ECLIPSE FUNDS
Supplement dated December 12, 2000
THE INFORMATION BELOW SUPPLEMENTS THE INFORMATION CONTAINED IN THE ECLIPSE
FUNDS' PROSPECTUS, DATED MAY 1, 2000. THIS SUPPLEMENT SHOULD BE READ WITH THE
PROSPECTUS AND ANY PREVIOUSLY ISSUED SUPPLEMENT.
On December 12, 2000, Towneley Capital Management, Inc. ("Towneley"), the
investment adviser to each series of Eclipse Funds (the "Funds"), sold certain
segments of its portfolio management businesses, including the business,
operations and activities that Towneley conducted relating to providing
investment advisory services to the Funds, to New York Life Investment
Management Holdings LLC (the "Transaction").
As a result of the Transaction, New York Life Investment Management LLC, 51
Madison Avenue, New York, NY 10010 ("NYLIM"), replaced Towneley as the
investment adviser to the Funds effective December 12, 2000, pursuant to a new
investment management agreement ("New Agreement") approved by the shareholders
of the Funds at a shareholder meeting held on December 5, 2000. The New
Agreement is the same in all material respects as the previous investment
management agreement with Towneley, including the amount of advisory fees
charged. In addition, under the New Agreement, NYLIM will provide fund
administration services.
For the initial two-year term of the New Agreement, NYLIM has undertaken that
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 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 old transfer agency
agreement (i.e., pre-Transaction) were still in effect will be borne by NYLIM.
In addition, NYLIM has contractually agreed to waive advisory fees of 0.20% of
the Ultra Short Term Income Fund's average daily net assets through December 31,
2002, and NYLIM will also continue to voluntarily waive through December 31,
2002 the advisory fees that Towneley had voluntarily waived with respect to this
Fund. NYLIM may discontinue all or part of the voluntary waiver at any time
after that date.
The operations and management of the Fund are not materially affected by the
Transaction. The investment personnel primarily responsible for the management
of the Funds are expected to remain unchanged since employees of Towneley
devoted to the Funds have become, or will become, employees of NYLIM.
The Funds have replaced certain service providers with new service providers as
a result of the Transaction. The new service providers and their addresses are
as follows:
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Transfer Agent and Shareholder
Services Agent: Mainstay Shareholder Services LLC
260 Cherry Hill Road
Parsippany, NJ 07075
Sub-Transfer Agent: Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, MA 02171
Custodian: The Bank of New York
48 Wall Street
New York, NY 10286
Distributor: NYLIFE Distributors Inc.
300 Interpace Parkway
Parsipany, NJ 07054
The exchange feature of the Funds has been expanded so that a shareholder in a
Fund is entitled to exchange some or all of those shares of a Fund for shares in
any series of Eclipse Funds Inc. Eclipse Funds Inc., a Maryland corporation, is
a registered investment company currently consisting of the following eleven
funds: Eclipse Growth Equity Fund, Eclipse Value Equity Fund, Eclipse Indexed
Equity Fund, Eclipse International Equity Fund, Eclipse Bond Fund, Eclipse
Indexed Bond Fund, Eclipse Short-Term Bond Fund, Eclipse Money Market Fund,
Eclipse Asset Manager Fund, Eclipse International Bond Fund, and Eclipse EAFE
Index Fund. Generally, exchanges between the Funds and the series of Eclipse
Funds Inc. may be made without a charge.
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