ECLIPSE FUNDS
DEFS14A, 2000-10-31
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                                  SCHEDULE 14A

                                 (RULE 14A-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
           Proxy Statement Pursuant to Section 14(a) of the Securities
                     Exchange Act of 1934 (Amendment No.__ )

Filed by the Registrant                           X
Filed by a Party other than the Registrant       ____

Check the appropriate box:
___      Preliminary Proxy Statement             ____   Confidential, for Use of
                                                        the Commission Only
                                                        (as permitted by
                                                        Rule 14a-6(e)(2))
   X     Definitive Proxy Statement
  ____   Definitive additional materials
  ____   Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

                                  ECLIPSE FUNDS

      (Name of Registrant as Specified in Its Charter/Declaration of Trust)

    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

X       No fee required.
____    Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1)       Title of each class of securities to which transaction applies:

(2)       Aggregate number of securities to which transaction applies:

(3)       Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (Set forth the amount on which the
          filing fee is calculated and state how it was determined):

(4)       Proposed maximum aggregate value of transaction:

(5)       Total fee paid:

         Fee paid previously with preliminary materials:

         Check box if any part of the fee is offset as provided by Exchange  Act
         Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee
         was paid  previously.  Identify  the  previous  filing by  registration
         statement number, or the form or schedule and the date of its filing.

(1)       Amount previously paid:

(2)       Form, Schedule or Registration Statement no.:

(3)       Filing Party:

(4)       Date Filed:


<PAGE>


                                                       Wesley G. McCain
                                                       Chairman
                                                       Eclipse Funds

November 3, 2000

Dear Shareholder:

         Towneley Capital Management, Inc. ("Towneley"),  your Fund's investment
adviser, has entered into an agreement with New York Life Investment  Management
Holdings  LLC  ("NYLIM  Holdings"),  a  subsidiary  of New York  Life  Insurance
Company,  pursuant to which NYLIM Holdings will acquire  certain of the business
segments and  operations of Towneley,  including the  business,  operations  and
activities  that Towneley  conducts  relating to providing  investment  advisory
services  to certain  institutional  and  private  accounts  and to the  Eclipse
no-load family of funds (the "Funds").  Towneley investment  personnel currently
managing  the  Funds,  including  me,  will  become  employees  of New York Life
Investment  Management LLC ("NYLIM  LLC"),  an affiliate of NYLIM  Holdings.  If
shareholders  approve  a new  investment  advisory  agreement,  NYLIM  LLC would
perform investment  advisory and administrative  services for the Funds, but the
portfolio  management of the Funds would remain  substantially  the same. A more
thorough  description of the businesses of NYLIM  Holdings,  NYLIM LLC and their
affiliates is contained in the proxy statement.

         Under NYLIM LLC's management, the Funds will have access to the greater
investment  resources of NYLIM LLC and its  affiliates.  In addition,  the Funds
will be  distributed  together  with the  MainStay  Institutional  Funds Inc., a
no-load fund family that will also be managed by NYLIM LLC (the "NYLIM Funds).

         At the  shareholder  meeting on December 5, 2000,  you will be asked to
approve  a new  management  agreement  for your  Fund to take  effect  after the
closing  of the  transaction.  The new  agreement  is the  same in all  material
respects as that currently in effect including advisory fees charged.  NYLIM LLC
will provide fund  administration  services under the new agreement  without any
increase in fees, and the new agreement will include other changes to conform to
the  agreements  for the NYLIM  Funds to permit ease of  administration.  If the
agreement  is  approved,   NYLIM  LLC  will  manage  the  Funds   following  the
transaction,  but the management team will remain the same.  Approval of the new
advisory  agreement  is sought  so that  management  of each  Fund can  continue
uninterrupted  after  the  transaction,   because  the  current  agreement  will
terminate  automatically  as a result  of the  transaction.  At the  shareholder
meeting,  you also  will be asked to ratify  the  selection  of the  independent
auditors and to elect new Trustees for Eclipse Funds (the "Trust").

         After careful consideration,  the Trust's Board of Trustees unanimously
approved each of the proposals and recommends that  shareholders vote "FOR" each
proposal.

         Your vote is  important  regardless  of the  number of shares  you own.
Please read the proxy  statement  and cast your vote  promptly.  It is important
that your vote be received by no later than the time of the shareholder  meeting
on December 5, 2000.

         If you are a  shareholder  of more than one Fund, or have more than one
account  registered  in your  name,  you will  receive  one proxy  card for each
account. Please vote and return each proxy card that you receive.

         If you have any  questions  before you vote,  please  contact our proxy
representative  at  1-877-518-9412.  They will help you get the answers you need
promptly.  We appreciate your  participation  and prompt response in this matter
and thank you for your continued support.

Sincerely,


Wesley G. McCain
(enclosures)


<PAGE>


                           NOTICE OF A SPECIAL MEETING
                             OF THE SHAREHOLDERS OF

                                  ECLIPSE FUNDS

                      Eclipse Ultra Short Term Income Fund

                              Eclipse Balanced Fund

                           Eclipse Mid Cap Value Fund

                          Eclipse Small Cap Value Fund
                  (each a "Fund" and collectively, the "Funds")

         Notice is hereby given that a Special Meeting of the Shareholders  (the
"Special  Meeting") of the Funds,  each a series of Eclipse Funds (the "Trust"),
will be held on  December  5, 2000,  at 10:00 a.m.,  Eastern  time,  at 470 Park
Avenue South, 16th Floor, New York, New York, 10016 for the following purposes:

1. To consider the election of four (4) Trustees to serve until their successors
are elected and qualified;

2. To approve or  disapprove a new  Investment  Advisory  Agreement  between the
Trust,  on behalf of each  Fund,  and New York Life  Investment  Management  LLC
("NYLIM LLC"), a subsidiary of New York Life Insurance Company;

3.  To  ratify  or  reject  the  selection  of  PricewaterhouseCoopers   LLP  as
independent auditors for the Funds for the fiscal year ending December 31, 2000;
and

4. To  transact  such other  business  as may  properly  come before the Special
Meeting and any adjournments thereof.

         Please read the enclosed  proxy  statement  carefully  for  information
concerning the proposals to be placed before the Special Meeting.

         Shareholders of record at the close of business on October 24, 2000 are
entitled to notice of and to vote at the Special Meeting and at any adjournments
thereof.  You are  invited to attend the Special  Meeting.  If you cannot do so,
however,  PLEASE  COMPLETE  AND SIGN THE  ENCLOSED  PROXY,  AND RETURN IT IN THE
ACCOMPANYING  ENVELOPE AS PROMPTLY AS POSSIBLE.  Any  shareholder  attending the
Special  Meeting  may vote in  person  even  though  a proxy  has  already  been
returned.

                                         By Order of the Board of Trustees,


                                         Sigrid A. Hess
                                         Secretary

November 3, 2000



<PAGE>


                                  ECLIPSE FUNDS

                         IMPORTANT NEWS FOR SHAREHOLDERS

         While we  encourage  you to read the full  text of the  enclosed  Proxy
Statement,  here is a brief  overview of some matters  affecting  your Fund that
will be the subject of a shareholder vote.

                          Q & A: QUESTIONS AND ANSWERS

Q.       WHAT IS HAPPENING?

A.        Your Fund's  investment  adviser,  Towneley Capital  Management,  Inc.
          ("Towneley"),  has agreed to sell  certain  segments of its  portfolio
          management   businesses,   including  the  business,   operations  and
          activities  that Towneley  conducts  relating to providing  investment
          advisory services to certain institutional and private accounts and to
          the  Eclipse  no-load  family  of funds,  to New York Life  Investment
          Management Holdings LLC ("NYLIM  Holdings"),  a subsidiary of New York
          Life Insurance  Company.  Headquartered  in New York, New York,  NYLIM
          Holdings  and its  affiliates  encompass a broad range of  specialties
          including: retail and institutional mutual funds, direct institutional
          asset  management,  guaranteed  products,  retirement  plans, and full
          service products for defined contribution and defined benefit plans.

         To ensure that there is no  interruption  in the services that Towneley
         currently provides to your Fund, we are asking the shareholders of each
         Fund to approve a new investment  advisory agreement with New York Life
         Investment   Management  LLC  ("NYLIM  LLC"),  an  affiliate  of  NYLIM
         Holdings.  The  most  important  matters  to be  voted  upon by you are
         approval of the new investment  advisory  agreement and the election of
         Trustees.  The following  pages give you additional  information  about
         NYLIM Holdings,  NYLIM LLC, the new investment  advisory  agreement and
         certain other matters.  The Board Members of your Fund, including those
         who are not affiliated with the Fund, Towneley,  NYLIM Holdings,  NYLIM
         LLC or any of their affiliates, unanimously recommend that you vote FOR
         these proposals.

Q.       WHY DID YOU SEND ME THIS BOOKLET?

A.       You are receiving  these proxy materials -- a booklet that includes the
         Proxy  Statement  and one or more proxy  cards -- because  you have the
         right to vote on important proposals  concerning your investment in the
         Fund.

Q.       WHY ARE MULTIPLE CARDS ENCLOSED?

A.       If you own shares of more than one Fund,  you will receive a proxy card
         for each Fund that you own.

Q.       WHY AM I BEING ASKED TO VOTE ON THE NEW INVESTMENT ADVISORY AGREEMENT?

A.       The  Investment  Company  Act of 1940,  which  imposes  regulations  on
         investment companies such as your Fund, requires that fund shareholders
         approve  a new  investment  advisory  agreement  whenever  there  is an
         assignment  of an investment  advisory  agreement.  The  Towneley-NYLIM
         Holdings transaction will result in such an assignment.  Therefore,  we
         are  seeking  shareholder  approval  of  the  new  investment  advisory
         agreement between NYLIM LLC and your Fund.

Q.       HOW WILL THE  TOWNELEY-NYLIM  HOLDINGS  TRANSACTION AFFECT ME AS A FUND
         SHAREHOLDER?

A.       The investment  management of your Fund and its  investment  objectives
         will  not  change  as a result  of the  transaction.  There  will be no
         increase  in advisory  fees.  You will still own the same shares in the
         same Fund. The Towneley  investment  personnel  currently  managing the
         Funds will  become  employees  of NYLIM LLC and will  remain  primarily
         responsible  for the management of the Funds after  consummation of the
         transaction.

         In addition,  the Funds will be distributed  together with the MainStay
         Institutional  Funds Inc., a no-load  family of funds that will also be
         managed by NYLIM LLC (the "NYLIM Funds").

Q.       WILL  THE  INVESTMENT  ADVISORY  FEES  INCREASE  AS  A  RESULT  OF  THE
         TRANSACTION?

A.       No, the proposal to approve the new agreement  seeks no increase in the
         investment advisory fee rates paid by your Fund.

Q.       WILL I CONTINUE TO BE ABLE TO PURCHASE SHARES WITHOUT ANY LOAD?

A.       Yes,  you will be able to  continue  to  purchase  shares  of your Fund
         without any sales load.

Q.       WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?

A.       As noted  above,  you are being  asked to elect four (4) new members of
         the Board. You are also being asked to vote for the ratification of the
         Board's selection of the Funds' auditors.

Q.       HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?

A.       After careful consideration,  the Board Members of your Fund, including
         those who are not affiliated with the Fund,  Towneley,  NYLIM Holdings,
         NYLIM LLC or their affiliates,  unanimously recommend that you vote FOR
         the Proposals.

Q.       WILL THE FUND PAY FOR THIS PROXY SOLICITATION?

A.        No,  Towneley,  NYLIM Holdings and/or their affiliates will bear these
          costs.

Q.       WHOM DO I CALL FOR MORE INFORMATION?

A.       Please call Shareholder  Communications  Corporation,  Towneley's proxy
         representative, at 1-877-518-9412.


<PAGE>


                                  ECLIPSE FUNDS
                              470 Park Avenue South
                                   16th Floor
                            New York, New York 10016
                                 (800) 872-2710

                      Eclipse Ultra Short Term Income Fund

                              Eclipse Balanced Fund

                           Eclipse Mid Cap Value Fund

                          Eclipse Small Cap Value Fund
                 (each, a "Fund" and collectively, the "Funds")

                                 PROXY STATEMENT
                                November 3, 2000

         This Proxy  Statement  provides you with  information you should review
before  voting on the matters  listed in the Notice of Special  Meeting  (each a
"Proposal")  on the previous page for the Funds,  each a series of Eclipse Funds
(the  "Trust").  The Trust's Board of Trustees (the "Board") is soliciting  your
vote for a Special Meeting of Shareholders of each Fund (the "Special  Meeting")
to be held at 470 Park Avenue South,  16th Floor,  New York, New York 10016,  on
December 5, 2000, at 10:00 a.m.,  Eastern time,  and, if the Special  Meeting is
adjourned, at any adjournment of that Meeting.

Solicitation of Proxies

         The Trust's Board is soliciting  votes from  shareholders  of each Fund
with respect to each Proposal.  The solicitation of votes is made by the mailing
of this Proxy Statement,  Notice of a Special Meeting and the accompanying proxy
card which are first being mailed to  shareholders  on or about November 3, 2000
or as soon as practicable  thereafter.  Holders of record of shares of each Fund
at the close of  business  on  October  24,  2000 (the  "Record  Date")  will be
entitled to one vote per share on all business of the Special Meeting. The table
below sets forth the number of shares outstanding for each Fund as of the Record
Date.

               Number of Shares Outstanding as of the Record Date

Fund                                      Total Shares Outstanding

Ultra Short Term Income                    660,372.149
Balanced                                   3,166,771.498
Mid Cap Value                              3,968,043.639
Small Cap Value                            16,175,160.576

         The  appointed  proxies  will  vote in their  discretion  on any  other
business as may properly come before the Special Meeting or any  adjournments or
postponements  thereof.  Additional matters would include only matters that were
not anticipated as of the date of this Proxy Statement.

Shareholder Reports

         Copies of the Trust's  Annual Report for the fiscal year ended December
31, 1999, and its  Semi-Annual  Report for the period ended June 30, 2000,  have
previously been mailed to  shareholders.  This Proxy Statement should be read in
conjunction  with the Annual and Semi-Annual  Reports.  You can obtain copies of
those Reports,  without charge, by writing to the Funds'  shareholder  servicing
agent,  Eclipse  Financial  Services,  Inc.,  P.O. Box 2196,  Peachtree City, GA
30269, or by calling 1-800-872-2710.

                                GENERAL OVERVIEW

         New York Life Investment  Management  Holdings LLC ("NYLIM  Holdings"),
Wesley  G.  McCain,  Towneley  Capital  Management,  Inc.  ("Towneley")  and the
shareholders of Towneley have entered into an Asset Purchase Agreement, dated as
of October 6, 2000. Under the Towneley Asset Purchase Agreement,  NYLIM Holdings
has  agreed  to  pay  Towneley   approximately   $10  million  in  exchange  for
substantially  all of Towneley's  assets  relating to the Eclipse Funds business
and  Towneley's  business  of  providing   investment   management  services  to
individual  and  institutional   clients,   including   Towneley's   proprietary
analytical models (the "Transaction").  Several trusts established by Mr. McCain
are the registered owners of all of the outstanding shares of Towneley.

         NYLIM Holdings has also agreed to make quarterly "earn-out" payments to
Mr.  McCain in the fourth,  fifth and sixth years  following  completion  of the
Transaction.  The  amount  of  each  earn-out  payment  will  be  calculated  by
multiplying  0.000375  by the value at the end of the  quarter of (a) the assets
(including  the assets in the Eclipse Funds)  formerly  managed by Towneley that
New York Life Investment  Management LLC, a registered investment adviser and an
affiliate of NYLIM Holdings  ("NYLIM LLC"),  will manage after completion of the
transaction,  (b) the assets in any other mutual funds and  investment  advisory
accounts  managed by the Eclipse team at NYLIM LLC,  and (c) a percentage  to be
agreed on a case-by-case  basis of the assets in any other  investment  products
developed, but not managed, by the Eclipse team.

         In connection with the  Transaction,  Mr. McCain,  as well as portfolio
manager Kathy O'Connor and quantitative analyst Jeffrey Sanders, will enter into
employment  agreements with NYLIM LLC. All other Towneley personnel will also be
offered positions with NYLIM LLC.

         Under Mr. McCain's employment agreement, the percentage of Mr. McCain's
professional  time devoted to NYLIM LLC matters will  decrease over the six-year
term of the  agreement.  NYLIM Holdings is not acquiring  Towneley's  hedge fund
business,  which Mr. McCain and Mr.  Sanders will continue to operate  following
the completion of the Transaction.  In addition,  NYLIM Holdings, Mr. McCain and
Towneley  will enter into a license  agreement  that will enable  Towneley,  Mr.
McCain and Mr.  Sanders to continue  to use the  proprietary  model  acquired by
NYLIM Holdings.

            The  transactions  under the Towneley Asset  Purchase  Agreement are
subject to a number of  conditions,  including,  but not limited to, a condition
that the  shareholders of the Eclipse Funds approve a new investment  management
agreement with NYLIM LLC, that the  shareholders of the Funds elect the proposed
trustees,  and a  condition  that  consents be obtained  from  Towneley  clients
(including the Funds) representing annualized investment management fee revenues
(taking into account  additional  contributions  to and withdrawals  from mutual
funds and  investment  advisory  accounts,  but not taking into  account  market
fluctuations)  that are at least 80% of such revenues as of March 31, 2000.  The
Transaction is expected to close by the end of the year.

         Fund  operations  are not  expected  to be  materially  affected by the
Transaction. NYLIM Holdings does not currently anticipate that there will be any
changes in the investment personnel primarily  responsible for the management of
the Funds in connection with the  Transaction.  Employees of Towneley devoted to
Fund operations will become  employees of NYLIM LLC. As part of the NYLIM family
of no-load funds,  the Funds will be distributed  by NYLIFE  Distributors,  Inc.
under the  "Eclipse"  name and the Funds'  shareholder  servicing  agent will be
MainStay  Shareholder  Services,  LLC Following the Transaction,  NYLIM Holdings
anticipates  that  it will  evaluate  capabilities  across  the  NYLIM  Holdings
companies and, where  appropriate,  will initiate  changes  designed to maximize
investment capabilities and achieve expense and resource efficiencies.

         NYLIM  Holdings  was  established  in December  1999 for the purpose of
holding the  ownership  of the asset  management  subsidiaries  of New York Life
Insurance Company. NYLIM LLC, the proposed new investment adviser for the Funds,
commenced  operations  in April,  2000,  is a wholly owned  subsidiary  of NYLIM
Holdings  and,  along  with the other  asset  management  subsidiaries  of NYLIM
Holdings (collectively, the "Asset Management Subsidiaries"), has more than $115
billion in assets under  management.  NYLIM  Holdings  and the Asset  Management
Subsidiaries  are committed to delivering high quality,  value added  investment
management products and services to clients.

         The  Asset  Management   Subsidiaries   provide   comprehensive   money
management and investment  services and their component  businesses  encompass a
broad range of specialties,  including:  retail and institutional  mutual funds,
direct institutional asset management,  guaranteed  products,  retirement plans,
and full service products for defined contribution and defined benefit plans.

         NYLIM Holdings'  principal  executive offices are located at 51 Madison
Avenue, New York, New York 10010.

         Information  regarding  NYLIM  Holdings  and its  affiliates  contained
herein has been  furnished to the Funds by NYLIM Holdings and its affiliates for
use  herein  and NYLIM  Holdings  and its  affiliates  are  responsible  for the
accuracy and completeness thereof.

                            MATTERS TO BE ACTED UPON

                                 PROPOSAL NO. 1
                              ELECTION OF TRUSTEES

         The Board has nominated four  individuals (the "Nominees") for election
to the Trust's  Board.  Shareholders  are being  asked to elect the  Nominees to
serve as Trustees,  each to serve until his or her successor is duly elected and
qualified.  Pertinent  information  about each Nominee is set forth below.  Each
Nominee  has  consented  to serve as a Trustee if elected.  The Trust's  current
Trustees have decided to step down upon completion of the Transaction.

         The  Nominees  are being  nominated  to provide  uniformity  across the
Boards of the Trustees/Directors of the Trust and the NYLIM Funds. In evaluating
the Nominees,  the Trustees took into account their  background and  experience,
including their familiarity with the issues relating to these types of funds and
investments as well as their careers in business,  finance,  marketing and other
areas.  The Trustees also considered the experience of the Nominees as Directors
of the NYLIM Funds.

Information Regarding Nominees

         Below are the names,  ages,  business  experience  during the past five
years and other  Trusteeships  of the Nominees.  An asterisk (*) has been placed
next to the name of each Nominee who would constitute an "interested person," as
defined  in the  Investment  Company  Act of 1940 as  amended  (the  "Investment
Company  Act"),  by virtue of that person's  affiliation  with any of the Funds,
Towneley,  NYLIM Holdings,  NYLIM LLC or any of their  affiliates.  The business
address of each Nominee is 51 Madison Avenue, New York, New York 10010.

Name and Age                    Position(s) Held    Principal Occupation(s)
                                With Fund           During Past Five Years

Stephen C. Roussin*                             Mr.  Roussin  has been  Director
(Age 37)                                        and    Chairman    of   MainStay
                                                Institutional  Funds  Inc.  from
                                                1997 to present;  President  and
                                                Chief  Operating  Officer,   New
                                                York Life Investment  Management
                                                Holdings  LLC,  (formerly,   New
                                                York Life Asset  Management LLC)
                                                from 1999 to present;  President
                                                and Chief Operating Officer, New
                                                York Life Investment  Management
                                                LLC  (formerly,  New  York  Life
                                                Asset    Management    Operating
                                                Company   LLC)   from   1999  to
                                                present;     President,    Chief
                                                Executive  Officer and  Trustee,
                                                The MainStay  Funds from 1997 to
                                                present;  Senior Vice President,
                                                New York Life Insurance  Company
                                                from 1997 to present;  Director,
                                                New York Life Trust Company from
                                                1997 to  present;  Manager,  New
                                                York Life  Benefit  Services LLC
                                                (formerly,  Director,  New  York
                                                Life Benefit Services Inc.) from
                                                1997 to present;  Director,  New
                                                York Life Securities,  Inc. from
                                                1997  to  present;  Manager  and
                                                Chairman,  MainStay  Shareholder
                                                Services LLC (formerly, MainStay
                                                Shareholder Services Inc.), from
                                                1997 to present; Director, Eagle
                                                Strategies  Corp.  from  1997 to
                                                present; and Manager,  President
                                                and  Chief  Executive   Officer,
                                                MainStay      Management     LLC
                                                (formerly,  MainStay  Management
                                                Inc.)  from 1997 to March  2000,
                                                and Chairman  and Manager,  from
                                                March 2000 to present; Director,
                                                NYLIFE  Distributors  Inc., from
                                                1997 to present,  Chairman  from
                                                March  2000  to   present,   and
                                                Senior Vice  President from 1997
                                                to  March  2000;   Chairman  and
                                                Director,  New York  Life  Trust
                                                Company,  FSB from  June 2000 to
                                                present.  Previously,  he served
                                                as  Senior  Vice   President  of
                                                Smith  Barney  from 1994 to 1997
                                                and  Division  Sales  Manager of
                                                Prudential  Securities from 1989
                                                to 1994.

Lawrence Glacken                                Mr.  Glacken  has  served  as  a
(Age 73)                                        Director    of   the    MainStay
                                                Institutional  Funds Inc.  since
                                                their inception in January 1991.
                                                He served as Vice  President  of
                                                Investment Banking for The First
                                                Boston  Corporation from 1964 to
                                                1987 and has been retired  since
                                                1987.

Robert P. Mulhearn                              Mr.  Mulhearn  has  served  as a
(Age 53)                                        Director    of   the    MainStay
                                                Institutional  Funds Inc.  since
                                                their inception in January 1991.
                                                He was a  Managing  Director  at
                                                Morgan   Stanley  from  1979  to
                                                1987.  Mr.  Mulhearn  has been a
                                                Private  Investor  from  1987 to
                                                present.

Susan B. Kerley                                 Ms.   Kerley  has  served  as  a
(Age 49)                                        Director    of   the    MainStay
                                                Institutional  Funds Inc.  since
                                                their inception in January 1991.
                                                She has been President of Global
                                                Research  Associates since 1990.
                                                From 1988 to 1990, she served as
                                                Manager of  Special  Investments
                                                at  Rockefeller  & Co.  She  was
                                                Director  of Research at Rogers,
                                                Casey   and    Barksdale    from
                                                1983-1988.  She has also  served
                                                as a Director of Citifunds  from
                                                1991 to present.

Executive Officers of the Trust

         The Trust's  officers  are  elected by the Board and hold office  until
they resign,  are removed or are otherwise  disqualified  to serve.  The current
executive  officers of the Trust,  together with such person's position with the
Trust and principal  occupation for the last five years,  are listed below.  The
business address for each of the officers is 470 Park Avenue South,  16th Floor,
New York, NY 10016.

Name and Age          Position(s) Held             Principal Occupation(s)
                      With the Trust               During Past Five Years

Wesley G. McCain        Chairman of the         Mr.  McCain is the  founder  and
(Age 58)                Board and President     has been  Chairman  of  Towneley
                                                Capital  Management,  Inc. since
                                                1971. Mr. McCain is a trustee of
                                                the  Van Eck  Funds  and the Van
                                                Eck World Wide Insurance  Trust,
                                                and  a   director   of  the  Van
                                                Eck/Chubb  Funds,  Inc.  He is a
                                                Public    Advisor   to   Pacific
                                                Exchange  Stock and Options.  He
                                                was a director of the  Peregrine
                                                Fund from 1995 to 1998.  He is a
                                                general   partner   of   Pharaoh
                                                Partners,  L.P.,  which  is  the
                                                general    partner    of   Libre
                                                Partners,  L.P.  He  is  also  a
                                                trustee of Libre Group Trust,  a
                                                director  of  Libre  Investments
                                                (Cayman)   Ltd.,   a  member  of
                                                Pharaoh  Partners  (Cayman) LDC,
                                                and    Chairman   of   Millbrook
                                                Associates,  Inc. and of Eclipse
                                                Financial Services, Inc. He is a
                                                Chartered  Financial Analyst and
                                                a member of the  Association for
                                                Investment     Management    and
                                                Research.    In    addition   to
                                                managing investment  portfolios,
                                                Mr. McCain's experience includes
                                                economic      and      financial
                                                consulting   to  a   diversified
                                                corporate clientele.

Sigrid A. Hess          Executive Vice          Ms. Hess is a Vice  President of
(Age 59)                President and           Towneley   Capital   Management,
                        Secretary               Inc.,   where   she   has   been
                                                employed  since  1977.  Ms. Hess
                                                also  serves  as   Secretary  of
                                                Eclipse   Financial    Services,
                                                Inc.,  the  Trust's  shareholder
                                                servicing agent.

John A. Flanagan        Vice President,         Mr.   Flanagan   has  been  Vice
(Age 54)                Treasurer               President,    New   York    Life
                                                Insurance  Company,  1999 to the
                                                present;   Vice   President  and
                                                Treasurer,    New   York    Life
                                                Investment  Management  Holdings
                                                LLC,  (formerly,  New York  Life
                                                Asset  Management LLC) from 1999
                                                to present;  Vice  President and
                                                Treasurer,    New   York    Life
                                                Investment  Management  LLC from
                                                1999   to  the   present;   Vice
                                                President  and  Chief  Financial
                                                Officer, The MainStay Funds from
                                                1999  to   present;   Treasurer,
                                                Principal      Financial     and
                                                Accounting   Officer,   MainStay
                                                Institutional  Funds  Inc.  from
                                                1999  to   present;   Treasurer,
                                                MainStay  VP Series  Fund,  Inc.
                                                from 1999 to  present;  Manager,
                                                Senior Vice  President and Chief
                                                Financial   Officer,    MainStay
                                                Management     LLC    (formerly,
                                                MainStay  Management  Inc.) from
                                                1999   to   present;    Manager,
                                                MainStay   Shareholder  Services
                                                LLC     (formerly,      MainStay
                                                Shareholder  Services Inc.) from
                                                1999 to the present; Senior Vice
                                                President  and  Chief  Financial
                                                Officer,   NYLIFE   Distributors
                                                Inc.  from 1999 to the  present.
                                                He served as Treasurer of Strong
                                                Funds and Senior Vice  President
                                                of  Strong  Capital  Management,
                                                Inc. from 1997 to 1998 and was a
                                                Partner  at the  predecessor  to
                                                PricewaterhouseCoopers       LLP
                                                (Coopers & Lybrand, L.L.P.) from
                                                1994 to 1997.

Sylvia McCormick        Vice President          Ms.  McCormick has been employed
(Age 54)                                        by Towneley Capital  Management,
                                                Inc.    since   1973.   She   is
                                                President  of Eclipse  Financial
                                                Services,   Inc.,   the  Trust's
                                                shareholder servicing agent.

Antoinette B. Cirillo   Assistant               Ms.  Cirillo has been  Assistant
(Age 46)                Treasurer               Treasurer of The MainStay  Funds
                                                from   1992   to  the   present,
                                                Assistant  Treasurer of MainStay
                                                Institutional  Funds  Inc.  from
                                                1992   to   the   present,   and
                                                Assistant  Treasurer of MainStay
                                                VP Series Fund,  Inc.  from 1993
                                                to   the   present,    and   was
                                                Corporate    Vice     President,
                                                Assistant    Vice     President,
                                                Director  and Senior  Accountant
                                                of   Mutual   Fund    Accounting
                                                Operations, NYLIFE Distributors,
                                                Inc. and MainStay Management LLC
                                                (formerly,  MainStay  Management
                                                Inc.)  from  1988 to  1999.  She
                                                held  various  positions  in New
                                                York Life Insurance Company from
                                                1987 to 1988.


Patrick J. Farrell      Assistant               Mr.   Farrell   has  been   Vice
(Age 40)                Treasurer               President,     Corporate    Vice
                                                President      and     Assistant
                                                Treasurer        of       NYLIFE
                                                Distributors,  Inc. and MainStay
                                                Management     LLC    (formerly,
                                                MainStay  Management  Inc.) from
                                                1996   to   present,   Assistant
                                                Treasurer of MainStay Funds from
                                                1996   to   present,   Assistant
                                                Treasurer       of      MainStay
                                                Institutional  Funds  Inc.  from
                                                1996 to  present  and  Assistant
                                                Treasurer  of MainStay VP Series
                                                Fund from  1996 to the  present.
                                                He   was   Vice   President   of
                                                Alliance   Capital    Management
                                                Corporation from 1988 to 1996.

         Upon  the  closing  of the  Transaction,  it is  anticipated  that  the
foregoing  officers  will resign and that  persons who are  directors,  officers
and/or employees of NYLIM Holdings or its affiliates,  which may include certain
of the individuals named above, will become officers of the Trust.

Trustees Not Standing for Reelection

         Below are the names,  ages,  business  experience  during the past five
years and other  Trusteeships of the current  Trustees of the Trust. An asterisk
(*) has been placed next to the name of each  Trustee  who would  constitute  an
"interested  person," as defined in the  Investment  Company  Act.  The business
address of each Trustee is 470 Park Avenue, New York, New York 10016.

Wesley G. McCain*       Trustee, Chairman       Please see the description under
(Age 58)                of the Board and        "Executive   Officers   of   the
                        President               Trust"

Sigrid A. Hess*         Trustee, Executive      Please see the description under
(Age 59)                Vice President and      "Executive   Officers   of   the
                        Secretary               Trust," above.

John C. Novogrod        Trustee                 Mr. Novogrod is a partner of the
(Age 58)                                        law  firm  of  Kirkland  & Ellis
                                                since  1997.  Prior to this,  he
                                                was  a  partner  of  Novogrod  &
                                                Kurlander from 1991 to 1995, and
                                                a partner  of  Schiff,  Hardin &
                                                Waite from 1995 to 1997.

Yung Wong               Trustee                 Mr.  Wong is a  Trustee  of Back
(Age 61)                                        Bay  Funds,   Inc.,   California
                                                Daily  Tax  Free  Income   Fund,
                                                Inc., Connecticut Daily Tax Free
                                                Income  Fund,  Inc.,  Daily  Tax
                                                Free    Income    Fund,    Inc.,
                                                Delafield Fund,  Inc.,  Michigan
                                                Daily  Tax  Free  Income   Fund,
                                                Inc., New Jersey Daily Municipal
                                                Income   Fund,    Inc.,    North
                                                Carolina Daily Municipal  Income
                                                Fund,  Inc.,  Short Term  Income
                                                Fund,   Inc.,   Virginia   Daily
                                                Municipal   Income  Fund,  Inc.,
                                                Georgia Daily  Municipal  Income
                                                Fund,  Inc., and PAX World Money
                                                Market  Fund,  Inc. He is also a
                                                trustee   of    Florida    Daily
                                                Municipal      Income      Fund,
                                                Institutional Daily Income Fund,
                                                and Pennsylvania Daily Municipal
                                                Income  Fund.  Dr.  Wong  was  a
                                                Trustee   of   Shaw   Investment
                                                Management  (H.K.)  Limited  (an
                                                asset   management   and  direct
                                                investment  firm)  from  1994 to
                                                1995.

John C.  Van Eck        Trustee                 Mr. Van Eck is  Chairman  of the
(Age 85)                                        Board and  President  of Van Eck
                                                (Age  85)   Funds  and  Van  Eck
                                                Worldwide     Insurance    Trust
                                                (mutual  funds).  He is Chairman
                                                of    Van     Eck     Associates
                                                Corporation,    an    investment
                                                adviser,  and Van Eck Securities
                                                Corporation, a broker dealer.

Ownership of Fund Shares

         Appendix 2 hereto sets forth the number of shares of each class of each
Fund owned directly or beneficially by the current Trustees.  To the best of the
Trust's  knowledge,  as of October 24, 2000, no current Trustee owned 1% or more
of the  outstanding  shares of any class of a Fund, and the current  Trustees of
the Funds  owned,  as a group,  less than 1% of the shares of each class of each
Fund, except as otherwise noted in Appendix 2.

Meetings

         During the fiscal year ended  December 31, 1999, the current Board held
four (4) regular  meetings.  Each Trustee  attended  100% of the total number of
Board  meetings and meetings held by all  committees of the Board on which he or
she served.

Committees

         Audit Committee.  The Board has an Audit Committee whose function is to
assist the Board in fulfilling its responsibilities to shareholders of the Funds
relating to  accounting  and  reporting,  internal  controls and the adequacy of
auditing relative thereto. The Committee currently consists of Messrs. Novogrod,
Wong, and Van Eck. During the fiscal year ended December 31, 1999, the Committee
met once.

          The  Board  does not have a  Nominating  Committee  or a  Compensation
Committee. The responsibilities  associated with these committees are handled by
the Trustees who are not "interested persons" as described above.

Remuneration of Trustees and Officers

         For  service  on the  Board,  each  Trustee  who is not an  "interested
person" of the adviser is entitled to receive (i) an annual  retainer of $2,000;
(ii) $750 per meeting for each Board  meeting in which the Trustee  participates
and (iii)  reimbursement  for  out-of-pocket  expenses.  None of the Trustees is
entitled to receive pension or retirement benefits.

         The  following  table sets forth the  compensation  paid to each of the
current  Trustees  for the fiscal year ended  December  31,  1999.  Trustees and
officers of the Trust who are also  Trustees,  officers or employees of Towneley
or MainStay Management LLC are not entitled to receive any compensation from the
Trust.

                                           Aggregate          Total Compensation
                                          Compensation        from the Trust
      Name of Person, Position            from the Trust      Paid to Trustees

Sigrid A. Hess                                $0                    $0
Trustee, Executive Vice President and
Secretary

Wesley G. McCain                              $0                    $0
Trustee, Chairman and President

John C. Novogrod                            $5,000                $5,000
Trustee

John C. Van Eck                             $5,000                $5,000
Trustee

Yung Wong                                   $5,000                $5,000
Trustee

         The effectiveness of this Proposal 1 is conditioned on the consummation
of the  Transaction.  Accordingly,  in the  event  that the  Transaction  is not
consummated,  each of the current  Trustees  will continue to serve until his or
her successor is duly elected and qualified.

Vote Required

         The affirmative  vote of a plurality of all  outstanding  shares of the
Trust  represented  in person or by proxy and  entitled  to vote at the  Special
Meeting is required to approve the election of each Nominee. This means that the
four Nominees receiving the largest number of votes will be elected.

          The Board unanimously  recommends that shareholders vote "FOR" each of
the Nominees under Proposal No. 1.

                                 PROPOSAL NO. 2
                    APPROVAL OF INVESTMENT ADVISORY AGREEMENT

Introduction

         Shareholders  of each of the  Funds are  being  asked to  approve a new
Investment Advisory Agreement (the "New Agreement") between the Trust, on behalf
of  their  Fund,  and  NYLIM  LLC  (also  referred  to in  this  section  as the
"Manager").  Approval of the New  Agreement is sought so that the  management of
each Fund can continue  uninterrupted  after the Transaction because the current
Investment   Advisory   Agreement  (the  "Current   Agreement")  will  terminate
automatically as a result of the Transaction.

         Towneley's  goal is to  complete  the  Transaction  during  the  fourth
quarter  of 2000.  As a  result  of the  Transaction,  certain  of the  business
segments and  operations  of Towneley will be purchased by NYLIM  Holdings.  The
sale of certain assets of Towneley resulting from the Transaction will be deemed
under the Investment  Company Act to be an assignment of the Current  Agreement.
The Current Agreement provides for its automatic termination upon an assignment.
Accordingly,  the New Agreement between NYLIM LLC and the Trust on behalf of the
Funds is proposed for approval by  shareholders  of each Fund. A form of the New
Agreement is attached as Exhibit A to this Proxy  Statement and the  description
of its terms in this  section is  qualified  in its  entirety  by  reference  to
Exhibit A.

         Towneley Capital  Management,  Inc.,  located at 470 Park Avenue South,
16th Floor, New York, New York 10016,  has served as investment  adviser to each
Fund pursuant to the Current  Agreement since the  commencement of operations of
the  Funds.  The  terms of the New  Agreement  will be the same in all  material
respects as those of the Current  Agreement,  including  advisory  fees charged.
NYLIM LLC will  provide fund  administration  services  under the New  Agreement
without  any  increase  in  fees,  and  the New  Agreement  will  include  other
ministerial  changes to conform to the  agreements for the NYLIM Funds to permit
ease of administration. Also, the same portfolio managers, as employees of NYLIM
LLC, will continue to manage each Fund.  Towneley does not  anticipate  that the
Transaction  will cause any reduction in the quality of services now provided to
the Funds. In addition,  NYLIM LLC has undertaken that for the initial  two-year
term of the New  Agreement,  there will be no  increase  in the annual  ordinary
operating expense ratios (excluding transfer agency expenses) of the Funds above
those for the twelve months ended December 31, 2000  (excluding  transfer agency
expenses).  In the  case  of  transfer  agency  expenses,  NYLIM  LLC  has  also
undertaken  that during the initial  two-year  period,  any increase in a Fund's
transfer  agency  expenses above those that would have been  experienced by that
Fund if the existing  transfer agency  agreement  (i.e.,  pre-Transaction)  were
still in effect will be borne by NYLIM LLC.

         The following table shows the date when each Fund commenced operations,
the date of the Current  Agreement,  as amended,  and the dates when the Current
Agreement was approved by the Board on behalf of the applicable  Fund and by the
applicable  Fund's  shareholders  (or,  in some  cases,  a Fund's  sole  initial
shareholder).

<TABLE>
<S>                         <C>               <C>                      <C>                  <C>

                                              Date of                  Date Current         Date Current
                            Commencement      Current                  Investment           Investment
                               of             Investment               Advisory             Advisory
                             Operations       Advisory                 Agreement Last       Agreement Last
                                              Agreement                Approved by          Approved by
Fund                                                                   the Board            Shareholders

Ultra Short Term Income       12/27/94          12/27/94               12/15/99               12/27/94

Balanced                       5/1/89      1/7/87, as amended          12/15/99               6/13/90
                                           3/15/89 and 3/16/90

Mid Cap Value                 12/27/94          12/27/94               12/15/99               12/27/94

Small Cap Value                1/12/87     1/7/87, as amended          12/15/99               6/13/90
                                           3/15/89 and 3/16/90
</TABLE>


         At the October 20, 2000  meeting of the Board,  the New  Agreement  was
approved unanimously by the Board,  including by all of the Trustees who are not
interested  parties to the New Agreement or interested  persons of such parties.
The New  Agreement  as approved by the Board is  submitted  for  approval by the
shareholders of each Fund to which the New Agreement pertains. The New Agreement
must be voted  upon  separately  by the  shareholders  of each  Fund to which it
pertains.

         If the New Agreement is approved by  shareholders,  it will take effect
immediately after the closing of the Transaction. The New Agreement will have an
initial term of two years and,  unless  earlier  terminated,  will continue from
year to year  thereafter,  provided  that  each  such  continuance  is  approved
annually with respect to each Fund (i) by the Board or by the vote of a majority
of the  outstanding  voting  securities of the particular  Fund,  and, in either
case, (ii) by a majority of the Trust's  Trustees who are not parties to the New
Agreement or  "interested  persons" of any such party (other than as Trustees of
the Trust).

Comparison of the Terms of the New Agreement and the Current Agreement

         The  terms  of the  New  Agreement  will be the  same  in all  material
respects  as those of the  Current  Agreement,  except for the  effective  date,
initial term and the parties. Certain conforming changes are proposed to conform
to the current form of advisory  agreement for the NYLIM Funds,  as discussed in
detail below.

         Under the Current  Agreement,  Towneley provides an investment  program
for each Fund, makes the day-to-day investment decisions for each Fund, executes
the purchase and sale orders for the portfolio  transactions  of each Fund,  and
generally  manages  each Fund's  investments.  In  addition,  Towneley  provides
persons satisfactory to the Board to serve as officers of the Trust. The Current
Agreement also provides that Towneley is required to pay the fees of the Trust's
administrator.  This  arrangement  is  described  in more detail below under the
caption "Administration."

         The New Agreement requires NYLIM LLC, subject to the supervision of the
Board,  to administer  each Fund's  business  affairs and manage the  investment
operations  of each Fund and the  composition  of the  portfolio  of each  Fund,
including the purchase,  retention and  disposition  of securities  thereof,  in
accordance  with the investment  objectives,  policies and  restrictions of each
Fund, as stated in the currently effective Prospectus.

         Specifically,  the New  Agreement  provides  that the Manager shall (i)
furnish each Fund with office facilities;  (ii) be responsible for the financial
and accounting  records  required to be maintained by each Fund (excluding those
being  maintained by the Fund's  custodian and transfer agent except as to which
the Manager has supervisory  functions) and other than those being maintained by
the  Fund's  subadviser,  if any;  and (iii)  furnish  each  Fund with  ordinary
clerical, bookkeeping and recordkeeping services at such office facilities.

Administration

         Under  the  Current  Agreement,  the  Trust is  required  to  retain an
administrator  acceptable to Towneley,  which administrator's expenses are to be
paid by  Towneley  out of its  management  fee.  Pursuant  to an  administration
agreement dated January 1, 1998, the Trust retained MainStay Management LLC (the
"Administrator"),  300 Interpace Parkway,  Building A, Parsippany,  NJ 07054, to
administer  all aspects of the  Trust's  operations  except  those which are the
responsibility of Towneley.  The  Administrator is a wholly-owned  subsidiary of
New York Life Insurance  Company.  In connection  with its  responsibilities  as
administrator, the Administrator performs such supervisory,  administrative, and
clerical functions as are necessary in order to provide effective administration
of the Trust,  including maintaining certain books and records;  authorizing the
payment of Fund  expenses  and  maintaining  control  over daily cash  balances;
monitoring the  availability of funds for investment;  overseeing and confirming
portfolio  holdings with the Funds'  custodian and  Towneley;  coordinating  and
controlling  on a daily  basis  the  administrative  and  professional  services
rendered  to the Trust by others,  including  Towneley,  the  custodian  and the
transfer and dividend  disbursing agent, and the Trust's  shareholder  servicing
agent,  as well as  accounting,  auditing and other  services  performed for the
Trust;  calculating  the net asset value of the Trust's  shares;  providing  the
Trust with adequate conference facilities for all board meetings; overseeing the
preparation  and filing with the Securities and Exchange  Commission  ("SEC") of
the Trust's  registration  statement,  prospectus  and  statement of  additional
information; and preparing and filing all required state Blue Sky filings.

         For providing such services, the Administrator receives a fee, computed
daily and paid monthly in arrears,  from Towneley based on the average  combined
daily net asset value of the Funds  ("Combined  Assets") to be calculated at the
annual rate of 0.15% of the  Combined  Assets up to $50  million,  plus 0.12% of
such Combined Assets in excess of $50 million but not in excess of $100 million,
plus 0.08% of such  Combined  Assets in excess of $100 million but not in excess
of $150 million;  plus 0.05% of such  Combined  Assets in excess of $150 million
but not in excess of $750 million and 0.02% of the Combined  Assets in excess of
$750 million. In addition,  for any Fund, Towneley shall pay the Administrator a
monthly fee of $625 until such time as the Fund's  average daily net asset value
during the  preceding  month  exceeded  $20  million.  For the fiscal year ended
December 31, 1999,  the  Administrator  received  $316,631 from Towneley for the
Funds.

         The  administration  contract can be  terminated  by either party on 60
days'  written  notice to the other and will  terminate  automatically  upon the
termination of the Investment  Advisory Agreement.  The administration  contract
provides  that in the  absence  of  willful  misfeasance,  bad  faith  or  gross
negligence  on the part of the  Administrator,  or of reckless  disregard of its
obligations thereunder,  the Administrator shall not be liable for any action or
failure to act in accordance with its duties.

         The New Agreement wraps the  administrative  agreement and the advisory
agreement into one agreement.  Under the New Agreement, NYLIM LLC is responsible
for both investment advice and administration without any increase in the Funds'
current  advisory fees. It is expected that NYLIM LLC will retain its affiliate,
MainStay Management LLC, the current administrator,  to perform the same duties.
Accordingly, the Funds' administration is not expected to change.

Best Execution

         Under the New Agreement,  the Manager, and any sub-adviser to whom such
authority has been delegated,  shall determine the securities to be purchased or
sold by each Fund and will place orders  pursuant to its  determination  with or
through such persons,  brokers or dealers  (including NYLIFE Securities Inc.) in
conformity with the policy with respect to brokerage as set forth in the Trust's
registration statement and prospectus or as the Trustees may direct from time to
time. It is recognized that, in providing a Fund with investment  supervision or
the placing of orders for portfolio transactions, the Manager or any sub-adviser
will  give  primary  consideration  to  securing  the most  favorable  price and
efficient execution. Consistent with this policy, the Manager or any sub-adviser
may consider the financial  responsibility,  research and investment information
and other  services  provided by brokers or dealers who may effect or be a party
to any such  transaction  or other  transactions  to which other  clients of the
Manager or any  sub-adviser  may be a party.  It is understood  that none of the
Funds,  the Trust nor the  Manager  or  sub-adviser  has  adopted a formula  for
allocation of a Fund's investment  transaction  business.  It is also understood
that it is  desirable  for each Fund that the  Manager or any  sub-adviser  have
access to supplemental  investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher cost to a Fund than may result when allocating brokerage to other brokers
on the  basis of  seeking  the most  favorable  price and  efficient  execution.
Therefore,  the Manager or any sub-adviser is authorized to place orders for the
purchase and sale of securities for a Fund with such certain brokers, subject to
review by the Trust's  Trustees from time to time with respect to the extent and
continuation of this practice.  It is understood  that the services  provided by
such brokers may be useful to the Manager or any  sub-adviser in connection with
its services to other clients.

Aggregation

         The New Agreement  also provides that on occasions  when the Manager or
any  sub-adviser  deems the  purchase  or sale of a  security  to be in the best
interests of a Fund as well as other clients, the Manager or any subadviser,  to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation  to,  aggregate the securities to be so sold or purchased in order
to obtain the most favorable price or lower brokerage  commissions and efficient
execution.  In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Manager or any
sub-adviser  in the manner it considers to be the most  equitable and consistent
with its  fiduciary  obligations  to that Fund and to such  other  clients.  The
Current Agreement does not address aggregation.

Delegation

         While the  Current  Agreement  permits  the  Manager  to  engage  other
contractors at its expense to aid in the  fulfillment  of its  responsibilities,
the New Agreement  specifically  provides that with respect to any or all series
of the  Trust,  including  the  Funds,  the  Manager  may enter into one or more
contracts ("Sub-Advisory or Sub-Administration  Contract") with a sub-adviser or
sub-administrator  in  which  the  Manager  delegates  to  such  sub-adviser  or
sub-administrator  any or all its duties  specified in this Agreement,  provided
that each Sub-Advisory or Sub-Administration  Contract meets all requirements of
the Investment Company Act and the Rules thereunder.

Advisory Fees

         This  Proposal  to  approve  the New  Agreement  seeks no  increase  in
advisory fees for any of the Funds.  The annual  advisory fees that NYLIM LLC is
entitled  to receive  from each Fund under the New  Agreement  at an annual rate
based on average daily net assets of the Fund are listed in the following table.

Fund                                                         Advisory Fee

Ultra Short Term Income                                      .40%
Balanced                                                     .75%
Mid Cap Value                                                .90%
Small Cap Value                                              1.00%

Exclusivity

         Like  the  Current  Agreement,  the New  Agreement  provides  that  the
services of NYLIM LLC to a Fund are not to be deemed to be exclusive,  and NYLIM
LLC shall be free to provide  investment  advisory  or other  services to others
(including other  investment  companies) and to engage in other  activities,  so
long as its services under the New Agreement are not impaired as a result.

Limitation of Liability

         Like the Current  Agreement,  the New Agreement provides that NYLIM LLC
shall not be liable  to the  Trust  for any  error of  judgment  or for any loss
suffered by a Fund in connection with matters to which the New Agreement relates
except a loss resulting from willful misfeasance,  bad faith or gross negligence
in the  performance  of its duties,  or reckless  disregard  by NYLIM LLC of its
obligations and duties under the New Agreement.

Duration

         If  approved  by the  shareholders,  the  New  Agreement  shall  become
effective on the date the Transaction is  consummated,  and will have an initial
term of two years. Thereafter,  the New Agreement will be continued from year to
year, provided that its continuation is specifically  approved at least annually
in conformity  with the  Investment  Company Act and the Rules  thereunder.  The
Current Agreement contains a comparable provision.

Termination

         The New Agreement may be terminated at any time, without the payment of
any  penalty,  by vote of the  Board  or by vote  of a  majority  of the  Fund's
outstanding  voting securities (as defined in the Investment Company Act), or by
NYLIM LLC, on not more than sixty (60) nor less than  thirty (30) days'  written
notice to the other  party.  The Current  Agreement  can be  terminated  without
penalty  by the  Trust on 60 days'  written  notice  when  authorized  either by
majority vote of its outstanding voting shares or by a vote of a majority of its
Board, or by the Manager on 60 days' written notice. Like the New Agreement, the
Current Agreement will automatically  terminate in the event of its "assignment"
as defined in the Investment Company Act.

Expenses

         The New Agreement and the Current Agreement contain similar  provisions
relating to respective parties' responsibilities for bearing certain expenses of
each Fund.

         Under the New Agreement,  the  applicable  Fund generally pays all fees
and expenses incurred in connection with its management;  however,  NYLIM LLC is
specifically  responsible  for the salaries and expenses of all personnel of the
Trust and the  Manager,  except the fees and  expenses of  Trustees  who are not
interested  persons of the Manager or the Trust,  and all  expenses  incurred by
NYLIM LLC in connection with managing the investment operations of each Fund and
administering  the  ordinary  course of each Fund's  business,  other than those
assumed by that Fund. Each Fund assumes and pays its expenses, including but not
limited to: (i) the fees and expenses of Trustees who are not interested persons
of the Manager or of the Trust;  (ii)  certain  fees and  expenses of the Fund's
custodian;  (iii) the fees and  expenses of the Trust's  transfer  and  dividend
disbursing agent, which may be the custodian, which relate to the maintenance of
each  shareholder  account;  (iv) the charges and expenses of legal  counsel and
independent accountants for the Trust; (v) brokers' commissions and any issue or
transfer  taxes  chargeable  to the  Trust in  connection  with  its  securities
transactions on behalf of the Funds; (vi) all taxes and business fees payable by
the  Trust  or  the  Funds   including   registration   fees;   (vii)  allocable
communications  expenses  with respect to investor  services and all expenses of
shareholders'  and  Trustees'  meetings and of  preparing,  printing and mailing
prospectuses   and  reports  to  shareholders   in  the  amount   necessary  for
distribution to the shareholders; (viii) litigation and indemnification expenses
and other  extraordinary  expenses not  incurred in the  ordinary  course of the
Trust's business;  and (ix) any expenses assumed by the Funds pursuant to a plan
of  distribution  adopted in  conformity  with Rule 12b-1  under the  Investment
Company Act.

         Under the Current  Agreement,  each Fund is responsible  for payment of
all the Trust's expenses with respect to that Fund, including a list of expenses
similar to those enumerated above.

Expense Limitations

         Towneley has  contractually  agreed to waive fees of 0.20% of the Ultra
Short Term Income  Fund's  average daily net assets  through  December 31, 2001.
NYLIM LLC will enter into a similar agreement to extend until December 31, 2002.
In addition,  NYLIM LLC has undertaken that for the initial two-year term of the
New  Agreement,  there  will be no  increase  in the annual  ordinary  operating
expense ratios (excluding transfer agency expenses) of the Funds above those for
the twelve months ended December 31, 2000 (excluding  transfer agency expenses).
In the case of transfer  agency  expenses,  NYLIM LLC has also  undertaken  that
during the initial  two-year  period,  any increase in a Fund's  transfer agency
expenses  above  those  that  would  have been  experienced  by that Fund if the
existing transfer agency agreement (i.e.,  pre-Transaction) were still in effect
will be borne by NYLIM LLC.

Information About NYLIM LLC

         New York Life Investment Management LLC is a Delaware limited liability
company.  It currently has its principal offices at 51 Madison Avenue, New York,
New York 10010. NYLIM LLC is registered with the SEC as an investment adviser.

         The following  table provides  information  with respect to the current
Directors and principal executive officers of NYLIM LLC:

             Principal Executive Officers and Directors of NYLIM LLC

                       Positions and Offices           Other Principal
Name                   with NYLIM LLC                  Position(s) Held

Gary E. Wendlandt     Chairman, Manager         Mr.   Wendlandt  has  served  as
                      and Chief Executive       Executive  Vice  President,  New
                      Officer                   York Life Insurance Company from
                                                1999 to  present;  Trustee,  The
                                                MainStay  Funds  from March 2000
                                                to  present;   Chief   Executive
                                                Officer,     New    York    Life
                                                Investment  Management  Holdings
                                                LLC  (formerly,  New  York  Life
                                                Asset  Management LLC) from 1999
                                                to  present;  Manager,  Chairman
                                                and Chief Executive Officer, New
                                                York Life Investment  Management
                                                Holdings  LLC , from  March 2000
                                                to   present;    Chairman    and
                                                Manager,     New    York    Life
                                                Investment     Management    LLC
                                                (formerly,  New York Life  Asset
                                                Management   Operating   Company
                                                LLC) from March 2000 to present;
                                                Manager,  New York Life  Benefit
                                                Services LLC (formerly, MainStay
                                                Management    Inc.),    Manager,
                                                Monitor  Capital  Advisors  LLC,
                                                Manager, MainStay Management LLC
                                                (formerly,  Director,  New  York
                                                Life  Benefit  Services,  Inc.),
                                                Manager,   MainStay  Shareholder
                                                Services LLC (formerly, MainStay
                                                Shareholder    Services   Inc.),
                                                President  and Manager,  Madison
                                                Square    Advisors    LLC,   and
                                                Director,   NYLIFE  Distributors
                                                Inc.,   from   March   2000   to
                                                present.   Previously,   he  was
                                                Executive   Vice  President  and
                                                Chief   Investment   Officer  of
                                                MassMutual     Life    Insurance
                                                Company from 1993 to 1999.

Stephen C. Roussin    President and Chief       Mr.  Roussin  has been  Director
                      Operating Officer         and    Chairman    of   MainStay
                                                Institutional  Funds Inc.,  1997
                                                to present;  President and Chief
                                                Operating Officer, New York Life
                                                Investment  Management  Holdings
                                                LLC,  (formerly,  New York  Life
                                                Asset  Management LLC) from 1999
                                                to present;  President and Chief
                                                Operating Officer, New York Life
                                                Investment     Management    LLC
                                                (formerly,  New York Life  Asset
                                                Management   Operating   Company
                                                LLC)  from   1999  to   present;
                                                President,    Chief    Executive
                                                Officer   and    Trustee,    The
                                                MainStay   Funds  from  1997  to
                                                present;  Senior Vice President,
                                                New York Life Insurance  Company
                                                from 1997 to present;  Director,
                                                New York Life Trust Company from
                                                1997 to  present;  Manager,  New
                                                York Life  Benefit  Services LLC
                                                (formerly,  Director,  New  York
                                                Life Benefit Services Inc.) from
                                                1997 to present;  Director,  New
                                                York Life Securities,  Inc. from
                                                1997  to  present;  Manager  and
                                                Chairman,  MainStay  Shareholder
                                                Services LLC (formerly, MainStay
                                                Shareholder  Services Inc.) from
                                                1997 to present; Director, Eagle
                                                Strategies  Corp.  from  1997 to
                                                present; and Manager,  President
                                                and  Chief  Executive   Officer,
                                                MainStay      Management     LLC
                                                (formerly,  MainStay  Management
                                                Inc.)  from 1997 to March  2000,
                                                and  Chairman  and Manager  from
                                                March 2000 to present; Director,
                                                NYLIFE  Distributors  Inc.  from
                                                1997 to present,  Chairman  from
                                                March  2000  to   present,   and
                                                Senior Vice  President from 1997
                                                to  March  2000;   Chairman  and
                                                Director,  New York  Life  Trust
                                                Company,  FSB from  June 2000 to
                                                present.  Previously,  he served
                                                as  Senior  Vice   President  of
                                                Smith  Barney  from 1994 to 1997
                                                and  Division  Sales  Manager of
                                                Prudential  Securities from 1989
                                                to 1994.

Ravi Akhoury          Manager and Vice          Mr.   Akhoury   has   served  as
                      Chairman                  Chairman  and  Chief   Executive
                                                Officer  of  MacKay-Shields  LLC
                                                (formerly     MacKay     Shields
                                                Financial Corporation) from 1992
                                                to present;  and Senior Managing
                                                Director  since 1996.  He joined
                                                MacKay-Shields   in  1984  as  a
                                                Director,   became  a   Managing
                                                Director  in 1988 and  President
                                                in  1989.   He  also  serves  as
                                                Manager,   Chairman   and  Chief
                                                Executive    Officer,     MacKay
                                                Shields     Domestic     General
                                                Partner,  LLC;  Manager and Vice
                                                Chairman,    New    York    Life
                                                Investment  Management  Holdings
                                                LLC,  (formerly,  New York  Life
                                                Asset  Management LLC) from 1999
                                                to present;  Director,  New York
                                                Life    International,     Inc.;
                                                Director,    New    York    Life
                                                International  India  Fund  LLC;
                                                Manager,  New York Life  Benefit
                                                Services     LLC      (formerly,
                                                Director,  New York Life Benefit
                                                Services, Inc.); Manager, NYLIFE
                                                LLC; and Director, NYLI-VB Asset
                                                Management Co, LLC.  Previously,
                                                Mr. Akhoury was associated  with
                                                Fischer,   Francis,   Trees  and
                                                Watts from 1980 to 1984 where he
                                                served as Vice President.

Seymour Sternberg     Manager                   Mr.   Sternberg  has  served  as
                                                Chairman of the Board, President
                                                and Chief  Executive  Officer of
                                                New York Life Insurance  Company
                                                since  1997;  Manager,  New York
                                                Life    Investment    Management
                                                Holdings LLC  (formerly New York
                                                Life Asset  Management LLC) from
                                                1999   to   present.   He   also
                                                currently  serves  as  Director,
                                                Express Scripts, Inc.; Director,
                                                New  York  Life   Insurance  and
                                                Annuity  Corporation;  Director,
                                                New  York  Life   International,
                                                Inc.; Director,  Chairman, Chief
                                                Executive Officer and President,
                                                NYLIFE  HealthCare   Management,
                                                Inc.;   Manager  and  President,
                                                NYLIFE LLC.  Previously  he held
                                                various  positions at MassMutual
                                                Life  Insurance  Company,   most
                                                recently      Executive     Vice
                                                President from 1976 to 1989.

Howard I. Atkins      Manager                   Mr.   Atkins   has   served   as
                                                Executive   Vice  President  and
                                                Chief  Financial  Officer of New
                                                York Life Insurance Company from
                                                1996 to  present;  Manager,  New
                                                York Life Investment  Management
                                                Holdings  LLC,  (formerly,   New
                                                York Life Asset  Management LLC)
                                                from  1999 to  present.  He also
                                                serves  as   Director,   Express
                                                Scripts,     Inc.;     Director,
                                                Executive   Vice  President  and
                                                Chief  Financial  Officer,   New
                                                York Life  Insurance and Annuity
                                                Corporation;  Director, New York
                                                Life    International,     Inc.;
                                                Executive Vice President, NYLIFE
                                                HealthCare   Management,   Inc.;
                                                Manager, NYLIFE LLC. Previously,
                                                Mr.  Atkins  served as Executive
                                                Vice    President    and   Chief
                                                Financial  Officer at  Midlantic
                                                Corporation  from  1991 to 1995,
                                                and after its  merger  with PNC,
                                                Executive  Vice  President  from
                                                1995          to           1996.

The principal  business  address of each person named is 51 Madison Avenue,  New
York, New York 10010.

Information About Towneley

            Towneley  Capital  Management,  Inc. is a Delaware  corporation.  It
currently has its principal  offices at 470 Park Avenue South,  16th Floor,  New
York, New York 10016.

         The following tables contain a list of the principal executive officers
and Directors of Towneley and identifies those  individuals  serving as officers
and/or  Trustees  of the  Trust  that  are also  officers  and/or  Directors  of
Towneley. Towneley is registered with the SEC as an investment adviser.

             Principal Executive Officers and Directors of Towneley

                      Positions and Offices                Other Principal
Name                  with Investment Adviser              Position(s) Held

Wesley G. McCain      Chairman, Director        Mr.  McCain is a trustee  of the
                                                Van  Eck  Funds  and the Van Eck
                                                World Wide Insurance  Trust, and
                                                a Trustee  of the Van  Eck/Chubb
                                                Funds,   Inc.  He  is  a  Public
                                                Advisor  to   Pacific   Exchange
                                                Stock  and  Options.  He  was  a
                                                Trustee  of the  Peregrine  Fund
                                                from  1995  to  1998.  He  is  a
                                                general   partner   of   Pharaoh
                                                Partners,  L.P.,  which  is  the
                                                general    partner    of   Libre
                                                Partners,  L.P.  He  is  also  a
                                                trustee of Libre Group Trust,  a
                                                Trustee  of  Libre   Investments
                                                (Cayman)   Ltd.,   a  member  of
                                                Pharaoh  Partners  (Cayman) LDC,
                                                and    Chairman   of   Millbrook
                                                Associates,  Inc. and of Eclipse
                                                Financial Services, Inc. He is a
                                                Chartered  Financial Analyst and
                                                a member of the  Association for
                                                Investment     Management    and
                                                Research.

Kathy O'Connor             Vice President

Joan Sabella               Vice President

Tracy Thatcher Kuntz       Vice President

Sigrid A. Hess             Vice President
                           and Secretary        Ms. Hess is  Trustee,  Executive
                                                Vice  President and Secretary of
                                                the  Eclipse  Funds.   She  also
                                                serves as  Secretary  of Eclipse
                                                Financial  Services,  Inc.,  the
                                                shareholder  servicing  agent of
                                                the Eclipse Funds.

Steven Confessore          Vice President

Maggie Goodman             Vice President

Except  for Ms.  Kuntz,  whose  address is 23197 La Cadena  Drive # 103,  Laguna
Hills, CA 92653, the principal business address of each person named is 470 Park
Avenue South, 16th Floor, New York, New York 10016.

           Common Officers and Trustees of Eclipse Funds and Towneley

Name                  Position(s) with the Trust      Position(s) with Towneley

Wesley G. McCain      Chairman and Trustee            Chairman

Sigrid A. Hess        Trustee, Executive Vice       Vice President and Secretary
                      President and Secretary


         The following  table sets forth the amount of investment  advisory fees
that have been paid by the Funds to  Towneley  during  each  Fund's  most recent
fiscal year.

             Advisory Fees Paid to Towneley Capital Management, Inc.
                   for the Fiscal Year Ended December 31, 1999

                               Total Investment                   Net Advisory
                    Fund        Advisory Fees        Waiver        Fees Paid

Ultra Short Term Income            $32,290           $32,290           $0
Balanced                           $673,283            $0           $673,283
Mid Cap Value                      $918,205            $0           $918,205
Small Cap Value                   $2,183,901           $0          $2,183,901


         From time to time,  Towneley  receives  brokerage and research services
from brokers that execute securities  transactions for certain of the Funds. The
commission  paid by a Fund to a broker that  provides  such services to Towneley
may be greater than the commission  would be if the Fund used a broker that does
not provide the same level of  brokerage  and research  services.  Additionally,
Towneley may use such services for clients other than the specific Fund or Funds
from which the related commissions are derived.  The Funds have not effected any
brokerage  transactions  in  portfolio  securities  with  Towneley  or any other
affiliated person of the Trust.

Evaluation by the Board

         In  determining  whether or not it was  appropriate  to approve the New
Agreement and to recommend its approval to  shareholders,  the Board,  including
the  Trustees  who are not  interested  persons of  Towneley  (the  "Independent
Trustees"),   considered  various  materials  and  representations  provided  by
Towneley and met with representatives of NYLIM Holdings,  NYLIM LLC and New York
Life Insurance  Company.  The  Independent  Trustees were advised by independent
legal  counsel  with  respect to these  matters.  The Board of  Trustees  met on
October  10,  2000 and October 20,  2000,  to review and  consider,  among other
things,  information  relating to the New Agreement.  During the course of these
meetings,  the Independent Trustees met separately with their counsel to discuss
the Transaction and its effect on the Funds.

         Among  the   representations   considered   by  the   Trustees   was  a
representation  by NYLIM  LLC  that  the  personnel  currently  responsible  for
managing the Funds at Towneley would continue to have primary responsibility for
managing the Funds after the Transaction.

         Information  considered by the Trustees  included,  among other things,
information  regarding  NYLIM  Holdings  and  NYLIM  LLC (and  their  affiliated
companies) and their personnel,  operations,  financial condition and investment
philosophy.   NYLIM  LLC  also  provided   information   regarding  NYLIM  LLC's
arrangements  for  distribution  of shares of its  funds,  its legal  compliance
capabilities,  and the arrangements for NYLIM LLC's  shareholder  services.  The
Board of Trustees  also  reviewed the terms of the New Agreement and the Current
Agreement.

         Also in connection with approval of the New Agreement,  the Trustees of
the Funds met with officers of NYLIM LLC and its affiliates.  During that visit,
personnel  from  NYLIM  LLC  and  its  distributor  were  available  to  discuss
operations and to answer questions  concerning the proposed  investment advisory
and other arrangements.  In addition, the Independent Trustees of the Funds were
advised by counsel to such  Trustees with respect to their  fiduciary  duties in
connection with approval of the proposed arrangement.

         During  the  course of its  deliberations,  the Board  also  considered
certain additional  possible benefits of the Transaction for the Funds and their
shareholders  from the  combination  of Towneley and the existing NYLIM Holdings
and  NYLIM  LLC  businesses.  These  include  the  seasoned  NYLIM  mutual  fund
administration operations; the potential of increased distribution opportunities
for the Funds, in light of the strong distribution capabilities and global reach
of NYLIM Holdings and its affiliates;  improved shareholder  servicing;  and the
potential  for  economies  of scale to be achieved  in light of  existing  NYLIM
Holdings and NYLIM LLC businesses.

         After  consideration  of the above factors,  and such other factors and
information  it  considered  relevant,  the Board  unanimously  approved the New
Agreement and voted to recommend its approval by the Funds' shareholders.

         The  effectiveness  of  this  Proposal  No.  2 is  conditioned  on  the
consummation of the Transaction.  Accordingly, in the event that the Transaction
is not  consummated,  Towneley will continue to manage the Funds pursuant to the
Current Agreement.

Vote Required

         Shareholders  of each Fund must  separately  approve the applicable New
Investment  Management  Agreement  with  respect to that Fund.  Approval of this
Proposal No. 2 by a Fund requires an  affirmative  vote of the lesser of (i) 67%
or more of the Fund's shares present at the Special  Meeting if more than 50% of
the outstanding  shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Fund.

               The Board unanimously recommends that shareholders
                        vote "FOR" this Proposal No. 2.

                                 PROPOSAL NO. 3
                RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

         The Funds are being  asked to ratify the  selection  of the  accounting
firm of  PricewaterhouseCoopers  LLP ("PWC") to act as the independent  auditors
for the Trust for the fiscal year ending December 31, 2000.

         At a meeting of the Board held on March 30, 2000, the Board,  including
a majority  of  Independent  Trustees,  selected  PWC to act as the  independent
auditors for the fiscal year ending December 31, 2000.

         On August 13, 1999,  McGladrey & Pullen, LLP ("McGladrey")  resigned as
independent  accountants of the Trust pursuant to an agreement by PWC to acquire
McGladrey's   investment   company   practice.   The   McGladrey   partners  and
professionals  serving the Funds at the time of the  acquisition  joined PWC. On
September 22, 1999,  the Trust,  with the approval of the Trustees and its Audit
Committee,  engaged PWC as its independent  accountants.  PWC or McGladrey,  its
predecessor has served as independent auditors for the Trust with respect to its
financial statements since the Trust's inception.

         PWC has advised the Trust that it is an  independent  auditing firm and
has no direct financial or material  indirect  financial  interest in the Trust.
Representatives  of PWC are not expected to be at the Special Meeting,  but have
been  given  the  opportunity  to make a  statement  if they  wish,  and will be
available telephonically should any matter arise requiring their participation.

Vote Required

         The  affirmative  vote of a majority of all  outstanding  shares of the
Trust  represented  in person or by proxy and  entitled  to vote at the  Special
Meeting is required to approve this Proposal No. 3.

               The Board unanimously recommends that shareholders
                        vote "FOR" this Proposal No. 3.


                               GENERAL INFORMATION
                    Other Matters to Come Before the Meeting

         Management of the Funds does not know of any matters to be presented at
the Special Meeting other than those described in this Proxy Statement. If other
business  should  properly come before the Meeting,  the proxy holders will vote
thereon in accordance with their best judgment.

Section 15(f) of the Investment Company Act

         NYLIM Holdings and Towneley intend to use their reasonable best efforts
to assure  compliance  with the  conditions of Section  15(f) of the  Investment
Company  Act.  Section  15(f)  provides  a  non-exclusive  safe  harbor  for  an
investment  adviser or any affiliated  persons  thereof to receive any amount or
benefit in connection with a transaction  that results in a change in control of
or identity of the  investment  adviser to an investment  company as long as two
conditions are met.  First,  no "unfair burden" may be imposed on the investment
company as a result of the transaction relating to the change in control, or any
express or implied terms,  conditions or understandings  applicable  thereto. As
defined in the  Investment  Company Act, the term "unfair  burden"  includes any
arrangement  during the two-year  period after the change in control whereby the
investment  adviser (or  predecessor  or successor  adviser),  or any interested
person of any such adviser, receives or is entitled to receive any compensation,
directly or  indirectly,  from the  investment  company or its security  holders
(other than fees for bona fide investment  advisory or other services),  or from
any  person in  connection  with the  purchase  or sale of  securities  or other
property to, from, or on behalf of the investment  company (other than bona fide
ordinary  compensation  as principal  underwriter  of the  investment  company).
Second,  during  the three  year  period  immediately  following  the  change in
control,  at least 75% of an investment  company's board of Trustees must not be
"interested  persons" of the investment  adviser or the  predecessor  investment
adviser within the meaning of the Investment Company Act.

Voting Rights

         Shareholders  of record on October  24,  2000 (the  "Record  Date") are
entitled  to be present  and to vote at the  Special  Meeting  or any  adjourned
meeting.  As of the Record  Date,  each Fund  offered one class of shares to the
public. The presence in person or by proxy of a Fund's shareholders  entitled to
cast a majority in number of votes is necessary  to  constitute a quorum for the
transaction  of  business.  In the event  that a quorum of  shareholders  is not
represented  at the  Special  Meeting  with  respect to one or more  Funds,  the
Meeting may be adjourned  by a majority of the  applicable  Fund's  shareholders
present in person or by proxy until a quorum exists.  If there are  insufficient
votes to approve a  Proposal,  the  persons  named as proxies may propose one or
more  adjournments  of the  Special  Meeting to permit  additional  time for the
solicitation of proxies,  in accordance with applicable law.  Adjourned meetings
must be held  within a  reasonable  time after the date  originally  set for the
meeting (but not more than 60 days after the Record Date). Solicitation of votes
may continue to be made without any obligation to provide any additional  notice
of the  adjournment.  The  persons  named as proxies  will vote in favor of such
adjournment  those  proxies  which  they  are  entitled  to vote in favor of the
Proposal and will vote against any such  adjournment  those  proxies to be voted
against the Proposal.

         The Funds expect that, before the Special Meeting,  broker-dealer firms
holding  shares of the Funds in "street name" for their  customers  will request
voting  instructions  from  their  customers  and  beneficial  owners.  If these
instructions are not received by the date specified in the broker-dealer  firms'
proxy solicitation materials,  the Funds understand that the broker-dealers that
are  members  of the  New  York  Stock  Exchange  may  vote on the  items  to be
considered at the Special  Meeting on behalf of their  customers and  beneficial
owners under rules of the New York Stock Exchange.

         For purposes of  determining  the presence of a quorum for  transacting
business at the Special  Meeting,  abstentions  and broker  "non-votes"  will be
treated as shares that are present but which have not been voted in favor of the
Proposal.  Broker  non-votes  are  proxies  received  by a Fund from  brokers or
nominees when the broker or nominee has neither received  instructions  from the
beneficial owner or other persons entitled to vote nor has  discretionary  power
to vote on a particular matter.  Accordingly,  shareholders are urged to forward
their voting instructions promptly. Abstentions and broker non-votes will not be
counted in favor of, but will have no other effect on, Proposal 1, and will have
the effect of a "no" vote on Proposals 2 and 3.

         Some  shares of a Fund may be held by  Towneley  affiliates  in various
capacities and will be voted in the following  manner:  shares of a Fund held of
record  by the  Towneley  Capital  Management  Pension  Plan and  Trust  and the
Towneley  Capital  Management  401(k) and Profit  Sharing Plan shall be voted in
favor of each of the Proposals by each plan's trustee,  Wesley G. McCain. Shares
of a Fund held of record  by a  Towneley  separately  managed  account  under an
agreement  pursuant to which  Wesley G. McCain is given the power to vote shares
as trustee or custodian shall be voted in favor of each of the Proposals.

         The number of shares that you may vote is the total of the number shown
on the proxy card accompanying  this Proxy Statement.  Shareholders are entitled
to one vote for each full  share and a  proportionate  vote for each  fractional
share held.  Any  shareholder  giving a proxy has the power to revoke it by mail
(addressed to the Secretary at the  principal  executive  office of the Trust at
the address shown at the beginning of this Proxy  Statement) or in person at the
Special Meeting,  by executing a superseding  proxy or by submitting a notice of
revocation to the Trust.

Beneficial Owners

         To the best of the Trust's knowledge, as of October 24, 2000, no person
owned beneficially more than 5% of any class of any Fund, except as set forth in
Appendix 1.

Expenses

         Towneley,  NYLIM,  and/or one or more of their  affiliates will pay the
expenses of the Funds in connection with this Notice and Proxy Statement and the
Special  Meeting,  including  the  printing,  mailing,   solicitation  and  vote
tabulation expenses,  legal fees, and out-of-pocket expenses. The Funds will not
bear the expenses of the Proxy Statement or the Special Meeting.

Additional Proxy Solicitation Information

         In  addition   to   solicitation   by  mail,   certain   officers   and
representatives  of the Trust,  officers  and  employees of Towneley and certain
financial  services firms and their  representatives,  who will receive no extra
compensation for their services,  may solicit proxies by telephone,  telegram or
personally.

         Shareholder  Communications  Corporation  (the  "Solicitor")  has  been
engaged to assist in the solicitation of proxies, at an estimated cost of $2,000
per Fund plus expenses which are not expected to exceed $25,000. As noted above,
this cost will be borne by Towneley,  NYLIM Holdings and/or one or more of their
affiliates,  not by the Funds.  As the date of the Special  Meeting  approaches,
certain Fund  shareholders may receive a telephone call from a representative of
the Solicitor if their votes have not yet been received. Authorization to permit
the Solicitor to execute proxies may be obtained by telephonic instructions from
shareholders  of a  Fund.  Proxies  that  are  obtained  telephonically  will be
recorded in accordance  with the procedures set forth below.  The Board believes
that these  procedures are reasonably  designed to ensure that both the identity
of  the  shareholder  casting  the  vote  and  the  voting  instructions  of the
shareholder are accurately determined.

         In all cases  where a  telephonic  proxy is  solicited,  the  Solicitor
representative  is required to ask for each  shareholder's  full name,  address,
social security or employer  identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares  owned,  and to confirm  that the  shareholder  has received the proxy
materials in the mail. If the information  solicited agrees with the information
provided  to  the  Solicitor,   then  the  Solicitor   representative   has  the
responsibility to explain the process,  read the Proposals on the proxy card(s),
and  ask for the  shareholder's  instructions  on the  Proposals.  Although  the
Solicitor  representative is permitted to answer questions about the process, he
or she is not permitted to recommend to the shareholder how to vote,  other than
to read any recommendation set forth in the Proxy Statement.  The Solicitor will
record  the  shareholder's  instructions  on the  card.  Within  72  hours,  the
shareholder  will be sent a letter or  mailgram  to confirm  his or her vote and
asking  the  shareholder  to  call  the  Solicitor  immediately  if  his  or her
instructions are not correctly reflected in the confirmation.

         If a shareholder wishes to participate in the Special Meeting, but does
not wish to give a proxy by telephone or  electronically,  the  shareholder  may
still  submit the proxy  card(s)  originally  sent with the Proxy  Statement  or
attend in person.  Should shareholders require additional  information regarding
the proxy or replacement proxy card(s), they may contact the Solicitor toll-free
at  1-877-518-9412.  As explained  above,  any proxy given by a  shareholder  is
revocable until voted at the Special Meeting.

         Shareholders  may  also  provide  their  voting  instructions   through
telephone   touch-tone   voting  or  Internet  voting.   These  options  require
shareholders  to  input a  control  number  which  is  located  on  each  voting
instruction card. After inputting this number,  shareholders will be prompted to
provide their voting  instructions on the Proposals.  Shareholders  will have an
opportunity to review their voting  instructions and make any necessary  changes
before submitting their voting instructions and terminating their telephone call
or  Internet  link.  Shareholders  who  vote on the  Internet,  in  addition  to
confirming their voting  instructions prior to submission,  will also receive an
e-mail confirming their instructions.

Shareholder Proposals

         The Funds are not required to hold annual meetings of shareholders  and
currently  do not  intend to hold such  meetings  unless  shareholder  action is
required in accordance with the Investment  Company Act. A shareholder  proposal
to be considered for inclusion in the proxy statement at any subsequent  meeting
of  shareholders  must be submitted a reasonable time before the proxy statement
for that  meeting  is  mailed.  Whether a  proposal  is  submitted  in the proxy
statement  will be determined in accordance  with  applicable  federal and state
laws. The timely submission of a proposal does not guarantee its inclusion.

         Please  complete  the  enclosed  proxy  card(s)  and return the card(s)
promptly in the enclosed self-addressed, postage-paid envelope.

                                                      By Order of the Board,


                                                      Sigrid A. Hess
                                                      Secretary

<PAGE>

                                    EXHIBIT A

                                   FORM OF NEW
                          INVESTMENT ADVISORY AGREEMENT

                                  ECLIPSE FUNDS

                      Eclipse Ultra Short Term Income Fund

                              Eclipse Balanced Fund

                           Eclipse Mid Cap Value Fund

                          Eclipse Small Cap Value Fund

                              MANAGEMENT AGREEMENT

         This  Agreement  is made as of the  ____  day of  ______________,  200_
between Eclipse Funds, a Massachusetts  business trust  ("Trust"),  on behalf of
Eclipse Ultra Short Term Income Fund,  Eclipse  Balanced  Fund,  Eclipse Mid Cap
Value Fund and  Eclipse  Small Cap Value  Fund (each a "Fund" and  collectively,
"Funds"),  each a  separate  series of the Trust,  and New York Life  Investment
Management LLC, a Delaware limited liability company ("Manager").

                              W I T N E S S E T H:
                               - - - - - - - - - -

         WHEREAS,  the  Trust  is  an  open-end  management  investment  company
registered under the Investment Company Act of 1940, as amended ("1940 Act");

         WHEREAS,  the shares of beneficial interest of the Trust ("Shares") are
divided into separate series,  each of which is established by resolution of the
Board of Trustees of the Trust and the Trustees may from time to time  terminate
such series or establish and terminate additional series; and

         WHEREAS,  the Trust desires to retain the Manager to render  investment
advisory  and  related  administrative  services  to each of the Funds,  and the
Manager  is  willing  to  render  such  services  on the  terms  and  conditions
hereinafter set forth;

         NOW, THEREFORE, the parties agree as follows:

1.          Appointment.  The Trust  hereby  appoints  New York Life  Investment
            Management LLC to act as manager to each of the Funds for the period
            and on the terms set forth in this  Agreement.  The Manager  accepts
            such appointment and agrees to render the services herein described,
            for the compensation herein provided.

2.          Duties as Manager. Subject to the supervision of the Trustees of the
            Trust, the Manager shall administer each Fund's business affairs and
            manage the investment operations of each Fund and the composition of
            the portfolio of each Fund,  including  the purchase,  retention and
            disposition  thereof, in accordance with the investment  objectives,
            policies and  restrictions  of each Fund, as stated in its currently
            effective  Prospectus  (as  hereinafter  defined) and subject to the
            following understandings:

            (a)         The  Manager  shall (i)  furnish  each Fund with  office
                        facilities;  (ii) be  responsible  for the financial and
                        accounting  records  required to be  maintained  by each
                        Fund  (excluding  those being  maintained  by the Fund's
                        custodian  and  transfer  agent  except  as to which the
                        Manager has supervisory  functions) and other than those
                        being maintained by the Fund's  subadviser,  if any; and
                        (iii)   furnish  each  Fund  with   ordinary   clerical,
                        bookkeeping  and  recordkeeping  services at such office
                        facilities.

            (b)         The Manager  shall  provide  supervision  of each Fund's
                        investments   and  determine  from  time  to  time  what
                        investments or securities  will be purchased,  retained,
                        sold or lent by each  Fund,  and  what  portion  of each
                        Fund's  assets will be invested  or held  uninvested  as
                        cash.

            (c)         The  Manager   shall  use  its  best   judgment  in  the
                        performance of its duties under this Agreement.

            (d)         The  Manager,  in  the  performance  of its  duties  and
                        obligations   under   this   Agreement,   shall  act  in
                        conformity  with the  Declaration of Trust,  By-Laws and
                        Prospectus  (each as  hereinafter  defined) of the Trust
                        and with the instructions and directions of the Trustees
                        of the Trust,  and will  conform to and comply  with the
                        requirements  of the 1940 Act and all  other  applicable
                        federal and state laws and regulations.

            (e)         The Manager,  and any  subadviser to whom such authority
                        has been delegated, shall determine the securities to be
                        purchased  or sold by each  Fund and will  place  orders
                        pursuant  to its  determination  with  or  through  such
                        persons, brokers or dealers (including NYLIFE Securities
                        Inc.) in  conformity  with the  policy  with  respect to
                        brokerage  as  set  forth  in the  Trust's  Registration
                        Statement and Prospectus  (each as hereinafter  defined)
                        or as the Trustees  may direct from time to time.  It is
                        recognized  that,  in  providing a Fund with  investment
                        supervision  or the  placing  of  orders  for  portfolio
                        transactions,  the Manager or any  subadviser  will give
                        primary  consideration  to securing  the most  favorable
                        price  and  efficient  execution.  Consistent  with this
                        policy,  the Manager or any  subadviser may consider the
                        financial   responsibility,   research  and   investment
                        information  and other  services  provided by brokers or
                        dealers  who  may  effect  or be a  party  to  any  such
                        transaction or other transactions to which other clients
                        of the Manager or any subadviser  may be a party.  It is
                        understood that none of the Funds,  nor the Trust or the
                        Manager  or   subadviser   has  adopted  a  formula  for
                        allocation of a Fund's investment  transaction business.
                        It is also understood that it is desirable for each Fund
                        that  the  Manager  or any  subadviser  have  access  to
                        supplemental investment and market research and security
                        and economic  analyses  provided by certain  brokers who
                        may execute brokerage transactions at a higher cost to a
                        Fund than may result when allocating  brokerage to other
                        brokers on the basis of seeking the most favorable price
                        and efficient execution.  Therefore,  the Manager or any
                        subadviser   is  authorized  to  place  orders  for  the
                        purchase  and sale of  securities  for a Fund  with such
                        certain  brokers,  subject  to  review  by  the  Trust's
                        Trustees  from time to time with  respect  to the extent
                        and continuation of this practice. It is understood that
                        the  services  provided by such brokers may be useful to
                        the Manager or any  subadviser  in  connection  with its
                        services to other clients.

         On occasions when the Manager or any  subadviser  deems the purchase or
sale of a  security  to be in the  best  interest  of a Fund  as  well as  other
clients,  the Manager or any subadviser,  to the extent  permitted by applicable
laws and  regulations,  may, but shall be under no obligation to,  aggregate the
securities  to be so sold or  purchased  in order to obtain  the most  favorable
price or lower  brokerage  commissions and efficient  execution.  In such event,
allocation of the securities so purchased or sold, as well as expenses  incurred
in the transaction,  will be made by the Manager or any subadviser in the manner
it  considers  to be the  most  equitable  and  consistent  with  its  fiduciary
obligations to that Fund and to such other clients.

            (f)         The Manager  shall  maintain  all books and records with
                        respect to each Fund's securities  transactions required
                        by  sub-paragraphs   (b)(5),   (6),  (9)  and  (10)  and
                        paragraph  (f) of Rule 31a-1  under the 1940 Act and any
                        other books and records  required to be maintained by it
                        under  the 1940 Act and the Rules  thereunder  and shall
                        render to the Trust's Trustees such periodic and special
                        reports as the Trustees may reasonably request.

            (g)         The Manager shall provide the Trust's  custodian on each
                        business day with information  relating to the execution
                        of  all  portfolio  transactions  pursuant  to  standing
                        instructions.

            (h)         With  respect  to  any  or  all  series  of  the  Trust,
                        including  the Funds,  the Manager may enter into one or
                        more     contracts     ("Sub-Advisory     Contract    or
                        Sub-Administration   Contract")  with  a  subadviser  or
                        sub-administrator in which the Manager delegates to such
                        subadviser  or  sub-administrator  any or all its duties
                        specified  in  this   Agreement,   provided   that  each
                        Sub-Advisory  Contract  or  Sub-Administration  Contract
                        meets  all  requirements  of  the  1940  Act  and  rules
                        thereunder.

3.          Manager Personnel. The Manager shall authorize and permit any of its
            directors, officers and employees who may be elected or appointed as
            Trustees  or  officers  of the Trust to serve in the  capacities  in
            which they are elected or appointed. Services to be furnished by the
            Manager under this Agreement may be furnished  through the medium of
            any of such directors, officers or employees.

4.          Books and  Records.  The Manager  shall keep each  Fund's  books and
            records  required to be  maintained  by it,  pursuant to paragraph 2
            hereof. The Manager agrees that all records which it maintains for a
            Fund are the property of that Fund, and it will  surrender  promptly
            to that  Fund any of such  records  upon  the  Fund's  request.  The
            Manager  further  agrees to preserve for the periods  prescribed  by
            Rule 31a-2 as promulgated by the Securities and Exchange  Commission
            (the  "Commission")  under  the  1940 Act any  such  records  as are
            required to be  maintained  by the Manager  pursuant to  paragraph 2
            hereof.

5.          Services  Not  Exclusive.  The  services  furnished  by the  Manager
            hereunder  are not to be deemed  exclusive  and the Manager shall be
            free to furnish  similar  services to others so long as its services
            under this Agreement are not impaired thereby.

6.          Documents.  The Trust has delivered to the Manager copies of each of
            the following documents and will deliver to it all future amendments
            and supplements, if any:

            (a)         Declaration  of  Trust  of the  Trust,  filed  with  the
                        Massachusetts  Secretary of State (such  Declaration  of
                        Trust,  as in effect on the date  hereof  and as amended
                        from time to time, is herein called the  "Declaration of
                        Trust");

            (b)         By-Laws of the Trust (such By-Laws,  as in effect on the
                        date hereof and as amended from time to time, are herein
                        called the "By-Laws");

            (c)         Certified  Resolutions  of the  Trustees  of  the  Trust
                        authorizing the appointment of the Manager and approving
                        the form of this Agreement;

            (d)         Registration  Statement  under  the  1940  Act  and  the
                        Securities  Act of 1933,  as amended,  on Form N-lA (the
                        "Registration Statement"), as filed with the Commission,
                        relating  to each Fund and each  Fund's  Shares  and all
                        amendments thereto;

            (e)         Notification of Registration of the Trust under the 1940
                        Act on Form N-8A as filed  with the  Commission  and all
                        amendments thereto; and

            (f)         Each form of  Prospectus  and  Statement  of  Additional
                        Information   of  the  Trust  (such   Prospectuses   and
                        Statement  of  Additional  Information,  as currently in
                        effect and as amended or supplemented from time to time,
                        being herein called collectively the "Prospectus").

7.          Expenses.  (a) In  connection  with  the  services  rendered  by the
            Manager  under  this  Agreement,  the  Manager  will bear all of the
            following expenses:

                        (i)         the salaries  and expenses of all  personnel
                                    of the Trust  and the  Manager,  except  the
                                    fees and  expenses of  Trustees  who are not
                                    interested  persons of the Manager or of the
                                    Trust, and

                        (ii)        all  expenses  incurred  by the  Manager  in
                                    connection   with  managing  the  investment
                                    operations  of each  Fund and  administering
                                    the ordinary course of each Fund's business,
                                    other  than  those   assumed  by  that  Fund
                                    herein;

            (b)         Each Fund assumes and will pay its  expenses,  including
                        but not limited to those described below (where any such
                        category  applies  to more than one series of the Trust,
                        each Fund shall be liable only for its allocable portion
                        of the expenses):

                        (i)         the fees and  expenses of  Trustees  who are
                                    not interested  persons of the Manager or of
                                    the Trust;

                        (ii)        the  fees  and   expenses   of  the   Fund's
                                    custodian  which relate to (A) the custodial
                                    function  and  the  recordkeeping  connected
                                    therewith,   (B)  the   maintenance  of  the
                                    required  accounting records of the Fund not
                                    being  maintained  by the  Manager,  (C) the
                                    pricing of the Fund's Shares,  including the
                                    cost  of any  pricing  service  or  services
                                    which  may  be  retained   pursuant  to  the
                                    authorization  of the Trustees of the Trust,
                                    and (D) for both mail and wire  orders,  the
                                    cashiering  function in connection  with the
                                    issuance  and   redemption   of  the  Fund's
                                    Shares;

                        (iii)       the  fees  and   expenses   of  the  Trust's
                                    transfer  and  dividend   disbursing  agent,
                                    which may be the custodian,  which relate to
                                    the maintenance of each shareholder account,

                        (iv)        the  charges and  expenses of legal  counsel
                                    and independent accountants for the Trust;

                        (v)         brokers'   commissions   and  any  issue  or
                                    transfer  taxes  chargeable  to the Trust in
                                    connection with its securities  transactions
                                    on behalf of the Funds;

                        (vi)        all taxes and  business  fees payable by the
                                    Trust  or the  Funds  to  federal,  state or
                                    other governmental agencies;

                        (vii)       the fees of any trade  association  of which
                                    the Trust may be a member;

                        (viii)      the  cost  of  share  certificates,  if any,
                                    representing Fund Shares;

                        (ix)        the   fees   and   expenses    involved   in
                                    registering and maintaining registrations of
                                    the  Trust  and  of  its  Shares   with  the
                                    Commission,   registering  the  Trust  as  a
                                    broker or dealer and  qualifying  its shares
                                    and/or   complying  with  notice  and  other
                                    applicable    requirements    under    state
                                    securities  laws,  including the preparation
                                    and  printing  of the  Trust's  registration
                                    statements and prospectuses for filing under
                                    federal and state  securities  laws for such
                                    purposes;

                        (x)         allocable   communications   expenses   with
                                    respect  to   investor   services   and  all
                                    expenses  of  shareholders'   and  Trustees'
                                    meetings  and  of  preparing   printing  and
                                    mailing   reports  to  shareholders  in  the
                                    amount  necessary  for  distribution  to the
                                    shareholders;

                        (xi)        litigation and indemnification  expenses and
                                    other extraordinary expenses not incurred in
                                    the ordinary course of the Trust's business;
                                    and

                        (xii)       any expenses  assumed by the Funds  pursuant
                                    to  a  Plan  of   Distribution   adopted  in
                                    conformity  with Rule  12b-1  under the 1940
                                    Act.

            (c)         Fees and  expenses  of  legal  counsel,  of  registering
                        shares and  complying  with state  securities  laws,  of
                        holding meetings and of communicating  with shareholders
                        as  described  in  subparagraph  (b)  above  include  an
                        allocable portion of the cost of maintaining an internal
                        legal and compliance department.

8.          Organization  Expenses.  Each Fund hereby  agrees to  reimburse  the
            Manager for the organization  expenses of, and the expenses incurred
            in connection with, the initial offering of any Shares of that Fund.

9.          Compensation. For the services provided and the facilities furnished
            pursuant  to this  Agreement,  the Trust will pay to the  Manager as
            full compensation  therefor a fee at an annual rate of the following
            percentage of the average daily net assets of each Fund.

Eclipse Ultra Short Term Income Fund                           0.40%
Eclipse Balanced Fund                                          0.75%
Eclipse Mid Cap Value Fund                                     0.90%
Eclipse Small Cap Value Fund                                   1.00%

                  This  fee  will  be  computed  daily  and  will be paid to the
Manager monthly. This fee will be chargeable only to the respective Fund, and no
other series of the Trust shall be liable for the fee due and payable hereunder.
No Fund shall not be liable for any expense of any other series of the Trust.

10.         Standard of Care.  Subject to applicable  law, the Manager shall not
            be liable for any error of  judgment  or for any loss  suffered by a
            Fund in connection with the matters to which this Agreement relates,
            except a loss resulting from willful misfeasance, bad faith or gross
            negligence  on its part in the  performance  of its  duties  or from
            reckless  disregard by it of its  obligations  and duties under this
            Agreement.

11.         Duration and  Termination.  This Agreement  shall continue in effect
            with  respect to a Fund for a period of more than two years from the
            date  hereof  only  so  long as  such  continuance  is  specifically
            approved at least  annually  with respect to that Fund in conformity
            with the  requirements  of the 1940  Act and the  Rules  thereunder;
            provided,  however,  that  this  Agreement  may be  terminated  with
            respect to any Fund at any time, without the payment of any penalty,
            by the  Trustees  of the  Trust  or by  vote  of a  majority  of the
            outstanding  voting  securities (as defined in the 1940 Act) of that
            Fund,  or by the  Manager at any time,  without  the  payment of any
            penalty,  on not more than 60 days'  nor less than 30 days'  written
            notice  to  the  other  party.   This  Agreement   shall   terminate
            automatically in the event of its assignment (as defined in the 1940
            Act).

12.         Other  Business.  Nothing in this Agreement  shall limit or restrict
            the right of any  director,  officer or  employee of the Manager who
            may also be a Trustee,  officer,  or employee of the Trust to engage
            in any other  business or to devote his or her time and attention in
            part to the management or other aspects of any business,  whether of
            a similar or dissimilar  nature, nor limit or restrict the Manager's
            right to engage in any other  business or to render  services of any
            kind  to  any  other  corporation,   trust,   firm,   individual  or
            association.

13.         Independent  Contractor.  Except  as  otherwise  provided  herein or
            authorized  by the  Trustees  of the Trust  from  time to time,  the
            Manager shall for all purposes herein be deemed to be an independent
            contractor  and shall have no authority to act for or represent  any
            Fund or the Trust in any way or  otherwise be deemed an agent of any
            Fund or the Trust.

14.         Trust Materials. During the term of this Agreement, the Trust agrees
            to furnish the  Manager at its  principal  office all  Prospectuses,
            proxy statements, reports to shareholders, sales literature or other
            materials  prepared for distribution to shareholders of a Fund or to
            the  public,  which  refer to the  Manager in any way,  prior to use
            thereof  and not to use such  materials  if the  Manager  reasonably
            objects in writing  within five business days (or such other time as
            may be  mutually  agreed)  after  receipt  thereof.  In the event of
            termination of this Agreement, the Trust will continue to furnish to
            the Manager  copies of any of the  above-mentioned  materials  which
            refer  in  any  way to the  Manager.  The  Trust  shall  furnish  or
            otherwise  make  available  to the  Manager  such other  information
            relating to the business  affairs of each Fund as the Manager at any
            time,  or  from  time to  time,  reasonably  requests  in  order  to
            discharge its obligations hereunder.

15.         Amendment.  This  Agreement  may be  amended  in  writing  by mutual
            consent, but the consent of each of the Funds, if required,  must be
            obtained in conformity with the requirements of the 1940 Act and the
            Rules thereunder.

16.         Notice.  Any  notice  or other  communication  required  to be given
            pursuant to this  Agreement  shall be deemed duly given if delivered
            or mailed by registered mail, postage prepaid, (1) to the Manager at
            Morris  Corporate  Center  I,  Building  A, 300  Interpace  Parkway,
            Parsippany,  New  Jersey  07054;  or (2) to the Trust at 51  Madison
            Avenue, New York, NY 10010.

17.         Governing Law. This Agreement  shall be governed by and construed in
            accordance with the laws of the State of New York.

18.         Miscellaneous.  The  captions in this  Agreement  are  included  for
            convenience of reference only and in no way define or delimit any of
            the  provisions  hereof or otherwise  affect their  construction  or
            effect.  If any  provision of this  Agreement  shall be held or made
            invalid  by a  court  decision,  statute,  rule  or  otherwise,  the
            remainder of this Agreement shall not be affected  thereby.  As used
            in this  Agreement,  terms shall have the same meaning as such terms
            have in the 1940 Act.  Where  the  effect  of a  requirement  of the
            federal securities laws reflected in any provision of this Agreement
            is made  less  restrictive  by a rule,  regulation  or  order of the
            Commission,   whether  of  special  or  general  application,   such
            provision  shall be deemed to  incorporate  the effect of such rule,
            regulation or order. This Agreement may be signed in counterpart.


<PAGE>


         IN WITNESS  WHEREOF,  the parties hereto have caused this instrument to
be  executed  by their  officers  designated  below as of the day and year first
above written.

                                               ECLIPSE  FUNDS,  on behalf of the
                                               Funds By:

                                      Name:

                                     Title:

                                 NEW YORK LIFE INVESTMENT MANAGEMENT LLC

                                                By:
                                      Name:

                                      Title




<PAGE>


                                                                 Appendix 1

                   Beneficial Owners of More than 5% of a Fund
                             as of October 24, 2000

Name and Address                Percent                     Amount and Nature
of Beneficial Owner            of Fund                   of Beneficial Ownership


                          Ultra Short Term
                              Income Fund

FTC &  Co.*                        53.06                       350,370.692
DataLynx House Account                                         Beneficial
P.O. Box 173136
Denver, CO 80217-3136

Hopke Partnership TCM*             19.17                       126,611.996
c/o Rochdale Securities Corp.                                  Beneficial
570 Lexington Avenue Floor 8
New York, NY 10022-6837


Richard C. Dalsemer                 6.18                       40,806.293
2554 Santa Lucia Avenue                                        Record
Carmel, CA 93923-9105


John C. Van Eck                     5.01                       33,077.605
99 Park Avenue                                                 Record
8th Floor
New York, New York  10016-1501


                                  Balanced Fund

Mellon Bank as Trustee*             60.49                       1,915,551.535
Agent Omnibus                                                   Beneficial
135 Santilli Way
Everett, MA 02149-1906


FTC &  Co.*                         12.68                       401,625.374
DataLynx House Account                                          Beneficial
P.O. Box 173136
Denver, CO 80217-3136


EGAP & Co.                           7.32                       231,951.695
Chittenden Bank                                                 Beneficial
Trust Operations
PO Box 820
Burlington, Vermont 05402-0820

                               Mid Cap Value Fund

American Express Trust Company*      72.74                       2,886,208.73
American Express Retirement Services                             Beneficial
FBO NIBCO 401(K)
ATTN Chris Hunt N10/996
P.O. Box 534
Minneapolis, MN 55440-0534

FTC & Co.*                            9.13                       362,435.111
DataLynx House Account                                           Beneficial
PO Box 2052
Jersey City, NJ 07303-2052

                              Small Cap Value Fund

National Financial Services Corp*    25.08                       4,055,934.592
200 Liberty Street                                              Beneficial
One World Financial Center
New York, NY 10281-1003


Charles Schwab & Co. Inc.*           22.15                       3,583,135.373
Mutual Funds Department                                         Beneficial
101 Montgomery Street
San Francisco, CA 94104-4122


The Northern Trust Company TTEE*      6.91                       1,117,267.999
Guidant Corporation                                             Beneficial
FBD Master Investment Trust U/A
   3-22-99
P.O. Box 92-956
Chicago, IL 60675-2956

Masonic Charity Foundation            4.31                       696,856.852
c/o Bankers Trust New York                                      Beneficial
34 Exchange Place Mailbox Stop 3029
Jersey City, New Jersey 07302-3885

FTC & Co.                             3.95                       638,966.692
DataLynx House Account                                          Beneficial
P.O. Box 173136
Denver, Colorado 80217-3136


* Each of these  entities is the  shareholder  of record and may be deemed to be
the  beneficial  owner of the  shares  listed  for  certain  purposes  under the
securities  laws,  although in certain  instances  they may not have an economic
interest  in  these  shares  and  would,  therefore,   ordinarily  disclaim  any
beneficial ownership therein.


<PAGE>



                                                                    Appendix 2

                              Trustee Shareholdings
                             as of October 24, 2000

Name of                        Percent                     Amount and Nature
Beneficial Owner               of Fund                   of Beneficial Ownership

                          Ultra Short Term
                             Income Fund

John C. Van Eck                  5.01                       33,077.605
                                                            Record

Wesley G. McCain                 0.45                       2,968.263(1)


                                  Balanced Fund

Wesley G. McCain                 0.02                       649.134
                                                            Record

John C. Van Eck                  0.23                       7,721.776
                                                            Record

Sigrid A. Hess                   0.07                       2,328.669
                                                            Record

                               Mid Cap Value Fund

Wesley G. McCain                 0.44                       17,489.940(2)


                              Small Cap Value Fund

Wesley G. McCain                 0.15                       24,902.215(3)


John C. Van Eck                  0.07                       11,563.735
                                                            Record

Sigrid A. Hess                   0.06                       9,402.237
                                                            Record

Yung Wong                        0.06                       8,913.979
                                                            Record


(1)         Of this  amount,  1,577.667  shares  are held of record  by  Eclipse
            Financial Services,  Inc., the outstanding shares of which are owned
            by  Manastee  River  Revocable  Trust for the  benefit  of Wesley G.
            McCain.  Mr.  McCain is also the Trustee.  The  remaining  1,390.596
            shares are held of record by Mr. McCain.

(2)         Of this  amount,  16,564.938  shares are held of record by  Manastee
            River  Revocable  Trust for the  benefit  of Wesley G.  McCain.  Mr.
            McCain is also the Trustee. The remaining 925.002 shares are held of
            record by Mr. McCain.

(3)         Of this  amount,  23,627.386  shares are held of record by  Manastee
            River  Revocable  Trust for the  benefit  of Wesley G.  McCain.  Mr.
            McCain is also the Trustee. The remaining 925.002 shares are held of
            record by Mr. McCain.


<PAGE>


                                  ECLIPSE FUNDS
                                  (the "Trust")

 [Eclipse Ultra Short Term Income Fund]        [Eclipse Balanced Fund]
 [Eclipse Mid Cap Value Fund]                  [Eclipse Small Cap Value Fund]

                                  (the "Fund")

               THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD
                          OF TRUSTEES OF ECLIPSE FUNDS

IF THIS PROXY CARD IS PROPERLY EXECUTED AND RETURNED,  YOUR SHARES WILL BE VOTED
BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION
IS MADE, YOUR SHARES WILL BE VOTED BY THE PROXIES FOR APPROVAL OF THE PROPOSALS.

   Please sign exactly as name appears on this card. If the account is in the
  name of joint tenants, all should sign. If you are signing as administrator,
 trustee or guardian, please give title. If the account is that of a corporation
    or partnership, please have an authorized person sign in the name of the
                          corporation or partnership.


                             X______________________

                             X______________________

                                  Signature(s)

                         Dated: __________________, 2000

Please refer to the Proxy  Statement  for a discussion  of these  matters.  This
proxy  card  is  solicited  in  connection  with  the  special  meeting  of  the
shareholders  the Fund to be held at 10:00 a.m.,  Eastern  Time,  on December 5,
2000, and at any adjournment  thereof.  THIS PROXY CARD, WHEN PROPERLY EXECUTED,
DIRECTS  WESLEY G.  MCCAIN AND  SIGRID A. HESS TO VOTE THE SHARES  LISTED BELOW
AS DIRECTED AND REVOKES ALL PRIOR PROXY CARDS.

                             YOUR VOTE IS IMPORTANT!
                               VOTE TODAY BY MAIL,
                        TOUCH-TONE PHONE OR THE INTERNET
                        CALL TOLL FREE 1-888-690-6903 OR
                           LOG ON TO WWW.PROXYVOTE.COM

*** CONTROL NUMBER XXX XXX XXX XXX XX ***


Please vote the shares listed below by filling in the  appropriate box below, as
shown, using blue or black ink or dark pencil. Do not use red ink.

EXAMPLE: [   ] [box is filled in solidly]


THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.


1.          To elect four (4)  Trustees  to serve  until  their  successors  are
            elected and qualified;


            FOR   [ ]         WITHHOLD   [ ]    FOR ALL EXCEPT   [ ]


(01) Stephen C. Roussin                     (03) Lawrence Glacken

(02) Robert P. Mulhearn                     (04) Susan B. Kerley

Note: If you do not wish your shares voted "For" a particular Nominee,  mark the
"For All  Except" box and strike a line  through the name(s) of the  Nominee(s).
Your shares will be voted for the remaining Nominee(s).

2.          To approve a new Investment Advisory Agreement between the Trust, on
            behalf of the  Fund,  and New York Life  Investment  Management  LLC
            ("NYLIM LLC");


           [   ] FOR                  [   ] AGAINST             [   ] ABSTAIN


3.          To ratify the selection of PricewaterhouseCoopers LLP as independent
            auditors for the Funds for the fiscal year ending December 31, 2000.

          [   ] FOR                  [   ] AGAINST             [   ] ABSTAIN


IN THEIR  DISCRETION,  THE  PROXIES  ARE  AUTHORIZED  TO VOTE  UPON  SUCH  OTHER
BUSINESS,  INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.



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