,095,326
Total System Services, Inc. (b) 12,016 317,102
------------
15,476,268
------------
LEISURE EQUIPMENT & PRODUCTS (1.8%)
Eastman Kodak Co. (b) 70,055 1,807,419
Hasbro, Inc. 53,946 1,470,029
Mattel, Inc. 122,798 2,782,603
------------
6,060,051
------------
LIFE SCIENCES TOOLS & SERVICES (0.8%)
Applera Corp.-Applied BioSystems Group 58,075 2,130,772
Thermo Fisher Scientific, Inc. (a) 12,090 547,556
Waters Corp. (a) 1,713 83,886
------------
2,762,214
------------
MACHINERY (4.7%)
AGCO Corp. (a) 28,984 896,765
Crane Co. 3,939 144,325
Cummins, Inc. (b) 16,816 1,987,315
Dover Corp. 45,559 2,233,302
Eaton Corp. 40,275 3,026,264
Gardner Denver, Inc. (a) 8,897 331,947
ITT Corp. 19,148 1,087,989
Manitowoc Co., Inc. (The) 19,601 1,164,887
Parker Hannifin Corp. (b) 25,205 1,937,760
</Table>
M-244 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)
- -----------------------------------------------------------------------------
MACHINERY (CONTINUED)
Terex Corp. (a) 32,130 $ 2,074,955
Toro Co. (The) 13,646 636,313
------------
15,521,822
------------
MEDIA (3.7%)
Cablevision Systems Corp. Class A 32,440 923,891
Clear Channel Outdoor Holdings, Inc. Class A (a) 5,317 148,397
DreamWorks Animation SKG, Inc. Class A (a) 6,035 177,972
EchoStar Communications Corp. Class A (a) 30,837 1,172,731
Gannett Co., Inc. 28,892 1,746,810
Harte-Hanks, Inc. 13,083 362,530
Hearst-Argyle Television, Inc. 3,987 101,669
John Wiley & Sons, Inc. Class A 14,153 544,466
Liberty Global, Inc. Class A (a) 85,630 2,496,115
V Liberty Media Holding Corp. Class A (a) 34,350 3,365,613
Meredith Corp. 4,973 280,229
Regal Entertainment Group Class A (b) 9,471 201,922
Univision Communications, Inc. Class A (a)(b) 17,222 610,003
Warner Music Group Corp. 7,017 161,040
------------
12,293,388
------------
METALS & MINING (2.3%)
Carpenter Technology Corp. 8,151 835,641
Freeport-McMoRan Copper & Gold, Inc. Class B (b) 51,592 2,875,222
Southern Copper Corp. (b) 4,351 234,475
Steel Dynamics, Inc. 30,567 991,899
United States Steel Corp. 39,196 2,866,795
------------
7,804,032
------------
MULTILINE RETAIL (2.7%)
Dillard's, Inc. Class A (b) 9,377 327,914
Dollar Tree Stores, Inc. (a) 33,768 1,016,417
Family Dollar Stores, Inc. 29,640 869,341
V J.C. Penney Co., Inc. (b) 46,099 3,566,219
Nordstrom, Inc. 62,662 3,091,743
Saks, Inc. 3,943 70,264
------------
8,941,898
------------
MULTI-UTILITIES (0.6%)
Alliant Energy Corp. 3,125 118,031
KeySpan Corp. 14,002 576,602
NSTAR 8,113 278,763
OGE Energy Corp. 29,028 1,161,120
------------
2,134,516
------------
OIL, GAS & CONSUMABLE FUELS (2.9%)
Frontier Oil Corp. 36,254 1,041,940
Holly Corp. 8,162 419,527
</Table>
<Table>
<Caption>
SHARES VALUE
OIL, GAS & CONSUMABLE FUELS (CONTINUED)
Kinder Morgan, Inc. 8,516 $ 900,567
Noble Energy, Inc. 56,568 2,775,792
Overseas Shipholding Group, Inc. 9,563 538,397
Plains Exploration & Production Co. (a) 25,170 1,196,330
Sunoco, Inc. 20,170 1,257,801
Tesoro Corp. 21,961 1,444,375
------------
9,574,729
------------
PERSONAL PRODUCTS (1.2%)
Avon Products, Inc. 93,065 3,074,868
Estee Lauder Cos., Inc. (The) Class A (b) 21,149 863,302
------------
3,938,170
------------
PHARMACEUTICALS (2.2%)
Endo Pharmaceuticals Holdings, Inc. (a) 42,582 1,174,412
Forest Laboratories, Inc. (a) 52,651 2,664,141
King Pharmaceuticals, Inc. (a) 77,550 1,234,596
Mylan Laboratories, Inc. (b) 67,279 1,342,889
Watson Pharmaceuticals, Inc. (a) 37,326 971,596
------------
7,387,634
------------
REAL ESTATE INVESTMENT TRUSTS (4.5%)
Apartment Investment & Management Co. Class A (b) 31,081 1,741,158
Boston Properties, Inc. (b) 14,738 1,648,887
BRE Properties, Inc. Class A 6,836 444,477
CBL & Associates Properties, Inc. 5,419 234,914
Equity Office Properties Trust 52,779 2,542,364
Essex Property Trust, Inc. 3,611 466,722
Health Care, Inc. 6,010 258,550
Host Hotels & Resorts, Inc. 29,634 727,515
HRPT Properties Trust 51,658 637,976
iStar Financial, Inc. 8,609 411,682
Kimco Realty Corp. 343 15,418
Mack-Cali Realty Corp. (b) 5,308 270,708
New Plan Excel Realty Trust (b) 28,356 779,223
Plum Creek Timber Co., Inc. 15,815 630,228
ProLogis 9,195 558,780
Public Storage, Inc. 7,939 774,053
Rayonier, Inc. 2,886 118,470
SL Green Realty Corp. 10,788 1,432,431
Taubman Centers, Inc. 8,974 456,418
Ventas, Inc. 16,818 711,738
------------
14,861,712
------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (0.5%)
CB Richard Ellis Group, Inc. Class A (a) 29,191 969,141
Jones Lang LaSalle, Inc. 6,085 560,854
------------
1,529,995
------------
ROAD & RAIL (0.4%)
Laidlaw International, Inc. 26,283 799,792
Ryder System, Inc. 4,639 236,867
</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-245
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
ROAD & RAIL (CONTINUED)
Swift Transportation Co., Inc. (a) 1,160 $ 30,473
YRC Worldwide, Inc. (a) 4,849 182,953
------------
1,250,085
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.2%)
Altera Corp. (a) 32,897 647,413
Atmel Corp. (a) 134,625 814,481
LSI Logic Corp. (a) 77,034 693,306
Micron Technology, Inc. (a) 86,896 1,213,068
National Semiconductor Corp. (b) 26,381 598,849
Novellus Systems, Inc. (a)(b) 47,382 1,630,888
Teradyne, Inc. (a)(b) 68,175 1,019,898
Xilinx, Inc. 28,928 688,776
------------
7,306,679
------------
SOFTWARE (3.4%)
BEA Systems, Inc. (a) 124,629 1,567,833
BMC Software, Inc. (a) 68,089 2,192,466
CA, Inc. 56,772 1,285,886
Cadence Design Systems, Inc. (a)(b) 90,329 1,617,792
Compuware Corp. (a) 120,019 999,758
Fair Isaac Corp. 6,245 253,859
Intuit, Inc. (a) 66,521 2,029,556
McAfee, Inc. (a) 51,013 1,447,749
------------
11,394,899
------------
SPECIALTY RETAIL (5.6%)
Abercrombie & Fitch Co. Class A 23,275 1,620,638
Alberto-Culver Co. 13,252 284,255
American Eagle Outfitters, Inc. 54,761 1,709,091
AnnTaylor Stores Corp. (a) 23,222 762,610
AutoNation, Inc. (a) 41,622 887,381
AutoZone, Inc. (a) 8,602 994,047
Barnes & Noble, Inc. 16,644 660,933
Claire's Stores, Inc. 14,852 492,195
Dick's Sporting Goods, Inc. (a)(b) 5,854 286,787
Office Depot, Inc. (a) 74,256 2,834,352
OfficeMax, Inc. 22,754 1,129,736
PetSmart, Inc. 10,647 307,272
RadioShack Corp. (b) 33,328 559,244
Ross Stores, Inc. 24,414 715,330
Sally Beauty Holdings, Inc. (a) 6,737 52,549
Sherwin-Williams Co. (The) 36,114 2,296,128
TJX Cos., Inc. (The) 109,789 3,126,791
------------
18,719,339
------------
TEXTILES, APPAREL & LUXURY GOODS (1.6%)
Hanesbrands, Inc. (a) 7,025 165,931
Jones Apparel Group, Inc. 36,023 1,204,249
Liz Claiborne, Inc. 20,830 905,272
</Table>
<Table>
<Caption>
SHARES VALUE
TEXTILES, APPAREL & LUXURY GOODS (CONTINUED)
Polo Ralph Lauren Corp. 10,387 $ 806,654
VF Corp. 27,562 2,262,289
------------
5,344,395
------------
THRIFTS & MORTGAGE FINANCE (0.4%)
PMI Group, Inc. (The) (b) 19,991 942,975
Radian Group, Inc. 6,085 328,042
------------
1,271,017
------------
TOBACCO (1.2%)
Loews Corp.- Carolina Group 14,740 953,973
UST, Inc. 49,732 2,894,402
------------
3,848,375
------------
TRADING COMPANIES & DISTRIBUTORS (0.2%)
WESCO International, Inc. (a) 11,326 666,082
------------
WIRELESS TELECOMMUNICATION SERVICES (0.4%)
Telephone & Data Systems, Inc. 26,598 1,445,069
------------
Total Common Stocks
(Cost $287,580,956) 327,500,003
------------
INVESTMENT COMPANIES (0.9%)
- -----------------------------------------------------------------------------
S&P 500 Index--SPDR
Trust Series 1 (b)(c) 10,970 1,554,668
S&P MidCap 400 Index--MidCap SPDR Trust
Series 1 (b)(c) 10,650 1,556,391
------------
Total Investment Companies
(Cost $3,051,485) 3,111,059
------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (13.3%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (3.1%)
Barton Capital LLC
5.298%, due 1/4/07 (d) $ 813,691 813,691
Charta LLC
5.314%, due 1/11/07 (d) 833,585 833,585
Ciesco, Inc.
5.305%, due 1/10/07 (d) 1,087,899 1,087,899
Compass Securitization LLC
5.324%, due 1/18/07 (d) 1,111,446 1,111,446
Fairway Finance Corp.
5.301%, due 1/8/07 (d) 833,584 833,584
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (d) 822,152 822,152
Greyhawk Funding LLC
5.305%, due 1/5/07 (d) 815,280 815,280
</Table>
M-246 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>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Jupiter Securitization Corp.
5.324%, due 1/18/07 (d) $ 833,584 $ 833,584
Liberty Street Funding Co.
5.325%, due 1/29/07 (d) 277,861 277,861
Old Line Funding LLC
5.303%, due 1/9/07 (d) 1,089,117 1,089,117
Ranger Funding LLC
5.308%, due 1/30/07 (d) 833,584 833,584
Sheffield Receivables Corp.
5.336%, due 1/16/07 (d) 833,584 833,584
------------
Total Commercial Paper
(Cost $10,185,367) 10,185,367
------------
<Caption>
SHARES
INVESTMENT COMPANY (1.8%)
BGI Institutional Money Market Fund (d) 5,804,363 5,804,363
------------
Total Investment Company
(Cost $5,804,363) 5,804,363
------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $278,029
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note, with rates between
5.00%-8.96% and maturity dates between
8/15/09-12/29/49, with a Principal Amount of
$275,216 and a Market Value of $287,698) (d) $ 277,861 277,861
------------
Total Repurchase Agreement
(Cost $277,861) 277,861
------------
TIME DEPOSITS (8.3%)
Abbey National PLC
5.34%, due 1/2/07 (d) 3,334,338 3,334,338
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (d) 2,222,892 2,222,892
Bank of America Corp.
5.27%, due 1/19/07 (d)(e) 2,222,892 2,222,892
Bank of Montreal
5.30%, due 1/26/07 (d) 1,389,307 1,389,307
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Barclays
5.32%, due 1/18/07 (d) $1,833,886 $ 1,833,886
Calyon
5.31%, due 2/12/07 (d) 2,222,892 2,222,892
Citigroup
5.325%, due 3/22/07 (d) 1,945,030 1,945,030
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (d) 2,111,747 2,111,747
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (d) 2,222,892 2,222,892
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (d) 2,056,175 2,056,175
Rabobank Nederland
5.29%, due 3/6/07 (d) 1,667,169 1,667,169
Standard Chartered Bank
5.29%, due 1/10/07 (d) 2,222,892 2,222,892
UBS AG
5.285%, due 1/12/07 (d) 2,222,892 2,222,892
------------
Total Time Deposits
(Cost $27,675,004) 27,675,004
------------
Total Short-Term Investments
(Cost $43,942,595) 43,942,595
------------
Total Investments
(Cost $334,575,036 (f) 113.0% 374,553,657(g)
Liabilities in Excess of
Cash and Other Assets (13.0) (42,957,677)
---------- ------------
Net Assets 100.0% $331,595,980
========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(d) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(e) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(f) The cost for federal income tax purposes is $335,226,762.
(g) At December 31, 2006 net unrealized appreciation was
$39,326,895 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 $40,933,086 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $1,606,191.
</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
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $334,575,036) including $42,429,067
market value of securities loaned $374,553,657
Cash 474,370
Receivables:
Investment securities sold 558,673
Dividends and interest 447,307
Fund shares sold 267,672
Other assets 754
-------------
Total assets 376,302,433
-------------
LIABILITIES:
Securities lending collateral 43,942,595
Payables:
Investment securities purchased 352,720
Manager (See Note 3) 238,046
Shareholder communication 49,753
Fund shares redeemed 46,176
Professional fees 40,790
NYLIFE Distributors (See Note 3) 27,757
Custodian 5,015
Directors 439
Accrued expenses 3,162
-------------
Total liabilities 44,706,453
-------------
Net assets $331,595,980
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 127,157
Service Class 84,828
Additional paid-in capital 254,730,253
Accumulated undistributed net investment
income 1,218,318
Accumulated undistributed net realized gain on
investments 35,456,803
Net unrealized appreciation on investments 39,978,621
-------------
Net assets $331,595,980
=============
INITIAL CLASS
Net assets applicable to outstanding shares $199,355,577
=============
Shares of capital stock outstanding 12,715,706
=============
Net asset value per share outstanding $ 15.68
=============
SERVICE CLASS
Net assets applicable to outstanding shares $132,240,403
=============
Shares of capital stock outstanding 8,482,757
=============
Net asset value per share outstanding $ 15.59
=============
</Table>
M-248 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 4,106,840
Income from securities loaned--net 74,960
Interest 47,367
------------
Total income 4,229,167
------------
EXPENSES:
Manager (See Note 3) 2,500,455
Distribution and service--Service Class (See
Note 3) 279,120
Professional fees 87,074
Shareholder communication 65,981
Custodian 49,647
Directors 15,895
Miscellaneous 13,794
------------
Total expenses 3,011,966
------------
Net investment income 1,217,201
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 35,766,638
Net change in unrealized appreciation on
investments 3,681,577
------------
Net realized and unrealized gain on investments 39,448,215
------------
Net increase in net assets resulting from
operations $40,665,416
============
</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 CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 1,217,201 $ 962,527
Net realized gain on
investments 35,766,638 19,639,923
Net change in unrealized
appreciation on investments 3,681,577 10,175,553
---------------------------
Net increase in net assets
resulting from operations 40,665,416 30,778,003
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class -- (827,840)
Service Class -- (309,626)
From net realized gain on investments:
Initial Class (1,206,053) (14,846,471)
Service Class (802,200) (8,350,470)
---------------------------
Total dividends and
distributions to
shareholders (2,008,253) (24,334,407)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 53,836,182 32,620,625
Service Class 36,328,517 40,661,989
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 1,206,053 15,674,311
Service Class 802,200 8,660,096
---------------------------
92,172,952 97,617,021
Cost of shares redeemed:
Initial Class (39,671,998) (22,191,388)
Service Class (9,315,501) (2,955,610)
---------------------------
(48,987,499) (25,146,998)
Increase in net assets
derived from capital share
transactions 43,185,453 72,470,023
---------------------------
Net increase in net assets 81,842,616 78,913,619
NET ASSETS:
Beginning of year 249,753,364 170,839,745
---------------------------
End of year $331,595,980 $249,753,364
===========================
Accumulated undistributed net
investment income at end of
year $ 1,218,318 $ 1,117
===========================
</Table>
M-250 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.
This page intentionally left blank
www.mainstayfunds.com M-251
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 13.72 $ 13.12 $ 11.01 $ 8.16 $ 9.40
-------- -------- -------- ------- -------
Net investment income 0.07 0.07 0.06 0.05(b) 0.02
Net realized and unrealized
gain (loss) on investments 1.99 2.02 2.39 2.84 (1.24)
-------- -------- -------- ------- -------
Total from investment
operations 2.06 2.09 2.45 2.89 (1.22)
-------- -------- -------- ------- -------
Less dividends and
distributions:
From net investment income -- (0.08) (0.06) (0.04) (0.02)
From net realized gain on
investments (0.10) (1.41) (0.28) -- --
-------- -------- -------- ------- -------
Total dividends and
distributions (0.10) (1.49) (0.34) (0.04) (0.02)
-------- -------- -------- ------- -------
Net asset value at end of
period $ 15.68 $ 13.72 $ 13.12 $ 11.01 $ 8.16
======== ======== ======== ======= =======
Total investment return 14.96% 15.86% 22.27% 35.43% (12.92%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 0.51% 0.54% 0.70% 0.55% 0.39%
Net expenses 0.93% 0.94% 0.98% 0.98% 0.98%
Expenses (before
waiver/reimbursement) 0.93% 0.94% 1.04% 1.18% 1.34%
Portfolio turnover rate 166% 159% 185% 202% 217%
Net assets at end of period
(in 000's) $199,356 $159,762 $128,178 $55,351 $27,936
</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 of 0.25%.
+ Annualized.
</Table>
M-252 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>
SERVICE CLASS
- ---------------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 13.68 $ 13.10 $ 11.00 $ 9.28
-------- --------------- --------------- ---------------
0.04 0.04 0.04 0.03(b)
1.97 2.00 2.38 1.72
-------- --------------- --------------- ---------------
2.01 2.04 2.42 1.75
-------- --------------- --------------- ---------------
-- (0.05) (0.04) (0.03)
(0.10) (1.41) (0.28) --
-------- --------------- --------------- ---------------
(0.10) (1.46) (0.32) (0.03)
-------- --------------- --------------- ---------------
$ 15.59 $ 13.68 $ 13.10 $ 11.00
======== =============== =============== ===============
14.67% 15.57% 21.96% 18.89%(c)
0.26% 0.37% 0.45% 0.30%+(d)
1.18% 1.19% 1.23% 1.23%+
1.18% 1.19% 1.29% 1.43%+
166% 159% 185% 202%
$132,240 $ 89,991 $ 42,662 $ 8,930
</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
MAINSTAY VP MID CAP GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 9.24% 10.15% 7.44%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID
CAP GROWTH RUSSELL MIDCAP RUSSELL 2500 GROWTH S&P MIDCAP 400
PORTFOLIO GROWTH INDEX INDEX INDEX
--------------- -------------- ------------------- --------------
7/2/01 10000 10000 10000 10000
9157 9174 9181 9844
6538 6660 6510 8416
9466 9505 9525 11413
11607 10976 10915 13295
13592 12304 11807 14964
12/31/06 14847 13615 13255 16508
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 8.97% 9.88% 7.17%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID
CAP GROWTH RUSSELL MIDCAP RUSSELL 2500 GROWTH S&P MIDCAP 400
PORTFOLIO GROWTH INDEX INDEX INDEX
--------------- -------------- ------------------- --------------
7/2/01 10000 10000 10000 10000
9145 9174 9181 9844
6514 6660 6510 8416
9408 9505 9525 11413
11506 10976 10915 13295
13439 12304 11807 14964
12/31/06 14645 13615 13255 16508
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
Russell Midcap(R) Growth Index* 10.66% 8.22% 5.77%
Russell 2500(R) Growth Index* 12.26 7.62 5.26
S&P Midcap 400(R) Index* 10.32 10.89 9.54
</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 figures shown for the five-year and since-inception periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 10.14% and 7.44% for the Initial Class and
9.87% and 7.17% for the Service Class for the five-year and since-inception
periods, respectively.
2. 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-254 MainStay VP Mid Cap Growth Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MID CAP GROWTH PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,023.30 $4.18 $1,020.90 $4.18
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,022.05 $5.45 $1,019.65 $5.45
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.82% for Initial Class and 1.07% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-255
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 95.3
Short-Term Investments (collateral from securities lending 24.4
is 17.7%)
Liabilities in Excess of Cash and Other Assets (19.7)
</Table>
See Portfolio of Investments on page M-259 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Allegheny Technologies, Inc.
2. Terex Corp.
3. American Eagle Outfitters, Inc.
4. Affiliated Managers Group, Inc.
5. Coach, Inc.
6 Oregon Steel Mills, Inc.
7. Tesoro Corp.
8. Coventry Health Care, Inc.
9. Alliant Techsystems, Inc.
10. Cytyc Corp.
</Table>
M-256 MainStay VP Mid Cap Growth Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by Portfolio Manager Edmund C. Spelman of MacKay Shields LLC.
HOW DID MAINSTAY VP MID CAP GROWTH PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK DURING THE YEAR ENDED DECEMBER 31, 2006?
For the year ended December 31, 2006, MainStay VP Mid Cap Growth Portfolio
returned 9.24% for Initial Class shares and 8.97% for Service Class shares. Both
share classes outperformed the 8.66% return of the average Lipper* Variable
Products Mid-Cap Growth Portfolio over the same period. Both share classes
underperformed the 10.66% return of the Russell Midcap(R) Growth Index,* the
Portfolio's broad-based securities-market index, for the year ended December 31,
2006.
WHAT ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
The Portfolio's underperformance of the Russell Midcap(R) Growth Index* resulted
primarily from unfavorable security selection within the health care,
financials, energy and industrials sectors. The Portfolio did not have exposure
in either the telecommunication services or utilities sectors during the year,
which also detracted from performance.
WHAT KEY MANAGEMENT DECISIONS AFFECTED THE PORTFOLIO'S PERFORMANCE?
Our decision to maintain an overweight position in the materials sector had a
positive effect on the Portfolio's performance in 2006. Our decision to maintain
an underweight position in the information technology and consumer discretionary
sectors also had a positive impact on performance.
WHAT STOCKS WERE THE STRONGEST POSITIVE CONTRIBUTORS TO THE FUND'S PERFORMANCE?
Specialty metals producer Allegheny Technologies was among the strongest
contributors to the Portfolio's performance. The company benefited from strong
end-market demand, higher selling prices, reduced product costs and improved
productivity. Equipment manufacturer Terex was also a strong contributor. The
company's positive financial results--driven by strong earnings from operations
and the sale of the company's interest in Tatra--were partially offset by
capital expenditures, increases in working capital and a call premium on the
early extinguishment of debt.
Retailer American Eagle Outfitters advanced on well-managed inventories and
continued record sales and earnings. Las Vegas Sands, owner and operator of
premium casinos and resort hotels, showed strong profits from gross gaming
revenue from table games and overall market share in Macao. The company has also
benefited from the growing popularity of Las Vegas as a vacation destination
WHICH STOCKS DETRACTED FROM THE PORTFOLIO'S PERFORMANCE?
Chico's FAS, a specialty retailer of private-label casual wear and formal wear
for woman, suffered from weaker-than-expected same-store sales in recent months,
which resulted in weaker sales and earnings performance. Arch Coal, a leading
coal producer, had to initiate major production cutbacks when mild weather
slowed electricity demand and inflated stockpiles among power generators.
Omnicare, a leading provider of pharmaceutical care for seniors, declined on
lower reimbursements from UnitedHealth Group, which led to a lawsuit, and a
mislabeling incident, which prompted a prescription drug recall. Other
detractors included Simpson Manufacturing and Ryland Group, both of which were
hurt by the housing slowdown. During 2006, we sold the Portfolio's positions in
all five of these weak performers.
DID THE PORTFOLIO MAKE ANY SIGNIFICANT PURCHASES IN 2006?
We added new positions to the Portfolio across a variety of sectors, including
Allegheny Technologies and Akamai Technologies in the information technology
sector, Oregon Steel Mills in the materials sector, Phillips-Van Heusen and
Cablevision Systems in consumer discretionary and CapitalSource in financial
services.
Investors should note that portfolios that invest in companies with market
capitalizations below $10 billion involve additional risks. The securities of
these companies are generally less established and their stocks may be more
volatile and less liquid than the securities of larger companies. The principal
risk of growth stocks is that investors expect growth companies to increase
their earnings at a certain rate that is generally higher than the rate expected
for nongrowth companies. If these expectations are not met, the market price of
the stock may decline significantly, even if earnings showed an absolute
increase.
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-257
WHAT STOCKS DID THE PORTFOLIO SELL?
In addition to the detractors already mentioned, the Portfolio sold its position
in homebuilder KB Home, which suffered from softening demand in residential
housing and a more competitive sales environment in most markets. We also
eliminated coal producer Massey Energy when mild weather slowed the company's
growth prospects.
HOW DID THE PORTFOLIO'S WEIGHTINGS CHANGE IN 2006?
During the year, the Portfolio more than doubled its weighting in information
technology and substantially increased its weightings in materials and
industrials. The Portfolio substantially decreased its weightings in consumer
discretionary and energy. Weightings were also reduced, but more modestly, in
financials and health care.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE RUSSELL MIDCAP(R) GROWTH INDEX*
AT YEAR-END?
As of December 31, 2006, the Portfolio was substantially overweight relative to
the Russell Midcap(R) Growth Index* in materials and energy and health care and
less so in industrials, information technology and financials. On the same date,
the Portfolio was underweight in the consumer discretionary sector and had no
holdings in consumer staples, telecommunication services or utilities.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP MID CAP GROWTH PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-258 MainStay VP Mid Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (95.3%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (4.9%)
V Alliant Techsystems, Inc. (a)(b) 84,700 $ 6,622,693
L-3 Communications Holdings, Inc. 60,800 4,972,224
Precision Castparts Corp. 64,800 5,072,544
------------
16,667,461
------------
BIOTECHNOLOGY (2.4%)
Cephalon, Inc. (a)(b) 57,500 4,048,575
MannKind Corp. (a)(b) 256,500 4,229,685
------------
8,278,260
------------
BUILDING PRODUCTS (1.0%)
Lennox International, Inc. 108,300 3,315,063
------------
CAPITAL MARKETS (2.3%)
V Affiliated Managers Group, Inc. (a)(b) 74,550 7,837,441
------------
CHEMICALS (1.7%)
Scotts Miracle-Gro Co. (The) Class A 114,300 5,903,595
------------
COMMUNICATIONS EQUIPMENT (0.7%)
Avocent Corp. (a) 73,300 2,481,205
------------
COMPUTERS & PERIPHERALS (1.2%)
QLogic Corp. (a) 186,800 4,094,656
------------
CONSTRUCTION & ENGINEERING (1.6%)
Fluor Corp. (b) 67,500 5,511,375
------------
CONSUMER FINANCE (1.7%)
AmeriCredit Corp. (a)(b) 134,300 3,380,331
Capital One Financial Corp. 29,200 2,243,144
------------
5,623,475
------------
DIVERSIFIED FINANCIAL SERVICES (2.3%)
IntercontinentalExchange, Inc. (a) 32,200 3,474,380
Nasdaq Stock Market, Inc. (The) (a)(b) 138,000 4,249,020
------------
7,723,400
------------
ELECTRICAL EQUIPMENT (1.4%)
Roper Industries, Inc. 95,500 4,797,920
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (3.1%)
Amphenol Corp. Class A 84,000 5,214,720
Avnet, Inc. (a)(b) 133,900 3,418,467
CDW Corp. 24,600 1,729,872
------------
10,363,059
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (5.2%)
Atwood Oceanics, Inc. (a) 128,600 $ 6,297,542
ENSCO International, Inc. 103,900 5,201,234
National-Oilwell Varco, Inc. (a) 101,500 6,209,770
------------
17,708,546
------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.2%)
V Cytyc Corp. (a) 223,000 6,310,899
Varian Medical Systems, Inc. (a) 98,300 4,676,131
------------
10,987,030
------------
HEALTH CARE PROVIDERS & SERVICES (9.2%)
Caremark Rx, Inc. 34,400 1,964,584
V Coventry Health Care, Inc. (a) 132,650 6,639,133
DaVita, Inc. (a) 69,400 3,947,472
Health Net, Inc. (a) 111,400 5,420,724
Henry Schein, Inc. (a)(b) 110,700 5,422,086
Quest Diagnostics, Inc. 70,200 3,720,600
Sierra Health Services, Inc. (a) 112,800 4,065,312
------------
31,179,911
------------
HOTELS, RESTAURANTS & LEISURE (3.6%)
Boyd Gaming Corp. (b) 34,500 1,563,195
Las Vegas Sands Corp. (a) 67,600 6,048,848
Penn National Gaming, Inc. (a) 106,700 4,440,854
------------
12,052,897
------------
HOUSEHOLD DURABLES (2.4%)
Garmin, Ltd. (b) 70,600 3,929,596
Harman International Industries, Inc. 43,100 4,306,121
------------
8,235,717
------------
INSURANCE (1.8%)
W.R. Berkley Corp. 174,500 6,021,995
------------
INTERNET SOFTWARE & SERVICES (2.8%)
Akamai Technologies, Inc. (a)(b) 111,400 5,917,568
j2 Global Communications, Inc. (a)(b) 130,300 3,550,675
------------
9,468,243
------------
IT SERVICES (2.8%)
Alliance Data Systems Corp. (a) 84,800 5,297,456
Global Payments, Inc. 92,400 4,278,120
------------
9,575,576
------------
LIFE SCIENCES TOOLS & SERVICES (3.5%)
Pharmaceutical Product Development, Inc. 170,800 5,503,176
Thermo Fisher Scientific, Inc. (a)(b) 137,100 6,209,259
------------
11,712,435
------------
</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.
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
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
(x
MACHINERY (5.2%)
Joy Global, Inc. 92,500 $ 4,471,450
Oshkosh Truck Corp. 103,900 5,030,838
V Terex Corp. (a) 124,100 8,014,378
------------
17,516,666
------------
MEDIA (1.4%)
Cablevision Systems Corp. Class A 168,500 4,798,880
------------
METALS & MINING (7.1%)
V Allegheny Technologies, Inc. 124,100 11,253,389
Commercial Metals Co. 194,000 5,005,200
V Oregon Steel Mills, Inc. (a) 108,200 6,752,762
Steel Dynamics, Inc. 30,900 1,002,705
------------
24,014,056
------------
OIL, GAS & CONSUMABLE FUELS (5.6%)
Holly Corp. 51,300 2,636,820
Newfield Exploration Co. (a) 127,900 5,877,005
Peabody Energy Corp. 94,200 3,806,622
V Tesoro Corp. 101,000 6,642,770
------------
18,963,217
------------
PHARMACEUTICALS (1.0%)
Endo Pharmaceuticals Holdings, Inc. (a) 118,300 3,262,714
------------
REAL ESTATE INVESTMENT TRUSTS (1.1%)
CapitalSource, Inc. (b) 135,700 3,705,967
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.0%)
Atheros Communications, Inc. (a) 42,100 897,572
Diodes, Inc. (a) 85,600 3,037,088
MEMC Electronic Materials, Inc. (a) 99,800 3,906,172
Trident Microsystems, Inc. (a) 135,800 2,468,844
------------
10,309,676
------------
SOFTWARE (5.2%)
Amdocs, Ltd. (a) 138,400 5,363,000
Autodesk, Inc. (a) 109,800 4,442,508
FactSet Research Systems, Inc. 110,900 6,263,632
TIBCO Software, Inc. (a) 182,000 1,718,080
------------
17,787,220
------------
SPECIALTY RETAIL (2.3%)
V American Eagle Outfitters, Inc. 255,450 7,972,595
------------
TEXTILES, APPAREL & LUXURY GOODS (3.7%)
V Coach, Inc. (a) 165,800 7,122,768
Phillips-Van Heusen Corp. 105,400 5,287,918
------------
12,410,686
------------
</Table>
<Table>
<Caption>
SHARES VALUE
TRADING COMPANIES & DISTRIBUTORS (0.9%)
WESCO International, Inc. (a) 54,000 $ 3,175,740
------------
Total Common Stocks
(Cost $244,294,835) 323,456,677
------------
<Caption>
PRINCIPAL
AMOUNT
(x
SHORT-TERM INVESTMENTS (24.4%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (10.9%)
American Express Credit Corp.
5.28%, due 1/5/07 $3,425,000 3,422,990
Barton Capital LLC
5.298%, due 1/4/07 (c) 1,113,128 1,113,128
Charta LLC
5.314%, due 1/11/07 (c) 1,140,342 1,140,342
Ciesco, Inc.
5.305%, due 1/10/07 (c) 1,488,244 1,488,244
Compass Securitization LLC
5.324%, due 1/18/07 (c) 1,520,457 1,520,457
European Investment Bank
5.20%, due 1/16/07 3,395,000 3,387,644
Fairway Finance Corp.
5.301%, due 1/8/07 (c) 1,140,342 1,140,342
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (c) 1,124,703 1,124,703
Goldman Sachs Group, Inc.
5.29%, due 1/11/07 4,000,000 3,994,123
Greyhawk Funding LLC
5.305%, due 1/5/07 (c) 1,115,302 1,115,302
ING U.S. Funding LLC
5.25%, due 1/4/07 4,000,000 3,998,250
Jupiter Securitization Corp.
5.324%, due 1/18/07 (c) 1,140,342 1,140,342
Liberty Street Funding Co.
5.325%, due 1/29/07 (c) 380,114 380,114
Old Line Funding LLC
5.303%, due 1/9/07 (c) 1,489,910 1,489,910
Prudential Funding LLC
5.26%, due 1/3/07 4,120,000 4,118,796
Rabobank USA Financial Corp.
5.28%, due 1/3/07 4,000,000 3,998,826
Ranger Funding LLC
5.308%, due 1/30/07 (c) 1,140,342 1,140,342
Sheffield Receivables Corp.
5.336%, due 1/16/07 (c) 1,140,342 1,140,342
------------
Total Commercial Paper
(Cost $36,854,197) 36,854,197
------------
</Table>
M-260 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>
SHARES VALUE
(x
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
INVESTMENT COMPANY (2.3%)
BGI Institutional Money Market Fund (c) 7,940,361 $ 7,940,361
------------
Total Investment Company
(Cost $7,940,361) 7,940,361
------------
PRINCIPAL
AMOUNT
(x
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $380,343
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note, with rates between
5.00%-8.96% and maturity dates between
8/15/09-12/29/49, with a Principal Amount of
$376,495 and a Market Value of $393,570) (c) $ 380,114 380,114
------------
Total Repurchase Agreement
(Cost $380,114) 380,114
------------
TIME DEPOSITS (11.1%)
Abbey National PLC
5.34%, due 1/2/07 (c) 4,561,370 4,561,370
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (c) 3,040,913 3,040,913
Bank of America Corp.
5.27%, due 1/19/07 (c)(d) 3,040,913 3,040,913
Bank of Montreal
5.30%, due 1/26/07 (c) 1,900,571 1,900,571
Barclays
5.32%, due 1/18/07 (c) 2,508,753 2,508,753
Calyon
5.31%, due 2/12/07 (c) 3,040,913 3,040,913
Citigroup
5.325%, due 3/22/07 (c) 2,660,799 2,660,799
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (c) $2,888,868 $ 2,888,868
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (c) 3,040,913 3,040,913
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (c) 2,812,845 2,812,845
Rabobank Nederland
5.29%, due 3/6/07 (c) 2,280,685 2,280,685
Standard Chartered Bank
5.29%, due 1/10/07 (c) 3,040,913 3,040,913
UBS AG
5.285%, due 1/12/07 (c) 3,040,913 3,040,913
------------
Total Time Deposits
(Cost $37,859,369) 37,859,369
------------
Total Short-Term Investments
(Cost $83,034,041) 83,034,041
------------
Total Investments
(Cost $327,328,876) (e) 119.7% 406,490,718(f)
Liabilities in Excess of
Cash and Other Assets (19.7) (66,915,477)
---------- ------------
Net Assets 100.0% $339,575,241
========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(d) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(e) The cost for federal income tax purposes is $327,651,229.
(f) At December 31, 2006 net unrealized appreciation was
$78,839,489, 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 $80,929,749 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $2,090,260.
</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-261
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $327,328,876) including $58,459,217
market value of securities loaned $406,490,718
Cash 5,501
Receivables:
Dividends and interest 90,906
Fund shares sold 90,109
Other assets 910
-------------
Total assets 406,678,144
-------------
LIABILITIES:
Securities lending collateral 60,113,412
Payables:
Investment securities purchased 6,354,833
Fund shares redeemed 276,784
Manager (See Note 3) 218,832
Shareholder communication 55,996
Professional fees 42,528
NYLIFE Distributors (See Note 3) 35,643
Custodian 1,559
Directors 477
Accrued expenses 2,839
-------------
Total liabilities 67,102,903
-------------
Net assets $339,575,241
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 118,718
Service Class 115,206
Additional paid-in capital 234,438,673
Accumulated undistributed net realized gain on
investments 25,740,802
Net unrealized appreciation on investments 79,161,842
-------------
Net assets $339,575,241
=============
INITIAL CLASS
Net assets applicable to outstanding shares $173,107,609
=============
Shares of capital stock outstanding 11,871,830
=============
Net asset value per share outstanding $ 14.58
=============
SERVICE CLASS
Net assets applicable to outstanding shares $166,467,632
=============
Shares of capital stock outstanding 11,520,612
=============
Net asset value per share outstanding $ 14.45
=============
</Table>
M-262 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 1,550,833
Interest 907,002
Income from securities loaned--net 309,965
------------
Total income 2,767,800
------------
EXPENSES:
Manager (See Note 3) 2,514,453
Distribution and service--Service Class
(See Note 3) 396,114
Professional fees 92,594
Shareholder communication 79,493
Directors 18,616
Custodian 18,430
Miscellaneous 16,053
------------
Total expenses 3,135,753
------------
Net investment loss (367,953)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 26,178,179
Net change in unrealized appreciation on
investments 911,157
------------
Net realized and unrealized gain on investments 27,089,336
------------
Net increase in net assets resulting from
operations $26,721,383
============
</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-263
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (367,953) $ (726,609)
Net realized gain on
investments 26,178,179 9,531,506
Net change in unrealized
appreciation on investments 911,157 29,651,408
---------------------------
Net increase in net assets
resulting from operations 26,721,383 38,456,305
---------------------------
Distributions to shareholders:
From net realized gain on investments:
Initial Class (3,048,439) (73,365)
Service Class (2,947,839) (59,926)
---------------------------
Total distributions to
shareholders (5,996,278) (133,291)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 37,168,119 38,999,507
Service Class 41,380,409 53,887,831
Net asset value of shares issued
to shareholders in reinvestment
of distributions:
Initial Class 3,048,439 73,365
Service Class 2,947,839 59,926
---------------------------
84,544,806 93,020,629
Cost of shares redeemed:
Initial Class (41,948,408) (25,288,667)
Service Class (20,577,115) (6,219,909)
---------------------------
(62,525,523) (31,508,576)
Increase in net assets
derived from capital share
transactions 22,019,283 61,512,053
---------------------------
Net increase in net assets 42,744,388 99,835,067
NET ASSETS:
Beginning of year 296,830,853 196,995,786
---------------------------
End of year $339,575,241 $296,830,853
===========================
</Table>
M-264 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.
This page intentionally left blank
www.mainstayfunds.com M-265
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 13.59 $ 11.61 $ 9.47 $ 6.54 $ 9.16
-------- -------- -------- ------- -------
Net investment income (loss) 0.00 (b) (0.03)(c) (0.03)(c) (0.04)(c) (0.05)(c)
Net realized and unrealized
gain (loss) on investments 1.25 2.02 2.17 2.97 (2.57)
-------- -------- -------- ------- -------
Total from investment
operations 1.25 1.99 2.14 2.93 (2.62)
-------- -------- -------- ------- -------
Less distributions:
From net realized gain on
investments (0.26) (0.01) -- -- --
-------- -------- -------- ------- -------
Net asset value at end of
period $ 14.58 $ 13.59 $ 11.61 $ 9.47 $ 6.54
======== ======== ======== ======= =======
Total investment return 9.24% 17.10%(f) 22.61% 44.78% (28.59%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income (loss) 0.01% (0.21%) (0.32%) (0.57%) (0.67%)
Net expenses 0.82% 0.79% 0.88% 0.97% 0.97%
Expenses (before
reimbursement) 0.82% 0.81% 0.88% 0.97% 1.10%
Portfolio turnover rate 51% 26% 50% 38% 163%
Net assets at end of period
(in 000's) $173,108 $163,514 $127,345 $83,839 $23,230
</Table>
<Table>
(a) Commencement of operations.
(b) Less than one cent per share.
(c) Per share data based on average shares outstanding during the period.
(d) Total return is not annualized.
(e) Represents income earned for the year by the Initial Class shares less service fee of
0.25%.
(f) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
17.07% and 16.78% for the Initial Class and Service Class, respectively, for the year
ended December 31, 2005.
+ Annualized.
</Table>
M-266 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>
SERVICE CLASS
- ---------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 13.50 $ 11.56 $ 9.45 $ 7.77
-------- -------- ------- ------------
(0.03) (0.06)(c) (0.05)(c) (0.03)(c)
1.24 2.01 2.16 1.71
-------- -------- ------- ------------
1.21 1.95 2.11 1.68
-------- -------- ------- ------------
(0.26) (0.01) -- --
-------- -------- ------- ------------
$ 14.45 $ 13.50 $ 11.56 $ 9.45
======== ======== ======= ============
8.97% 16.80%(f) 22.30% 21.71% (d)
(0.24%) (0.46%) (0.57%) (0.82%)+(e)
1.07% 1.04% 1.13% 1.22%+
1.07% 1.06% 1.13% 1.22%+
51% 26% 50% 38%
$166,468 $133,317 $69,651 $16,783
</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-267
MAINSTAY VP MID CAP VALUE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 14.05% 9.32% 8.22%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP RUSSELL MIDCAP VALUE
VALUE PORTFOLIO INDEX RUSSELL 1000 VALUE INDEX
------------------- -------------------- ------------------------
7/2/01 10000 10000 10000
9897 9909 9561
8455 8953 8077
10904 12362 10503
12817 15292 12235
13548 17226 13098
12/31/06 15452 20708 16012
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS(1) INCEPTION(1)
- ----------------------------------------------------------
After Portfolio operating
expenses 13.77% 9.04% 7.95%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP MID CAP RUSSELL MIDCAP VALUE
VALUE PORTFOLIO INDEX RUSSELL 1000 VALUE INDEX
------------------- -------------------- ------------------------
7/2/01 10000 10000 10000
9885 9909 9561
8424 8953 8077
10837 12362 10503
12706 15292 12235
13396 17226 13098
12/31/06 15241 20708 16012
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
Russell Midcap(R) Value Index* 20.22% 15.88% 14.15%
Russell 1000(R) Value Index* 22.25 10.86 8.94
</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 figures shown for the five-year and since-inception periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 9.31% and 8.22% for the Initial Class and 9.04%
and 7.95% for the Service Class for the five-year and since-inception
periods, respectively.
2. 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-268 MainStay VP Mid Cap Value Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MID CAP VALUE PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,088.30 $4.00 $1,021.20 $3.87
- ----------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,087.05 $5.31 $1,019.95 $5.14
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.76% for Initial Class and 1.01% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-269
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 91.4
Short-Term Investments (collateral from securities lending 22.0
is 16.5%)*
Investment Company 4.0
Liabilities in Excess of Cash and Other Assets (17.4)
</Table>
* Includes 5.0% of Short-Term Investment Company Securities.
See Portfolio of Investments on page M-272 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. iShares Russell Midcap Value Index Fund
2. PMI Group, Inc. (The)
3. Genworth Financial, Inc., Class A
4. Kroger Co. (The)
5. Edison International
6. Barr Pharmaceuticals, Inc.
7. American Standard Cos., Inc.
8. Pitney Bowes, Inc.
9. Marshall & Ilsley Corp.
10. Sovereign Bancorp, Inc.
</Table>
M-270 MainStay VP Mid Cap Value Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Richard A. Rosen and Mark T. Spellman
of MacKay Shields LLC.
HOW DID MAINSTAY VP MID CAP VALUE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Mid Cap Value Portfolio
returned 14.05% for Initial Class shares and 13.77% for Service Class shares.
Both share classes underperformed the 18.19% return of the average Lipper*
Variable Products Equity Income Portfolio for the same period. Both share
classes also underperformed the 20.22% return of the Russell Midcap(R) Value
Index,* the Portfolio's broad-based securities-market index, for the year ended
December 31, 2006.
DURING 2006, WHICH INDIVIDUAL STOCKS MADE POSITIVE CONTRIBUTIONS TO THE
PORTFOLIO'S PERFORMANCE?
Kos Pharmaceuticals was a leading contributor. After purchasing the position
earlier in 2006, the shares were acquired for a substantial premium by Abbot
Laboratories in early November. The shares continued to rise through late
December when we sold or tendered the entire position, benefiting the
Portfolio's performance.
Canadian nickel producer Inco received multiple takeover bids by other mining
concerns and was another positive contributor to the Portfolio's performance. We
sold the Portfolio's entire Inco position after it appreciated above our
market-value estimate.
Shares of offshore driller GlobalSanteFe were also strong. Higher contract rates
for the company's offshore drilling platforms drove earnings and the share price
higher throughout the year. We continued to own the position at year-end.
WHICH INDIVIDUAL HOLDINGS DETRACTED FROM THE PORTFOLIO'S PERFORMANCE IN 2006?
Specialty chemical concern Chemtura suffered from higher manufacturing input
costs. Unfortunately, the company had limited ability to pass these costs along
to its customers. We still believe that the shares offer compelling value, and
the Portfolio continues to hold them.
Shares of Abitibi-Consolidated fell during the year and hurt the Portfolio's
performance. Higher manufacturing costs coupled with significantly lower-than-
expected demand for newsprint detracted from the Portfolio's performance. We
reduced our position in the first quarter and eliminated it entirely by August.
Bowater is another paper manufacturer that suffered similar headwinds of higher
manufacturing costs and slack demand. We eliminated the Portfolio's position in
Bowater in October.
WERE THERE OTHER SIGNIFICANT PURCHASES OR SALES DURING 2006?
We reduced the Portfolio's overweighted position in energy as positions reached
their respective price targets. We also initiated a number of new health care
positions, raising the Portfolio's weighting in the health care sector.
HOW WAS THE PORTFOLIO POSITIONED AT YEAR-END 2006?
As of December 31, 2006, the Portfolio was overweighted relative to the Russell
Midcap(R) Value Index* in the health care, industrials and energy sectors and
underweighted in utilities, financials and consumer staples.
Investors should note that portfolios that invest in companies with market
capitalizations below $10 billion involve additional risks. The securities of
these companies are generally less established and their stocks may be more
volatile and less liquid than the securities of larger companies.
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.
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.
INFORMATION ABOUT MAINSTAY VP MID CAP VALUE PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-271
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (91.4%)+
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.8%)
Raytheon Co. 167,100 $ 8,822,880
------------
AUTO COMPONENTS (2.0%)
TRW Automotive Holdings Corp. (a) 365,100 9,445,137
------------
BUILDING PRODUCTS (2.2%)
V American Standard Cos., Inc. 228,100 10,458,385
------------
CHEMICALS (3.4%)
Arch Chemicals, Inc. 172,800 5,755,968
Chemtura Corp. 698,900 6,730,407
Olin Corp. 229,275 3,787,623
------------
16,273,998
------------
COMMERCIAL BANKS (7.2%)
Compass Bancshares, Inc. 117,570 7,013,050
KeyCorp (b) 246,800 9,385,804
V Marshall & Ilsley Corp. 199,673 9,606,268
PNC Financial Services Group, Inc. 116,300 8,610,852
------------
34,615,974
------------
COMMERCIAL SERVICES & SUPPLIES (2.1%)
V Pitney Bowes, Inc. 217,800 10,060,182
------------
COMPUTERS & PERIPHERALS (1.4%)
Emulex Corp. (a) 335,400 6,543,654
------------
CONTAINERS & PACKAGING (4.2%)
Ball Corp. 181,500 7,913,400
Owens-Illinois, Inc. (a)(b) 397,200 7,328,340
Temple-Inland, Inc. 106,800 4,916,004
------------
20,157,744
------------
DIVERSIFIED CONSUMER SERVICES (1.8%)
H&R Block, Inc. (b) 374,800 8,635,392
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.2%)
Windstream Corp. 51,903 738,061
------------
ELECTRIC UTILITIES (5.7%)
V Edison International 239,400 10,887,912
Entergy Corp. 74,200 6,850,144
PPL Corp. 261,600 9,375,744
------------
27,113,800
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (1.4%)
Molex, Inc. Class A 239,700 6,639,690
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (5.6%)
Diamond Offshore Drilling, Inc. (b) 69,800 $ 5,579,812
ENSCO International, Inc. 131,400 6,577,884
GlobalSantaFe Corp. 100,700 5,919,146
Pride International, Inc. (a) 74,100 2,223,000
Rowan Cos., Inc. (b) 193,600 6,427,520
------------
26,727,362
------------
FOOD & STAPLES RETAILING (3.0%)
V Kroger Co. (The) 611,100 14,098,077
------------
FOOD PRODUCTS (2.6%)
Cadbury Schweppes PLC, Sponsored ADR (c) 57,400 2,464,182
General Mills, Inc. 161,600 9,308,160
J.M. Smucker Co. (The) 15,800 765,826
------------
12,538,168
------------
HEALTH CARE PROVIDERS & SERVICES (2.3%)
Quest Diagnostics, Inc. 117,700 6,238,100
Universal Health Services, Inc. Class B 84,200 4,667,206
------------
10,905,306
------------
INSURANCE (9.5%)
Aspen Insurance Holdings, Ltd. 340,400 8,972,944
V Genworth Financial, Inc. Class A 452,400 15,476,604
Hartford Financial Services Group, Inc. (The) 53,300 4,973,423
PartnerRe, Ltd. (b) 118,500 8,417,055
SAFECO Corp. 123,400 7,718,670
------------
45,558,696
------------
IT SERVICES (1.0%)
Computer Sciences Corp. (a) 87,200 4,653,864
------------
MACHINERY (2.0%)
Pentair, Inc. 178,600 5,608,040
Timken Co. (The) 127,500 3,720,450
------------
9,328,490
------------
MEDIA (5.3%)
Gannett Co., Inc. 148,300 8,966,218
Getty Images, Inc. (a)(b) 176,000 7,536,320
Tribune Co. (b) 281,200 8,655,336
------------
25,157,874
------------
MULTI-UTILITIES (1.4%)
PG&E Corp. 142,594 6,748,974
------------
</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.
M-272 MainStay VP Mid Cap 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 & CONSUMABLE FUELS (1.7%)
Hess Corp. 167,400 $ 8,298,018
------------
PHARMACEUTICALS (5.4%)
V Barr Pharmaceuticals, Inc. (a) 212,900 10,670,548
Forest Laboratories, Inc. (a) 138,400 7,003,040
Teva Pharmaceutical Industries, Ltd., Sponsored
ADR (c) 261,200 8,118,096
------------
25,791,684
------------
REAL ESTATE INVESTMENT TRUSTS (2.8%)
DCT Industrial Trust, Inc. 55,500 654,900
Douglas Emmett, Inc. 72,500 1,927,775
General Growth Properties, Inc. 99,800 5,212,554
Highwoods Properties, Inc. 140,900 5,743,084
------------
13,538,313
------------
ROAD & RAIL (1.9%)
CSX Corp. 261,900 9,017,217
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.0%)
Advanced Micro Devices, Inc. (a) 462,600 9,413,910
------------
SPECIALTY RETAIL (3.9%)
Barnes & Noble, Inc. 88,700 3,522,277
Gap, Inc. (The) 360,900 7,037,550
Williams-Sonoma, Inc. (b) 256,500 8,064,360
------------
18,624,187
------------
THRIFTS & MORTGAGE FINANCE (5.8%)
V PMI Group, Inc. (The) (b) 386,900 18,250,073
V Sovereign Bancorp, Inc. (b) 374,418 9,506,473
------------
27,756,546
------------
TRADING COMPANIES & DISTRIBUTORS (1.3%)
W.W. Grainger, Inc. 85,800 6,000,852
------------
WIRELESS TELECOMMUNICATION SERVICES (0.5%)
ALLTEL Corp. 41,400 2,503,872
------------
Total Common Stocks
(Cost $375,772,120) 436,166,307
------------
INVESTMENT COMPANY (4.0%)
- ------------------------------------------------------------------------------
V iShares Russell Midcap Value Index Fund (b)(d) 129,400 18,948,042
------------
Total Investment Company
(Cost $16,234,236) 18,948,042
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (22.0%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (6.5%)
Barton Capital LLC
5.298%, due 1/4/07 (e) $ 1,462,145 $ 1,462,145
Charta LLC
5.314%, due 1/11/07 (e) 1,497,891 1,497,891
Ciesco, Inc.
5.305%, due 1/10/07 (e) 1,954,876 1,954,876
Compass Securitization LLC
5.324%, due 1/18/07 (e) 1,997,189 1,997,189
Fairway Finance Corp.
5.301%, due 1/8/07 (e) 1,497,891 1,497,891
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (e) 1,477,348 1,477,348
Goldman Sachs Group, Inc.
5.29%, due 1/11/07 3,000,000 2,995,592
Greyhawk Funding LLC
5.305%, due 1/5/07 (e) 1,465,000 1,465,000
Jupiter Securitization Corp.
5.324%, due 1/18/07 (e) 1,497,892 1,497,892
Liberty Street Funding Co.
5.325%, due 1/29/07 (e) 499,297 499,297
Old Line Funding LLC
5.303%, due 1/9/07 (e) 1,957,065 1,957,065
Prudential Funding LLC
5.26%, due 1/3/07 2,305,000 2,304,326
Ranger Funding LLC
5.308%, due 1/30/07 (e) 1,497,891 1,497,891
Sheffield Receivables Corp.
5.336%, due 1/16/07 (e) 1,497,892 1,497,892
Toyota Motor Credit Co.
5.27%, due 1/4/07 7,430,000 7,426,737
------------
Total Commercial Paper
(Cost $31,029,032) 31,029,032
------------
<Caption>
SHARES
INVESTMENT COMPANIES (5.0%)
BGI Institutional Money Market Fund (e) 10,430,026 10,430,026
Merrill Lynch Funds--Premier Institutional Money
Market Fund 13,213,363 13,213,363
------------
Total Investment Companies
(Cost $23,643,389) 23,643,389
------------
</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.
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-273
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $499,598 (Collateralized by
various Corporate Bonds and a U.S. Treasury Note,
with rates between 5.00%-8.96% and maturity dates
between 8/15/09-12/29/49, with a Principal Amount
of $494,544 and a Market Value of $516,973)(e) $ 499,297 $ 499,297
------------
Total Repurchase Agreement
(Cost $499,297) 499,297
------------
TIME DEPOSITS (10.4%)
Abbey National PLC
5.34%, due 1/2/07 (e) 5,991,567 5,991,567
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (e) 3,994,378 3,994,378
Bank of America Corp.
5.27%, due 1/19/07 (e)(f) 3,994,378 3,994,378
Bank of Montreal
5.30%, due 1/26/07 (e) 2,496,486 2,496,486
Barclays
5.32%, due 1/18/07 (e) 3,295,362 3,295,362
Calyon
5.31%, due 2/12/07 (e) 3,994,378 3,994,378
Citigroup
5.325%, due 3/22/07 (e) 3,495,081 3,495,081
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (e) 3,794,659 3,794,659
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (e) 3,994,378 3,994,378
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (e) 3,694,799 3,694,799
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Rabobank Nederland
5.29%, due 3/6/07 (e) $ 2,995,783 $ 2,995,783
Standard Chartered Bank
5.29%, due 1/10/07 (e) 3,994,378 3,994,378
UBS AG
5.285%, due 1/12/07 (e) 3,994,378 3,994,378
------------
Total Time Deposits
(Cost $49,730,005) 49,730,005
------------
Total Short-Term Investments
(Cost $104,901,723) 104,901,723
------------
Total Investments
(Cost $496,908,079)(g) 117.4% 560,016,072(h)
Liabilities in Excess of
Cash and Other Assets (17.4) (82,822,901)
----------- ------------
Net Assets 100.0% $477,193,171
=========== ============
</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) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(e) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(f) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(g) The cost for federal income tax purposes is $496,856,216.
(h) At December 31, 2006 net unrealized appreciation was
$63,159,856, based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized appreciation
for all investments on which there was an excess of market
value over cost of $68,743,365 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $5,583,509.
</Table>
M-274 MainStay VP Mid Cap 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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $496,908,079) including $76,421,412
market value of securities loaned $560,016,072
Cash 5,837
Receivables:
Dividends and interest 594,691
Fund shares sold 221,822
Other assets 1,242
-------------
Total assets 560,839,664
-------------
LIABILITIES:
Securities lending collateral 78,961,705
Payables:
Investment securities purchased 4,092,964
Manager (See Note 3) 284,667
Fund shares redeemed 138,476
Shareholder communication 73,453
Professional fees 49,413
NYLIFE Distributors (See Note 3) 40,538
Custodian 1,427
Directors 657
Accrued expenses 3,193
-------------
Total liabilities 83,646,493
-------------
Net assets $477,193,171
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 206,069
Service Class 138,577
Additional paid-in capital 369,374,718
Accumulated undistributed net investment
income 4,520,850
Accumulated undistributed net realized gain on
investments and written option transactions 39,844,964
Net unrealized appreciation on investments 63,107,993
-------------
Net assets $477,193,171
=============
INITIAL CLASS
Net assets applicable to outstanding shares $285,825,661
=============
Shares of capital stock outstanding 20,606,866
=============
Net asset value per share outstanding $ 13.87
=============
SERVICE CLASS
Net assets applicable to outstanding shares $191,367,510
=============
Shares of capital stock outstanding 13,857,703
=============
Net asset value per share outstanding $ 13.81
=============
</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-275
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 6,909,921
Interest 1,354,412
Income from securities loaned--net 139,569
------------
Total income 8,403,902
------------
EXPENSES:
Manager (See Note 3) 3,167,845
Distribution and service--Service Class
(See Note 3) 427,476
Shareholder communication 112,148
Professional fees 107,887
Directors 25,652
Custodian 16,323
Miscellaneous 21,842
------------
Total expenses 3,879,173
------------
Net investment income 4,524,729
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND WRITTEN
OPTIONS:
Net realized gain on:
Security transactions 39,870,629
Written option transactions 256,723
------------
Net realized gain on investments and written
option transactions 40,127,352
------------
Net change in unrealized appreciation on
investments 14,486,445
------------
Net realized and unrealized gain on investments
and written option transactions 54,613,797
------------
Net increase in net assets resulting from
operations $59,138,526
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of
$25,662.
M-276 MainStay VP Mid Cap 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 CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 4,524,729 $ 3,224,458
Net realized gain on
investments and written
option transactions 40,127,352 20,543,783
Net increase from payment by
affiliate for loss on the
disposal of investment in
violation of restrictions -- 16,177
Net change in unrealized
appreciation on investments 14,486,445 (1,942,656)
---------------------------
Net increase in net assets
resulting from operations 59,138,526 21,841,762
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (270,708) (2,112,408)
Service Class -- (846,941)
From net realized gain on investments:
Initial Class (3,606,729) (12,655,130)
Service Class (2,419,421) (6,829,981)
---------------------------
Total dividends and
distributions to
shareholders (6,296,858) (22,444,460)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 10,748,891 45,781,191
Service Class 31,544,124 69,756,113
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 3,877,437 14,767,538
Service Class 2,419,421 7,676,922
---------------------------
48,589,873 137,981,764
Cost of shares redeemed:
Initial Class (41,214,605) (36,773,363)
Service Class (12,748,686) (5,823,264)
---------------------------
(53,963,291) (42,596,627)
Increase (decrease) in net
assets derived from
capital share transactions (5,373,418) 95,385,137
---------------------------
Net increase in net assets 47,468,250 94,782,439
NET ASSETS:
Beginning of year 429,724,921 334,942,482
---------------------------
End of year $477,193,171 $429,724,921
===========================
Accumulated undistributed net
investment income at end of
year $ 4,520,850 $ 266,829
===========================
</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-277
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 12.33 $ 12.31 $ 10.65 $ 8.33 $ 9.85
-------- -------- -------- -------- -------
Net investment income 0.15 0.11(b) 0.10 0.11(b) 0.09
Net realized and unrealized
gain (loss) on investments 1.58 0.60 1.77 2.30 (1.52)
-------- -------- -------- -------- -------
Total from investment
operations 1.73 0.71 1.87 2.41 (1.43)
-------- -------- -------- -------- -------
Less dividends and
distributions:
From net investment income (0.01) (0.10) (0.10) (0.09) (0.09)
From net realized gain on
investments (0.18) (0.59) (0.11) -- --
-------- -------- -------- -------- -------
Total dividends and
distributions (0.19) (0.69) (0.21) (0.09) (0.09)
-------- -------- -------- -------- -------
Net asset value at end of
period $ 13.87 $ 12.33 $ 12.31 $ 10.65 $ 8.33
======== ======== ======== ======== =======
Total investment return 14.05% 5.70%(c)(d) 17.54% 28.97% (14.57%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.09% 0.89% 1.08% 1.21% 1.39%
Net expenses 0.76% 0.72% 0.81% 0.84% 0.89%
Expenses (before
reimbursement) 0.76% 0.75% 0.81% 0.84% 0.92%
Portfolio turnover rate 52% 37% 29% 34% 46%
Net assets at end of period
(in 000's) $285,826 $279,251 $255,129 $141,877 $84,392
</Table>
<Table>
(a) Commencement of operations.
(b) Per share data based on average shares outstanding during the period.
(c) Includes nonrecurring reimbursements from affiliates for printing and mailing cost. If
these nonrecurring reimbursements had not been made, the total return would have been
5.67% and 5.40% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(d) The effect of losses resulting from compliance violations and the subadviser reimbursement
of such losses were less than 0.01%.
(e) Total return is not annualized.
(f) Represents income earned for the year by the Initial Class share less service of 0.25%.
+ Annualized.
</Table>
M-278 MainStay VP Mid Cap 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 SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
-----------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 12.29 $ 12.29 $ 10.64 $ 9.18
-------- --------------- --------------- ---------------
0.11 0.08(b) 0.08 0.05(b)
1.59 0.58 1.76 1.50
-------- --------------- --------------- ---------------
1.70 0.66 1.84 1.55
-------- --------------- --------------- ---------------
-- (0.07) (0.08) (0.09)
(0.18) (0.59) (0.11) --
-------- --------------- --------------- ---------------
(0.18) (0.66) (0.19) (0.09)
-------- --------------- --------------- ---------------
$ 13.81 $ 12.29 $ 12.29 $ 10.64
======== =============== =============== ===============
13.77% 5.43%(c)(d) 17.25% 16.89%(e)
0.85% 0.64% 0.83% 0.96%+(f)
1.01% 0.97% 1.06% 1.09%+
1.01% 1.00% 1.06% 1.09%+
52% 37% 29% 34%
$191,368 $150,474 $ 79,813 $ 17,384
</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-279
MAINSTAY VP MODERATE ALLOCATION PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 9.93%
</Table>
(LINE GRAPH) (After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
MODERATE LEHMAN BROTHERS MODERATE
ALLOCATION MSCI EAFE AGGREGATE BOND ALLOCATION
PORTFOLIO S&P 500 INDEX INDEX INDEX BENCHMARK
----------- ------------- --------- --------------- ----------
2/13/06 10000 10000 10000 10000 10000
12/31/06 10993 11386 12152 10457 11083
</Table>
SERVICE CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 9.69%
</Table>
(LINE GRAPH) (After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
MODERATE LEHMAN BROTHERS MODERATE
ALLOCATION MSCI EAFE AGGREGATE BOND ALLOCATION
PORTFOLIO S&P 500 INDEX INDEX INDEX BENCHMARK
----------- ------------- --------- --------------- ----------
2/13/06 10000 10000 10000 10000 10000
12/31/06 10969 11386 12152 10457 11083
</Table>
<Table>
<Caption>
SINCE
BENCHMARK PERFORMANCE INCEPTION
Moderate Allocation Benchmark* 10.83%
S&P 500(R) Index* 13.86
MSCI EAFE(R) Index* 21.52
Lehman Brothers(R) Aggregate Bond Index* 4.57
</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.
* 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-280 MainStay VP Moderate Allocation Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MODERATE ALLOCATION
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
VALUE (BASED
ENDING ACCOUNT ON HYPOTHETICAL
VALUE (BASED 5% ANNUALIZED
BEGINNING ON ACTUAL EXPENSES RETURN AND EXPENSES
ACCOUNT RETURNS AND PAID ACTUAL PAID
VALUE EXPENSES) DURING EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,095.15 $0.79 $1,024.25 $0.77
- --------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,094.00 $2.11 $1,023.00 $2.04
- --------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.15% for Initial Class, 0.40% for Service Class) multiplied by the average
account value over the period, divided by 365 and multiplied by 184 (to
reflect the one-half year period). The expense ratio does not include the
fees and expenses associated with investments made in Underlying Funds; such
fees and expenses are reflected as a reduction in the Portfolio's gross
return.
www.mainstayfunds.com M-281
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Affiliated Investment Companies 99.7
Cash and Other Assets, Less Liabilities 0.3
</Table>
See Portfolio of Investments on page M-285 for specific holdings within these
categories.
M-282 MainStay VP Moderate Allocation Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Tony Elavia of New York Life Investment
Management LLC.
HOW DID MAINSTAY VP MODERATE ALLOCATION PORTFOLIO PERFORM RELATIVE TO ITS
BENCHMARK AND PEERS FROM FEBRUARY 13 THROUGH DECEMBER 31, 2006?
From February 13 through December 31, 2006, MainStay VP Moderate Allocation
Portfolio returned 9.93% for Initial Class shares and 9.69% for Service Class
shares. Both share classes outperformed the 9.53% return of the average Lipper*
Variable Products Mixed-Asset Target Allocation Moderate Portfolio(1) for the
same period. Both share classes underperformed the 13.86% return of the S&P
500(R) Index,* the Portfolio's broad-based securities-market index, as well as
the 10.83% return of the Moderate Allocation Benchmark* from February 13 through
December 31, 2006. The Moderate Allocation Benchmark is a blended benchmark
designed to represent the asset classes in which the Portfolio invests.
WERE THERE ANY CHANGES IN THE WAY THE PORTFOLIO WAS MANAGED DURING THE REPORTING
PERIOD?
During the reporting period, Devon McCormick resigned as portfolio manager of
the Portfolio. Also during the reporting period, the Board of Directors
authorized MainStay VP Asset Allocation Portfolios to invest in affiliated
MainStay mutual funds as underlying investment options.
HOW WAS THE PORTFOLIO ALLOCATED AMONG THE UNDERLYING INVESTMENT OPTIONS?
Throughout the summer and into the fall, we emphasized underlying investment
options with larger average capitalizations and a stronger growth orientation.
We believed that the market's capitalization and style preferences had become a
bit distorted in recent years. During the last six months of 2006, the style
bias had little impact on the performance of the Portfolio, but the orientation
toward larger capitalizations began to benefit returns.
WERE THERE ANY SPECIFIC CHANGES IN THE PORTFOLIO'S ALLOCATIONS DURING THE
REPORTING PERIOD?
One recent change has been a gradual migration out of MainStay VP Common Stock
Portfolio and into MainStay VP ICAP Select Equity Portfolio,(2) MainStay VP
Large Cap Growth Portfolio and MainStay Growth Equity Fund. Although the shift
detracted from per-formance through December 31, 2006, the overall impact was
slight.
We also elected to split the Portfolio's exposure to international equities
evenly between MainStay VP International Portfolio and MainStay ICAP
International Fund. Since MainStay ICAP International Fund did not become
available until September 1, 2006, the impact of the move, though negative, has
been very mild.
1. Performance for Initial Class and Service Class shares and the Portfolio's
benchmark, the S&P 500(R) Index,* as well as the Moderate Allocation Index*
are calculated from inception (2/13/06) through 12/31/06. Performance for the
average Lipper* Variable Products Mixed-Asset Allocation Moderate Portfolio
is calculated from 2/8/06 through 12/31/06.
2. During the reporting period, The Dreyfus Corporation was terminated as
subadvisor of MainStay VP Basic Value Portfolio and replaced by Institutional
Capital LLC (ICAP). Effective 11/10/06, MainStay VP Basic Value Portfolio's
name was changed to MainStay VP ICAP Select Equity Portfolio.
The Portfolio's performance depends on the advisor's skill in determining the
asset-class allocations and the mix of underlying investment options as well as
the performance of these underlying investment options. The underlying
investment options' performance may be lower than the performance of the asset
class or classes the underlying investment options were selected to represent.
The Portfolio is indirectly subject to the investment risks of each underlying
investment option held. Principal risks of the underlying investment options are
described below.
MainStay VP Moderate Allocation Portfolio is a "fund of funds" that invests in
other MainStay VP Portfolios and other MainStay mutual funds. The cost of
investing in the Portfolio may be higher than the cost of investing in a mutual
fund that invests directly in individual stocks and bonds. By investing in the
Portfolio, clients will indirectly bear fees and expenses charged by the
underlying investment options in which the Portfolio invests in addition to the
Portfolio's direct fees and expenses. In addition, the use of a fund-of-funds
structure could affect the timing, amount and character of distributions to the
client and may increase taxes payable by the client.
The Portfolio may invest more than 25% of its assets in one underlying
investment option, which may significantly affect the net asset value of the
Portfolio.
- - Stocks and bonds can decline because of adverse issuer, market, regulatory or
economic developments.
- - High-yield securities carry higher risks, and some of the underlying
investment options' investments have speculative characteristics and present a
greater risk of loss than higher-quality debt securities. High-yield
securities can also be subject to greater price volatility.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
* 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-283
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS HELD BY THE
PORTFOLIO HAD THE HIGHEST TOTAL RETURNS AND WHICH HAD THE LOWEST?
In terms of total return, MainStay VP International Equity Portfolio was by far
the best-performing underlying investment option held by the Portfolio. MainStay
VP ICAP Select Equity Portfolio followed at some distance, and MainStay VP Value
Portfolio was the third-best performer.
Among underlying investment options held by the Portfolio, MainStay VP Small Cap
Growth Portfolio had the lowest total return, followed by MainStay VP Developing
Growth Portfolio and MainStay VP Bond Portfolio.
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS MADE THE
GREATEST POSITIVE CONTRIBUTIONS TO THE PORTFOLIO'S PERFORMANCE AND WHICH
DETRACTED?
A sizable average allocation to MainStay VP Common Stock Portfolio was among the
strongest positive contributors to the Portfolio's performance on an absolute
basis and relative to the Moderate Allocation Benchmark.* Despite a relatively
small allocation to MainStay VP International Equity Portfolio, the position
contributed materially to the Portfolio's performance because of the Underlying
Portfolio's excellent return.
Although none of the Portfolio's underlying investment options generated
negative returns, a position in MainStay VP Large Cap Growth Portfolio was the
most noteworthy detractor from the Portfolio's performance relative to the
Moderate Allocation Benchmark.*
WHAT FACTORS INFLUENCED PERFORMANCE IN THE FIXED-INCOME PORTION OF THE PORTFOLIO
DURING THE REPORTING PERIOD?
A strategic blend of fixed-income investments similar to the bond component of
the benchmark was established at the inception of the Portfolio and has been
maintained ever since. During the reporting period, fixed-income returns tended
to improve with investments made further down the credit spectrum. The Portfolio
maintains small, strategic exposures to MainStay VP Floating Rate Portfolio and
MainStay VP High Yield Corporate Bond Portfolio, and the latter fared well
during the reporting period. The Portfolio's much larger allocation to MainStay
VP Bond Fund resulted in modest returns only a shade better than inflation or
cash.
- - Stocks of small companies may be subject to higher price volatility,
significantly lower trading volume and greater spreads between bid and ask
prices than stocks of larger companies. Furthermore, small-cap companies may
be more vulnerable to adverse business or market developments and may have
product lines that are more limited than those of larger-capitalization
companies.
- - Stocks of mid-cap companies may be more volatile and less liquid than the
securities of larger companies.
- - 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.
- - When interest rates rise, the prices of fixed-income securities in the
underlying investment options will generally fall. On the other hand, when
interest rates fall, the prices of fixed-income securities in the underlying
investment options will generally rise.
- - Underlying Floating-Rate Portfolios are generally considered to have
speculative characteristics. These underlying investment options may involve
risk of default on principal and interest and risks associated with collateral
impairment, nondiversification, borrower industry concentration and limited
liquidity.
- - AN INVESTMENT IN THE UNDERLYING CASH MANAGEMENT PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE UNDERLYING
CASH MANAGEMENT PORTFOLIO SEEKS TO MAINTAIN A VALUE OF $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO. THIS COULD OCCUR BECAUSE
OF HIGHLY UNUSUAL MARKET CONDITIONS OR A SUDDEN COLLAPSE IN THE
CREDITWORTHINESS OF A COMPANY ONCE BELIEVED TO BE AN ISSUER OF HIGH-QUALITY,
SHORT-TERM SECURITIES.
Before making an investment in the Portfolio, you should consider all the risks
associated with it.
Not all investment divisions are available under all policies.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
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.
* 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.
INFORMATION ABOUT MAINSTAY VP MODERATE ALLOCATION PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-284 MainStay VP Moderate Allocation Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
AFFILIATED INVESTMENT COMPANIES (99.7%)+
- ----------------------------------------------------------------------------
EQUITY FUNDS (59.8%)
MainStay Growth Equity Fund Class I (a) 183,255 $ 2,045,120
MainStay ICAP Equity Fund Class I 99,065 4,460,910
MainStay ICAP International Fund Class I 177,198 6,926,676
MainStay VP Capital Appreciation Portfolio Initial
Class 30,098 730,095
MainStay VP Common Stock Portfolio Initial Class 635,098 15,563,322
MainStay VP ICAP Select Equity Portfolio Initial
Class (a) 1,256,842 17,287,506
MainStay VP International Equity Portfolio Initial
Class 369,664 6,905,114
MainStay VP Large Cap Growth Portfolio Initial
Class (a) 1,766,263 21,889,818
MainStay VP S&P 500 Index Portfolio Initial Class 236,876 6,871,035
------------
82,679,596
------------
FIXED INCOME FUNDS (39.9%)
MainStay VP Bond Portfolio Initial Class 3,046,740 41,439,002
MainStay VP Floating Rate Portfolio Initial Class 700,509 6,906,817
MainStay VP High Yield Corporate Bond Portfolio
Initial Class 653,000 6,887,418
------------
55,233,237
------------
Total Affiliated Investment Companies
(Cost $131,528,695) (b) 99.7% 137,912,833(c)
Cash and Other Assets,
Less Liabilities 0.3 422,055
--------- ------------
Net Assets 100.0% $138,334,888
========= ============
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
(a) The Portfolio's ownership exceeds 5% of the outstanding
shares of the underlying Portfolio/Fund.
(b) The cost for federal income tax purposes is $132,023,444.
(c) At December 31, 2006 net unrealized appreciation was
$5,889,389 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 $6,051,171 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $161,782.
</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-285
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in affiliated investment companies,
at value (identified cost $131,528,695) $137,912,833
Cash 451,812
Receivables:
Fund shares sold 487,163
Interest 1,589
Unamortized offering costs 1,633
Other assets 4
-------------
Total assets 138,855,034
-------------
LIABILITIES:
Payables:
Investment securities purchased 451,812
NYLIFE Distributors (See Note 3) 26,958
Professional fees 22,304
Shareholder communication 13,823
Custodian 2,088
Directors 139
Accrued expenses 3,022
-------------
Total liabilities 520,146
-------------
Net assets $138,334,888
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 4,946
Service Class 122,603
Additional paid-in capital 131,579,833
Undistributed net investment income 18,442
Undistributed net realized gain on investments 224,926
Net unrealized appreciation on investments 6,384,138
-------------
Net assets $138,334,888
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 5,369,859
=============
Shares of capital stock outstanding 494,617
=============
Net asset value per share outstanding $ 10.86
=============
SERVICE CLASS
Net assets applicable to outstanding shares $132,965,029
=============
Shares of capital stock outstanding 12,260,321
=============
Net asset value per share outstanding $ 10.85
=============
</Table>
M-286 MainStay VP Moderate Allocation 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 PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividend distributions from affiliated
investment companies $1,177,231
Interest 27,098
-----------
Total income 1,204,329
-----------
EXPENSES:
Distribution and service--Service Class
(See Note 3) 148,517
Professional fees 35,487
Custodian 17,984
Offering 16,512
Shareholder communication 15,072
Directors 2,983
Miscellaneous 3,441
-----------
Total expenses 239,996
-----------
Net investment income 964,333
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Affiliated investment company transactions (102,138)
Capital gain distributions from affiliated
investment company transactions 937,553
-----------
Net realized gain on investments 835,415
-----------
Net unrealized appreciation on investments 6,384,138
-----------
Net realized and unrealized gain on investments 7,219,553
-----------
Net increase in net assets resulting from
operations $8,183,886
===========
</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-287
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
<Caption>
2006
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 964,333
Net realized gain on
investments 835,415
Net unrealized appreciation
on investments 6,384,138
------------
Net increase in net assets
resulting from operations 8,183,886
------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (51,473)
Service Class (1,124,377)
From net realized gain on investments:
Initial Class (15,237)
Service Class (376,805)
------------
Total dividends and
distributions to
shareholders (1,567,892)
------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 5,219,233
Service Class 154,255,193
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 66,710
Service Class 1,501,182
------------
161,042,318
Cost of shares redeemed:
Initial Class (189,136)
Service Class (29,134,288)
------------
(29,323,424)
Increase in net assets
derived from capital share
transactions 131,718,894
------------
Net increase in net assets 138,334,888
NET ASSETS:
Beginning of period --
------------
End of period $138,334,888
============
Undistributed net investment
income at end of period $ 18,442
============
</Table>
M-288 MainStay VP Moderate Allocation 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
------------- -------------
FEBRUARY 13, FEBRUARY 13,
2006(A) 2006(A)
THROUGH THROUGH
DECEMBER 31, DECEMBER 31,
2006 2006
Net asset value at beginning of period $ 10.00 $ 10.00
------------- -------------
Net investment income 0.18(b) 0.14(b)
Net realized and unrealized gain on
investments 0.82 0.83
------------- -------------
Total from investment operations 1.00 0.97
------------- -------------
Less dividends and distributions:
From net investment income (0.11) (0.09)
From net realized gain on investments (0.03) (0.03)
------------- -------------
Total dividends and distributions (0.14) (0.12)
------------- -------------
Net asset value at end of period $ 10.86 $ 10.85
============= =============
Total investment return 9.93%(c) 9.69%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.96%+ 1.55%+
Net expenses 0.15%+ 0.40%+
Portfolio turnover rate 62% 62%
Net assets at end of period (in 000's) $ 5,370 $132,965
</Table>
<Table>
(a) Commencement of operations.
(b) Per share data based on average shares outstanding during the period.
(c) Total return is not annualized.
+ 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-289
MAINSTAY VP MODERATE GROWTH ALLOCATION PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 11.92%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
MODERATE MODERATE
GROWTH LEHMAN BROTHERS GROWTH
ALLOCATION MSCI EAFE AGGREGATE BOND ALLOCATION
PORTFOLIO S&P 500 INDEX INDEX INDEX BENCHMARK
----------- ------------- --------- --------------- ----------
2/13/06 10000 10000 10000 10000 10000
12/31/06 11192 11386 12152 10457 11309
</Table>
SERVICE CLASS AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL SINCE
TOTAL RETURNS INCEPTION
- ---------------------------------------------
After Portfolio operating expenses 11.69%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP
MODERATE MODERATE
GROWTH LEHMAN BROTHERS GROWTH
ALLOCATION MSCI EAFE AGGREGATE BOND ALLOCATION
PORTFOLIO S&P 500 INDEX INDEX INDEX BENCHMARK
----------- ------------- --------- --------------- ----------
2/13/06 10000 10000 10000 10000 10000
12/31/06 11169 11386 12152 10457 11309
</Table>
<Table>
<Caption>
SINCE
BENCHMARK PERFORMANCE INCEPTION
Moderate Growth Allocation Benchmark* 13.09%
S&P 500(R) Index* 13.86
MSCI EAFE(R) Index* 21.52
Lehman Brothers(R) Aggregate Bond Index* 4.57
</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.
* 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-290 MainStay VP Moderate Growth Allocation Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP MODERATE GROWTH ALLOCATION
PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,107.35 $0.69 $1,024.35 $0.66
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,106.10 $2.02 $1,023.10 $1.94
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.13% for Initial Class and 0.38% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period). The expense ratio does not include the
fees and expenses associated with investments made in Underlying Funds; such
fees and expenses are reflected as a reduction in the Portfolio's gross
return.
www.mainstayfunds.com M-291
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Affiliated Investment Companies 99.2
Cash and Other Assets, Less Liabilities 0.8
</Table>
See Portfolio of Investments on page M-295 for specific holdings within these
categories.
M-292 MainStay VP Moderate Growth Allocation Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Tony Elavia of New York Life Investment
Management LLC.
HOW DID MAINSTAY VP MODERATE GROWTH ALLOCATION PORTFOLIO PERFORM RELATIVE TO ITS
BENCHMARK AND PEERS FROM FEBRUARY 13 THROUGH DECEMBER 31, 2006?
From February 13 through December 31, 2006, MainStay VP Moderate Growth
Allocation Portfolio returned 11.92% for Initial Class shares and 11.69% for
Service Class shares. Both share classes out-performed the 10.02% return of the
average Lipper* Variable Products Mixed-Asset Target Allocation Growth
Portfolio(1) for the same period. Both share classes underperformed the 13.86%
return of the S&P 500(R) Index,* the Portfolio's broad-based securities-market
index, as well as the 13.09% return of the Moderate Growth Allocation Benchmark*
from February 13 through December 31, 2006. The Moderate Growth Allocation
Benchmark is a blended benchmark designed to represent the asset classes in
which the Portfolio invests.
WERE THERE ANY CHANGES IN THE WAY THE PORTFOLIO WAS MANAGED DURING THE REPORTING
PERIOD?
During the reporting period, Devon McCormick resigned as portfolio manager of
the Portfolio. Also during the reporting period, the Board of Directors
authorized MainStay VP Asset Allocation Portfolios to invest in affiliated
MainStay mutual funds as underlying investment options.
HOW WAS THE PORTFOLIO ALLOCATED AMONG THE UNDERLYING INVESTMENT OPTIONS?
Throughout the summer and into the fall, we emphasized underlying investment
options with larger average capitalizations and a stronger growth orientation.
We believed that the market's capitalization and style preferences had become a
bit distorted in recent years. During the last six months of 2006, the style
bias had little impact on the performance of the Portfolio, but the orientation
toward larger capitalizations began to benefit returns.
WERE THERE ANY SPECIFIC CHANGES IN THE PORTFOLIO'S ALLOCATION DURING THE
REPORTING PERIOD?
One recent change has been a gradual migration out of MainStay VP Common Stock
Portfolio and into MainStay VP ICAP Select Equity Portfolio(2) and MainStay VP
Large Cap Growth Portfolio. Although the shift detracted from performance
through December 31, 2006, the overall impact was slight.
We also elected to split the Portfolio's exposure to international equities
evenly between MainStay VP International Portfolio and MainStay ICAP
International Fund. Since MainStay ICAP International Fund did not become
available until September 1, 2006, the impact of the move, though negative, has
been very mild.
1. Performance for Initial Class and Service Class shares and the Portfolio's
benchmark, the S&P 500(R) Index,* as well as the Moderate Growth Allocation
Index* are calculated from inception (2/13/06) through 12/31/06. Performance
for the average Lipper* Variable Products Mixed-Asset Allocation Growth
Portfolio is calculated from 2/8/06 through 12/31/06.
2. During the reporting period, The Dreyfus Corporation was terminated as
subadvisor of MainStay VP Basic Value Portfolio and replaced by Institutional
Capital LLC (ICAP). Effective 11/10/06, MainStay VP Basic Value Portfolio's
name was changed to MainStay VP ICAP Select Equity Portfolio.
The Portfolio's performance depends on the advisor's skill in determining the
asset-class allocations and the mix of underlying investment options as well as
the performance of these underlying investment options. The underlying
investment options' performance may be lower than the performance of the asset
class or classes the underlying investment options were selected to represent.
The Portfolio is indirectly subject to the investment risks of each underlying
investment option held. Principal risks of the underlying investment options are
described below.
MainStay VP Moderate Growth Allocation Portfolio is a "fund of funds" that
invests in other MainStay VP Portfolios and other MainStay mutual funds. The
cost of investing in the Portfolio may be higher than the cost of investing in a
mutual fund that invests directly in individual stocks and bonds. By investing
in the Portfolio, clients will indirectly bear fees and expenses charged by the
underlying investment options in which the Portfolio invests in addition to the
Portfolio's direct fees and expenses. In addition, the use of a fund-of-funds
structure could affect the timing, amount and character of distributions to the
client and may increase taxes payable by the client.
The Portfolio may invest more than 25% of its assets in one underlying
investment option, which may significantly affect the net asset value of the
Portfolio.
- - Stocks and bonds can decline because of adverse issuer, market, regulatory or
economic developments.
- - The principal risk of growth stocks is that investors expect growth companies
to increase their earnings at a certain rate that is generally higher than the
rate expected for nongrowth companies. If these expectations are not met, the
market price of the stock may decline significantly, even if earnings showed
an absolute increase.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
* 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-293
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS HELD BY THE
PORTFOLIO HAD THE HIGHEST TOTAL RETURNS AND WHICH HAD THE LOWEST?
In terms of total return, MainStay VP International Equity Portfolio was by far
the best-performing underlying investment option held by the Portfolio. MainStay
VP ICAP Select Equity Portfolio followed at some distance, and MainStay VP
Income & Growth Portfolio was the third-best performer.
Among underlying investment options held by the Portfolio, MainStay VP Small Cap
Growth Portfolio had the lowest total return, followed by MainStay VP Developing
Growth Portfolio and MainStay VP Capital Appreciation Portfolio.
DURING THE REPORTING PERIOD, WHICH UNDERLYING INVESTMENT OPTIONS MADE THE
GREATEST POSITIVE CONTRIBUTIONS TO THE PORTFOLIO'S PERFORMANCE AND WHICH
DETRACTED?
A sizable average allocation to MainStay VP Common Stock Portfolio was among the
strongest positive contributors to the Portfolio's performance on an absolute
basis and relative to the Moderate Growth Allocation Benchmark.* The Portfolio's
position in
MainStay VP International Equity Portfolio contributed substantially to the
Portfolio's performance because of the Underlying Portfolio's excellent return.
Although none of the Portfolio's underlying investment options generated
negative returns, a position in MainStay VP Large Cap Growth Portfolio was the
most noteworthy detractor from the Portfolio's performance relative to the
Moderate Growth Allocation Benchmark.*
WHAT FACTORS INFLUENCED PERFORMANCE IN THE FIXED-INCOME PORTION OF THE PORTFOLIO
DURING THE REPORTING PERIOD?
A strategic blend of fixed-income investments similar to the bond component of
the benchmark was established at the inception of the Portfolio and has been
maintained ever since. During the reporting period, fixed-income returns tended
to improve with investments made further down the credit spectrum. The Portfolio
maintains small, strategic exposures to MainStay VP Floating Rate Portfolio and
MainStay VP High Yield Corporate Bond Portfolio, and the latter fared well
during the reporting period. The Portfolio's much larger allocation to MainStay
VP Bond Fund resulted in modest returns only a shade better than inflation or
cash.
- - High-yield securities carry higher risks, and some of the underlying
investment options' investments have speculative characteristics and present a
greater risk of loss than higher-quality debt securities. High-yield
securities can also be subject to greater price volatility.
- - Stocks of small companies may be subject to higher price volatility,
significantly lower trading volume and greater spreads between bid and ask
prices than stocks of larger companies. Furthermore, small-cap companies may
be more vulnerable to adverse business or market developments and may have
product lines that are more limited than those of larger-capitalization
companies.
- - Stocks of mid-cap companies may be more volatile and less liquid than the
securities of larger companies.
- - 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.
- - When interest rates rise, the prices of fixed-income securities in the
Underlying Funds' portfolios will generally fall. On the other hand, when
interest rates fall, the prices of fixed-income securities in the underlying
investment options will generally rise.
- - Underlying Floating-Rate Portfolios are generally considered to have
speculative characteristics. These underlying investment options may involve
risk of default on principal and interest and risks associated with collateral
impairment, nondiversification, borrower industry concentration and limited
liquidity.
- - AN INVESTMENT IN THE UNDERLYING CASH MANAGEMENT PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE UNDERLYING
CASH MANAGEMENT PORTFOLIO SEEKS TO MAINTAIN A VALUE OF $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO. THIS COULD OCCUR BECAUSE
OF HIGHLY UNUSUAL MARKET CONDITIONS OR A SUDDEN COLLAPSE IN THE
CREDITWORTHINESS OF A COMPANY ONCE BELIEVED TO BE AN ISSUER OF HIGH-QUALITY,
SHORT-TERM SECURITIES.
Before making an investment in the Portfolio, you should consider all the risks
associated with it.
Not all investment divisions are available under all policies.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THE
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS AND SHOULD BE CAREFULLY READ IN
CONJUNCTION WITH THEM.
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.
* 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.
INFORMATION ABOUT MAINSTAY VP MODERATE GROWTH ALLOCATION PORTFOLIO ON THIS PAGE
AND THE PRECEDING PAGES HAS NOT BEEN AUDITED.
M-294 MainStay VP Moderate Growth Allocation Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
AFFILIATED INVESTMENT COMPANIES (99.2%)+
- ----------------------------------------------------------------------------
EQUITY FUNDS (79.3%)
MainStay ICAP Equity Fund Class I 198,062 $ 8,918,713
MainStay ICAP International Fund Class I 330,992 12,938,470
MainStay VP Capital Appreciation Portfolio Initial
Class 183,522 4,451,740
MainStay VP Common Stock Portfolio Initial Class 1,352,122 33,134,282
MainStay VP ICAP Select Equity Portfolio Initial
Class (a) 1,842,284 25,340,096
MainStay VP International Equity Portfolio Initial
Class 695,731 12,995,860
MainStay VP Large Cap Growth Portfolio Initial
Class (a) 2,615,015 32,408,644
MainStay VP S&P 500 Index Portfolio Initial Class 272,816 7,913,547
------------
138,101,352
------------
FIXED INCOME FUNDS (19.9%)
MainStay VP Bond Portfolio Initial Class 1,275,643 17,350,144
MainStay VP Floating Rate Portfolio Initial Class 873,956 8,616,958
MainStay VP High Yield Corporate Bond Portfolio
Initial Class 828,016 8,733,374
------------
34,700,476
------------
Total Affiliated Investment Companies
(Cost $164,328,630) (b) 99.2% 172,801,828(c)
Cash and Other Assets,
Less Liabilities 0.8 1,420,202
--------- ------------
Net Assets 100.0% $174,222,030
========= ============
</Table>
<Table>
+ Percentages indicated are based on Portfolio net assets.
(a) The Portfolio's ownership exceeds 5% of the outstanding
shares of the underlying Portfolio/Fund.
(b) The cost for federal income tax purposes is $164,768,394.
(c) At December 31, 2006 net unrealized appreciation was
$8,033,434 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 $8,355,370 and aggregate gross unrealized
depreciation for all investments on which there was an
excess of cost over market value of $321,936.
</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-295
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in affiliated investment companies,
at value (identified cost $164,328,630) $172,801,828
Cash 1,565,224
Receivables:
Fund shares sold 1,492,849
Interest 2,498
Unamortized offering costs 1,633
Other assets 5
-------------
Total assets 175,864,037
-------------
LIABILITIES:
Payables:
Investment securities purchased 1,565,223
NYLIFE Distributors (See Note 3) 32,334
Professional fees 23,146
Shareholder communication 16,322
Custodian 2,191
Directors 164
Accrued expenses 2,627
-------------
Total liabilities 1,642,007
-------------
Net assets $174,222,030
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 9,483
Service Class 148,508
Additional paid-in capital 164,579,688
Undistributed net investment income 27,249
Undistributed net realized gain on investments 983,904
Net unrealized appreciation on investments 8,473,198
-------------
Net assets $174,222,030
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 10,468,469
=============
Shares of capital stock outstanding 948,340
=============
Net asset value per share outstanding $ 11.04
=============
SERVICE CLASS
Net assets applicable to outstanding shares $163,753,561
=============
Shares of capital stock outstanding 14,850,841
=============
Net asset value per share outstanding $ 11.03
=============
</Table>
M-296 MainStay VP Moderate Growth Allocation 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 PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividend distributions from affiliated
investment companies $ 1,247,547
Interest 20,494
------------
Total income 1,268,041
------------
EXPENSES:
Distribution and service--Service Class (See
Note 3) 168,515
Professional fees 36,528
Custodian 19,141
Shareholder communication 17,693
Offering 16,512
Directors 3,450
Miscellaneous 3,077
------------
Total expenses 264,916
------------
Net investment income 1,003,125
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on:
Affiliated investment company transactions 410,170
Capital gain distributions from affiliated
investment company transactions 1,799,119
------------
Net realized gain on investments 2,209,289
------------
Net unrealized appreciation on investments 8,473,198
------------
Net realized and unrealized gain on investments 10,682,487
------------
Net increase in net assets resulting from
operations $11,685,612
============
</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-297
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 13, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006
<Table>
<Caption>
2006
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 1,003,125
Net realized gain on
investments 2,209,289
Net unrealized appreciation
on investments 8,473,198
------------
Net increase in net assets
resulting from operations 11,685,612
------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (92,839)
Service Class (1,277,194)
From net realized gain on investments:
Initial Class (50,851)
Service Class (791,889)
------------
Total dividends and
distributions to
shareholders (2,212,773)
------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 9,883,272
Service Class 159,330,449
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 143,690
Service Class 2,069,083
------------
171,426,494
Cost of shares redeemed:
Initial Class (139,291)
Service Class (6,538,012)
------------
(6,677,303)
Increase in net assets
derived from capital share
transactions 164,749,191
------------
Net increase in net assets 174,222,030
NET ASSETS:
Beginning of period --
------------
End of period $174,222,030
============
Undistributed net investment
income at end of period $ 27,249
============
</Table>
M-298 MainStay VP Moderate Growth Allocation 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
------------- -------------
FEBRUARY 13, FEBRUARY 13,
2006(A) 2006(A)
THROUGH THROUGH
DECEMBER 31, DECEMBER 31,
2006 2006
Net asset value at beginning of period $ 10.00 $ 10.00
------------- -------------
Net investment income 0.16(b) 0.13(b)
Net realized and unrealized gain on
investments 1.03 1.04
------------- -------------
Total from investment operations 1.19 1.17
------------- -------------
Less dividends and distributions:
From net investment income (0.10) (0.09)
From net realized gain on investments (0.05) (0.05)
------------- -------------
Total dividends and distributions (0.15) (0.14)
------------- -------------
Net asset value at end of period $ 11.04 $ 11.03
============= =============
Total investment return 11.92%(c) 11.69%(c)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.70%+ 1.39%+
Net expenses 0.13%+ 0.38%+
Portfolio turnover rate 46% 46%
Net assets at end of period (in 000's) $ 10,468 $163,754
</Table>
<Table>
(a) Commencement of operations.
(b) Per share data based on average shares outstanding during the period.
(c) Total return is not annualized.
+ 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-299
MAINSTAY VP S&P 500 INDEX PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ------------------------------------------------------
After Portfolio operating
expenses 15.45% 5.91% 8.14%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP S&P 500 INDEX
PORTFOLIO S&P 500 INDEX
------------------------- -------------
12/31/96 10000 10000
13283 13336
17067 17148
20600 20756
18681 18866
16418 16624
12771 12950
16371 16664
18089 18478
18951 19385
12/31/06 21880 22447
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR() YEARS(1) YEARS(1)
- -------------------------------------------------------
After Portfolio operating
expenses 15.16% 5.64% 7.87%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP S&P 500 INDEX
PORTFOLIO S&P 500 INDEX
------------------------- -------------
12/31/96 10000 10000
13250 13336
16981 17148
20446 20756
18495 18866
16215 16624
12581 12950
16089 16664
17733 18478
18527 19385
12/31/06 21336 22447
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
S&P 500(R) Index* 15.79% 6.19% 8.42%
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 5.88% and 8.13% for the Initial Class and 5.62%
and 7.86% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/5/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-300 MainStay VP S&P 500 Index Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP S&P 500 INDEX PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,125.75 $1.88 $1,023.25 $1.78
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,124.50 $3.21 $1,022.00 $3.06
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.35% for Initial Class and 0.60% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-301
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 95.0
Short-Term Investments (collateral from securities lending 6.4
is 4.5%)
Future Contracts* 0.0
Liabilities in Excess of Cash and Other Assets (4.4)
</Table>
* Less than one tenth of a percent.
See Portfolio of Investments on page M-304 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. ExxonMobil Corp.
2. General Electric Co.
3. Citigroup, Inc.
4. Microsoft Corp.
5. Bank of America Corp.
6. Procter & Gamble Co. (The)
7. Johnson & Johnson
8. Pfizer, Inc.
9. American International Group, Inc.
10. Altria Group, Inc.
</Table>
M-302 MainStay VP S&P 500 Index Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Francis J. Ok of New York Life
Investment Management LLC.
HOW DID MAINSTAY VP S&P 500 INDEX PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP S&P 500 Index Portfolio
returned 15.45% for Initial Class shares and 15.16% for Service Class shares.
Initial Class shares outperformed and Service Class shares underperformed the
15.38% return of the average Lipper* Variable Products S&P 500 Index Objective
Portfolio for the same period. Both share classes underperformed the 15.79%
return of the S&P 500(R) Index,* the Portfolio's broad-based securities-market
index, for the year ended December 31, 2006. Since the Portfolio incurs expenses
that an index does not, there will be times when the Portfolio lags the Index.
IN 2006, WHICH S&P 500(R) INDEX* SECTORS MADE THE STRONGEST POSITIVE
CONTRIBUTIONS TO THE PORTFOLIO'S PERFORMANCE AND WHICH SECTORS WERE THE GREATEST
DETRACTORS?
On the basis of impact, which takes weightings and total returns into account,
the sectors with the strongest positive contributions to the Portfolio's
performance in 2006 were financials, energy and consumer discretionary. Over the
same period, the sectors that detracted the most from performance were
materials, utilities and health care.
WHICH S&P 500(R) INDEX* SECTORS HAD THE HIGHEST TOTAL RETURNS IN 2006 AND WHICH
SECTORS HAD THE LOWEST TOTAL RETURNS.
The Portfolio's three strongest-performing sectors by total return were
telecommunications services, energy and utilities. The Portfolio's three
weakest-performing sectors in terms of total return were health care,
information technology and industrials.
WHICH INDIVIDUAL STOCKS MADE THE GREATEST POSITIVE CONTRIBUTION TO THE
PORTFOLIO'S PERFORMANCE AND WHICH STOCKS WERE THE GREATEST DETRACTORS?
On the basis of impact, which takes weightings and total returns both into
account, ExxonMobil was the stock that made the greatest positive contribution
to the Portfolio's performance. Cisco Systems was the second-strongest
contributor, followed by AT&T. The weakest contribution came from Intel,
followed by Yahoo! and eBay.
IN 2006, WHICH PORTFOLIO STOCKS HAD THE HIGHEST TOTAL RETURNS AND WHICH STOCKS
HAD THE LOWEST TOTAL RETURNS?
In 2006, the Portfolio's three strongest-performing securities by total return
were Allegheny Energy, Terex and NVIDIA. Dana had the lowest total return of any
stock in the Index. Whole Foods Market was second-lowest, followed by Apollo
Group.
DID ANY S&P 500(R) INDEX* HOLDINGS CHANGE DURING THE YEAR?
The Portfolio seeks to track the performance and weightings of 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
the U.S. economy. During 2006, there were 33 additions to and 33 deletions from
the S&P 500(R) Index. The most notable additions were Google, Celgene and
Chicago Mercantile Exchange. The most notable deletions were Alberto-Culver,
Cooper Tire & Rubber and Navistar International. Changes in the composition of
the Index result in corresponding changes in the Portfolio.
Index portfolios generally seek to reflect the performance of an index or an
allocation among indices, unlike other portfolios, whose objectives may, in some
cases, involve seeking to outperform an index or other benchmark. 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.
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.
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.
INFORMATION ABOUT MAINSTAY VP S&P 500 INDEX PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
www.mainstayfunds.com M-303
PORTFOLIO OF INVESTMENTS+++ DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (98.0%)+
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.3%)
Boeing Co. (The) 92,109 $ 8,182,964
General Dynamics Corp. 46,849 3,483,223
Goodrich Corp. 14,458 658,562
Honeywell International, Inc. 95,171 4,305,536
L-3 Communications Holdings, Inc. 14,582 1,192,516
Lockheed Martin Corp. 41,412 3,812,803
Northrop Grumman Corp. 40,061 2,712,130
Raytheon Co. 52,036 2,747,501
Rockwell Collins, Inc. 19,440 1,230,358
United Technologies Corp. 116,947 7,311,526
--------------
35,637,119
--------------
AIR FREIGHT & LOGISTICS (0.9%)
FedEx Corp. 35,632 3,870,348
United Parcel Service, Inc. Class B 125,138 9,382,847
--------------
13,253,195
--------------
AIRLINES (0.1%)
Southwest Airlines Co. 91,352 1,399,513
--------------
AUTO COMPONENTS (0.2%)
Goodyear Tire & Rubber Co. (The) (a)(b) 20,638 433,192
Johnson Controls, Inc. (b) 22,704 1,950,728
--------------
2,383,920
--------------
AUTOMOBILES (0.4%)
Ford Motor Co. (b) 218,674 1,642,242
General Motors Corp. (b) 65,828 2,022,236
Harley-Davidson, Inc. (b) 30,469 2,147,150
--------------
5,811,628
--------------
BEVERAGES (2.0%)
Anheuser-Busch Cos., Inc. 89,346 4,395,823
Brown-Forman Corp. Class B 9,168 607,288
Coca-Cola Co. (The) 237,642 11,466,227
Coca-Cola Enterprises, Inc. 32,172 656,952
Constellation Brands, Inc. Class A (a)(b) 24,544 712,267
Molson Coors Brewing Co. Class B 5,340 408,190
Pepsi Bottling Group, Inc. (The) 15,765 487,296
PepsiCo, Inc. 191,242 11,962,187
--------------
30,696,230
--------------
BIOTECHNOLOGY (1.3%)
Amgen, Inc. (a) 136,054 9,293,849
Biogen Idec, Inc. (a) 39,234 1,929,920
Celgene Corp. (a)(b) 43,400 2,496,802
Genzyme Corp. (a) 30,336 1,868,091
Gilead Sciences, Inc. (a) 53,600 3,480,248
MedImmune, Inc. (a)(b) 27,838 901,116
--------------
19,970,026
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
BUILDING PRODUCTS (0.2%)
American Standard Cos., Inc. 20,315 $ 931,443
Masco Corp. (b) 46,376 1,385,251
--------------
2,316,694
--------------
CAPITAL MARKETS (3.7%)
Ameriprise Financial, Inc. 28,285 1,541,533
Bank of New York Co., Inc. (The) 89,013 3,504,442
Bear Stearns Cos., Inc. (The) 13,688 2,228,133
Charles Schwab Corp. (The) 120,240 2,325,442
E*TRADE Financial Corp. (a) 49,644 1,113,019
Federated Investors, Inc. Class B 10,579 357,359
Franklin Resources, Inc. 19,404 2,137,739
Goldman Sachs Group, Inc. (The) 49,642 9,896,133
Janus Capital Group, Inc. 24,032 518,851
Legg Mason, Inc. 15,227 1,447,326
Lehman Brothers Holdings, Inc. 61,740 4,823,129
Mellon Financial Corp. 47,856 2,017,130
Merrill Lynch & Co., Inc. 103,060 9,594,886
Morgan Stanley 123,384 10,047,159
Northern Trust Corp. 21,751 1,320,068
State Street Corp. 38,522 2,597,924
T. Rowe Price Group, Inc. 30,430 1,331,921
--------------
56,802,194
--------------
CHEMICALS (1.5%)
Air Products & Chemicals, Inc. 25,639 1,801,909
Ashland, Inc. 6,643 459,563
Dow Chemical Co. (The) 111,533 4,454,628
E.I. du Pont de Nemours & Co. 107,122 5,217,913
Eastman Chemical Co. 9,440 559,886
Ecolab, Inc. (b) 20,747 937,764
Hercules, Inc. (a) 12,730 245,816
International Flavors & Fragrances, Inc. 9,183 451,436
Monsanto Co. 63,002 3,309,495
PPG Industries, Inc. 19,226 1,234,501
Praxair, Inc. 37,568 2,228,909
Rohm & Haas Co. (b) 16,654 851,352
Sigma-Aldrich Corp. (b) 7,748 602,175
--------------
22,355,347
--------------
COMMERCIAL BANKS (4.1%)
BB&T Corp. 63,039 2,769,303
Comerica, Inc. 18,831 1,105,003
Commerce Bancorp, Inc. (b) 21,701 765,394
Compass Bancshares, Inc. 15,085 899,820
Fifth Third Bancorp (b) 64,751 2,650,258
First Horizon National Corp. 14,367 600,253
Huntington Bancshares, Inc. (b) 27,701 657,899
KeyCorp 46,923 1,784,482
</Table>
+ Percentages indicated are based on Fund net assets.
V Among the Fund's 10 largest holdings, excluding short-term investments. May be
subject to change daily.
M-304 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 (CONTINUED)
M&T Bank Corp. 9,066 $ 1,107,503
Marshall & Ilsley Corp. 29,455 1,417,080
National City Corp. (b) 73,630 2,691,913
PNC Financial Services Group, Inc. 34,239 2,535,056
Regions Financial Corp. 84,643 3,165,648
SunTrust Banks, Inc. 41,232 3,482,042
Synovus Financial Corp. 37,655 1,160,904
U.S. Bancorp 204,827 7,412,689
Wachovia Corp. 222,007 12,643,299
Wells Fargo & Co. 393,416 13,989,873
Zions Bancorp. 12,377 1,020,360
--------------
61,858,779
--------------
COMMERCIAL SERVICES & SUPPLIES (0.5%)
Allied Waste Industries, Inc. (a) 29,518 362,776
Avery Dennison Corp. 10,881 739,146
Cintas Corp. 15,830 628,609
Equifax, Inc. 14,690 596,414
Monster Worldwide, Inc. (a) 14,778 689,246
Pitney Bowes, Inc. 25,706 1,187,360
R.R. Donnelley & Sons Co. 25,331 900,264
Robert Half International, Inc. (b) 19,861 737,240
Waste Management, Inc. 62,778 2,308,347
--------------
8,149,402
--------------
COMMUNICATIONS EQUIPMENT (2.6%)
ADC Telecommunications, Inc. (a) 13,184 191,564
Avaya, Inc. (a) 53,092 742,226
Ciena Corp. (a) 9,817 272,029
Cisco Systems, Inc. (a) 707,639 19,339,774
Comverse Technology, Inc. (a) 23,586 497,900
Corning, Inc. (a) 181,283 3,391,805
JDS Uniphase Corp. (a)(b) 24,482 407,870
Juniper Networks, Inc. (a) 65,947 1,249,036
Motorola, Inc. 281,683 5,791,402
QUALCOMM, Inc. 191,989 7,255,264
Tellabs, Inc. (a) 52,031 533,838
--------------
39,672,708
--------------
COMPUTERS & PERIPHERALS (3.7%)
Apple Computer, Inc. (a) 99,066 8,404,759
Dell, Inc. (a) 264,078 6,625,717
EMC Corp. (a) 256,637 3,387,608
Hewlett-Packard Co. 319,048 13,141,587
International Business Machines Corp. 175,576 17,057,208
Lexmark International, Inc. Class A (a) 11,684 855,269
NCR Corp. (a) 20,990 897,532
Network Appliance, Inc. (a) 43,247 1,698,742
QLogic Corp. (a) 18,819 412,513
SanDisk Corp. (a) 26,153 1,125,364
</Table>
<Table>
<Caption>
SHARES VALUE
COMPUTERS & PERIPHERALS (CONTINUED)
Sun Microsystems, Inc. (a) 407,959 $ 2,211,138
--------------
55,817,437
--------------
CONSTRUCTION & ENGINEERING (0.1%)
Fluor Corp. 10,138 827,768
--------------
CONSTRUCTION MATERIALS (0.1%)
Vulcan Materials Co. 10,954 984,436
--------------
CONSUMER FINANCE (1.0%)
American Express Co. 140,367 8,516,066
Capital One Financial Corp. 47,525 3,650,871
SLM Corp. 47,689 2,325,793
--------------
14,492,730
--------------
CONTAINERS & PACKAGING (0.2%)
Ball Corp. 12,103 527,691
Bemis Co., Inc. 12,192 414,284
Pactiv Corp. (a) 16,038 572,396
Sealed Air Corp. 9,490 616,091
Temple-Inland, Inc. 12,664 582,924
--------------
2,713,386
--------------
DISTRIBUTORS (0.1%)
Genuine Parts Co. 19,975 947,414
--------------
DIVERSIFIED CONSUMER SERVICES (0.1%)
Apollo Group, Inc. Class A (a) 16,231 632,522
H&R Block, Inc. 37,401 861,719
--------------
1,494,241
--------------
DIVERSIFIED FINANCIAL SERVICES (5.6%)
V Bank of America Corp. 523,294 27,938,667
Chicago Mercantile Exchange Holdings, Inc. (b) 4,100 2,089,975
CIT Group, Inc. 23,089 1,287,674
V Citigroup, Inc. 572,657 31,896,995
JPMorgan Chase & Co. 404,299 19,527,642
Moody's Corp. 27,557 1,903,086
--------------
84,644,039
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES (2.8%)
AT&T, Inc. 447,833 16,010,030
BellSouth Corp. 212,543 10,012,901
CenturyTel, Inc. 13,581 592,946
Citizens Communications Co. 37,343 536,619
Embarq Corp. 17,334 911,075
Qwest Communications International, Inc. (a) 186,073 1,557,431
Verizon Communications, Inc. 340,273 12,671,767
Windstream Corp. 55,093 783,422
--------------
43,076,191
--------------
</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-305
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.8%)
Allegheny Energy, Inc. (a) 19,020 $ 873,208
American Electric Power Co., Inc. 45,884 1,953,741
Duke Energy Corp. 146,329 4,859,586
Edison International 37,946 1,725,784
Entergy Corp. 24,224 2,236,360
Exelon Corp. 78,210 4,840,417
FirstEnergy Corp. 37,165 2,237,705
FPL Group, Inc. (b) 46,974 2,556,325
Pinnacle West Capital Corp. 11,619 588,386
PPL Corp. 44,091 1,580,221
Progress Energy, Inc. 29,497 1,447,713
Southern Co. (The) 86,297 3,180,907
--------------
28,080,353
--------------
ELECTRICAL EQUIPMENT (0.5%)
American Power Conversion Corp. 19,677 601,919
Cooper Industries, Ltd. Class A 10,652 963,260
Emerson Electric Co. 93,474 4,119,399
Rockwell Automation, Inc. 19,798 1,209,262
--------------
6,893,840
--------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.3%)
Agilent Technologies, Inc. (a) 47,472 1,654,399
Jabil Circuit, Inc. 21,502 527,874
Molex, Inc. 16,478 521,199
Sanmina-SCI Corp. (a) 61,896 213,541
Solectron Corp. (a) 106,336 342,402
Symbol Technologies, Inc. 29,975 447,827
Tektronix, Inc. 9,730 283,824
--------------
3,991,066
--------------
ENERGY EQUIPMENT & SERVICES (1.7%)
Baker Hughes, Inc. 37,358 2,789,148
BJ Services Co. 34,594 1,014,296
Halliburton Co. 117,159 3,637,787
Nabors Industries, Ltd. (a)(b) 34,834 1,037,357
National-Oilwell Varco, Inc. (a) 20,401 1,248,133
Noble Corp. 15,894 1,210,328
Rowan Cos., Inc. (b) 12,722 422,370
Schlumberger, Ltd. 137,211 8,666,247
Smith International, Inc. 23,300 956,931
Transocean, Inc. (a) 33,930 2,744,598
Weatherford International, Ltd. (a) 39,574 1,653,797
--------------
25,380,992
--------------
FOOD & STAPLES RETAILING (2.1%)
Costco Wholesale Corp. (b) 53,378 2,822,095
CVS Corp. 95,484 2,951,410
Kroger Co. (The) 83,817 1,933,658
Safeway, Inc. 51,654 1,785,162
SUPERVALU, Inc. 24,610 879,808
</Table>
<Table>
<Caption>
SHARES VALUE
FOOD & STAPLES RETAILING (CONTINUED)
Sysco Corp. 71,865 $ 2,641,757
Walgreen Co. 117,135 5,375,325
Wal-Mart Stores, Inc. 286,443 13,227,938
Whole Foods Market, Inc. (b) 16,457 772,327
--------------
32,389,480
--------------
FOOD PRODUCTS (1.1%)
Archer-Daniels-Midland Co. 76,249 2,436,918
Campbell Soup Co. 25,349 985,823
ConAgra Foods, Inc. 59,352 1,602,504
Dean Foods Co. (a) 15,510 655,763
General Mills, Inc. 39,951 2,301,178
H.J. Heinz Co. 38,571 1,736,081
Hershey Co. (The) (b) 20,427 1,017,265
Kellogg Co. 29,047 1,454,093
McCormick & Co., Inc. 15,317 590,624
Sara Lee Corp. 86,955 1,480,844
Tyson Foods, Inc. Class A (b) 29,250 481,163
Wm. Wrigley Jr. Co. (b) 25,499 1,318,808
--------------
16,061,064
--------------
GAS UTILITIES (0.1%)
Nicor, Inc. 5,203 243,500
Peoples Energy Corp. 4,508 200,922
Questar Corp. 10,000 830,500
--------------
1,274,922
--------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.6%)
Bausch & Lomb, Inc. 6,277 326,781
Baxter International, Inc. 75,851 3,518,728
Becton, Dickinson & Co. 28,426 1,994,084
Biomet, Inc. 28,432 1,173,389
Boston Scientific Corp. (a) 136,953 2,352,853
C.R. Bard, Inc. 12,051 999,871
Hospira, Inc. (a) 18,268 613,439
Medtronic, Inc. 133,650 7,151,612
St. Jude Medical, Inc. (a) 40,948 1,497,059
Stryker Corp. 34,538 1,903,389
Zimmer Holdings, Inc. (a) 27,798 2,178,807
--------------
23,710,012
--------------
HEALTH CARE PROVIDERS & SERVICES (2.4%)
Aetna, Inc. 60,802 2,625,430
AmerisourceBergen Corp. 22,417 1,007,868
Cardinal Health, Inc. 47,170 3,039,163
Caremark Rx, Inc. 49,598 2,832,542
CIGNA Corp. 11,925 1,568,972
Coventry Health Care, Inc. (a) 18,487 925,274
Express Scripts, Inc. (a) 15,918 1,139,729
Health Management Associates, Inc. Class A (b) 27,701 584,768
Humana, Inc. (a) 19,201 1,062,007
</Table>
M-306 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)
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
Laboratory Corp. of America Holdings (a)(b) 14,584 $ 1,071,486
Manor Care, Inc. (b) 8,543 400,838
McKesson Corp. 34,751 1,761,876
Medco Health Solutions, Inc. (a) 34,213 1,828,343
Patterson Cos., Inc. (a) 15,959 566,704
Quest Diagnostics, Inc. 18,823 997,619
Tenet Healthcare Corp. (a)(b) 54,823 382,116
UnitedHealth Group, Inc. 156,528 8,410,249
WellPoint, Inc. (a) 72,093 5,672,998
--------------
35,877,982
--------------
HEALTH CARE TECHNOLOGY (0.0%)++
IMS Health, Inc. 23,205 637,673
--------------
HOTELS, RESTAURANTS & LEISURE (1.6%)
Carnival Corp. (b) 51,727 2,537,209
Darden Restaurants, Inc. (b) 16,974 681,846
Harrah's Entertainment, Inc. 21,632 1,789,399
Hilton Hotels Corp. 44,890 1,566,661
International Game Technology 39,394 1,820,003
Marriott International, Inc. Class A 39,120 1,866,806
McDonald's Corp. 144,159 6,390,568
Starbucks Corp. (a) 87,857 3,111,895
Starwood Hotels & Resorts Worldwide, Inc. 24,690 1,543,125
Wendy's International, Inc. 11,070 366,306
Wyndham Worldwide Corp. (a) 23,044 737,869
Yum! Brands, Inc. 30,895 1,816,626
--------------
24,228,313
--------------
HOUSEHOLD DURABLES (0.6%)
Black & Decker Corp. 7,929 634,082
Centex Corp. (b) 13,821 777,708
D.R. Horton, Inc. 31,776 841,746
Fortune Brands, Inc. (b) 17,512 1,495,350
Harman International Industries, Inc. 7,601 759,416
KB HOME 9,040 463,571
Leggett & Platt, Inc. 21,009 502,115
Lennar Corp. Class A 15,970 837,786
Newell Rubbermaid, Inc. 32,222 932,827
Pulte Homes, Inc. 24,634 815,878
Snap-on, Inc. 6,605 314,662
Stanley Works (The) 9,423 473,883
Whirlpool Corp. (b) 9,060 752,161
--------------
9,601,185
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
HOUSEHOLD PRODUCTS (2.1%)
Clorox Co. (The) 17,642 $ 1,131,734
Colgate-Palmolive Co. 60,075 3,919,293
Kimberly-Clark Corp. 53,218 3,616,163
V Procter & Gamble Co. (The) 369,063 23,719,679
--------------
32,386,869
--------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.4%)
AES Corp. (The) (a) 76,931 1,695,559
Constellation Energy Group, Inc. 20,804 1,432,771
Dynegy, Inc. Class A (a) 43,172 312,565
TXU Corp. 53,586 2,904,897
--------------
6,345,792
--------------
INDUSTRIAL CONGLOMERATES (3.9%)
3M Co. 85,820 6,687,953
V General Electric Co. 1,201,200 44,696,652
Textron, Inc. 14,697 1,378,138
Tyco International, Ltd. 231,651 7,042,190
--------------
59,804,933
--------------
INSURANCE (4.8%)
ACE, Ltd. 37,828 2,291,242
AFLAC, Inc. 57,706 2,654,476
Allstate Corp. (The) 72,813 4,740,854
Ambac Financial Group, Inc. 12,320 1,097,342
V American International Group, Inc. 302,941 21,708,752
Aon Corp. 36,581 1,292,773
Chubb Corp. (The) 47,821 2,530,209
Cincinnati Financial Corp. 20,153 913,132
Genworth Financial, Inc. Class A 51,673 1,767,733
Hartford Financial Services Group, Inc. (The) 36,929 3,445,845
Lincoln National Corp. 33,462 2,221,877
Loews Corp. 53,130 2,203,301
Marsh & McLennan Cos., Inc. 63,945 1,960,554
MBIA, Inc. 15,563 1,137,033
MetLife, Inc. (b) 88,283 5,209,580
Principal Financial Group, Inc. 31,257 1,834,786
Progressive Corp. (The) 88,747 2,149,452
Prudential Financial, Inc. 55,793 4,790,387
SAFECO Corp. 12,325 770,929
St. Paul Travelers Cos., Inc. (The) 80,221 4,307,066
Torchmark Corp. 11,485 732,284
UnumProvident Corp. 39,585 822,576
XL Capital, Ltd. Class A 20,921 1,506,730
--------------
72,088,913
--------------
INTERNET & CATALOG RETAIL (0.2%)
Amazon.com, Inc. (a)(b) 35,965 1,419,179
IAC/InterActiveCorp (a)(b) 25,800 958,728
--------------
2,377,907
--------------
</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-307
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (1.3%)
eBay, Inc. (a) 134,877 $ 4,055,751
Google, Inc. Class A (a) 25,006 11,514,763
VeriSign, Inc. (a) 28,473 684,776
Yahoo!, Inc. (a) 142,624 3,642,617
--------------
19,897,907
--------------
IT SERVICES (1.1%)
Affiliated Computer Services, Inc. Class A (a)(b) 13,779 672,966
Automatic Data Processing, Inc. 64,115 3,157,664
Cognizant Technology Solutions Corp. Class A (a) 16,400 1,265,424
Computer Sciences Corp. (a) 19,860 1,059,928
Convergys Corp. (a) 16,229 385,926
Electronic Data Systems Corp. 60,192 1,658,290
Fidelity National Information Services, Inc. 18,900 757,701
First Data Corp. 88,905 2,268,856
Fiserv, Inc. (a) 20,205 1,059,146
Paychex, Inc. 39,366 1,556,532
Sabre Holdings Corp. Class A 15,031 479,339
Unisys Corp. (a) 39,977 313,420
Western Union Co. (The) 88,905 1,993,250
--------------
16,628,442
--------------
LEISURE EQUIPMENT & PRODUCTS (0.2%)
Brunswick Corp. 11,017 351,442
Eastman Kodak Co. (b) 33,589 866,596
Hasbro, Inc. 19,008 517,968
Mattel, Inc. 43,951 995,930
--------------
2,731,936
--------------
LIFE SCIENCES TOOLS & SERVICES (0.3%)
Applera Corp.-Applied BioSystems Group 21,386 784,652
Millipore Corp. (a)(b) 6,048 402,797
PerkinElmer, Inc. 14,713 327,070
Thermo Fisher Scientific, Inc. (a) 47,374 2,145,568
Waters Corp. (a) 11,920 583,722
--------------
4,243,809
--------------
MACHINERY (1.6%)
Caterpillar, Inc. 75,828 4,650,531
Cummins, Inc. 6,131 724,562
Danaher Corp. 27,487 1,991,158
Deere & Co. 26,838 2,551,489
Dover Corp. 23,601 1,156,921
Eaton Corp. 17,431 1,309,765
Illinois Tool Works, Inc. 48,898 2,258,599
Ingersoll-Rand Co. Class A 35,705 1,397,137
ITT Corp. 21,577 1,226,005
PACCAR, Inc. (b) 28,857 1,872,819
</Table>
<Table>
<Caption>
SHARES VALUE
MACHINERY (CONTINUED)
Pall Corp. 14,559 $ 503,013
Parker Hannifin Corp. 13,709 1,053,948
Terex Corp. (a) 62,800 4,055,624
--------------
24,751,571
--------------
MEDIA (3.6%)
CBS Corp. Class B 90,741 2,829,304
Clear Channel Communications, Inc. 57,721 2,051,404
Comcast Corp. Class A (a) 242,396 10,260,623
DIRECTV Group, Inc. (The) (a) 89,300 2,227,142
Dow Jones & Co., Inc. (b) 7,800 296,400
E.W. Scripps Co. (The) Class A 9,642 481,521
Gannett Co., Inc. 27,444 1,659,264
Interpublic Group of Cos., Inc. (The) (a)(b) 51,989 636,345
McGraw-Hill Cos., Inc. (The) 40,917 2,783,174
Meredith Corp. 4,502 253,688
New York Times Co. (The) Class A (b) 16,669 406,057
News Corp. Class A 272,692 5,857,424
Omnicom Group, Inc. 20,006 2,091,427
Time Warner, Inc. 465,117 10,130,248
Tribune Co. (b) 22,139 681,438
Univision Communications, Inc. Class A (a)(b) 29,189 1,033,874
Viacom, Inc. Class B (a) 81,511 3,344,396
Walt Disney Co. (The) 241,084 8,261,949
--------------
55,285,678
--------------
METALS & MINING (0.9%)
Alcoa, Inc. 100,787 3,024,618
Allegheny Technologies, Inc. 11,718 1,062,588
Freeport-McMoRan Copper & Gold, Inc. Class B (b) 22,852 1,273,542
Newmont Mining Corp. 52,236 2,358,455
Nucor Corp. 35,235 1,925,945
Phelps Dodge Corp. 23,678 2,834,730
United States Steel Corp. 13,830 1,011,526
--------------
13,491,404
--------------
MULTILINE RETAIL (1.1%)
Big Lots, Inc. (a) 12,947 296,745
Dillard's, Inc. Class A (b) 7,213 252,239
Dollar General Corp. 36,248 582,143
Family Dollar Stores, Inc. 17,668 518,202
Federated Department Stores, Inc. 61,205 2,333,747
J.C. Penney Co., Inc. 26,043 2,014,686
Kohl's Corp. (a) 38,085 2,606,157
Nordstrom, Inc. 26,506 1,307,806
Sears Holdings Corp. (a)(b) 9,696 1,628,249
Target Corp. 99,817 5,694,560
--------------
17,234,534
--------------
</Table>
M-308 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)
- --------------------------------------------------------------------------------
MULTI-UTILITIES (1.1%)
Ameren Corp. (b) 23,892 $ 1,283,717
CenterPoint Energy, Inc. (b) 35,945 595,968
CMS Energy Corp. (a)(b) 25,788 430,660
Consolidated Edison, Inc. 29,907 1,437,630
Dominion Resources, Inc. 41,026 3,439,620
DTE Energy Co. (b) 20,687 1,001,458
KeySpan Corp. 20,337 837,478
NiSource, Inc. 31,724 764,548
PG&E Corp. 40,353 1,909,908
Public Service Enterprise Group, Inc. 29,239 1,940,885
Sempra Energy 30,217 1,691,246
TECO Energy, Inc. (b) 24,283 418,396
Xcel Energy, Inc. (b) 47,132 1,086,864
--------------
16,838,378
--------------
OFFICE ELECTRONICS (0.1%)
Xerox Corp. (a) 113,720 1,927,554
--------------
OIL, GAS & CONSUMABLE FUELS (7.9%)
Anadarko Petroleum Corp. 53,360 2,322,227
Apache Corp. 38,278 2,545,870
Chesapeake Energy Corp. (b) 48,412 1,406,369
Chevron Corp. 253,998 18,676,473
ConocoPhillips 191,568 13,783,318
CONSOL Energy, Inc. 21,406 687,775
Devon Energy Corp. (b) 51,311 3,441,942
El Paso Corp. (b) 81,105 1,239,284
EOG Resources, Inc. 28,159 1,758,530
V ExxonMobil Corp. 679,428 52,064,568
Hess Corp. 31,490 1,560,959
Kinder Morgan, Inc. 12,421 1,313,521
Marathon Oil Corp. 41,011 3,793,518
Murphy Oil Corp. (b) 21,700 1,103,445
Occidental Petroleum Corp. 100,166 4,891,106
Peabody Energy Corp. 30,800 1,244,628
Sunoco, Inc. 14,337 894,055
Valero Energy Corp. 70,415 3,602,431
Williams Cos., Inc. (The) 69,481 1,814,844
XTO Energy, Inc. 42,453 1,997,414
--------------
120,142,277
--------------
PAPER & FOREST PRODUCTS (0.3%)
International Paper Co. 52,850 1,802,185
MeadWestvaco Corp. 21,019 631,831
Weyerhaeuser Co. 27,519 1,944,217
--------------
4,378,233
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
PERSONAL PRODUCTS (0.2%)
Avon Products, Inc. 52,065 $ 1,720,228
Estee Lauder Cos., Inc. (The) Class A (b) 15,039 613,892
--------------
2,334,120
--------------
PHARMACEUTICALS (6.2%)
Abbott Laboratories 178,845 8,711,540
Allergan, Inc. 17,951 2,149,453
Barr Pharmaceuticals, Inc. (a) 12,339 618,431
Bristol-Myers Squibb Co. 228,576 6,016,120
Eli Lilly & Co. 114,328 5,956,489
Forest Laboratories, Inc. (a) 37,001 1,872,251
V Johnson & Johnson 337,923 22,309,676
King Pharmaceuticals, Inc. (a) 28,228 449,390
Merck & Co., Inc. 252,969 11,029,448
Mylan Laboratories, Inc. (b) 24,460 488,222
V Pfizer, Inc. 840,250 21,762,475
Schering-Plough Corp. 172,223 4,071,352
Watson Pharmaceuticals, Inc. (a) 11,896 309,653
Wyeth 156,883 7,988,482
--------------
93,732,982
--------------
REAL ESTATE INVESTMENT TRUSTS (1.1%)
Apartment Investment & Management Co. Class A 11,268 631,233
Archstone-Smith Trust 25,463 1,482,201
Boston Properties, Inc. (b) 13,604 1,522,016
Equity Office Properties Trust 40,575 1,954,498
Equity Residential 33,926 1,721,745
Kimco Realty Corp. (b) 26,282 1,181,376
Plum Creek Timber Co., Inc. 20,852 830,952
ProLogis (b) 28,527 1,733,586
Public Storage, Inc. 14,142 1,378,845
Simon Property Group, Inc. 25,660 2,599,101
Vornado Realty Trust (b) 15,018 1,824,687
--------------
16,860,240
--------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (0.1%)
CB Richard Ellis Group, Inc. Class A (a) 21,300 707,160
Realogy Corp. (a) 24,805 752,088
--------------
1,459,248
--------------
ROAD & RAIL (0.7%)
Burlington Northern Santa Fe Corp. 41,811 3,086,070
CSX Corp. 50,670 1,744,568
Norfolk Southern Corp. 46,293 2,328,075
Ryder System, Inc. 7,278 371,615
Union Pacific Corp. 31,302 2,880,410
--------------
10,410,738
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.4%)
Advanced Micro Devices, Inc. (a) 63,021 1,282,477
Altera Corp. (a) 41,735 821,345
Analog Devices, Inc. 39,810 1,308,555
</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-309
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
Applied Materials, Inc. 161,324 $ 2,976,428
Broadcom Corp. Class A (a) 54,537 1,762,090
Intel Corp. 671,725 13,602,431
KLA-Tencor Corp. (b) 23,057 1,147,086
Linear Technology Corp. 35,038 1,062,352
LSI Logic Corp. (a) 46,451 418,059
Maxim Integrated Products, Inc. 37,489 1,147,913
Micron Technology, Inc. (a) 87,906 1,227,168
National Semiconductor Corp. 33,642 763,673
Novellus Systems, Inc. (a) 14,352 493,996
NVIDIA Corp. (a) 40,963 1,516,041
PMC-Sierra, Inc. (a)(b) 24,557 164,777
Teradyne, Inc. (a)(b) 22,879 342,270
Texas Instruments, Inc. 172,944 4,980,787
Xilinx, Inc. 39,633 943,662
--------------
35,961,110
--------------
SOFTWARE (3.3%)
Adobe Systems, Inc. (a) 67,977 2,795,214
Autodesk, Inc. (a) 26,873 1,087,282
BMC Software, Inc. (a) 23,834 767,455
CA, Inc. 47,779 1,082,194
Citrix Systems, Inc. (a) 21,340 577,247
Compuware Corp. (a) 41,010 341,613
Electronic Arts, Inc. (a) 35,530 1,789,291
Intuit, Inc. (a) 40,610 1,239,011
V Microsoft Corp. 1,008,069 30,100,940
Novell, Inc. (a) 39,437 244,509
Oracle Corp. (a) 466,217 7,990,959
Parametric Technology Corp. (a) 13,018 234,584
Symantec Corp. (a)(b) 109,329 2,279,510
--------------
50,529,809
--------------
SPECIALTY RETAIL (1.9%)
AutoNation, Inc. (a) 17,778 379,027
AutoZone, Inc. (a) 5,867 677,991
Bed Bath & Beyond, Inc. (a) 32,839 1,251,166
Best Buy Co., Inc. 47,233 2,323,391
Circuit City Stores, Inc. 16,377 310,835
Gap, Inc. (The) 61,381 1,196,930
Home Depot, Inc. (The) 237,781 9,549,285
Limited Brands, Inc. 39,528 1,143,940
Lowe's Cos., Inc. 177,603 5,532,333
Office Depot, Inc. (a) 32,928 1,256,862
OfficeMax, Inc. 8,658 429,870
RadioShack Corp. (b) 15,595 261,684
Sherwin-Williams Co. (The) 13,207 839,701
Staples, Inc. 84,422 2,254,067
</Table>
<Table>
<Caption>
SHARES VALUE
SPECIALTY RETAIL (CONTINUED)
Tiffany & Co. 16,050 $ 629,802
TJX Cos., Inc. (The) 52,276 1,488,820
--------------
29,525,704
--------------
TEXTILES, APPAREL & LUXURY GOODS (0.4%)
Coach, Inc. (a) 42,538 1,827,432
Jones Apparel Group, Inc. 13,066 436,796
Liz Claiborne, Inc. 12,012 522,042
NIKE, Inc. Class B 21,936 2,172,322
VF Corp. 10,284 844,111
--------------
5,802,703
--------------
THRIFTS & MORTGAGE FINANCE (1.4%)
Countrywide Financial Corp. 72,369 3,072,064
Fannie Mae 113,591 6,746,170
Freddie Mac 80,773 5,484,487
MGIC Investment Corp. 9,796 612,642
Sovereign Bancorp, Inc. 41,732 1,059,575
Washington Mutual, Inc. 110,142 5,010,360
--------------
21,985,298
--------------
TOBACCO (1.5%)
V Altria Group, Inc. 244,212 20,958,274
Reynolds American, Inc. 19,902 1,302,984
UST, Inc. 18,709 1,088,864
--------------
23,350,122
--------------
TRADING COMPANIES & DISTRIBUTORS (0.0%)++
W.W. Grainger, Inc. 8,797 615,262
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.6%)
ALLTEL Corp. 43,566 2,634,872
Sprint Nextel Corp. 337,382 6,373,146
--------------
9,008,018
--------------
Total Common Stocks
(Cost $975,465,952) 1,485,562,770(f)
--------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (6.4%)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (2.4%)
American Honda Finance Corp.
5.22%, due 1/26/07 $10,800,000 10,760,851
Barton Capital LLC
5.298%, due 1/4/07 (c) 1,260,761 1,260,761
Charta LLC
5.314%, due 1/11/07 (c) 1,291,585 1,291,585
Ciesco, Inc.
5.305%, due 1/10/07 (c) 1,685,628 1,685,628
Compass Securitization LLC
5.324%, due 1/18/07 (c) 1,722,113 1,722,113
</Table>
M-310 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)
Fairway Finance Corp.
5.301%, due 1/8/07 (c) $ 1,291,585 $ 1,291,585
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (c) 1,273,871 1,273,871
Greyhawk Funding LLC
5.305%, due 1/5/07 (c) 1,263,224 1,263,224
Jupiter Securitization Corp.
5.324%, due 1/18/07 (c) 1,291,585 1,291,585
Liberty Street Funding Co.
5.325%, due 1/29/07 (c) 430,528 430,528
National Rural Utilities Finance Corp.
5.24%, due 1/9/07 10,300,000 10,288,005
Old Line Funding LLC
5.303%, due 1/9/07 (c) 1,687,515 1,687,515
Ranger Funding LLC
5.308%, due 1/30/07 (c) 1,291,585 1,291,585
Sheffield Receivables Corp.
5.336%, due 1/16/07 (c) 1,291,585 1,291,585
--------------
Total Commercial Paper
(Cost $36,830,421) 36,830,421
--------------
<Caption>
SHARES
INVESTMENT COMPANY (0.6%)
BGI Institutional Money Market Fund (c) 8,993,481 8,993,481
--------------
Total Investment Company
(Cost $8,993,481) 8,993,481
--------------
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.0%)++
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $430,787 (Collateralized by
various Corporate Bonds and a U.S. Treasury Note,
with rates between 5.00%-8.96% and maturity dates
between 8/15/09-12/29/49, with a Principal Amount
of
$426,430 and a Market Value
of $445,769) (c) $ 430,528 430,528
--------------
Total Repurchase Agreement
(Cost $430,528) 430,528
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (2.8%)
Abbey National PLC
5.34%, due 1/2/07 (c) $ 5,166,338 $ 5,166,338
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (c) 3,444,225 3,444,225
Bank of America Corp.
5.27%, due 1/19/07 (c)(d) 3,444,225 3,444,225
Bank of Montreal
5.30%, due 1/26/07 (c) 2,152,641 2,152,641
Barclays
5.32%, due 1/18/07 (c) 2,841,486 2,841,486
Calyon
5.31%, due 2/12/07 (c) 3,444,225 3,444,225
Citigroup
5.325%, due 3/22/07 (c) 3,013,697 3,013,697
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (c) 3,272,014 3,272,014
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (c) 3,444,225 3,444,225
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (c) 3,185,909 3,185,909
Rabobank Nederland
5.29%, due 3/6/07 (c) 2,583,169 2,583,169
Standard Chartered Bank
5.29%, due 1/10/07 (c) 3,444,225 3,444,225
UBS AG
5.285%, due 1/12/07 (c) 3,444,225 3,444,225
--------------
Total Time Deposits
(Cost $42,880,604) 42,880,604
--------------
U.S. GOVERNMENT (0.6%)
United States Treasury Bills
3.558%, due 1/18/07 (e) 3,100,000 3,093,968
3.854%, due 1/25/07 5,300,000 5,284,932
--------------
8,378,900
--------------
Total U.S. Government
(Cost $8,373,396) 8,378,900
--------------
Total Short-Term Investments
(Cost $97,508,430) 97,513,934
--------------
Total Investments
(Cost $1,072,974,382) (g) 104.4% 1,583,076,704(h)
Liabilities in Excess of
Cash and Other Assets (4.4) (67,095,258)
----------- --------------
Net Assets 100.0% $1,515,981,446
=========== ==============
</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-311
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
CONTRACTS UNREALIZED
LONG APPRECIATION (I)
FUTURES CONTRACTS (0.0%)++
- -----------------------------------------------------------------------------
Standard & Poor's 500 Index
Mini March 2007 414 $ 23,037
-------------------
Total Futures Contracts
(Settlement Value $29,567,880) (f) $ 23,037
===================
</Table>
<Table>
++ Less than one tenth of a percent.
+++ Fifty percent of the Fund's assets are maintained to cover
"senior securities transactions" which may include, but are
not limited to, forwards, TBA's, options and futures. This
percentage is marked-to-market daily against the value of
the Fund's "senior securities" holdings to ensure proper
coverage for these transactions.
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(d) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(e) Segregated or partially segregated as collateral for futures
contracts.
(f) The combined market value of common stocks and settlement
value of Standard & Poor's 500 Index futures contracts
represents 99.9% of net assets.
(g) The cost for federal income tax purposes is $1,095,596,804.
(h) At December 31, 2006 net unrealized appreciation was
$487,479,900, 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 $553,277,703 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $65,797,803.
(i) Represents the difference between the value of the contracts
at the time they were opened and the value at December 31,
2006.
</Table>
M-312 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 ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value
(identified cost $1,072,974,382) including
$65,834,860 market value of securities
loaned $1,583,076,704
Cash 96,158
Receivables:
Dividends and interest 2,047,097
Fund shares sold 203,303
Investment securities sold 179,187
Other assets 4,083
--------------
Total assets 1,585,606,532
--------------
LIABILITIES:
Securities lending collateral 68,086,178
Payables:
Fund shares redeemed 633,093
Administrator (See Note 3) 257,134
Shareholder communication 233,258
Adviser (See Note 3) 117,658
Professional fees 112,505
Variation margin on futures contracts 111,880
NYLIFE Distributors (See Note 3) 57,774
Custodian 7,638
Directors 2,080
Accrued expenses 5,888
--------------
Total liabilities 69,625,086
--------------
Net assets $1,515,981,446
==============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 427,968
Service Class 95,024
Additional paid-in capital 1,140,980,659
Accumulated undistributed net investment
income 23,131,898
Accumulated net realized loss on investments
and futures transactions (158,779,462)
Net unrealized appreciation on investments
and futures contracts 510,125,359
--------------
Net assets $1,515,981,446
==============
INITIAL CLASS
Net assets applicable to outstanding shares $1,241,402,384
==============
Shares of capital stock outstanding 42,796,789
==============
Net asset value per share outstanding $ 29.01
==============
SERVICE CLASS
Net assets applicable to outstanding shares $ 274,579,062
==============
Shares of capital stock outstanding 9,502,378
==============
Net asset value per share outstanding $ 28.90
==============
</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-313
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 27,432,243
Interest 1,532,860
Income from securities loaned--net 129,169
-------------
Total income 29,094,272
-------------
EXPENSES:
Administration (See Note 3) 2,895,952
Advisory (See Note 3) 1,335,982
Distribution and service--Service Class
(See Note 3) 598,705
Shareholder communication 364,068
Professional fees 251,871
Directors 84,392
Custodian 47,240
Miscellaneous 102,107
-------------
Total expenses 5,680,317
-------------
Net investment income 23,413,955
-------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Security transactions (29,343,175)
Futures transactions 3,430,868
-------------
Net realized loss on investments and futures
transactions (25,912,307)
-------------
Net change in unrealized appreciation
(depreciation) on:
Security transactions 210,044,193
Futures contracts 349,698
-------------
Net change in unrealized appreciation
(depreciation) on investments and futures
contracts 210,393,891
-------------
Net realized and unrealized gain on
investments and futures transactions 184,481,584
-------------
Net increase in net assets resulting from
operations $207,895,539
=============
</Table>
M-314 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 CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 23,413,955 $ 23,699,470
Net realized loss on
investments and futures
transactions (25,912,307) (35,290,045)
Net change in unrealized
appreciation (depreciation)
on investments and futures
contracts 210,393,891 77,111,740
-------------------------------
Net increase in net assets
resulting from operations 207,895,539 65,521,165
-------------------------------
Dividends to shareholders:
From net investment income:
Initial Class (6,263,748) (14,301,966)
Service Class (944,308) (2,138,860)
-------------------------------
Total dividends to
shareholders (7,208,056) (16,440,826)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 58,779,419 34,850,186
Service Class 41,809,550 65,284,972
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Initial Class 6,263,748 14,301,966
Service Class 944,308 2,138,860
-------------------------------
107,797,025 116,575,984
Cost of shares redeemed:
Initial Class (217,783,767) (186,166,309)
Service Class (16,120,316) (7,849,281)
-------------------------------
(233,904,083) (194,015,590)
Decrease in net assets
derived from capital share
transactions (126,107,058) (77,439,606)
-------------------------------
Net increase (decrease) in
net assets 74,580,425 (28,359,267)
NET ASSETS:
Beginning of year 1,441,401,021 1,469,760,288
-------------------------------
End of year $1,515,981,446 $1,441,401,021
===============================
Accumulated undistributed net
investment income at end of
year $ 23,131,898 $ 7,203,336
===============================
</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-315
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 25.25 $ 24.38 $ 22.40 $ 17.68 $ 23.14
---------- ---------- ---------- ---------- --------
Net investment income 0.44(b) 0.41(b) 0.37(b)(c) 0.27 (b) 0.26
Net realized and unrealized gain (loss) on
investments 3.47 0.76 1.98 4.72 (5.40)
---------- ---------- ---------- ---------- --------
Total from investment operations 3.91 1.17 2.35 4.99 (5.14)
---------- ---------- ---------- ---------- --------
Less dividends and distributions:
From net investment income (0.15) (0.30) (0.37) (0.27) (0.26)
From net realized gain on investments -- -- -- -- (0.06)
Return of capital -- -- -- (0.00)(d) --
---------- ---------- ---------- ---------- --------
Total dividends and distributions (0.15) (0.30) (0.37) (0.27) (0.32)
---------- ---------- ---------- ---------- --------
Net asset value at end of period $ 29.01 $ 25.25 $ 24.38 $ 22.40 $ 17.68
========== ========== ========== ========== ========
Total investment return 15.45% 4.77%(e) 10.49% 28.19% (22.21%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.66% 1.68% 1.64%(c) 1.40% 1.25%
Net expenses 0.35% 0.19% 0.39% 0.39% 0.38%
Expenses (before reimbursement) 0.35% 0.34% 0.39% 0.39% 0.38%
Portfolio turnover rate 5% 5% 3% 3% 5%
Net assets at end of period (in 000's) $1,241,402 $1,227,193 $1,322,061 $1,239,412 $977,306
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
4.62% and 4.35% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(f) Total return is not annualized.
(g) Represents income earned for the year by the Initial Class share less service fee of
0.25%.
</Table>
M-316 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>
SERVICE CLASS
- ---------------------------------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 25.18 $ 24.34 $ 22.38 $ 19.95
-------- --------------- --------------- ---------------
0.38(b) 0.35(b) 0.34(b)(c) 0.12 (b)
3.44 0.74 1.95 2.56
-------- --------------- --------------- ---------------
3.82 1.09 2.29 2.68
-------- --------------- --------------- ---------------
(0.10) (0.25) (0.33) (0.25)
-- -- -- --
-- -- -- (0.00)(d)
-------- --------------- --------------- ---------------
(0.10) (0.25) (0.33) (0.25)
-------- --------------- --------------- ---------------
$ 28.90 $ 25.18 $ 24.34 $ 22.38
======== =============== =============== ===============
15.16% 4.47%(e) 10.22% 13.50%(f)
1.41% 1.43% 1.39%(c) 1.15%+(g)
0.60% 0.44% 0.64% 0.64%+
0.60% 0.59% 0.64% 0.64%+
5% 5% 3% 3%
$274,579 $214,208 $147,699 $ 39,440
</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-317
MAINSTAY VP SMALL CAP GROWTH PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ---------------------------------------------------
After Portfolio operating
expenses 6.32% 4.77% 3.45%
</Table>
(After Portfolio operating
expenses)
<Table>
<Caption>
MAINSTAY VP SMALL CAP RUSSELL 2000 GROWTH
GROWTH PORTFOLIO RUSSELL 2000 INDEX INDEX
--------------------- ------------------ -------------------
7/2/01 10000 10000 10000
9548 9591 9074
7027 7627 6328
9956 11231 9400
10892 13289 10744
11334 13894 11191
12/31/06 12051 16446 12684
</Table>
SERVICE CLASS(1) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE SINCE
TOTAL RETURNS YEAR YEARS INCEPTION
- ---------------------------------------------------
After Portfolio operating
expenses 6.06% 4.51% 3.19%
</Table>
(After Portfolio operating
expenses)
<Table>
<Caption>
MAINSTAY VP SMALL CAP RUSSELL 2000 GROWTH
GROWTH PORTFOLIO RUSSELL 2000 INDEX INDEX
--------------------- ------------------ -------------------
7/2/01 10000 10000 10000
9536 9591 9074
7000 7627 6328
9894 11231 9400
10798 13289 10744
11209 13894 11191
12/31/06 11888 16446 12684
</Table>
<Table>
<Caption>
ONE FIVE SINCE
BENCHMARK PERFORMANCE YEAR YEARS INCEPTION
Russell 2000(R) Growth Index* 13.35% 6.93% 4.42%
Russell 2000(R) Index* 18.37 11.39 9.47
</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-318 MainStay VP Small Cap Growth Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP SMALL CAP GROWTH PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,001.30 $4.94 $1,020.10 $4.99
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,000.05 $6.20 $1,018.85 $6.26
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.98% for Initial Class and 1.23% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-319
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 98.2
Short-Term Investments (collateral from securities lending 26.1
is 24.2%)
Liabilities in Excess of Cash and Other Assets (24.3)
</Table>
See Portfolio of Investments on page M-323 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Affiliated Managers Group, Inc.
2. Genlyte Group, Inc.
3. Trimble Navigation, Ltd.
4. Jefferies Group, Inc.
5. Kirby Corp.
6. Children's Place Retail Stores, Inc. (The)
7. TETRA Technologies, Inc.
8. Atwood Oceanics, Inc.
9. Jarden Corp.
10. FactSet Research Systems, Inc.
</Table>
M-320 MainStay VP Small Cap Growth Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Edmund C. Spelman of MacKay Shields LLC.
HOW DID MAINSTAY VP SMALL CAP GROWTH PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND
ITS BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Small Cap Growth Portfolio
returned 6.32% for Initial Class shares and 6.06% for Service Class shares. Both
share classes underperformed the 11.12% return of the average Lipper* Variable
Products Small-Cap Growth Portfolio for the same period. Both share classes
underperformed the 13.35% return of the Russell 2000(R) Growth Index,* the
Portfolio's broad-based securities-market index, for the year ended December 31,
2006.
WHAT FACTORS INFLUENCED THE PORTFOLIO'S RELATIVE PERFORMANCE?
The Portfolio's performance was hindered by stock selection in the energy,
consumer discretionary, health care and industrials sectors. An underweight
position in materials stocks and an overweight position in the consumer
discretionary sector detracted from performance. The Portfolio benefited from an
underweight position in the health care and information technology sectors and
an overweight position in the industrials and energy sectors.
WHAT DECISIONS GUIDED THE PORTFOLIO'S PERFORMANCE DURING THE REPORTING PERIOD?
A key decision that had a positive effect on perfor-mance was reducing the
Portfolio's significantly over-weight position in consumer discretionary stocks
in the first half of 2006. Our decision to decrease the Portfolio's weighting in
energy stocks during 2006 also had a positive effect.
WHICH STOCKS WERE THE STRONGEST POSITIVE CONTRIBUTORS TO THE PORTFOLIO'S
PERFORMANCE?
In 2006, the holdings that contributed most to performance were Terex, TETRA
Technologies and Immucor. Terex advanced on rising demand for cranes and other
heavy equipment. TETRA Technologies, an oil services company that operates in
the Gulf of Mexico, benefited from strong demand and higher drilling activity.
Immucor, which manufactures diagnostic testing equipment, advanced on strong
growth in orders and earnings.
WHICH STOCKS DETRACTED MOST FROM THE PORTFOLIO'S PERFORMANCE IN 2006?
The greatest detractors from the Portfolio's performance were Beazer Homes USA,
InterOil and Adolor. Beazer Homes USA suffered from sharp declines in new
housing orders and weaker-than-expected earnings. InterOil declined when one of
its high-potential drilling prospects produced disappointing results. Adolor
fell sharply when its lead biotechnology drug experienced a delay in receiving
FDA approval. InterOil and Adolor were both sold during 2006.
WERE THERE OTHER SIGNIFICANT SALES IN 2006?
We also sold several positions in the homebuilding industry, including M/I
Homes, Hovnanian Enterprises and Ryland Group. The Portfolio also eliminated
energy holdings Arch Coal, James River Coal and Bronco Drilling because of
deteriorating fundamental trends. Finally, the Portfolio eliminated Hughes
Supply, Petco, Remington Oil & Gas and Westcorp because of takeover bids.
WERE THERE ANY SIGNIFICANT PURCHASES DURING THE YEAR?
Yes. The Portfolio purchased Phillips-Van Heusen, which is executing well in its
core men's shirt business while rapidly expanding its Calvin Klein licensing
operations. We also added RBC Bearings, a manufacturer of bearing components for
the aerospace, defense and industrial markets. In the health care sector, we
added biotechnology firm Myogen, which was acquired by Gilead Sciences during
2006, and InVentiv Health, which provides outsourced sales and marketing
services to pharmaceutical companies.
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 principal risk of growth stocks is that investors expect growth
companies to increase their earnings at a certain rate that is generally higher
than the rate expected for nongrowth companies. If these expectations are not
met, the market price of the stock may decline significantly, even if earnings
showed an absolute increase.
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-321
HOW DID THE PORTFOLIO'S WEIGHTINGS CHANGE IN 2006?
Over the course of the year, the Portfolio decreased its weightings in the
consumer discretionary, energy and industrials sectors. The Portfolio increased
its weightings in information technology, financials and health care. The
Portfolio had no holdings in the telecommunication services or utilities sectors
in 2006.
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE RUSSELL 2000(R) GROWTH INDEX*
AT YEAR-END?
As of December 31, 2006, the Portfolio was overweight relative to the Russell
2000(R) Growth Index* in energy, consumer discretionary, financials and
information technology. On the same date, the Portfolio was underweight relative
to the benchmark in materials, consumer staples, health care and industrials.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP SMALL CAP GROWTH PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-322 MainStay VP Small Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (98.2%)+
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.3%)
Ceradyne, Inc. (a)(b) 42,750 $ 2,415,375
------------
BIOTECHNOLOGY (0.4%)
Progenics Pharmaceuticals, Inc. (a) 26,800 689,832
------------
CAPITAL MARKETS (5.3%)
V Affiliated Managers Group, Inc. (a)(b) 43,300 4,552,129
Cohen & Steers, Inc. 14,300 574,431
V Jefferies Group, Inc. 124,700 3,344,454
optionsXpress Holdings, Inc. 54,300 1,232,067
------------
9,703,081
------------
COMMERCIAL SERVICES & SUPPLIES (3.6%)
Administaff, Inc. (b) 36,000 1,539,720
CRA International, Inc. (a)(b) 41,900 2,195,560
Knoll, Inc. 71,400 1,570,800
Mobile Mini, Inc. (a) 47,800 1,287,732
------------
6,593,812
------------
COMMUNICATIONS EQUIPMENT (1.6%)
ARRIS Group, Inc. (a) 96,800 1,210,968
Avocent Corp. (a) 49,000 1,658,650
------------
2,869,618
------------
COMPUTERS & PERIPHERALS (0.9%)
SimpleTech, Inc. (a)(b) 128,800 1,633,184
------------
CONSTRUCTION & ENGINEERING (1.1%)
Quanta Services, Inc. (a) 100,500 1,976,835
------------
CONSUMER FINANCE (3.0%)
Cash America International, Inc. 46,000 2,157,400
First Cash Financial Services, Inc. (a) 70,400 1,821,248
World Acceptance Corp. (a) 33,000 1,549,350
------------
5,527,998
------------
ELECTRICAL EQUIPMENT (2.9%)
V Genlyte Group, Inc. (a) 46,000 3,593,060
II-VI, Inc. (a) 58,500 1,634,490
------------
5,227,550
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (6.9%)
Anixter International, Inc. (a) 31,100 1,688,730
Daktronics, Inc. (b) 18,700 689,095
FLIR Systems, Inc. (a)(b) 59,500 1,893,885
Itron, Inc. (a)(b) 35,900 1,861,056
NovAtel, Inc. (a) 37,100 1,480,290
Rogers Corp. (a) 22,700 1,342,705
V Trimble Navigation, Ltd. (a) 70,700 3,586,611
------------
12,542,372
------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (10.2%)
V Atwood Oceanics, Inc. (a) 66,800 $ 3,271,196
Dawson Geophysical Co. (a) 41,700 1,519,131
Dresser-Rand Group, Inc. (a) 82,000 2,006,540
Gulf Island Fabrication, Inc. 35,600 1,313,640
GulfMark Offshore, Inc. (a) 39,100 1,462,731
Hornbeck Offshore Services, Inc. (a) 39,800 1,420,860
Hydril Co. (a) 21,300 1,601,547
V TETRA Technologies, Inc. (a) 128,200 3,279,356
Todco (a)(b) 34,800 1,189,116
W-H Energy Services, Inc. (a) 31,700 1,543,473
------------
18,607,590
------------
HEALTH CARE EQUIPMENT & SUPPLIES (5.9%)
ArthroCare Corp. (a)(b) 50,900 2,031,928
Dade Behring Holdings, Inc. 70,900 2,822,529
Gen-Probe, Inc. (a) 24,900 1,304,013
Immucor, Inc. (a) 97,000 2,835,310
Integra LifeSciences Holdings Corp. (a)(b) 24,500 1,043,455
LifeCell Corp. (a) 30,500 736,270
------------
10,773,505
------------
HEALTH CARE PROVIDERS & SERVICES (6.6%)
Bio-Reference Laboratories, Inc. (a) 56,600 1,272,934
Healthspring, Inc. (a) 73,700 1,499,795
Healthways, Inc. (a)(b) 46,400 2,213,744
inVentiv Health, Inc. (a) 56,700 2,004,345
Matria Healthcare, Inc. (a)(b) 37,600 1,080,248
Sierra Health Services, Inc. (a) 63,100 2,274,124
WellCare Health Plans, Inc. (a)(b) 25,300 1,743,170
------------
12,088,360
------------
HOTELS, RESTAURANTS & LEISURE (1.3%)
Penn National Gaming, Inc. (a) 57,100 2,376,502
------------
HOUSEHOLD DURABLES (4.5%)
Beazer Homes USA, Inc. (b) 23,000 1,081,230
Interface, Inc. Class A (a) 98,200 1,396,404
V Jarden Corp. (a)(b) 91,900 3,197,201
Meritage Homes Corp. (a)(b) 21,700 1,035,524
Tempur-Pedic International, Inc. (a)(b) 71,800 1,469,028
------------
8,179,387
------------
INSURANCE (1.1%)
Tower Group, Inc. 66,200 2,056,834
------------
INTERNET & CATALOG RETAIL (0.8%)
Coldwater Creek, Inc. (a) 57,537 1,410,807
------------
</Table>
+ Percentages indicated are based on Fund net assets.
V Among the Fund's 10 largest holdings, excluding short-term investments. May be
subject to change daily.
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-323
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (3.1%)
Digitas, Inc. (a) 99,400 $ 1,332,954
j2 Global Communications, Inc. (a)(b) 35,500 967,375
Travelzoo, Inc. (a)(b) 47,500 1,422,625
WebEx Communications, Inc. (a)(b) 52,400 1,828,236
------------
5,551,190
------------
IT SERVICES (0.9%)
Sykes Enterprises, Inc. (a) 88,100 1,554,084
------------
LIFE SCIENCES TOOLS & SERVICES (1.5%)
Nektar Therapeutics (a)(b) 80,100 1,218,321
PAREXEL International Corp. (a) 52,300 1,515,131
------------
2,733,452
------------
MACHINERY (3.3%)
RBC Bearings, Inc. (a) 54,700 1,567,702
Terex Corp. (a) 31,500 2,034,270
Wabtec Corp. 81,800 2,485,084
------------
6,087,056
------------
MARINE (1.8%)
V Kirby Corp. (a) 97,200 3,317,436
------------
METALS & MINING (1.0%)
Brush Engineered Materials, Inc. (a) 51,800 1,749,286
------------
MULTILINE RETAIL (0.8%)
Bon-Ton Stores, Inc. (The) (b) 40,300 1,396,395
------------
OIL, GAS & CONSUMABLE FUELS (3.6%)
Giant Industries, Inc. (a) 25,300 1,896,235
Helix Energy Solutions Group, Inc. (a)(b) 82,200 2,578,614
World Fuel Services Corp. 48,500 2,156,310
------------
6,631,159
------------
PERSONAL PRODUCTS (1.2%)
Chattem, Inc. (a)(b) 43,200 2,163,456
------------
PHARMACEUTICALS (0.8%)
Sciele Pharma, Inc. (a)(b) 62,700 1,504,800
------------
ROAD & RAIL (1.2%)
Celadon Group, Inc. (a) 79,800 1,336,650
Knight Transportation, Inc. 50,350 858,467
------------
2,195,117
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (6.4%)
Cymer, Inc. (a) 30,100 1,322,895
Diodes, Inc. (a) 67,750 2,403,770
Hittite Microwave Corp. (a) 41,200 1,331,584
</Table>
<Table>
<Caption>
SHARES VALUE
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
Skyworks Solutions, Inc. (a) 198,300 $ 1,403,964
Supertex, Inc. (a) 35,600 1,397,300
Tessera Technologies, Inc. (a) 65,700 2,650,338
Trident Microsystems, Inc. (a) 68,100 1,238,058
------------
11,747,909
------------
SOFTWARE (4.7%)
V FactSet Research Systems, Inc. 53,150 3,001,912
Hyperion Solutions Corp. (a) 21,350 767,319
Macrovision Corp. (a)(b) 28,800 813,888
Mentor Graphics Corp. (a) 85,400 1,539,762
MICROS Systems, Inc. (a) 47,500 2,503,250
------------
8,626,131
------------
SPECIALTY RETAIL (8.1%)
Charlotte Russe Holding, Inc. (a) 48,500 1,491,375
V Children's Place Retail Stores,
Inc. (The) (a)(b) 51,900 3,296,688
GameStop Corp. Class A (a)(b) 33,753 1,860,128
Guitar Center, Inc. (a)(b) 58,200 2,645,772
Gymboree Corp. (The) (a) 38,300 1,461,528
Hibbett Sporting Goods, Inc. (a) 83,475 2,548,492
Tween Brands, Inc. (a)(b) 34,800 1,389,564
------------
14,693,547
------------
TEXTILES, APPAREL & LUXURY GOODS (1.4%)
Phillips-Van Heusen Corp. 51,700 2,593,789
------------
TRADING COMPANIES & DISTRIBUTORS (1.0%)
Houston Wire & Cable Co. (a)(b) 21,000 438,900
Interline Brands, Inc. (a) 62,900 1,413,363
------------
1,852,263
------------
Total Common Stocks
(Cost $147,907,330) 179,069,712
------------
<Caption>
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS (26.1%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (7.5%)
Barton Capital LLC
5.298%, due 1/4/07 (c) $ 816,412 816,412
Charta LLC
5.314%, due 1/11/07 (c) 836,371 836,371
Ciesco, Inc.
5.305%, due 1/10/07 (c) 1,091,536 1,091,536
Compass Securitization LLC
5.324%, due 1/18/07 (c) 1,115,162 1,115,162
Fairway Finance Corp.
5.301%, due 1/8/07 (c) 836,371 836,371
</Table>
M-324 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>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (c) $ 824,901 $ 824,901
Greyhawk Funding LLC
5.305%, due 1/5/07 (c) 818,006 818,006
Jupiter Securitization Corp.
5.324%, due 1/18/07 (c) 836,371 836,371
Liberty Street Funding Co.
5.325%, due 1/29/07 (c) 278,791 278,791
Old Line Funding LLC
5.303%, due 1/9/07 (c) 1,092,758 1,092,758
Prudential Funding LLC
5.26%, due 1/3/07 3,440,000 3,438,995
Ranger Funding LLC
5.308%, due 1/30/07 (c) 836,371 836,371
Sheffield Receivables Corp.
5.336%, due 1/16/07 (c) 836,371 836,371
------------
Total Commercial Paper
(Cost $13,658,416) 13,658,416
------------
<Caption>
SHARES
INVESTMENT COMPANY (3.2%)
BGI Institutional Money Market Fund (c) 5,823,770 5,823,770
------------
Total Investment Company
(Cost $5,823,770) 5,823,770
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT (0.2%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $278,958
(Collateralized by various Corporate Bonds and a
U.S. Treasury Note,
with rates between 5.00%-8.96% and maturity dates
between 8/15/09-12/29/49, with a Principal Amount
of
$276,136 and a Market Value
of $288,660) (c) $ 278,790 278,790
------------
Total Repurchase Agreement
(Cost $278,790) 278,790
------------
TIME DEPOSITS (15.2%)
Abbey National PLC
5.34%, due 1/2/07 (c) 3,345,486 3,345,486
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (c) 2,230,324 2,230,324
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Bank of America Corp.
5.27%, due 1/19/07 (c)(d) $ 2,230,324 $ 2,230,324
Bank of Montreal
5.30%, due 1/26/07 (c) 1,393,952 1,393,952
Barclays
5.32%, due 1/18/07 (c) 1,840,017 1,840,017
Calyon
5.31%, due 2/12/07 (c) 2,230,324 2,230,324
Citigroup
5.325%, due 3/22/07 (c) 1,951,533 1,951,533
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (c) 2,118,808 2,118,808
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (c) 2,230,324 2,230,324
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (c) 2,063,050 2,063,050
Rabobank Nederland
5.29%, due 3/6/07 (c) 1,672,743 1,672,743
Standard Chartered Bank
5.29%, due 1/10/07 (c) 2,230,324 2,230,324
UBS AG
5.285%, due 1/12/07 (c) 2,230,324 2,230,324
------------
Total Time Deposits
(Cost $27,767,533) 27,767,533
------------
Total Short-Term Investments
(Cost $47,528,509) 47,528,509
------------
Total Investments
(Cost $195,435,839) (e) 124.3% 226,598,221(f)
Liabilities in Excess of
Cash and Other Assets (24.3) (44,332,554)
----------- ------------
Net Assets 100.0% $182,265,667
=========== ============
</Table>
<Table>
(a) Non-income producing security.
(b) Represents a security, or a portion thereof, which is out on
loan.
(c) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(d) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(e) The cost for federal income tax purposes is $195,524,110.
(f) At December 31, 2006 net unrealized appreciation was
$31,074,111, 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 $34,422,033 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $3,347,922.
</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-325
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost
$195,435,839) including $42,769,141 market
value of securities loaned $226,598,221
Cash 4,917
Receivables:
Fund shares sold 58,898
Dividends and interest 13,332
Other assets 514
-------------
Total assets 226,675,882
-------------
LIABILITIES:
Securities lending collateral 44,089,514
Payables:
Manager (See Note 3) 140,939
Fund shares redeemed 92,692
Professional fees 33,259
Shareholder communication 30,212
NYLIFE Distributors (See Note 3) 19,187
Custodian 1,010
Directors 257
Accrued expenses 3,145
-------------
Total liabilities 44,410,215
-------------
Net assets $182,265,667
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 78,371
Service Class 76,199
Additional paid-in capital 138,683,752
Accumulated undistributed net realized gain on
investments 12,264,963
Net unrealized appreciation on investments 31,162,382
-------------
Net assets $182,265,667
=============
INITIAL CLASS
Net assets applicable to outstanding shares $ 92,818,787
=============
Shares of capital stock outstanding 7,837,116
=============
Net asset value per share outstanding $ 11.84
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 89,446,880
=============
Shares of capital stock outstanding 7,619,852
=============
Net asset value per share outstanding $ 11.74
=============
</Table>
M-326 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 OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 454,081
Dividends 308,556
Income from securities loaned--net 82,357
------------
Total income 844,994
------------
EXPENSES:
Manager (See Note 3) 1,652,786
Distribution and service--Service Class
(See Note 3) 217,559
Professional fees 71,499
Shareholder communication 40,562
Custodian 11,701
Directors 9,851
Miscellaneous 10,254
------------
Total expenses 2,014,212
------------
Net investment loss (1,169,218)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 14,087,125
Net change in unrealized appreciation on
investments (2,317,336)
------------
Net realized and unrealized gain on investments 11,769,789
------------
Net increase in net assets resulting from
operations $10,600,571
============
</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-327
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (1,169,218) $ (596,142)
Net realized gain (loss) on
investments 14,087,125 (910,433)
Net change in unrealized
appreciation on investments (2,317,336) 7,709,461
---------------------------
Net increase in net assets
resulting from operations 10,600,571 6,202,886
---------------------------
Distributions to shareholders:
From net realized gain on investments:
Initial Class (784) (1,632,350)
Service Class (760) (1,384,577)
---------------------------
Total distributions to
shareholders (1,544) (3,016,927)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 16,608,438 11,633,771
Service Class 15,430,530 25,126,834
Net asset value of shares issued
to shareholders in reinvestment
of distributions:
Initial Class 784 1,632,350
Service Class 760 1,384,577
---------------------------
32,040,512 39,777,532
Cost of shares redeemed:
Initial Class (24,327,018) (25,672,239)
Service Class (11,216,069) (3,808,724)
---------------------------
(35,543,087) (29,480,963)
Increase (decrease) in net
assets derived from
capital share transactions (3,502,575) 10,296,569
---------------------------
Net increase in net assets 7,096,452 13,482,528
NET ASSETS:
Beginning of year 175,169,215 161,686,687
---------------------------
End of year $182,265,667 $175,169,215
===========================
</Table>
M-328 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.
This page intentionally left blank
www.mainstayfunds.com M-329
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 11.14 $ 10.89 $ 9.96 $ 7.03 $ 9.55
------- ------- -------- ------- -------
Net investment loss (b) (0.06) (0.03) (0.06) (0.06) (0.05)
Net realized and unrealized gain (loss) on
investments 0.76 0.48 0.99 2.99 (2.47)
------- ------- -------- ------- -------
Total from investment operations 0.70 0.45 0.93 2.93 (2.52)
------- ------- -------- ------- -------
Less distributions:
From net realized gain on investments (0.00)(c) (0.20) -- -- --
------- ------- -------- ------- -------
Net asset value at end of period $ 11.84 $ 11.14 $ 10.89 $ 9.96 $ 7.03
======= ======= ======== ======= =======
Total investment return 6.32% 4.06% 9.40% 41.69% (26.41%)
Ratios (to average net
assets)/Supplemental Data:
Net investment loss (0.52%) (0.26%) (0.61%) (0.73%) (0.68%)
Net expenses 0.98% 0.95% 0.95% 0.95% 0.95%
Expenses (before reimbursement) 0.98% 0.98% 1.14% 1.21% 1.29%
Portfolio turnover rate 60% 41% 108% 65% 126%
Net assets at end of period (in 000's) $92,819 $94,855 $105,650 $90,085 $34,368
</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%.
+ Annualized.
</Table>
M-330 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.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
- -------------------------------------------------------
JUNE 5,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 11.07 $ 10.85 $ 9.94 $ 8.06
------- ------- ------- ------------
(0.09) (0.06) (0.08) (0.04)
0.76 0.48 0.99 1.92
------- ------- ------- ------------
0.67 0.42 0.91 1.88
------- ------- ------- ------------
(0.00)(c) (0.20) -- --
------- ------- ------- ------------
$ 11.74 $ 11.07 $ 10.85 $ 9.94
======= ======= ======= ============
6.06% 3.81% 9.13% 23.37%(d)
(0.77%) (0.51%) (0.86%) (0.98%)+(e)
1.23% 1.20% 1.20% 1.20%+
1.23% 1.23% 1.39% 1.46%+
60% 41% 108% 65%
$89,447 $80,314 $56,037 $14,398
</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-331
MAINSTAY VP TOTAL RETURN PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 9.50% 4.37% 6.37%
</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
----------------- ------------------- ----------------- -------------
12/31/96 10000 10000 10000 10000
11779 12207 12331 13336
14975 15477 14815 17148
17523 18387 16583 20756
16760 16638 16562 18866
14968 15182 15890 16624
12489 13084 14376 12950
14946 15576 17128 16664
15898 16453 18603 18478
16931 17152 19499 19385
12/31/06 18539 18389 21629 22447
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- -----------------------------------------------------
After Portfolio operating
expenses 9.23% 4.11% 6.10%
</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
----------------- ------------------- ----------------- -------------
12/31/96 10000 10000 10000 10000
11749 12207 12331 13336
14898 15477 14815 17148
17388 18387 16583 20756
16587 16638 16562 18866
14777 15182 15890 16624
12299 13084 14376 12950
14683 15576 17128 16664
15580 16453 18603 18478
16544 17152 19499 19385
12/31/06 18070 18389 21629 22447
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Total Return Core Composite Index* 10.93% 6.36% 8.02%
Total Return Growth Composite Index* 7.21 3.91 6.28
S&P 500(R) Index* 15.79 6.19 8.42
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 4.33% and 6.34% for the Initial Class and 4.07%
and 6.08% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-332 MainStay VP Total Return Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP TOTAL RETURN PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,078.15 $3.09 $1,022.05 $3.01
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,076.90 $4.40 $1,020.80 $4.28
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.59% for Initial Class and 0.84% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-333
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 64.3
U.S. Government & Federal Agencies 19.4
Short-Term Investments (collateral from securities lending 9.9
is 7.1%)*
Corporate Bonds 5.6
Mortgage-Backed Securities 2.4
Foreign Bonds 2.3
Asset-Backed Securities 1.4
Convertible Bonds 1.1
Loan Assignments 0.2
Investment Company 0.1
Municipal Bond 0.1
Yankee Bonds 0.1
Convertible Preferred Stock+ 0.0
Liabilities in Excess of Cash and Other Assets (6.9)
</Table>
* Includes 0.9% of Short-Term Investment Company Securities.
+ Less than one tenth of a percent.
See Portfolio of Investments on page M-337 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Bank of America Corp.
2. Citigroup, Inc.
3. United States Treasury Note, 4.875%, due 8/15/16
4. Motorola, Inc.
5. Johnson & Johnson
6. Microsoft Corp.
7. Transocean, Inc.
8. Pfizer, Inc.
9. JPMorgan Chase & Co.
10. United States Treasury Note, 3.875%, due 2/15/13
</Table>
M-334 MainStay VP Total Return Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Gary Goodenough, Joseph Portera,
Richard A. Rosen, CFA, and Edmund C. Spelman of MacKay Shields LLC.
HOW DID MAINSTAY VP TOTAL RETURN PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Total Return Portfolio
returned 9.50% for Initial Class shares and 9.23% for Service Class shares. Both
share classes underperformed the 11.67% return of the average Lipper* Variable
Products Mixed-Asset Target Allocation Growth Portfolio for the same period.
Both share classes also underperformed the 15.79% return of the S&P 500(R)
Index,* the Portfolio's broad-based securities-market index, as well as the
10.93% return of the Total Return Core Composite Index* for the year ended
December 31, 2006. The Total Return Core Composite Index is a blended benchmark
designed to represent the asset classes in which the Portfolio invests.
IN 2006, WHICH SECTORS IN THE PORTFOLIO WERE THE STRONGEST PERFORMERS AND WHICH
SECTORS WERE THE WEAKEST?
The Portfolio invests in growth and value stocks as well as bonds. Effective
stock selection in the finan-cials sector made the greatest positive
contribution to the Portfolio's results relative to the Russell 1000(R) Index,*
the equity component of the Total Return Core Composite Index.* The sectors that
detracted the most from relative performance in the equity portion of the
Portfolio were information technology, health care and energy.
WHICH STOCKS WERE THE STRONGEST CONTRIBUTORS TO THE PORTFOLIO'S PERFORMANCE IN
2006 AND WHICH STOCKS DETRACTED?
Within the financials sector, the Portfolio's capital-markets-sensitive holdings
provided strong performance as they benefited from stock and bond markets and
increased merger and acquisition activity. Leading the way were Merrill Lynch,
Goldman Sachs, JPMorgan, Citigroup and Morgan Stanley, all of which produced
strong absolute gains. Among the Portfolio's other financial holdings, insurer
Prudential Financial rose, in part because of a dividend increase and a new
share buyback program.
A number of the Portfolio's information technology holdings produced
disappointing results for the year. Advanced Micro Devices was sharply lower as
rival Intel made new product inroads and pricing competition heated up. Intel
also lagged. Several Portfolio holdings with wireless industry
exposure--including Motorola and Texas Instruments--also declined. We added to
the Portfolio's position in Motorola and trimmed exposure to Texas Instruments.
WERE THERE ANY SIGNIFICANT EQUITY PURCHASES OR SALES DURING 2006?
We purchased Time Warner, a global media and entertainment conglomerate with
businesses ranging from online access and content to television networks, music
and publishing. We were attracted by the potential in the company's cable
segment after the acquisition of Adelphia's cable operations.
We added Diamond Offshore Drilling, whose operations span the Gulf of Mexico,
the North Sea, South America, Africa and Southeast Asia. We also initiated a
position in Lowe's, the world's second-largest home improvement retailer. The
company focuses on retail do-it-yourself customers, as well as do-it-for-me
customers who utilize Lowe's installation services.
We sold the Portfolio's holdings in telecommunications company Alltel following
a rather weak quarterly earnings announcement. We had already been trimming the
position as the stock approached our price target.
Two of the leading contributors in 2006 were Kos Pharmaceuticals, which advanced
strongly after receiving a takeover bid, and Canadian nickel miner Inco, which
received several offers. We later sold the Portfolio's entire position in these
holdings at their respective price targets.
The principal risk of growth stocks is that investors expect growth companies to
increase their earnings at a certain rate that is generally higher than the rate
expected for nongrowth companies. If these expectations are not met, the market
price of the stock may decline significantly, even if earnings showed an
absolute increase. The principal risk of investing in value stocks is that they
may never reach what the portfolio manager believes is their full value or they
may even go down in value. 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 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
Portfolio's use of investment practices such as mortgage dollar rolls presents
certain risks. The principal risk of mortgage dollar roll transactions is that
the security the Portfolio receives at the end of the transaction may be worth
less than the security the Portfolio sold to the same counterparty at the
beginning of the transaction.
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-335
HOW DID THE PORTFOLIO'S EQUITY SECTOR WEIGHTINGS COMPARE WITH THOSE OF THE
RUSSELL 1000(R) INDEX?*
At year-end, the equity portion of the Portfolio was overweight relative to the
Russell 1000(R) Index* in the consumer discretionary and energy sectors. These
overweight positions detracted from performance. The equity portion of the
Portfolio was underweight relative to the Russell 1000(R) Index* in consumer
staples and weighted in line with the Index in financials and information
technology.
HOW DID YOU POSITION THE BOND PORTION OF THE PORTFOLIO IN DURING THE REPORTING
PERIOD?
We maintained an overweight position in the bond segment of the Portfolio
relative to the Total Return Core Composite Index.* Since interest rates clung
to a relatively narrow range and collateral showed no signs of fatigue, we
expected mortgage-backed and asset-backed securities to perform well. Collateral
strength was especially true of commercial real estate, where fundamentals held
firm. We felt that slower appreciation in housing prices would help residential
mortgage-backed securities, since borrowers would have fewer refinancing options
and the future cash flows would tend to stabilize. Although most of our market
expectations were met, our decision to overweight Ginnie Maes detracted from
performance when demand slackened among overseas buyers. We reduced our
commitment to Ginnie Maes by year-end.
HOW DID SECTOR WEIGHTINGS CHANGE IN THE BOND PORTION OF THE PORTFOLIO IN 2006?
By the beginning of the period, we had trimmed the Portfolio's high-yield
exposure to a modest level, and during the year, we reduced the Portfolio's
investment-grade credit exposure to an underweight position relative to the
benchmark.
A notable trade for the Portfolio in 2006 was a commitment to convertible bonds.
This trade allowed the bond portion of the Portfolio to take greater advantage
of the stock market's advance during 2006, particularly at a time when tight
spreads had reduced appreciation potential in the bond market. Performance in
the bond portion of the Portfolio was also strengthened by a settlement award
from a class action suit against the underwriters of Worldcom bond offerings in
2000 and 2001.
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.
* 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.
INFORMATION ABOUT MAINSTAY VP TOTAL RETURN PORTFOLIO ON THIS PAGE AND THE
PRECEDING PAGES HAS NOT BEEN AUDITED.
M-336 MainStay VP Total Return Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (32.6%)+
ASSET-BACKED SECURITIES (1.4%)
- -----------------------------------------------------------------------------
COMMERCIAL BANKS (0.1%)
Structured Asset Investment Loan Trust
Series 2006-3, Class A4
5.41%, due 6/25/36 (a) $ 345,000 $ 345,350
------------
CONSUMER FINANCE (0.3%)
Harley-Davidson Motorcycle Trust
Series 2004-1, Class A2
2.53%, due 11/15/11 1,341,775 1,309,032
------------
CONSUMER LOANS (0.2%)
Atlantic City Electric Transition Funding LLC
Series 2002-1, Class A4
5.55%, due 10/20/23 850,000 867,769
------------
CREDIT CARDS (0.4%)
Bank of America Credit Card Trust
Series 2006-C4, Class C4
5.58%, due 11/15/11 (a) 445,000 444,937
Chase Issuance Trust
Series 2006-C4, Class C4
5.64%, due 1/15/14 (a)(b) 780,000 780,000
Citibank Credit Card Issuance Trust
Series 2006-C4, Class C4
5.57%, due 1/9/12 (a) 565,000 565,000
Murcie Lago International, Ltd.
Series 2006-1X, Class A
5.55%, due 3/27/11 (a)(b) 295,000 295,413
------------
2,085,350
------------
DIVERSIFIED FINANCIAL SERVICES (0.2%)
Dunkin Securitization
Series 2006-1, Class A2
5.779%, due 6/20/31 (c) 385,000 389,788
USXL Funding LLC
Series 2006-1A, Class A
5.379%, due 4/15/14 (c) 366,957 366,976
------------
756,764
------------
ELECTRIC (0.1%)
AES Eastern Energy, L.P.
Series 1999-A
9.00%, due 1/2/17 80,687 90,369
Public Service New Hampshire Funding LLC
Pass-Through Certificates
Series 2002-1, Class A
4.58%, due 2/1/10 500,975 498,810
------------
589,179
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
HOME EQUITY (0.1%)
Citicorp Residential Mortgage Securities, Inc.
Series 2006-3, Class A3
5.61%, due 11/25/36 $ 295,000 $ 294,890
Series 2006-1, Class A3
5.706%, due 7/25/36 450,000 450,768
------------
745,658
------------
Total Asset-Backed Securities
(Cost $6,703,623) 6,699,102
------------
CONVERTIBLE BONDS (1.1%)
- -----------------------------------------------------------------------------
BIOTECHNOLOGY (0.1%)
Amgen, Inc.
0.125%, due 2/1/11 (c) 535,000 524,300
------------
DISTRIBUTION & WHOLESALE (0.1%)
Costco Wholesale Corp.
(zero coupon), due 8/19/17 (d) 485,000 584,425
------------
DIVERSIFIED FINANCIAL SERVICES (0.2%)
Merrill Lynch & Co., Inc.
(zero coupon), due 3/13/32 515,000 685,825
------------
INSURANCE (0.0%)++
Conseco, Inc.
3.50%, due 9/30/35
(zero coupon), beginning 9/30/10 45,000 44,662
------------
LODGING (0.2%)
Hilton Hotels Corp.
3.375%, due 4/15/23 455,000 720,037
------------
MEDIA (0.1%)
Liberty Media Corp.
3.50%, due 1/15/31 530,000 531,325
------------
OIL & GAS SERVICES (0.1%)
Schlumberger, Ltd.
Series A
1.50%, due 6/1/23 355,000 627,906
------------
</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.
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-337
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CONVERTIBLE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
ax
PHARMACEUTICALS (0.3%)
ALZA Corp.
(zero coupon), due 7/28/20 (d) $ 655,000 $ 597,687
Teva Pharmaceutical Finance LLC
Series C
0.25%, due 2/1/26 405,000 388,294
Wyeth
5.109%, due 1/15/24 (a)(d) 535,000 583,471
------------
1,569,452
------------
Total Convertible Bonds
(Cost $4,890,004) 5,287,932
------------
CORPORATE BONDS (5.6%)
- -----------------------------------------------------------------------------
ADVERTISING (0.0%)++
Lamar Media Corp.
6.625%, due 8/15/15 50,000 49,562
------------
AEROSPACE & DEFENSE (0.0%)++
Sequa Corp.
8.875%, due 4/1/08 45,000 46,350
9.00%, due 8/1/09 15,000 16,050
------------
62,400
------------
AGRICULTURE (0.1%)
Cargill, Inc.
4.375%, due 6/1/13 (c) 460,000 433,569
Reynolds American, Inc.
7.625%, due 6/1/16 30,000 31,786
7.75%, due 6/1/18 30,000 31,847
------------
497,202
------------
AIRLINES (0.1%)
Delta Air Lines, Inc.
8.30%, due 12/15/29 (e)(f) 105,000 70,350
Southwest Airlines Co.
5.125%, due 3/1/17 545,000 505,346
------------
575,696
------------
AUTO PARTS & EQUIPMENT (0.1%)
Collins & Aikman Products Co.
12.875%, due 8/15/12 (c)(e)(f) 45,000 56
FleetPride Corp.
11.50%, due 10/1/14 (c) 95,000 95,000
Goodyear Tire & Rubber Co. (The)
8.625%, due 12/1/11 (c) 70,000 72,275
11.25%, due 3/1/11 55,000 60,775
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
AUTO PARTS & EQUIPMENT (CONTINUED)
Lear Corp.
8.50%, due 12/1/13 (c) $ 45,000 $ 43,650
8.75%, due 12/1/16 (c) 45,000 43,481
Tenneco Automotive, Inc.
8.625%, due 11/15/14 (d) 50,000 51,000
------------
366,237
------------
BANKS (0.2%)
HSBC Bank USA N.A.
4.625%, due 4/1/14 685,000 652,928
USB Capital IX
6.189%, due 10/15/49 (a) 135,000 137,874
------------
790,802
------------
BEVERAGES (0.0%)++
Constellation Brands, Inc.
7.25%, due 9/1/16 55,000 56,512
------------
BUILDING MATERIALS (0.1%)
U.S. Concrete, Inc.
8.375%, due 4/1/14 30,000 29,325
USG Corp.
6.30%, due 11/15/16 (c) 195,000 193,292
------------
222,617
------------
CHEMICALS (0.1%)
Equistar Chemicals, L.P.
7.55%, due 2/15/26 55,000 52,250
Millennium America, Inc.
7.625%, due 11/15/26 75,000 68,437
Mosaic Global Holdings, Inc.
7.375%, due 12/1/14 (c) 50,000 51,312
7.625%, due 12/1/16 (c) 65,000 67,356
Reichhold Industries, Inc.
9.00%, due 8/15/14 (c) 10,000 9,800
Terra Capital, Inc.
12.875%, due 10/15/08 60,000 66,900
Tronox Worldwide LLC/Tronox Finance Corp.
9.50%, due 12/1/12 65,000 68,412
------------
384,467
------------
COAL (0.0%)++
Peabody Energy Corp.
7.375%, due 11/1/16 35,000 37,275
7.875%, due 11/1/26 25,000 26,875
------------
64,150
------------
COMMERCIAL SERVICES (0.0%)++
Service Corp. International
7.375%, due 10/1/14 35,000 36,575
7.625%, due 10/1/18 35,000 37,100
</Table>
M-338 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)
- -----------------------------------------------------------------------------
COMMERCIAL SERVICES (CONTINUED)
Vertrue, Inc.
9.25%, due 4/1/14 $ 65,000 $ 68,250
------------
141,925
------------
COMPUTERS (0.0%)++
SunGard Data Systems, Inc.
3.75%, due 1/15/09 35,000 33,075
9.125%, due 8/15/13 25,000 26,250
------------
59,325
------------
DIVERSIFIED FINANCIAL SERVICES (0.8%)
American Real Estate Partners, L.P./ American Real
Estate Finance Corp.
8.125%, due 6/1/12 180,000 185,850
Bear Stearns Cos., Inc. (The)
2.875%, due 7/2/08 580,000 560,354
Citigroup, Inc.
5.00%, due 9/15/14 700,000 683,478
Ford Motor Credit Co.
7.375%, due 10/28/09 45,000 45,096
General Motors Acceptance Corp.
5.125%, due 5/9/08 400,000 395,724
6.75%, due 12/1/14 60,000 61,628
8.00%, due 11/1/31 80,000 91,845
HSBC Finance Corp.
4.75%, due 4/15/10 520,000 513,047
Idearc, Inc.
8.00%, due 11/15/16 (c) 100,000 101,500
LaBranche & Co., Inc.
11.00%, due 5/15/12 35,000 37,712
OMX Timber Finance Investments LLC
Series 1
5.42%, due 1/29/20 (c) 255,000 245,636
Rainbow National Services LLC
8.75%, due 9/1/12 (c) 50,000 52,562
Regency Energy Partners, L.P./Regency Energy
Finance Corp.
8.375%, due 12/15/13 (c) 85,000 85,212
Residential Capital Corp.
6.50%, due 4/17/13 400,000 405,374
Stripes Acquisition LLC/Susser Finance Corp.
10.625%, due 12/15/13 (c) 40,000 43,400
------------
3,508,418
------------
ELECTRIC (0.5%)
AES Corp. (The)
9.00%, due 5/15/15 (c) 85,000 91,375
Calpine Corp.
8.50%, due 7/15/10 (c)(e) 76,000 81,130
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRIC (CONTINUED)
Consumers Energy Co.
Series F
4.00%, due 5/15/10 $ 450,000 $ 430,128
Kiowa Power Partners LLC
Series B
5.737%, due 3/30/21 (c) 540,000 522,785
Monterrey Power S.A. de C.V.
9.625%, due 11/15/09 (c) 320,323 353,957
NiSource Finance Corp.
5.25%, due 9/15/17 300,000 281,176
5.45%, due 9/15/20 400,000 372,539
NRG Energy, Inc.
7.25%, due 2/1/14 10,000 10,075
7.375%, due 2/1/16 20,000 20,100
PSE&G Energy Holdings LLC
8.625%, due 2/15/08 14,000 14,385
Reliant Energy Mid-Atlantic Power Holdings LLC
Series C
9.681%, due 7/2/26 60,000 71,400
Tenaska Virginia Partners, L.P.
6.119%, due 3/30/24 (c) 266,521 267,766
------------
2,516,816
------------
ELECTRICAL COMPONENTS & EQUIPMENT (0.1%)
Emerson Electric Co.
6.00%, due 8/15/32 520,000 541,560
------------
ELECTRONICS (0.0%)++
Fisher Scientific International, Inc.
6.75%, due 8/15/14 45,000 45,883
------------
ENTERTAINMENT (0.1%)
Gaylord Entertainment Co.
6.75%, due 11/15/14 35,000 34,737
8.00%, due 11/15/13 80,000 83,000
Jacobs Entertainment Co.
9.75%, due 6/15/14 45,000 45,675
Mohegan Tribal Gaming Authority
6.375%, due 7/15/09 70,000 70,000
Speedway Motorsports, Inc.
6.75%, due 6/1/13 115,000 115,000
Vail Resorts, Inc.
6.75%, due 2/15/14 115,000 115,000
------------
463,412
------------
ENVIRONMENTAL CONTROL (0.0%)++
Geo Sub Corp.
11.00%, due 5/15/12 55,000 53,075
------------
</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-339
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
FOREST PRODUCTS & PAPER (0.1%)
Georgia-Pacific Corp.
7.00%, due 1/15/15 (c) $ 100,000 $ 99,750
7.125%, due 1/15/17 (c) 370,000 369,075
7.75%, due 11/15/29 10,000 9,975
8.00%, due 1/15/24 15,000 15,225
8.875%, due 5/15/31 20,000 21,150
------------
515,175
------------
HEALTH CARE--SERVICES (0.3%)
Alliance Imaging, Inc.
7.25%, due 12/15/12 (d) 25,000 23,750
HCA, Inc.
8.75%, due 9/1/10 85,000 88,612
Highmark, Inc.
6.80%, due 8/15/13 (c) 835,000 875,752
Quest Diagnostics, Inc.
5.45%, due 11/1/15 215,000 207,539
Triad Hospitals, Inc.
7.00%, due 5/15/12 70,000 71,225
------------
1,266,878
------------
HOLDING COMPANIES--DIVERSIFIED (0.0%)++
Kansas City Southern Railway
9.50%, due 10/1/08 45,000 47,025
------------
INSURANCE (0.2%)
Crum & Forster Holdings Corp.
10.375%, due 6/15/13 50,000 54,125
Fund American Cos., Inc.
5.875%, due 5/15/13 375,000 372,759
Marsh & McLennan Cos., Inc.
3.625%, due 2/15/08 365,000 357,111
------------
783,995
------------
LEISURE TIME (0.0%)++
Town Sports International, Inc.
9.625%, due 4/15/11 65,000 68,656
------------
LODGING (0.1%)
Boyd Gaming Corp.
7.75%, due 12/15/12 90,000 93,038
MGM Mirage, Inc.
7.00%, due 11/15/36 105,000 106,838
8.50%, due 9/15/10 75,000 80,250
MTR Gaming Group, Inc.
Series B
9.75%, due 4/1/10 45,000 47,475
Park Place Entertainment Corp.
9.375%, due 2/15/07 115,000 115,288
------------
442,889
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MACHINERY--CONSTRUCTION & MINING (0.1%)
Caterpillar, Inc.
6.05%, due 8/15/36 $ 345,000 $ 355,121
------------
MEDIA (0.4%)
Houghton Mifflin Co.
7.20%, due 3/15/11 70,000 70,700
MediaNews Group, Inc.
6.375%, due 4/1/14 65,000 55,900
Morris Publishing Group LLC
7.00%, due 8/1/13 50,000 47,375
Paxson Communications Corp.
8.624%, due 1/15/12 (a)(c) 10,000 10,125
11.624%, due 1/15/13 (a)(c) 45,000 45,563
Time Warner Entertainment Co., L.P.
10.15%, due 5/1/12 1,180,000 1,397,288
Viacom, Inc.
6.25%, due 4/30/16 300,000 297,922
Ziff Davis Media, Inc.
11.371%, due 5/1/12 (a) 45,000 42,806
------------
1,967,679
------------
METAL FABRICATE & HARDWARE (0.0%)++
Neenah Foundary Co.
9.50%, due 1/1/17 (c) 85,000 85,425
------------
MINING (0.1%)
Southern Copper Corp.
7.50%, due 7/27/35 270,000 292,757
------------
MISCELLANEOUS--MANUFACTURING (0.0%)++
RBS Global, Inc./Rexnord Corp.
9.50%, due 8/1/14 (c) 55,000 57,200
------------
OIL & GAS (0.7%)
Chaparral Energy, Inc.
8.50%, due 12/1/15 90,000 89,550
Chesapeake Energy Corp.
6.50%, due 8/15/17 95,000 92,863
Enterprise Products Operating, L.P.
Series B
6.65%, due 10/15/34 400,000 406,581
Forest Oil Corp.
8.00%, due 12/15/11 60,000 62,400
Gazprom International S.A.
7.201%, due 2/1/20 (c) 500,000 528,750
Hilcorp Energy I, L.P./Hilcorp Finance Co.
9.00%, due 6/1/16 (c) 45,000 47,588
Pemex Project Funding Master Trust
6.625%, due 6/15/35 420,000 429,660
</Table>
M-340 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)
- -----------------------------------------------------------------------------
OIL & GAS (CONTINUED)
Pogo Producing Co.
6.625%, due 3/15/15 $ 40,000 $ 38,100
6.875%, due 10/1/17 125,000 119,375
Pride International, Inc.
7.375%, due 7/15/14 35,000 36,138
Ras Laffan Liquefied Natural
Gas Co., Ltd. III
6.332%, due 9/30/27 (c) 595,000 602,670
Sunoco Logistics Partners Operations, L.P.
6.125%, due 5/15/16 660,000 665,316
Vintage Petroleum, Inc.
8.25%, due 5/1/12 30,000 31,483
Whiting Petroleum Corp.
7.00%, due 2/1/14 85,000 84,788
------------
3,235,262
------------
OIL & GAS SERVICES (0.0%)++
Allis-Chalmers Energy, Inc.
9.00%, due 1/15/14 (c) 35,000 35,175
Complete Production Services, Inc.
8.00%, due 12/15/16 (c) 75,000 76,875
------------
112,050
------------
PACKAGING & CONTAINERS (0.0%)++
Berry Plastics Holding Corp.
8.875%, due 9/15/14 (c) 45,000 45,675
Owens-Brockway Glass Container, Inc.
7.75%, due 5/15/11 45,000 46,238
8.875%, due 2/15/09 40,000 40,900
Owens-Illinois, Inc.
8.10%, due 5/15/07 45,000 45,113
------------
177,926
------------
PHARMACEUTICALS (0.2%)
Medco Health Solutions, Inc.
7.25%, due 8/15/13 935,000 1,003,608
------------
PIPELINES (0.1%)
ANR Pipeline Co.
9.625%, due 11/1/21 40,000 53,081
Copano Energy LLC
8.125%, due 3/1/16 45,000 46,575
El Paso Natural Gas Co.
7.50%, due 11/15/26 65,000 72,849
El Paso Production Holding Co.
7.75%, due 6/1/13 25,000 26,156
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
PIPELINES (CONTINUED)
MarkWest Energy Partners, L.P./MarkWest Energy
Finance Corp.
Series B
6.875%, due 11/1/14 $ 60,000 $ 57,900
8.50%, due 7/15/16 (c) 15,000 15,600
Pacific Energy Partners, L.P./Pacific Energy
Finance Corp.
7.125%, due 6/15/14 45,000 46,179
------------
318,340
------------
REAL ESTATE INVESTMENT TRUSTS (0.2%)
Host Marriott L.P.
Series Q
6.75%, due 6/1/16 35,000 35,044
Omega Healthcare Investors, Inc.
7.00%, due 4/1/14 70,000 70,525
ProLogis
5.625%, due 11/15/16 560,000 555,818
------------
661,387
------------
RETAIL (0.3%)
CVS Corp.
5.789%, due 1/10/26 (c) 69,489 67,963
Home Depot, Inc.
5.40%, due 3/1/16 435,000 425,450
Rite Aid Corp.
7.50%, due 1/15/15 95,000 94,050
Star Gas Partners, L.P./Star Gas Finance Co.
Series B
10.25%, due 2/15/13 31,000 32,356
Toys "R" Us, Inc.
7.625%, due 8/1/11 25,000 23,000
Wal-Mart Stores, Inc.
4.50%, due 7/1/15 25,000 23,556
5.25%, due 9/1/35 610,000 560,162
------------
1,226,537
------------
SAVINGS & LOANS (0.1%)
Washington Mutual Bank
5.95%, due 5/20/13 390,000 396,418
------------
SEMICONDUCTORS (0.0%)++
Freescale Semiconductor, Inc.
8.875%, due 12/15/14 (c) 100,000 99,625
MagnaChip Semiconductor S.A.
8.61%, due 12/15/11 (a) 100,000 86,000
------------
185,625
------------
SOFTWARE (0.1%)
Computer Associates International, Inc.
4.75%, due 12/1/09 (c) 585,000 569,020
------------
</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-341
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (0.3%)
Ameritech Capital Funding Corp.
6.25%, due 5/18/09 $ 220,000 $ 222,474
Dobson Cellular Systems, Inc.
8.375%, due 11/1/11 (c) 35,000 36,881
GCI, Inc.
7.25%, due 2/15/14 50,000 49,625
Lucent Technologies, Inc.
6.45%, due 3/15/29 265,000 244,463
6.50%, due 1/15/28 65,000 59,963
PanAmSat Corp.
9.00%, due 8/15/14 32,000 33,800
9.00%, due 6/15/16 (c) 60,000 63,525
Qwest Communications International, Inc.
7.25%, due 2/15/11 45,000 46,013
Qwest Corp.
7.125%, due 11/15/43 15,000 14,400
7.25%, due 9/15/25 30,000 30,825
7.50%, due 10/1/14 95,000 100,700
8.875%, due 3/15/12 20,000 22,275
Sprint Nextel Corp.
6.00%, due 12/1/16 225,000 219,291
------------
1,144,235
------------
TEXTILES (0.1%)
INVISTA
9.25%, due 5/1/12 (c) 75,000 80,438
Mohawk Industries, Inc.
6.125%, due 1/15/16 355,000 352,445
------------
432,883
------------
Total Corporate Bonds
(Cost $25,531,633) 25,746,150
------------
FOREIGN BONDS (2.3%)
- -----------------------------------------------------------------------------
BEVERAGES (0.4%)
CIA Brasileira de Bebidas
10.50%, due 12/15/11 1,355,000 1,639,550
Coca-Cola HBC Finance B.V.
5.125%, due 9/17/13 245,000 240,634
------------
1,880,184
------------
COMMERCIAL SERVICES (0.0%)++
Quebecor World, Inc.
9.75%, due 1/15/15 (c) 50,000 50,313
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES (0.2%)
Tengizchevroil Finance Co. S.A.R.L.
6.124%, due 11/15/14 (c) $ 230,000 $ 229,425
TNK-BP Finance S.A.
7.50%, due 7/18/16 (c) 545,000 579,744
------------
809,169
------------
ELECTRIC (0.1%)
SP PowerAssets, Ltd.
5.00%, due 10/22/13 (c) 360,000 353,512
------------
ELECTRONICS (0.0%)++
NXP B.V./NXP Funding LLC
7.875%, due 10/15/14 (c) 75,000 77,531
9.50%, due 10/15/15 (c) 95,000 97,375
------------
174,906
------------
FOREIGN SOVEREIGN (0.2%)
Republic of Panama
6.70%, due 1/26/36 (d) 500,000 520,000
United Mexican States
8.125%, due 12/30/19 350,000 425,250
------------
945,250
------------
FOREST PRODUCTS & PAPER (0.0%)++
Bowater Canada Finance
7.95%, due 11/15/11 5,000 4,900
------------
HOLDING COMPANIES--DIVERSIFIED (0.1%)
Hutchison Whampoa International, Ltd.
6.50%, due 2/13/13 (c) 485,000 507,581
------------
HOUSEHOLD PRODUCTS & WARES (0.0%)++
Controladora Mabe S.A. de C.V.
6.50%, due 12/15/15 (c) 140,000 140,954
------------
INSURANCE (0.1%)
Nippon Life Insurance Co.
4.875%, due 8/9/10 (c) 250,000 244,524
------------
LEISURE TIME (0.2%)
Royal Caribbean Cruises, Ltd.
6.875%, due 12/1/13 650,000 658,870
------------
MEDIA (0.2%)
BSKYB Finance UK PLC
5.625%, due 10/15/15 (c) 520,000 509,284
6.50%, due 10/15/35 (c) 260,000 257,130
CanWest Media, Inc.
8.00%, due 9/15/12 25,000 26,094
Nielsen Finance LLC/Nielsen Finance Co.
10.00%, due 8/1/14 (c) 5,000 5,419
</Table>
M-342 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
FOREIGN BONDS (CONTINUED)
- -----------------------------------------------------------------------------
MEDIA (CONTINUED)
Quebecor Media, Inc.
7.75%, due 3/15/16 $ 10,000 $ 10,213
Videotron Ltee
6.375%, due 12/15/15 50,000 48,875
------------
857,015
------------
MINING (0.3%)
Alcan, Inc.
5.00%, due 6/1/15 475,000 451,788
Corporacion Nacional del Cobre-Codelco, Inc.
5.50%, due 10/15/13 (c) 475,000 475,010
Vale Overseas, Ltd.
8.25%, due 1/17/34 365,000 432,358
------------
1,359,156
------------
OIL & GAS (0.2%)
Burlington Resources Finance Co.
7.20%, due 8/15/31 850,000 996,147
------------
PHARMACEUTICALS (0.0%)++
Angiotech Pharmaceuticals, Inc.
7.75%, due 4/1/14 (c) 50,000 43,500
------------
RETAIL (0.0%)++
Jean Coutu Group PJC, Inc. (The)
8.50%, due 8/1/14 (d) 45,000 45,281
------------
TELECOMMUNICATIONS (0.3%)
Millicom International Cellular S.A.
10.00%, due 12/1/13 60,000 65,400
Nortel Networks, Ltd.
10.75%, due 7/15/16 (c) 45,000 49,219
Satelites Mexicanos S.A. de C.V.
14.11%, due 11/30/11 (a) 55,000 58,163
Telecom Italia Capital S.A.
7.20%, due 7/18/36 410,000 428,334
Telefonos de Mexico S.A. de C.V.
5.50%, due 1/27/15 675,000 657,088
Vodafone Group PLC
4.625%, due 7/15/18 130,000 115,795
5.75%, due 3/15/16 120,000 119,921
------------
1,493,920
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TRANSPORTATION (0.0%)++
Grupo Transportacion Ferroviaria Mexicana S.A. de
C.V.
12.50%, due 6/15/12 $ 115,000 $ 124,200
Stena AB
9.625%, due 12/1/12 45,000 47,925
------------
172,125
------------
Total Foreign Bonds
(Cost $10,383,552) 10,737,307
------------
MORTGAGE-BACKED SECURITIES (2.4%)
- -----------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (2.4%)
Banc of America Commercial Mortgage, Inc.
Series 2005-5, Class A2
5.001%, due 10/10/45 805,000 798,506
Bayview Commercial Asset Trust
Series 2006-4A, Class A1
5.55%, due 12/25/36 (a)(c) 307,127 307,127
Citigroup Commercial Mortgage Trust
Series 2004-C2, Class A5
4.733%, due 10/15/41 (c) 760,000 732,142
Citigroup/Deutsche Bank Commercial Mortgage Trust
Series 2005-CD1, Class A4
5.226%, due 7/15/44 (a) 815,000 813,136
Commercial Mortgage Pass-Through Certificates
Series 2006-C7, Class A4
5.769%, due 6/10/46 425,000 440,402
Credit Suisse Mortgage Capital Certificates
Series 2006-C4, Class AJ
5.538%, due 9/15/39 (a) 1,070,000 1,077,387
Four Times Square Trust
Series 2006-4TS, Class A
5.401%, due 12/13/28 (c) 480,000 474,326
LB-UBS Commercial Mortgage Trust
Series 2004-C2, Class A2
3.246%, due 3/15/29 1,050,000 1,008,203
Series 2004-C7, Class A1
3.625%, due 10/15/29 692,232 675,871
Series 2005-C7, Class A4
5.197%, due 11/15/30 (a) 640,000 634,497
Series 2006-C4, Class A4
5.899%, due 6/15/38 (a) 380,000 397,480
</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-343
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MORTGAGE-BACKED SECURITIES (CONTINUED)
- -----------------------------------------------------------------------------
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (CONTINUED)
axMerrill Lynch Mortgage Trust
Series 2004-MKB1, Class A1
3.563%, due 2/12/42 $ 586,963 $ 573,558
Series 2004-BPC1, Class A5
4.855%, due 10/12/41 (a) 1,530,000 1,483,191
National RMBS Trust
Series 2006-3, Class A1
5.444%, due 10/20/37 (a)(c) 1,090,000 1,090,000
Timberstar Trust
Series 2006-1, Class A
5.668%, due 10/15/36 (c) 160,000 162,525
Wachovia Bank Commercial Mortgage Trust
Series 2004-C14, Class A1
3.477%, due 8/15/41 231,156 225,610
------------
Total Mortgage-Backed Securities
(Cost $11,019,220) 10,893,961
------------
MUNICIPAL BOND (0.1%)
- -----------------------------------------------------------------------------
TEXAS (0.1%)
Harris County Texas Industrial Development Corp.
Solid Waste Deer Park
5.683%, due 3/1/23 (a) 395,000 394,980
------------
Total Municipal Bond
(Cost $395,000) 394,980
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (19.4%)
- -----------------------------------------------------------------------------
FANNIE MAE
(COLLATERALIZED MORTGAGE OBLIGATION) (0.1%)
Series 2006-B1, Class AB
6.00%, due 6/25/16 582,572 583,797
------------
FANNIE MAE GRANTOR TRUST
(COLLATERALIZED MORTGAGE OBLIGATION) (0.1%)
Series 1998-M6, Class A2
6.32%, due 8/15/08 (g) 278,447 281,558
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (2.4%)
3.00%, due 8/1/10 343,229 329,907
4.321%, due 3/1/35 (a) 1,130,401 1,112,846
5.00%, due 8/1/33 604,535 584,336
5.50%, due 1/1/21 2,173,878 2,172,112
5.50%, due 7/1/34 2,269,017 2,247,313
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (CONTINUED)
5.50%, due 1/1/36 $2,947,315 $ 2,915,355
5.50%, due 9/1/36 433,742 428,908
6.00%, due 3/1/36 1,374,642 1,385,118
------------
11,175,895
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (2.5%)
4.00%, due 9/2/08 4,795,000 4,705,588
4.625%, due 5/1/13 870,000 843,250
5.125%, due 1/2/14 545,000 543,571
5.25%, due 8/1/12 2,330,000 2,341,328
6.25%, due 2/1/11 435,000 453,330
6.625%, due 9/15/09 2,565,000 2,670,788
------------
11,557,855
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (8.9%)
4.50%, due 4/1/18 672,304 650,151
4.50%, due 7/1/18 2,245,677 2,171,681
4.50%, due 11/1/18 3,056,901 2,956,174
4.50%, due 9/1/20 850,000 820,077
5.00%, due 9/1/20 377,500 371,121
5.00%, due 10/1/20 377,500 371,122
5.00%, due 12/1/20 1,893,184 1,861,195
5.00%, due 7/1/35 535,292 516,954
5.00%, due 2/1/36 1,426,646 1,377,772
5.00%, due 5/1/36 1,405,000 1,356,868
5.00%, due 6/1/36 3,170,353 3,060,712
5.50%, due 2/1/17 2,465,377 2,471,260
5.50%, due 4/1/21 2,313,030 2,312,622
5.50%, due 6/1/21 3,733,591 3,733,046
5.50%, due 6/1/33 3,510,721 3,474,934
5.50%, due 11/1/33 1,957,485 1,937,531
5.50%, due 12/1/33 1,242,968 1,230,298
5.50%, due 6/1/34 1,415,905 1,400,725
6.00%, due 1/1/33 605,226 610,749
6.00%, due 3/1/33 779,617 786,190
6.00%, due 9/1/34 832,834 839,076
6.00%, due 9/1/35 2,579,167 2,599,167
6.00%, due 10/1/35 1,927,018 1,940,487
6.00%, due 6/1/36 1,568,421 1,579,041
6.50%, due 6/1/31 301,830 309,001
6.50%, due 8/1/31 245,606 251,441
6.50%, due 10/1/31 337,053 345,061
------------
41,334,456
------------
FREDDIE MAC
(COLLATERALIZED MORTGAGE OBLIGATION) (0.1%)
Series 2632, Class NH
3.50%, due 6/15/13 653,011 621,831
------------
</Table>
M-344 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
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- -----------------------------------------------------------------------------
FREDDIE MAC REFERENCE REMIC
(COLLATERALIZED MORTGAGE OBLIGATION) (0.3%)
Series R001, Class AE
4.375%, due 4/15/15 $1,174,955 $ 1,145,709
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (0.6%)
5.00%, due 3/15/36 841,497 818,593
5.00%, due 6/15/36 529,344 514,724
6.00%, due 4/15/29 522,291 530,858
6.00%, due 8/15/32 1,078,229 1,094,897
------------
2,959,072
------------
UNITED STATES TREASURY BONDS (1.4%)
6.25%, due 8/15/23 (d) 1,180,000 1,358,199
6.25%, due 5/15/30 2,795,000 3,329,544
6.875%, due 8/15/25 650,000 804,680
7.50%, due 11/15/16 60,000 72,909
8.75%, due 8/15/20 580,000 801,850
------------
6,367,182
------------
UNITED STATES TREASURY NOTES (3.0%)
V 3.875%, due 2/15/13 (d) 5,270,000 5,043,759
4.50%, due 2/15/09 (d) 605,000 601,337
4.875%, due 7/31/11 1,695,000 1,706,918
V 4.875%, due 8/15/16 (d) 6,340,000 6,415,782
------------
13,767,796
------------
Total U.S. Government & Federal Agencies
(Cost $89,935,200) 89,795,151
------------
LOAN ASSIGNMENTS (0.2%) (h)
- -----------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT (0.0%)++
Goodyear Tire & Rubber Co. (The)
2nd Lien Term Loan
8.14%, due 4/30/10 175,000 176,969
------------
CHEMICALS (0.0%)++
Talecris Biotherapeutics, Inc.
2nd Lien Term Loan
13.50%, due 12/6/14 100,000 100,125
------------
DIVERSIFIED FINANCIAL SERVICES (0.0%)++
BHM Technologies LLC
1st Lien Term Loan
8.437%, due 7/23/13 118,679 114,080
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
HEALTH CARE--SERVICES (0.0%)++
HCA, Inc.
Term Loan B
8.114%, due 11/17/13 $ 165,000 $ 166,809
------------
MINING (0.0%)++
Aleris International, Inc.
New Term Loan B
8.125%, due 12/19/13 100,000 100,438
------------
REAL ESTATE (0.1%)
LNR Property Corp.
Initial Tranche B Term Loan
8.12%, due 7/12/11 140,000 140,408
Rental Services Corp.
2nd Lien Term Loan
8.86%, due 11/27/10 100,000 100,844
------------
241,252
------------
RETAIL (0.1%)
Michaels Stores, Inc.
Term Loan B
8.375%, due 10/31/13 117,500 118,161
Toys "R" Us (Delaware), Inc.
Term Loan
10.349%, due 1/9/13 100,000 100,328
------------
218,489
------------
Total Loan Assignments
(Cost $1,113,246) 1,118,162
------------
YANKEE BONDS (0.1%) (i)
- -----------------------------------------------------------------------------
FOREST PRODUCTS & PAPER (0.0%)++
Smurfit Capital Funding PLC
7.50%, due 11/20/25 120,000 114,600
------------
INSURANCE (0.0%)++
Fairfax Financial Holdings, Ltd.
7.375%, due 4/15/18 (d) 15,000 13,838
8.30%, due 4/15/26 (d) 10,000 9,950
------------
23,788
------------
LEISURE TIME (0.1%)
Royal Caribbean Cruises, Ltd.
7.00%, due 6/15/13 200,000 203,568
------------
Total Yankee Bonds
(Cost $333,142) 341,956
------------
Total Long-Term Bonds
(Cost $150,304,620) 151,014,701
------------
</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-345
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
ax
INVESTMENT COMPANY (0.1%)
- -----------------------------------------------------------------------------
iShares Russell 1000 Value Index Fund (j) 8,000 $ 660,560
------------
Total Investment Company
(Cost $600,960) 660,560
------------
COMMON STOCKS (64.3%)
- -----------------------------------------------------------------------------
ADVERTISING (0.5%)
Omnicom Group, Inc. 23,500 2,456,690
------------
AEROSPACE & DEFENSE (1.6%)
L-3 Communications Holdings, Inc. 30,100 2,461,578
Northrop Grumman Corp. 26,200 1,773,740
United Technologies Corp. 48,200 3,013,464
------------
7,248,782
------------
APPAREL (1.3%)
Coach, Inc. (k) 91,900 3,948,024
NIKE, Inc. Class B 21,700 2,148,951
------------
6,096,975
------------
BANKS (4.5%)
V Bank of America Corp. 158,500 8,462,315
Bank of New York Co., Inc. (The) 87,700 3,452,749
PNC Financial Services Group, Inc. 43,200 3,198,528
U.S. Bancorp 70,200 2,540,538
Wachovia Corp. 54,100 3,080,995
------------
20,735,125
------------
BEVERAGES (0.5%)
PepsiCo, Inc. 39,800 2,489,490
------------
BIOTECHNOLOGY (0.9%)
Amgen, Inc. (k) 27,000 1,844,370
Genentech, Inc. (k) 27,700 2,247,301
------------
4,091,671
------------
BUILDING MATERIALS (0.5%)
Ainsworth Lumber Co., Ltd. (d) 200 1,630
American Standard Cos., Inc. 51,700 2,370,445
------------
2,372,075
------------
CHEMICALS (1.7%)
E.I. du Pont de Nemours & Co. 87,600 4,266,996
Praxair, Inc. 60,000 3,559,800
------------
7,826,796
------------
COAL (0.4%)
Peabody Energy Corp. 40,100 1,620,441
------------
</Table>
<Table>
<Caption>
SHARES VALUE
COMPUTERS (2.7%)
Apple Computer, Inc. (k) 47,000 $ 3,987,480
Computer Sciences Corp. (k) 32,600 1,739,862
EMC Corp. (k) 180,200 2,378,640
International Business Machines Corp. 33,500 3,254,525
Research In Motion, Ltd. (k) 9,200 1,175,576
------------
12,536,083
------------
DISTRIBUTION & WHOLESALE (0.3%)
W.W. Grainger, Inc. 19,600 1,370,824
------------
DIVERSIFIED FINANCIAL SERVICES (6.5%)
American Express Co. 47,000 2,851,490
Ameriprise Financial, Inc. 15,500 844,750
Capital One Financial Corp. 18,800 1,444,216
V Citigroup, Inc. 142,900 7,959,530
Goldman Sachs Group, Inc. (The) 11,400 2,272,590
V JPMorgan Chase & Co. (d) 105,684 5,104,537
Lehman Brothers Holdings, Inc. 21,700 1,695,204
Merrill Lynch & Co., Inc. 36,600 3,407,460
Morgan Stanley 54,400 4,429,792
------------
30,009,569
------------
ELECTRIC (0.8%)
Dynegy, Inc. Class A (k) 33 239
Energy East Corp. 76,200 1,889,760
FirstEnergy Corp. 28,000 1,685,880
------------
3,575,879
------------
ELECTRONICS (0.9%)
Thermo Fisher Scientific, Inc. (k) 87,700 3,971,933
------------
FOOD (0.9%)
General Mills, Inc. 29,500 1,699,200
Kroger Co. (The) 109,500 2,526,165
------------
4,225,365
------------
HEALTH CARE--PRODUCTS (1.3%)
V Johnson & Johnson 89,200 5,888,984
------------
HEALTH CARE--SERVICES (2.1%)
Coventry Health Care, Inc. (k) 30,450 1,524,023
Quest Diagnostics, Inc. 60,500 3,206,500
UnitedHealth Group, Inc. 35,300 1,896,669
WellPoint, Inc. (k) 40,000 3,147,600
------------
9,774,792
------------
HOME FURNISHINGS (0.4%)
Harman International Industries, Inc. 19,200 1,918,272
------------
HOUSEHOLD PRODUCTS & WARES (0.4%)
Kimberly-Clark Corp. 25,700 1,746,315
------------
</Table>
M-346 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)
- -----------------------------------------------------------------------------
INSURANCE (2.9%)
Genworth Financial, Inc. Class A 92,300 $ 3,157,583
Hartford Financial Services Group, Inc. (The) 25,800 2,407,398
PMI Group, Inc. (The) (d) 63,400 2,990,578
Prudential Financial, Inc. 58,600 5,031,396
------------
13,586,955
------------
INTERNET (0.4%)
Akamai Technologies, Inc. (d)(k) 38,900 2,066,368
------------
LEISURE TIME (0.5%)
Harley-Davidson, Inc. 35,100 2,473,497
------------
MACHINERY--CONSTRUCTION & MINING (0.3%)
Caterpillar, Inc. 24,000 1,471,920
------------
MEDIA (2.0%)
Comcast Corp. Class A (k) 93,000 3,936,690
Gannett Co., Inc. 33,900 2,049,594
News Corp. Class A 86,200 1,851,576
Tribune Co. (d) 52,500 1,615,950
------------
9,453,810
------------
METAL FABRICATE & HARDWARE (0.2%)
Precision Castparts Corp. 8,800 688,864
------------
MINING (0.5%)
Alcoa, Inc. 80,000 2,400,800
------------
MISCELLANEOUS--MANUFACTURING (2.6%)
Danaher Corp. 48,600 3,520,584
General Electric Co. 94,800 3,527,508
Honeywell International, Inc. 71,200 3,221,088
Pentair, Inc. 50,200 1,576,280
------------
11,845,460
------------
OIL & GAS (5.4%)
Apache Corp. 16,200 1,077,462
Chevron Corp. 59,900 4,404,447
ConocoPhillips 51,000 3,669,450
Diamond Offshore Drilling, Inc. (d) 26,600 2,126,404
ENSCO International, Inc. 48,200 2,412,892
Rowan Cos., Inc. (d) 133,600 4,435,520
V Transocean, Inc. (k) 64,700 5,233,583
Valero Energy Corp. 33,200 1,698,512
------------
25,058,270
------------
</Table>
<Table>
<Caption>
SHARES VALUE
OIL & GAS SERVICES (1.8%)
Baker Hughes, Inc. 43,000 $ 3,210,380
BJ Services Co. 70,500 2,067,060
Weatherford International, Ltd. (k) 74,700 3,121,713
------------
8,399,153
------------
PACKAGING & CONTAINERS (0.3%)
Ball Corp. 33,000 1,438,800
------------
PHARMACEUTICALS (4.4%)
Abbott Laboratories 65,400 3,185,634
Barr Pharmaceuticals, Inc. (k) 56,500 2,831,780
Caremark Rx, Inc. 31,200 1,781,832
Gilead Sciences, Inc. (k) 44,800 2,908,864
V Pfizer, Inc. 200,500 5,192,950
Teva Pharmaceutical Industries, Ltd., Sponsored
ADR (l) 69,700 2,166,276
Wyeth 47,300 2,408,516
------------
20,475,852
------------
RETAIL (4.4%)
Bed Bath & Beyond, Inc. (k) 54,400 2,072,640
Best Buy Co., Inc. 38,100 1,874,139
CVS Corp. 83,600 2,584,076
Gap, Inc. (The) 100,000 1,950,000
Home Depot, Inc. (The) (d) 98,900 3,971,824
Kohl's Corp. (k) 50,700 3,469,401
Lowe's Cos., Inc. (d) 56,600 1,763,090
Star Gas Partners, L.P. (k) 387 1,362
Target Corp. 47,000 2,681,350
------------
20,367,882
------------
SAVINGS & LOANS (0.4%)
Washington Mutual, Inc. 41,800 1,901,482
------------
SEMICONDUCTORS (2.6%)
Advanced Micro Devices, Inc. (k) 114,600 2,332,110
Intel Corp. 237,800 4,815,450
Linear Technology Corp. 26,700 809,544
National Semiconductor Corp. (d) 95,200 2,161,040
Texas Instruments, Inc. 74,500 2,145,600
------------
12,263,744
------------
SOFTWARE (1.6%)
Autodesk, Inc. (k) 19,500 788,970
BEA Systems, Inc. (k) 95,700 1,203,906
V Microsoft Corp. 177,500 5,300,150
------------
7,293,026
------------
TELECOMMUNICATIONS (4.8%)
ALLTEL Corp. 12,700 768,096
AT&T, Inc. 73,200 2,616,900
Cisco Systems, Inc. (k) 78,000 2,131,740
Corning, Inc. (k) 137,100 2,565,141
</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-347
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
V Motorola, Inc. 294,100 $ 6,046,696
Nokia Oyj, Sponsored ADR (l) 142,200 2,889,504
Sprint Nextel Corp. 126,200 2,383,918
Verizon Communications, Inc. 74,700 2,781,828
------------
22,183,823
------------
TRANSPORTATION (1.0%)
FedEx Corp. 25,300 2,748,086
Norfolk Southern Corp. 39,100 1,966,339
------------
4,714,425
------------
Total Common Stocks
(Cost $240,289,277) 298,040,192
------------
CONVERTIBLE PREFERRED STOCK (0.0%)++
- -----------------------------------------------------------------------------
SOFTWARE (0.0%)++
QuadraMed Corp.
5.50% (c)(k)(m) 4,900 122,500
------------
Total Convertible Preferred Stock
(Cost $122,500) 122,500
------------
<Caption>
PRINCIPAL
AMOUNT
ax
SHORT-TERM INVESTMENTS (9.9%)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER (4.4%)
Barton Capital LLC
5.298%, due 1/4/07 (n) $ 610,662 610,662
Charta LLC
5.314%, due 1/11/07 (n) 625,592 625,592
Ciesco, Inc.
5.305%, due 1/10/07 (n) 816,450 816,450
Compass Securitization LLC
5.324%, due 1/18/07 (n) 834,122 834,122
Fairway Finance Corp.
5.301%, due 1/8/07 (n) 625,592 625,592
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (n) 617,012 617,012
Greyhawk Funding LLC
5.305%, due 1/5/07 (n) 611,855 611,855
ING U.S. Funding LLC
5.25%, due 1/4/07 4,000,000 3,998,250
Jupiter Securitization Corp.
5.324%, due 1/18/07 (n) 625,592 625,592
Liberty Street Funding Co.
5.325%, due 1/29/07 (n) 208,531 208,531
Old Line Funding LLC
5.303%, due 1/9/07 (n) 817,364 817,364
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Ranger Funding LLC
5.308%, due 1/30/07 (n) $ 625,592 $ 625,592
Sheffield Receivables Corp.
5.336%, due 1/16/07 (n) 625,592 625,592
UBS Finance (Delaware)
5.26%, due 1/3/07 8,945,000 8,942,386
------------
Total Commercial Paper
(Cost $20,584,592) 20,584,592
------------
<Caption>
SHARES
ax
INVESTMENT COMPANY (0.9%)
BGI Institutional Money Market Fund (n) 4,356,081 4,356,081
------------
Total Investment Company
(Cost $4,356,081) 4,356,081
------------
PRINCIPAL
AMOUNT
ax
REPURCHASE AGREEMENT (0.1%)
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $208,656
(Collateralized by various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$206,545 and a Market Value
of $215,913) (n) $ 208,531 208,531
------------
Total Repurchase Agreement
(Cost $208,531) 208,531
------------
TIME DEPOSITS (4.5%)
Abbey National PLC
5.34%, due 1/2/07 (n) 2,502,366 2,502,366
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (n) 1,668,244 1,668,244
Bank of America Corp.
5.27%, due 1/19/07 (a)(n) 1,668,244 1,668,244
Bank of Montreal
5.30%, due 1/26/07 (n) 1,042,653 1,042,653
Barclays
5.32%, due 1/18/07 (n) 1,376,302 1,376,302
Calyon
5.31%, due 2/12/07 (n) 1,668,244 1,668,244
Citigroup
5.325%, due 3/22/07 (n) 1,459,714 1,459,714
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (n) 1,584,832 1,584,832
</Table>
M-348 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
SHORT-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
TIME DEPOSITS (CONTINUED)
xHBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (n) $1,668,244 $ 1,668,244
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (n) 1,543,126 1,543,126
Rabobank Nederland
5.29%, due 3/6/07 (n) 1,251,183 1,251,183
Standard Chartered Bank
5.29%, due 1/10/07 (n) 1,668,244 1,668,244
UBS AG
5.285%, due 1/12/07 (n) 1,668,244 1,668,244
------------
Total Time Deposits
(Cost $20,769,640) 20,769,640
------------
Total Short-Term Investments
(Cost $45,918,844) 45,918,844
------------
Total Investments
(Cost $437,236,201) (o) 106.9% 495,756,797(p)
Liabilities in Excess of
Cash and Other Assets (6.9) (31,871,103)
---------- ------------
Net Assets 100.0% $463,885,694
========== ============
</Table>
<Table>
++ Less than one tenth of a percent.
(a) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(b) Fair valued security. The total market value of these
securities at December 31, 2006 is $1,075,413, which
reflects 0.2% of the Portfolio's net assets.
(c) May be sold to institutional investors only under Rule 144a
or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
(d) Represents a security, or a portion thereof, which is out on
loan.
(e) Issue in default.
(f) Issuer in bankruptcy.
(g) ACES--Alternative Credit Enhancement Structure.
(h) Floating Rate Loan--generally pays interest at rates which
are periodically re-determined at a margin above the London
Inter-Bank Offered Rate ("LIBOR") or other short-term rates.
The rate shown is the rate(s) in effect at December 31,
2006. Floating Rate Loans are generally considered
restrictive in that the Fund is ordinarily contractually
obligated to receive consent from the Agent Bank and/or
borrower prior to disposition of a Floating Rate Loan.
(i) Yankee Bond--dollar-denominated bond issued in the United
States by a foreign bank or corporation.
(j) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(k) Non-income producing security.
(l) ADR--American Depositary Receipt.
(m) Illiquid security. The total market value of these
securities at December 31, 2006 is $122,500, which
represents 0.0% of the Portfolio's net assets.
(n) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(o) The cost for federal income tax purposes is $438,657,313.
(p) At December 31, 2006, net unrealized appreciation was
$57,099,484 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 $60,609,482 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $3,509,998.
</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-349
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $437,236,201) including $32,038,859
market value of securities loaned $495,756,797
Cash 69,396
Receivables:
Investment securities sold 3,855,509
Dividends and interest 1,642,937
Fund shares sold 39,518
Other assets 1,401
-------------
Total assets 501,365,558
-------------
LIABILITIES:
Securities lending collateral 32,978,208
Payables:
Investment securities purchased 3,806,430
Fund shares redeemed 333,884
Adviser (See Note 3) 126,870
Administrator (See Note 3) 79,295
Shareholder communication 75,849
Professional fees 59,699
NYLIFE Distributors (See Note 3) 11,809
Custodian 3,942
Directors 676
Accrued expenses 3,202
-------------
Total liabilities 37,479,864
-------------
Net assets $463,885,694
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 217,274
Service Class 29,830
Additional paid-in capital 366,916,924
Accumulated undistributed net investment
income 9,759,310
Accumulated undistributed net realized gain on
investments and written option transactions 28,441,760
Net unrealized appreciation on investments 58,520,596
-------------
Net assets $463,885,694
=============
INITIAL CLASS
Net assets applicable to outstanding shares $408,052,329
=============
Shares of capital stock outstanding 21,727,383
=============
Net asset value per share outstanding $ 18.78
=============
SERVICE CLASS
Net assets applicable to outstanding shares $ 55,833,365
=============
Shares of capital stock outstanding 2,983,039
=============
Net asset value per share outstanding $ 18.72
=============
</Table>
M-350 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 7,711,427
Dividends (a) 4,920,979
Income from securities loaned--net 62,414
------------
Total income 12,694,820
------------
EXPENSES:
Advisory (See Note 3) 1,535,135
Administration (See Note 3) 959,459
Distribution and service--Service Class
(See Note 3) 130,601
Professional fees 118,991
Shareholder communication 107,686
Custodian 44,101
Directors 27,761
Miscellaneous 26,973
------------
Total expenses 2,950,707
------------
Net investment income 9,744,113
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND WRITTEN
OPTIONS:
Net realized gain on:
Security transactions 29,694,008
Written option transactions 99,576
------------
Net realized gain on investments and written
option transactions 29,793,584
------------
Net change in unrealized appreciation on
investments 3,436,018
------------
Net realized and unrealized gain on investments
and written options 33,229,602
------------
Net increase in net assets resulting from
operations $42,973,715
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $2,955.
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-351
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 9,744,113 $ 10,122,701
Net realized gain on
investments and written
option transactions 29,793,584 21,452,843
Net change in unrealized
appreciation on investments 3,436,018 125,125
----------------------------
Net increase in net assets
resulting from operations 42,973,715 31,700,669
----------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (2,546,034) (6,779,154)
Service Class (240,857) (647,767)
From net realized gain on investments:
Initial Class (5,245,726) --
Service Class (720,227) --
----------------------------
Total dividends and
distributions to
shareholders (8,752,844) (7,426,921)
----------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 6,071,980 4,892,426
Service Class 8,344,960 12,766,252
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 7,791,760 6,779,154
Service Class 961,084 647,767
----------------------------
23,169,784 25,085,599
Cost of shares redeemed:
Initial Class (87,961,766) (105,926,698)
Service Class (6,057,822) (4,449,955)
----------------------------
(94,019,588) (110,376,653)
Decrease in net assets
derived from capital share
transactions (70,849,804) (85,291,054)
----------------------------
Net decrease in net assets (36,628,933) (61,017,306)
NET ASSETS:
Beginning of year 500,514,627 561,531,933
----------------------------
End of year $463,885,694 $ 500,514,627
============================
Accumulated undistributed net
investment income at end of
year $ 9,759,310 $ 2,780,019
============================
</Table>
M-352 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.
This page intentionally left blank
www.mainstayfunds.com M-353
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning of period $ 17.48 $ 16.67 $ 15.93 $ 13.55 $ 16.69
-------- -------- -------- -------- --------
Net investment income 0.37(b) 0.33(b) 0.28(c) 0.27(b) 0.37
Net realized and unrealized gain (loss) on
investments 1.30 0.75 0.74 2.39 (3.13)
-------- -------- -------- -------- --------
Total from investment operations 1.67 1.08 1.02 2.66 (2.76)
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income (0.12) (0.27) (0.28) (0.28) (0.38)
From net realized gain on investments (0.25) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (0.37) (0.27) (0.28) (0.28) (0.38)
-------- -------- -------- -------- --------
Net asset value at end of period $ 18.78 $ 17.48 $ 16.67 $ 15.93 $ 13.55
======== ======== ======== ======== ========
Total investment return 9.50% 6.50%(d) 6.37% 19.68% (16.57%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 2.06% 1.96% 1.64%(c) 1.87% 2.28%
Net expenses 0.59% 0.37% 0.62% 0.61% 0.61%
Expenses (before reimbursement) 0.59% 0.58% 0.62% 0.61% 0.61%
Portfolio turnover rate 61%(e) 76%(e) 111% 69% 101%
Net assets at end of period (in 000's) $408,052 $451,605 $523,683 $558,181 $498,484
</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 $0.01 per share and 0.05%, respectively, resulting from a special
one-time dividend from Microsoft Corp. that paid $3.00 per share.
(d) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
6.27% and 5.99% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(e) The portfolio turnover rate not including mortgage dollar rolls is 51% and 39% for the
years ended December 31, 2006 and, 2005, respectively.
(f) Total return is not annualized.
(g) Represents income earned for the year by the Initial Class share less service fee of
0.25%.
+ Annualized.
</Table>
M-354 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 SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
---------------------------------------------------
JUNE 4,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 17.43 $ 16.64 $ 15.92 $ 14.79
------- ------- ------- ------------
0.33(b) 0.29(b) 0.24(c) 0.14(b)
1.29 0.73 0.73 1.26
------- ------- ------- ------------
1.62 1.02 0.97 1.40
------- ------- ------- ------------
(0.08) (0.23) (0.25) (0.27)
(0.25) -- -- --
------- ------- ------- ------------
(0.33) (0.23) (0.25) (0.27)
------- ------- ------- ------------
$ 18.72 $ 17.43 $ 16.64 $ 15.92
======= ======= ======= ============
9.23% 6.19%(d) 6.10% 9.47%(f)
1.81% 1.71% 1.39%(c) 1.62%+(g)
0.84% 0.62% 0.87% 0.86%+
0.84% 0.83% 0.87% 0.86%+
61%(e) 76%(e) 111% 69%
$55,833 $48,909 $37,849 $12,116
</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-355
MAINSTAY VP VALUE PORTFOLIO
INVESTMENT AND PERFORMANCE COMPARISON (UNAUDITED)
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. BECAUSE OF MARKET VOLATILITY, CURRENT PERFORMANCE
MAY BE LOWER 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 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ---------------------------------------------------------------
After Portfolio operating
expenses 18.87% 7.16% 7.46%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP VALUE
PORTFOLIO RUSSELL 1000 VALUE INDEX S&P 500 INDEX
----------------- ------------------------ -------------
12/31/96 10000 10000 10000
12289 13518 13336
11781 15631 17148
12818 16780 20756
14470 17957 18866
14528 16953 16624
11470 14321 12950
14609 18622 16664
16257 21694 18478
17272 23224 19385
12/31/06 20532 28390 22447
</Table>
SERVICE CLASS(2) AS OF 12/31/06
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL ONE FIVE TEN
TOTAL RETURNS YEAR YEARS(1) YEARS(1)
- ---------------------------------------------------------------
After Portfolio operating
expenses 18.58% 6.89% 7.19%
</Table>
(After Portfolio operating expenses)
<Table>
<Caption>
MAINSTAY VP VALUE
PORTFOLIO RUSSELL 1000 VALUE INDEX S&P 500 INDEX
----------------- ------------------------ -------------
12/31/96 10000 10000 10000
12258 13518 13336
11720 15631 17148
12721 16780 20756
14325 17957 18866
14348 16953 16624
11299 14321 12950
14357 18622 16664
15937 21694 18478
16887 23224 19385
12/31/06 20024 28390 22447
</Table>
<Table>
<Caption>
ONE FIVE TEN
BENCHMARK PERFORMANCE YEAR YEARS YEARS
Russell 1000(R) Value Index* 22.25% 10.86% 11.00%
S&P 500(R) Index* 15.79 6.19 8.42
</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 figures shown for the five-year and ten-year periods ended
12/31/06 reflect nonrecurring reimbursements from affiliates for printing and
mailing costs. If these nonrecurring reimbursements had not been made, the
total returns would have been 7.14% and 7.45% for the Initial Class and 6.88%
and 7.18% for the Service Class for the five-year and ten-year periods,
respectively.
2. Performance for the Service Class shares, first offered 6/4/03, includes the
historical performance of the Initial Class shares from 1/1/97 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-356 MainStay VP Value Portfolio
COST IN DOLLARS OF A $1,000 INVESTMENT IN MAINSTAY VP VALUE PORTFOLIO
(UNAUDITED)
- --------------------------------------------------------------------------------
The example below is intended to describe the fees and expenses borne by
shareholders during the six-month period from July 1, 2006, to December 31,
2006, and the impact of those costs on your investment.
EXAMPLE
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction
costs, including redemption fees, if applicable, exchange fees and sales charges
(loads) on purchases, and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees and other Portfolio expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolio and to compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
made at the beginning of the six-month period and held for the entire period
from July 1, 2006, to December 31, 2006. Shares are only sold in connection with
variable life and annuity contracts and the example does not reflect any
contract level or other transactional fees or expenses. If these costs had been
included, your costs would have been higher.
This example illustrates your Portfolio's ongoing costs in two ways:
- - ACTUAL EXPENSES
The second and third data columns in the table below provide information about
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested to estimate the expenses that you
paid during the six-months ended December 31, 2006. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
- - HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The fourth and fifth data columns in the table below provide information about
hypothetical account values and hypothetical expenses based on the Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balances or expenses you paid for the six-month period shown. You may use this
information to compare the ongoing costs of investing in the Portfolio with the
ongoing costs of investing in other Portfolios. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other Portfolios.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees, if applicable, exchange fees or sales charges (loads).
Therefore, the fourth and fifth data columns of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE (BASED
VALUE (BASED ON HYPOTHETICAL
BEGINNING ON ACTUAL EXPENSES 5% ANNUALIZED EXPENSES
ACCOUNT RETURNS AND PAID RETURN AND PAID
VALUE EXPENSES) DURING ACTUAL EXPENSES) DURING
SHARE CLASS 7/1/06 12/31/06 PERIOD(1) 12/31/06 PERIOD(1)
INITIAL CLASS $1,000.00 $1,119.00 $3.31 $1,021.90 $3.16
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE CLASS $1,000.00 $1,117.75 $4.64 $1,020.65 $4.43
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Portfolio's annualized expense ratio of each class
(0.62% for Initial Class and 0.87% for Service Class) multiplied by the
average account value over the period, divided by 365 and multiplied by 184
(to reflect the one-half year period).
www.mainstayfunds.com M-357
PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2006
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 93.9
Short-Term Investments (collateral from securities lending 11.6
is 7.3%)*
Investment Company 1.9
Liabilities in Excess of Cash and Other Assets (7.4)
</Table>
* Includes 1.0% of Short-Term Investment Company Securities.
See Portfolio of Investments on page M-361 for specific holdings within these
categories.
TOP TEN HOLDINGS AS OF DECEMBER 31, 2006 (EXCLUDING SHORT-TERM INVESTMENTS)
<Table>
1. Citigroup, Inc.
2. Bank of America Corp.
3. ExxonMobil Corp.
4. Pfizer, Inc.
5. E.I. du Pont de Nemours & Co.
6. Chevron Corp.
7. JPMorgan Chase & Co.
8. Home Depot, Inc. (The)
9. ConocoPhillips
10. Bank of New York Co., Inc. (The)
</Table>
M-358 MainStay VP Value Portfolio
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Richard A. Rosen of MacKay Shields LLC.
HOW DID MAINSTAY VP VALUE PORTFOLIO PERFORM RELATIVE TO ITS PEERS AND ITS
BENCHMARK DURING 2006?
For the year ended December 31, 2006, MainStay VP Value Portfolio returned
18.87% for Initial Class shares and 18.58% for Service Class shares. Both share
classes underperformed the 19.01% return of the average Lipper* Variable
Products Large-Cap Value Portfolio for the same period. Both share classes
underperformed the 22.25% return of the Russell 1000(R) Value Index,* the
Portfolio's broad-based securities-market index, for the year ended December 31,
2006.
WHAT FACTORS ACCOUNTED FOR THE PORTFOLIO'S RELATIVE PERFORMANCE IN 2006?
Weak performance from several of the Portfolio's information technology and
telecommunication services holdings hurt the Portfolio's performance. The
effects were partially offset by good relative results in the health care and
financials sectors and a fourth-quarter recovery in the energy sector.
WHICH PORTFOLIO SECTORS WERE THE STRONGEST PERFORMERS DURING 2006 AND WHICH WERE
THE WEAKEST?
The financials sector was the strongest positive contributor to the Portfolio's
overall performance on a relative basis. Several of the Portfolio's financial
holdings benefited from strong securities markets and increased merger and
acquisition activity. Energy was a strong absolute performer, particularly
toward the end of the year as oil and natural gas prices appeared to stabilize.
Several media and health care companies were also positive contributors to the
Portfolio's relative performance.
Information technology was the Portfolio's weakest sector, followed by
telecommunication services. Consumer-related sectors also lagged.
IN 2006, WHICH INDIVIDUAL SECURITIES WERE THE STRONGEST PERFORMERS IN THE
PORTFOLIO AND WHICH WERE THE WEAKEST?
Among the Portfolio's strongest performers were Comcast, Goldman Sachs Group and
AT&T. Shares of Kos Pharmaceuticals advanced substantially on a takeover bid, as
did shares of nickel mining company Inco and exploration & production company
Kerr-McGee.
Sprint Nextel experienced difficulties with merger integration, and the
company's shares declined substantially as the year progressed. Advanced Micro
Devices was sharply lower when Intel made new-product inroads and pricing
competition heated up. Other technology laggards included Intel, Motorola and
Texas Instruments. Home Depot also disappointed when the housing market slowed.
DID THE PORTFOLIO MAKE ANY SIGNIFICANT PURCHASES OR SALES IN 2006?
We added to the Portfolio's positions in ConocoPhillips and Chevron during the
year. We also added to the Portfolio's position in Motorola. We initiated
positions in Honeywell International, which makes a number of products for home,
auto, aircraft, military and industrial use. We also bought Ball, which offers
metal and plastic packaging to the beverage and food industries worldwide.
We reduced the Portfolio's positions in Goldman Sachs and Comcast as these
stocks approached our price targets. Although we found significant asset-value
potential in the shares of Sprint Nextel, we reduced the Portfolio's position in
the stock to manage risk. Shares of Kos Pharmaceuticals, Inco and Kerr-McGee
were sold when the companies were acquired.
The principal risk of investing in value stocks is that they may never reach
what the portfolio manager believes is their full value or they may even go down
in value.
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-359
HOW WAS THE PORTFOLIO POSITIONED RELATIVE TO THE RUSSELL 1000(R) VALUE INDEX AT
THE END OF 2006?
As of December 31, 2006, the Portfolio was overweight relative to the Russell
1000(R) Value Index* in information technology, health care, materials and
consumer discretionary. At year-end, the Portfolio was underweight relative to
the Index in utilities, financials, industrials, telecommunications services,
consumer staples and energy.
* 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.
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.
INFORMATION ABOUT MAINSTAY VP VALUE PORTFOLIO ON THIS PAGE AND THE PRECEDING
PAGES HAS NOT BEEN AUDITED.
M-360 MainStay VP Value Portfolio
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (93.9%)+
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.6%)
Honeywell International, Inc. 268,800 $ 12,160,512
Northrop Grumman Corp. 94,300 6,384,110
-------------
18,544,622
-------------
BUILDING PRODUCTS (1.4%)
American Standard Cos., Inc. 216,000 9,903,600
-------------
CAPITAL MARKETS (6.3%)
V Bank of New York Co., Inc. (The) 357,400 14,070,838
Goldman Sachs Group, Inc. (The) 46,800 9,329,580
Merrill Lynch & Co., Inc. 130,100 12,112,310
Morgan Stanley 119,100 9,698,313
-------------
45,211,041
-------------
CHEMICALS (2.4%)
V E.I. du Pont de Nemours & Co. (a) 348,800 16,990,048
-------------
COMMERCIAL BANKS (6.3%)
PNC Financial Services Group, Inc. 178,600 13,223,544
U.S. Bancorp 278,500 10,078,915
Wachovia Corp. 186,600 10,626,870
Wells Fargo & Co. 324,700 11,546,332
-------------
45,475,661
-------------
COMMUNICATIONS EQUIPMENT (3.5%)
Motorola, Inc. 664,900 13,670,344
Nokia Oyj, Sponsored ADR (b) 575,300 11,690,096
-------------
25,360,440
-------------
COMPUTERS & PERIPHERALS (1.6%)
International Business Machines Corp. 119,800 11,638,570
-------------
CONTAINERS & PACKAGING (0.8%)
Ball Corp. 136,400 5,947,040
-------------
DIVERSIFIED FINANCIAL SERVICES (10.4%)
V Bank of America Corp. 489,592 26,139,317
V Citigroup, Inc. 604,297 33,659,343
V JPMorgan Chase & Co. (a) 317,740 15,346,842
-------------
75,145,502
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES (3.5%)
AT&T, Inc. 383,700 13,717,275
Verizon Communications, Inc. 309,100 11,510,884
-------------
25,228,159
-------------
ELECTRIC UTILITIES (1.5%)
Duke Energy Corp. 137,000 4,549,770
FirstEnergy Corp. 99,700 6,002,937
-------------
10,552,707
-------------
</Table>
<Table>
<Caption>
SHARES VALUE
ENERGY EQUIPMENT & SERVICES (4.5%)
Diamond Offshore Drilling, Inc. (a) 87,000 $ 6,954,780
ENSCO International, Inc. 69,600 3,484,176
Rowan Cos., Inc. (a) 359,900 11,948,680
Transocean, Inc. (c) 119,200 9,642,088
-------------
32,029,724
-------------
FOOD & STAPLES RETAILING (2.8%)
CVS Corp. 342,100 10,574,311
Kroger Co. (The) 421,800 9,730,926
-------------
20,305,237
-------------
FOOD PRODUCTS (1.3%)
General Mills, Inc. 157,300 9,060,480
-------------
HEALTH CARE PROVIDERS & SERVICES (1.0%)
Quest Diagnostics, Inc. 137,300 7,276,900
-------------
HOUSEHOLD PRODUCTS (1.0%)
Kimberly-Clark Corp. 103,700 7,046,415
-------------
INSURANCE (4.5%)
Genworth Financial, Inc. Class A 377,100 12,900,591
Hartford Financial Services Group, Inc. (The) 104,300 9,732,233
Prudential Financial, Inc. 109,600 9,410,256
-------------
32,043,080
-------------
IT SERVICES (0.9%)
Computer Sciences Corp. (c) 121,000 6,457,770
-------------
MACHINERY (0.7%)
Pentair, Inc. 152,200 4,779,080
-------------
MEDIA (4.2%)
Comcast Corp. Class A (c) 229,000 9,693,570
Gannett Co., Inc. 122,300 7,394,258
Time Warner, Inc. 306,800 6,682,104
Tribune Co. (a) 214,100 6,589,998
-------------
30,359,930
-------------
METALS & MINING (1.3%)
Alcoa, Inc. 311,128 9,336,951
-------------
MULTI-UTILITIES (0.4%)
Energy East Corp. 129,500 3,211,600
-------------
</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.
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-361
PORTFOLIO OF INVESTMENTS DECEMBER 31, 2006 (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (8.4%)
V Chevron Corp. 223,786 $ 16,454,985
V ConocoPhillips 198,400 14,274,880
V ExxonMobil Corp. 298,200 22,851,066
Valero Energy Corp. 131,300 6,717,308
-------------
60,298,239
-------------
PHARMACEUTICALS (9.7%)
Abbott Laboratories 251,100 12,231,081
Barr Pharmaceuticals, Inc. (c) 224,900 11,271,988
Johnson & Johnson 170,800 11,276,216
V Pfizer, Inc. 740,100 19,168,590
Teva Pharmaceutical Industries, Ltd., Sponsored
ADR (b) 286,400 8,901,312
Wyeth 138,200 7,037,144
-------------
69,886,331
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.5%)
Advanced Micro Devices, Inc. (c) 467,000 9,503,450
Intel Corp. 330,100 6,684,525
Texas Instruments, Inc. 304,900 8,781,120
-------------
24,969,095
-------------
SPECIALTY RETAIL (4.1%)
Gap, Inc. (The) 392,000 7,644,000
V Home Depot, Inc. (The) (a) 368,900 14,815,024
Lowe's Cos., Inc. 233,000 7,257,950
-------------
29,716,974
-------------
THRIFTS & MORTGAGE FINANCE (2.8%)
PMI Group, Inc. (The) (a) 276,800 13,056,656
Washington Mutual, Inc. 161,500 7,346,635
-------------
20,403,291
-------------
TRADING COMPANIES & DISTRIBUTORS (0.7%)
W.W. Grainger, Inc. 75,600 5,287,464
-------------
WIRELESS TELECOMMUNICATION SERVICES (1.8%)
ALLTEL Corp. 51,400 3,108,672
Sprint Nextel Corp. 523,300 9,885,137
-------------
12,993,809
-------------
Total Common Stocks
(Cost $560,191,493) 675,459,760
-------------
INVESTMENT COMPANY (1.9%)
- ------------------------------------------------------------------------------
iShares Russell 1000 Value Index Fund (d) 169,000 13,954,330
-------------
Total Investment Company
(Cost $11,818,668) 13,954,330
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (11.6%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (6.0%)
Barton Capital LLC
5.298%, due 1/4/07 (e) $ 978,837 $ 978,837
Charta LLC
5.314%, due 1/11/07 (e) 1,002,768 1,002,768
Ciesco, Inc.
5.305%, due 1/10/07 (e) 1,308,698 1,308,698
Compass Securitization LLC
5.324%, due 1/18/07 (e) 1,337,024 1,337,024
Fairway Finance Corp.
5.301%, due 1/8/07 (e) 1,002,768 1,002,768
Falcon Asset Securitization Corp.
5.312%, due 1/12/07 (e) 989,015 989,015
Goldman Sachs Group, Inc.
5.29%, due 1/11/07 6,870,000 6,859,905
Greyhawk Funding LLC
5.305%, due 1/5/07 (e) 980,749 980,749
ING U.S. Funding LLC
5.25%, due 1/4/07 6,000,000 5,997,375
Jupiter Securitization Corp.
5.324%, due 1/18/07 (e) 1,002,768 1,002,768
Liberty Street Funding Co.
5.325%, due 1/29/07 (e) 334,256 334,256
Minnesota Mining & Manufacturing Co.
5.19%, due 1/3/07 5,030,000 5,028,549
Old Line Funding LLC
5.303%, due 1/9/07 (e) 1,310,163 1,310,163
Ranger Funding LLC
5.308%, due 1/30/07 (e) 1,002,768 1,002,768
Sheffield Receivables Corp.
5.336%, due 1/16/07 (e) 1,002,768 1,002,768
Toyota Motor Credit Co.
5.27%, due 1/3/07 6,000,000 5,998,244
UBS Finance (Delaware) LLC
5.26%, due 1/3/07 6,850,000 6,847,998
-------------
Total Commercial Paper
(Cost $42,984,653) 42,984,653
-------------
<Caption>
SHARES
INVESTMENT COMPANY (1.0%)
BGI Institutional Money Market Fund (e) 6,982,412 6,982,412
-------------
Total Investment Company
(Cost $6,982,412) 6,982,412
-------------
</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.
M-362 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
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT (0.0%)++
Morgan Stanley & Co.
5.42%, dated 12/29/06
due 1/2/07
Proceeds at Maturity $334,457
(Collateralized by various Corporate Bonds
and a U.S. Treasury Note,
with rates between 5.00%-8.96% and
maturity dates between 8/15/09-12/29/49,
with a Principal Amount of
$331,074 and a Market Value
of $346,089) (e) $ 334,256 $ 334,256
-------------
Total Repurchase Agreement
(Cost $334,256) 334,256
-------------
TIME DEPOSITS (4.6%)
Abbey National PLC
5.34%, due 1/2/07 (e) 4,011,072 4,011,072
Banco Bilbao Vizcaya Argentaria S.A.
5.30%, due 1/9/07 (e) 2,674,048 2,674,048
Bank of America Corp.
5.27%, due 1/19/07 (e)(f) 2,674,048 2,674,048
Bank of Montreal
5.30%, due 1/26/07 (e) 1,671,280 1,671,280
Barclays
5.32%, due 1/18/07 (e) 2,206,089 2,206,089
Calyon
5.31%, due 2/12/07 (e) 2,674,048 2,674,048
Citigroup
5.325%, due 3/22/07 (e) 2,339,792 2,339,792
Credit Suisse First Boston Corp.
5.30%, due 1/12/07 (e) 2,540,345 2,540,345
HBOS Halifax Bank of Scotland
5.30%, due 1/10/07 (e) 2,674,048 2,674,048
Lloyds TSB Bank PLC
5.29%, due 2/21/07 (e) 2,473,494 2,473,494
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TIME DEPOSITS (CONTINUED)
Rabobank Nederland
5.29%, due 3/6/07 (e) $2,005,536 $ 2,005,536
Standard Chartered Bank
5.29%, due 1/10/07 (e) 2,674,048 2,674,048
UBS AG
5.285%, due 1/12/07 (e) 2,674,048 2,674,048
-------------
Total Time Deposits
(Cost $33,291,896) 33,291,896
-------------
Total Short-Term Investments
(Cost $83,593,217) 83,593,217
-------------
Total Investments
(Cost $655,603,378) (g) 107.4% 773,007,307(h)
Liabilities in Excess of
Cash and Other Assets (7.4) (53,298,360)
---------- -------------
Net Assets 100.0% $ 719,708,947
========== =============
</Table>
<Table>
++ Less than one tenth of a percent.
(a) Represents a security, or a portion thereof, which is out on
loan.
(b) ADR--American Depositary Receipt.
(c) Non-income producing security.
(d) Exchange Traded Fund--represents a basket of securities that
are traded on an exchange.
(e) Represents a security, or a portion thereof, purchased with
cash collateral received for securities on loan.
(f) Floating rate. Rate shown is the rate in effect at December
31, 2006.
(g) The cost for federal income tax purposes is $656,840,428.
(h) At December 31, 2006 net unrealized appreciation was
$116,166,879, 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 $122,585,259 and aggregate gross
unrealized depreciation for all investments on which there
was an excess of cost over market value of $6,418,380.
</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.
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-363
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 2006
<Table>
ASSETS:
Investment in securities, at value (identified
cost $655,603,378) including $51,084,987
market value of securities loaned $773,007,307
Cash 4,908
Receivables:
Dividends and interest 339,821
Fund shares sold 206,649
Other assets 3,378
-------------
Total assets 773,562,063
-------------
LIABILITIES:
Securities lending collateral 52,861,146
Payables:
Fund shares redeemed 298,919
Adviser (See Note 3) 218,892
Investment securities purchased 148,504
Administrator (See Note 3) 121,607
Shareholder communication 109,186
Professional fees 63,294
NYLIFE Distributors (See Note 3) 25,434
Custodian 1,927
Directors 985
Accrued expenses 3,222
-------------
Total liabilities 53,853,116
-------------
Net assets $719,708,947
=============
NET ASSETS CONSIST OF:
Capital stock (par value of $.01 per share)
200 million shares authorized:
Initial Class $ 296,257
Service Class 60,632
Additional paid-in capital 534,215,892
Accumulated undistributed net investment
income 11,181,828
Accumulated undistributed net realized gain on
investments and written option transactions 56,550,409
Net unrealized appreciation on investments 117,403,929
-------------
Net assets $719,708,947
=============
INITIAL CLASS
Net assets applicable to outstanding shares $597,830,715
=============
Shares of capital stock outstanding 29,625,673
=============
Net asset value per share outstanding $ 20.18
=============
SERVICE CLASS
Net assets applicable to outstanding shares $121,878,232
=============
Shares of capital stock outstanding 6,063,176
=============
Net asset value per share outstanding $ 20.10
=============
</Table>
M-364 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, 2006
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 14,139,734
Interest 1,318,435
Income from securities loaned--net 90,874
-------------
Total income 15,549,043
-------------
EXPENSES:
Advisory (See Note 3) 2,397,956
Administration (See Note 3) 1,332,198
Distribution and service--Service Class
(See Note 3) 244,595
Shareholder communication 166,411
Professional fees 136,340
Directors 37,865
Custodian 16,676
Miscellaneous 33,563
-------------
Total expenses 4,365,604
-------------
Net investment income 11,183,439
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND WRITTEN
OPTIONS:
Net realized gain on:
Security transactions 57,720,981
Written option transactions 344,417
-------------
Net realized gain on investments and written
option transactions 58,065,398
-------------
Net change in unrealized appreciation on
investments 46,235,925
-------------
Net realized and unrealized gain on
investments and written option transactions 104,301,323
-------------
Net increase in net assets resulting from
operations $115,484,762
=============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $7,017.
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-365
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005
<Table>
<Caption>
2006 2005
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 11,183,439 $ 9,643,274
Net realized gain on
investments and written
option transactions 58,065,398 34,513,341
Net change in unrealized
appreciation on investments 46,235,925 (6,845,679)
---------------------------
Net increase in net assets
resulting from operations 115,484,762 37,310,936
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Initial Class (2,148,630) (6,464,216)
Service Class (271,532) (813,008)
From net realized gain on investments:
Initial Class (8,716,798) --
Service Class (1,782,820) --
---------------------------
Total dividends and
distributions to
shareholders (12,919,780) (7,277,224)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Initial Class 28,182,232 15,510,234
Service Class 32,250,967 23,384,467
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Initial Class 10,865,428 6,464,216
Service Class 2,054,352 813,008
---------------------------
73,352,979 46,171,925
Cost of shares redeemed:
Initial Class (76,963,364) (67,844,926)
Service Class (7,694,375) (3,460,752)
---------------------------
(84,657,739) (71,305,678)
Decrease in net assets
derived from
capital share transactions (11,304,760) (25,133,753)
---------------------------
Net increase in net assets 91,260,222 4,899,959
NET ASSETS:
Beginning of year 628,448,725 623,548,766
---------------------------
End of year $719,708,947 $628,448,725
===========================
Accumulated undistributed net
investment
income at end of year $ 11,181,828 $ 2,418,551
===========================
</Table>
M-366 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.
This page intentionally left blank
www.mainstayfunds.com M-367
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
INITIAL CLASS
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005 2004 2003 2002
Net asset value at beginning
of period $ 17.29 $ 16.47 $ 14.96 $ 11.91 $ 15.35
-------- -------- -------- -------- --------
Net investment income 0.32(b) 0.27(b) 0.18 0.21(b) 0.20
Net realized and unrealized
gain (loss) on investments 2.94 0.76 1.51 3.04 (3.43)
-------- -------- -------- -------- --------
Total from investment
operations 3.26 1.03 1.69 3.25 (3.23)
-------- -------- -------- -------- --------
Less dividends and
distributions:
From net investment income (0.07) (0.21) (0.18) (0.20) (0.19)
From net realized gain on
investments (0.30) -- -- -- (0.02)
-------- -------- -------- -------- --------
Total dividends and
distributions (0.37) (0.21) (0.18) (0.20) (0.21)
-------- -------- -------- -------- --------
Net asset value at end of
period $ 20.18 $ 17.29 $ 16.47 $ 14.96 $ 11.91
======== ======== ======== ======== ========
Total investment return 18.87% 6.24%(d) 11.28% 27.37% (21.05%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.72% 1.58% 1.34% 1.60% 1.43%
Net expenses 0.62% 0.50% 0.65% 0.66% 0.65%
Expenses (before
reimbursement) 0.62% 0.61% 0.65% 0.66% 0.65%
Portfolio turnover rate 46% 40% 81% 62% 64%
Net assets at end of period
(in 000's) $597,831 $548,065 $567,182 $418,992 $331,833
</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) Includes nonrecurring reimbursements from affiliates for printing and mailing costs. If
these nonrecurring reimbursements had not been made, the total return would have been
6.13% and 5.87% for the Initial Class and Service Class, respectively, for the year ended
December 31, 2005.
(e) Represents income earned for the year by the Initial Class share less service fee of
0.25%.
+ Annualized.
</Table>
M-368 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 SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SERVICE CLASS
----------------------------------------------------------
JUNE 4,
2003(A)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
2006 2005 2004 2003
$ 17.24 $ 16.44 $ 14.95 $ 12.81
-------- ------- ------- ------------
0.27(b) 0.22(b) 0.15 0.10(b)
2.94 0.76 1.49 2.23
-------- ------- ------- ------------
3.21 0.98 1.64 2.33
-------- ------- ------- ------------
(0.05) (0.18) (0.15) (0.19)
(0.30) -- -- --
-------- ------- ------- ------------
(0.35) (0.18) (0.15) (0.19)
-------- ------- ------- ------------
$ 20.10 $ 17.24 $ 16.44 $ 14.95
======== ======= ======= ============
18.58% 5.96%(d) 11.01% 18.14%(c)
1.46% 1.33% 1.09% 1.35%+(e)
0.87% 0.75% 0.90% 0.91%+
0.87% 0.86% 0.90% 0.91%+
46% 40% 81% 62%
$121,878 $80,384 $56,367 $15,024
</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-369
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
February 13, 2006 Conservative Allocation, Growth
Allocation, Moderate Allocation and
Moderate Growth Allocation Portfolios
- ------------------------------------------------------------
May 2, 2005 Balanced and Floating Rate Portfolios
- ------------------------------------------------------------
July 2, 2001 Mid Cap Core, Mid Cap Growth, Mid Cap
Value and Small Cap Growth Portfolios
- ------------------------------------------------------------
May 1, 1998 Income & Growth, Developing Growth, ICAP
Select Equity (formerly Basic Value) and
Large Cap 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 and Total
Return Portfolios
- ------------------------------------------------------------
January 23, 1984 Bond and Common Stock 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 contracts 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. Contract owners of variable annuity contracts purchased after June 2,
2003 are permitted to invest only in the Service Class shares.
The Service Class of each Portfolio commenced operations on the dates indicated
below:
<Table>
<Caption>
COMMENCEMENT
OF OPERATIONS PORTFOLIOS
February 13, 2006 Conservative Allocation, Growth
Allocation, Moderate Allocation and
Moderate Growth Allocation Portfolios
- ------------------------------------------------------------
May 2, 2005 Balanced and Floating Rate Portfolios
- ------------------------------------------------------------
June 13, 2003 Income & Growth Portfolio
- ------------------------------------------------------------
June 6, 2003 Large Cap Growth Portfolio
- ------------------------------------------------------------
June 5, 2003 Capital Appreciation, Common Stock,
Convertible, Developing Growth, ICAP
Select Equity (formerly Basic Value),
International Equity, Mid Cap Core, Mid
Cap Growth, Mid Cap Value, S&P 500 Index
and Small Cap 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:
BALANCED: to seek high total return.
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.
CONSERVATIVE ALLOCATION: to seek current income and, secondarily, long-term
growth of capital.
CONVERTIBLE: to seek capital appreciation together with current income.
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.
FLOATING RATE: to seek to provide high current income.
GOVERNMENT: to seek a high level of current income, consistent with safety of
principal.
GROWTH ALLOCATION: to seek long-term growth of capital.
HIGH YIELD CORPORATE BOND: to seek maximum current income through investment in
a diversified portfolio of high yield, high risk debt securities. Capital
appreciation is a secondary objective.
ICAP SELECT EQUITY: to seek capital appreciation.
M-370 MainStay VP Series Fund, Inc.
INCOME & GROWTH: to seek dividend growth, current income and capital
appreciation.
INTERNATIONAL EQUITY: to seek long-term growth of capital commensurate with an
acceptable level of risk by investing in a portfolio consisting primarily of
non-U.S. equity securities. Current income is a secondary objective.
LARGE CAP GROWTH: to seek growth through long-term capital appreciation.
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.
MODERATE ALLOCATION: to seek long-term growth of capital and, secondarily,
current income.
MODERATE GROWTH ALLOCATION: to seek long-term growth of capital and, secondarily
current income.
S&P 500 INDEX: 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.
SMALL CAP GROWTH: to seek long-term capital appreciation by investing in
securities of small-cap companies.
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.
The Conservative Allocation, Growth Allocation, Moderate Allocation and Moderate
Growth Allocation Portfolios (collectively the "Asset Allocation Portfolios")
operate as "fund-of-funds." The Asset Allocation Portfolios invest primarily in
other Portfolios of the Fund and other affiliated MainStay Funds ("Underlying
Portfolios") that are managed by New York Life Investment Management LLC.
The 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 each day the Funds are open for business
("valuation date"); such securities not traded on the valuation date are valued
at the mean of the latest quoted bid and asked prices. Prices normally are taken
from the principal market in which each security trades. Debt securities are
valued at prices supplied by a pricing agent or brokers selected by the Fund's
Manager, in consultation with a portfolio's subadvisor, if any, whose prices
reflect broker/dealer supplied valuations and electronic data processing
techniques, if such prices are deemed by the Fund's Manager, in consultation
with a portfolio's subadvisor, if any to be representative of market values, at
the regular close of trading of the New York Stock Exchange. Investments in
underlying portfolios are valued at their net asset value at the close of
business each day.
Loans assignments & participations are valued at the average of bid quotations
obtained from a pricing service. 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 ask prices based on dealer or exchange quotations. Temporary cash
investments acquired over 60 days prior 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. Investments in money market
funds are valued daily at their NAVs. Portfolio securities of the 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
www.mainstayfunds.com M-371
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 2006, the Convertible, Government,
High Yield Corporate Bond and Total Return Portfolios held securities with
values of $234, $855,000, $7,379,213 and $1,075,413, 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/Subadvisors conclude
that such events may have affected the accuracy of the last price reported on
the local foreign market, the Administrator or Adviser/ Subadvisor 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, net of any foreign tax withheld at the
source, and interest income is accrued as earned. Dividends and distributions
received by the Asset Allocation Portfolios from the underlying portfolios are
recorded on the ex-dividend date. Discounts and premiums on securities, other
than short-term securities, purchased for all Portfolios are accreted and
amortized, respectively, on the constant yield method over the life of the
respective securities or, in the case of a callable security, over the period to
the first date of call. Discounts and premiums on short-term securities are
accreted and amortized, respectively, on the straight line method.
For Real Estate Investment Trusts ("REITs"), dividend income is recorded at
management's estimate of the income included in distributions from the REIT
investments. Distributions received in excess of the estimated amount are
recorded as a reduction of the cost investments. The actual amounts of income,
return of capital and capital gains are only determined by each REIT after the
fiscal year end and may differ from the estimated amounts. A Portfolio adjusts
the estimated amounts of the components of distributions (and consequently its
net investment income) as necessary once the issuers provide information about
the actual composition of the distributions.
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) FUTURES CONTRACTS. The Portfolios may enter into futures contracts for
hedging purposes or to enhance income. A futures contract is an agreement to
purchase or sell a specified quantity of an underlying instrument at a specified
future date and price, or to make or receive a cash payment based on the value
of a securities index, foreign currency or interest rate. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking to market" such contract on a daily basis
to reflect the market value of the contract at the end of each day's trading. A
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 Balanced and S&P 500 Index Portfolios invest 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
contacts, interest rates and the underlying hedged assets, and the possible
inability of counterparties to meet the terms of their contracts. However, each
Portfolio's activities in futures contracts are conducted through regulated
exchanges which minimize counterparty credit risks.
(D) REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements
to earn income. The Portfolios may enter into repurchase agreements only with
financial institutions that are deemed by the Adviser to be creditworthy,
pursuant to guidelines established by the Portfolios' Board of Directors. During
the term of any repurchase agreement, the Adviser will continue to monitor the
creditworthiness of the seller. Repurchase agreements are considered under the
Act to be collateralized loans by a Portfolio to the seller secured by the
securities transferred to the Portfolio. When a Portfolio invests in repurchase
agreements, the Portfolio's custodian takes possession of the collateral pledged
for investments in the repurchase agreement. The underlying collateral is valued
daily on a mark-to-market basis to evaluate whether the value, including accrued
interest, exceeds the repurchase
M-372 MainStay VP Series Fund, Inc.
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. The Portfolio may incur a loss if the value of
the security should decline as well as disposition cost in liquidating the
security. 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.
(E) FOREIGN CURRENCY FORWARD CONTRACTS. Certain Portfolios may enter into
foreign currency forward contracts, which are agreements 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 primarily to hedge their foreign
currency denominated investments and receivables and payables against adverse
movements in future foreign exchange rates or to try to enhance their returns.
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 a Portfolio's
involvement in these financial instruments. Risks arise from the possible
movements in the foreign exchange rates underlying these instruments. While a
Portfolio may enter into forward contracts to reduce currency exchange risks,
changes in currency exchange rates may result in poorer overall performance for
the portfolio than if it had not engaged in such transactions. Exchange rate
movements can be large, depending on the currency, and can last for extended
periods of time, affecting the value of a Portfolio's assets. Moreover, there
may be an imperfect correlation between a Portfolio's holding's of securities
denominated in a particular currency and forward contracts entered into by the
Portfolio. Such imperfect correlation may prevent the Portfolio from achieving
the intended hedge or expose the Portfolio to the risk of currency exchange
loss. 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 6 on page 382.)
(F) FOREIGN CURRENCY TRANSACTIONS. The books and records of the Portfolios are
kept in U.S. dollars. Prices of securities denominated in foreign currencies 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 the Portfolios that are denominated in foreign
currency amounts are presented at the exchange rates and market values at the
end of the period. 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 as recorded
on the Portfolio's books, and the U.S. dollar equivalent amount actually
received or paid. Net currency gains or losses from valuing such foreign
currency denominated assets and liabilities including currency and foreign
currency forward contracts, but excluding other investments, are reflected in
unrealized foreign exchange gains or losses. (See Note 6 on page 382.)
(G) MORTGAGE DOLLAR ROLLS. Certain Portfolios may enter into mortgage dollar
roll ("MDR") transactions in which they sell mortgage-backed securities ("MBS")
from their portfolio 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.
During the roll period, the Portfolio foregoes principal and interest on the
securities. The Portfolio is compensated by the difference between the current
sales price and the forward price for the future purchase as well as by the
earnings on the cash proceeds of the initial sale. MDRs may be renewed without
physical delivery of the securities subject to the contract. The Portfolios
maintain liquid assets 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, while substantially similar, could be inferior to what was
initially sold to the counterparty.
www.mainstayfunds.com M-373
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(H) SECURITIES LENDING. In order to realize additional income a Portfolio may
lend its 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. Collateral will consist of U.S. Government
securities, cash equivalents or irrevocable letters of credit. 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 6 on page 382.)
(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, and unrealized appreciation and depreciation is recorded, to reflect
the current value of the options written. Premiums received from writing options
that expire are treated as realized gains. Premiums received from writing
options that are exercised or are cancelled in closing purchase transactions are
added to the proceeds or netted against the amount paid on the transaction to
determine the realized gain or loss. By writing a covered call option, in
exchange for the premium, a Portfolio foregoes the opportunity for capital
appreciation above the exercise price should the 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 the 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. A Portfolio
may also purchase options to seek to enhance returns. Risks may arise from an
imperfect correlation between the change in market value of the securities or
foreign currencies held by the 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 6 on page 382.)
(J) LOAN ASSIGNMENTS, PARTICIPATIONS AND COMMITMENTS. The Floating Rate, High
Yield Corporate Bond and Total Return Portfolios invest in loan commitments and
loan participations. Loan commitments and loan participations ("loans") are
agreements to make money available to a borrower in a specified amount, at a
specified rate and within a specified time. Such loans are typically senior,
secured and collateralized in nature. The Portfolio records an investment when
the borrower withdraws money and records interest as earned. The unfunded
amounts are marked to market daily. 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"). (See Note 5 on
page 382.)
(K) RESTRICTED SECURITIES. Each Portfolio may invest in securities that are
subject to legal or contractual restrictions on resale. These securities
generally may be resold in transactions exempt from registration or to the
public if the securities are registered. The High Yield Corporate Bond Portfolio
does not have the right to demand that such securities be registered. Disposal
of these securities may involve time-consuming negotiations and expense, and
prompt sale at an acceptable price may be difficult. Information regarding
restricted securities is included at the end of the Portfolios' Schedule of
Investments. (See Note 6 on page 382.)
(L) 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. By doing so, the portfolio will be relieved
from all or substantially all of federal and state income and excise taxes.
Investment income received by the Portfolios from foreign sources may be subject
to foreign income taxes. These foreign income taxes are withheld at the source.
M-374 MainStay VP Series Fund, Inc.
(M) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions
are recorded on the ex-dividend date. For the Cash Management and Floating Rate
Portfolios 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 at least once a year. All dividends
and distributions are reinvested in shares of the Fund, at net asset value,
unless the shareholders elects otherwise. 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.
(N) 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 expense can be made.
Expenses (other than expenses incurred under the Distribution and Service Plan,
which are charged directly to the Service Class) 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.
In addition, each Asset Allocation Portfolio bears a pro rata share of the fees
and expenses of the underlying portfolios in which they invest. Because the
underlying portfolios have varied expense and fee levels and the Asset
Allocation Portfolios may own different proportions of the underlying portfolios
at different times, the amount of fees and expenses incurred indirectly by each
Asset Allocation Portfolio will vary.
(O) USE OF ESTIMATES. In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
management makes estimates and assumptions that affect the reported amount of
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(P) OFFERING COSTS. Costs incurred by a Portfolio in connection with the
commencement of the Portfolio's operations are being amortized on a straight
line basis over twelve months.
(Q) INDEMNIFICATIONS. In the normal course of business the Portfolios enter
into contracts with third party service providers that contain a variety of
representations and warranties and which provide general indemnifications. The
Portfolios' maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Portfolios that have not yet
occurred. Based on experience, management is of the view that the risk of loss
in connection with these potential indemnification obligations is remote;
however, there can be no assurance that material liabilities related to such
obligations will not arise in the future that could adversely impact the
Portfolios.
NOTE 3--FEES AND RELATED PARTY TRANSACTIONS:
(A) INVESTMENT ADVISORY, SUBADVISORY AND ADMINISTRATION FEES. New York Life
Investment Management LLC ("NYLIM" or "Manager"), an indirect wholly-owned
subsidiary of New York Life, serves as investment adviser to the Fund under an
Investment Advisory Agreement. Balanced, Bond, Common Stock, Conservative
Allocation, Floating Rate, Growth Allocation, Mid Cap Core, Moderate Allocation,
Moderate Growth Allocation and S&P 500 Index Portfolios are managed by NYLIM.
MacKay Shields, a registered investment adviser and an indirect wholly-owned
subsidiary of New York Life, serves as subadvisor 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 Subadvisory Agreement with NYLIM. Pursuant to a Subadvisory
Agreement with NYLIM, Lord Abbett & Co. serves as subadvisor to the Developing
Growth Portfolio; American Century Investment Management, Inc. serves as
subadvisor to the Income & Growth Portfolio and Winslow Capital Management, Inc.
serves as the subadvisor to the Large Cap Growth Portfolio. Effective July 3,
2006 Institutional Capital LLC ("ICAP"), an indirect wholly-owned subsidiary of
NYLIM Holdings LLC, which is a wholly-owned subsidiary of New York Life, began
managing the Basic Value Portfolio (now known as the ICAP Select Equity
Portfolio) as interim subadvisor. Prior to July 3, 2006 The Dreyfus Corporation
served as the subadvisor.
NYLIM also serves as administrator for the Fund. NYLIM provides offices and
conducts clerical, recordkeeping and bookkeeping services, and is responsible
for the financial and accounting records required to be maintained by the
Portfolios. These administrative services are provided to the Balanced,
Conservative Allocation, Floating Rate, Growth Allocation, Mid Cap Core, Mid Cap
Growth, Mid Cap Value, Moderate Allocation, Moderate Growth Allocation and Small
Cap Growth Portfolios pursuant to the Management Agreements referenced above.
These services are provided to the other 15 Portfolios pursuant to separate
Administration Agreements. Each of the 15 Portfolios pays NYLIM a monthly fee
for administrative services performed and the facilities furnished by NYLIM, at
an annual rate of 0.20% of the average daily net assets of each Portfolio.
www.mainstayfunds.com M-375
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Investors Bank & Trust Company, 200 Clarendon Street, P.O. Box 9130, Boston,
Massachusetts, 02116 ("IBT") provides sub-administration and sub-accounting
services to the Portfolios pursuant to an agreement with NYLIM. These services
include calculating daily net asset values of the Portfolios, maintaining
general ledger and sub-ledger accounts for the calculation of the Portfolio's
respective net asset values, and assisting NYLIM in conducting various aspects
of the Portfolio's administrative operations. For providing these services to
the Portfolios, IBT is compensated by NYLIM.
The Fund, on behalf of each Portfolio, pays the Adviser and Administrator a
monthly fee for the services performed and the facilities furnished at an
approximate annual percentage of the average daily net assets of each Portfolio
as follows:
<Table>
<Caption>
ADVISER ADMINISTRATOR
Balanced Portfolio (b) 0.75%(a) 0.00%
- ----------------------------------------------------------
Bond Portfolio 0.25% 0.20%
- ----------------------------------------------------------
Capital Appreciation Portfolio 0.36% 0.20%
- ----------------------------------------------------------
Cash Management Portfolio (c) 0.25% 0.20%
- ----------------------------------------------------------
Common Stock Portfolio 0.25% 0.20%
- ----------------------------------------------------------
Conservative Allocation 0.00% 0.00%
- ----------------------------------------------------------
Convertible Portfolio 0.36% 0.20%
- ----------------------------------------------------------
Developing Growth Portfolio (d) 0.60% 0.20%
- ----------------------------------------------------------
Floating Rate Portfolio 0.60%(a) 0.00%
- ----------------------------------------------------------
Government Portfolio 0.30% 0.20%
- ----------------------------------------------------------
Growth Allocation 0.00% 0.00%
- ----------------------------------------------------------
High Yield Corporate Bond
Portfolio 0.30% 0.20%
- ----------------------------------------------------------
ICAP Select Equity Portfolio (e) 0.60% 0.20%
- ----------------------------------------------------------
Income & Growth Portfolio (f) 0.50% 0.20%
- ----------------------------------------------------------
International Equity Portfolio 0.60% 0.20%
- ----------------------------------------------------------
Large Cap Growth Portfolio (g) 0.50% 0.20%
- ----------------------------------------------------------
Mid Cap Core Portfolio (h) 0.85%(a) 0.00%
- ----------------------------------------------------------
Mid Cap Growth Portfolio 0.75%(a) 0.00%
- ----------------------------------------------------------
Mid Cap Value Portfolio 0.70%(a) 0.00%
- ----------------------------------------------------------
Moderate Allocation 0.00% 0.00%
- ----------------------------------------------------------
Moderate Growth Allocation 0.00% 0.00%
- ----------------------------------------------------------
S&P 500 Index Portfolio (i) 0.10% 0.20%
- ----------------------------------------------------------
Small Cap Growth Portfolio 0.90%(a) 0.00%
- ----------------------------------------------------------
Total Return Portfolio 0.32% 0.20%
- ----------------------------------------------------------
Value Portfolio 0.36% 0.20%
- ----------------------------------------------------------
</Table>
(a) This fee reflects the Management Fee, which includes both Advisory and
Administrative fees.
(b) Effective January 1, 2007, NYLIM has terminated the written expense
limitation agreement in effect.
(c) On assets up to $500 million and 0.20% on assets in excess of $500 million.
(d) On assets up to $200 million, 0.55% from $200 million to $500 million,
0.525% from $500 million to $1 billion and 0.50% on assets in excess of $1
billion.
(e) On assets up to $250 million and 0.55% in excess of $250 million. For the
year ended December 31, 2006, the Manager waived its fees in the amount of
$59,495. Effective January 1, 2007 the voluntary fee waiver will become a
contractual fee waiver.
(f) On assets up to $100 million, 0.45% from $100 million to $200 million and
0.40% on assets in excess of $200 million.
(g) On assets up to $200 million and 0.40% on assets in excess of $200 million.
(h) Effective January 1, 2007, NYLIM has contractually agreed to waive a portion
of its management fee to 0.80% for assets over $500 million.
(i) On assets up to $1 billion and 0.075% on assets in excess of $1 billion.
Effective January 1, 2007 NYLIM has voluntarily agreed to waive its Advisory
Fee to 0.05% on assets up to $1 billion and 0.025% on assets in excess of $1
billion.
Pursuant to the terms of the Subadvisory Agreements between NYLIM and the
subadvisors, NYLIM pays the subadvisors 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 (a) 0.25%
- ------------------------------------------------------------
Convertible Portfolio 0.36%
- ------------------------------------------------------------
Developing Growth Portfolio (b) 0.50%
- ------------------------------------------------------------
Government Portfolio 0.30%
- ------------------------------------------------------------
High Yield Corporate Bond Portfolio 0.30%
- ------------------------------------------------------------
ICAP Select Equity Portfolio (c) 0.45%
- ------------------------------------------------------------
Income & Growth Portfolio (d) 0.40%
- ------------------------------------------------------------
International Equity Portfolio 0.60%
- ------------------------------------------------------------
Large Cap Growth Portfolio (e) 0.40%
- ------------------------------------------------------------
Mid Cap Growth Portfolio 0.375%
- ------------------------------------------------------------
Mid Cap Value Portfolio 0.35%
- ------------------------------------------------------------
Small Cap Growth Portfolio 0.50%
- ------------------------------------------------------------
Total Return Portfolio 0.32%
- ------------------------------------------------------------
Value Portfolio 0.36%
- ------------------------------------------------------------
</Table>
(a) On assets up to $500 million and 0.20% on assets in excess of $500 million.
(b) On assets up to $200 million, 0.45% from $200 million up to $500 million,
0.425% from $500 million up to $1 billion and 0.40% on assets in excess of
$1 billion.
(c) On assets up to $250 million and 0.40% on assets in excess of $250 million.
(d) On assets up to $100 million, 0.35% from $100 million up to $200 million,
0.30% on assets in excess of $200 million.
(e) Of the average daily net asset value of all Subadvisor-serviced investment
company assets managed by the Manager, including series of the Fund, up to
$250 million; 0.35% of the average daily net asset value of all Subadvisor-
serviced investment company assets managed by the Manager, including series
of the Fund, from $250 million to $500 million; 0.30% of the average daily
net asset value of all Subadvisor-serviced investment company assets managed
by the Manager, including series of the Fund, from $500 million to $750
million; 0.25% of the average daily net asset value of all
Subadvisor-serviced investment company assets managed by the Manager,
including series of the Fund, from $750 million to $1 billion; and 0.20% of
the average daily net asset value of all Subadvisor-serviced
M-376 MainStay VP Series Fund, Inc.
investment company assets managed by the Manager, including series of the
Fund, in excess of $1 billion. The subadvisory fee agreement between NYLIM
and Winslow includes breakpoints based on the aggregation of assets of all
NYLIM-managed mutual funds subadvised by Winslow. As a result of the
potential benefits received from this arrangement, NYLIM may provide a
management fee waiver as breakpoints are reached. For the year ended
December 31, 2006, the Manager waived its fees in the amount of $25,627.
NYLIM entered into a written expense limitation agreement under which it agreed
to waive a portion of the Balanced Portfolio's management fee or reimburse the
Balanced Portfolio so that its total ordinary operating expenses do not exceed
0.90% for its Initial Class shares. The Manager will apply an equivalent waiver
or reimbursement, in an equal amount of basis points, to the Service Class
shares of these Portfolios. This expense limitation may be modified or
terminated only with the approval of the Board of Directors. The Manager may
recoup the amount of any management fee waiver or expense reimbursement from the
Portfolio pursuant to this agreement if such action does not cause the Portfolio
to exceed existing expense limitations and the recoupment is made within three
years after the year in which the Manager incurred the expenses. Effective
January 1, 2007 the above mentioned written expense limitation agreement will be
removed.
Effective January 1, 2007 NYLIM has contractually agreed to waive other fees
and/or reimburse the Portfolio for certain expenses so that net annual operating
expenses for the Initial Class shares, excluding Underlying Portfolio expenses
does not exceed 0.05% for the ICAP Select Equity and Mid Cap Core Portfolios.
NYLIM has contractually agreed to waive other fees and/or reimburse the Asset
Allocation Portfolios for certain expenses so that net annual operating expenses
for the Initial Class shares, excluding Underlying Portfolio expenses for the
following portfolios do not exceed the indicated percentages. NYLIM will apply
an equivalent reimbursement, in an equal amount of basis points, to the Service
Class shares. These expense limitations may be modified or terminated only with
the approval of the Board of Directors. NYLIM may recoup the amount of any
expense reimbursements from a share class pursuant to this agreement if such
action does not cause a class to exceed existing expense limitations and the
recoupment is made within three years after the year in which NYLIM incurred the
expense.
<Table>
Conservative Allocation Portfolio 0.25%
- -------------------------------------------------------------
Growth Allocation Portfolio 0.25%
- -------------------------------------------------------------
Moderate Allocation Portfolio 0.25%
- -------------------------------------------------------------
Moderate Growth Allocation Portfolio 0.25%
- -------------------------------------------------------------
</Table>
For the year ended December 31, 2006 the accrual amounts for the contractual and
expense limitations described above are as follows:
<Table>
Conservative Allocation Portfolio $8,917
- -----------------------------------------------------------
</Table>
As of December 31, 2006 the amounts of waived or reimbursed fees that are
subject to possible recoupment by the Manager and the related expiration dates
are as follows:
<Table>
<Caption>
DECEMBER 31,
2009 TOTAL
Conservative Allocation Portfolio* $ 8,917 $8,917
- -------------------------------------------------------------
</Table>
* Commencement of operations February 13, 2006.
At December 31, 2006, the Balanced, Growth Allocation, Moderate Allocation and
Moderate Growth Allocation Portfolio's had no amounts available for recoupment.
NYLIM has directed certain portfolio trades brokers who paid a portion of the
expenses of the ICAP Select Equity, Developing Growth and Large Cap Growth
Portfolios for the year ended December 31, 2006. The Portfolio's miscellaneous
expenses were reduced by $6,894, $5,844 and $12,573, respectively, under this
agreement.
(B) DISTRIBUTOR. NYLIFE Distributors LLC ("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.
(C) DISTRIBUTION AND SERVICE FEES. With respect to the Service Class shares of
all Portfolios, except the 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.
(D) NON-INTERESTED DIRECTOR FEES. For the year ended December 31, 2006,
Non-Interested Directors were paid an annual retainer of $35,000, $4,000 for
each Board meeting attended, $2,000 for each telephonic Board meeting attended,
$2,000 for each Audit Committee meeting attended and $1,500 for each Valuation
and Nominating and Governance Committee meeting attended, plus reimbursement for
travel and other out-of-pocket expenses. The Lead Independent Director received
an additional retainer of $1,000 per month (January 1, 2006 through December 31,
2006), and the Audit Committee Chair received an additional annual retainer of
$12,000, and each
www.mainstayfunds.com M-377
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
member of the Audit Committee received an annual retainer of $3,000.
(E) CAPITAL. At December 31, 2006, NYLIAC was the beneficial owner of shares of
the following Portfolios with net asset values and percentages of net assets as
follows:
<Table>
Balanced Portfolio $11,522,644 6.0%
- --------------------------------------------------------------
Conservative Allocation Portfolio 536,466 0.8
- --------------------------------------------------------------
Floating Rate Portfolio 48,092,626 16.9
- --------------------------------------------------------------
Growth Allocation Portfolio 558,613 0.7
- --------------------------------------------------------------
Moderate Allocation Portfolio 545,437 0.4
- --------------------------------------------------------------
Moderate Growth Allocation Portfolio 555,713 0.3
- --------------------------------------------------------------
</Table>
(F) 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, 2006 these fees, which are included in Professional fees shown on
the Statement of Operations, are as follows:
<Table>
Balanced Portfolio $ 7,185
- -----------------------------------------------------------
Bond Portfolio 22,345
- -----------------------------------------------------------
Capital Appreciation Portfolio 39,238
- -----------------------------------------------------------
Cash Management Portfolio $16,271
- -----------------------------------------------------------
Common Stock Portfolio 43,846
- -----------------------------------------------------------
Conservative Allocation 1,306
- -----------------------------------------------------------
Convertible Portfolio 16,823
- -----------------------------------------------------------
Developing Growth Portfolio 2,635
- -----------------------------------------------------------
Floating Rate Portfolio 9,598
- -----------------------------------------------------------
Government Portfolio 12,759
- -----------------------------------------------------------
Growth Allocation 1,559
- -----------------------------------------------------------
High Yield Corporate Bond Portfolio 65,490
- -----------------------------------------------------------
ICAP Select Equity Portfolio 5,624
- -----------------------------------------------------------
Income & Growth Portfolio 5,139
- -----------------------------------------------------------
International Equity Portfolio 19,421
- -----------------------------------------------------------
Large Cap Growth Portfolio 7,766
- -----------------------------------------------------------
Mid Cap Core Portfolio 13,443
- -----------------------------------------------------------
Mid Cap Growth Portfolio 15,244
- -----------------------------------------------------------
Mid Cap Value Portfolio 20,820
- -----------------------------------------------------------
Moderate Allocation 2,781
- -----------------------------------------------------------
Moderate Growth Allocation 3,272
- -----------------------------------------------------------
S&P 500 Index Portfolio 66,901
- -----------------------------------------------------------
Small Cap Growth Portfolio 8,410
- -----------------------------------------------------------
Total Return Portfolio 22,322
- -----------------------------------------------------------
Value Portfolio 30,821
- -----------------------------------------------------------
</Table>
M-378 MainStay VP Series Fund, Inc.
NOTE 4--FEDERAL INCOME TAX:
The following table discloses the current year reclassifications between
accumulated undistributed net investment income (loss), accumulated
undistributed net realized gain (loss) and paid-in-capital arising from
permanent differences; net assets at December 31, 2006 are not affected.
<Table>
<Caption>
ACCUMULATED ACCUMULATED ADDITIONAL
UNDISTRIBUTED NET UNDISTRIBUTED NET PAID-IN
INVESTMENT INCOME (LOSS) REALIZED GAIN (LOSS) CAPITAL
Balanced Portfolio $ 67,409 $ (67,409) $ --
- ---------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio 157,951 (157,951) --
- ---------------------------------------------------------------------------------------------------------------------------------
Cash Management Portfolio 5,102 (5,102) --
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock Portfolio (95,727) 95,727 --
- ---------------------------------------------------------------------------------------------------------------------------------
Conservative Allocation Portfolio 71,890 (60,378) (11,512)
- ---------------------------------------------------------------------------------------------------------------------------------
Convertible Portfolio 510,909 (510,907) (2)
- ---------------------------------------------------------------------------------------------------------------------------------
Developing Growth Portfolio 278,071 -- (278,071)
- ---------------------------------------------------------------------------------------------------------------------------------
Government Portfolio 215,231 (215,231) --
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Allocation Portfolio 260,598 (249,086) (11,512)
- ---------------------------------------------------------------------------------------------------------------------------------
High Yield Corporate Bond Portfolio 156,240 (156,240) --
- ---------------------------------------------------------------------------------------------------------------------------------
Income & Growth Portfolio (24,223) 24,223 --
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity Portfolio (2,145,423) 2,145,423 --
- ---------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Portfolio 367,953 -- (367,953)
- ---------------------------------------------------------------------------------------------------------------------------------
Moderate Allocation Portfolio 229,959 (218,447) (11,512)
- ---------------------------------------------------------------------------------------------------------------------------------
Moderate Growth Allocation Portfolio 394,157 (382,645) (11,512)
- ---------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index Portfolio (277,337) 277,340 (3)
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Portfolio 1,169,218 -- (1,169,218)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return Portfolio 22,069 (22,069) --
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
The reclassifications for the Portfolios are primarily due to paydown gain
(loss), dividends received from real estate investment trusts and regulated
investment companies, foreign currency gain (loss), reclassifications of
distributions, premium amortization and accretion adjustments, bond
restructuring, non-deductible offering costs and net operating losses.
www.mainstayfunds.com M-379
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 years ended December 31, 2006 and December 31, 2005 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>
2006 2005
------------------------------------------- -------------------------------------------
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
Balanced Portfolio $ 4,415,502 $ 658,086 $ 1,253,763 $ --
- -------------------------------------------------------------------------------------------------------------------------------
Cash Management Portfolio 15,352,470 4,916 8,844,731** --
- -------------------------------------------------------------------------------------------------------------------------------
Conservative Allocation
Portfolio 800,840 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Growth Allocation Portfolio 979,311 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
ICAP Select Equity
Portfolio 576,562 661,254 826,736 977,399
- -------------------------------------------------------------------------------------------------------------------------------
Income & Growth Portfolio 815,812 1,209,198 1,159,544** --
- -------------------------------------------------------------------------------------------------------------------------------
International Equity
Portfolio 6,373,561 163,610 5,061,487** 12,895,717**
- -------------------------------------------------------------------------------------------------------------------------------
Mid Cap Core Portfolio -- 2,008,253* 12,850,980 11,483,427
- -------------------------------------------------------------------------------------------------------------------------------
Mid Cap Value Portfolio 270,708* 6,026,150* 3,016,465 19,427,995
- -------------------------------------------------------------------------------------------------------------------------------
Moderate Allocation
Portfolio 1,567,892 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Moderate Growth Allocation
Portfolio 2,212,773 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total Return Portfolio 3,864,548 4,888,296 7,426,921** --
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
* The tax-based distributions from ordinary income and long-term gains are not
different between book and tax for 2006.
** The tax-based distributions from ordinary income and long-term gains are not
different between book and tax for 2005.
M-380 MainStay VP Series Fund, Inc.
At December 31, 2006, the components of accumulated earnings on a tax basis were
as follows:
<Table>
<Caption>
ACCUMULATED OTHER UNREALIZED
ORDINARY CAPITAL GAINS TEMPORARY APPRECIATION
INCOME (LOSSES) DIFFERENCES (DEPRECIATION)
Balanced Portfolio $ 54,011 $ 73,940 $ -- $ 11,959,759
- --------------------------------------------------------------------------------------------------------------------------
Bond Portfolio 22,228,200 (4,420,863) -- (1,280,198)
- --------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio 945,648 (201,289,950) -- 210,429,824
- --------------------------------------------------------------------------------------------------------------------------
Cash Management Portfolio 67,405 (4,909) (67,168) --
- --------------------------------------------------------------------------------------------------------------------------
Common Stock Portfolio 32,397,829 56,016,193 -- 124,447,090
- --------------------------------------------------------------------------------------------------------------------------
Conservative Allocation Portfolio 14,771 253,094 -- 2,292,614
- --------------------------------------------------------------------------------------------------------------------------
Convertible Portfolio 8,411,149 9,727,678 (40,407) 30,532,245
- --------------------------------------------------------------------------------------------------------------------------
Developing Growth Portfolio -- 3,704,714 -- 5,899,681
- --------------------------------------------------------------------------------------------------------------------------
Floating Rate Portfolio 5,016 (506,074) (41,070) (459,108)
- --------------------------------------------------------------------------------------------------------------------------
Government Portfolio 12,142,051 (6,218,707) (26,597) (1,990,466)
- --------------------------------------------------------------------------------------------------------------------------
Growth Allocation Portfolio 22,880 861,502 -- 4,255,612
- --------------------------------------------------------------------------------------------------------------------------
High Yield Corporate Bond Portfolio 98,611,546 (91,446,501) (11,204) 49,709,572
- --------------------------------------------------------------------------------------------------------------------------
ICAP Select Equity Portfolio 4,230,836 9,190,932 -- 18,688,200
- --------------------------------------------------------------------------------------------------------------------------
Income & Growth Portfolio 3,487,815 3,102,001 -- 15,260,442
- --------------------------------------------------------------------------------------------------------------------------
International Equity Portfolio 14,816,620 30,653,240 (1,850,608) 113,579,810
- --------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio 45,570 (112,737,716) -- 22,650,113
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Core Portfolio 8,442,110 28,884,737 -- 39,326,895
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Portfolio -- 26,063,155 -- 78,839,489
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Value Portfolio 17,227,335 27,525,527 (438,911) 63,159,856
- --------------------------------------------------------------------------------------------------------------------------
Moderate Allocation Portfolio 19,011 719,106 -- 5,889,389
- --------------------------------------------------------------------------------------------------------------------------
Moderate Growth Allocation Portfolio 34,443 1,416,474 -- 8,033,434
- --------------------------------------------------------------------------------------------------------------------------
S&P 500 Index Portfolio 23,131,898 (130,483,748) (5,650,255) 487,479,900
- --------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Portfolio -- 12,353,234 -- 31,074,111
- --------------------------------------------------------------------------------------------------------------------------
Total Return Portfolio 11,997,356 27,736,890 (112,064) 57,099,484
- --------------------------------------------------------------------------------------------------------------------------
Value Portfolio 28,525,826 41,800,957 (1,357,496) 116,166,879
- --------------------------------------------------------------------------------------------------------------------------
<Caption>
TOTAL
ACCUMULATED
GAIN (LOSS)
Balanced Portfolio $ 12,087,710
- --------------------------------------
Bond Portfolio 16,527,139
- --------------------------------------
Capital Appreciation Portfolio 10,085,522
- --------------------------------------
Cash Management Portfolio (4,672)
- --------------------------------------
Common Stock Portfolio 212,861,112
- --------------------------------------
Conservative Allocation Portfolio 2,560,479
- --------------------------------------
Convertible Portfolio 48,630,665
- --------------------------------------
Developing Growth Portfolio 9,604,395
- --------------------------------------
Floating Rate Portfolio (1,001,236)
- --------------------------------------
Government Portfolio 3,906,281
- --------------------------------------
Growth Allocation Portfolio 5,139,994
- --------------------------------------
High Yield Corporate Bond Portfolio 56,863,413
- --------------------------------------
ICAP Select Equity Portfolio 32,109,968
- --------------------------------------
Income & Growth Portfolio 21,850,258
- --------------------------------------
International Equity Portfolio 157,199,062
- --------------------------------------
Large Cap Growth Portfolio (90,042,033)
- --------------------------------------
Mid Cap Core Portfolio 76,653,742
- --------------------------------------
Mid Cap Growth Portfolio 104,902,644
- --------------------------------------
Mid Cap Value Portfolio 107,473,807
- --------------------------------------
Moderate Allocation Portfolio 6,627,506
- --------------------------------------
Moderate Growth Allocation Portfolio 9,484,351
- --------------------------------------
S&P 500 Index Portfolio 374,477,795
- --------------------------------------
Small Cap Growth Portfolio 43,427,345
- --------------------------------------
Total Return Portfolio 96,721,666
- --------------------------------------
Value Portfolio 185,136,166
- --------------------------------------
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily due to wash sale loss deferrals,
amortization/accretion of premiums/discounts, real estate investment trust,
mark-to-market of futures contracts and forward currency contracts and other
basis adjustments.
The other temporary differences are primarily due to distribution payables,
post-October loss deferrals, straddle loss deferrals and interest adjustments.
www.mainstayfunds.com M-381
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At December 31, 2006, for federal income tax purposes, capital loss
carryfowards, as shown in the table below, were available to the extent provided
by the 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 or currency losses that arose
after October 31, 2006 as if they arose on January 1, 2007.
<Table>
<Caption>
CAPITAL/
CAPITAL LOSS CURRENCY
AVAILABLE AMOUNTS LOSS DEFERRED
THROUGH (000'S) (000'S)
Bond Portfolio 2013 $ 1,692
2014 2,729
- ---------------------------------------------------------------
$ 4,421 $ --
- ---------------------------------------------------------------
Capital Appreciation
Portfolio 2009 $ 44,060
2010 97,959
2011 21,298
2012 37,973
- ---------------------------------------------------------------
$201,290 $ --
- ---------------------------------------------------------------
Cash Management
Portfolio 2014 $ 5
- ---------------------------------------------------------------
$ 5 $ --
- ---------------------------------------------------------------
Floating Rate
Portfolio 2013 $ 283
2014 223
- ---------------------------------------------------------------
$ 506 $ 40
- ---------------------------------------------------------------
Government Portfolio 2008 $ 1,695
2012 2,240
2014 2,284
- ---------------------------------------------------------------
$ 6,219 $ 27
- ---------------------------------------------------------------
High Yield Corporate
Bond Portfolio 2009 $ 4,882
2010 24,586
2011 61,979
- ---------------------------------------------------------------
$ 91,447 $ 11*
- ---------------------------------------------------------------
International Equity
Portfolio $ --
- ---------------------------------------------------------------
$ -- $ 1,851*
- ---------------------------------------------------------------
Large Cap Growth
Portfolio 2009 $ 74,416
2010 37,086
2012 294
2014 942
- ---------------------------------------------------------------
$112,738 $ --
- ---------------------------------------------------------------
</Table>
<Table>
<Caption>
CAPITAL/
CAPITAL LOSS CURRENCY
AVAILABLE AMOUNTS LOSS DEFERRED
THROUGH (000'S) (000'S)
S&P 500 Index
Portfolio 2010 $ 66,906
2011 14,323
2012 1,932
2013 17,352
2014 29,971
- ---------------------------------------------------------------
$130,484 $ 5,650
- ---------------------------------------------------------------
</Table>
* Currency losses.
The Capital Appreciation, Convertible, Developing Growth and High Yield
Corporate Portfolios utilized $37,805,234, $6,262,353, $3,223,373 and
$4,633,170, respectively, of capital loss carryforwards during year ended
December 31, 2006.
NOTE 5--COMMITMENTS AND CONTINGENCIES:
As of December 31, 2006, the following Portfolios had unfunded loan commitments
pursuant to the following loan agreements:
FLOATING RATE PORTFOLIO
<Table>
<Caption>
UNFUNDED UNREALIZED
BORROWER COMMITMENT APPRECIATION
InfrastruX Group, Inc., due
11/15/12 $ 63,636 $ 239
Lucite International US Finco,
Ltd., due 7/8/13 259,542 1,784
- ----------------------------------------------------------
$ 2,023
- ----------------------------------------------------------
</Table>
The commitments are available until the maturity date of the respective
security.
NOTE 6--PORTFOLIO SECURITIES LOANED, FOREIGN CURRENCY FORWARD CONTRACTS, FOREIGN
CURRENCY, WRITTEN OPTIONS AND RESTRICTED SECURITIES:
As of December 31, 2006, the following Portfolios had securities on loan and
received collateral as follows:
<Table>
<Caption>
MARKET VALUE
OF SECURITIES CASH
PORTFOLIO ON LOAN COLLATERAL
Balanced $ 18,617,871 $19,202,655
- --------------------------------------------------------------
Bond 43,520,448 44,537,500
- --------------------------------------------------------------
Capital Appreciation 24,993,226 25,821,369
- --------------------------------------------------------------
Common Stock 68,575,387 70,811,305
- --------------------------------------------------------------
Convertible 38,026,238 39,504,687
- --------------------------------------------------------------
Developing Growth 18,270,059 18,943,310
- --------------------------------------------------------------
Government 43,479,723 44,810,053
- --------------------------------------------------------------
</Table>
M-382 MainStay VP Series Fund, Inc.
<Table>
<Caption>
MARKET VALUE
OF SECURITIES CASH
PORTFOLIO ON LOAN COLLATERAL
High Yield Corporate Bond $ 51,286,810 $52,514,218
- --------------------------------------------------------------
ICAP Select Equity 4,935,828 5,091,458
- --------------------------------------------------------------
Income and Growth 12,038,194 12,461,893
- --------------------------------------------------------------
International Equity 53,767,428 56,419,373
- --------------------------------------------------------------
Large Cap Growth 19,012,640 19,577,892
- --------------------------------------------------------------
Mid Cap Core 42,429,067 43,942,595
- --------------------------------------------------------------
Mid Cap Growth 58,459,217 60,113,412
- --------------------------------------------------------------
Mid Cap Value 76,421,412 78,961,705
- --------------------------------------------------------------
S&P 500 Index 65,834,860 68,086,178
- --------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET VALUE
OF SECURITIES CASH
PORTFOLIO ON LOAN COLLATERAL
Small Cap Growth $ 42,769,141 $44,089,514
- --------------------------------------------------------------
Total Return 32,038,859 32,978,208
- --------------------------------------------------------------
Value 51,084,987 52,861,146
- --------------------------------------------------------------
</Table>
The cash collateral received for securities on loan was used to purchase highly
liquid short-term investments in accordance with the securities lending
procedures of the Portfolios. Securities purchased with collateral received are
valued at amortized cost which approximates market value.
INTERNATIONAL EQUITY PORTFOLIO
Foreign currency forward contracts held at December 31, 2006:
<Table>
<Caption>
CONTRACT CONTRACT UNREALIZED
AMOUNT AMOUNT APPRECIATION/
PURCHASED SOLD (DEPRECIATION)
Foreign Currency Buy Contracts
- ------------------------------------------------------------------------------------------------------------------------------
Australian Dollar vs. U.S. Dollar, expiring 5/30/07 A$ 2,694,783 $ 2,060,000 $ 57,964
- ------------------------------------------------------------------------------------------------------------------------------
Japanese Yen vs. U.S. Dollar, expiring 3/5/07 Y 415,399,050 3,630,000 (111,965)
- ------------------------------------------------------------------------------------------------------------------------------
Pound Sterling vs. U.S. Dollar, expiring 6/19/07 L 2,341,789 4,600,000 (14,172)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CONTRACT CONTRACT
AMOUNT AMOUNT
SOLD PURCHASED
Foreign Currency Sale Contracts
- ------------------------------------------------------------------------------------------------------------------------------
Australian Dollar vs. Canadian Dollar, expiring 2/9/07 A$ 6,634,105 C$ 5,725,000 (316,767)
- ------------------------------------------------------------------------------------------------------------------------------
Australian Dollar vs. Canadian Dollar, expiring 5/30/07 A$ 2,587,087 C$ 2,280,000 (69,664)
- ------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar vs. Australian Dollar, expiring 2/9/07 C$ 10,602,000 A$ 12,417,762 690,872
- ------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar vs. Australian Dollar, expiring 5/30/07 C$ 12,782,000 A$ 14,631,700 491,248
- ------------------------------------------------------------------------------------------------------------------------------
Euro Dollar vs. Japanese Yen, expiring 1/12/07 E 5,131,201 Y 750,229,113 (466,171)
- ------------------------------------------------------------------------------------------------------------------------------
Euro Dollar vs. Japanese Yen, expiring 5/29/07 E 22,060,000 Y 3,279,219,000 (1,223,000)
- ------------------------------------------------------------------------------------------------------------------------------
Hong Kong Dollar vs. Pound Sterling, expiring 6/6/07 HK$52,513,332 L 3,490,000 42,923
- ------------------------------------------------------------------------------------------------------------------------------
Swiss Franc vs. Japanese Yen, expiring 6/12/07 CF 33,995,000 Y 3,260,604,662 (316,611)
- ------------------------------------------------------------------------------------------------------------------------------
Swedish Krona vs. Japanese Yen, expiring 3/14/07 KR 69,250,000 Y 1,106,997,655 (772,245)
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on foreign currency forward
contracts: $ (2,007,588)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M-383
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HIGH YIELD PORTFOLIO
Foreign currency forward contracts held at December 31, 2006:
<Table>
<Caption>
CONTRACT CONTRACT UNREALIZED
AMOUNT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
Foreign Currency Sale Contracts
- ------------------------------------------------------------------------------------------------------------------------------
Euro vs. U.S. Dollar, expiring 1/4/07 E 3,045,600 $ 3,896,419 $ (124,113)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CONTRACT CONTRACT
AMOUNT AMOUNT
PURCHASED SOLD
Foreign Currency Buy Contracts
- ------------------------------------------------------------------------------------------------------------------------------
Euro vs. U.S. Dollar, expiring 1/4/07 E 3,045,600 $ 3,888,774 131,757
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on foreign currency forward
contracts: $ 7,644
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
As of December 31, 2006, the following Portfolios had foreign currency:
INTERNATIONAL EQUITY PORTFOLIO
<Table>
<Caption>
CURRENCY COST VALUE
Australian Dollar A$ 7,174,248 $ 5,517,027 $ 5,662,992
Danish Krone DK 18,825 3,205 3,333
Euro E 15,949 21,031 21,054
Japanese Yen Y 2,023,664,553 17,204,392 17,004,870
Norwegian Krone NK 2,278,319 365,863 365,396
Pound Sterling L 1,695,304 3,321,103 3,319,405
Singapore Dollar S$ 40,256 25,916 26,247
Swiss Franc CF 351,093 286,794 288,135
- -----------------------------------------------------------------------------------------
$26,745,331 $26,691,432
- -----------------------------------------------------------------------------------------
</Table>
HIGH YIELD PORTFOLIO
<Table>
<Caption>
CURRENCY COST VALUE
Canadian Dollar C$ 338,580 $ 251,621 $ 290,340
Euro Dollar E 1,120 1,434 1,479
- ---------------------------------------------------------------------------------------
$ 253,055 $ 291,819
- ---------------------------------------------------------------------------------------
</Table>
During the year ended December 31, 2006, the following Portfolios had
transactions in written options:
MID CAP VALUE PORTFOLIO
<Table>
<Caption>
NUMBER OF
CONTRACTS PREMIUM
Options outstanding at December 31, 2005 -- $ --
- --------------------------------------------------------------------------
Options--Canceled in Closing Transactions 1,324 262,081
- --------------------------------------------------------------------------
Options--written (1,324) (262,081)
- --------------------------------------------------------------------------
Options outstanding at December 31, 2006 -- $ --
- --------------------------------------------------------------------------
</Table>
TOTAL RETURN PORTFOLIO
<Table>
<Caption>
NUMBER OF
CONTRACTS PREMIUM
Options outstanding at December 31, 2005 -- $ --
- --------------------------------------------------------------------------
Options--Canceled in Closing Transactions 613 101,068
- --------------------------------------------------------------------------
Options--written (613) (101,068)
- --------------------------------------------------------------------------
Options outstanding at December 31, 2006 -- $ --
- --------------------------------------------------------------------------
</Table>
VALUE PORTFOLIO
<Table>
<Caption>
NUMBER OF
CONTRACTS PREMIUM
Options outstanding at December 31, 2005 -- $ --
- --------------------------------------------------------------------------
Options--Canceled in Closing Transactions 2,126 349,528
- --------------------------------------------------------------------------
Options--written (2,126) (349,528)
- --------------------------------------------------------------------------
Options outstanding at December 31, 2006 -- $ --
- --------------------------------------------------------------------------
</Table>
M-384 MainStay VP Series Fund, Inc.
HIGH YIELD CORPORATE BOND PORTFOLIO
Restricted securities held at December 31, 2006:
<Table>
<Caption>
NUMBER OF
DATE(S) OF WARRANTS/ 12/31/06 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 10/15/02 949,786 697,808 2,892,098 0.2
Convertible Preferred Stock 6.00% 6/8/05 107,873 295,589 351,936 0.0(a)
- -------------------------------------------------------------------------------------------------------------------------------
Haights Cross Communications, Inc.
Preferred Stock 16.00% 1/22/04-2/3/06 99,800 4,655,813 4,091,800 0.3
Warrants 1/22/04-2/3/06 97,876 979 979 0.0(a)
- -------------------------------------------------------------------------------------------------------------------------------
North Atlantic Trading Co., Inc.
Common Stock 4/21/04 2,418 24 24 0.0(a)
- -------------------------------------------------------------------------------------------------------------------------------
$10,740,806 $7,336,851 0.5%
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
(a) Less than one tenth of a percent.
NOTE 7--LINE OF CREDIT:
The Portfolios, except for the 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 paid a commitment fee, at an annual rate
of 0.07%, up to September 6, 2006 at which time the rate changed to .060% 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 made or outstanding on this line of credit during the year ended
December 31, 2006.
NOTE 8--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 have cooperated fully and completed responding to these
requests. To date, substantially all of the costs associated with these and
other regulatory matters have been borne 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.
In a separate matter, the Securities and Exchange Commission 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 Securities
and Exchange Commission concerning a possible resolution of this matter. There
can be no assurance at this time as to the outcome of these efforts.
The MainStay Equity Index Fund is not a portfolio of the MainStay VP Series
Fund, Inc.
www.mainstayfunds.com M-385
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--PURCHASES AND SALES OF SECURITIES (IN 000'S):
During the year ended December 31, 2006, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<Table>
<Caption>
BALANCED BOND
PORTFOLIO PORTFOLIO
------------------- --------------------
PURCHASES SALES PURCHASES SALES
U.S. Government Securities $ -- $ -- $564,671 $563,659
- ------------------------------------------------------------------------
All Others 130,087 70,316 256,346 206,553
- ------------------------------------------------------------------------
Total $130,087 $70,316 $821,017 $770,212
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CONSERVATIVE ALLOCATION CONVERTIBLE
PORTFOLIO PORTFOLIO
------------------------ --------------------
PURCHASES SALES PURCHASES SALES
U.S. Government Securities $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------
All Others 70,220 7,769 263,651 285,232
- -----------------------------------------------------------------------------
Total $70,220 $7,769 $263,651 $285,232
- -----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
GOVERNMENT GROWTH ALLOCATION
PORTFOLIO PORTFOLIO
-------------------- -------------------
PURCHASES SALES PURCHASES SALES
U.S. Government Securities $208,938 $229,686 $ -- $ --
- ------------------------------------------------------------------------
All Others 9,970 8,958 100,502 24,654
- ------------------------------------------------------------------------
Total $218,908 $238,644 $100,502 $24,654
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
INCOME & GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
------------------- --------------------
PURCHASES SALES PURCHASES SALES
U.S. Government Securities $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------
All Others 74,270 82,088 301,083 178,942
- ------------------------------------------------------------------------
Total $74,270 $82,088 $301,083 $178,942
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MID CAP GROWTH MID CAP VALUE
PORTFOLIO PORTFOLIO
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
U.S. Government Securities $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------
All Others 163,060 162,449 231,566 229,393
- -------------------------------------------------------------------------
Total $163,060 $162,449 $231,566 $229,393
- -------------------------------------------------------------------------
</Table>
<Table>
<Caption>
S&P 500 INDEX SMALL CAP GROWTH
PORTFOLIO PORTFOLIO
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
U.S. Government Securities $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------
All Others 72,407 186,962 104,405 108,360
- -------------------------------------------------------------------------
Total $72,407 $186,962 $104,405 $108,360
- -------------------------------------------------------------------------
</Table>
M-386 MainStay VP Series Fund, Inc.
<Table>
<Caption>
CAPITAL APPRECIATION COMMON STOCK
PORTFOLIO PORTFOLIO
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
$ -- $ -- $ -- $ --
- -----------------------------------------------
233,155 368,561 855,358 912,758
- -----------------------------------------------
$233,155 $368,561 $855,358 $912,758
- -----------------------------------------------
</Table>
<Table>
<Caption>
DEVELOPING GROWTH FLOATING RATE
PORTFOLIO PORTFOLIO
-------------------- -------------------
PURCHASES SALES PURCHASES SALES
$ -- $ -- $ -- $ --
- ----------------------------------------------
132,639 130,062 230,147 11,021
- ----------------------------------------------
$132,639 $130,062 $230,147 $11,021
- ----------------------------------------------
</Table>
<Table>
<Caption>
HIGH YIELD CORPORATE ICAP SELECT EQUITY
BOND PORTFOLIO PORTFOLIO
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
$ -- $ 47,515 $ -- $ --
- -----------------------------------------------
596,571 536,440 217,924 154,688
- -----------------------------------------------
$596,571 $583,955 $217,924 $154,688
- -----------------------------------------------
</Table>
<Table>
<Caption>
LARGE CAP GROWTH MID CAP CORE
PORTFOLIO PORTFOLIO
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
$ -- $ -- $ -- $ --
- -----------------------------------------------
234,901 159,156 528,877 487,803
- -----------------------------------------------
$234,901 $159,156 $528,877 $487,803
- -----------------------------------------------
</Table>
<Table>
<Caption>
MODERATE ALLOCATION MODERATE GROWTH
PORTFOLIO ALLOCATION PORTFOLIO
------------------- ---------------------
PURCHASES SALES PURCHASES SALES
$ -- $ -- $ -- $ --
- -----------------------------------------------
176,417 45,274 201,943 39,635
- -----------------------------------------------
$176,417 $45,274 $201,943 $39,635
- -----------------------------------------------
</Table>
<Table>
<Caption>
TOTAL RETURN VALUE
PORTFOLIO PORTFOLIO
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
$128,050 $134,354 $ -- $ --
- -----------------------------------------------
161,585 232,141 291,363 312,886
- -----------------------------------------------
$289,635 $366,495 $291,363 $312,886
- -----------------------------------------------
</Table>
www.mainstayfunds.com M-387
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10--CAPITAL SHARE TRANSACTIONS (IN 000'S):
Transactions in capital shares for the year ended December 31, 2006 and the year
ended December 31, 2005 were as follows:
<Table>
<Caption>
BALANCED PORTFOLIO BOND PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED MAY 2, 2005* YEAR ENDED YEAR ENDED
DECEMBER 31, THROUGH DECEMBER 31, DECEMBER 31,
2006 DECEMBER 31, 2005 2006 2005
Shares sold 340 6,618 925 10,178 7,705 1,441 937 2,437
- -------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 35 416 11 109 353 75 926 210
- -------------------------------------------------------------------------------------------------------------
375 7,034 936 10,287 8,058 1,516 1,863 2,647
- -------------------------------------------------------------------------------------------------------------
Shares redeemed (96) (1,486) (8) (189) (6,594) (778) (4,807) (405)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) 279 5,548 928 10,098 1,464 738 (2,944) 2,242
- -------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCK PORTFOLIO CONSERVATIVE ALLOCATION PORTFOLIO
------------------------------------- ---------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED FEBRUARY 13, 2006*
DECEMBER 31, DECEMBER 31, THROUGH
2006 2005 DECEMBER 31, 2006
Shares sold 4,682 614 464 666 145 6,493
- ---------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 1,042 68 859 44 2 73
- ---------------------------------------------------------------------------------------------------------
5,724 682 1,323 710 147 6,566
- ---------------------------------------------------------------------------------------------------------
Shares redeemed (6,847) (208) (6,424) (127) (8) (506)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,123) 474 (5,101) 583 139 6,060
- ---------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
FLOATING RATE PORTFOLIO GOVERNMENT PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED MAY 2, 2005* YEAR ENDED YEAR ENDED
DECEMBER 31, THROUGH DECEMBER 31, DECEMBER 31,
2006 DECEMBER 31, 2005 2006 2005
Shares sold 2,948 16,610 2,496 9,725 723 1,558 1,025 2,202
- -------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 238 1,039 68 159 180 55 698 167
- -------------------------------------------------------------------------------------------------------------
3,186 17,649 2,564 9,884 903 1,613 1,723 2,369
- -------------------------------------------------------------------------------------------------------------
Shares redeemed (486) (3,372) (34) (544) (5,436) (768) (5,690) (600)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) 2,700 14,277 2,530 9,340 (4,533) 845 (3,967) 1,769
- -------------------------------------------------------------------------------------------------------------
</Table>
* Commencement of Operations.
M-388 MainStay VP Series Fund, Inc.
<Table>
<Caption>
CAPITAL APPRECIATION PORTFOLIO CASH MANAGEMENT PORTFOLIO
------------------------------------- ---------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL
CLASS CLASS CLASS CLASS CLASS
------------------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
1,625 367 766 553 438,357 258,844
- -----------------------------------------------------------------------
114 4 1 -- 15,358 8,814
- -----------------------------------------------------------------------
1,739 371 767 553 453,715 267,658
- -----------------------------------------------------------------------
(7,161) (375) (8,119) (276) (408,853) (269,424)
- -----------------------------------------------------------------------
(5,422) (4) (7,352) 277 44,862 (1,766)
- -----------------------------------------------------------------------
</Table>
<Table>
<Caption>
CONVERTIBLE PORTFOLIO DEVELOPING GROWTH PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
517 1,746 574 2,122 857 1,097 191 737
- ---------------------------------------------------------------------------------
454 207 333 110 -- -- -- --
- ---------------------------------------------------------------------------------
971 1,953 907 2,232 857 1,097 191 737
- ---------------------------------------------------------------------------------
(3,853) (762) (4,646) (706) (1,148) (571) (1,509) (241)
- ---------------------------------------------------------------------------------
(2,882) 1,191 (3,739) 1,526 (291) 526 (1,318) 496
- ---------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
GROWTH ALLOCATION PORTFOLIO HIGH YIELD CORPORATE BOND PORTFOLIO
--------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
--------------------------- -------------------------------------
FEBRUARY 13, 2006* YEAR ENDED YEAR ENDED
THROUGH DECEMBER 31, DECEMBER 31,
DECEMBER 31, 2006 2006 2005
666 6,882 5,546 9,083 6,372 14,117
- -----------------------------------------------------------------------
9 80 1,715 825 6,266 2,386
- -----------------------------------------------------------------------
675 6,962 7,261 9,908 12,638 16,503
- -----------------------------------------------------------------------
(16) (232) (21,957) (3,218) (23,951) (2,624)
- -----------------------------------------------------------------------
659 6,730 (14,696) 6,690 (11,313) 13,879
- -----------------------------------------------------------------------
</Table>
www.mainstayfunds.com M-389
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<Table>
<Caption>
ICAP SELECT EQUITY PORTFOLIO INCOME & GROWTH PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
Shares sold 5,303 1,192 363 720 824 660 620 1,253
- -------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 70 19 111 44 96 52 71 27
- -------------------------------------------------------------------------------------------------------------
5,373 1,211 474 764 920 712 691 1,280
- -------------------------------------------------------------------------------------------------------------
Shares redeemed (1,140) (302) (1,104) (298) (1,921) (338) (1,148) (167)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) 4,233 909 (630) 466 (1,001) 374 (457) 1,113
- -------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MID CAP CORE PORTFOLIO MID CAP GROWTH PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
Shares sold 3,718 2,489 2,356 2,905 2,584 2,902 3,148 4,358
- -------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 77 51 1,137 630 208 203 5 4
- -------------------------------------------------------------------------------------------------------------
3,795 2,540 3,493 3,535 2,792 3,105 3,153 4,362
- -------------------------------------------------------------------------------------------------------------
Shares redeemed (2,722) (636) (1,616) (213) (2,956) (1,461) (2,089) (509)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,073 1,904 1,877 3,322 (164) 1,644 1,064 3,853
- -------------------------------------------------------------------------------------------------------------
</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
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
Shares sold 2,205 1,574 1,422 2,680 1,422 1,329 1,069 2,320
- -------------------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of dividends
and distributions 215 32 563 85 --(a) --(a) 146 124
- -------------------------------------------------------------------------------------------------------------
2,420 1,606 1,985 2,765 1,422 1,329 1,215 2,444
- -------------------------------------------------------------------------------------------------------------
Shares redeemed (8,221) (612) (7,604) (325) (2,100) (965) (2,400) (353)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) (5,801) 994 (5,619) 2,440 (678) 364 (1,185) 2,091
- -------------------------------------------------------------------------------------------------------------
</Table>
* Commencement of Operations.
(a) Less than one thousand shares.
M-390 MainStay VP Series Fund, Inc.
<Table>
<Caption>
INTERNATIONAL EQUITY PORTFOLIO LARGE CAP GROWTH PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
6,600 4,581 3,033 3,460 8,863 1,498 391 628
- ---------------------------------------------------------------------------------
223 127 847 395 20 1 --(a) --
- ---------------------------------------------------------------------------------
6,823 4,708 3,880 3,855 8,883 1,499 391 628
- ---------------------------------------------------------------------------------
(3,073) (333) (1,019) (181) (3,612) (282) (2,734) (305)
- ---------------------------------------------------------------------------------
3,750 4,375 2,861 3,674 5,271 1,217 (2,343) 323
- ---------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MODERATE ALLOCATION MODERATE GROWTH
MID CAP VALUE PORTFOLIO PORTFOLIO ALLOCATION PORTFOLIO
------------------------------------- ------------------- ---------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- ------------------- ---------------------
YEAR ENDED YEAR ENDED FEBRUARY 13, 2006* FEBRUARY 13, 2006*
DECEMBER 31, DECEMBER 31, THROUGH THROUGH
2006 2005 DECEMBER 31, 2006 DECEMBER 31, 2006
823 2,420 3,655 5,585 507 15,042 948 15,297
- ---------------------------------------------------------------------------------------
278 174 1,196 623 6 138 13 188
- ---------------------------------------------------------------------------------------
1,101 2,594 4,851 6,208 513 15,180 962 15,485
- ---------------------------------------------------------------------------------------
(3,147) (976) (2,920) (463) (18) (2,920) (13) (634)
- ---------------------------------------------------------------------------------------
(2,046) 1,618 1,931 5,745 495 12,260 948 14,851
- ---------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
TOTAL RETURN PORTFOLIO VALUE PORTFOLIO
------------------------------------- -------------------------------------
INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE INITIAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
338 463 285 757 1,504 1,707 921 1,394
- ---------------------------------------------------------------------------------
413 51 387 37 536 102 373 47
- ---------------------------------------------------------------------------------
751 514 672 794 2,040 1,809 1,294 1,441
- ---------------------------------------------------------------------------------
(4,854) (336) (6,265) (264) (4,117) (408) (4,038) (208)
- ---------------------------------------------------------------------------------
(4,103) 178 (5,593) 530 (2,077) 1,401 (2,744) 1,233
- ---------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M-391
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--CONTRACTUAL OBLIGATIONS
The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's Maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
NOTE 12--NEW ACCOUNTING PRONOUNCEMENTS
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax provisions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Portfolio's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. FIN 48 is effective
during the first required financial reporting period for fiscal years beginning
after December 15, 2006. Management of the Fund is currently evaluating the
impact that FIN 48 will have on the Fund's financial statements.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
"fair value," sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of December 31, 2006, the Fund does not believe the
adoption of SFAS No. 157 will impact the amounts reported in the financial
statements, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain measurements reported
in the financial statements for a fiscal period.
M-392 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 Balanced Portfolio, Bond Portfolio,
Capital Appreciation Portfolio, Cash Management Portfolio, Common Stock
Portfolio, Conservative Allocation Portfolio, Convertible Portfolio, Developing
Growth Portfolio, Floating Rate Portfolio, Government Portfolio, Growth
Allocation Portfolio, High Yield Corporate Bond Portfolio, ICAP Select Equity
Portfolio (formerly Basic Value Portfolio), Income & Growth Portfolio,
International Equity Portfolio, Large Cap Growth Portfolio, Mid Cap Core
Portfolio, Mid Cap Growth Portfolio, Mid Cap Value Portfolio, Moderate
Allocation Portfolio, Moderate Growth Allocation Portfolio, S&P 500 Index
Portfolio, Small Cap Growth Portfolio, Total Return Portfolio and Value
Portfolio (constituting MainStay VP Series Fund, Inc., hereafter referred to as
the "Fund") at December 31, 2006, the results of each of their operations for
the year then ended (for Conservative Allocation Portfolio, Growth Allocation
Portfolio, Moderate Allocation Portfolio and Moderate Growth Allocation
Portfolio, from February 13, 2006, commencement of operations, to December 31,
2006), the changes in each of their net assets for each of the two years in the
period then ended (for Conservative Allocation Portfolio, Growth Allocation
Portfolio, Moderate Allocation Portfolio and Moderate Growth Allocation
Portfolio, from February 13, 2006, commencement of operations, to December 31,
2006 and for Balanced Portfolio and Floating Rate Portfolio, from May 2, 2005,
commencement of operations, to December 31, 2005 and the year ended December 31,
2006) 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, 2006 by
correspondence with the custodian, agent banks and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 16, 2007
www.mainstayfunds.com M-393
PROXY VOTING POLICIES AND PROCEDURES (UNAUDITED)
A description of the policies and procedures that New York Life Investment
Management LLC (NYLIM) uses to vote proxies related to the Portfolios'
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 Fund is required to file with the SEC the 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 (UNAUDITED)
Each Portfolio 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
Portfolio'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-394 MainStay VP Series Fund, Inc.
SPECIAL MEETING OF SHAREHOLDERS
Pursuant to notice, a special meeting of the shareholders of the Basic Value
Portfolio of MainStay VP Series Fund, Inc. (the "Fund") was held on September
28, 2006 at the Parsippany, New Jersey offices of New York Life Investment
Management LLC. The purpose of the meeting was to present the following proposal
for shareholder consideration:
To approve a new subadvisory agreement between NYLIM and Institutional Capital
LLC on behalf of the MainStay VP Basic Value Portfolio.
No other business came before the special meeting.
The proposal was passed by the shareholders of the Basic Value Portfolio as
shown below.
<Table>
<Caption>
VOTES VOTES
VOTES FOR AGAINST WITHHELD TOTAL
7,064,664.940 236,197.302 426,909.844 7,727,772.086
- ---------------------------------------------------------
</Table>
www.mainstayfunds.com M-395
DIRECTORS AND OFFICERS (UNAUDITED)
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 or her successor is elected and qualified or
until his or 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>
TERM OF OFFICE,
POSITION(S) HELD WITH NUMBER OF PORTFOLIOS OTHER
NAME AND FUND AND LENGTH PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH OF SERVICE DURING PAST FIVE YEARS OVERSEEN BY DIRECTOR HELD BY DIRECTOR
----------------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS*
BRIAN A. MURDOCK Indefinite; Member of the Board of Managers and 65 Chairman and
3/14/56 Chairman and Director President (since 2004) and Chief Executive Trustee, The
since September 2006 Officer (since July 2006), New York Life MainStay Funds
and Chief Executive Investment Management LLC and New York Life (since September
Officer since July Investment Management Holdings LLC; Senior 2006); Director,
2006 Vice President, New York Life Insurance ICAP Funds, Inc.
Company (since 2004); Chairman of the Board (since 2006)
and President, NYLIFE Distributors LLC
(since 2004); Member of the Board of
Managers, Madison Capital Funding LLC
(since 2004); Member of the Board of
Managers, NYLCAP Manager LLC (since 2004)
and Institutional Capital LLC (since 2006);
Chief Executive Officer, Eclipse Funds and
Eclipse Funds Inc.; Chairman and Trustee
(since September 2006) and Chief Executive
Officer (since July 2006); The MainStay
Funds; Chief Executive Officer (since
August 2006) ICAP Funds, Inc.; Chief
Operating Officer, Merrill Lynch Investment
Managers (2003 to 2004); Chief Investment
Officer, MLIM Europe and Asia (2001 to
2003); President of Merrill Japan and
Chairman of MLIM's Pacific Region (1999 to
2001).
----------------------------------------------------------------------------------------------------------------------------
ROBERT D. ROCK Indefinite; Senior Vice President, New York Life 25 None
12/16/54 Vice President since Insurance Company; Senior Vice President,
1985 and Director Chief Investment Officer, and Director, New
since 1984 York Life Insurance and Annuity Corporation
and NYLIFE Insurance Company of Arizona;
Senior Vice President, NYLIFE Securities
Inc.
----------------------------------------------------------------------------------------------------------------------------
</Table>
* Certain Directors are considered to be interested persons of the Company
within the meaning of the Investment Company Act of 1940 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, ICAP Funds, Inc., NYLIFE
Securities Inc. and/or NYLIFE Distributors LLC, as described in detail
in the column "Principal Occupation(s) During Past Five Years."
M-396 MainStay VP Series Fund, Inc.
<Table>
<Caption>
TERM OF OFFICE,
POSITION(S) HELD WITH NUMBER OF PORTFOLIOS OTHER
NAME AND FUND AND LENGTH PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH OF SERVICE DURING PAST FIVE YEARS OVERSEEN BY DIRECTOR HELD BY DIRECTOR
----------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED DIRECTORS
JILL FEINBERG Indefinite; President, Jill Feinberg & Company, Inc. 25 Director, New
4/14/54 Director since 1995; (special events and meeting planning firm). York Life
Settlement
Corporation
----------------------------------------------------------------------------------------------------------------------------
DANIEL HERRICK Indefinite; Retired. Treasurer and Executive Officer, 25 None
12/1/20 Director since 1983; National Gallery of Art (1985 to 1995).
----------------------------------------------------------------------------------------------------------------------------
RICHARD H. Until age 75; Managing Director, ICC Capital Management; 25 None
NOLAN, JR. Director since 2006; President--Shields/Alliance, Alliance
11/16/46 Capital Management (1994 to 2004).
----------------------------------------------------------------------------------------------------------------------------
RAYMOND STICKEL, Until age 75; Retired; Managing Partner of Investment 25 Trustee, AIM
JR. Director since 2006; Management Services for New York, New Funds Group
3/1/44 Jersey, and Connecticut, Deloitte and
Touche, LLP (1998 to 2002).
----------------------------------------------------------------------------------------------------------------------------
ROMAN L. WEIL Indefinite; V. Duane Rath Professor of Accounting, 25 None
5/22/40 Director since 1994; Graduate School of Business, University of
Audit Committee Chicago; President, Roman L. Weil
Financial Expert Associates, Inc. (consulting firm).
since August 2003
----------------------------------------------------------------------------------------------------------------------------
JOHN A. WEISSER, Indefinite; Retired. Managing Director of Salomon 25 None
JR. Director since 1997; Brothers, Inc. (1981 to 1995).
10/22/41 Lead Independent
Director since July
2005
----------------------------------------------------------------------------------------------------------------------------
<Caption>
POSITION(S) HELD WITH
NAME AND FUND AND LENGTH
DATE OF BIRTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
----------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
ROBERT A. Chief Legal Officer Senior Managing Director, General Counsel, and Secretary, New York Life Investment
ANSELMI since 2003 Management LLC (including predecessor advisory organizations) and New York Life
10/19/46 Investment Management Holdings LLC; Senior Vice President, New York Life Insurance
Company; Vice President and Secretary, McMorgan & Company LLC; Secretary, NYLIM
Service Company LLC; NYLCAP Manager LLC, Madison Capital Funding LLC and
Institutional Capital LLC; Chief Legal Officer, The MainStay Funds, Eclipse Funds,
Eclipse Funds Inc., McMorgan Funds, and ICAP Funds, Inc. (since August 2006);
Managing Director and Senior Counsel, Lehman Brothers Inc. (1998 to 1999); General
Counsel and Managing Director, JP Morgan Investment Management Inc. (1986 to 1998).
----------------------------------------------------------------------------------------------------------------------------
ARPHIELA Treasurer and Managing Director, Mutual Fund Accounting (since September 2006), and Director and
ARIZMENDI Principal Financial Manager of Fund Accounting and Administration (2003 to August 2006), New York Life
10/26/56 and Accounting Investment Management LLC; Treasurer and Principal Financial and Accounting
Officer since 2006; Officer, The MainStay Funds, Eclipse Funds, Eclipse Funds Inc., and McMorgan Funds
Acting Treasurer and (since December 2005), and ICAP Funds, Inc. (since August 2006); Assistant
Principal Financial Treasurer, NYLIFE Distributors LLC; Assistant Treasurer, MainStay VP Series Fund,
and Accounting The MainStay Funds, Eclipse Funds, Eclipse Funds Inc., and McMorgan Funds (1992 to
Officer (2005 to December 2005).
March 2006).
----------------------------------------------------------------------------------------------------------------------------
CHRISTOPHER O. President since July Executive Vice President, New York Life Investment Management LLC and New York Life
BLUNT 2006 Investment Management Holdings LLC (since 2004); Manager and Executive Vice
5/13/62 President, NYLIM Product Distribution, NYLIFE Distributors LLC (since January
2005); Chairman, NYLIM Service Company LLC (since March 2005); Chairman and Class C
Director, New York Life Trust Company, FSB (since 2004); Chairman, New York Life
Trust Company (since February 2005); President, Eclipse Funds, Eclipse Funds Inc.
and The MainStay Funds (since 2005) and ICAP Funds, Inc. (since August 2006);
Chairman and Chief Executive Officer, Giving Capital, Inc. (2001 to 2004); Chief
Marketing Officer--Americas, Merrill Lynch Investment Managers (1999 to 2001);
President, Mercury Funds Distributors (1999 to 2001).
----------------------------------------------------------------------------------------------------------------------------
MICHAEL G. GALLO Executive Vice Senior Vice President, New York Life Insurance Company.
1/1/55 President since
February 2005
----------------------------------------------------------------------------------------------------------------------------
</Table>
www.mainstayfunds.com M-397
<Table>
<Caption>
POSITION(S) HELD WITH
NAME AND FUND AND LENGTH
DATE OF BIRTH OF SERVICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
SCOTT T. Vice President-- Director, New York Life Investment Management LLC (including predecessor advisory
HARRINGTON Administration since organizations); Executive Vice President, New York Life Trust Company and New
2/8/59 2005 York Life Trust Company, FSB (since January 2006); Vice
President--Administration, Eclipse Funds, Eclipse Funds Inc., and The MainStay
Funds (since June 2005) and ICAP Funds, Inc. (since August 2006).
--------------------------------------------------------------------------------------------------------------------------
ALAN J. Senior Vice President Managing Director, Mutual Funds/Administration and Chief Financial Officer of
KIRSHENBAUM since July 2006 Retail Investments, New York Life Investment Management LLC (since July 2006);
6/25/71 Senior Vice President, Eclipse Funds, Eclipse Funds Inc., and The MainStay Funds
(since June 2006) and ICAP Funds, Inc. (since August 2006); Chief Financial
Officer, Bear Stearns Asset Management (1999 to May 2006).
--------------------------------------------------------------------------------------------------------------------------
ALISON H. Senior Vice President Senior Managing Director and Chief Compliance Officer (since March 2006), and
MICUCCI and Chief Compliance Managing Director and Chief Compliance Officer (2003 to February 2006), New York
12/16/65 Officer since 2006; Life Investment Management LLC and New York Life Investment Management Holdings
Vice President-- LLC; Senior Managing Director, Compliance (since March 2006) and Managing
Compliance since Director, Compliance (2003 to February 2006), NYLIFE Distributors LLC; Chief
September 2004 to Compliance Officer, NYLCAP Manager LLC; Senior Vice President and Chief
June 2006 Compliance Officer, Eclipse Funds, Eclipse Funds Inc., The MainStay Funds (since
June 2006) and ICAP Funds, Inc. (since August 2006); Vice President--Compliance,
Eclipse Funds, Eclipse Funds Inc., The MainStay Funds (until June 2006); Deputy
Chief Compliance Officer, New York Life Investment Management LLC (2002 to 2003);
Vice President and Compliance Officer, Goldman Sachs Asset Management (1999 to
2002).
--------------------------------------------------------------------------------------------------------------------------
MARGUERITE E.H. Secretary since Managing Director and Associate General Counsel, New York Life Investment
MORRISON September 2004 Management LLC (since June 2004); Secretary, The MainStay Funds, Eclipse Funds,
3/26/56 Eclipse Funds Inc. and ICAP 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. Vice President--Tax Vice President, New York Life Insurance Company; Vice President, New York Life
ZUCCARO since 1991 Insurance and Annuity Corporation, NYLIFE Insurance Company of Arizona, NYLIFE
12/12/49 LLC, NYLIFE Securities Inc., and NYLIFE Distributors LLC; Tax Vice President, New
York Life International, LLC; Vice President--Tax, Eclipse Funds, Eclipse Funds
Inc., and The MainStay Funds.
--------------------------------------------------------------------------------------------------------------------------
</Table>
M-398 MainStay VP Series Fund, Inc.
RENEWAL OF INVESTMENT ADVISORY AGREEMENT, MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENTS
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act")
requires that each fund's board of directors, including a majority of directors
who are not "interested persons" of the fund, as defined in the 1940 Act
("Independent Directors"), annually review and approve the fund's investment
advisory agreements.
At a meeting held on December 7-8, 2006, the Board of Directors of the Fund (the
"Board"), including the Independent Directors, considered the renewal of the
Fund's investment advisory and subadvisory agreements (collectively, the
"Agreements") with respect to each of the Fund's twenty-five portfolios (each, a
"Portfolio" and collectively the "Portfolios"). The Board requested and
evaluated a variety of information in order to fulfill its obligations under
Section 15(c) of the 1940 Act. Information requested by and provided to the
Board specifically in connection with the annual contract review process
included information from New York Life Investment Management LLC (the
"Adviser") and from MacKay Shields LLC ("MacKay"), Institutional Capital LLC
("ICAP"), American Century Investment Management, Inc. ("American Century"),
Lord Abbett & Co. LLC ("Lord Abbett") and Winslow Capital Management, Inc.
("Winslow" and together with MacKay, ICAP, American Century and Lord Abbett, the
"Subadvisors"). The Adviser and each Subadvisor provided the Board with written
materials that addressed a number of topics, including (without limitation): (i)
services performed; (ii) portfolio performance; (iii) brokerage practices and
allocation of portfolio transactions; (iv) revenue sharing; (v) portfolio
expenses and profitability; (vi) compliance and administration; and (vii)
substantive litigation and governmental inquires. To supplement their review,
the Independent Directors engaged Strategic Insight Mutual Fund Research and
Consulting, LLC ("Strategic Insight"), an outside third-party service provider,
to report objectively on each Portfolio's investment performance, management fee
and expense ratio.
The Board also considered information furnished to it throughout the year at
regular and special Board meetings. On a quarterly basis, the Board receives
various reports and presentations from the Adviser, including portfolio
performance reports, Fund compliance reports and sales and marketing reports. As
a result, the Board was able to continually monitor issues or concerns that
arose in these areas over the past year and referenced these materials during
the annual contract renewal process. The Board used this information, in
addition to the information received in connection with the annual renewal
process, to become fully informed in its consideration of renewal of the
Agreements.
In determining to renew the Agreements, the members of the Board reviewed and
evaluated all of the information and factors they believed, in light of legal
advice furnished to them by independent legal counsel and through the exercise
of their own business judgment, to be relevant and appropriate. The broad
factors considered by the Board are discussed in greater detail below, and
included, among other things: (i) the nature, extent, and quality of the
services to be provided to the Fund by the Adviser; (ii) the investment
performance of the Portfolios, including the performance of the Adviser as
investment advisor to the Portfolios; (iii) the costs of the services to be
provided, and profits to be realized, by the Adviser and its affiliates from the
Adviser's relationship with the Fund; (iv) the extent to which economies of
scale may be realized as the Portfolios grow; and (v) the extent to which
economies of scale may benefit the Portfolios' investors.
The Board's decision to renew the Agreements was based on a comprehensive
consideration of all of the information provided to the Board throughout the
year and in connection with the contract renewal process, and was not based on
any single factor noted above. Each member of the Board may have weighed certain
factors differently. A discussion of the factors that figured prominently in the
Board's decision to renew the Agreements is provided below.
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY THE ADVISER
The Board examined the nature, extent and quality of the services that the
Adviser provides to the Fund. The Board received a description of the advisory
and other services provided to the Fund by the Adviser. The Board evaluated the
Adviser's experience in serving as manager of the Fund, noting that the Adviser
serves a variety of other investment advisory clients and has experience
overseeing and monitoring the Subadvisors. The Board considered the benefit to
shareholders of investing in a fund complex that is part of a larger
organization that provides investment advisory services to mutual funds,
separate accounts, commingled funds and collective trusts. The Independent
Directors also considered that the Adviser was responsible for the investment
management and related administrative services provided to each Portfolio of the
Fund, which included the purchase, retention and disposition of securities in
accordance with the investment objectives, policies and restrictions of each
Portfolio. The Independent Directors noted that the Adviser reviews each
Portfolios' overall compliance and provides compliance support as it relates to
Rule 38a-1 compliance programs. The Board observed that the scope of services
provided by the Adviser had expanded over time as a result of regulatory and
other developments. The Board also considered the level of assistance and
diligence provided by each Subadvisor with respect to market support, compliance
and other matters. The Independent Directors noted that the Adviser provides
office space and performs clerical, recordkeeping and bookkeeping services to
the Fund. The Independent Directors then discussed the Adviser's experience,
resources and personnel to perform its obligations under the management
agreement. The Board considered the experience of senior personnel at the
Adviser providing management and administrative services to the Fund, as
www.mainstayfunds.com M-399
well as the Adviser's reputation and financial condition. Based upon this and
other information, the Board determined that the Adviser had the experience,
resources and personnel to perform its obligations under the investment advisory
agreements and provide appropriate, high-quality services to the Portfolios.
INVESTMENT PERFORMANCE OF THE PORTFOLIOS
In evaluating the Portfolios' investment performance, the Board considered
investment performance results in light of the Portfolios' investment
objectives, strategies, and risks, as disclosed in the Portfolios' prospectus.
The Board considered the quantitative and qualitative measures to monitor and
evaluate investments results, which was overseen by the Adviser's Investment
Committee. The Board noted that on a quarterly basis it received portfolio
performance reports from the Adviser, which included a detailed description of
the Portfolios' investment approach, information on the Portfolios' gross and
net returns, the Portfolios' investment performance relative to relevant
investment categories and benchmarks and the Portfolios' risk-adjusted
investment performance. The Board also considered information provided by
Strategic Insight showing the investment performance of the Portfolios as
compared to comparable mutual funds managed by other investment advisors.
In considering the quality and consistency of the Portfolios' investment
performance, the Board considered both long-and short-term performance. The
Board noted that the Adviser's Investment Committee responded to performance
issues and personnel changes with specific action plans. The Board considered
that Portfolios that underperformed were evaluated for remediation strategies
that may include: (i) adjusting the investment process; (ii) adding additional
analytical/portfolio management resources; (iii) removing the portfolio
manager/team; (iv) appointing a new portfolio manager/team or recommending a new
subadvisor; and (v) discontinuing the product.
Based on these considerations, the Board concluded, within the context of its
overall determinations regarding the Agreements, that each Portfolio's
investment performance over time has been satisfactory. The Fund discloses more
information about its performance in the Investment and Performance Comparison
section and Portfolio Management Discussion and Analysis section of this Annual
Report, as well as in the Fund's prospectus.
COSTS OF THE SERVICES PROVIDED, AND PROFITS TO BE REALIZED, BY THE ADVISER AND
ITS AFFILIATES
The Board considered the costs of the services to be provided and the profits to
be realized by the Adviser (and its affiliates) and the Subadvisors from their
relationships with the Fund. The Board also considered any other ancillary
benefits that may accrue to the Adviser or Subadvisor due to its association
with the Portfolios, including: (a) any "float" realized on Portfolio-related
transactions; (b) any other source of income or benefit to the Adviser or
Subadvisor attributable to its relationship with the Portfolios; (c) any
potential for the Portfolios to increase other business of the Adviser or
Subadvisor (e.g., the ability to market to shareholders other financial products
offered by the Adviser); and (d) soft-dollar credits, which are credits obtained
with the Portfolios' brokerage commissions that are used to purchase research
products and services from brokers. The Board reviewed confidential information
relating to the Adviser's and Subadvisors' profitability and financial
condition. The Board also evaluated how profit margins could affect the
Adviser's ability to recruit and retain qualified investment personnel. In
addition, the Board received information with respect to the Adviser's and
Subadvisors' allocation methodologies used in preparing the profitability data.
The Board noted that payments to the Subadvisors for their services were made by
the Adviser and not by the Portfolios. The Board discussed the profitability of
the Adviser as compared to other investment advisers. The Board noted that
benchmarking profitability was difficult for a number of reasons including the
fact that the data is limited to publicly traded companies, and that the data
reporting across companies was inconsistent and sometimes included revenues from
services other than advisory services. While recognizing the difficulty in
evaluating a manager's profitability with respect to the Portfolios it manages,
and noting that other profitability methodologies may also be reasonable, the
Board concluded that the profitability methodology presented by the Adviser to
the Board with respect to the Portfolios was reasonable in all material
respects.
The Board then considered the profitability of each of the Fund's Portfolios on
an individual basis. The Board noted that with the exception of the four new
Asset Allocation Portfolios, all of the Portfolios were profitable in 2006. The
Board recognized that current profitability was not fully reflective of longer
term economics. The Board noted that until newer portfolios had an opportunity
to attain scale, the Adviser was committed to providing value to its
shareholders through the use of expense reimbursements.
Based upon these and other considerations, the Board determined that the profit
margins realized by the Adviser for activities related to the Portfolios were
within an acceptable range and were reasonable given the nature, extent and
quality of the services provided to the Portfolios.
EXTENT TO WHICH ECONOMIES OF SCALE MAY BE REALIZED AS THE PORTFOLIOS GROW AND
EXTENT TO WHICH ECONOMIES OF SCALE MAY BENEFIT THE PORTFOLIOS' INVESTORS
The Board considered whether there would be a potential for the realization of
economies of scale. The Independent Directors noted that a number of the
Portfolios had net management fees that were significantly below their
respective peer group median. The Independent Directors also noted that the
Portfolios that have assets in excess of $500 million either had breakpoints in
place or contractual
M-400 MainStay VP Series Fund, Inc.
management fees that were at or below the median of their Strategic Insight
expense peer group. The Independent Directors then evaluated whether
implementing breakpoints in the fee schedules of certain Portfolios would be
beneficial, without adversely impacting the Adviser's ability to be competitive.
The Independent Directors reviewed the Adviser's response to their proposal that
additional breakpoints be implemented on certain Portfolios. In one instance,
where the Portfolios' contractual management fee was higher than the Strategic
Insight expense peer group median, the Adviser agreed to introduce a breakpoint
for assets over $500 million. In other instances, the Independent Directors
concluded that additional breakpoints were not necessary given the expected size
and structure of the Portfolios. With respect to certain Portfolios, contractual
or voluntary advisory fee waivers were agreed to in light of the Portfolio's
small asset size or level of operating expenses.
Based on this information, the Board concluded, within the context of its
overall determinations regarding the Agreements, that any potential economies of
scale were being shared between shareholders and the Adviser in an appropriate
manner. The Board noted, however, that it would continue to evaluate the
reasonableness of each Portfolio's expense structure as the Portfolio continues
to grow over time.
CONCLUSION
After a full and complete discussion, the Board approved the continuation of the
Agreements for each of the Portfolios for a one-year period. Based upon their
evaluation of all the factors discussed above in their totality, the Board,
including the Independent Directors, was satisfied that the terms of the
Agreements were fair and reasonable and in the best interests of the Portfolios
and the Portfolios' shareholders. In arriving at a decision to approve the
continuation of the Agreements, the Board did not identify any single factor or
group of factors as all-important or controlling, but considered all factors
together.
www.mainstayfunds.com M-401
DIRECTORS AND OFFICERS*
BRIAN A. MURDOCK
Chairman, Chief Executive Officer and Director
CHRISTOPHER O. BLUNT
President
JILL FEINBERG
Director
DANIEL HERRICK
Director
RICHARD H. NOLAN, JR.
Director
ROBERT D. ROCK
Director and Vice President
RAYMOND STICKEL, JR.
Director
ROMAN L. WEIL
Director
JOHN A. WEISSER, JR.
Director
ROBERT A. ANSELMI
Chief Legal Officer
ARPHIELA ARIZMENDI
Treasurer and Principal Financial and Accounting Officer
MICHAEL G. GALLO
Executive Vice President
SCOTT T. HARRINGTON
Vice President--Administration
ALAN J. KIRSHENBAUM
Senior Vice President
ALISON H. MICUCCI
Senior Vice President and Chief Compliance Officer
MARGUERITE E. H. MORRISON
Secretary
RICHARD W. ZUCCARO
Vice President--Tax
INVESTMENT ADVISER
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
Some Portfolios may not be available in all products.
* As of December 31, 2006.
** An affiliate of New York Life Investment Management LLC.
SUBADVISORS
MACKAY SHIELDS LLC**
INSTITUTIONAL CAPITAL LLC**
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
LORD, ABBETT & CO., LLC
WINSLOW CAPITAL MANAGEMENT, INC.
ADMINISTRATOR
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
DISTRIBUTOR
NYLIFE DISTRIBUTORS LLC
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRICEWATERHOUSECOOPERS LLP
LEGAL COUNSEL
DECHERT LLP
M-402 MainStay VP Series Fund, Inc.
This page intentionally left blank.
(NEW YORK LIFE INVESTMENT MANAGEMENT LLC LOGO)
- ------------------------------------------------
Not FDIC insured. No bank guarantee. May lose value.
NYLIFE DISTRIBUTORS LLC, 169 LACKAWANNA AVENUE,
PARSIPPANY, NEW JERSEY 07054
This report may be distributed only when preceded or accompanied
by a current Fund prospectus.
New York Life Investment Management LLC is the investment
advisor to The MainStay Funds.
www.mainstayfunds.com
(C) 2006 by NYLIFE Distributors LLC. All rights reserved.
You may obtain copies of the Prospectuses and the Statements of
Additional Information free of charge, upon request, by calling
toll-free 1-800-598-2019 or writing to New York Life Insurance
and Annuity Corporation, 51 Madison Avenue, New York, NY 10010.
Not a part of the Annual Report
(RECYCLE LOGO) MSVPII-02/07
Item 2. Code of Ethics.
As of the end of the period covered by this report, the MainStay VP
Series Fund, Inc. ("Registrant") has adopted a code of ethics (the "Code") that
applies to the Registrant's principal executive officer ("PEO") and principal
financial officer ("PFO"). The Code was not amended during the period covered by
the report. As required by Item 12(a)(1), a copy of the Code is filed herewith.
The Registrant did not grant any waivers, including implicit waivers, from any
provisions of the Code to the PEO or PFO during the period covered by this
report.
Item 3. Audit Committee Financial Expert.
The Registrant's 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 as 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 Registrant's annual financial statements or
services that are normally provided by PwC in connection with statutory and
regulatory filings or engagements for those fiscal years were $886,650 for 2005
and $885,825 for 2006.
(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 Registrant's financial statements
and are not reported under paragraph (a) of this Item were $0 for 2005 and
$0 for 2006.
(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 were $162,350 for 2005 and $117,500 for 2006.
(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 were $0 for 2005 and
$0 for 2006.
(e) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES.
(1) Audit Committee Policies Regarding Pre-Approval of Services:
The Registrant's Audit Committee has adopted pre-approval
policies and procedures (the "Procedures") to govern the
Committee's pre-approval of (i) all audit services and
permissible non-audit services to be provided to the
Registrant by its independent accountant, and (ii) all
permissible non-audit services to be provided by such
independent accountant to the Registrant's investment
adviser and to any entity controlling, controlled by or
under common control with the investment adviser that
provides ongoing services to the Registrant (collectively,
the "Service Affiliates") if the services directly relate to
the Registrant's operations and financial reporting. In
accordance with the Procedures, the Audit Committee is
responsible for the engagement of the independent accountant
to certify the Registrant's financial statements for each
fiscal year. With respect to the pre-approval of non-audit
services provided to the Registrant and its Service
Affiliates, the Procedures provide that the Audit Committee
may annually pre-approve a list of the types of services that
may be provided to the Registrant or its Service Affiliates,
or the Audit Committee may pre-approve such services on a
project-by-project basis as they arise. Unless a type of
service has received general pre-approval, it will require
specific pre-approval by the Audit Committee if it is to be
provided by the independent accountant. The Procedures also
permit the Audit Committee to delegate authority to one or
more of its members to pre-approve any proposed non-audit
services that have not been previously pre-approved by the
Audit Committee, subject to the ratification by the full Audit
Committee no later than its next scheduled meeting. To date,
the Audit Committee has not delegated such authority.
(2) Percentage of Services described in each of paragraphs (b)
through (d) of this Item 4 that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
None.
(f) Less than fifty percent of PwC's engagement to audit the
Registrant's financial statements for the fiscal year ended December 31, 2006
was attributable to work performed by persons other than PwC's full-time,
permanent employees.
(g) All non-audit fees billed by PwC for services rendered to the
Registrant for the fiscal years ended December 31, 2006 and December 31, 2005
are disclosed in 4(b)-(d) above. The aggregate non-audit fees billed by PwC for
services 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 adviser that provides ongoing
services to the Registrant were approximately: (i) $189,776 for the fiscal year
ended December 31, 2006, and (ii) $31,229 for the fiscal year ended December 31,
2005.
(h) The Registrant's Audit Committee has determined that the non-audit
services rendered by PwC for the fiscal year ended December 31, 2006 to the
Registrant's investment adviser and any entity controlling, controlled by, or
under common control with the Registrant's investment adviser that provides
ongoing services to the Registrant that were not required to be pre-approved by
the Audit Committee because they did not relate directly to the operations and
financial reporting of the registrant were compatible with maintaining the
respective independence of PwC during the relevant time period.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
The Schedule of Investments is included as part of Item 1 of this
report.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable. The Registrant is not a closed-end management
investment company.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable. The Registrant is not a closed-end management
investment company.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable. The Registrant is not closed-end management investment
company.
Item 10. Submission of Matters to a Vote of Security Holders.
Since the Registrant's last response to this Item, there have been
no material changes to the procedures by which shareholders may recommend
Nominees to the Registrant's Board of Directors.
Item 11. Controls and Procedures.
(a) Based on an evaluation of the Disclosure Controls and Procedures
(as defined in Rule 30a-3(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 principal 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 second fiscal quarter
of the period covered by this Report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits.
--------
(a)(1) The Code of Ethics referenced in Item 2 of this report is
furnished as an exhibit to this filing.
(a)(2) Certifications of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2(a) under the
Investment Company Act of 1940 and Section 302 of the Sarbanes-Oxley Act of 2002
are filed as exhibits to this filing.
(b) Certifications of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2(b) under the
Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002
are filed 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/ Christopher O. Blunt
-----------------------------------------
Christopher O. Blunt
President and Principal Executive Officer
Date: March 9, 2007
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/ Christopher O. Blunt
-----------------------------------------
Christopher O. Blunt
President and Principal Executive Officer
Date: March 9, 2007
By: /s/Arphiela Arizmendi
--------------------------------------------------------
Arphiela Arizmendi
Treasurer and Principal Financial and Accounting Officer
Date: March 9, 2007
EXHIBIT INDEX
(a)(1) The Code of Ethics referenced in Item 2 of this report is furnished as
an exhibit to this filing.
(a)(2) Certifications of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2(a) under the
Investment Company Act of 1940 and Section 302 of the Sarbanes-Oxley Act of 2002
are filed as exhibits to this filing.
(b) Certifications of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2(b) under the
Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002
are filed as exhibits to this filing.