<PAGE> 1
THE MAINSTAY FUNDS
SUPPLEMENT DATED DECEMBER 8, 1998 TO THE
PROSPECTUS DATED MAY 1, 1998
A. In pursuing their investment objectives, certain Funds may invest in
securities of issuers organized outside the United States. These
foreign securities may be denominated in U.S. or foreign currencies and
may be traded in U.S. or foreign securities markets.
Under normal circumstances: the Capital Appreciation and Total Return
Funds may each invest up to 5% and the Convertible Fund may invest up
to 10% of its total assets in foreign securities. Each of the Strategic
Value, High Yield Corporate Bond and Strategic Income Funds may, and
each of the International Equity and International Bond Funds will,
invest more than 20% of its total assets in foreign securities. The
Equity Index Fund will invest in foreign securities in the same
proportion as the S&P 500 Index. The Money Market Fund may invest up to
50% of its assets in dollar-denominated foreign securities, as
described in the prospectus. The Value, Government, California Tax
Free, New York Tax Free and Tax Free Bond Funds do not invest in
foreign securities.
The risks of investing in foreign securities are discussed under
"Description of Investments and Investment Practices--Foreign
Securities."
B. 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%
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EQUITY INDEX FUND
<S> <C> <C>
Expenses after 1 year $40 $30 up-front sales charge
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
[GRAPH]
STRATEGIC INCOME FUND - CLASS A
Expenses after 1 year $59 $45 up-front sales charge
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
[GRAPH]
</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> 2
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND - CLASS B STRATEGIC INCOME FUND - CLASS B
ASSUMING NO REDEMPTION ASSUMING REDEMPTION AT THE END OF EACH PERIOD
<S> <C> <C>
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>
$20 up-front sales charge
$32 management fees
$54 12b-1 fees
$34 other expenses
- ------------------
$140 total sales charges and expenses
[GRAPH]
C. Shigemi Takagi is no longer with MacKay-Shields Financial Corporation,
the investment sub-adviser MainStay International Equity Fund (the
"Fund"). Joseph Portera currently is portfolio manager of Fund. Mr.
Portera's biography appears on page 49 of the prospectus. Mr. Takagi's
biography, which appears on page 42, is hereby deleted.
D. Page 58 of the prospectus is revised to reflect that the reinvestment
privilege has been changed to a 90-day period from a 30-day period.
E. 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 an annual 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 that have entered into a
supplemental agreement with the Distributor that (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.
F. 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> 3
THE MAINSTAY FUNDS
SUPPLEMENT DATED DECEMBER 8, 1998 TO THE
PROSPECTUS DATED JUNE 1, 1998
A. In pursuing their investment objectives, certain Funds may invest in
securities of issuers organized outside the United States. These
foreign securities may be denominated in U.S. or foreign currencies and
may be traded in U.S. or foreign securities markets.
Under normal circumstances: the Small Cap Growth and Small Cap Value
Funds may invest up to 5%, the Equity Income and Growth Opportunities
Funds may invest up to 10%, the Blue Chip Growth and Research Value
Funds may invest less than 20% and the Global High Yield Fund may
invest more than 20% of their total assets in foreign securities.
The risks of investing in foreign securities are discussed under
"Description of Investments and Investment Practices--Foreign
Securities."
B. 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.
C. Page 20 of the prospectus is revised to reflect that the reinvestment
privilege has been changed to a 90-day period from a 30-day period.
D. 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.
E. 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
<PAGE> 4
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), 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.
F. 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 an annual 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 that have entered into a
supplemental agreement with the Distributor that (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.
G. 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> 5
THE MAINSTAY FUNDS
SMALL CAP GROWTH FUND
SMALL CAP VALUE FUND
BLUE CHIP GROWTH FUND
CAPITAL APPRECIATION FUND
EQUITY INDEX FUND
INTERNATIONAL EQUITY FUND
CONVERTIBLE FUND
EQUITY INCOME FUND
GROWTH OPPORTUNITIES FUND
RESEARCH VALUE FUND
STRATEGIC VALUE FUND
TOTAL RETURN FUND
VALUE FUND
HIGH YIELD CORPORATE BOND FUND
MONEY MARKET FUND
SUPPLEMENT DATED DECEMBER 8, 1998 TO THE
PROSPECTUS DATED SEPTEMBER 1, 1998
A. In pursuing their investment objectives, certain Funds may invest in
securities of issuers organized outside the United States. These
foreign securities may be denominated in U.S. or foreign currencies and
may be traded in U.S. or foreign securities markets.
Under normal circumstances: the Small Cap Growth, Small Cap Value,
Capital Appreciation and Total Return Funds may invest up to 5%, the
Convertible, Growth Opportunities and Equity Income Funds may invest up
to 10% and the Blue Chip Growth and Research Value Funds may invest
less than 20% of their total assets in foreign securities. The Value
Fund does not invest in foreign securities. Each of the Strategic Value
and High Yield Corporate Bond Funds may, and the International Equity
Fund will, invest more than 20% of its total assets in foreign
securities. The Equity Index Fund will invest in U.S. traded foreign
securities in the same proportion as the S&P 500 Index. The Money
Market Fund may invest up to 50% of its assets in dollar-denominated
foreign securities as described in the prospectus.
The risks of investing in foreign securities are discussed under
"Description of Investments and Investment Practices--Foreign
Securities."
B. Page 52 of the prospectus is revised to reflect that the reinvestment
privilege has been changed to a 90-day period from a 30-day period.
C. On page 79 under "Alternative Sales Arrangements--Initial Sales Charge
Alternative Class A Shares" 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 an annual basis.
Such commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer concession.
<PAGE> 6
THE MAINSTAY FUNDS
GLOBAL HIGH YIELD FUND
GOVERNMENT FUND
HIGH YIELD CORPORATE BOND FUND
INTERNATIONAL BOND FUND
MONEY MARKET FUND
STRATEGIC INCOME FUND
CALIFORNIA TAX FREE FUND
NEW YORK TAX FREE FUND
TAX FREE BOND FUND
SUPPLEMENT DATED DECEMBER 8, 1998 TO THE
PROSPECTUS DATED SEPTEMBER 1, 1998
A. In pursuing their investment objectives, certain Funds invest in
securities of issuers organized outside the United States. These
foreign securities may be denominated in U.S. or foreign currencies and
may be traded in U.S. or foreign securities markets.
Under normal circumstances: the Global High Yield, High Yield
Corporate Bond and Strategic Income Funds may, and the International
Bond Fund will, invest more than 20% of their total assets in foreign
securities. The Money Market Fund may invest up to 50% of its assets
in dollar-denominated foreign securities, as described in the
prospectus. The Government, California Tax Free, New York Tax Free and
Tax Free Bond Funds do not invest in foreign securities.
The risks of investing in foreign securities are discussed under
"Description of Investments and Investment Practices--Foreign
Securities."
B. Page 40 of the prospectus is revised to reflect that the reinvestment
privilege has been changed to a 90-day period from a 30-day period.
C. On page 61 under "Alternative Sales Arrangements -- Initial Sales
Charge Alternative Class A Shares" 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 an annual basis.
Such commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer concession.
