<PAGE> 1
THE MAINSTAY(R) FUNDS
CALIFORNIA TAX FREE FUND
GOVERNMENT FUND
NEW YORK TAX FREE FUND
RESEARCH VALUE FUND
SMALL CAP VALUE FUND
TAX FREE BOND FUND
TOTAL RETURN FUND
Supplement dated August 30, 2000
to the Prospectus dated May 1, 2000
(replacing supplement dated July 21, 2000)
PORTFOLIO MANAGER CHANGES
California Tax Free Fund. Effective July 2000, the portfolio managers of
the California Tax Free Fund are Mr. John Fitzgerald and Ms. Laurie Walters.
Government Fund. Effective July 2000, the portfolio managers of the
Government Fund are Mr. Gary Goodenough and Mr. Joseph Portera. Mr. Christopher
Harms no longer serves as portfolio manager of the Fund.
New York Tax Free Fund. Effective July 2000, the portfolio managers of the
New York Tax Free Fund are Mr. John Fitzgerald and Ms. Laurie Walters.
Research Value Fund. As of August 2000, the Research Value Fund is managed
by John A. Levin & Co., Inc.'s Large Cap Value team with Mr. Daniel M.
Theriault, Mr. Joseph A. Austin and Mr. John (Jack) Murphy handling the day to
day responsibilities of the Fund. Mr. Jeffrey A. Kigner and Mr. G. Todd Silva no
longer serve on the team that manages the Fund.
Small Cap Value Fund. The portfolio managers of the Small Cap Value Fund
are Mr. Timothy Dalton, Jr., Mr. Kenneth Greiner and Mr. Stephen J. Bruno. Mr.
Bruno became a manager of this Fund effective April 2000.
Tax Free Bond Fund. Effective July 2000, the portfolio managers of the Tax
Free Bond Fund are Mr. John Fitzgerald and Ms. Laurie Walters.
Total Return Fund. Effective July 2000, the portfolio managers of the
Total Return Fund are Mr. Gary Goodenough, Mr. Christopher Harms, Mr. Edmund C.
Spelman and Mr. Rudolph C. Carryl. Mr. Edward Munshower no longer serves as
portfolio manager of the Fund.
Portfolio Managers: Biographies:
The following biographies are added to Know With Whom You're
Investing -- Portfolio Managers: Biographies:
MR. JOSEPH A. AUSTIN has been a manager of the Research Value Fund since
August 2000. Prior to joining John A. Levin & Co., Inc. in 1993, Mr.
Austin served as Portfolio Manager, AIG Global Investors, Inc.
(1990 -- 1993) and Securities Analyst, Bankers Trust Company
(1984 -- 1990).
MR. STEPHEN J. BRUNO has been a manager of the Small Cap Value Fund
since April 2000. He joined Dalton, Greiner, Hartman, Maher & Co. in
1990 and currently is an Executive Vice President and shareholder. Prior
to that he was an investment analyst with Dillon, Read Capital, Inc.
from 1989 to 1990.
MS16-08/00
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MR. JOHN FITZGERALD became a manager of the California Tax Free Fund and
the New York Tax Free Fund in July 2000. Mr. Fitzgerald joined MacKay
Shields in 2000. Prior to joining MacKay Shields, Mr. Fitzgerald was
Senior Portfolio Manager at SSB Citibank Asset Management where he
managed tax-exempt fixed income accounts for institutions and high
net-worth individuals from August 1999 to May 2000. Prior to this, he
was a Vice President and Portfolio Manager at BlackRock Inc. and an
Assistant Vice President at TCW Insurance Advisors.
MR. GARY GOODENOUGH became a manager of the Government Fund and the
Total Return Fund in July 2000. Mr. Goodenough joined MacKay Shields as
Managing Director and Co-head of the Bond Team in 2000. Prior to joining
MacKay Shields, Mr. Goodenough was a Senior Portfolio Manager at Loomis
Sayles & Co. from December 1993 to May 2000. Prior to this, he was a
Managing Director at Bear Stearns & Company and was a Managing Director
of High Yield Bonds and a Managing Director of Global Bonds at Salomon
Brothers.
MR. JOHN (JACK) W. MURPHY became a manager of the Research Value Fund in
August 2000. Before joining John A. Levin & Co., Inc. in 1995, Mr.
Murphy was Senior Equity Analyst, Prudential Securities (1991 -- 1995)
and worked at Bain & Co., a management consulting firm (1988 -- 1991).
MR. DANIEL M. THERIAULT became a manager of the Research Value Fund in
June 2000. Mr. Theriault joined John A. Levin & Co. in 1997, where he
had also been a securities analyst from 1994 to 1995. From 1995 to 1997
he was President and Portfolio Manager, T. Rowe Price Financial Services
Fund.
MS. LAURIE WALTERS became a manager of the California Tax Free Fund and
the New York Tax Free Fund in July 2000. Ms. Walters joined MacKay
Shields in 1997 and became an Associate in 2000. Prior to joining MacKay
Shields, Ms. Walters was a Mortgage Trader at Bear Stearns & Company
from September 1994 to February 1995 and with Nomura Securities
International from 1987 to 1994. Prior to this, she was an investment
banking analyst at PaineWebber, Inc. Ms. Walters has 13 years of
investment management and research experience and is a candidate for the
Chartered Financial Analyst designation.
RELATED PERFORMANCE OF DGHM
Footnote 2 on page 129 is replaced by the following:
With respect to DGHM's Small Cap Value Composite, performance is net of
actual management fees paid, which were 1% per annum. The composite
consists of fewer than five accounts since its inception in July 1994. A
complete list of composites is available upon request. Annual net
returns, composite assets (in millions), percentage of firm assets and
the standard deviation of composite accounts were as follows:
1994 -- .3%, $25, <1%, 0; 1995 -- 13.4%, $20, <1%, .30; 1996 -- 30.2%,
$21, 1%, .17; 1997 -- 40%, $27, 2%, .33; 1998 -- 2.7%, $46, 5%, 0.05;
1999 -- 6.8%, $57, 8%, .56.
The table under "DGHM: Related Performance" on page 131 is replaced by the
following:
<TABLE>
<CAPTION>
AS OF 12/31/99
------------------------------------------------------
ONE YEAR THREE YEAR FIVE YEAR SINCE INCEPTION
TOTAL TOTAL TOTAL TOTAL
RETURN RETURN RETURN RETURN
----- ----- ----- -----
<S> <C> <C> <C> <C>
Dalton, Greiner, Hartman, Maher & Co.
Small Cap Value Composite 6.8% 13.3% 16.5% 15.0%
Russell 2000 Index 21.3% 13.1% 16.7% 16.1%
</TABLE>
