<PAGE>
THE MAINSTAY FUNDS
SUPPLEMENT DATED SEPTEMBER 1, 1998 TO THE
PROSPECTUS DATED MAY 1, 1998
A. On pages 7 and 10, respectively, "Sales Charges and Operating Expenses" and
"Examples," found under "If you Invest $1,000, You Might Pay...." for
Equity Index and Strategic Income Funds, respectively, are deleted and
replaced with the following:
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES EQUITY INDEX FUND STRATEGIC INCOME FUND
CLASS A CLASS A CLASS B
<S> <C> <C> <C>
Maximum Sales Charge Imposed on
Purchase
of Shares (as a percentage of
offering price) 3.00% 4.50% None
Deferred Sales Charge
(as a percentage of redemption
proceeds)/1/ None None 5.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees 0.50% 0.60% 0.60%
12b-1 Fees 0.25% 0.25% 1.00%
Other Expenses 0.24% 0.64% 0.64%
----- ----- -----
Total Fund Operating Expenses 0.99% 1.49% 2.24%
===== ===== =====
EQUITY INDEX FUND
Expenses after 1 year $ 40 $30 up-front sales charge [PIE CHART]
Expenses after 3 years $ 61 $27 management fees
Expenses after 5 years $ 83 $13 12b-1 fees
Expenses after 10 years $ 148 $13 other expenses
-----------------------
$83 total sales charges
and expenses
STRATEGIC INCOME FUND - CLASS A
Expenses after 1 year $ 59 $45 up-front sales charge [PIE CHART]
Expenses after 3 years $ 90 $31 management fees
Expenses after 5 years $ 123 $13 12b-1 fees
Expenses after 10 years $ 215 $34 other expenses
------------------
$123 total sales charges
and expenses
STRATEGIC INCOME FUND - CLASS B STRATEGIC INCOME FUND - CLASS B
ASSUMING NO REDEMPTION ASSUMING REDEMPTION AT THE END OF EACH PERIOD
Expenses after 1 year $ 23 Expenses after 1 year $ 73
Expenses after 3 years $ 70 Expenses after 3 years $ 100
Expenses after 5 years $ 120 Expenses after 5 years $ 140
Expenses after 10 years $ 238 Expenses after 10 years $ 238
</TABLE>
/1/ Generally, Class A shares of the Funds are not subject to a contingent
deferred sales charge upon redemption. However, because front-end sales charges
are waived on investments in Class A shares of $1 million or more, a contingent
deferred sales charge of 1.00% will be imposed on redemptions of such
investments effected within one year of the date of purchase. With respect to
Class B shares, the amount of the contingent deferred sales charge will depend
on the number of years since the shareholder purchased the shares being
redeemed. See "Alternative Sales Arrangements--Deferred Sales Charge Class B
Shares--Contingent Deferred Sales Charge, Class B."
<PAGE>
$20 up-front sales charge [PIE CHART]
$32 management fees
$54 12b-1 fees
$34 other expenses
------------------------------
$140 total sales charges
and expenses
B. Shigemi Takagi is no longer with MacKay-Shields Financial Corporation, the
Sub-Adviser to MainStay International Equity Fund (the "Fund"). Joseph
Portera currently is portfolio manager of the Fund. Mr. Portera's biography
appears on page 49 of the prospectus. Mr. Takagi's biography, which appears
on page 42, is hereby deleted.
C. The section titled "Alternative Sales Arrangements" is revised as follows:
1. Under "Initial Sales Charge Alternative Class A Shares" on page 82 the last
sentence of the fifth paragraph is deleted and replaced with the following:
The dealer will receive a commission of 1.00% on the portion of a sale from
$1,000,000 to $2,999,999, 0.50% of any portion from $3,000,000 to
$4,999,999 and 0.40% on any portion of $5,000,000 or more. Effective
January 1, 1999, commissions will be calculated on a calendar year basis.
Such commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer concession.
2. The first sentence of the first paragraph under "Purchases at NAV" on page
82 is deleted and replaced with the following:
A Fund's Class A shares may be purchased at NAV, without payment of any
sales charge, by its Trustees, New York Life and its subsidiaries and their
employees, officers, directors or agents (and immediate family members);
employees and clients (and immediate family members) of John A. Levin &
Co.("Levin") and Dalton, Greiner, Hartman, Maher & Co. ("DGHM"); employees
(and immediate family members) of Gabelli Asset Management Company; and
investors who are recommended by Levin and DGHM to invest in the MainStay
funds managed by Levin and DGHM, respectively.
3. On page 83, the third paragraph under "Purchases at NAV" is deleted and
replaced with the following:
Class A shares of the Funds also may be purchased at net asset value,
without payment of any sales charge, through broker-dealers, investment
advisers and other financial institutions which have entered into a
supplemental agreement with the Distributor which (i) includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or similar program under which clients
pay a fee to the broker-dealer, investment adviser or other financial
institution or (ii) provides for certain employee benefit plans to be made
available to their clients.
4. Under "Deferred Sales Charge Class B Shares - Contingent Deferred Sales
Charge, Class B" on page 84 the last sentence of the second paragraph is
deleted and replaced with the following:
Solely for purposes of determining the number of years from the time of
payment for the purchase of shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
D. On page 86, the last sentence of the last paragraph under "Redemptions and
Exchanges - Exchange Privileges", is deleted and replaced with the
following:
The Exchange Privilege may be amended or terminated at any time upon prior
notice.
<PAGE>
THE MAINSTAY FUNDS
SUPPLEMENT DATED SEPTEMBER 1, 1998 TO THE
PROSPECTUS DATED JUNE 1, 1998
A. Page 17 of the prospectus is revised to add the following information under
the section titled "Fund Diversification":
Global High Yield Fund is "nondiversified" for the purposes of the 1940
Act, meaning that it may invest a greater percentage of its assets in the
securities of one issuer than a diversified fund. As a "nondiversified"
fund, Global High Yield Fund may be more susceptible to risks associated
with a single economic, political, or regulatory occurrence than a
diversified fund might be. However, the Global High Yield Fund intends to
qualify as a "regulated investment company" under provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and therefore will
be subject to diversification limits requiring that, as of the close of
each fiscal quarter:
. no more than 25% of its total assets may be invested in the
securities of a single issuer (except for U.S. government securities);
and
. with respect to 50% of its total assets, no more than 5% of such
assets may be invested in the securities of a single issuer (except
for U.S. government securities) or invested in more than 10% of the
outstanding voting securities of a single issuer.
B. On page 27 under "Who Manages Your Money?" the last two sentences of the
description of Gabelli Asset Management Company ("GAMCO") are deleted and
replaced with the following:
GAMCO was formed in 1978 and, as of December 31, 1997, acts as investment
adviser to institutional and individual investors with aggregate assets of
approximately $6 billion. GAMCO is a wholly owned subsidiary of Gabelli
Funds, Inc.
C. Page 28 of the prospectus is revised as follows:
1. The following language: "In addition, information with regard to dispersion
(standard deviation) of account performance is not provided for such
periods" is inserted after the sixth sentence which reads: "For the periods
prior to January 1, 1993, performance data for the John A. Levin & Co.
Large Cap Value Composite was not calculated in compliance with AIMR
standards because size-weighted composite returns were calculated using
end-of-period market values."
2. Under GABELLI FUNDS, INC. AND GAMCO - PRIOR PERFORMANCE the first sentence
is deleted and replaced with the following:
Set forth below is the performance record for another mutual fund which is
managed by Gabelli Funds, Inc., the parent of GAMCO, which has investment
objectives and policies that are substantially similar, though not
identical to, those of the Blue Chip Growth Fund.
3. Footnote 2 is deleted and replaced with the following footnote:
With respect to the John A. Levin & Co. Large Cap Value Composite, for the
period through June 30, 1996, performance is that of the company's
predecessor. For the period from inception through 1989, the results shown
reflect the deduction of a 1% investment management fee payable quarterly
at the rate of .25% of ending market value. This is the maximum investment
management fee charged by John A. Levin & Co. Individual account fees may
have varied. For the periods from January 1, 1990 through December 31,
1997, returns reflect the deduction of the actual dollar-weighted fee rate
paid by all accounts in the composite. The dollar-weighted fee rate has
been calculated by dividing the quarterly investment management fees paid
by the accounts in the composite by the total composite asset value. This
dollar-weighted fee rate includes the performance fees paid by certain
accounts; inclusion of the performance-based fees does not materially
affect the dollar-weighted fee rate. Annual net returns, the number of
portfolios included in the composite, composite assets (in millions),
<PAGE>
and percentage of firm assets included in the composite were as follows at
year-ends 1982-1997: 1982 - 4.2%; 6; $3; 13%; 1983 - 32.7%; 10; $16; 15%;
1984 - 15.0%; 13; $10; 20%; 1985 - 35.6%; 18; $43; 44%; 1986 -14.8%; 27;
$182; 47.1%; 1987 - 12.8%; 27; $245; 56.7%; 1988 - 22.5%; 38; $397; 44.2%;
1989 - 29.7%; 60; $823; 52.4%; 1990 - (3.08)%; 81; $960; 57.5%; 1991 -
24.9%; 97; $1,289; 55.5%; 1992 - 14.1%; 121; $1,531; 55.1%; 1993 - 13.6%;
149; $2,373; 74.2%; 1994 - 0.9%; 201; $2,889; 72.1%; 1995 - 32.6%; 238;
$3,714; 68.9%; 1996 - 21.0%; 333; $5,110; 78.8%; 1997 - 23.0%; 369; $5,723;
72%. For the years 1990 - 1997, the actual dollar weighted fee rates used
to calculate the composite were as follows: 1990 - 0.66%; 1991 - 0.65%;
1992 - 0.68%; 1993 - 0.68%; 1994 - 0.68%; 1995 - 0.60%; 1996 - 0.48%; 1997-
0.48%. For the years 1993 -1997, the standard deviation of composite
accounts were as follows: 1993 - 2.57; 1994 - 2.07; 1995 - 2.65; 1996 -
2.53; 1997 - 3.46. A complete list of composites is available upon request.
D. The section titled "Alternative Sales Arrangements" is revised as follows:
1. Under "Initial Sales Charge Alternative Class A Shares" on page 40 the last
sentence of the fourth paragraph is deleted and replaced with the
following:
The dealer will receive a commission of 1.00% on the portion of a sale from
$1,000,000 to $2,999,999, 0.50% of any portion from $3,000,000 to
$4,999,999 and 0.40% on any portion of $5,000,000 or more. Effective
January 1, 1999, commissions will be calculated on a calendar year basis.
Such commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer concession.
2. The first sentence of the first paragraph under "Purchases at NAV" on page
40 is deleted and replaced with the following:
A Fund's Class A shares may be purchased at NAV, without payment of any
sales charge, by its Trustees, New York Life and its subsidiaries and their
employees, officers, directors or agents (and immediate family members);
employees and clients (and immediate family members) of John A. Levin & Co.
and DGHM; employees (and immediate family members) of GAMCO; and investors
who are recommended to invest in the Research Value and Small Cap Value
Funds by John A. Levin & Co. and DGHM, respectively.
3. The third paragraph under "Purchases at NAV" on page 40 is deleted and
replaced with the following:
Class A shares of the Funds also may be purchased at net asset value,
without payment of any sales charge, through broker-dealers, investment
advisers and other financial institutions which have entered into a
supplemental agreement with the Distributor which (i) includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or similar program under which clients
pay a fee to the broker-dealer, investment adviser or other financial
institution or (ii) provides for certain employee benefit plans to be made
available to their clients.
4. Under "Deferred Sales Charge Class B Shares - Contingent Deferred Sales
Charge, Class B" on page 41 the last sentence of the second paragraph is
deleted and replaced with the following:
Solely for purposes of determining the number of years from the time of
payment for the purchase of shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
E. On page 43, the last sentence of the last paragraph under "Redemptions and
Exchanges - Exchange Privileges", is deleted and replaced with the
following:
The Exchange Privilege may be amended or terminated at any time upon prior
notice.
<PAGE>
THE MAINSTAY FUNDS
SUPPLEMENT DATED SEPTEMBER 1, 1998 TO THE
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1998
1. The section "Trustees and Officers" is revised to reflect that Richard M.
Kernan, Jr. has replaced Donald K. Ross as Chairman of the board of
Trustees. Mr. Ross remains a Trustee.
2. The following language is added under "Other Information"
The services provided to the Funds by the Manager, the Sub-Advisers and the
Funds' other service providers are dependent on those service providers'
computer systems. Many computer software and hardware systems in use today
cannot distinguish between the year 2000 and the year 1900 because of the
way dates are encoded and calculated (the "Year 2000 Issue"). The failure
to make this distinction could have a negative implication on handling
securities trades, pricing and account services. The Manager, the Sub-
Advisers and the Funds' other service providers are taking steps that each
believes are reasonably designed to address the Year 2000 Issue with
respect to the computer systems that they use. The Funds have no reason to
believe these steps will not be sufficient to avoid any material adverse
impact on the Funds, although there can be no assurances. The costs or
consequences of incomplete or untimely resolution of the Year 2000 Issue
are unknown to the Manager, the Sub-Advisers and the Funds' other service
providers at this time but could have a material adverse impact on the
operations of the Funds and the Manager, the Sub-Advisers and the Funds'
other service providers. In addition, companies in which the Funds invest
may experience Year 2000 Issue difficulties which could adversely impact
their business and adversely affect the value of the securities issued by
them.
<PAGE>
THE MAINSTAY FUNDS
SUPPLEMENT DATED SEPTEMBER 1, 1998 TO THE
STATEMENT OF ADDITIONAL INFORMATION DATED JUNE 1, 1998
1. The section "Trustees and Officers" is revised to reflect that Richard M.
Kernan, Jr. has replaced Donald K. Ross as Chairman of the board of
Trustees. Mr. Ross remains a Trustee.
2. The following language is added under "Other Information"
The services provided to the Funds by the Manager, the Sub-Advisers and the
Funds' other service providers are dependent on those service providers'
computer systems. Many computer software and hardware systems in use today
cannot distinguish between the year 2000 and the year 1900 because of the
way dates are encoded and calculated (the "Year 2000 Issue"). The failure
to make this distinction could have a negative implication on handling
securities trades, pricing and account services. The Manager, the Sub-
Advisers and the Funds' other service providers are taking steps that each
believes are reasonably designed to address the Year 2000 Issue with
respect to the computer systems that they use. The Funds have no reason to
believe these steps will not be sufficient to avoid any material adverse
impact on the Funds, although there can be no assurances. The costs or
consequences of incomplete or untimely resolution of the Year 2000 Issue
are unknown to the Manager, the Sub-Advisers and the Funds' other service
providers at this time but could have a material adverse impact on the
operations of the Funds and the Manager, the Sub-Advisers and the Funds'
other service providers. In addition, companies in which the Funds invest
may experience Year 2000 Issue difficulties which could adversely impact
their business and adversely affect the value of the securities issued by
them.
