UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04847
Eclipse Funds
(Exact name of Registrant as specified in charter)
51 Madison Avenue, New York, NY 10010
(Address of principal executive offices) (Zip code)
Robert A. Anselmi, Esq.
Michael Hession, Esq.
169 Lackawanna Avenue
Parsippany, New Jersey 07054
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 576-7000
Date of fiscal year end: 10/31/04
Date of reporting period: 11/1/03-4/30/04
Item 1. Reports to Stockholders.
[New York Life Investment Management LLC LOGO]
EQUITY FUNDS
MainStay All Cap Growth Fund
MainStay All Cap Value Fund
MainStay Mid Cap Core Fund
MainStay Mid Cap Opportunity Fund
MainStay S&P 500 Index Fund
MainStay Small Cap Opportunity Fund
INCOME FUNDS
MainStay Cash Reserves Fund
MainStay Indexed Bond Fund
MainStay Intermediate Term Bond Fund
MainStay Short Term Bond Fund
BLENDED FUNDS
MainStay Asset Manager Fund
MainStay Balanced Fund
MAINSTAY(R) FUNDS
SEMIANNUAL REPORT
Unaudited
April 30, 2004
MESSAGE FROM
THE PRESIDENT
Most domestic and international stock markets advanced during the six months
ended April 30, 2004. The U.S. economy generally improved, with real gross
domestic product growing at a seasonally adjusted annual rate of 4.1% in the
fourth quarter of 2003 and, according to preliminary estimates, rising 4.4% in
the first quarter of 2004. Inflation remained relatively modest throughout the
reporting period but increased enough to reassure the Federal Reserve that
unwanted deflation was no longer a serious concern.
Increases in corporate productivity led to worries that we might be having a
"jobless recovery." In early April, however, the release of March employment
figures showed a dramatic rise in nonfarm payrolls. Unfortunately, the
combination of higher employment and rising inflation suggested that the Federal
Reserve might soon move to raise interest rates. Bond markets adjusted to
accommodate this perception, with yields rising and prices declining in April.
The stock market, which had recorded relatively steady gains since mid-March of
2003, became increasingly volatile from late January through the end of April
2004.
In March and April, bond yields rose to reflect the increasing likelihood of a
less-accommodative monetary policy. Since bond prices and yields tend to move in
opposite directions, several bond indices recorded negative price performance
during the six-month reporting period, but most provided positive total returns.
A weak U.S. dollar helped strengthen the performance of international stocks and
was good news for U.S. exporters. The strengthening Japanese economy was greeted
as positive news by international investors, but moves to decelerate the rapid
economic growth in China were not as favorably received. Several international
markets provided double-digit total returns for the six-month reporting period.
On January 1, 2004, the Eclipse Funds were re-branded as MainStay Funds. The
change was part of a repositioning initiative at New York Life Investment
Management LLC. During the reporting period, some Funds were merged, others
liquidated, and still others renamed. The result was a single, robust, and
integrated mutual fund family that gives investors a more comprehensive array of
alternatives.
At MainStay, each of our Funds seeks to achieve its investment objective through
consistent application of an established investment process. Whether the
investments you've chosen use quantitative analysis, fundamental research, or a
combination of the two, our disciplines remain the same, even when the markets
move. We believe that our time-tested investment strategies can help you pursue
your long-range goals with confidence. We hope to continue to serve your
investment needs for many years to come.
Sincerely,
[/s/ Gary E. Wendlandt]
Gary E. Wendlandt
President
TABLE OF CONTENTS
<Table>
Message from the President 1
- ---------------------------------------------------
EQUITY FUNDS
MainStay All Cap Growth Fund 2
- ---------------------------------------------------
MainStay All Cap Value Fund 16
- ---------------------------------------------------
MainStay Mid Cap Core Fund 30
- ---------------------------------------------------
MainStay Mid Cap Opportunity Fund 46
- ---------------------------------------------------
MainStay S&P 500 Index Fund 60
- ---------------------------------------------------
MainStay Small Cap Opportunity Fund 76
INCOME FUNDS
MainStay Cash Reserves Fund 92
- ---------------------------------------------------
MainStay Indexed Bond Fund 103
- ---------------------------------------------------
MainStay Intermediate Term Bond Fund 123
- ---------------------------------------------------
MainStay Short Term Bond Fund 140
- ---------------------------------------------------
BLENDED FUNDS
MainStay Asset Manager Fund 152
- ---------------------------------------------------
MainStay Balanced Fund 184
- ---------------------------------------------------
Notes to Financial Statements 202
- ---------------------------------------------------
Board Members and Officers 213
</Table>
www.mainstayfunds.com 1
MAINSTAY ALL CAP GROWTH FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
S&P 500(R) INDEX(1) 6.27% 22.88% -2.26% 11.36%
RUSSELL 1000(R) GROWTH INDEX(2) 4.14 21.65 -6.37 9.61
RUSSELL 3000(R) GROWTH INDEX(3) 4.13 22.93 -5.95 9.21
AVERAGE LIPPER LARGE-CAP GROWTH FUND(4) 2.45 18.27 -5.46 7.94
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -2.95% 12.47% -7.79% 7.07%
Excluding sales charges 2.70 19.02 -6.74 7.68
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 GROWTH RUSSELL 3000 GROWTH
GROWTH FUND S&P 500 INDEX INDEX(1) INDEX
---------------- ------------- ------------------- -------------------
4/30/94 945 1000 1000 1000
1023 1175 1196 1186
1421 1530 1585 1580
1573 1914 1935 1867
2232 2700 2750 2653
2807 3289 3479 3280
3427 3622 4438 4193
2595 3152 3007 2862
2087 2754 2402 2310
1663 2388 2058 1963
4/30/04 1980 2934 2503 2413
</Table>
<Table>
-- MainStay All Cap Growth Fund -- Russell 1000 Growth Index
-- S&P 500 Index -- Russell 3000 Growth Index
</Table>
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -2.58% 13.22% -7.83% 6.71%
Excluding sales charges 2.42 18.22 -7.53 6.71
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 GROWTH RUSSELL 3000 GROWTH
GROWTH FUND S&P 500 INDEX INDEX(1) INDEX
---------------- ------------- ------------------- -------------------
4/30/94 1000 1000 1000 1000
1072 1175 1196 1186
1477 1530 1585 1580
1621 1914 1935 1867
2275 2700 2750 2653
2832 3289 3479 3280
3423 3622 4438 4193
2564 3152 3007 2862
2046 2754 2402 2310
1619 2388 2058 1963
4/30/04 1914 2934 2503 2413
</Table>
<Table>
-- MainStay All Cap Growth Fund -- Russell 1000 Growth Index
-- S&P 500 Index -- Russell 3000 Growth Index
</Table>
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 1.48% 17.29% -7.52% 6.72%
Excluding sales charges 2.48 18.29 -7.52 6.72
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 GROWTH RUSSELL 3000 GROWTH
GROWTH FUND S&P 500 INDEX INDEX(1) INDEX
---------------- ------------- ------------------- -------------------
4/30/94 1000 1000 1000 1000
1072 1175 1196 1186
1477 1530 1585 1580
1621 1914 1935 1867
2275 2700 2750 2653
2832 3289 3479 3280
3423 3622 4438 4193
2564 3152 3007 2862
2046 2754 2402 2310
1619 2388 2058 1963
4/30/04 1915 2934 2503 2413
</Table>
<Table>
-- MainStay All Cap Growth Fund -- Russell 1000 Growth Index
-- S&P 500 Index -- Russell 3000 Growth Index
</Table>
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A, B, and C shares, first
offered 1/1/04, includes the historical performance of Class I shares from
inception (1/2/91) through 12/31/03 adjusted to reflect the applicable sales
charge (or CDSC) and fees and expenses for such shares.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
2 MainStay All Cap Growth Fund
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 2.84% 19.34% -6.59% 7.87%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 GROWTH RUSSELL 3000 GROWTH
GROWTH FUND S&P 500 INDEX INDEX(1) INDEX
---------------- ------------- ------------------- -------------------
4/30/94 1000 1000 1000 1000
1085 1175 1196 1186
1510 1530 1585 1580
1676 1914 1935 1867
2382 2700 2750 2653
2999 3289 3479 3280
3666 3622 4438 4193
2775 3152 3007 2862
2237 2754 2402 2310
1787 2388 2058 1963
4/30/04 2133 2934 2503 2413
</Table>
<Table>
-- MainStay All Cap Growth Fund -- Russell 1000 Growth Index
-- S&P 500 Index -- Russell 3000 Growth Index
</Table>
1. "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P 500 is
an unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock-market performance. Results assume reinvestment of all
income and capital gains. An investment cannot be made directly into an
index.
2. The Russell 1000(R) Growth Index is an unmanaged index that measures the
performance of those Russell 1000(R) companies with higher price-to-book
ratios and higher forecasted growth values. The Russell 1000(R) Index is an
unmanaged index that measures the performance of the 1,000 largest U.S.
companies based on total market capitalization. Results assume reinvestment
of all income and capital gains. An investment cannot be made directly into
an index.
3. MainStay All Cap Growth Fund, going forward, will measure its performance
against the Russell 3000(R) Growth Index. The Russell 3000(R) Growth Index
measures the performance of those Russell 3000(R) Index companies with higher
price-to-book ratios and higher forecasted growth values. The Russell 3000(R)
Index measures the performance of the 3,000 largest U.S. companies based on
total market capitalization and represents approximately 98% of the
investable U.S. equity market. Total returns assume reinvestment of all
dividends and capital gains. An investment cannot be made directly into an
index.
4. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 3
$1,000 INVESTED IN MAINSTAY ALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $ 982 $4 $1,046 $4
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $ 980 $7 $1,043 $7
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(1,2) $1,000 $ 981 $7 $1,043 $7
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,029 $5 $1,045 $5
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares, Class B shares and Class C shares were first offered on
January 1, 2004. Expenses paid during the period reflect ongoing costs for
the four-month period ending April 30, 2004. Had these shares been offered
for the six months ended April 30, 2004, based on a hypothetical 5% return,
expenses paid during the period would be $7, $10 and $10, respectively, and
the ending account value would be $1,044, $1,040 and $1,040, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
4 MainStay All Cap Growth Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Rudolph C. Carryl and Edmund C. Spelman
of MacKay Shields LLC
MAINSTAY ALL CAP GROWTH FUND (FORMERLY ECLIPSE GROWTH EQUITY FUND)
DID THE FUND'S PORTFOLIO-MANAGEMENT MANDATE CHANGE DURING THE REPORTING PERIOD?
Prior to January 2004, the Fund invested primarily in large-cap growth stocks.
As its new name implies, MainStay All Cap Growth Fund has the flexibility to
diversify its portfolio without capitalization restrictions. We have added a
number of new stocks to the portfolio to reflect this added flexibility.
WHAT FACTORS AFFECTED THE STOCK MARKET DURING THE SIX MONTHS ENDED APRIL 30,
2004?
A number of factors kept the market volatile as investor sentiment shifted from
positive to negative. The chief concern was uncertainty over the timing and
magnitude of an anticipated Federal Reserve move to increase interest rates.
Other worries included global terrorist activity, ongoing tensions in Iraq, and
the threat that high oil prices could slow consumer spending. Despite these
negatives, the U.S. economy continued on a strong growth track, and recent
employment data suggest that the long-awaited recovery in the job market is
finally beginning to take hold.
WHY DID THE FUND LAG ITS BENCHMARK OVER THE REPORTING PERIOD?
The primary reason why the Fund underperformed the Russell 3000(R) Index(1) was
an overweighted position in consumer discretionary stocks, where
company-specific issues negatively affected results. The Fund was also hurt by
its underweighted position in consumer staples, a sector that rose as investors
grew more defensive. Company-specific issues also had a negative impact on
several of the Fund's financial holdings.
WHICH SECTORS PRODUCED THE STRONGEST RESULTS DURING THE REPORTING PERIOD?
The Fund's energy holdings gained the most ground, rising 31.0%(2) as the price
of oil rose. This compared with a 27.2% increase for related stocks in the
Index. The Fund's three energy holdings, Weatherford International (+25.2%), BJ
Services (+33.7%), and Baker Hughes (+28.8%) were all strong performers.
The second-best-performing sector was health care, which delivered a 15.8%
return versus an 11.8% increase for related stocks in the Index. The Fund's best
performers in this sector were Caremark Rx (+76.1%), Genentech (+47.0%), Forest
Laboratories (+29.5%), WellPoint Health Networks (+24.1%), and Cardinal Health
(+21.8%).
HOW DID THE FUND'S INDUSTRIAL HOLDINGS PERFORM?
The Fund's industrials holdings rose 8.7% during the first half of the fiscal
year versus a 6.5% increase for related stocks in the Index. Cendant (+19.8%)
and Illinois Tool Works (+16.6%) advanced on strength in their various business
segments. Danaher (+11.4%) was well positioned for an economic recovery. FedEx
(-6.0%) fell on concerns over declining domestic market share. Lockheed Martin
(-2.2%) declined on uncertainty over the direction of defense spending, and we
sold the Fund's position in the stock.
WHICH SECTORS LAGGED THE BENCHMARK?
The Fund's consumer discretionary stocks declined 1.2% versus a 2.1% increase
for the sector in the Index. The Fund did, however, hold a number of strong
performers, including International Game Technology (+91.6%), Harley-Davidson
(+16.7%), and TJX (+16.4%). Unfortunately, these gains were more than offset by
weakness in other holdings. Kohl's (-25.2%) fell on competitive concerns.
InterActive (-13.7%) declined on investor worries over InterActive's third-party
bookings (Expedia and Hotels.com) versus competitors' direct Internet bookings.
Other laggards in the consumer discretionary sector were Bed Bath & Beyond
(-10.7%), Lowe's (-10.9%), and Lennar (-1.2%).
Overall, the Fund's information technology holdings fell 4.8%, versus a 5.3%
decline for related stocks in the Index. Investors generally rotated out of the
sector and into more-defensive issues as business spending remained modest and
evidence mounted that the semiconductor cycle had peaked. The Fund's top
information technology performer was Symantec
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value.
1. See footnote on page 3 for more information on the Russell 3000(R) Index.
2. Percentages for Fund holdings reflect the total return performance of the
indicated securities or sectors for the six months ended 4/30/04, or for the
portion of the reporting period such securities or sector holdings were held
in the Fund, if shorter. Due to purchases and sales, the performance of Fund
holdings may differ from the performance of the securities or sectors
themselves.
www.mainstayfunds.com 5
(+32.2%), which advanced on strong demand for its antivirus and Internet
security software. Most of the major detractors in the sector were in
semiconductor-related businesses. Among the semiconductor-related holdings that
experienced significant declines were KLA-Tencor (-12.2%), Applied Materials
(-8.6%), Intel (-17.5%), and Texas Instruments (-1.0%). Network storage software
vendor VERITAS Software (-23.8%) declined after its January 2004 announcement
that the company would likely miss sales and profit forecasts in the coming
quarter.
HOW DID THE FUND'S FINANCIAL HOLDINGS PERFORM?
The Fund's financials stocks declined 1.9% during the period versus a 4.1% gain
for related stocks in the Index. Most financial stocks performed well until
early March 2004, when interest-rate concerns began to take hold. Morgan Stanley
(-3.7%) declined even though it handily beat earnings estimates during the
period. Fannie Mae (-1.9%) was eliminated from the portfolio early in the year.
Other financials positions sold during the period included Bank of America and
Fifth Third Bancorp. Both were eliminated as growth slowed and the commercial
loan market remained sluggish. During the period, we added positions in Capital
One Financial, Doral Financial, New Century Financial, IndyMac Bancorp, and New
York Community Bancorp.
WHAT IS YOUR OUTLOOK FOR THE STOCK MARKET AND HOW IS THE FUND POSITIONED GOING
FORWARD?
Investors are clearly focused on the potential for a Federal Reserve
interest-rate hike. Terrorism and geopolitical conflicts are also important
concerns. Despite these issues, we continue to take a long-term view and believe
that holding a broadly based portfolio of best-in-class companies with strong
growth prospects is the appropriate strategy for any market environment.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 100.00
Short-Term Investments (collateral from securities lending 2.00
is 2.0%)
Liabilities in Excess of Cash and Other Assets -2.0
</Table>
6 MainStay All Cap Growth Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (100.0%)+
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.6%)
United Technologies Corp. 58,800 $ 5,072,088
-------------
AIR FREIGHT & LOGISTICS (1.6%)
FedEx Corp. 71,600 5,148,756
-------------
AUTOMOBILES (1.4%)
Harley-Davidson, Inc. 81,000 4,561,920
-------------
BEVERAGES (0.9%)
PepsiCo, Inc. 54,700 2,980,603
-------------
BIOTECHNOLOGY (2.9%)
Amgen, Inc. (a) 67,500 3,798,225
Genentech, Inc. (a) 25,200 3,094,560
Gilead Sciences, Inc. (a) 38,700 2,354,121
-------------
9,246,906
-------------
BUILDING PRODUCTS (0.8%)
Eagle Materials, Inc. 32,842 2,157,719
Eagle Materials, Inc. Class B 2,831 180,901
-------------
2,338,620
-------------
CAPITAL MARKETS (1.5%)
Morgan Stanley 91,400 4,697,046
-------------
CHEMICALS (1.5%)
Praxair, Inc. 133,700 4,886,735
-------------
COMMERCIAL SERVICES & SUPPLIES (2.2%)
Apollo Group, Inc. Class A (a) 23,000 2,090,240
Cendant Corp. 214,400 5,076,992
-------------
7,167,232
-------------
COMMUNICATIONS EQUIPMENT (2.8%)
Avaya, Inc. (a) 253,000 3,461,040
Cisco Systems, Inc. (a) 243,800 5,088,106
QLogic Corp. (a) 20,000 539,800
-------------
9,088,946
-------------
COMPUTERS & PERIPHERALS (4.3%)
*Dell, Inc. (a) 157,000 5,449,470
Hewlett-Packard Co. 230,000 4,531,000
International Business Machines Corp. 44,200 3,897,114
-------------
13,877,584
-------------
CONSUMER FINANCE (2.4%)
American Express Co. 75,900 3,715,305
Capital One Financial Corp. 58,300 3,820,399
-------------
7,535,704
-------------
DIVERSIFIED FINANCIAL SERVICES (1.6%)
Citigroup, Inc. 107,493 5,169,338
-------------
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRICAL EQUIPMENT (0.5%)
Roper Industries, Inc. 36,000 $ 1,747,800
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.1%)
Agilent Technologies, Inc. (a) 136,800 3,694,968
Amphenol Corp. Class A (a) 98,400 3,110,424
-------------
6,805,392
-------------
ENERGY EQUIPMENT & SERVICES (1.8%)
Baker Hughes, Inc. 46,600 1,709,288
BJ Services Co. (a) 51,400 2,287,300
Weatherford International Ltd. (a) 43,700 1,900,076
-------------
5,896,664
-------------
FOOD & STAPLES RETAILING (2.7%)
*Sysco Corp. 137,100 5,244,075
Walgreen Co. 97,400 3,358,352
-------------
8,602,427
-------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.2%)
*Boston Scientific Corp. (a) 136,300 5,614,197
Medtronic, Inc. 95,100 4,798,746
-------------
10,412,943
-------------
HEALTH CARE PROVIDERS & SERVICES (8.4%)
*Cardinal Health, Inc. 78,200 5,728,150
*Caremark Rx, Inc. (a) 163,100 5,520,935
HCA, Inc. 39,100 1,588,633
Odyssey Healthcare, Inc. (a) 66,000 1,109,460
Oxford Health Plans, Inc. 43,500 2,368,140
Unitedhealth Group, Inc. 83,200 5,115,136
*WellPoint Health
Networks, Inc. (a) 50,800 5,673,852
-------------
27,104,306
-------------
HOTELS, RESTAURANTS & LEISURE (1.4%)
International Game Technology 118,200 4,460,868
-------------
HOUSEHOLD DURABLES (4.5%)
Centex Corp. 68,000 3,260,600
Harman International Industries, Inc. 21,000 1,592,850
Hovnanian Enterprises, Inc. Class A (a) 60,000 2,158,200
Lennar Corp. Class A 87,200 4,085,320
Mohawk Industries, Inc. (a) 21,700 1,673,938
Toro Co. (The) 30,000 1,744,500
-------------
14,515,408
-------------
HOUSEHOLD PRODUCTS (0.6%)
Colgate-Palmolive Co. 30,200 1,747,976
-------------
INDUSTRIAL CONGLOMERATES (1.2%)
General Electric Co. 129,200 3,869,540
-------------
</Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com 7
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ------------------------------------------------------------------------------
w
INTERNET & CATALOG RETAIL (1.9%)
InterActive Corp. (a)(c) 151,700 $ 4,834,679
Netflix, Inc. (a)(c) 48,000 1,213,920
-------------
6,048,599
-------------
IT SERVICES (1.8%)
*First Data Corp. 126,600 5,746,374
-------------
LEISURE EQUIPMENT & PRODUCTS (0.8%)
Brunswick Corp. 61,300 2,520,043
-------------
MACHINERY (5.2%)
*Danaher Corp. 60,400 5,588,208
Dover Corp. 130,300 5,215,909
*Illinois Tool Works, Inc. 68,500 5,905,385
-------------
16,709,502
-------------
MEDIA (4.9%)
Clear Channel Communications, Inc. 76,320 3,166,517
Gannett Co., Inc. 49,900 4,325,332
Omnicom Group, Inc. 64,700 5,144,297
Viacom, Inc. Class B 82,661 3,194,847
-------------
15,830,993
-------------
MULTILINE RETAIL (2.9%)
Kohl's Corp. (a) 102,200 4,270,938
Target Corp. 114,100 4,948,517
-------------
9,219,455
-------------
PHARMACEUTICALS (6.2%)
Forest Laboratories, Inc. (a) 76,900 4,958,512
Johnson & Johnson 78,100 4,219,743
Pfizer, Inc. 125,400 4,484,304
Taro Pharmaceutical Industries Ltd. (a) 25,000 1,081,250
*Teva Pharmaceutical Industries Ltd. ADR (b) 86,200 5,306,472
-------------
20,050,281
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (8.1%)
Analog Devices, Inc. 115,000 4,899,000
Applied Materials, Inc. (a) 196,300 3,578,549
Intel Corp. 155,000 3,988,150
KLA-Tencor Corp. (a) 66,800 2,783,556
</Table>
<Table>
<Caption>
SHARES VALUE
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
Maxim Integrated
Products, Inc. 102,900 $ 4,732,371
Silicon Laboratories, Inc. 30,000 1,414,500
Texas Instruments, Inc. 186,800 4,688,680
-------------
26,084,806
-------------
SOFTWARE (7.3%)
Electronic Arts, Inc. (a) 103,200 5,223,984
Microsoft Corp. 175,100 4,547,347
Oracle Corp. (a) 401,948 4,509,857
Symantec Corp. (a) 104,700 4,716,735
VERITAS Software Corp. (a) 170,600 4,549,902
-------------
23,547,825
-------------
SPECIALTY RETAIL (5.5%)
Advanced Auto Parts, Inc. (a) 45,000 1,941,750
Bed Bath & Beyond, Inc. (a) 115,600 4,291,072
Chico's Fas, Inc. (a) 35,000 1,425,550
Lowe's Cos., Inc. 91,700 4,773,902
TJX Cos., Inc. (The) 209,900 5,157,243
-------------
17,589,517
-------------
TEXTILES, APPAREL & LUXURY GOODS (0.5%)
Coach, Inc. (a) 37,000 1,576,200
-------------
THRIFTS & MORTGAGE FINANCE (3.0%)
Doral Financial Corp. 60,000 1,967,400
IndyMac Bancorp, Inc. (a) 55,000 1,768,800
New Century Financial Corp. 39,500 1,675,985
New York Community Bancorp, Inc. 170,566 4,276,090
-------------
9,688,275
-------------
Total Common Stocks
(Cost $290,768,068) 321,546,672
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
w
SHORT-TERM INVESTMENTS (2.0%)
- ------------------------------------------------------------------------------
INVESTMENT COMPANY (0.1%)
AIM Institutional Funds Group (d) $ 181,108 181,108
-------------
Total Investment Company
(Cost $181,108) 181,108
-------------
</Table>
8 MainStay All Cap Growth Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (1.9%)
Credit Suisse First Boston
1.113%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $3,000,278 (d)
(Collateralized by
Various Bonds
with a Principal Amount of $2,914,317 and a
Market Value of $3,056,564) $3,000,000 $ 3,000,000
-------------
Lehman Brothers, Inc.
1.113%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $3,000,278 (d)
(Collateralized by
Various Bonds
with a Principal Amount of $3,936,592 and a
Market Value of $3,144,565) 3,000,000 3,000,000
-------------
Total Repurchase Agreements (Cost $6,000,000) 6,000,000
-------------
Total Short-Term Investments (Cost $6,181,108) 6,181,108
-------------
</Table>
<Table>
Total Investments
(Cost $296,949,176) (e) 102.0% 327,727,780(f)
Liabilities in Excess of Cash and Other Assets (2.0) (6,271,090)
------ -------------
Net Assets 100.0% $ 321,456,690
====== =============
</Table>
<Table>
(a) Non-income producing security.
(b) ADR-American Depositary Receipt.
(c) Represents securities out on loan or a portion which is
out on loan.
(d) Represents a security or a portion thereof, purchased
with cash collateral received for securities on loan.
(e) The cost for federal Income tax purposes is
$297,063,845.
(f) At April 30, 2004 net unrealized appreciation was
$30,663,935, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $49,210,914 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $18,546,979.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com 9
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value (identified
cost $296,949,176) including $6,048,599
market value of securities loaned $327,727,780
Receivables:
Investment securities sold 445,507
Dividends and interest 156,441
Fund shares sold 133,565
Other assets 17,786
------------
Total assets 328,481,079
------------
LIABILITIES:
Securities lending collateral 6,181,108
Payables:
Fund shares redeemed 263,931
Due to Custodian 210,079
Manager 208,794
Transfer agent 84,691
Professional 44,972
NYLIFE Distributors 3,526
Directors 804
Accrued expenses 26,484
------------
Total liabilities 7,024,389
------------
Net assets $321,456,690
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Class A $ 648
Class B 66
Class C 11
Class I 16,045
Additional paid-in capital 329,956,625
Accumulated net investment loss (362,960)
Accumulated net realized loss on investments (38,932,349)
Net unrealized appreciation on investments 30,778,604
------------
Net assets $321,456,690
============
CLASS A
Net assets applicable to outstanding shares $ 12,094,930
============
Shares of capital stock outstanding 648,359
============
Net asset value per share outstanding $ 18.65
Maximum sales charge (5.50% of offering price) 1.09
------------
Maximum offering price per share outstanding $ 19.74
============
CLASS B
Net assets applicable to outstanding shares $ 1,222,082
============
Shares of capital stock outstanding 65,649
============
Net asset value and offering price per share
outstanding $ 18.62
============
CLASS C
Net assets applicable to outstanding shares $ 199,686
============
Shares of capital stock outstanding 10,721
============
Net asset value and offering price per share
outstanding $ 18.63
============
CLASS I
Net assets applicable to outstanding shares $307,939,992
============
Shares of capital stock outstanding 16,044,803
============
Net asset value and offering price per share
outstanding $ 19.19
============
</Table>
10 MainStay All Cap Growth Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 1,279,023
Interest 5,656
Income from securities loaned -- net 1,171
-----------
Total income 1,285,850
-----------
EXPENSES:
Manager 1,492,105
Transfer agent 149,416
Professional 54,512
Shareholder communication 20,565
Custodian 17,604
Directors 16,190
Registration 12,495
Service -- Class A 9,342
Service -- Class B 460
Service -- Class C 72
Service -- Service Class 4,802
Distribution -- Class B 1,380
Distribution -- Class C 215
Miscellaneous 11,912
-----------
Total expenses before reimbursement 1,791,070
Expense reimbursement from Manager (142,260)
-----------
Net expenses 1,648,810
-----------
Net investment loss (362,960)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 5,718,457
Net change in unrealized appreciation on
investments 6,370,248
-----------
Net realized and unrealized gain on investments 12,088,705
-----------
Net increase in net assets resulting from
operations $11,725,745
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $3,274.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
11
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE)
IN NET ASSETS:
Operations:
Net investment loss $ (362,960) $ (142,962)
Net realized gain (loss) on
investments and
written option transactions 5,718,457 (2,856,949)
Net change in unrealized
appreciation (depreciation) on
investments and written option
transactions 6,370,248 53,772,257
---------------------------
Net increase in net assets
resulting from operations 11,725,745 50,772,346
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 12,891,854 --
Class B 1,290,127 --
Class C 214,308 --
Class I 20,623,000 49,738,142
Service Class 375,347 3,583,519
---------------------------
35,394,636 53,321,661
Cost of shares redeemed:
Class A (642,872) --
Class B (18,399) --
Class C (6,063) --
Class I (66,986,690) (76,228,177)
Service Class (11,343,459) (4,891,991)
---------------------------
(78,997,483) (81,120,168)
---------------------------
Decrease in net assets derived
from capital share
transactions (43,602,847) (27,798,507)
---------------------------
Net increase (decrease) in net
assets (31,877,102) 22,973,839
NET ASSETS:
Beginning of period 353,333,792 330,359,953
---------------------------
End of period $321,456,690 $353,333,792
===========================
Accumulated net investment loss at
end of period $ (362,960) $ --
===========================
</Table>
12 MainStay All Cap Growth Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
This page intentionally left blank
13
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
---------- ---------- ----------
JANUARY 1, JANUARY 1, JANUARY 1,
2004** 2004** 2004**
THROUGH THROUGH THROUGH
APRIL 30, APRIL 30, APRIL 30,
2004*** 2004*** 2004***
Net asset value at beginning of period $ 18.99 $18.99 $18.99
------- ------ ------
Net investment loss (a) (0.04) (0.08) (0.08)
Net realized and unrealized gain (loss) on
investments (0.30) (0.29) (0.28)
------- ------ ------
Total from investment operations (0.34) (0.37) (0.36)
------- ------ ------
Less distributions:
From net realized gain on investments -- -- --
------- ------ ------
Net asset value at end of period $ 18.65 $18.62 $18.63
======= ====== ======
Total investment return (b) (1.79%) (1.95%) (1.90%)
Ratios (to average net
assets)/Supplemental Data:
Net investment loss (0.57%)+ (1.32%)+ (1.32%)+
Net expenses 1.30%+ 2.05%+ 2.05%+
Expenses (before reimbursement) 1.38%+ 2.13%+ 2.13%+
Portfolio turnover rate 23% 23% 23%
Net assets at end of period (in 000's) $12,095 $1,222 $200
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Per share data based on average shares outstanding during
the period.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
</Table>
14 MainStay All Cap Growth Fund The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
- -----------------------------------------------------------------------------------------------
JANUARY 1,
SIX MONTHS 1999 YEAR
ENDED THROUGH ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
2004*** 2003 2002 2001 2000 1999* 1998
$ 18.66 $ 16.02 $ 19.92 $ 37.50 $ 36.45 $ 33.48 $ 25.43
-------- -------- -------- -------- ---------- ---------- --------
(0.02) (0.01) (0.04) (0.09) (0.20) (0.14) (0.09)
0.55 2.65 (3.86) (12.79) 4.66 3.45 10.35
-------- -------- -------- -------- ---------- ---------- --------
0.53 2.64 (3.90) (12.88) 4.46 3.31 10.26
-------- -------- -------- -------- ---------- ---------- --------
-- -- -- (4.70) (3.41) (0.34) (2.21)
-------- -------- -------- -------- ---------- ---------- --------
$ 19.19 $ 18.66 $ 16.02 $ 19.92 $ 37.50 $ 36.45 $ 33.48
======== ======== ======== ======== ========== ========== ========
2.84% 16.48% (19.58%) (38.34%) 12.24% 9.96% 40.50%
(0.20%)+ (0.04%) (0.22%) (0.32%) (0.52%) (0.49%)+ (0.31%)
0.93%+ 0.93% 0.93% 0.93% 0.93% 0.93%+ 0.94%
1.01%+ 1.02% 1.02% 0.98% 0.93% 0.93%+ 0.94%
23% 35% 63% 35% 48% 27% 29%
$307,940 $342,761 $320,059 $436,898 $1,197,216 $1,049,756 $975,010
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
15
MAINSTAY ALL CAP VALUE FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
S&P 500(R) INDEX(1) 6.27% 22.88% -2.26% 11.36%
RUSSELL 1000(R) VALUE INDEX(2) 8.15 26.26 1.55 12.12
RUSSELL 3000(R) VALUE INDEX(3) 8.23 27.39 2.32 12.09
AVERAGE LIPPER LARGE-CAP VALUE FUND(4) 7.68 24.91 0.35 9.87
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 2.88% 19.59% 0.44% 7.23%
Excluding sales charges 8.87 26.55 1.58 7.84
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 VALUE RUSSELL 3000 VALUE
VALUE FUND S&P 500 INDEX INDEX INDEX
---------------- ------------- ------------------ ------------------
4/30/94 945 1000 1000 1000
1033 1175 1126 1118
1290 1530 1463 1449
1505 1914 1793 1763
1979 2700 2549 2507
1858 3289 2908 2791
1765 3622 2796 2698
2027 3152 2975 2902
1972 2754 2859 2839
1588 2388 2487 2458
4/30/04 2010 2934 3140 3131
</Table>
<Table>
-- MainStay All Cap Value Fund -- Russell 1000 Value Index
-- S&P 500 Index -- Russell 3000 Value Index
</Table>
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 3.49% 20.70% 0.48% 7.08%
Excluding sales charges 8.49 25.70 0.84 7.08
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 VALUE RUSSELL 3000 VALUE
VALUE FUND S&P 500 INDEX INDEX INDEX
---------------- ------------- ------------------ ------------------
4/30/94 1000 1000 1000 1000
1085 1175 1126 1118
1346 1530 1463 1449
1559 1914 1793 1763
2037 2700 2549 2507
1901 3289 2908 2791
1791 3622 2796 2698
2044 3152 2975 2902
1974 2754 2859 2839
1577 2388 2487 2458
4/30/04 1982 2934 3140 3131
</Table>
<Table>
-- MainStay All Cap Value Fund -- Russell 1000 Value Index
-- S&P 500 Index -- Russell 3000 Value Index
</Table>
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 7.49% 24.70% 0.84% 7.08%
Excluding sales charges 8.49 25.70 0.84 7.08
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 VALUE RUSSELL 3000 VALUE
VALUE FUND S&P 500 INDEX INDEX INDEX
---------------- ------------- ------------------ ------------------
4/30/94 1000 1000 1000 1000
1085 1175 1126 1118
1346 1530 1463 1449
1559 1914 1793 1763
2037 2700 2549 2507
1901 3289 2908 2791
1791 3622 2796 2698
2044 3152 2975 2902
1974 2754 2859 2839
1577 2388 2487 2458
4/30/04 1982 2934 3140 3131
</Table>
<Table>
-- MainStay All Cap Value Fund -- Russell 1000 Value Index
-- S&P 500 Index -- Russell 3000 Value Index
</Table>
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A, B, and C shares, first
offered 1/1/04, includes the historical performance of Class I shares from
inception (1/2/91) through 12/31/03 adjusted to reflect the applicable sales
charge (or CDSC) and fees and expenses for such shares.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
16 MainStay All Cap Value Fund
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 9.00% 26.92% 1.82% 8.09%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ALL CAP RUSSELL 1000 VALUE RUSSELL 3000 VALUE
VALUE FUND S&P 500 INDEX INDEX INDEX
---------------- ------------- ------------------ ------------------
4/30/94 1000 1000 1000 1000
1096 1175 1126 1118
1372 1530 1463 1449
1604 1914 1793 1763
2114 2700 2549 2507
1990 3289 2908 2791
1894 3622 2796 2698
2181 3152 2975 2902
2126 2754 2859 2839
1716 2388 2487 2458
4/30/04 2178 2934 3140 3131
</Table>
<Table>
-- MainStay All Cap Value Fund -- Russell 1000 Value Index
-- S&P 500 Index -- Russell 3000 Value Index
</Table>
1. "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P 500 is
an unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock-market performance. Results assume reinvestment of all
income and capital gains. An investment cannot be made directly into an
index.
2. The Russell 1000(R) Value Index is an unmanaged index that measures the
performance of those Russell 1000(R) companies with lower price-to-book
ratios and lower forecasted growth values. The Russell 1000(R) Index is an
unmanaged index that measures the performance of the 1,000 largest U.S.
companies based on total market capitalization. Results assume reinvestment
of all income and capital gains. An investment cannot be made directly into
an index.
3. MainStay All Cap Value Fund, going forward, will measure its performance
against the Russell 3000(R) Value Index. The Russell 3000(R) Value Index
measures the performance of those Russell 3000(R) Index companies with lower
price-to-book ratios and lower forecasted growth values. The Russell 3000(R)
Index measures the performance of the 3,000 largest U.S. companies based on
total market capitalization and represents approximately 98% of the
investable U.S. equity market. Total returns assume reinvestment of all
dividends and capital gains. You cannot invest directly in an index.
4. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 17
$1,000 INVESTED IN MAINSTAY ALL CAP VALUE FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- -------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $1,002 $4 $1,046 $4
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $ 999 $7 $1,043 $7
- -------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(1,2) $1,000 $ 999 $7 $1,043 $7
- -------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,090 $5 $1,045 $5
- -------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares, Class B shares and Class C shares were first offered on
January 1, 2004. Expenses paid during the period reflect ongoing costs for
the four-month period ending April 30, 2004. Had these shares been offered
for the six months ended April 30, 2004, based on a hypothetical 5% return,
expenses paid during the period would be $6, $10 and $10, respectively, and
the ending account value would be $1,044, $1,040 and $1,040, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
18 MainStay All Cap Value Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Richard A. Rosen of MacKay Shields LLC
MAINSTAY ALL CAP VALUE FUND (FORMERLY ECLIPSE VALUE EQUITY FUND)
DID THE FUND'S PORTFOLIO-MANAGEMENT MANDATE CHANGE DURING THE REPORTING PERIOD?
Prior to January 2004, the Fund invested primarily in large-cap value stocks. As
its new name implies, MainStay All Cap Value Fund now has the flexibility to
diversify its portfolio without capitalization restrictions. We have added some
new stocks to the portfolio to reflect this added flexibility.
WHAT MAJOR FACTORS INFLUENCED THE STOCK MARKET DURING THE SIX MONTHS ENDED APRIL
30, 2004?
In November and December 2003, evidence of an improving economy drove stock
prices higher. Strong growth in corporate profits helped equities continue their
climb in January and February 2004. Fourth-quarter 2003 earnings reports
confirmed a strong growth trend, with rapid revenue growth making a significant
contribution to bottom-line gains.
The interest-rate and inflation outlook remained relatively benign through most
of the reporting period. In the last two months, however, strong employment
figures and rising inflation data led to concerns that the Federal Reserve might
move to raise interest rates. In March and April 2004, the equity market gave
back some of the ground it had earlier gained.
WERE THERE OTHER FORCES AT WORK?
The push and pull of mixed economic signals had a definite effect. While U.S.
economic news was generally favorable, the market was affected by geopolitical
unrest and signs that economic growth in China might decelerate. First-quarter
2004 corporate profit reports were strong, but inflation and interest-rate
concerns seemed to preoccupy investors in April.
WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG RELATIVE PERFORMANCE?
Excluding sales charges, the Fund outperformed its benchmarks largely because of
good stock selection within the financials, industrials, and information
technology sectors. As of April 30, 2004, the Fund was underweighted in
financials and overweighted in industrials. Some holdings in the Fund's
overweighted positions in energy, materials, and industrials also benefited from
improving trends in manufacturing and industrial data.
HOW DID THE FUND'S FINANCIAL STOCKS IN THIS SECTOR FARE DURING THE PERIOD?
The financials sector was one of the Fund's weakest-performing sectors on an
absolute basis. This was particularly true in April 2004, as concern about the
potential for rising interest rates was reflected in the market. Fortunately,
the Fund avoided many of the stocks that fell sharply, and it had exposure to
some issues that posted good results. The Fund's insurance-related holdings
advanced on positive pricing trends. Allstate, Prudential Financial, and
Hartford Financial Services Group all enhanced the Fund's results during the
reporting period. Bank One and FleetBoston Financial were also strong.
FleetBoston Financial received an acquisition bid from Bank of America in late
October 2003, and FleetBoston Financial's shares were up 13% for the reporting
period.(1) Bank One gained 18%, partly because of a January 2004 takeover bid
from J.P. Morgan Chase.
Unfortunately, the Fund also held financial stocks that detracted from the
Fund's relative performance. Among them were Merrill Lynch, a capital-markets
sensitive stock that fell with the broader equity market, and Washington Mutual,
a lender that might be negatively affected by higher interest rates. Both stocks
were down 8% during the period.
HOW DID THE FUND'S INFORMATION TECHNOLOGY HOLDINGS PERFORM?
Although the information technology sector generally provided lackluster
performance during the reporting period, the Fund's holdings in the sector
strongly outperformed information technology stocks in the Russell 1000(R) Value
Index and the Russell 3000(R) Value Index. The Fund benefited from its position
in Motorola, which rose 36% during the reporting period. Balance sheet strength,
new leadership, and improving operating trends in mobile handsets,
semiconductors, and telecommunications equipment helped Motorola post
first-quarter 2004 earnings well above the most optimistic expectations.
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value.
1. Percentages reflect the price performance of the securities mentioned for the
six months ended 4/30/04, or for the portion of the reporting period shares
were held in the Fund, if shorter. Performance percentages do not reflect the
impact of dividends received, if any. Due to purchases and sales, the
performance of Fund holdings may differ from that of the securities
themselves.
www.mainstayfunds.com 19
Although Advanced Micro Devices posted strong gains in 2003, investors began to
take profits when the company appeared to be embarking on a major spending
initiative. There was also speculation that rival Intel might counter Advanced
Micro Devices' 64-bit microprocessor with one of its own.
WERE THERE OTHER STOCKS THAT ENHANCED OR DETRACTED FROM RESULTS?
The Fund's defense & aerospace industry holdings contributed positively to the
Fund's performance, as government spending helped earnings and cash-flow
generation. Raytheon was up 23%. Northrop Grumman and Boeing each gained 12%.
Within the industrials sector, Navistar International climbed 12%. Navistar
International has benefited from rising heavy-duty truck order rates and, in our
view, has remained inexpensive relative to its earnings power. High energy
prices helped the Fund's integrated energy stocks, with ConocoPhillips rising
26% and ChevronTexaco gaining 25%. We reduced the Fund's positions in these
stocks as they approached our price targets. Bowater managed small gains during
the reporting period, but the position had a negative impact on relative
performance. We remain optimistic about price increases in the paper industry
and expect these holdings to respond favorably.
HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD?
At the end of April 2004, the Fund was overweighted in energy, industrials,
materials, health care, and consumer staples, and underweighted in the consumer
discretionary, financials, and utilities sectors. We remain confident in our
investment disciplines and will continue to seek opportunities among undervalued
stocks with improving fundamental characteristics.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 92.00
Short-Term Investments (collateral from securities lending 8.70
is 1.4%)
Convertible Preferred Stock 0.60
Liabilities in Excess of Cash and Other Assets -1.30
</Table>
20 MainStay All Cap Value Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (92.0%)+
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE (4.7%)
Boeing Co. (The) 55,500 $ 2,369,295
Northrop Grumman Corp. 25,900 2,570,575
Raytheon Co. 75,300 2,429,178
-------------
7,369,048
-------------
AUTO COMPONENTS (2.3%)
Delphi Corp. 210,200 2,144,040
TRW Automotive Holdings Corp. (a) 68,200 1,430,836
-------------
3,574,876
-------------
BUILDING PRODUCTS (1.3%)
American Standard Cos., Inc. (a) 19,600 2,061,724
-------------
CAPITAL MARKETS (4.7%)
Goldman Sachs Group, Inc. (The) 22,600 2,186,550
iShares Russell 3000 Value Index (c) 40,000 3,043,200
Merrill Lynch & Co., Inc. 38,800 2,104,124
-------------
7,333,874
-------------
COMMERCIAL BANKS (8.9%)
*Bank of America Corp. 49,277 3,966,306
Bank One Corp. 45,800 2,261,146
PNC Financial Services Group, Inc. (The) 53,600 2,846,160
U.S. Bancorp 76,500 1,961,460
Wachovia Corp. 62,300 2,850,225
-------------
13,885,297
-------------
COMMUNICATIONS EQUIPMENT (0.9%)
Motorola, Inc. 77,400 1,412,550
-------------
COMPUTERS & PERIPHERALS (1.9%)
International Business Machines Corp. 33,800 2,980,146
-------------
CONTAINERS & PACKAGING (2.6%)
*Smurfit-Stone Container Corp. (a) 233,700 4,017,303
-------------
DIVERSIFIED FINANCIAL SERVICES (2.8%)
*Citigroup, Inc. 91,233 4,387,395
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES (5.3%)
ALLTEL Corp. 47,100 2,371,014
BellSouth Corp. 74,200 1,915,102
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
</Table>
<Table>
<Caption>
SHARES VALUE
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
SBC Communications, Inc. 33,000 $ 821,700
Verizon Communications, Inc. 84,500 3,189,030
-------------
8,296,846
-------------
ELECTRIC UTILITIES (0.6%)
FirstEnergy Corp. 24,500 957,950
-------------
ELECTRICAL EQUIPMENT (1.0%)
Cooper Industries Ltd. Class A 30,200 1,658,282
-------------
ENERGY EQUIPMENT & SERVICES (4.2%)
Diamond Offshore Drilling, Inc. (d) 91,500 2,064,240
Pride International, Inc. (a) 135,200 2,280,824
Transocean, Inc. (a) 83,700 2,324,349
-------------
6,669,413
-------------
FOOD & STAPLES RETAILING (3.4%)
*CVS Corp. 102,200 3,947,986
Kroger Co. (The) (a) 81,300 1,422,750
-------------
5,370,736
-------------
FOOD PRODUCTS (4.0%)
Cadbury Schweppes PLC ADR (e) 58,900 1,923,085
General Mills, Inc. 50,900 2,481,375
Kraft Foods, Inc. Class A 55,800 1,836,378
-------------
6,240,838
-------------
HEALTH CARE PROVIDERS & SERVICES (3.0%)
HCA, Inc. 76,500 3,108,195
Universal Health Services, Inc.
Class B 35,100 1,540,890
-------------
4,649,085
-------------
HOUSEHOLD PRODUCTS (1.6%)
Kimberly-Clark Corp. 37,600 2,460,920
-------------
INSURANCE (9.7%)
Allstate Corp. (The) 66,000 3,029,400
American International Group, Inc. 27,300 1,956,045
Hartford Financial Services Group, Inc. (The) 49,200 3,005,136
Marsh & McLennan Cos., Inc. 32,500 1,465,750
Prudential Financial, Inc. 60,400 2,653,976
St. Paul Travelers Cos., Inc. (The) 77,834 3,165,509
-------------
15,275,816
-------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
21
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ---------------------------------------------------------------------------------
IT SERVICES (2.3%)
*Computer Sciences Corp. (a) 87,900 $ 3,595,989
-------------
MACHINERY (3.0%)
*Navistar International Corp. (a) 104,500 4,718,175
-------------
METALS & MINING (1.5%)
Alcoa, Inc. 77,772 2,391,489
-------------
OIL & GAS (9.0%)
*ChevronTexaco Corp. 40,121 3,671,071
*ConocoPhillips 51,300 3,657,690
ExxonMobil Corp. 78,300 3,331,665
Kerr-McGee Corp. 70,000 3,425,100
-------------
14,085,526
-------------
PAPER & FOREST PRODUCTS (2.6%)
*Bowater, Inc. 95,700 4,014,615
-------------
PHARMACEUTICALS (4.0%)
Bristol-Myers Squibb Co. 81,400 2,043,140
*Merck & Co., Inc. 90,200 4,239,400
-------------
6,282,540
-------------
ROAD & RAIL (1.6%)
Burlington Northern Santa Fe Corp. 76,000 2,485,200
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.5%)
Advanced Micro Devices, Inc. (a) 57,000 810,540
-------------
SOFTWARE (1.0%)
BMC Software, Inc. (a) 95,900 1,659,070
-------------
SPECIALTY RETAIL (2.3%)
Gap, Inc. (The) 162,300 3,572,223
-------------
THRIFTS & MORTGAGE FINANCE (1.3%)
Washington Mutual, Inc. 51,500 2,028,585
-------------
Total Common Stocks (Cost $124,532,931) 144,246,051
-------------
</Table>
<Table>
<Caption>
SHARES VALUE
CONVERTIBLE PREFERRED STOCK (0.6%)
- ---------------------------------------------------------------------------------
OIL & GAS (0.6%)
Goldman Sachs Group, Inc. (The)
2.75%, Series BSKT (f) 10,000 $ 988,220
-------------
Total Convertible Preferred Stock (Cost
$1,000,000) 988,220
-------------
<Caption>
NUMBER OF
CONTRACTS (G) VALUE
PURCHASED CALL OPTION (0.0%) (B)
- ---------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (0.0%) (B)
Rowan Cos., Inc.
Strike Price $25.00
Expire 10/16/04 (a)(h) 597 71,640
-------------
Total Purchased Call Option (Cost $73,407) 71,640
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (8.7%)
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER (7.3%)
American Express Credit Corp.
1.02%, due 5/4/04 $ 700,000 699,941
American General Finance Corp.
1.02%, due 5/7/04 1,670,000 1,669,716
Federal National Mortgage Association
0.91%, due 5/3/04 890,000 889,955
General Electric Capital Corp.
1.02%, due 5/6/04 445,000 444,937
Morgan Stanley & Co.
0.97%, due 5/24/04 3,470,000 3,467,716
UBS Finance Delaware LLC
1.02%, due 5/3/04 4,250,000 4,249,759
-------------
Total Commercial Paper (Cost $11,422,024) 11,422,024
-------------
<Caption>
SHARES VALUE
INVESTMENT COMPANY (0.1%)
AIM Institutional Funds Group (i) 162,367 162,367
-------------
Total Investment Company (Cost $162,367) 162,367
-------------
</Table>
22 MainStay All Cap Value Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENT (1.3%)
Lehman Brothers, Inc.
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$2,000,185 (i)
(Collateralized by Various Bonds with a
Principal Amount of $2,628,126 and a Market
Value of $2,099,358) $ 2,000,000 $ 2,000,000
-------------
Total Repurchase Agreement (Cost $2,000,000) 2,000,000
-------------
Total Short-Term Investments (Cost $13,584,391) 13,584,391
-------------
Total Investments
(Cost $139,190,729) (j) 101.3% 158,890,302(k)
Liabilities in Excess of
Cash & Other Assets (1.3) (2,107,243)
------ ------------
Net Assets 100.0% $ 156,783,059
====== ============
<Caption>
NUMBER OF
CONTRACTS (g) VALUE
WRITTEN CALL OPTIONS (-0.0%) (B)
- ---------------------------------------------------------------------------------
MACHINERY (-0.0%) (B)
Navistar International Corp.
Strike Price $55.00
Expire 7/17/04 (a)(h) (229) $ (9,160)
-------------
OIL & GAS (-0.0%) (B)
ChevronTexaco Corp.
Strike Price $90.00
Expire 6/19/04 (a)(h) (118) (38,940)
-------------
Total Written Call Options
(Premium ($52,412)) $ (48,100)
=============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Exchange Traded Fund -- represents a basket of
securities that are traded on an exchange.
(d) Represents securities out on loan or a portion which is
out on loan.
(e) ADR -- American Depositary Receipt.
(f) An equity-linked security issued by an entity other than
the issuer of the underlying equity instrument.
(g) One contract relates to 100 shares.
(h) Options can be exercised into the underlying common
stock.
(i) Represents a security or portion thereof, purchased with
cash collateral received for securities on loan.
(j) The cost for federal income tax purposes is
$140,497,447.
(k) At April 30, 2004 net unrealized appreciation was
$18,392,855, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $19,699,032 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $1,306,177.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
23
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $139,190,729) including
$2,030,400 market value of securities loaned $158,890,302
Cash 1,223
Receivables:
Investment securities sold 4,143,291
Fund shares sold 356,524
Dividends and interest 241,398
Other assets 16,839
------------
Total assets 163,649,577
------------
LIABILITIES:
Securities lending collateral 2,162,367
Written options, at value (premium received
$52,412) 48,100
Payables:
Investment securities purchased 4,417,310
Manager 89,856
Transfer agent 66,929
Fund shares redeemed 26,967
Custodian 5,498
NYLIFE Distributors 2,744
Accrued expenses 46,747
------------
Total liabilities 6,866,518
------------
Net assets $156,783,059
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Class A $ 635
Class B 116
Class C 34
Class I 12,158
Additional paid-in capital 162,158,260
Accumulated undistributed net investment
income 638,318
Accumulated net realized loss on investments
and option transactions (25,730,347)
Net unrealized appreciation on investments and
written options 19,703,885
------------
Net assets $156,783,059
============
CLASS A
Net assets applicable to outstanding shares $ 7,676,558
============
Shares of capital stock outstanding 634,552
============
Net asset value per share outstanding $ 12.10
Maximum sales charge (5.50% of offering price) 0.70
------------
Maximum offering price per share outstanding $ 12.80
============
CLASS B
Net assets applicable to outstanding shares $ 1,403,822
============
Shares of capital stock outstanding 116,295
============
Net asset value and offering price per share
outstanding $ 12.07
============
</Table>
<Table>
CLASS C
Net assets applicable to outstanding shares $ 410,202
============
Shares of capital stock outstanding 33,985
============
Net asset value and offering price per share
outstanding $ 12.07
============
CLASS I
Net assets applicable to outstanding shares $147,292,477
============
Shares of capital stock outstanding 12,158,195
============
Net asset value and offering price per share
outstanding $ 12.11
============
</Table>
24 MainStay All Cap Value Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 1,549,022
Interest 37,660
Income from securities loaned -- net 782
-----------
Total income 1,587,464
-----------
EXPENSES:
Manager 666,525
Transfer agent 107,047
Professional 31,992
Registration 12,337
Custodian 11,252
Directors 10,514
Shareholder communication 10,456
Service -- Class A 5,255
Service -- Class B 453
Service -- Class C 143
Service -- Service Class 2,596
Distribution -- Class B 1,360
Distribution -- Class C 427
Miscellaneous 10,704
-----------
Total expenses before reimbursement 871,061
Expense reimbursement from Manager (123,724)
-----------
Net expenses 747,337
-----------
Net investment income 840,127
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND WRITTEN
OPTION TRANSACTIONS:
Net realized gain from:
Security transactions 8,408,994
Written option transactions 45,210
-----------
Net realized gain on investments and written
option transactions 8,454,204
-----------
Net change in unrealized appreciation on:
Security transactions 4,211,161
Written option transactions 4,312
-----------
Net unrealized gain on investments and written
option transactions 4,215,473
-----------
Net realized and unrealized gain on investments
and written option transactions 12,669,677
-----------
Net increase in net assets resulting from
operations $13,509,804
===========
(a) Dividends recorded net of foreign withholdings taxes in
the amount of $3,414.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
25
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE)
IN NET ASSETS:
Operations:
Net investment income $ 840,127 $ 2,115,385
Net realized gain (loss) on
investments and written option
transactions 8,454,204 (5,825,222)
Net change in unrealized
appreciation on investments and
written option transactions 4,215,473 34,319,392
---------------------------
Net increase in net assets
resulting from operations 13,509,804 30,609,555
---------------------------
Dividends to shareholders:
From net investment income:
Class I (2,046,476) (1,595,725)
Service Class (65,067) (40,231)
---------------------------
Total dividends to shareholders (2,111,543) (1,635,956)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 8,368,320 --
Class B 1,466,964 --
Class C 420,316 --
Class I 14,779,524 33,010,544
Service Class 429,948 1,233,322
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Class I 2,043,233 1,593,669
Service Class 52,463 40,013
---------------------------
27,560,768 35,877,548
Cost of shares redeemed:
Class A (652,028) --
Class B (32,442) --
Class C (2,284) --
Class I (44,136,992) (36,240,410)
Service Class (6,291,284) (1,037,345)
---------------------------
(51,115,030) (37,277,755)
---------------------------
Decrease in net assets derived
from capital share
transactions (23,554,262) (1,400,207)
---------------------------
Net increase (decrease) in net
assets (12,156,001) 27,573,392
NET ASSETS:
Beginning of period 168,939,060 141,365,668
---------------------------
End of period $156,783,059 $168,939,060
===========================
Accumulated undistributed net
investment income at end of period $ 638,318 $ 1,909,734
===========================
</Table>
26 MainStay All Cap Value Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
This page intentionally left blank
27
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
------------ ------------ ------------
JANUARY 1, JANUARY 1, JANUARY 1,
2004** 2004** 2004**
THROUGH THROUGH THROUGH
APRIL 30, APRIL 30, APRIL 30,
2004*** 2004*** 2004***
Net asset value at beginning of period $12.08 $12.08 $12.08
------ ------ ------
Net investment income 0.07(c) 0.04(c) 0.04(c)
Net realized and unrealized gain (loss) on
investments (0.05) (0.05) (0.05)
------ ------ ------
Total from investment operations 0.02 (0.01) (0.01)
------ ------ ------
Less dividends and distributions:
From net investment income -- -- --
From net realized gain on investments -- -- --
------ ------ ------
Total dividends and distributions -- -- --
------ ------ ------
Net asset value at end of period $12.10 $12.07 $12.07
====== ====== ======
Total investment return (b) 0.17% (0.08%) (0.08%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 0.80%+ 0.05%+ 0.05%+
Net expenses 1.22%+ 1.97%+ 1.97%+
Expenses (before reimbursement) 1.38%+ 2.13%+ 2.13%+
Portfolio turnover rate 24% 24% 24%
Net assets at end of period (in 000's) $7,677 $1,404 $ 410
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
(c) Per share data based on average shares outstanding during
the period.
</Table>
28 MainStay All Cap Value Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
- -------------------------------------------------------------------------------------------------
JANUARY 1,
SIX MONTHS 1999
ENDED THROUGH YEAR ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
2004*** 2003 2002 2001 2000 1999* 1998
$ 11.26 $ 9.38 $ 12.55 $ 14.00 $ 12.69 $ 11.76 $ 16.36
-------- -------- -------- -------- -------- -------- --------
0.07(c) 0.14(c) 0.13(c) 0.16(c) 0.15 0.09 0.18
0.94 1.85 (1.86) (1.15) 1.27 0.84 (1.58)
-------- -------- -------- -------- -------- -------- --------
1.01 1.99 (1.73) (0.99) 1.42 0.93 (1.40)
-------- -------- -------- -------- -------- -------- --------
(0.16) (0.11) (0.31) (0.15) (0.11) (0.00)(a) (0.18)
-- -- (1.13) (0.31) -- -- (3.02)
-------- -------- -------- -------- -------- -------- --------
(0.16) (0.11) (1.44) (0.46) (0.11) (0.00)(a) (3.20)
-------- -------- -------- -------- -------- -------- --------
$ 12.11 $ 11.26 $ 9.38 $ 12.55 $ 14.00 $ 12.69 $ 11.76
======== ======== ======== ======== ======== ======== ========
9.00% 21.43% (16.46%) (7.29%) 11.31% 7.91% (8.10%)
1.08%+ 1.37% 1.12% 1.28% 1.12% 0.84%+ 1.04%
0.94%+ 0.94% 0.94% 0.94% 0.94% 0.96%+ 0.98%
1.10%+ 1.11% 1.12% 1.00% 0.94% 0.96%+ 0.98%
24% 64% 65% 94% 96% 49% 76%
$147,292 $163,551 $137,069 $140,919 $742,924 $741,300 $800,993
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
29
MAINSTAY MID CAP CORE FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE SINCE
BENCHMARKS MONTHS YEAR INCEPTION
RUSSELL MIDCAP INDEX(1) 7.25% 35.45% 3.52%
AVERAGE LIPPER MID-CAP CORE FUND(2) 6.53 33.08 2.88
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE SINCE
TOTAL RETURNS MONTHS YEAR INCEPTION
- -----------------------------------------------------------
With sales charges 0.27% 23.95% 0.45%
Excluding sales charges 6.10 31.17 2.17
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP CORE FUND RUSSELL MIDCAP INDEX
-------------------------- --------------------
1/2/01 1000 1000
976 972
956 965
819 828
4/30/04 1015 1117
</Table>
-- MainStay Mid Cap Core Fund
-- Russell Midcap Index
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE SINCE
TOTAL RETURNS MONTHS YEAR INCEPTION
- -----------------------------------------------------------
With sales charges 0.74% 25.40% 0.83%
Excluding sales charges 5.74 30.40 1.42
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP CORE FUND RUSSELL MIDCAP INDEX
-------------------------- --------------------
1/2/01 1000 1000
974 972
947 965
804 828
4/30/04 1028 1117
</Table>
-- MainStay Mid Cap Core Fund
-- Russell Midcap Index
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE SINCE
TOTAL RETURNS MONTHS YEAR INCEPTION
- -----------------------------------------------------------
With sales charges 4.64% 29.28% 1.39%
Excluding sales charges 5.64 30.28 1.39
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP CORE FUND RUSSELL MIDCAP INDEX
-------------------------- --------------------
1/2/01 1000 1000
974 972
947 965
804 828
4/30/04 1047 1117
</Table>
-- MainStay Mid Cap Core Fund
-- Russell Midcap Index
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A, B, and C shares, first
offered 1/1/04, includes the historical performance of Class I shares from
inception (1/2/01) through 12/31/03 adjusted to reflect the applicable sales
charge (or CDSC) and fees and expenses for such shares.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
30 MainStay Mid Cap Core Fund
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE SINCE
TOTAL RETURNS MONTHS YEAR INCEPTION
- -----------------------------------------------------------
With sales charges N/A N/A N/A
Excluding sales charges 6.21% 31.56% 2.43%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP CORE FUND RUSSELL MIDCAP INDEX
-------------------------- --------------------
1/2/01 1000.00 1000.00
977.00 972.00
960.00 965.00
823.00 828.00
4/30/04 1083.00 1117.00
</Table>
-- MainStay Mid Cap Core Fund
-- Russell Midcap Index
1. The Russell Midcap(R) Index is an unmanaged index that measures the
performance of the 800 smallest companies in the Russell 1000(R) Index,
which, in turn, is an unmanaged index that measures the performance of the
1,000 largest U.S. companies based on total market capitalization. Results
assume reinvestment of all income and capital gains. An investment cannot be
made directly into an index.
2. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 31
$1,000 INVESTED IN MAINSTAY MID CAP CORE FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $1,003 $6 $1,044 $6
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $1,001 $8 $1,042 $8
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(1,2) $1,000 $1,000 $8 $1,042 $8
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,062 $5 $1,045 $5
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares, Class B shares and Class C shares were first offered on
January 1, 2004. Expenses paid during the period reflect ongoing costs for
the four-month period ending April 30, 2004. Had these shares been offered
for the six months ended April 30, 2004, based on a hypothetical 5% return,
expenses paid during the period would be $9, $13 and $13, respectively, and
the ending account value would be $1,041, $1,038 and $1,038, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
32 MainStay Mid Cap Core Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Harvey Fram, CFA, of New York Life
Investment Management LLC
MAINSTAY MID CAP CORE FUND
WHAT MAJOR FACTORS INFLUENCED THE STOCK MARKET DURING THE SIX MONTHS ENDED APRIL
30, 2004?
U.S. equities began the semiannual period with a bang, but the rally fizzled
when the markets experienced a significant downturn in March and April 2004. As
a result, six-month returns for the broadly watched equity indices were rather
muted. As measured by Russell indices,(1) mid-cap stocks outperformed their
large- and small-capitalization counterparts for the six months ended April 30,
2004. Value stocks outperformed growth stocks at all capitalization levels.
WHAT FACTORS MOST SIGNIFICANTLY AFFECTED FUND PERFORMANCE DURING THE SEMIANNUAL
PERIOD?
The Fund's holdings in the telecommunication services and utilities sectors made
the largest positive contributions to performance. Unfortunately, these strong
holdings were not enough to outweigh the effects of the Fund's health care and
industrial positions, which detracted from the Fund's six-month returns.
WHAT WERE SOME OF THE FUND'S STRONG PERFORMERS DURING THE REPORTING PERIOD?
Within the telecommunication services sector, the Fund's overweighted position
in Sprint (PCS Group) (+119.8)(2) made the greatest security-level contribution
to the Fund's performance. Sprint (PCS Group) shares skyrocketed more than 60%
in the first quarter of 2004 alone, as takeover speculation on the heels of the
AT&T Wireless/Cingular deal sparked investor interest. The Fund's underweighted
position in Level 3 Communications (-46.8%), a high-speed communications network
operation, also helped returns during the reporting period. In the utilities
sector, the portfolio's overweighted position in Dallas-based energy company TXU
(+51.1%) made a positive contribution to the Fund's return when the company's
shares surged.
WHICH STOCKS DETRACTED FROM THE FUND'S PERFORMANCE?
Within the health care sector, the Fund's underweighted position in Biogen Idec
(+54.5%), a rapidly growing biotech concern, proved to be the largest
security-level detractor from Fund performance, as the company posted an
impressive six-month gain. The Fund was also hurt by its underweighted position
in medical-device company Zimmer Holdings (+25.1%), which had relatively strong
performance. In the industrials sector, the Fund's overweighted positions in
such laggards as SPX (-7.3%) and JetBlue Airways (-27.9%) had a negative impact
on results. Career Education (+19.5%) had solid earnings and provided relatively
strong performance for the six-month period, but the Fund's underweighted
position relative to the Russell Midcap(R) Index detracted from the Fund's
performance.
WHAT DO YOU ANTICIPATE GOING FORWARD?
We will continue to favor issues with an established history of real revenues
and earnings. If investors become more fundamentally oriented, we believe that
the Fund's model-driven performance will be more likely to produce results in
line with our expectations relative to the equity market as a whole.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value. Investors should note that funds that invest in companies
with market capitalizations below $10 billion involve additional risks. The
securities of these companies may be more volatile and less liquid than the
securities of larger companies.
1. The Russell 1000(R) Index is an unmanaged index that measures the performance
of the 1,000 largest U.S. companies based on total market capitalization. The
Russell Midcap(R) Index is an unmanaged index that measures the performance
of the 800 smallest companies in the Russell 1000(R) Index. The Russell
2000(R) Index is an unmanaged index that measures the performance of the
2,000 smallest companies in the Russell 3000(R) Index, which, in turn, is an
unmanaged index that measures the performance of the 3,000 largest U.S.
companies based on total market capitalization. Results for all indices
assume reinvestment of all income and capital gains. An investment cannot be
made directly into an index.
2. Percentages reflect total returns of Fund holdings in the securities
mentioned, including purchases and sales, for the six months ended 4/30/04,
or for the portion of the reporting period such securities were held in the
Fund, if shorter.
www.mainstayfunds.com 33
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 99.90
Cash and Other Assets (less liabilities) 0.10
</Table>
34 MainStay Mid Cap Core Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (99.9%)+
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.7%)
Goodrich Corp. 4,421 $ 127,281
Precision Castparts Corp. 644 28,986
Rockwell Collins, Inc. 1,964 63,339
United Defense Industries, Inc. (a) 904 31,324
------------
250,930
------------
AIR FREIGHT & LOGISTICS (0.5%)
CNF, Inc. 313 11,443
J.B. Hunt Transport Services, Inc. (a) 2,076 65,726
Ryder System, Inc. 2,189 80,534
------------
157,703
------------
AUTO COMPONENTS (2.1%)
American Axle & Manufacturing Holdings, Inc. (a) 898 34,546
ArvinMeritor, Inc. 689 14,255
Autoliv, Inc. 3,565 151,620
BorgWarner, Inc. 626 51,295
Dana Corp. 5,218 105,195
Delphi Corp. 3,067 31,283
Johnson Controls, Inc. 3,950 216,697
Lear Corp. 1,968 119,300
------------
724,191
------------
BEVERAGES (1.0%)
Adolph Coors Co. Class B 323 21,224
Coca-Cola Enterprises, Inc. 5,870 158,490
PepsiAmericas, Inc. 2,193 43,926
Pepsi Bottling Group, Inc. (The) 4,391 128,525
------------
352,165
------------
BIOTECHNOLOGY (0.6%)
Affymetrix, Inc. (a) 385 11,765
Biogen Idec, Inc. (a) 1,776 104,784
IDEXX Laboratories, Inc. (a) 873 53,480
ImClone Systems, Inc. (a) 327 21,870
Protein Design Labs, Inc. (a) 1,206 29,523
------------
221,422
------------
BUILDING PRODUCTS (0.7%)
American Standard Cos., Inc. (a) 2,296 241,516
------------
CAPITAL MARKETS (3.3%)
A.G. Edwards, Inc. 832 30,443
Ameritrade Holding Corp. (a) 5,731 70,147
BlackRock, Inc. 498 30,976
</Table>
<Table>
<Caption>
SHARES VALUE
CAPITAL MARKETS (CONTINUED)
E*TRADE Financial Corp. (a) 10,382 $ 117,939
Franklin Resources, Inc. 1,030 56,475
Friedman, Billings, Ramsey Group, Inc. Class A 1,032 19,092
Jefferies Group, Inc. 270 9,207
Northern Trust Corp. 2,096 88,619
Nuveen Investments Class A 264 6,766
Raymond James Financial, Inc. 373 9,370
S&P 500 Index-SPDR Trust Series 1 (c) 2,791 309,689
S&P MidCap 400 Index-MidCap SPDR Trust, Series 1
(c) 2,256 240,264
T.Rowe Price Group, Inc. 2,581 132,354
------------
1,121,341
------------
CHEMICALS (1.9%)
Airgas, Inc. 1,161 25,716
Cabot Corp. 1,431 48,368
Eastman Chemical Co. 488 20,774
Engelhard Corp. 2,185 63,452
International Flavors & Fragrances, Inc. 871 31,574
Lyondell Chemical Co. 885 14,470
*Monsanto Co. 9,668 334,416
PPG Industries, Inc. 1,392 82,560
RPM International, Inc. 963 14,522
Scotts Co. (The) Class A (a) 139 9,167
------------
645,019
------------
COMMERCIAL BANKS (3.0%)
Associated Banc-Corp. 437 17,895
Bank of Hawaii Corp. 1,464 64,006
CCBT Financial Cos., Inc. 1,608 53,804
Colonial BancGroup, Inc. (The) 791 13,629
Commerce Bancshares, Inc. 855 38,390
First BanCorp. 472 17,398
First Horizon National Corp. 1,566 68,841
Hibernia Corp. Class A 1,732 37,740
International Bancshares Corp. 166 8,848
Marshall & Ilsley Corp. 4,814 177,011
North Fork Bancorp., Inc. 1,727 64,106
Provident Financial Group, Inc. 1,094 43,082
Second Bancorp, Inc. 1,007 30,220
SouthTrust Corp. 6,941 215,726
Trust Company of New Jersey (The) 2,161 80,000
UnionBanCal Corp. 332 17,739
United Bankshares, Inc. 413 12,394
</Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
35
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
COMMERCIAL BANKS (CONTINUED)
xUnizan Financial Corp. 1,277 $ 31,095
Whitney Holding Corp. 237 9,717
------------
1,001,641
------------
COMMERCIAL SERVICES & SUPPLIES (1.8%)
Allied Waste Industries, Inc. (a) 5,254 66,148
ARAMARK Corp. Class B 1,869 53,453
Career Education Corp. (a) 611 39,104
Donnelley (R.R.) & Sons Co. 2,300 67,666
H&R Block, Inc. 2,195 99,016
Hewitt Associates, Inc. Class A (a) 460 14,219
HON INDUSTRIES, Inc. 641 23,723
IKON Office Solutions, Inc. 5,392 60,013
ITT Educational Services, Inc. (a) 1,050 42,347
Manpower, Inc. 1,155 54,170
Republic Services, Inc. 1,469 42,337
University of Phoenix Online (a) 157 13,668
Viad Corp. 1,218 30,401
------------
606,265
------------
COMMUNICATIONS EQUIPMENT (3.4%)
Avaya, Inc. (a) 13,822 189,085
Corning, Inc. (a) 11,125 122,709
Foundry Networks, Inc. (a) 1,162 13,131
Harris Corp. 1,766 79,558
*Juniper Networks, Inc. (a) 14,658 320,717
Lucent Technologies, Inc. (a) 75,838 255,574
Polycom, Inc. (a) 1,365 26,044
Scientific-Atlanta, Inc. 3,483 112,814
Tellabs, Inc. (a) 2,626 22,925
------------
1,142,557
------------
COMPUTERS & PERIPHERALS (0.9%)
Lexmark International, Inc. (a) 652 58,980
Maxtor Corp. (a) 2,163 14,081
NCR Corp. (a) 3,244 144,974
Network Appliance, Inc. (a) 3,309 61,614
Storage Technology Corp. (a) 1,122 29,475
------------
309,124
------------
CONSTRUCTION MATERIALS (0.7%)
Florida Rock Industries, Inc. 225 8,953
Lafarge North America, Inc. 204 9,027
Martin Marietta Materials, Inc. 1,213 52,462
Vulcan Materials Co. 3,380 156,291
------------
226,733
------------
</Table>
<Table>
<Caption>
SHARES VALUE
CONSUMER FINANCE (0.5%)
AmeriCredit Corp. (a) 5,496 $ 89,090
Providian Financial Corp. (a) 6,245 75,752
------------
164,842
------------
CONTAINERS & PACKAGING (1.0%)
Ball Corp. 1,519 100,254
Bemis Co., Inc. 598 16,152
Owens-Illinois, Inc. (a) 1,362 19,014
Pactiv Corp. (a) 1,018 23,363
Sealed Air Corp. (a) 930 45,644
Sonoco Products Co. 585 14,543
Temple-Inland, Inc. 1,746 107,851
------------
326,821
------------
DIVERSIFIED FINANCIAL SERVICES (1.2%)
Chicago Mercantile Exchange (The) 169 19,824
CIT Group, Inc. 4,914 168,894
Instinet Group, Inc. (a) 1,452 9,482
Moody's Corp. 3,265 210,625
------------
408,825
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.7%)
Citizens Communications Co. (a) 2,719 35,456
IDT Corp. (a) 706 13,118
NTL, Inc. (a) 2,443 138,689
Qwest Communications International, Inc. (a) 8,772 35,263
------------
222,526
------------
ELECTRIC UTILITIES (6.0%)
Alliant Energy Corp. 2,562 63,691
Ameren Corp. 1,777 77,690
CenterPoint Energy, Inc. 10,213 110,198
DPL, Inc. 3,635 64,049
Duquesne Light Holdings, Inc. 2,796 52,481
Edison International 10,250 239,850
Great Plains Energy, Inc. 2,152 67,164
Hawaiian Electric Industries, Inc. 513 25,527
Northeast Utilities 3,953 72,538
NSTAR 1,638 79,279
OGE Energy Corp. 1,942 46,705
*PG&E Corp. (a) 12,968 356,879
Pinnacle West Capital Corp. 231 9,023
PPL Corp. 3,532 151,346
TECO Energy, Inc. 3,733 47,521
Texas Genco Holdings, Inc. 554 19,601
TXU Corp. 8,202 280,016
</Table>
36 MainStay Mid Cap Core Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES (CONTINUED)
Wisconsin Energy Corp. 1,317 $ 41,354
Xcel Energy, Inc. 13,719 229,519
------------
2,034,431
------------
ELECTRICAL EQUIPMENT (0.6%)
Hubbell, Inc. Class B 1,890 84,936
Rockwell Automation, Inc. 3,720 121,607
------------
206,543
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.8%)
Agilent Technologies, Inc. (a) 6,398 172,810
Amphenol Corp. Class A (a) 248 7,839
Arrow Electronics, Inc. (a) 3,767 95,230
Avnet, Inc. (a) 4,505 97,488
AVX Corp. 580 8,230
CDW Corp. (a) 817 51,054
Molex, Inc. 1,417 42,198
PerkinElmer, Inc. 4,061 78,174
Sanmina-SCI Corp. (a) 16,047 160,791
Solectron Corp. (a) 17,052 83,555
Tektronix, Inc. 1,346 39,842
Vishay Intertechnology, Inc. (a) 5,009 87,157
Waters Corp. (a) 793 34,218
------------
958,586
------------
ENERGY EQUIPMENT & SERVICES (0.0%) (B)
Grant Prideco, Inc. (a) 629 9,592
------------
FOOD & STAPLES RETAILING (0.9%)
Rite Aid Corp. (a) 11,527 56,482
SUPERVALU, Inc. 4,986 153,519
Whole Foods Market, Inc. 1,295 103,587
------------
313,588
------------
FOOD PRODUCTS (0.8%)
Hershey Foods Corp. 976 86,757
Hormel Foods Corp. 942 28,721
Lancaster Colony Corp. 300 12,390
Tyson Foods, Inc. Class A 7,838 146,884
------------
274,752
------------
GAS UTILITIES (1.1%)
Kinder Morgan, Inc. 2,693 162,146
NiSource, Inc. 2,367 47,719
Sempra Energy 4,946 157,035
------------
366,900
------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.4%)
Apogent Technologies, Inc. (a) 3,255 105,527
Bausch & Lomb, Inc. 2,005 125,974
Beckman Coulter, Inc. 590 32,946
Hillenbrand Industries, Inc. 1,258 84,915
</Table>
<Table>
<Caption>
SHARES VALUE
HEALTH CARE EQUIPMENT & SUPPLIES (CONTINUED)
Respironics, Inc. (a) 1,120 $ 58,699
Varian Medical Systems, Inc. (a) 941 80,775
Zimmer Holdings, Inc. (a) 22 1,757
------------
490,593
------------
HEALTH CARE PROVIDERS & SERVICES (4.7%)
Aetna, Inc. 731 60,490
Andrx Corp. (a) 1,706 39,033
Caremark Rx, Inc. (a) 7,347 248,696
CIGNA Corp. 3,386 218,431
Coventry Health Care, Inc. (a) 759 31,756
DaVita, Inc. (a) 2,234 114,157
Express Scripts, Inc. (a) 1,153 89,173
Humana, Inc. (a) 4,013 65,372
IMS Health, Inc. 4,232 106,858
Manor Care, Inc. 2,587 83,922
PacifiCare Health Systems, Inc. (a) 2,993 107,030
Quest Diagnostics, Inc. 1,468 123,826
Renal Care Group, Inc. (a) 1,777 87,926
Service Corp. International (a) 11,213 82,864
Triad Hospitals, Inc. (a) 1,862 63,327
Universal Health Services, Inc. Class B 814 35,735
WellChoice, Inc. (a) 825 34,980
------------
1,593,576
------------
HOTELS, RESTAURANTS & LEISURE (5.2%)
Applebee's International, Inc. 1,469 56,968
Brinker International, Inc. (a) 1,240 47,690
Caesars Entertainment, Inc. (a) 10,391 137,681
CBRL Group, Inc. 307 11,528
Darden Restaurants, Inc. 1,006 22,796
GTECH Holdings Corp. 569 34,663
Harrah's Entertainment, Inc. 2,618 139,225
Hilton Hotels Corp. 2,204 38,548
*International Game Technology 10,009 377,740
International Speedway Corp. Class A 180 7,583
Mandalay Resort Group 1,319 75,777
MGM Mirage (a) 1,706 78,152
Starwood Hotels & Resorts Worldwide, Inc. 7,162 284,976
Station Casinos, Inc. 1,001 45,125
Wendy's International, Inc. 3,541 138,099
Yum! Brands, Inc. (a) 6,886 267,108
------------
1,763,659
------------
HOUSEHOLD DURABLES (3.6%)
Black & Decker Corp. (The) 1,851 107,080
Centex Corp. 2,871 137,664
D.R. Horton, Inc. 6,575 189,360
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
37
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES (CONTINUED)
Fortune Brands, Inc. 2,889 $ 220,286
Furniture Brands International, Inc. 299 8,414
Harman International Industries, Inc. 1,927 146,163
KB HOME 675 46,528
Lennar Corp. Class A 686 32,139
Maytag Corp. 491 13,699
NVR, Inc. (a) 138 62,238
Ryland Group, Inc. (The) 276 21,790
Snap-on, Inc. 564 19,052
Stanley Works (The) 2,358 100,239
Whirlpool Corp. 1,609 105,406
------------
1,210,058
------------
INDUSTRIAL CONGLOMERATES (1.0%)
Alleghany Corp. (a) 126 33,070
ALLETE, Inc. 949 32,788
Carlisle Cos., Inc. 546 32,350
Textron, Inc. 4,306 237,605
------------
335,813
------------
INSURANCE (6.4%)
Ambac Financial Group, Inc. 2,165 149,385
American Financial Group, Inc. 915 28,091
Aon Corp. 2,754 71,769
Arthur J. Gallagher & Co. 993 32,004
Cincinnati Financial Corp. 2,893 118,617
Fidelity National Financial, Inc. 5,707 208,876
First American Corp. 2,371 64,302
HCC Insurance Holdings, Inc. 795 25,456
Lincoln National Corp. 6,687 300,113
Loews Corp. 4,709 273,169
Mercury General Corp. 267 13,614
Nationwide Financial Services, Inc. Class A 2,038 70,107
Odyssey Re Holdings Corp. 430 10,204
Old Republic International Corp. 3,369 78,228
Protective Life Corp. 1,681 60,449
SAFECO Corp. 2,618 114,642
St. Paul Travelers Cos., Inc. (The) 281 11,428
StanCorp Financial Group, Inc. 320 19,799
Torchmark Corp. 4,355 226,634
Transatlantic Holdings, Inc. 752 67,304
Unitrin, Inc. 1,679 66,572
UnumProvident Corp. 3,169 49,278
W. R. Berkley Corp. 2,457 99,509
Wesco Financial Corp. 25 9,911
------------
2,169,461
------------
</Table>
<Table>
<Caption>
SHARES VALUE
INTERNET SOFTWARE & SERVICES (0.3%)
VeriSign, Inc. (a) 6,504 $ 104,910
------------
IT SERVICES (1.5%)
Acxiom Corp. 2,449 56,670
CheckFree Corp. (a) 811 24,362
Cognizant Technology Solutions Corp. (a) 1,526 66,015
Computer Sciences Corp. (a) 1,961 80,224
Convergys Corp. (a) 1,631 23,682
DST Systems, Inc. (a) 1,115 49,227
Electronic Data Systems Corp. 10,333 188,991
Sabre Holdings Corp. 845 19,934
------------
509,105
------------
LEISURE EQUIPMENT & PRODUCTS (0.6%)
Brunswick Corp. 3,061 125,838
Hasbro, Inc. 2,465 46,564
Polaris Industries, Inc. 758 32,518
------------
204,920
------------
MACHINERY (3.9%)
Cummins, Inc. 849 50,779
Dover Corp. 1,292 51,719
Eaton Corp. 5,226 310,320
Graco, Inc. 946 26,677
Harsco Corp. 1,210 52,671
ITT Industries, Inc. 1,175 93,166
*PACCAR, Inc. 5,996 338,534
Parker Hannifin Corp. 4,458 246,483
Pentair, Inc. 625 37,244
SPX Corp. 1,936 85,861
Timken Co. (The) 1,254 27,663
------------
1,321,117
------------
MEDIA (0.9%)
Cablevision Systems New York Group Class A (a) 909 19,843
Cox Radio, Inc. Class A (a) 373 7,725
McClatchy Co. (The) Class A 663 47,073
Media General, Inc. Class A 99 7,116
PanAmSat Corp. (a) 946 21,834
Radio One, Inc. Class D (a) 508 9,632
Regal Entertainment Group Class A 896 19,524
Sirius Satellite Radio, Inc. (a) 6,977 23,024
UnitedGlobalCom, Inc. Class A (a) 3,437 25,709
</Table>
38 MainStay Mid Cap Core Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
MEDIA (CONTINUED)
Wiley (John) & Sons, Inc. Class A 615 $ 18,819
XM Satellite Radio Holdings, Inc. Class A (a) 4,821 115,511
------------
315,810
------------
METALS & MINING (1.8%)
CONSOL Energy, Inc. 629 18,008
Freeport-McMoRan Copper & Gold, Inc. Class B 4,219 128,680
Nucor Corp. 1,588 94,327
Peabody Energy Corp. 399 18,709
Phelps Dodge Corp. (a) 3,134 206,311
United States Steel Corp. 4,025 115,236
Worthington Industries, Inc. 1,592 28,736
------------
610,007
------------
MULTILINE RETAIL (4.2%)
Dollar General Corp. 3,146 59,019
*Federated Department Stores, Inc. 6,807 333,543
*J.C. Penney Co., Inc. Holding Co. 10,006 338,803
May Department Stores Co. (The) 7,715 237,622
Neiman Marcus Group, Inc. (The) Class A 657 31,956
Class B 226 10,227
Nordstrom, Inc. 3,564 126,985
Saks, Inc. 4,717 67,925
Sears, Roebuck and Co. 5,299 212,225
------------
1,418,305
------------
MULTI-UTILITIES & UNREGULATED POWER (2.3%)
AES Corp. (The) (a) 15,739 136,457
Constellation Energy Group 5,808 223,492
Dynegy, Inc. Class A (a) 7,482 29,629
Energy East Corp. 1,606 37,821
MDU Resources Group, Inc. 711 15,926
National Fuel Gas Co. 826 20,229
Questar Corp. 2,177 77,218
Reliant Energy, Inc. (a) 6,470 53,766
Williams Cos., Inc. (The) 18,518 190,735
------------
785,273
------------
OFFICE ELECTRONICS (1.0%)
*Xerox Corp. (a) 24,647 331,009
------------
OIL & GAS (5.4%)
Amerada Hess Corp. 2,656 188,921
Ashland, Inc. 2,554 122,337
Chesapeake Energy Corp. 1,311 18,026
</Table>
<Table>
<Caption>
SHARES VALUE
OIL & GAS (CONTINUED)
EOG Resources, Inc. 712 $ 35,066
Marathon Oil Corp. 9,536 320,028
Newfield Exploration Co. (a) 418 22,020
Noble Energy, Inc. 2,146 98,931
Pioneer Natural Resources Co. 751 24,565
Pogo Producing Co. 1,437 70,873
Sunoco, Inc. 2,849 179,202
Unocal Corp. 8,445 304,358
Valero Energy Corp. 3,252 207,348
Western Gas Resources, Inc. 463 25,210
Westport Resources Corp. (a) 4,138 141,644
XTO Energy, Inc. 2,677 71,476
------------
1,830,005
------------
PAPER & FOREST PRODUCTS (1.4%)
Boise Cascade Corp. 2,429 81,930
*Georgia-Pacific Corp. 9,367 328,782
Rayonier, Inc. 2,071 80,769
------------
491,481
------------
PERSONAL PRODUCTS (0.4%)
Estee Lauder Cos., Inc. (The) Class A 3,174 145,084
------------
PHARMACEUTICALS (0.9%)
American Pharmaceutical Partners, Inc. (a) 462 19,543
Endo Pharmaceuticals Holdings, Inc. (a) 1,130 26,973
Eon Labs, Inc. (a) 74 4,865
Medicis Pharmaceutical Corp. Class A 660 28,327
Mylan Laboratories, Inc. 2,624 60,116
Sepracor, Inc. (a) 1,001 47,858
Valeant Pharmaceuticals International 2,665 61,561
Watson Pharmaceuticals, Inc. (a) 1,116 39,741
------------
288,984
------------
REAL ESTATE (2.9%)
AMB Property Corp. 830 25,149
Archstone-Smith Trust 715 19,613
Arden Realty, Inc. 1,433 40,439
Boston Properties, Inc. 1,722 80,934
Camden Property Trust 372 15,743
CBL & Associates Properties, Inc. 245 12,311
Cousins Properties, Inc. 1,276 35,881
Crescent Real Estate Equities Co. 862 13,335
Developers Diversified Realty Corp. 1,586 51,942
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
39
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
REAL ESTATE (CONTINUED)
Forest City Enterprises, Inc. Class A 719 $ 37,704
Healthcare Realty Trust, Inc. 805 28,859
Hospitality Properties Trust 807 31,538
Host Marriot Corp. (a) 3,782 45,006
Liberty Property Trust 444 16,228
Macerich Co. (The) 1,748 73,189
Mack-Cali Realty Corp. 795 29,693
New Plan Excel Realty Trust 1,920 43,085
Public Storage, Inc. 2,475 103,430
Rouse Co. (The) 1,916 82,963
Simon Property Group, Inc. 1,691 81,523
Trizec Properties, Inc. 2,972 42,559
United Dominion Realty Trust, Inc. 627 11,255
Vornado Realty Trust 1,376 69,419
------------
991,798
------------
ROAD & RAIL (0.8%)
CSX Corp. 2,356 72,470
Norfolk Southern Corp. 8,896 211,903
------------
284,373
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.5%)
Advanced Micro Devices, Inc. (a) 9,238 131,364
Agere Systems, Inc. Class B (a) 15,962 34,637
Altera Corp. (a) 3,899 78,019
Amkor Technology, Inc. (a) 1,045 8,444
Atmel Corp. (a) 15,481 90,409
Broadcom Corp. Class A (a) 7,503 283,313
Cypress Semiconductor Corp. (a) 2,936 41,016
Fairchild Semiconductor International, Inc. (a) 3,336 64,952
International Rectifier Corp. (a) 2,011 79,716
Lam Research Corp. (a) 1,397 30,930
LSI Logic Corp. (a) 1,161 8,638
National Semiconductor Corp. (a) 5,730 233,727
PMC-Sierra, Inc. (a) 3,632 44,129
Rambus, Inc. (a) 266 4,955
Teradyne, Inc. (a) 2,039 41,555
------------
1,175,804
------------
SOFTWARE (2.9%)
Autodesk, Inc. 4,204 140,834
BMC Software, Inc. (a) 8,756 151,479
Cadence Design Systems, Inc. (a) 2,944 37,742
Compuware Corp. (a) 13,690 104,728
Jack Henry & Associates, Inc. 736 13,388
</Table>
<Table>
<Caption>
SHARES VALUE
SOFTWARE (CONTINUED)
Novell, Inc. (a) 3,787 $ 36,507
Red Hat, Inc. (a) 3,010 68,357
*Symantec Corp. (a) 9,214 415,091
------------
968,126
------------
SPECIALTY RETAIL (3.5%)
Advanced Auto Parts, Inc. (a) 1,810 78,102
Barnes & Noble, Inc. (a) 1,085 32,409
Borders Group, Inc. 2,317 55,539
Claire's Stores, Inc. 3,046 62,077
Foot Locker, Inc. 5,315 127,560
Limited Brands 8,810 181,838
RadioShack Corp. 6,270 192,865
Regis Corp. 1,646 71,469
Rent-A-Center, Inc. (a) 778 22,772
Sherwin-Williams Co. (The) 1,548 58,901
Staples, Inc. 4,055 104,457
TJX Cos., Inc. (The) 5,856 143,882
Toys 'R' Us, Inc. (a) 2,722 42,055
------------
1,173,926
------------
TEXTILES, APPAREL & LUXURY GOODS (0.8%)
Coach, Inc. (a) 4,332 184,543
Polo Ralph Lauren Corp. 860 29,756
Reebok International Ltd. 318 11,569
Timberland Co. (The) Class A (a) 463 29,039
------------
254,907
------------
THRIFTS & MORTGAGE FINANCE (1.1%)
Astoria Financial Corp. 1,923 66,190
Countrywide Financial Corp. 1,150 68,195
Doral Financial Corp. 657 21,543
Downey Financial Corp. 652 31,459
IndyMac Bancorp, Inc. 675 21,708
MGIC Investment Corp. 919 67,657
New York Community Bancorp, Inc. 774 19,404
People's Bank 512 21,612
Sovereign Bancorp, Inc. 2,174 43,436
Webster Financial Corp. 628 27,318
------------
388,522
------------
TOBACCO (0.7%)
Loews Corp.- Carolina Group 1,018 26,712
R.J. Reynolds Tobacco Holdings, Inc. 3,157 204,479
------------
231,191
------------
TRADING COMPANIES & DISTRIBUTORS (0.0%) (B)
MSC Industrial Direct Co., Inc. Class A 530 15,190
------------
</Table>
40 MainStay Mid Cap Core Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
x
WIRELESS TELECOMMUNICATION SERVICES (0.6%)
American Tower Corp. Class A (a) 1,857 $ 23,120
Crown Castle International Corp. (a) 2,976 41,515
Nextel Partners, Inc. Class A (a) 1,005 13,417
Telephone & Data Systems, Inc. 1,565 103,227
United States Cellular Corp. (a) 403 13,811
------------
195,090
------------
Total Investments (Cost $30,426,640) (d) 99.9% 33,886,110(e)
Cash and Other Assets,
Less Liabilities 0.1 48,742
----- ------------
Net Assets 100.0% $ 33,934,852
======== ===============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Exchange Traded Fund -- represents a basket of
securities that are traded on an exchange.
(d) The cost for federal income tax purposes is $30,475,087.
(e) At April 30, 2004 net unrealized appreciation was
$3,411,023, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $4,400,971 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $989,948.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
41
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $30,426,640) $33,886,110
Cash 113,876
Receivables:
Investment securities sold 3,093,876
Dividends and interest 36,550
Fund shares sold 10,596
Other assets 12,743
-----------
Total assets 37,153,751
-----------
LIABILITIES:
Payables:
Investment securities purchased 3,173,530
Manager 16,775
Custodian 5,787
Transfer agent 3,756
NYLIFE Distributors 781
Accrued expenses 18,270
-----------
Total liabilities 3,218,899
-----------
Net assets $33,934,852
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Class A $ 58
Class B 76
Class C 7
Class I 3,029
Additional paid-in capital 31,576,848
Accumulated undistributed net investment
income 48,416
Accumulated net realized loss on investments (1,153,052)
Net unrealized appreciation on investments 3,459,470
-----------
Net assets $33,934,852
===========
CLASS A
Net assets applicable to outstanding shares $ 619,614
===========
Shares of capital stock outstanding 57,904
===========
Net asset value per share outstanding $ 10.70
Maximum sales charge (5.50% of offering price) 0.62
-----------
Maximum offering price per share outstanding $ 11.32
===========
CLASS B
Net assets applicable to outstanding shares $ 807,026
===========
Shares of capital stock outstanding 75,584
===========
Net asset value and offering price per share
outstanding $ 10.68
===========
CLASS C
Net assets applicable to outstanding shares $ 76,021
===========
Shares of capital stock outstanding 7,122
===========
Net asset value and offering price per share
outstanding $ 10.67
===========
CLASS I
Net assets applicable to outstanding shares $32,432,191
===========
Shares of capital stock outstanding 3,028,622
===========
Net asset value and offering price per share
outstanding $ 10.71
===========
</Table>
42 MainStay Mid Cap Core Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 252,786
Interest 27
-----------
Total income 252,813
-----------
EXPENSES:
Manager 139,599
Custodian 16,731
Professional 14,598
Transfer agent 8,551
Registration 7,580
Portfolio pricing 6,712
Directors 6,535
Shareholder communication 2,177
Distribution -- Class B 1,158
Distribution -- Class C 72
Service -- Class A 203
Service -- Class B 386
Service -- Class C 24
Miscellaneous 9,360
-----------
Total expenses before reimbursement 213,686
Expense reimbursement from Manager (47,608)
-----------
Net expenses 166,078
-----------
Net investment income 86,735
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 3,443,564
Net change in unrealized appreciation on
investments (1,718,671)
-----------
Net realized and unrealized gain on investments 1,724,893
-----------
Net increase in net assets resulting from
operations $ 1,811,628
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $24.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
43
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 86,735 $ 115,176
Net realized gain on investments 3,443,564 512,384
Net change in unrealized appreciation
(depreciation) on investments (1,718,671) 6,009,353
-------------------------
Net increase in net assets resulting
from operations 1,811,628 6,636,913
-------------------------
Dividends to shareholders:
From net investment income:
Class I (113,396) (82,305)
-------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 643,411 --
Class B 848,805 --
Class C 79,730 --
Class I 1,142,952 2,326,100
Net asset value of shares issued to
shareholders in reinvestment of
dividends:
Class I 18,593 8,055
-------------------------
2,733,491 2,334,155
Cost of shares redeemed:
Class A (3,585) --
Class B (14,096) --
Class C (124) --
Class I (202,129) (1,117,764)
-------------------------
(219,934) (1,117,764)
-------------------------
Increase in net assets derived
from capital share transactions 2,513,557 1,216,391
-------------------------
Net increase in net assets 4,211,789 7,770,999
NET ASSETS:
Beginning of period 29,723,063 21,952,064
-------------------------
End of period $33,934,852 $29,723,063
=========================
Accumulated undistributed net
investment income at end of period $ 48,416 $ 75,077
=========================
</Table>
44 MainStay Mid Cap Core Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I
---------- ---------- ---------- ---------------------------------------------
JANUARY 1, JANUARY 1, JANUARY 1, SIX JANUARY 2,
2004* 2004* 2004* MONTHS 2001*
THROUGH THROUGH THROUGH ENDED YEAR ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
2004** 2004** 2004** 2004** 2003 2002 2001
Net asset value at beginning of period $10.67 $10.67 $10.67 $ 10.12 $ 7.82 $ 8.41 $ 10.00
------ ------ ------ ------- ------- ------- -------
Net investment income (loss) 0.01(b) (0.01)(b) (0.01)(b) 0.03(b) 0.04 0.03 0.03
Net realized and unrealized gain (loss) on
investments 0.02 0.02 0.01 0.60 2.29 (0.58) (1.62)
------ ------ ------ ------- ------- ------- -------
Total from investment operations 0.03 0.01 0.00 0.63 2.33 (0.55) (1.59)
------ ------ ------ ------- ------- ------- -------
Less dividends:
From net investment income -- -- -- (0.04) (0.03) (0.04) --
------ ------ ------ ------- ------- ------- -------
Net asset value at end of period $10.70 $10.68 $10.67 $ 10.71 $ 10.12 $ 7.82 $ 8.41
====== ====== ====== ======= ======= ======= =======
Total investment return (a) 0.28% 0.09% 0.00% 6.21% 29.90% (6.66%) (15.90%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income (loss) (0.19%)+ (0.94%)+ (0.94%)+ 0.54%+ 0.48% 0.34% 0.35%+
Net expenses 1.73%+ 2.48%+ 2.48%+ 1.00%+ 1.00% 1.00% 1.00%+
Expenses (before reimbursement) 2.02%+ 2.77%+ 2.77%+ 1.29%+ 1.42% 1.27% 1.27%+
Portfolio turnover rate 89% 89% 89% 89% 150% 151% 106%
Net assets at end of period (in 000's) $ 620 $ 807 $ 76 $32,432 $29,723 $21,952 $21,156
</Table>
<Table>
* Commencement of Operations.
** Unaudited.
+ Annualized.
(a) Total return is calculated exclusive of sales charges and is
not annualized.
(b) Per share data based on average shares outstanding during
the period.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
45
MAINSTAY MID CAP OPPORTUNITY FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE SINCE
BENCHMARKS MONTHS YEAR YEARS INCEPTION
RUSSELL MIDCAP(R) VALUE INDEX(1) 8.30% 34.92% 7.65% 14.41%
RUSSELL MIDCAP(R) INDEX(2) 7.25 35.45 6.09 13.51
S&P 500(R) INDEX(3) 6.27 22.88 -2.26 11.72
AVERAGE LIPPER MID-CAP CORE FUND(4) 6.53 33.08 7.82 12.27
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE SINCE
TOTAL RETURNS MONTHS YEAR YEARS INCEPTION
- ----------------------------------------------------------
With sales charges 0.11% 26.26% 4.83% 12.27%
Excluding sales
charges 5.94 33.60 6.02 12.95
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP RUSSELL MIDCAP RUSSELL MIDCAP
OPPORTUNITY FUND VALUE INDEX(1) INDEX S&P 500 INDEX
---------------- -------------- -------------- -------------
12/27/94 945.00 1000.00 1000.00 1000.00
1022.00 1124.00 1121.00 1129.00
1277.00 1437.00 1466.00 1470.00
1511.00 1692.00 1626.00 1839.00
2219.00 2385.00 2293.00 2594.00
2202.00 2430.00 2429.00 3161.00
1961.00 2321.00 2818.00 3481.00
2264.00 2776.00 2826.00 3029.00
2515.00 3010.00 2806.00 2647.00
2208.00 2604.00 2409.00 2294.00
4/30/04 2950.00 3513.00 3264.00 2819.00
</Table>
<Table>
-- MainStay Mid Cap Opportunity Fund -- Russell Midcap Value Index
-- Russell Midcap Index -- S&P 500 Index
</Table>
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE SINCE
TOTAL RETURNS MONTHS YEAR YEARS INCEPTION
- ----------------------------------------------------------
With sales charges 0.54% 27.56% 4.88% 12.02%
Excluding sales
charges 5.54 32.56 5.21 12.02
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP RUSSELL MIDCAP RUSSELL MIDCAP
OPPORTUNITY FUND VALUE INDEX(1) INDEX S&P 500 INDEX
---------------- -------------- -------------- -------------
12/27/94 1000.00 1000.00 1000.00 1000.00
1079.00 1124.00 1121.00 1129.00
1337.00 1437.00 1466.00 1470.00
1565.00 1692.00 1626.00 1839.00
2281.00 2385.00 2293.00 2594.00
2243.00 2430.00 2429.00 3161.00
1980.00 2321.00 2818.00 3481.00
2269.00 2776.00 2826.00 3029.00
2502.00 3010.00 2806.00 2647.00
2181.00 2604.00 2409.00 2294.00
4/30/04 2891.00 3513.00 3264.00 2819.00
</Table>
<Table>
-- MainStay Mid Cap Opportunity Fund -- Russell Midcap Value Index
-- Russell Midcap Index -- S&P 500 Index
</Table>
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A and B shares, first
offered 1/1/04, includes the historical performance of Class I shares from
inception (12/27/94) through 12/31/03 adjusted to reflect the applicable sales
charge (or CDSC) and fees and expenses for such shares. Prior to 1/1/04, the
Fund offered Class L shares, which were subject to a 1% sales charge and a 1%
CDSC on
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
46 MainStay Mid Cap Opportunity Fund
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE SINCE
TOTAL RETURNS MONTHS YEAR YEARS INCEPTION
- ----------------------------------------------------------
With sales charges 4.54% 31.62% 5.25% 12.04%
Excluding sales
charges 5.54 32.62 5.25 12.04
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP RUSSELL MIDCAP RUSSELL MIDCAP
OPPORTUNITY FUND VALUE INDEX(1) INDEX S&P 500 INDEX
---------------- -------------- -------------- -------------
12/27/94 1000.00 1000.00 1000.00 1000.00
1078.00 1124.00 1121.00 1129.00
1337.00 1437.00 1466.00 1470.00
1565.00 1692.00 1626.00 1839.00
2282.00 2385.00 2293.00 2594.00
2243.00 2430.00 2429.00 3161.00
1980.00 2321.00 2818.00 3481.00
2269.00 2776.00 2826.00 3029.00
2502.00 3010.00 2806.00 2647.00
2184.00 2604.00 2409.00 2294.00
4/30/04 2896.00 3513.00 3264.00 2819.00
</Table>
<Table>
-- MainStay Mid Cap Opportunity Fund -- Russell Midcap Value Index
-- Russell Midcap Index -- S&P 500 Index
</Table>
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE SINCE
TOTAL RETURNS MONTHS YEAR YEARS INCEPTION
- ----------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales
charges 6.02% 33.87% 6.27% 13.21%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY MID CAP RUSSELL MIDCAP RUSSELL MIDCAP
OPPORTUNITY FUND VALUE INDEX(1) INDEX S&P 500 INDEX
---------------- -------------- -------------- -------------
12/27/94 1000.00 1000.00 1000.00 1000.00
1083.00 1124.00 1121.00 1129.00
1356.00 1437.00 1466.00 1470.00
1608.00 1692.00 1626.00 1839.00
2366.00 2385.00 2293.00 2594.00
2353.00 2430.00 2429.00 3161.00
2100.00 2321.00 2818.00 3481.00
2431.00 2776.00 2826.00 3029.00
2706.00 3010.00 2806.00 2647.00
2383.00 2604.00 2409.00 2294.00
4/30/04 3190.00 3513.00 3264.00 2819.00
</Table>
<Table>
-- MainStay Mid Cap Opportunity Fund -- Russell Midcap Value Index
-- Russell Midcap Index -- S&P 500 Index
</Table>
redemptions within one year of purchase. Performance for Class L shares, first
offered 12/30/02, includes the historical performance of Class I shares from
inception through 12/29/02 adjusted to reflect the applicable sales charge,
CDSC, and fees and expenses for such shares. Effective 1/1/04, all outstanding
Class L shares of the Fund were converted to and/or redesignated Class C shares.
1. The Russell Midcap(R) Value Index is an unmanaged index that measures the
performance of those Russell Midcap(R) companies with lower price-to-book
ratios and lower forecasted growth values. The Russell Midcap(R) Index is an
unmanaged index that measures the performance of the 800 smallest companies
in the Russell 1000(R) Index, which, in turn, is an unmanaged index that
measures the performance of the 1,000 largest U.S. companies based on total
market capitalization. Results for all indices assume reinvestment of all
income and capital gains. An investment cannot be made directly into an
index.
2. The Russell Midcap(R) Index is an unmanaged index that measures the
performance of the 800 smallest companies in the Russell 1000(R) Index,
which, in turn, is an unmanaged index that measures the performance of the
1,000 largest U.S. companies based on total market capitalization. Results
assume reinvestment of all income and capital gains. An investment cannot be
made directly into an index.
3. "S&P 500" is a trademark of the McGraw-Hill Companies, Inc. The S&P 500 is an
unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock-market performance. Results assume reinvestment of all
income and capital gains. An investment cannot be made directly into an
index.
4. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 47
$1,000 INVESTED IN MAINSTAY MID CAP OPPORTUNITY FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $1,005 $ 5 $1,045 $ 5
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $1,003 $ 7 $1,043 $ 7
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(3) $1,000 $1,056 $11 $1,039 $11
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,061 $ 6 $1,045 $ 5
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares and Class B shares were first offered on January 1, 2004.
Expenses paid during the period reflect ongoing costs for the four-month
period ending April 30, 2004. Had Class A shares and Class B shares been
offered for the six months ended April 30, 2004, based on a hypothetical 5%
return, expenses paid during the period would be $7 and $11, respectively,
and the ending account value would be $1,043 and $1,039, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
48 MainStay Mid Cap Opportunity Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Wesley G. McCain and Kathy A. O'Connor
of New York Life Investment Management LLC
MAINSTAY MID CAP OPPORTUNITY FUND
(FORMERLY ECLIPSE MID CAP VALUE FUND)
WHAT MAJOR FACTORS INFLUENCED THE STOCK MARKET DURING THE SIX MONTHS ENDED APRIL
30, 2004?
Most broadly watched equity indices provided positive performance for the six
months ended April 30, 2004. Mid-caps and small-caps tended to outperform
large-capitalization issues. The market favored the value style over the growth
style of investing at all capitalization levels.
For much of the semiannual period, positive investor sentiment boosted the U.S.
equity markets. Low interest rates and indications of rebounding economic
activity helped to fuel an optimistic outlook. In March and April, however,
heightened geopolitical tensions and growing concerns over potential
interest-rate increases contributed to generally declining equity indices.
WHAT FACTORS MOST SIGNIFICANTLY AFFECTED FUND PERFORMANCE DURING THE SEMIANNUAL
PERIOD?
Fund holdings in the consumer durables & apparel, capital goods, and materials
industry groups showed weaker relative performance than related stocks in the
Russell Midcap(R) Value Index.(1)
The Fund's relative performance was also affected by its underweighted exposure
to the top 50% of companies within the Russell Midcap(R) Value Index, as
measured by market capitalization. For the six months ended April 30, 2004,
these larger mid-cap companies outperformed the smaller mid-cap companies in the
Index. Unlike the Index, which has a larger weighting in securities with larger
market capitalizations, the Fund attempts to have equal weights among the
securities in its portfolio. It is important to note that the Fund was invested
in some, but not all, of the companies in the Russell Midcap(R) Value Index.
WHAT WERE SOME OF THE FUND'S STRONG PERFORMERS DURING THE REPORTING PERIOD?
Software company Autodesk (+73.8%)(2) provided outstanding results. Other strong
performers included Activision (+48.4%), Mandalay Resort Group (+47.4%), Kmart
Holding (+47.3%), and MGIC Investment (+40.9%).
WHICH STOCKS UNDERPERFORMED?
Maxtor (-52.4%), which operates in the computers & peripherals industry, was the
Fund's worst-performing stock during the reporting period. Quanta Services
(-32.4%), Citrix Systems (-24.3%), Ascential Software (-23.7%), and United
States Steel (-18.3%) also detracted from the Fund's performance.
WERE THERE ANY SIGNIFICANT PURCHASES DURING THE REPORTING PERIOD?
The Fund purchases stocks that have relatively improving operating
characteristics and are relatively undervalued based on our proprietary model.
Among the securities that fit the Fund's purchase criteria during the reporting
period were Activision, Apogent Technologies, and Bausch & Lomb.
WHAT STOCKS DID THE FUND SELL?
The Fund sells stocks that exhibit deteriorating operating results and/or are
relatively overvalued. During the reporting period, AdvancePCS was acquired by
Caremark Rx in a stock and cash transaction. The Fund sold its entire position
in American Eagle Outfitters when weakening sales hampered earnings. The Fund
also sold JDS Uniphase when declining demand caused the company to dramatically
reduce its workforce.
DID THE FUND CHANGE ITS INDUSTRY GROUP WEIGHTINGS?
Weighting changes in the Fund result from a combination of security performance,
industry performance, and the Fund's proprietary security selection process.
From the end of October 2003 to the end of April 2004, the Fund increased its
weighting in the banks industry group from 8.70% to 15.46%. The shift reflected
new purchases and improved performance among banks relative to other industry
groups. Over the same period, the Fund decreased its technology hardware &
equipment industry group
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value. Investors should note that funds that invest in companies
with market capitalizations below $10 billion involve additional risks. The
securities of these companies may be more volatile and less liquid than the
securities of larger companies.
1. See footnote on page 47 for more information on the Russell Midcap(R) Value
Index.
2. Percentages reflect total returns of Fund holdings in the securities
mentioned, including purchases and sales, for the six months ended 4/30/04,
or for the portion of the reporting period such securities were held in the
Fund, if shorter.
www.mainstayfunds.com 49
weighting from 12.38% to 7.21%. The decline reflected position sales and weaker
relative performance of the industry group.
HOW DO THE FUND'S WEIGHTINGS DIFFER FROM THOSE OF ITS BENCHMARK?
As of April 30, 2004, the Fund was overweighted relative to the Russell
Midcap(R) Value Index in the health care equipment & services, consumer durables
& apparel, and banks industry groups. The Fund's overweighted position in banks
helped performance, but an overweighted position in consumer durables & apparel
detracted from the Fund's results.
At the end of the reporting period, the Fund was underweighted relative to the
Russell Midcap(R) Value Index in the utilities, insurance, and materials
industry groups. Although the Fund was underweighted in the insurance and
materials industry groups, the Fund's positions underperformed related
securities in the benchmark.
WHAT DO YOU ANTICIPATE GOING FORWARD?
We will continue to utilize the Fund's proprietary quantitative methodologies to
select mid-capitalization stocks of companies that our model indicates are
relatively undervalued and have strong operating characteristics. Whatever the
markets or the economy may bring, the Fund will continue to seek high total
return.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 96.5
Short-Term Investment 3.3
Cash and Other Assets (less liabilities) 0.2
</Table>
50 MainStay Mid Cap Opportunity Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (96.5%)+
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (1.0%)
J.B. Hunt Transport Services, Inc. 6,200 $ 196,292
------------
AUTO COMPONENTS (1.4%)
Dana Corp. 12,900 260,064
------------
CAPITAL MARKETS (1.6%)
Bear Stearns Cos., Inc. (The) 2,097 168,053
Lehman Brothers Holdings, Inc. 1,700 124,780
------------
292,833
------------
COMMERCIAL BANKS (1.9%)
International Bancshares Corp. 2,700 143,910
Silicon Valley Bancshares (a) 6,300 216,468
------------
360,378
------------
COMMERCIAL SERVICES & SUPPLIES (2.7%)
Cendant Corp. 9,100 215,488
Deluxe Corp. 600 24,786
*Kelly Services, Inc. Class A 9,400 279,368
------------
519,642
------------
COMPUTERS & PERIPHERALS (2.6%)
Dell, Inc. (a) 4,800 166,608
InFocus Corp. (a) 27,300 223,041
Maxtor Corp. (a) 16,200 105,462
------------
495,111
------------
CONSTRUCTION & ENGINEERING (0.7%)
Quanta Services, Inc. (a) 25,300 138,391
------------
CONSUMER FINANCE (3.1%)
AmeriCredit Corp. (a) 14,100 228,561
Student Loan Corp. (The) 700 99,120
WFS Financial, Inc. (a) 5,700 253,878
------------
581,559
------------
DIVERSIFIED FINANCIAL SERVICES (1.2%)
CIT Group, Inc. 6,700 230,279
------------
ELECTRIC UTILITIES (1.4%)
*Edison International 11,500 269,100
------------
ELECTRICAL EQUIPMENT (0.3%)
American Power
Conversion Corp. 3,300 61,578
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (4.6%)
Avnet, Inc. (a) 10,700 231,548
Sanmina-SCI Corp. (a) 24,800 248,496
</Table>
<Table>
<Caption>
SHARES VALUE
Solectron Corp. (a) 26,100 $ 127,890
Tektronix, Inc. 8,700 257,520
------------
865,454
------------
FOOD & STAPLES RETAILING (1.9%)
Albertson's, Inc. 10,600 247,616
SUPERVALU, Inc. 3,900 120,081
------------
367,697
------------
FOOD PRODUCTS (3.5%)
Hershey Foods Corp. 2,200 195,558
Hormel Foods Corp. 6,400 195,136
*Tyson Foods, Inc. Class A 14,800 277,352
------------
668,046
------------
HEALTH CARE EQUIPMENT & SUPPLIES (2.6%)
Apogent Technologies, Inc. (a) 7,800 252,876
Bausch & Lomb, Inc. 3,800 238,754
------------
491,630
------------
HEALTH CARE PROVIDERS & SERVICES (7.6%)
*Caremark Rx, Inc. (a) 7,740 261,999
Coventry Health Care, Inc. (a) 5,850 244,764
HEALTHSOUTH Corp. (a) 29,900 130,065
Humana, Inc. (a) 15,700 255,753
*Manor Care, Inc. 8,100 262,764
*PacifiCare Health
Systems, Inc. (a) 7,800 278,928
------------
1,434,273
------------
HOTELS, RESTAURANTS & LEISURE (3.6%)
Bob Evans Farms, Inc. 6,300 193,158
CBRL Group, Inc. 2,200 82,610
Choice Hotels International, Inc. 1,900 85,310
Mandalay Resort Group 2,500 143,625
Outback Steakhouse, Inc. 3,900 171,327
------------
676,030
------------
HOUSEHOLD DURABLES (8.2%)
Centex Corp. 3,400 163,030
Fortune Brands, Inc. 3,300 251,625
Hovnanian Enterprises, Inc. Class A (a) 4,400 158,268
KB HOME 1,200 82,716
La-Z-Boy, Inc. 5,600 116,704
M.D.C. Holdings, Inc. 1,320 81,563
NVR, Inc. (a) 400 180,400
Ryland Group, Inc. (The) 1,300 102,635
</Table>
<Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
51
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES (CONTINUED)
Stanley Works (The) 5,800 $ 246,558
Toll Brothers, Inc. (a) 4,400 174,108
------------
1,557,607
------------
HOUSEHOLD PRODUCTS (1.4%)
Energizer Holdings, Inc. (a) 6,000 259,800
------------
INDUSTRIAL CONGLOMERATES (0.4%)
Alleghany Corp. 306 80,313
------------
INSURANCE (1.6%)
MBIA, Inc. 2,600 153,114
Torchmark Corp. 2,900 150,916
------------
304,030
------------
LEISURE EQUIPMENT & PRODUCTS (1.4%)
Callaway Golf Co. 7,100 120,487
Hasbro, Inc. 7,900 149,231
------------
269,718
------------
MACHINERY (1.3%)
Terex Corp. (a) 7,200 236,520
------------
METALS & MINING (1.1%)
United States Steel Corp. 7,400 211,862
------------
MULTILINE RETAIL (4.2%)
Federated Department
Stores, Inc. 3,400 166,600
Kmart Holding Corp. (a) 4,700 210,278
Neiman Marcus Group, Inc. (The) Class A 1,800 87,552
Saks, Inc. 13,700 197,280
Sears, Roebuck & Co. 3,400 136,170
------------
797,880
------------
MULTI-UTILITIES & UNREGULATED POWER (1.3%)
Williams Cos., Inc. (The) 23,700 244,110
------------
OIL & GAS (1.3%)
Overseas Shipholding Group, Inc. 7,600 249,052
------------
PERSONAL PRODUCTS (1.6%)
*Estee Lauder Cos., Inc. (The) Class A 6,400 292,544
------------
PHARMACEUTICALS (0.7%)
Mylan Laboratories, Inc. 5,600 128,296
------------
</Table>
<Table>
<Caption>
SHARES VALUE
REAL ESTATE (4.9%)
AMB Property Corp. 4,400 $ 133,320
Cousins Properties, Inc. 3,800 106,856
Equity Office Properties Trust 9,200 231,564
Hospitality Properties Trust 2,400 93,792
LNR Property Corp. 3,600 180,792
Reckson Associates Realty Corp. 7,900 187,783
------------
934,107
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.7%)
Advanced Micro Devices, Inc. (a) 5,400 76,788
Novellus Systems, Inc. (a) 1,600 46,336
------------
123,124
------------
SOFTWARE (5.7%)
*Activision, Inc. (a) 18,300 275,598
Ascential Software Corp. (a) 5,200 88,400
*Autodesk, Inc. 8,600 288,100
Cadence Design
Systems, Inc. (a) 19,700 252,554
Citrix Systems, Inc. (a) 9,200 175,260
------------
1,079,912
------------
SPECIALTY RETAIL (3.3%)
Barnes & Noble, Inc. (a) 3,500 104,545
Circuit City Stores, Inc. 10,900 127,312
Home Depot, Inc. (The) 2,300 80,937
Sherwin-Williams Co. (The) 3,800 144,590
Zale Corp. (a) 2,900 162,168
------------
619,552
------------
TEXTILES, APPAREL & LUXURY GOODS (0.7%)
Reebok International Ltd. 3,500 127,330
------------
THRIFTS & MORTGAGE FINANCE (13.5%)
Astoria Financial Corp. 6,900 237,498
Countrywide Financial Corp. 2,799 165,981
Doral Financial Corp. 4,800 157,392
Freddie Mac 1,600 93,440
Fremont General Corp. 10,500 226,275
GreenPoint Financial Corp. 5,000 195,000
Independence Community
Bank Corp. 4,800 174,864
IndyMac Bancorp, Inc. 6,900 221,904
MGIC Investment Corp. 3,000 220,860
New Century Financial Corp. 5,300 224,879
New York Community
Bancorp, Inc. 8,333 208,908
PMI Group, Inc. (The) 5,600 240,968
Radian Group, Inc. 4,200 195,342
------------
2,563,311
------------
</Table>
52 MainStay Mid Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- --------------------------------------------------------------------------------
TOBACCO (1.5%)
*R.J. Reynolds Tobacco
Holdings, Inc. 4,500 $ 291,465
------------
Total Common Stocks (Cost $15,695,601) 18,278,890
------------
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (3.3%)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (3.3%)
Bank of New York (The)
0.90%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$616,046
(Collateralized by
Federal National Mortgage
Association
3.921%, due 3/1/33
with a Principal Amount of
$753,000 and a
Market Value of $751,759 including accrued
interest) $ 616,000 616,000
------------
Total Short-Term Investment (Cost $616,000) 616,000
------------
Total Investments (Cost $16,311,601) (b) 99.8% 18,894,890(c)
Cash and Other Assets,
Less Liabilities 0.2 44,369
----- ------------
Net Assets 100.0% $ 18,939,259
======== ============
</Table>
<Table>
(a) Non-income producing security.
(b) The cost for federal income tax purposes is $16,325,932.
(c) At April 30, 2004 net unrealized appreciation was
$2,568,958, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $3,162,570 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $593,612.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
53
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $16,311,601) $18,894,890
Cash 38,536
Receivables:
Investment securities sold 919,022
Fund shares sold 54,729
Dividends and interest 38,710
Other assets 24,325
-----------
Total assets 19,970,212
-----------
LIABILITIES:
Payables:
Investment securities purchased 648,931
Fund shares redeemed 328,110
Transfer agent 11,454
Custodian 3,818
Manager 3,214
NYLIFE Distributors 2,373
Accrued expenses 33,053
-----------
Total liabilities 1,030,953
-----------
Net assets $18,939,259
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per share)
1 billion shares authorized
Class A $ 1,033
Class B 776
Class C 538
Class I 6,234
Additional paid-in capital 15,383,145
Accumulated undistributed net investment
income 23,197
Accumulated undistributed net realized gain
on investments 941,047
Net unrealized appreciation on investments 2,583,289
-----------
Net assets $18,939,259
===========
CLASS A
Net assets applicable to outstanding shares $ 2,276,391
===========
Shares of capital stock outstanding 103,254
===========
Net asset value per share outstanding $ 22.05
Maximum sales charge (5.50% of offering price) 1.28
-----------
Maximum offering price per share outstanding $ 23.33
===========
CLASS B
Net assets applicable to outstanding shares $ 1,694,943
===========
Shares of capital stock outstanding 77,555
===========
Net asset value and offering price per share
outstanding $ 21.85
===========
CLASS C
Net assets applicable to outstanding shares $ 1,176,630
===========
Shares of capital stock outstanding 53,828
===========
Net asset value and offering price per share
outstanding $ 21.86
===========
CLASS I
Net assets applicable to outstanding shares $13,791,295
===========
Shares of capital stock outstanding 623,449
===========
Net asset value and offering price per share
outstanding $ 22.12
===========
</Table>
54 MainStay Mid Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 110,414
Interest 2,854
---------
Total income 113,268
---------
EXPENSES:
Manager 74,188
Transfer agent 22,934
Registration 21,285
Professional 18,008
Trustees 7,941
Custodian 5,165
Portfolio pricing 2,395
Distribution -- Class B 1,748
Distribution -- Class C 887
Shareholder communication 1,556
Service -- Class A 820
Service -- Class B 583
Service -- Class C 296
Service -- Service Class 9
Miscellaneous 8,809
---------
Total expenses before reimbursement 166,624
Expense reimbursement from Manager (73,243)
Fees paid indirectly (See Note 2(D)) (3,310)
---------
Net expenses 90,071
---------
Net investment income 23,197
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 955,651
Net change in unrealized appreciation on
investments (266,238)
---------
Net realized and unrealized gain on investments 689,413
---------
Net increase in net assets resulting from
operations $ 712,610
=========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $58.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
55
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE)
IN NET ASSETS:
Operations:
Net investment income $ 23,197 $ 229,089
Net realized gain on investments 955,651 10,470,034
Net change in unrealized appreciation
on investments (266,238) 787,704
--------------------------
Net increase in net assets resulting
from operations 712,610 11,486,827
--------------------------
Dividends and distributions to shareholders:
From net investment income:
Class I -- (220,660)
Service Class -- (1)
From net realized gain on investments:
Class C (11) --
Class I (109,405) --
Service Class (167) --
--------------------------
Total dividends and distributions to
shareholders (109,583) (220,661)
--------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 2,423,081 --
Class B 1,805,423 --
Class C 1,225,685 1,148
Class I 3,356,404 6,543,744
Service Class 21,108 1,529
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Class C 10 --
Class I 109,130 219,240
Service Class 167 1
--------------------------
8,941,008 6,765,662
Cost of shares redeemed:
Class A (45,696) --
Class B (31,937) --
Class C (1,408) (104)
Class I (4,121,428) (55,643,197)
Service Class (24,327) --
--------------------------
(4,224,796) (55,643,301)
--------------------------
Increase (decrease) in net assets
derived from capital share
transactions 4,716,212 (48,877,639)
--------------------------
Net increase (decrease) in net
assets 5,319,239 (37,611,473)
</Table>
<Table>
<Caption>
2004 2003
NET ASSETS:
Beginning of period $13,620,020 $ 51,231,493
--------------------------
End of period $18,939,259 $ 13,620,020
==========================
Accumulated undistributed net
investment income at end of period $ 23,197 $ --
==========================
</Table>
56 MainStay Mid Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
This page intentionally left blank
57
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
----------------- ----------------- -------------------------------
JANUARY 1, JANUARY 1, DECEMBER 30,
2004** 2004** SIX MONTHS 2002**
THROUGH THROUGH ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31,
2004*** 2004*** 2004*** 2003
Net asset value at beginning of period $21.93 $21.79 $20.86 $15.87
------ ------ ------ ------
Net investment income (loss) 0.00(b) (0.02) (0.01) (0.06)(a)
Net realized and unrealized gain (loss) on
investments 0.12 0.08 1.16 5.05
------ ------ ------ ------
Total from investment operations 0.12 0.06 1.15 4.99
------ ------ ------ ------
Less dividends and distributions:
From net investment income -- -- -- --
From net realized gain on investments -- -- (0.15) --
------ ------ ------ ------
Total dividends and distributions -- -- (0.15) --
------ ------ ------ ------
Net asset value at end of period $22.05 $21.85 $21.86 $20.86
====== ====== ====== ======
Total investment return (c) 0.55% 0.28% 5.54% 31.44%
Ratios (to average net
assets)/Supplemental Data:
Net investment income (loss) 0.05%+ (0.70%)+ (0.70%)+ (0.53%)+
Net expenses 1.36%+# 2.11%+# 2.11%+# 2.13%+#
Expenses (before reimbursement) 2.25%+# 3.00%+# 3.00%+# 2.37%+#
Portfolio turnover rate 25% 25% 25% 90%
Net assets at end of period (in 000's) $2,276 $1,695 $1,177 $ 1
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
# Includes transfer agent fees paid indirectly which amounted
to 0.04%, 0.09%, 0.13% and 0.15% of average net assets for
the six months ended April 30, 2004, the years ended October
31, 2003 and October 31, 2002 and the ten months ended
October 31, 2001, respectively, and custodian fees and other
expenses paid indirectly which amounted to 0.02% of average
net assets for the year ended December 31, 2000.
(a) Per share data based on average shares outstanding during
the period.
(b) Less than one cent per share.
(c) Total return is calculated exclusive of sales charges and is
not annualized.
(d) Restated.
</Table>
58 MainStay Mid Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
------------------------------------------------------------------------------------
JANUARY 1,
SIX MONTHS 2001
ENDED YEAR ENDED THROUGH
APRIL 30, OCTOBER 31, OCTOBER 31, YEAR ENDED DECEMBER 31,
2004*** 2003 2002 2001* 2000 1999 1998
$ 21.01 $ 16.16 $ 16.30 $ 16.93 $ 16.06 $ 17.73 $ 17.76
------- ------- ------- ------- ------- ------- --------
0.04 0.08(a) 0.09 0.06 0.06 0.11 0.06
1.22 4.84 (0.14) (0.69) 0.88 (0.13) 1.76
------- ------- ------- ------- ------- ------- --------
1.26 4.92 (0.05) (0.63) 0.94 (0.02) 1.82
------- ------- ------- ------- ------- ------- --------
-- (0.07) (0.09) -- (0.06) (0.11) (0.06)
(0.15) -- -- -- (0.01) (1.54) (1.79)
------- ------- ------- ------- ------- ------- --------
(0.15) (0.07) (0.09) -- (0.07) (1.65) (1.85)
------- ------- ------- ------- ------- ------- --------
$ 22.12 $ 21.01 $ 16.16 $ 16.30 $ 16.93 $ 16.06 $ 17.73
======= ======= ======= ======= ======= ======= ========
6.02% 30.59% (0.38%) (3.72%) 5.83% 0.04% 10.35%
0.33%+ 0.47% 0.46% 0.41%+ 0.35% 0.51% 0.33%
1.08%+# 1.13%# 1.17%# 1.19%+#(d) 1.06%# 1.05% 0.98%
1.97%+# 1.37%# 1.29%# 1.22%+#(d) 1.06%# 1.05% 1.08%
25% 90% 75% 69% 114% 51% 81%
$13,791 $13,617 $51,231 $56,907 $67,401 $83,064 $124,525
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
59
MAINSTAY S&P 500 INDEX FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
S&P 500(R) INDEX(1) 6.27% 22.88% -2.26% 11.36%
AVERAGE LIPPER S&P 500 INDEX OBJECTIVE FUND(2) 5.92 22.05 -2.78 10.91
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 2.80% 18.61% -3.18% 10.54%
Excluding sales 5.98 22.28 -2.59 10.88
charges
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY S&P 500 INDEX FUND S&P 500 INDEX
--------------------------- -------------
4/30/94 970.00 1000.00
1133.00 1175.00
1465.00 1530.00
1822.00 1914.00
2556.00 2700.00
3106.00 3289.00
3408.00 3622.00
2965.00 3152.00
2579.00 2754.00
2228.00 2388.00
4/30/04 2725.00 2934.00
</Table>
-- MainStay S&P 500 Index Fund
-- S&P 500 Index
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ----------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 6.12% 22.63% -2.38% 11.12%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY S&P 500 INDEX FUND S&P 500 INDEX
--------------------------- -------------
4/30/94 1000.00 1000.00
1171.00 1175.00
1517.00 1530.00
1891.00 1914.00
2659.00 2700.00
3239.00 3289.00
3560.00 3622.00
3102.00 3152.00
2704.00 2754.00
2342.00 2388.00
4/30/04 2872.00 2934.00
</Table>
-- MainStay S&P 500 Index Fund
-- S&P 500 Index
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 3% and an annual 12b-1
fee of .25%. Class I shares are sold with no initial sales charge or CDSC, have
no annual 12b-1 fee, and are generally available to corporate and institutional
investors with a minimum initial investment of $5 million. Performance figures
reflect certain fee waivers and/or expense limitations, without which total
returns may have been lower. The fee waivers and/or expense limitations are
contractual and may be discontinued at any time after December 31, 2004.
Performance for Class A shares, first offered 1/1/04, includes the historical
performance of Class I shares from inception (1/2/91) through 12/31/03 adjusted
to reflect the applicable sales charge and fees and expenses for such shares.
1. "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. and has been
licensed for use. Standard & Poor's does not sponsor, endorse, sell, or
promote the Fund or represent the advisability of investing in the Fund. The
S&P 500(R) is an unmanaged index and is widely regarded as the standard for
measuring large-cap U.S. stock-market performance. Results assume
reinvestment of all income and capital gains. An investment cannot be made
directly into an index.
2. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
60 MainStay S&P 500 Index Fund
$1,000 INVESTED IN MAINSTAY S&P 500 INDEX FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $ 999 $2 $1,048 $2
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,061 $2 $1,049 $2
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares were first offered on January 1, 2004. Expenses paid during
the period reflect ongoing costs for the four-month period ending April 30,
2004. Had Class A shares been offered for the six months ended April 30,
2004, based on a hypothetical 5% return, expenses paid during the period
would be $3, and the ending account value would be $1,047.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
www.mainstayfunds.com 61
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Francis J. Ok of New York Life
Investment Management LLC
MAINSTAY S&P 500 INDEX FUND (FORMERLY ECLIPSE INDEXED EQUITY FUND)
WHAT MAJOR FACTORS INFLUENCED THE STOCK MARKET DURING THE SIX MONTHS ENDED APRIL
30, 2004?
When the reporting period began, investor sentiment was changing, since most
indicators seemed to show that the U.S. economy was firmly on the path of
expansion. Bearish gloom gave way to a general sense of optimism, prompting
investors to question how high the stock market might rise. Several factors
served as catalysts in the U.S. economic recovery. These included the lowest
interest rates in more than four decades, President Bush's tax-cut program, the
positive impact of a weaker U.S. dollar on export activity, and slim inventories
that stimulated business investment.
The U.S. equity markets, however, were not able to sustain the tremendous gains
they had seen in the last months of 2003. Stocks surged in early February 2004,
but late February through the end of April proved to be a troublesome time for
U.S. equities. Terrorism muted any momentum that had been building in the equity
markets, as the train bombing in Madrid and the assassination of Hamas leader
Sheik Ahmed Yasin drove equities lower. Ongoing violence against civilians and
coalition troops involved in the rebuilding of Iraq continued to trouble the
financial markets through the end of the semiannual period.
WHAT FACTORS MOST SIGNIFICANTLY AFFECTED FUND PERFORMANCE DURING THE SEMIANNUAL
PERIOD?
Excluding all shares charges, the differences in return between the Fund and its
benchmark, the S&P 500(R) Index,(1) and between the Fund and the average
Lipper(2) S&P 500 Index objective fund over the semiannual period were modest.
Since the Fund includes real-world expenses that a hypothetical index does not,
there may be times when the Fund underperforms the Index. Excluding sales
charges, the Fund's modest outperformance of its Lipper peer group may be
attributed to a difference in annual expenses.
WHAT WERE THE BEST-PERFORMING SUBINDUSTRIES(3) IN THE S&P 500(R) INDEX DURING
THE REPORTING PERIOD?
Based on total returns alone, wireless services (+44.16%)(4) was the
best-performing subindustry for the six months ended April 30, 2004. Other top-
performing subindustries included Internet retail (+42.69%), oil & gas
refineries (+38.16%), fertilizers & agricultural chemicals (+38.08%), and office
electronics (+27.94%).
Because of their higher weightings in the Index, however, subindustries with
lower total returns were among the five top contributors to the overall
performance of the S&P 500(R) Index. Taking weightings and total returns both
into consideration, the leading subindustry was integrated oil & gas (+19.37%),
followed by pharmaceuticals (+7.52%), health care equipment (+18.56%),
multi-line insurance (+17.97%), and industrial conglomerates (+7.28%).
WHICH SUBINDUSTRIES WERE THE WORST PERFORMERS?
Based solely on total returns, the worst-performing subindustries in the Index
for the reporting period were airlines (-28.85%), semiconductor equipment
(-22.98%), semiconductors (-15.72%), IT consulting (-15.17%), and gold
(-14.57%). Because of a higher Index weighting, semiconductors (-15.72%) had the
greatest negative impact on the total return of the Index for the reporting
period when weightings and total returns were taken into account. Other poor-
performing subindustries by impact were computer hardware (-3.50%),
semiconductor equipment (-22.98%), investment banking & brokerage (-5.30%), and
home improvement retail (-6.65%).
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value. Index funds generally seek to reflect the performance of
an index or an allocation among indices, unlike other funds, whose objectives
may, in some cases, involve seeking to outperform an index or other benchmark.
1. See footnote on page 60 for more information on the S&P 500 Index.
2. See footnote on page 60 for more information about Lipper Inc.
3. The Global Industry Classification Standard categorizes companies by sector,
industry group, industry, and subindustry. Results in these sections of the
semiannual report reflect subindustry and company performance. In the
Portfolio of Investments that follows, companies are listed by industry.
4. Percentages reflect the total return performance, including reinvestment of
all dividends and capital gains, of the subindustries or the securities
mentioned for the six months ended 4/30/04. Due to purchases and sales, the
performance of Fund holdings may differ from that of the subindustries or
securities themselves.
62 MainStay S&P 500 Index Fund
WHO WERE THE CORPORATE LEADERS DURING THE REPORTING PERIOD?
For the six months ended April 30, 2004, the best-performing company in the S&P
500(R) Index based on total return alone was AT&T Wireless Services (+90.48%).
Other top-performing companies based solely on total returns were Autodesk
(+74.03%), Visteon (+68.11%), Biogen Idec (+67.95%), and Novell (+64.22%). As
impressive as these returns may be, the five stocks with the greatest positive
impact on the performance of the S&P 500(R) Index all had higher weightings and
lower total returns. Taking weightings and total returns both into account, the
strongest positive contributors to the performance of the Index for the
six-month period were ExxonMobil (+16.30%), followed by Pfizer (+13.10%),
American International Group (+17.00%), ChevronTexaco (+23.10%), and Altria
Group (+19.10%).
WHICH COMPANIES' STOCKS LAGGED THE S&P 500(R) INDEX?
Not surprisingly, based on total returns alone, the worst-performing security in
the S&P 500(R) Index for the reporting period was a member of the worst-
performing subindustry. That company was Delta Air Lines (-52.23%). Other
poor-performing securities (based on total returns alone) were QLogic (-51.85%),
Ciena (-35.41%), PMC-Sierra (-33.13%), and Apartment Investment & Management
(-31.12%). Similarly, when taking both weightings and total returns into
account, semiconductor company Intel (-22.15%), a company from the worst
performing subindustry, made the greatest negative contribution to the
performance of the Index.
Other laggards (based on weightings and total returns) included Wal-Mart Stores
(-3.30%), Wyeth (-13.70%), Applied Materials (-21.99%), and Comcast (-11.26%).
WERE THERE ANY CHANGES MADE TO THE FUND OR THE INDEX DURING THE PERIOD?
The Fund seeks to track the performance and weightings of stocks in the S&P
500(R) Index. The Index itself, however, may change from time to time as
companies merge, divest units, add to their market capitalization, or face
financial difficulties. Standard & Poor's may also occasionally adjust the Index
to better reflect the companies that it believes are most representative of the
makeup of our economy. During the six months ended April 30, 2004, there were
eight companies deleted from the Index and eight companies added to it.
WHAT DO YOU ANTICIPATE GOING FORWARD?
We believe that interest rates are a key factor that could affect the outlook
for the U.S. equity market for the remainder of the year. Most investors feel
that the Federal Reserve will not be able to keep the targeted federal funds
rate at its current record low of 1.0%. Indeed, we believe that surging oil
prices may prompt the Federal Reserve to increase interest rates sooner rather
than later to head off the prospect of inflation. Signs of inflation have
already materialized in the Consumer Price Index, the Producer Price Index, and
the ISM Index, the last of which tracks manufacturing costs. Political
uncertainty is another variable that could hold off a stock market rally. The
mere possibility of a change in leadership may add to the instability of the
global landscape. Finally, heightened geopolitical tensions and ongoing
terrorist threats remain obstacles with no clear resolution in sight.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 95.5
Short Term Investments 4.4
Cash and Other Assets (less liabilities) 0.1
</Table>
www.mainstayfunds.com 63
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (95.5%)+
- ----------------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.8%)
Boeing Co. (The) 90,008 $ 3,842,442
General Dynamics Corp. 21,076 1,973,135
Goodrich Corp. 12,544 361,142
Honeywell International, Inc. 91,671 3,169,983
Lockheed Martin Corp. 48,183 2,298,329
Northrop Grumman Corp. 19,930 1,978,052
Raytheon Co. 44,053 1,421,150
Rockwell Collins, Inc. 19,069 614,975
United Technologies Corp. 55,106 4,753,444
--------------
20,412,652
--------------
AIR FREIGHT & LOGISTICS (1.0%)
FedEx Corp. 31,960 2,298,244
Ryder System, Inc. 6,770 249,068
United Parcel Service, Inc. Class B 120,611 8,460,862
--------------
11,008,174
--------------
AIRLINES (0.1%)
Delta Air Lines, Inc. (a) 13,301 82,732
Southwest Airlines Co. 83,781 1,196,393
--------------
1,279,125
--------------
AUTO COMPONENTS (0.2%)
Cooper Tire & Rubber Co. 7,942 169,880
Dana Corp. 15,970 321,955
Delphi Corp. 60,051 612,520
Goodyear Tire & Rubber Co. (The) (a) 18,792 163,678
Johnson Controls, Inc. 20,145 1,105,155
Visteon Corp. 13,808 149,955
--------------
2,523,143
--------------
AUTOMOBILES (0.7%)
Ford Motor Co. 195,965 3,010,022
General Motors Corp. 60,007 2,845,532
Harley-Davidson, Inc. 32,419 1,825,838
--------------
7,681,392
--------------
BEVERAGES (2.7%)
Adolph Coors Co. Class B 3,884 255,218
Anheuser-Busch Cos., Inc. 87,142 4,465,156
Brown-Forman Corp. Class B 13,025 610,352
Coca-Cola Co. (The) 261,085 13,203,068
Coca-Cola Enterprises, Inc. 48,457 1,308,339
Pepsi Bottling Group, Inc. (The) 27,716 811,247
PepsiCo, Inc. 182,612 9,950,528
--------------
30,603,908
--------------
BIOTECHNOLOGY (1.1%)
Amgen, Inc. (a) 137,829 7,755,638
Biogen Idec, Inc. (a) 35,029 2,066,711
</Table>
<Table>
<Caption>
SHARES VALUE
BIOTECHNOLOGY (CONTINUED)
Chiron Corp. (a) 20,070 $ 931,248
Genzyme Corp. (a) 23,790 1,036,292
MedImmune, Inc. (a) 26,969 653,729
--------------
12,443,618
--------------
BUILDING PRODUCTS (0.2%)
American Standard Cos., Inc. (a) 7,725 812,593
Masco Corp. 48,768 1,365,991
--------------
2,178,584
--------------
CAPITAL MARKETS (3.4%)
Bank of New York Co., Inc. (The) 82,414 2,401,544
Bear Stearns Cos., Inc. (The) 11,031 884,024
Charles Schwab Corp. (The) 144,385 1,485,722
E*TRADE Financial Corp. (a) 39,000 443,040
Federated Investors, Inc. Class B 11,525 338,835
Franklin Resources, Inc. 26,777 1,468,183
Goldman Sachs Group, Inc. (The) 51,569 4,989,301
J.P. Morgan Chase & Co. 219,829 8,265,570
Janus Capital Group, Inc. 25,664 390,093
Lehman Brothers Holdings, Inc. 29,517 2,166,548
Mellon Financial Corp. 46,149 1,367,856
Merrill Lynch & Co., Inc. 103,624 5,619,529
Morgan Stanley 117,147 6,020,184
Northern Trust Corp. 23,715 1,002,670
State Street Corp. 35,667 1,740,550
T.Rowe Price Group, Inc. 13,207 677,255
--------------
39,260,904
--------------
CHEMICALS (1.4%)
Air Products & Chemicals, Inc. 24,399 1,215,314
Dow Chemical Co. (The) 99,909 3,965,388
E.I. du Pont de Nemours & Co. 106,614 4,579,071
Eastman Chemical Co. 8,304 353,501
Ecolab, Inc. 27,758 827,189
Engelhard Corp. 13,689 397,529
Great Lakes Chemical Corp. 5,368 134,844
Hercules, Inc. (a) 11,823 131,354
International Flavors & Fragrances, Inc. 10,044 364,095
Monsanto Co. 28,030 969,558
PPG Industries, Inc. 18,162 1,077,188
Praxair, Inc. 34,967 1,278,044
Rohm & Haas Co. 23,677 918,194
Sigma-Aldrich Corp. 7,644 432,956
--------------
16,644,225
--------------
COMMERCIAL BANKS (5.9%)
AmSouth Bancorp. 37,966 836,011
*Bank of America Corp. 217,863 17,535,793
Bank One Corp. 119,507 5,900,061
</Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
64 MainStay S&P 500 Index Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------
COMMERCIAL BANKS (CONTINUED)
BB&T Corp. 58,445 $ 2,015,768
Charter One Financial, Inc. 24,227 808,455
Comerica, Inc. 18,827 972,038
Fifth Third Bancorp 60,321 3,236,825
First Horizon National Corp. 13,474 592,317
Huntington Bancshares, Inc. 24,392 521,989
KeyCorp 45,024 1,337,213
M&T Bank Corp. 12,833 1,090,805
Marshall & Ilsley Corp. 23,995 882,296
National City Corp. 64,958 2,252,094
North Fork Bancorp., Inc. 16,031 595,071
PNC Financial Services Group, Inc. (The) 29,609 1,572,238
Regions Financial Corp. 23,743 824,119
SouthTrust Corp. 35,579 1,105,795
SunTrust Banks, Inc. 30,059 2,045,515
Synovus Financial Corp. 32,260 770,046
U.S. Bancorp 204,976 5,255,585
Union Planters Corp. 20,181 561,032
Wachovia Corp. 140,367 6,421,790
Wells Fargo & Co. 180,680 10,201,193
Zions Bancorp 9,593 542,196
--------------
67,876,245
--------------
COMMERCIAL SERVICES & SUPPLIES (1.0%)
Allied Waste Industries, Inc. (a) 34,207 430,666
Apollo Group, Inc. Class A (a) 18,820 1,710,362
Avery Dennison Corp. 11,873 762,603
Cendant Corp. 107,467 2,544,819
Cintas Corp. 18,192 817,912
Deluxe Corp. 5,830 240,837
Donnelley (R.R.) & Sons Co. 22,837 671,864
Equifax, Inc. 15,209 372,773
H&R Block, Inc. 19,182 865,300
Monster Worldwide, Inc. (a) 11,987 306,987
Pitney Bowes, Inc. 24,946 1,091,387
Robert Half International, Inc. 18,245 497,541
Waste Management, Inc. 61,654 1,750,974
--------------
12,064,025
--------------
COMMUNICATIONS EQUIPMENT (2.8%)
ADC Telecommunications, Inc. (a) 86,090 215,225
Andrew Corp. (a) 17,185 291,286
Avaya, Inc. (a) 45,329 620,101
CIENA Corp. (a) 50,600 209,484
Cisco Systems, Inc. (a) 732,860 15,294,788
Comverse Technology, Inc. (a) 20,249 331,274
Corning, Inc. (a) 145,751 1,607,633
JDS Uniphase Corp. (a) 153,553 466,801
Lucent Technologies, Inc. (a) 454,886 1,532,966
Motorola, Inc. 249,964 4,561,843
QLogic Corp. (a) 10,012 270,224
QUALCOMM, Inc. 85,997 5,371,372
</Table>
<Table>
<Caption>
SHARES VALUE
COMMUNICATIONS EQUIPMENT (CONTINUED)
Scientific-Atlanta, Inc. 16,013 $ 518,661
Tellabs, Inc. (a) 44,260 386,390
--------------
31,678,048
--------------
COMPUTERS & PERIPHERALS (3.4%)
Apple Computer, Inc. (a) 38,723 996,343
Dell, Inc. (a) 273,397 9,489,610
EMC Corp. (a) 258,310 2,882,740
Gateway, Inc. (a) 39,954 192,578
Hewlett-Packard Co. 325,599 6,414,300
International Business Machines Corp. 181,206 15,976,933
Lexmark International, Inc. (a) 13,653 1,235,050
NCR Corp. (a) 10,224 456,911
Network Appliance, Inc. (a) 36,471 679,090
Silicon Graphics, Inc. (a) 35 67
Sun Microsystems, Inc. (a) 345,873 1,348,905
--------------
39,672,527
--------------
CONSTRUCTION & ENGINEERING (0.0%) (B)
Fluor Corp. 8,568 326,955
--------------
CONSTRUCTION MATERIALS (0.0%) (B)
Vulcan Materials Co. 10,899 503,970
--------------
CONSUMER FINANCE (1.2%)
American Express Co. 137,157 6,713,835
Capital One Financial Corp. 24,635 1,614,332
MBNA Corp. 136,677 3,332,185
Providian Financial Corp. (a) 31,073 376,915
SLM Corp. 48,210 1,846,925
--------------
13,884,192
--------------
CONTAINERS & PACKAGING (0.2%)
Ball Corp. 6,053 399,498
Bemis Co., Inc. 11,318 305,699
Pactiv Corp. (a) 16,976 389,599
Sealed Air Corp. (a) 9,008 442,113
Temple-Inland, Inc. 5,789 357,586
--------------
1,894,495
--------------
DISTRIBUTORS (0.1%)
Genuine Parts Co. 18,810 673,398
--------------
DIVERSIFIED FINANCIAL SERVICES (2.5%)
*Citigroup, Inc. 549,259 26,413,865
Moody's Corp. 15,919 1,026,935
Principal Financial Group, Inc. 34,548 1,219,544
--------------
28,660,344
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES (2.8%)
ALLTEL Corp. 33,323 1,677,480
AT&T Corp. 84,395 1,447,374
BellSouth Corp. 195,170 5,037,338
CenturyTel, Inc. 15,283 441,373
Citizens Communications Co. (a) 30,265 394,655
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
65
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
Qwest Communications International, Inc. (a) 189,067 $ 760,049
SBC Communications, Inc. 353,219 8,795,153
Sprint Corp. (FON Group) 151,629 2,712,643
Verizon Communications, Inc. 294,447 11,112,430
--------------
32,378,495
--------------
ELECTRIC UTILITIES (2.0%)
Allegheny Energy, Inc. (a) 13,470 185,616
Ameren Corp. 19,387 847,600
American Electric Power Co., Inc. 42,232 1,285,542
CenterPoint Energy, Inc. 32,670 352,509
Cinergy Corp. 19,020 721,619
CMS Energy Corp. (a) 15,597 129,611
Consolidated Edison, Inc. 23,980 988,216
Dominion Resources, Inc. 34,544 2,204,253
DTE Energy Co. 17,971 701,228
Edison International 34,897 816,590
Entergy Corp. 24,263 1,324,760
Exelon Corp. 35,115 2,350,598
FirstEnergy Corp. 34,845 1,362,439
FPL Group, Inc. 19,601 1,247,016
PG&E Corp. (a) 44,439 1,222,961
Pinnacle West Capital Corp. 9,732 380,132
PPL Corp. 19,137 820,020
Progress Energy, Inc. 25,851 1,105,647
Public Service Enterprise Group, Inc. 25,102 1,076,876
Southern Co. (The) 77,593 2,231,575
TECO Energy, Inc. 20,137 256,344
TXU Corp. 34,563 1,179,981
Xcel Energy, Inc. 42,767 715,492
--------------
23,506,625
--------------
ELECTRICAL EQUIPMENT (0.4%)
American Power Conversion Corp. 21,039 392,588
Cooper Industries, Ltd. Class A 9,844 540,534
Emerson Electric Co. 45,029 2,711,646
Power-One, Inc. (a) 8,592 73,891
Rockwell Automation, Inc. 19,884 650,008
Thomas & Betts Corp. (a) 6,251 150,274
--------------
4,518,941
--------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.5%)
Agilent Technologies, Inc. (a) 50,817 1,372,567
Jabil Circuit, Inc. (a) 21,284 561,685
Molex, Inc. 20,546 611,860
PerkinElmer, Inc. 13,526 260,376
Sanmina-SCI Corp. (a) 54,693 548,024
Solectron Corp. (a) 88,730 434,777
Symbol Technologies, Inc. 24,721 296,652
Tektronix, Inc. 9,084 268,886
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRONIC EQUIPMENT & INSTRUMENTS (CONTINUED)
Thermo Electron Corp. (a) 17,585 $ 513,482
Waters Corp. (a) 13,282 573,118
--------------
5,441,427
--------------
ENERGY EQUIPMENT & SERVICES (0.8%)
Baker Hughes, Inc. 35,824 1,314,024
BJ Services Co. (a) 16,887 751,471
Halliburton Co. 46,807 1,394,849
Nabors Industries, Ltd. (a) 15,570 690,685
Noble Corp. (a) 14,328 532,428
Rowan Cos., Inc. (a) 10,105 225,342
Schlumberger Ltd. 62,837 3,677,850
Transocean, Inc. (a) 34,284 952,067
--------------
9,538,716
--------------
FOOD & STAPLES RETAILING (3.5%)
Albertson's, Inc. 39,421 920,875
Costco Wholesale Corp. 48,981 1,834,338
CVS Corp. 42,196 1,630,031
Kroger Co. (The) (a) 80,396 1,406,930
Safeway, Inc. (a) 47,263 1,084,686
SUPERVALU, Inc. 14,298 440,235
Sysco Corp. 68,894 2,635,196
Walgreen Co. 109,696 3,782,318
*Wal-Mart Stores, Inc. 461,479 26,304,303
Winn-Dixie Stores, Inc. 15,093 115,009
--------------
40,153,921
--------------
FOOD PRODUCTS (1.3%)
Archer-Daniels-Midland Co. 69,196 1,215,082
Campbell Soup Co. 44,021 1,216,300
ConAgra Foods, Inc. 57,616 1,664,526
General Mills, Inc. 39,688 1,934,790
H.J. Heinz Co. 37,677 1,438,885
Hershey Foods Corp. 13,909 1,236,371
Kellogg Co. 43,994 1,887,342
McCormick & Co., Inc. 14,910 509,326
Sara Lee Corp. 84,555 1,951,529
Wm. Wrigley Jr. Co. 24,100 1,486,970
--------------
14,541,121
--------------
GAS UTILITIES (0.3%)
KeySpan Corp. 16,829 608,368
Kinder Morgan, Inc. 13,117 789,775
Nicor, Inc. 4,708 160,025
NiSource, Inc. 28,254 569,599
Peoples Energy Corp. 3,910 163,438
Sempra Energy 23,931 759,809
--------------
3,051,014
--------------
HEALTH CARE EQUIPMENT & SUPPLIES (2.1%)
Applera Corp. Applied Biosystems Group 22,410 416,154
Bausch & Lomb, Inc. 5,703 358,319
Baxter International, Inc. 65,179 2,062,915
Becton, Dickinson & Co. 27,274 1,378,701
Biomet, Inc. 27,418 1,083,011
Boston Scientific Corp. (a) 87,502 3,604,207
</Table>
66 MainStay S&P 500 Index Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (CONTINUED)
C.R. Bard, Inc. 5,517 $ 586,292
Guidant Corp. 33,283 2,097,162
Medtronic, Inc. 129,501 6,534,620
Millipore Corp. (a) 5,215 273,422
St. Jude Medical, Inc. (a) 18,260 1,392,508
Stryker Corp. 21,363 2,113,442
Zimmer Holdings, Inc. (a) 25,828 2,062,366
--------------
23,963,119
--------------
HEALTH CARE PROVIDERS & SERVICES (2.0%)
Aetna, Inc. 16,431 1,359,665
AmerisourceBergen Corp. 11,924 690,280
Anthem, Inc. (a) 14,807 1,311,604
Cardinal Health, Inc. 46,487 3,405,173
Caremark Rx, Inc. (a) 47,600 1,611,260
CIGNA Corp. 14,969 965,650
Express Scripts, Inc. (a) 8,341 645,093
HCA, Inc. 52,929 2,150,505
Health Management Associates, Inc. 25,617 592,521
Humana, Inc. (a) 17,379 283,104
IMS Health, Inc. 25,462 642,916
Manor Care, Inc. 9,667 313,598
McKesson Corp. 31,194 1,025,035
Medco Health Solutions, Inc. (a) 28,977 1,025,786
Quest Diagnostics, Inc. 11,281 951,552
Tenet Healthcare Corp. (a) 49,788 585,507
UnitedHealth Group, Inc. 66,869 4,111,106
WellPoint Health Networks, Inc. (a) 16,557 1,849,251
--------------
23,519,606
--------------
HOTELS, RESTAURANTS & LEISURE (1.3%)
Carnival Corp. 67,395 2,875,745
Darden Restaurants, Inc. 17,590 398,589
Harrah's Entertainment, Inc. 11,828 629,013
Hilton Hotels Corp. 40,445 707,390
International Game Technology 36,972 1,395,323
Marriott International, Inc. Class A 24,723 1,165,937
McDonald's Corp. 134,790 3,670,332
Starbucks Corp. (a) 42,324 1,644,711
Starwood Hotels & Resorts Worldwide, Inc. 21,553 857,594
Wendy's International, Inc. 12,325 480,675
Yum! Brands, Inc. (a) 31,175 1,209,278
--------------
15,034,587
--------------
HOUSEHOLD DURABLES (0.5%)
American Greetings Corp. Class A (a) 7,085 145,243
Black & Decker Corp. (The) 8,343 482,642
Centex Corp. 13,260 635,817
</Table>
<Table>
<Caption>
SHARES VALUE
HOUSEHOLD DURABLES (CONTINUED)
Fortune Brands, Inc. 15,549 $ 1,185,611
KB HOME 5,120 352,922
Leggett & Platt, Inc. 20,688 467,549
Maytag Corp. 8,410 234,639
Newell Rubbermaid, Inc. 29,598 699,697
Pulte Homes, Inc. 13,233 650,667
Snap-on, Inc. 6,236 210,652
Stanley Works (The) 9,085 386,202
Whirlpool Corp. 7,366 482,547
--------------
5,934,188
--------------
HOUSEHOLD PRODUCTS (2.0%)
Clorox Co. (The) 22,535 1,166,862
Colgate-Palmolive Co. 56,923 3,294,703
Kimberly-Clark Corp. 53,548 3,504,717
Procter & Gamble Co. (The) 138,025 14,596,144
--------------
22,562,426
--------------
INDUSTRIAL CONGLOMERATES (4.0%)
3M Co. 83,520 7,222,810
*General Electric Co. (c) 1,087,536 32,571,703
Textron, Inc. 14,613 806,345
Tyco International Ltd. 213,762 5,867,767
--------------
46,468,625
--------------
INSURANCE (4.5%)
ACE, Ltd. 29,501 1,293,324
AFLAC, Inc. 54,730 2,311,248
Allstate Corp. (The) 75,255 3,454,205
Ambac Financial Group, Inc. 11,395 786,255
*American International Group, Inc. 278,205 19,933,388
Aon Corp. 33,422 870,977
Chubb Corp. (The) 20,068 1,384,692
Cincinnati Financial Corp. 18,220 746,821
Hartford Financial Services Group, Inc. (The) 31,073 1,897,939
Jefferson-Pilot Corp. 15,072 747,421
Lincoln National Corp. 19,020 853,618
Loews Corp. 19,799 1,148,540
Marsh & McLennan Cos., Inc. 56,991 2,570,294
MBIA, Inc. 15,487 912,029
MetLife, Inc. 80,771 2,786,599
Progressive Corp. (The) 23,305 2,039,654
Prudential Financial, Inc. 57,634 2,532,438
SAFECO Corp. 14,862 650,807
St. Paul Travelers Cos., Inc. (The) 71,107 2,891,922
Torchmark Corp. 12,075 628,383
UnumProvident Corp. 30,962 481,459
XL Capital Ltd. Class A 14,607 1,115,244
--------------
52,037,257
--------------
INTERNET & CATALOG RETAIL (0.5%)
eBay, Inc. (a) 68,997 5,507,341
--------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
67
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (0.3%)
Yahoo!, Inc. (a) 71,034 $ 3,584,376
--------------
IT SERVICES (1.2%)
Affiliated Computer Services, Inc. Class A (a) 14,500 703,250
Automatic Data Processing, Inc. 62,522 2,739,089
Computer Sciences Corp. (a) 20,107 822,578
Convergys Corp. (a) 15,711 228,124
Electronic Data Systems Corp. 51,118 934,948
First Data Corp. 94,747 4,300,566
Fiserv, Inc. (a) 20,731 757,925
Paychex, Inc. 40,265 1,501,079
Sabre Holdings Corp. 15,269 360,196
SunGard Data Systems, Inc. (a) 30,411 792,815
Unisys Corp. (a) 35,178 458,369
--------------
13,598,939
--------------
LEISURE EQUIPMENT & PRODUCTS (0.2%)
Brunswick Corp. 9,643 396,424
Eastman Kodak Co. 30,676 791,134
Hasbro, Inc. 18,616 351,656
Mattel, Inc. 46,809 793,881
--------------
2,333,095
--------------
MACHINERY (1.4%)
Caterpillar, Inc. 37,039 2,879,041
Crane Co. 6,385 196,722
Cummins, Inc. 4,396 262,925
Danaher Corp. 16,371 1,514,645
Deere & Co. 26,018 1,770,265
Dover Corp. 21,726 869,692
Eaton Corp. 16,174 960,412
Illinois Tool Works, Inc. 32,936 2,839,413
Ingersoll-Rand Co. Class A 18,831 1,215,541
ITT Industries, Inc. 9,815 778,231
Navistar International Corp. (a) 7,268 328,150
PACCAR, Inc. 18,669 1,054,052
Pall Corp. 13,207 314,062
Parker-Hannifin Corp. 12,602 696,765
--------------
15,679,916
--------------
MEDIA (3.6%)
Clear Channel Communications, Inc. 65,835 2,731,494
Comcast Corp. Class A (a) 239,984 7,223,519
Dow Jones & Co., Inc. 8,750 403,288
Gannett Co., Inc. 28,824 2,498,464
Interpublic Group of Cos., Inc. (The) (a) 44,325 695,459
Knight-Ridder, Inc. 8,585 664,822
McGraw-Hill Cos., Inc. (The) 20,433 1,611,346
Meredith Corp. 5,310 270,491
</Table>
<Table>
<Caption>
SHARES VALUE
MEDIA (CONTINUED)
New York Times Co. (The) Class A 16,194 $ 741,847
Omnicom Group, Inc. 20,379 1,620,334
Time Warner, Inc. (a) 486,190 8,177,716
Tribune Co. 35,237 1,687,148
Univision Communications, Inc. Class A (a) 34,466 1,166,674
Viacom, Inc. Class B 186,507 7,208,496
Walt Disney Co. (The) 218,790 5,038,734
--------------
41,739,832
--------------
METALS & MINING (0.6%)
Alcoa, Inc. 92,818 2,854,153
Allegheny Technologies, Inc. 8,627 88,168
Freeport-McMoRan Copper & Gold, Inc. Class B 18,315 558,607
Newmont Mining Corp. 46,252 1,729,825
Nucor Corp. 8,332 494,921
Phelps Dodge Corp. (a) 9,990 657,642
United States Steel Corp. 12,095 346,280
Worthington Industries, Inc. 9,225 166,511
--------------
6,896,107
--------------
MULTILINE RETAIL (1.0%)
Big Lots, Inc. (a) 12,421 175,881
Dillard's, Inc. Class A 9,019 151,790
Dollar General Corp. 35,831 672,190
Family Dollar Stores, Inc. 18,387 590,958
Federated Department Stores, Inc. 19,276 944,524
J.C. Penney Co., Inc. Holding Co. 28,852 976,929
Kohl's Corp. (a) 36,392 1,520,822
May Department Stores Co. (The) 30,970 953,876
Nordstrom, Inc. 14,594 519,984
Sears, Roebuck and Co. 23,779 952,349
Target Corp. 97,430 4,225,539
--------------
11,684,842
--------------
MULTI-UTILITIES & UNREGULATED POWER (0.4%)
AES Corp. (The) (a) 66,034 572,515
Calpine Corp. (a) 40,882 177,428
Constellation Energy Group, Inc. 17,719 681,827
Duke Energy Corp. 96,766 2,037,892
Dynegy, Inc. Class A (a) 39,935 158,143
El Paso Corp. 68,428 479,680
Williams Cos., Inc. (The) 55,448 571,114
--------------
4,678,599
--------------
OFFICE ELECTRONICS (0.1%)
Xerox Corp. (a) 84,621 1,136,460
--------------
OIL & GAS (5.1%)
Amerada Hess Corp. 9,531 677,940
Anadarko Petroleum Corp. 26,619 1,426,246
</Table>
68 MainStay S&P 500 Index Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------
OIL & GAS (CONTINUED)
Apache Corp. 34,781 $ 1,456,281
Ashland, Inc. 7,251 347,323
Burlington Resources, Inc. 21,169 1,424,039
ChevronTexaco Corp. 114,140 10,443,810
ConocoPhillips 73,098 5,211,887
Devon Energy Corp. 24,977 1,528,592
EOG Resources, Inc. 12,346 608,041
*ExxonMobil Corp. 699,311 29,755,683
Kerr-McGee Corp. 10,808 528,835
Marathon Oil Corp. 36,288 1,217,825
Occidental Petroleum Corp. 41,008 1,935,578
Sunoco, Inc. 8,226 517,415
Unocal Corp. 27,691 997,984
Valero Energy Corp. 7,100 452,696
--------------
58,530,175
--------------
PAPER & FOREST PRODUCTS (0.5%)
Boise Cascade Corp. 9,157 308,866
Georgia-Pacific Corp. 26,916 944,752
International Paper Co. 51,377 2,071,521
Louisiana-Pacific Corp. 11,186 263,878
MeadWestvaco Corp. 21,463 561,257
Weyerhaeuser Co. 23,793 1,408,545
--------------
5,558,819
--------------
PERSONAL PRODUCTS (0.6%)
Alberto-Culver Co. 9,448 445,568
Avon Products, Inc. 25,170 2,114,280
Gillette Co. (The) 107,501 4,398,941
--------------
6,958,789
--------------
PHARMACEUTICALS (8.0%)
Abbott Laboratories 166,737 7,339,763
Allergan, Inc. 13,848 1,219,316
Bristol-Myers Squibb Co. 207,340 5,204,234
Forest Laboratories, Inc. (a) 39,409 2,541,092
*Johnson & Johnson 316,459 17,098,280
King Pharmaceuticals, Inc. (a) 25,794 444,947
Lilly (Eli) & Co. 120,117 8,865,836
Merck & Co., Inc. 237,515 11,163,205
Mylan Laboratories, Inc. 28,600 655,226
*Pfizer, Inc. 813,143 29,077,994
Schering-Plough Corp. 157,269 2,631,110
Watson Pharmaceuticals, Inc. (a) 11,443 407,485
Wyeth 142,441 5,422,729
--------------
92,071,217
--------------
REAL ESTATE (0.4%)
Apartment Investment & Management Co. Class A 9,989 281,390
Equity Office Properties Trust 42,712 1,075,061
Equity Residential 29,093 798,894
Plum Creek Timber Co., Inc. 19,805 585,436
</Table>
<Table>
<Caption>
SHARES VALUE
REAL ESTATE (CONTINUED)
ProLogis 19,198 $ 564,805
Simon Property Group, Inc. 21,795 1,050,737
--------------
4,356,323
--------------
ROAD & RAIL (0.4%)
Burlington Northern Santa Fe Corp. 39,871 1,303,782
CSX Corp. 22,918 704,958
Norfolk Southern Corp. 41,754 994,580
Union Pacific Corp. 27,595 1,626,173
--------------
4,629,493
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.3%)
Advanced Micro Devices, Inc. (a) 36,943 525,329
Altera Corp. (a) 40,968 819,770
Analog Devices, Inc. 39,875 1,698,675
Applied Materials, Inc. (a) 179,558 3,273,342
Applied Micro Circuits Corp. (a) 32,588 143,713
Broadcom Corp. Class A (a) 31,888 1,204,091
*Intel Corp. 691,450 17,791,009
KLA-Tencor Corp. (a) 20,768 865,403
Linear Technology Corp. 33,483 1,192,999
LSI Logic Corp. (a) 40,359 300,271
Maxim Integrated Products, Inc. 35,095 1,614,019
Micron Technology, Inc. (a) 65,301 889,400
National Semiconductor Corp. (a) 18,970 773,786
Novellus Systems, Inc. (a) 16,059 465,069
NVIDIA Corp. (a) 16,951 348,174
PMC-Sierra, Inc. (a) 18,043 219,222
Teradyne, Inc. (a) 20,253 412,756
Texas Instruments, Inc. 185,164 4,647,616
Xilinx, Inc. 36,265 1,219,592
--------------
38,404,236
--------------
SOFTWARE (4.1%)
Adobe Systems, Inc. 25,469 1,052,888
Autodesk, Inc. 11,990 401,665
BMC Software, Inc. (a) 24,933 431,341
Citrix Systems, Inc. (a) 17,472 332,842
Computer Associates International, Inc. 62,187 1,667,233
Compuware Corp. (a) 40,609 310,659
Electronic Arts, Inc. (a) 31,611 1,600,149
Intuit, Inc. (a) 21,227 901,511
Mercury Interactive Corp. (a) 9,200 391,460
*Microsoft Corp. (c) 1,151,049 29,892,743
Novell, Inc. (a) 41,699 401,978
Oracle Corp. (a) 558,071 6,261,557
Parametric Technology Corp. (a) 28,220 129,248
PeopleSoft, Inc. (a) 38,900 656,632
Siebel Systems, Inc. (a) 52,184 536,451
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
69
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------
SOFTWARE (CONTINUED)
Symantec Corp. (a) 33,207 $ 1,495,975
VERITAS Software Corp. (a) 45,529 1,214,258
--------------
47,678,590
--------------
SPECIALTY RETAIL (2.3%)
AutoNation, Inc. (a) 29,380 500,048
AutoZone, Inc. (a) 9,359 819,568
Bed Bath & Beyond, Inc. (a) 31,549 1,171,099
Best Buy Co., Inc. 34,518 1,872,601
Circuit City Stores, Inc. 22,252 259,903
Gap, Inc. (The) 95,559 2,103,254
Home Depot, Inc. (The) 243,237 8,559,510
Limited Brands 49,667 1,025,127
Lowe's Cos., Inc. 84,009 4,373,508
Office Depot, Inc. (a) 33,105 579,669
RadioShack Corp. 18,022 554,357
Sherwin-Williams Co. (The) 15,725 598,336
Staples, Inc. 52,335 1,348,150
Tiffany & Co. 15,515 605,085
TJX Cos., Inc. (The) 54,550 1,340,293
Toys "R" Us, Inc. (a) 22,869 353,326
--------------
26,063,834
--------------
TEXTILES, APPAREL & LUXURY GOODS (0.3%)
Jones Apparel Group, Inc. 13,702 501,493
Liz Claiborne, Inc. 11,505 403,825
NIKE, Inc. Class B 28,367 2,041,006
Reebok International Ltd. 6,392 232,541
V.F. Corp. 11,568 533,979
--------------
3,712,844
--------------
THRIFTS & MORTGAGE FINANCE (1.7%)
Countrywide Financial Corp. 29,277 1,736,126
Fannie Mae 103,575 7,117,674
Freddie Mac 73,390 4,285,976
Golden West Financial Corp. 16,302 1,713,503
MGIC Investment Corp. 10,572 778,311
Washington Mutual, Inc. 96,040 3,783,015
--------------
19,414,605
--------------
TOBACCO (1.2%)
Altria Group, Inc. 218,561 12,103,908
R.J. Reynolds Tobacco Holdings, Inc. 9,098 589,278
UST, Inc. 17,987 669,296
--------------
13,362,482
--------------
</Table>
<Table>
<Caption>
SHARES VALUE
TRADING COMPANIES & DISTRIBUTORS (0.0%) (B)
Grainger (W.W.), Inc. 9,778 $ 512,367
--------------
WIRELESS TELECOMMUNICATION SERVICES (0.6%)
AT&T Wireless Services, Inc. (a) 290,941 4,017,895
Nextel Communications, Inc. Class A (a) 117,447 2,802,286
--------------
6,820,181
--------------
Total Common Stocks (Cost $1,052,160,038) 1,098,833,454(d)
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (4.4%)
- ----------------------------------------------------------------------------------
COMMERCIAL PAPER (3.2%)
7-Eleven, Inc.
1.02%, due 6/15/04 $ 8,200,000 8,189,542
1.03%, due 5/28/04 3,235,000 3,232,500
American Honda Finance Corp.
1.00%, due 5/5/04 1,600,000 1,599,822
1.00%, due 5/11/04 9,800,000 9,797,274
1.01%, due 5/5/04 600,000 599,933
1.01%, due 5/11/04 900,000 899,747
Dealers Capital Access Trust
1.06%, due 6/4/04 4,200,000 4,195,792
HBOS Treasury Services PLC
1.04%, due 5/27/04 1,400,000 1,398,953
Hitachi Credit America Corp.
1.01%, due 5/13/04 2,200,000 2,199,259
International Lease Finance Corp.
1.03%, due 5/25/04 700,000 699,519
Toyota Credit Puerto Rico
1.03%, due 5/25/04 500,000 499,657
Yorkshire Building Society
1.03%, due 5/26/04 2,200,000 2,198,425
1.04%, due 5/26/04 1,700,000 1,698,777
--------------
Total Commercial Paper (Cost $37,209,200) 37,209,200
--------------
</Table>
70 MainStay S&P 500 Index Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ----------------------------------------------------------------------------------
U.S. GOVERNMENT (1.2%)
United States Treasury Bills
0.89%, due 7/15/04 (c) $ 2,900,000 $ 2,894,473
0.91%, due 7/8/04 (c) 10,900,000 10,881,274
--------------
Total U.S. Government (Cost $13,775,853) 13,775,747
--------------
Total Short-Term Investments (Cost $50,985,053) 50,984,947
--------------
Total Investments (Cost $1,103,145,091) (e) 99.9% 1,149,818,401(f)
Cash and Other Assets, Less Liabilities 0.1 317,701
------ -------------
Net Assets 100.0% $1,150,136,102
====== ==============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
71
<Table>
<Caption>
CONTRACTS UNREALIZED
LONG DEPRECIATION (G)
FUTURES CONTRACTS (-0.1%)
- ------------------------------------------------------------------------------------
Standard & Poor's 500 Index June 2004 188 $ (1,507,228)
Mini June 2004 17 (4,392)
--------------
Total Futures Contracts (Settlement Value
$52,926,885) (d) $ (1,511,620)
==============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated or designated as collateral for futures
contracts.
(d) The combined market value of common stocks and settle-
ment value of Standard & Poor's 500 Index futures
contracts represents 100.1% of net assets.
(e) The cost for federal income tax purposes is
$1,107,133,096.
(f) At April 30, 2004 net unrealized appreciation was
$42,685,305, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $158,103,779 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $115,418,474.
(g) Represents the difference between the value of the con-
tracts at the time they were opened and the value at
April 30, 2004.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
71
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $1,103,145,091) $1,149,818,401
Cash 7,913
Receivables:
Fund shares sold 2,257,769
Dividends 1,391,692
Other assets 20,492
--------------
Total assets 1,153,496,267
--------------
LIABILITIES:
Payables:
Investment securities purchased 976,000
Fund shares redeemed 852,654
Variation margin on futures contracts 771,667
Transfer agent 338,791
Manager 192,997
Professional 82,049
NYLIFE Distributors 49,558
Shareholder communication 48,951
Custodian 27,369
Directors 5,691
Accrued expenses 14,438
--------------
Total liabilities 3,360,165
--------------
Net assets $1,150,136,102
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
500 million shares authorized
Class A $ 9,341
Class I 35,609
Additional paid-in capital 1,137,528,987
Accumulated undistributed net investment
income 4,519,580
Accumulated net realized loss on investments
and futures contracts (37,119,105)
Net unrealized appreciation on investments
and futures contracts 45,161,690
--------------
Net assets $1,150,136,102
==============
CLASS A
Net assets applicable to outstanding shares $ 237,650,869
==============
Shares of capital stock outstanding 9,341,438
==============
Net asset value per share outstanding $ 25.44
Maximum sales charge (3.00% of offering
price) 0.79
--------------
Maximum offering price per share outstanding $ 26.23
==============
CLASS I
Net assets applicable to outstanding shares $ 912,485,233
==============
Shares of capital stock outstanding 35,609,025
==============
Net asset value and offering price per share
outstanding $ 25.63
==============
</Table>
72 MainStay S&P 500 Index Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Dividends $ 8,602,554
Interest 392,402
-----------
Total income 8,994,956
-----------
EXPENSES:
Manager 2,753,945
Transfer agent 192,002
Service -- Class A 185,699
Service -- Service Class 93,676
Professional 122,121
Custodian 66,086
Shareholder communication 62,008
Directors 36,081
Registration 13,738
Miscellaneous 28,682
-----------
Total expenses before reimbursement 3,554,038
Expense reimbursement from Manager (1,622,296)
-----------
Net expenses 1,931,742
-----------
Net investment income 7,063,214
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Security transactions (2,679,335)
Futures transactions 7,890,356
-----------
Net realized gain on investments 5,211,021
-----------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions 49,967,663
Futures transactions (2,252,296)
-----------
Net unrealized gain on investments 47,715,367
-----------
Net realized and unrealized gain on investments 52,926,388
-----------
Net increase in net assets resulting from
operations $59,989,602
===========
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
73
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 7,063,214 $ 10,878,788
Net realized gain on investments
and futures contracts 5,211,021 2,197,918
Net change in unrealized
appreciation (depreciation) on
investments and
futures contracts 47,715,367 138,389,476
------------------------------
Net increase in net assets
resulting from operations 59,989,602 151,466,182
------------------------------
Dividends to shareholders:
From net investment income:
Class I (9,637,543) (7,726,950)
Service Class (2,029,294) (1,659,778)
------------------------------
Total dividends to shareholders (11,666,837) (9,386,728)
------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 270,105,432 --
Class I 191,904,616 293,140,422
Service Class 16,110,983 105,806,918
Net asset value of shares issued
to shareholders in reinvestment
of dividends:
Class I 9,634,831 7,719,756
Service Class 2,029,015 1,659,778
------------------------------
489,784,877 408,326,874
Cost of shares redeemed:
Class A (31,820,360) --
Class I (105,456,500) (164,877,116)
Service Class (225,114,946) (66,922,507)
------------------------------
(362,391,806) (231,799,623)
------------------------------
Increase in net assets derived
from capital share
transactions 127,393,071 176,527,251
------------------------------
Net increase in net assets 175,715,836 318,606,705
NET ASSETS:
Beginning of period 974,420,266 655,813,561
------------------------------
End of period $1,150,136,102 $ 974,420,266
==============================
Accumulated undistributed net
investment income at end of period $ 4,519,580 $ 9,123,203
==============================
</Table>
74 MainStay S&P 500 Index Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS I
------------ ---------------------------------------------------------------------------
JANUARY 1, JANUARY 1,
2004** SIX MONTHS 1999
THROUGH ENDED THROUGH
APRIL 30, APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31,
2004*** 2004*** 2003 2002 2001 2000 1999*
Net asset value at beginning of
period $ 25.46 $ 24.43 $ 20.57 $ 25.84 $ 37.38 $ 36.99 $ 33.39
-------- -------- -------- -------- -------- ---------- ----------
Net investment income 0.08 0.15 0.32(a) 0.31 0.30(a) 0.37 0.31
Net realized and unrealized gain
(loss) on investments (0.10) 1.34 3.85 (3.86) (9.06) 1.86 3.60
-------- -------- -------- -------- -------- ---------- ----------
Total from investment operations (0.02) 1.49 4.17 (3.55) (8.76) 2.23 3.91
-------- -------- -------- -------- -------- ---------- ----------
Less dividends and distributions:
From net investment income -- (0.29) (0.31) (0.32) (0.36) (0.38) --
From net realized gain on
investments -- -- -- (1.40) (2.42) (1.46) (0.31)
-------- -------- -------- -------- -------- ---------- ----------
Total dividends and distributions -- (0.29) (0.31) (1.72) (2.78) (1.84) (0.31)
-------- -------- -------- -------- -------- ---------- ----------
Net asset value at end of period $ 25.44 $ 25.63 $ 24.43 $ 20.57 $ 25.84 $ 37.38 $ 36.99
======== ======== ======== ======== ======== ========== ==========
Total investment return (b) (0.08%) 6.12% 20.59% (15.23%) (24.90%) 5.98% 11.80%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.04%+ 1.33%+ 1.46% 1.31% 1.03% 0.95% 1.06%+
Net expenses 0.59%+ 0.30%+ 0.30% 0.30% 0.30% 0.30% 0.30%+
Expenses (before reimbursement) 0.88%+ 0.59%+ 0.61% 0.59% 0.57% 0.54% 0.55%+
Portfolio turnover rate 1% 1% 3% 4% 5% 11% 7%
Net assets at end of period (in
000's) $237,651 $912,485 $777,843 $527,277 $612,937 $1,503,224 $1,641,591
<Caption>
CLASS I
------------
YEAR ENDED
DECEMBER 31,
1998
Net asset value at beginning of
period $ 27.05
----------
Net investment income 0.38
Net realized and unrealized gain
(loss) on investments 7.36
----------
Total from investment operations 7.74
----------
Less dividends and distributions:
From net investment income (0.38)
From net realized gain on
investments (1.02)
----------
Total dividends and distributions (1.40)
----------
Net asset value at end of period $ 33.39
==========
Total investment return (b) 28.62%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.29%
Net expenses 0.30%
Expenses (before reimbursement) 0.56%
Portfolio turnover rate 8%
Net assets at end of period (in
000's) $1,472,263
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Per share data based on average shares outstanding during
the period.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
75
MAINSTAY SMALL CAP OPPORTUNITY FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
RUSSELL 2000(R) VALUE INDEX(1) 9.09% 42.45% 12.92% 12.90%
S&P 500(R) INDEX(2) 6.27 22.88 -2.26 11.36
S&P SMALLCAP 600(R) INDEX(3) 8.47 39.94 10.92 12.17
LIPPER SMALL CAP VALUE FUNDS INDEX(4) 10.46 46.70 13.68 12.38
AVERAGE LIPPER SMALL-CAP VALUE FUND(5) 10.45 42.48 13.58 13.28
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 3.83% 37.84% 8.78% 11.72%
Excluding sales 9.87 45.86 10.02 12.35
charges
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY SMALL
CAP OPPORTUNITY LIPPER SM-CAP RUSSELL 2000 S&P SMALL CAP
FUND S&P 500 INDEX VALUE INDEX VALUE INDEX(1) 600 INDEX
--------------- ------------- ------------- -------------- -------------
4/30/94 945.00 1000.00 1000.00 1000.00 1000.00
940.00 1175.00 1061.00 1056.00 1060.00
1185.00 1530.00 1307.00 1333.00 1439.00
1379.00 1914.00 1439.00 1527.00 1493.00
2110.00 2700.00 2044.00 2165.00 2191.00
1879.00 3289.00 1693.00 1833.00 1878.00
1893.00 3622.00 1817.00 1913.00 2262.00
1940.00 3152.00 2208.00 2377.00 2446.00
2342.00 2754.00 2648.00 2911.00 2850.00
2077.00 2388.00 2191.00 2362.00 2253.00
4/30/04 3029.00 2934.00 3214.00 3365.00 3153.00
</Table>
<Table>
-- MainStay Small Cap -- S&P SmallCap 600 -- S&P 500 Index
Opportunity Fund Index
-- Lipper Small Cap -- Russell 2000 Value
Value Funds Index Index
</Table>
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 4.42% 39.73% 8.94% 11.32%
Excluding sales charges 9.42 44.73 9.22 11.32
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY SMALL
CAP OPPORTUNITY LIPPER SM-CAP RUSSELL 2000 S&P SMALL CAP
FUND S&P 500 INDEX VALUE INDEX VALUE INDEX(1) 600 INDEX
--------------- ------------- ------------- -------------- -------------
4/30/94 1000.00 1000.00 1000.00 1000.00 1000.00
986.00 1175.00 1061.00 1056.00 1060.00
1231.00 1530.00 1307.00 1333.00 1439.00
1413.00 1914.00 1439.00 1527.00 1493.00
2134.00 2700.00 2044.00 2165.00 2191.00
1879.00 3289.00 1693.00 1833.00 1878.00
1880.00 3622.00 1817.00 1913.00 2262.00
1912.00 3152.00 2208.00 2377.00 2446.00
2290.00 2754.00 2648.00 2911.00 2850.00
2019.00 2388.00 2191.00 2362.00 2253.00
4/30/04 2921.00 2934.00 3214.00 3365.00 3153.00
</Table>
<Table>
-- MainStay Small Cap -- S&P SmallCap 600 -- S&P 500 Index
Opportunity Fund Index
-- Lipper Small Cap -- Russell 2000 Value
Value Funds Index Index
</Table>
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A and B shares, first
offered 1/1/04, includes the historical performance of Class I shares from
inception (1/12/87) through 12/31/03 adjusted to reflect the applicable sales
charge (or CDSC) and fees and expenses for such shares. Prior to 1/1/04, the
Fund offered Class L shares, which were subject to a 1% sales charge and a 1%
CDSC on redemptions within one year of purchase. Performance for Class L shares,
first offered 12/30/02, includes the historical performance of Class I shares
from inception through 12/29/02 adjusted to reflect the applicable sales charge,
CDSC, and fees and expenses for such shares. Effective 1/1/04, all outstanding
Class L shares of the Fund were converted and/or redesignated Class C shares.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
76 MainStay Small Cap Opportunity Fund
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 8.36% 43.76% 9.23% 11.33%
Excluding sales charges 9.36 44.76 9.23 11.33
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY SMALL
CAP OPPORTUNITY LIPPER SM-CAP RUSSELL 2000 S&P SMALL CAP
FUND S&P 500 INDEX VALUE INDEX VALUE INDEX(1) 600 INDEX
--------------- ------------- ------------- -------------- -------------
4/30/94 1000.00 1000.00 1000.00 1000.00 1000.00
985.00 1175.00 1061.00 1056.00 1060.00
1231.00 1530.00 1307.00 1333.00 1439.00
1414.00 1914.00 1439.00 1527.00 1493.00
2134.00 2700.00 2044.00 2165.00 2191.00
1881.00 3289.00 1693.00 1833.00 1878.00
1882.00 3622.00 1817.00 1913.00 2262.00
1914.00 3152.00 2208.00 2377.00 2446.00
2291.00 2754.00 2648.00 2911.00 2850.00
2021.00 2388.00 2191.00 2362.00 2253.00
4/30/04 2925.00 2934.00 3214.00 3365.00 3153.00
</Table>
<Table>
-- MainStay Small Cap -- S&P SmallCap 600 -- S&P 500 Index
Opportunity Fund Index
-- Lipper Small Cap -- Russell 2000 Value
Value Funds Index Index
</Table>
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales 9.86% 46.06% 10.27% 12.65%
charges
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY SMALL LIPPER SMALL CAP
CAP OPPORTUNITY RUSSELL 2000 S&P SMALL CAP VALUE FUNDS
FUND S&P 500 INDEX VALUE INDEX 600 INDEX INDEX
--------------- ------------- ------------ ------------- ----------------
4/30/94 1000.00 1000.00 1000.00 1000.00 1000.00
998.00 1175.00 1056.00 1060.00 1061.00
1261.00 1530.00 1333.00 1439.00 1307.00
1473.00 1914.00 1527.00 1493.00 1439.00
2260.00 2700.00 2165.00 2191.00 2044.00
2018.00 3289.00 1833.00 1878.00 1693.00
2039.00 3622.00 1913.00 2262.00 1817.00
2095.00 3152.00 2377.00 2446.00 2208.00
2533.00 2754.00 2911.00 2850.00 2648.00
2253.00 2388.00 2362.00 2253.00 2191.00
4/30/04 3291.00 2934.00 3365.00 3153.00 3214.00
</Table>
<Table>
-- MainStay Small Cap -- S&P SmallCap 600 -- S&P 500 Index
Opportunity Fund Index
-- Lipper Small Cap -- Russell 2000 Value
Value Funds Index Index
</Table>
1. The Russell 2000(R) Value Index is an unmanaged index that measures the
performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values. The Russell 2000(R) Index is an unmanaged
index that measures the performance of the 2,000 smallest companies in the
Russell 3000(R) Index, which, in turn, is an unmanaged index that measures
the performance of the 3,000 largest U.S. companies based on total market
capitalization. Results assume reinvestment of all income and capital gains.
An investment cannot be made directly into an index.
2. "S&P 500(R)" is a trademark of the McGraw-Hill Companies, Inc. The S&P 500(R)
is an unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock-market performance. Results assume reinvestment of all
income and capital gains. An investment cannot be made directly into an
index.
3. S&P SmallCap 600(R) Index is a market-value weighted benchmark of 600
small-capitalization common stocks. Results assume reinvestment of all
dividend and capital-gain distributions. An investment cannot be made
directly into an index.
4. Lipper Small Cap Value Funds Index is an unmanaged index that tracks the
performance of the 30 largest small-company value funds, after expenses.
Results assume reinvestment of all dividend and capital-gain distributions.
An investment cannot be made directly into an index.
5. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 77
$1,000 INVESTED IN MAINSTAY SMALL CAP OPPORTUNITY FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $1,011 $ 6 $1,044 $ 6
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $1,008 $ 9 $1,041 $ 9
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(3) $1,000 $1,095 $14 $1,037 $14
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,099 $ 6 $1,044 $ 6
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares and Class B shares were first offered on January 1, 2004.
Expenses paid during the period reflect ongoing costs for the four-month
period ending April 30, 2004. Had Class A shares and Class B shares been
offered for the six months ended April 30, 2004, based on a hypothetical 5%
return, expenses paid during the period would be $10 and $14, respectively,
and the ending account value would be $1,040 and $1,037, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
78 MainStay Small Cap Opportunity Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Wesley G. McCain and Kathy A. O'Connor
of New York Life Investment Management LLC
MAINSTAY SMALL CAP OPPORTUNITY FUND
(FORMERLY ECLIPSE SMALL CAP VALUE FUND)
WHAT MAJOR FACTORS INFLUENCED THE STOCK MARKET DURING THE SIX MONTHS ENDED APRIL
30, 2004?
All broadly watched equity indices provided positive performance for the six
months ended April 30, 2004. Small-capitalization stocks outperformed large-
capitalization stocks. The market favored the value style over the growth style
of investing across all capitalization levels.
For much of the semiannual period, positive investor sentiment boosted the U.S.
equity markets. Low interest rates and indications of rebounding economic
activity helped to fuel an optimistic outlook. In April, however, heightened
geopolitical tensions and growing concerns over potential interest-rate
increases contributed to market uncertainty.
WHAT FACTORS MOST SIGNIFICANTLY AFFECTED FUND PERFORMANCE DURING THE SEMIANNUAL
PERIOD?
The relative performance of Fund holdings in the real estate, energy,
transportation, and media industry groups was stronger than that of related
stocks in the Fund's benchmark, the Russell 2000(R) Value Index.(1)
The Fund's relative performance was also enhanced by its overweighted exposure
to the bottom 25% of companies within the Russell 2000(R) Value Index, as
measured by market capitalization. For the six months ended April 30, 2004,
these smaller small-cap companies outperformed the larger small-cap companies in
the Index. Unlike the Index, which has a larger weighting in securities with
larger market capitalizations, the Fund attempts to have relatively equal
weightings among the securities in its portfolio. It is important to note that
the Fund was invested in some, but not all, of the companies in the Russell
2000(R) Value Index.
WHAT WERE SOME OF THE FUND'S STRONG PERFORMERS DURING THE REPORTING PERIOD?
Wireless telecommunication services company Arch Wireless (+117.0%)(2) provided
outstanding results. Other strong performers included Harvest Natural Resources
(+110.0%), Ocwen Financial (+104.4%), Petroleum Development (+84.9%), and EnPro
Industries (+83.1%).
WHICH STOCKS UNDERPERFORMED?
Quovadx (-64.4%), which operates in the Internet software & services industry,
was the Fund's worst-performing stock during the reporting period. Brightpoint
(-59.4%), Time Warner Telecom (-57.9%), Bookham Technology (-57.6%), and
Friedman's (-46.3%) also detracted from the Fund's results.
WERE THERE ANY SIGNIFICANT PURCHASES DURING THE REPORTING PERIOD?
The Fund purchases stocks that have relatively improving operating
characteristics and are relatively undervalued based on our proprietary model.
Among the securities that fit the Fund's purchase criteria during the reporting
period were Petroleum Development, Titanium Metals, Nuevo Energy, Res-Care, and
Lakes Entertainment.
WHAT STOCKS DID THE FUND SELL?
The Fund sells stocks that exhibit deteriorating operating results and/or are
relatively overvalued. During the reporting period, Enesco Group, R&G Financial,
Dura Automotive Systems, and New Focus were among the stocks that were
eliminated from the Fund's portfolio based on the Fund's proprietary sell
disciplines.
DID THE FUND CHANGE ITS INDUSTRY-GROUP WEIGHTINGS?
Weighting changes in the Fund result from a combination of security performance,
industry performance, and the Fund's proprietary security selection process.
From the end of October 2003 to the end of April 2004, the Fund increased its
weighting in the insurance industry group from 7.8% to 14.4%, in
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value. Percentages reflect total returns of Fund holdings in the
securities mentioned, including purchases and sales, for the six months ended
4/30/04, or for the portion of the reporting period such securities were held in
the Fund, if shorter. Stocks of small companies may be subject to greater price
volatility, significantly lower trading volumes, and greater spreads between bid
and ask prices than stocks of larger companies. Small companies may be more
vulnerable to adverse business or market development than mid- or
large-capitalization companies.
1. See footnote on page 77 for more information on the Russell 2000(R) Value
Index.
2. Percentages reflect total returns of Fund holdings in the securities
mentioned, including purchases and sales, for the six months ended 4/30/04,
or for the portion of the reporting period such securities were held in the
Fund, if shorter.
www.mainstayfunds.com 79
health care equipment & services from 1.5% to 4.7%, and in energy from 5.2% to
8.2%. The shifts reflected new purchases and improved performance among these
industry groups relative to other industry groups.
Over the same period, the Fund decreased its weightings in banks from 16.7% to
10.8%, in food, beverage & tobacco from 9.4% to 3.8%, and in telecommunication
services from 7.0% to 2.0%. The decline in these industry group weightings
reflected position sales and weaker relative performance of the groups.
HOW DO THE FUND'S WEIGHTINGS DIFFER FROM THOSE OF ITS BENCHMARK?
As of April 30, 2004, the Fund was overweighted relative to the Russell 2000(R)
Value Index in the insurance, energy, consumer durables & apparel, and health
care equipment & services industry groups. The Fund's overweighted positions in
insurance, energy, and consumer durables & apparel helped Fund performance.
At the end of the reporting period, the Fund was underweighted relative to the
Russell 2000(R) Value Index in the capital goods, materials, and banks industry
groups. Security selection in each of these industry groups was quite strong.
Although the Fund was underweighted in capital goods and banks, these industry
groups made a relatively strong contribution to Fund performance. In the
materials industry group, the Fund's underweighted position detracted from
relative performance.
WHAT DO YOU ANTICIPATE GOING FORWARD?
We will continue to utilize the Fund's proprietary quantitative methodologies to
select small-capitalization stocks of companies that our model indicates are
relatively undervalued and have strong operating characteristics.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 100.10
Short-Term Investments 0.50
Liabilities in Excess of Cash and Other Assets -0.60
</Table>
80 MainStay Small Cap Opportunity Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (100.1%)+
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.1%)
Ducommun, Inc. (a) 10,800 $ 254,880
-------------
AIR FREIGHT & LOGISTICS (0.2%)
Hub Group, Inc. Class A (a) 12,000 414,000
-------------
AUTO COMPONENTS (0.1%)
Tenneco Automotive, Inc. (a) 20,400 281,520
-------------
BIOTECHNOLOGY (0.2%)
Caliper Life Sciences, Inc. (a) 65,000 436,800
-------------
BUILDING PRODUCTS (0.9%)
Jacuzzi Brands, Inc. (a) 196,300 1,715,662
-------------
CAPITAL MARKETS (5.2%)
iShares Russell 2000 Index Fund (b) 22,800 2,533,308
iShares Russell 2000 Value Index Fund (b) 15,800 2,556,440
iShares S&P SmallCap 600 Index Fund (b) 18,900 2,586,654
iShares S&P SmallCap 600/ BARRA Value Index Fund
(b) 25,200 2,590,056
SWS Group, Inc. 4,000 64,960
-------------
10,331,418
-------------
CHEMICALS (0.6%)
Ethyl Corp. (a) 19,600 364,952
Octel Corp. 400 9,320
OM Group, Inc. (a) 29,800 758,410
-------------
1,132,682
-------------
COMMERCIAL BANKS (4.7%)
BFC Financial Corp. Class A (a) 83,663 1,087,619
Center Financial Corp. 29,500 427,750
Century Bancorp, Inc. Class A 6,800 222,700
Columbia Bancorp 8,300 240,700
F.N.B. Corp. 1,900 37,240
First Citizens BancShares, Inc. Class A 6,800 833,068
First Financial Corp. 7,000 206,500
First M&F Corp. 6,900 237,636
First Republic Bank 15,000 571,500
FLAG Financial Corp. 6,100 79,300
FNB Corp. 5,700 114,000
Humboldt Bancorp 72,400 1,388,632
Independent Bank Corp. 34,476 862,934
Nara Bancorp, Inc. 2,900 83,520
</Table>
<Table>
<Caption>
SHARES VALUE
COMMERCIAL BANKS (CONTINUED)
Oak Hill Financial, Inc. 8,800 $ 284,944
Provident Bankshares Corp. 33,000 929,610
Republic Bancorp, Inc. Class A 11,870 222,563
S&T Bancorp, Inc. 14,500 412,235
Southern Financial Bancorp, Inc. 2,880 121,047
Southside Bancshares, Inc. 3,835 70,602
State Financial Services Corp. Class A 7,100 207,817
Taylor Capital Group, Inc. 2,500 51,925
Trust Company of
New Jersey (The) 2,600 96,252
U.S.B. Holding Co., Inc. 4,400 92,620
West Coast Bancorp 19,300 424,600
-------------
9,307,314
-------------
COMMERCIAL SERVICES & SUPPLIES (4.1%)
Ambassadors International, Inc. 48,200 624,190
Brink's Co. (The) 10,200 282,846
Century Business
Services, Inc. (a) 94,000 388,220
Consolidated Graphics, Inc. (a) 14,500 541,140
Geo Group, Inc. (The) (a) 17,500 411,250
Gundle/SLT Environmental, Inc. (a) 2,300 42,389
Imagistics International, Inc. (a) 11,900 481,831
Mail-Well, Inc. (a) 216,100 875,205
MemberWorks, Inc. (a) 34,700 1,023,997
*United Rentals, Inc. (a) 201,600 3,467,520
-------------
8,138,588
-------------
COMMUNICATIONS EQUIPMENT (1.3%)
Audiovox Corp. Class A (a) 35,700 539,070
Bookham Technology PLC ADR (a)(c) 278,954 387,745
CommScope, Inc. (a) 14,600 255,646
Digi International, Inc. (a) 80,600 783,432
Enterasys Networks, Inc. (a) 9,100 19,110
MRV Communications, Inc. (a) 252,300 592,905
-------------
2,577,908
-------------
COMPUTERS & PERIPHERALS (1.0%)
Intergraph Corp. (a) 34,100 859,661
Komag, Inc. (a) 5,600 71,176
Quantum Corp. (a) 15,900 49,767
Western Digital Corp. (a) 128,400 1,037,472
-------------
2,018,076
-------------
CONSTRUCTION & ENGINEERING (1.8%)
Comfort Systems USA, Inc. (a) 80,200 546,964
Perini Corp. (a) 86,100 1,214,010
</Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
81
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ---------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (CONTINUED)
Quanta Services, Inc. (a) 4,200 $ 22,974
Washington Group
International, Inc. (a) 46,900 1,694,028
-------------
3,477,976
-------------
CONSTRUCTION MATERIALS (0.3%)
Texas Industries, Inc. 16,900 569,699
-------------
CONSUMER FINANCE (2.4%)
Advanta Corp. Class B 108,500 1,738,170
ASTA Funding, Inc. 45,200 724,556
CompuCredit Corp. (a) 400 6,628
World Acceptance Corp. (a) 152,600 2,334,780
-------------
4,804,134
-------------
CONTAINERS & PACKAGING (0.2%)
Crown Holdings, Inc. (a) 29,600 249,824
Greif, Inc. Class A 4,900 161,063
-------------
410,887
-------------
DISTRIBUTORS (0.3%)
Noland Co. 15,200 674,880
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.3%)
Cincinnati Bell, Inc. (a) 168,900 667,155
ITC-DeltaCom, Inc. (a) 63,700 377,741
Primus Telecommunications Group, Inc. (a) 14,400 80,208
Time Warner Telecom, Inc. (a) 364,900 1,386,620
-------------
2,511,724
-------------
ELECTRIC UTILITIES (0.6%)
Green Mountain Power Corp. 50,400 1,288,728
-------------
ELECTRICAL EQUIPMENT (0.2%)
General Cable Corp. (a) 61,000 469,700
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.5%)
Brightpoint, Inc. (a) 45,625 496,856
CellStar Corp. (a) 13,700 95,489
MTS Systems Corp. 16,200 381,510
Pemstar, Inc. (a) 27,200 88,672
-------------
1,062,527
-------------
FOOD & STAPLES RETAILING (0.9%)
NeighborCare, Inc. (a) 59,600 1,379,144
Pantry, Inc. (The) (a) 8,400 167,580
Smart & Final, Inc. (a) 23,500 271,425
-------------
1,818,149
-------------
</Table>
<Table>
<Caption>
SHARES VALUE
FOOD PRODUCTS (3.7%)
Cal-Maine Foods, Inc. 18,200 $ 200,928
Central Garden & Pet Co. (a) 21,900 843,369
Chiquita Brands
International, Inc. (a) 8,000 144,080
Corn Products International, Inc. 7,100 301,750
John B. Sanfilippo &
Son, Inc. (a) 27,200 853,264
*M & F Worldwide Corp. (a) 311,700 3,871,314
Omega Protein Corp. (a) 10,600 84,482
Pilgrim's Pride Corp. 11,700 270,621
Sanderson Farms, Inc. 20,000 743,600
Zapata Corp. (a) 1,000 58,500
-------------
7,371,908
-------------
HEALTH CARE EQUIPMENT & SUPPLIES (2.2%)
ALARIS Medical
Systems, Inc. (a) 19,800 384,516
*Dade Behring Holdings, Inc. (a) 88,500 4,071,000
-------------
4,455,516
-------------
HEALTH CARE PROVIDERS & SERVICES (2.4%)
Alderwoods Group, Inc. (a) 180,000 2,210,400
Gentiva Health Services, Inc. (a) 63,300 924,813
Mariner Health Care, Inc. (a) 14,800 267,288
MedCath Corp. (a) 20,500 311,600
Res-Care, Inc. (a) 72,400 981,744
-------------
4,695,845
-------------
HOTELS, RESTAURANTS & LEISURE (2.7%)
Aztar Corp. (a) 10,300 266,770
Dave & Buster's, Inc. (a) 24,600 457,806
Isle of Capri Casinos, Inc. (a) 47,400 995,400
La Quinta Corp. (a) 74,000 532,060
Lakes Entertainment, Inc. (a) 114,400 2,594,592
Prime Hospitality Corp. (a) 53,000 532,650
-------------
5,379,278
-------------
HOUSEHOLD DURABLES (4.7%)
Brookfield Homes Corp. 48,300 1,561,539
Emerson Radio Corp. (a) 8,900 36,223
Fedders Corp. 4,900 26,509
Hooker Furniture Corp. 13,000 296,140
*M.D.C. Holdings, Inc. 65,960 4,075,669
Standard Pacific Corp. 35,800 1,805,752
Technical Olympic USA, Inc. (a) 2,100 68,775
William Lyon Homes, Inc. (a) 16,000 1,410,560
-------------
9,281,167
-------------
INDUSTRIAL CONGLOMERATES (0.1%)
United Capital Corp. (a) 9,800 196,000
-------------
</Table>
82 MainStay Small Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ---------------------------------------------------------------------------------
INSURANCE (14.4%)
Allmerica Financial Corp. (a) 40,200 $ 1,397,352
AmerUs Group Co. 21,200 818,320
Argonaut Group, Inc. (a) 32,900 608,650
*Ceres Group, Inc. (a) 528,300 3,618,855
Delphi Financial Group, Inc. Class A 26,050 1,046,168
Donegal Group, Inc. Class B 62,500 1,319,375
Enstar Group, Inc. (The) (a) 4,800 211,200
FBL Financial Group, Inc. Class A 70,400 1,874,752
FPIC Insurance Group, Inc. (a) 75,700 1,672,970
Independence Holding Co. 6,200 223,200
Kansas City Life Insurance Co. 29,600 1,184,000
LandAmerica Financial
Group, Inc. 49,300 2,031,653
National Western Life Insurance Co. Class A (a) 8,100 1,176,930
NYMAGIC, Inc. 34,500 883,200
Odyssey Re Holdings Corp. 2,700 64,071
Ohio Casualty Corp. (a) 15,700 308,034
Phoenix Cos., Inc. (The) 90,500 1,146,635
*Safety Insurance Group, Inc. 190,800 4,123,188
SCPIE Holdings, Inc. 65,600 541,200
Stewart Information
Services Corp. 72,600 2,577,300
United Fire & Casualty Co. 42,200 1,849,626
-------------
28,676,679
-------------
INTERNET & CATALOG RETAIL (1.1%)
Blair Corp. 34,400 894,400
Systemax, Inc. (a) 243,100 1,217,931
-------------
2,112,331
-------------
INTERNET SOFTWARE & SERVICES (3.3%)
Equinix, Inc. (a) 6,100 179,279
*InfoSpace, Inc. (a) 115,200 3,765,888
Keynote Systems, Inc. (a) 220,800 2,618,688
Quovadx, Inc. (a) 26,500 61,745
-------------
6,625,600
-------------
IT SERVICES (0.1%)
Sykes Enterprises, Inc. (a) 38,600 211,142
-------------
LEISURE EQUIPMENT & PRODUCTS (0.2%)
K2, Inc. (a) 28,200 413,412
Steinway Musical
Instruments, Inc. (a) 200 7,250
-------------
420,662
-------------
</Table>
<Table>
<Caption>
SHARES VALUE
MACHINERY (2.7%)
Alamo Group, Inc. 33,900 $ 561,723
Ampco-Pittsburgh Corp. 1,600 20,704
Astec Industries, Inc. (a) 18,500 330,040
EnPro Industries, Inc. (a) 6,600 130,680
Greenbrier Cos., Inc. (The) (a) 61,100 1,032,590
Joy Global, Inc. 82,900 2,176,125
NACCO Industries, Inc. Class A 9,900 842,292
Terex Corp. (a) 8,000 262,800
-------------
5,356,954
-------------
MEDIA (0.4%)
Carmike Cinemas, Inc. (a) 8,300 313,242
Pegasus Communications Corp. (a) 3,000 60,102
PRIMEDIA, Inc. (a) 63,300 184,836
Young Broadcasting, Inc. Class A (a) 7,800 137,748
-------------
695,928
-------------
METALS & MINING (1.9%)
Brush Engineered
Materials, Inc. (a) 13,500 218,430
Carpenter Technology Corp. 9,800 267,638
Gibraltar Steel Corp. 2,200 54,120
Metal Management, Inc. (a) 140,400 2,035,800
Metals USA, Inc. (a) 44,300 560,439
Oregon Steel Mills, Inc. (a) 200 1,706
Quanex Corp. 4,800 195,840
Schnitzer Steel Industries, Inc. Class A 3,000 78,810
Steel Technologies, Inc. 300 5,787
Stillwater Mining Co. (a) 17,300 232,339
Titanium Metals Corp. (a) 1,000 79,250
-------------
3,730,159
-------------
MULTILINE RETAIL (0.6%)
Dillard's, Inc. Class A 66,600 1,120,878
-------------
MULTI-UTILITIES & UNREGULATED POWER (3.0%)
Avista Corp. 20,400 344,760
*Energen Corp. 85,800 3,547,830
Westar Energy, Inc. 100,500 2,051,205
-------------
5,943,795
-------------
OFFICE ELECTRONICS (0.0%) (D)
Gerber Scientific, Inc. (a) 7,800 46,800
-------------
OIL & GAS (8.2%)
Comstock Resources, Inc. (a) 95,900 1,951,565
Denbury Resources, Inc. (a) 5,200 94,952
General Maritime Corp. (a) 152,900 3,071,761
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
83
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ---------------------------------------------------------------------------------
OIL & GAS (CONTINUED)
Harvest Natural
Resources, Inc. (a) 39,200 $ 644,448
*KCS Energy, Inc. (a) 291,400 3,502,628
Nuevo Energy Co. (a) 14,100 486,450
Overseas Shipholding
Group, Inc. 42,700 1,399,279
Petroleum Development Corp. (a) 27,100 715,982
Plains Exploration &
Production Co. (a) 16,400 323,080
Resource America, Inc. Class A 73,300 1,419,088
Swift Energy Co. (a) 14,700 318,843
Tesoro Petroleum Corp. (a) 116,400 2,364,084
-------------
16,292,160
-------------
PAPER & FOREST PRODUCTS (0.7%)
Louisiana-Pacific Corp. 42,400 1,000,216
Potlatch Corp. 12,600 477,288
-------------
1,477,504
-------------
REAL ESTATE (8.2%)
American Land Lease, Inc. 35,700 690,795
American Mortgage
Acceptance Co. 3,400 45,492
Anworth Mortgage Asset Corp. 15,800 184,386
Avatar Holdings, Inc. (a) 400 15,264
Bluegreen Corp. (a) 82,200 1,048,872
Corporate Office
Properties Trust 6,900 140,415
Corrections Corp. of America (a) 45,600 1,661,664
Cousins Properties, Inc. 45,000 1,265,400
CRIIMI MAE, Inc. (a) 46,300 492,169
HRPT Properties Trust 8,300 79,265
Impac Mortgage Holdings, Inc. 159,600 3,002,076
Koger Equity, Inc. 59,500 1,246,525
LaSalle Hotel Properties 42,100 926,200
LNR Property Corp. 5,600 281,232
LTC Properties, Inc. 29,000 451,240
National Health Investors, Inc. 25,900 620,823
Newcastle Investment Corp. 67,800 1,811,616
Novastar Financial, Inc. 18,600 603,756
Prime Group Realty Trust (a) 2,000 11,060
Redwood Trust, Inc. 17,100 742,995
Senior Housing Properties Trust 57,700 862,615
Thornburg Mortgage, Inc. 2,900 75,052
-------------
16,258,912
-------------
</Table>
<Table>
<Caption>
SHARES VALUE
ROAD & RAIL (1.8%)
AMERCO (a) 7,800 $ 219,414
RailAmerica, Inc. (a) 24,800 303,056
*SCS Transportation, Inc. (a) 137,300 3,141,424
-------------
3,663,894
-------------
SOFTWARE (0.1%)
RSA Security, Inc. (a) 6,600 105,732
-------------
SPECIALTY RETAIL (1.5%)
Building Materials Holding Corp. 4,100 67,404
Friedman's, Inc. Class A (a) 33,500 168,170
Rent-Way, Inc. (a) 200,400 1,871,736
Stage Stores, Inc. (a) 20,900 820,534
TBC Corp. (a) 2,200 61,468
Trans World
Entertainment Corp. (a) 700 7,266
-------------
2,996,578
-------------
TEXTILES, APPAREL & LUXURY GOODS (2.4%)
Brown Shoe Co., Inc. 6,900 252,402
Haggar Corp. 76,800 1,508,352
Hampshire Group, Ltd. (a) 13,600 405,987
Hartmarx Corp. (a) 161,700 942,711
Kellwood Co. 2,200 86,790
Movado Group, Inc. 6,300 189,000
Perry Ellis International, Inc. (a) 8,200 231,650
Phillips-Van Heusen Corp. 64,400 1,163,708
-------------
4,780,600
-------------
THRIFTS & MORTGAGE FINANCE (6.0%)
BankAtlantic Bancorp, Inc. Class A 45,400 710,510
BankUnited Financial Corp. Class A (a) 26,300 695,109
Berkshire Hills Bancorp, Inc. 12,800 433,280
Corus Bankshares, Inc. 7,600 286,900
EverTrust Financial Group, Inc. 28,100 452,972
Fidelity Bankshares, Inc. 11,400 379,050
First Federal Financial Corp. of Kentucky 2,300 57,500
FIRSTFED AMERICA BANCORP, Inc. 5,100 124,950
FirstFed Financial Corp. (a) 26,400 1,067,088
Flagstar Bancorp, Inc. 20,600 420,858
Fremont General Corp. 27,100 584,005
Hawthorne Financial Corp. (a) 35,500 1,198,480
Heritage Financial Corp. 2,600 50,700
Hudson River Bancorp., Inc. 25,100 452,051
ITLA Capital Corp. (a) 36,700 1,578,100
New Century Financial Corp. 1,650 70,009
Ocwen Financial Corp. (a) 110,600 1,202,222
PennFed Financial Services, Inc. 16,000 481,600
</Table>
84 MainStay Small Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- ---------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (CONTINUED)
Provident Financial
Holdings, Inc. 10,950 $ 268,275
Sterling Financial Corp. (a) 23,657 780,918
United Community
Financial Corp. 7,300 89,571
Warwick Community
Bancorp, Inc. 400 12,548
WSFS Financial Corp. 11,900 576,674
-------------
11,973,370
-------------
TOBACCO (0.1%)
Universal Corp. 5,100 256,224
-------------
WIRELESS TELECOMMUNICATION SERVICES (0.7%)
American Tower Corp. Class A (a) 3,200 39,840
Arch Wireless, Inc. Class A (a) 8,600 293,862
Crown Castle
International Corp. (a) 19,000 265,050
Dobson Communications Corp. Class A (a) 71,400 255,612
SBA Communications Corp. (a) 153,900 615,600
-------------
1,469,964
-------------
Total Common Stocks (Cost $176,697,536) 199,292,832
-------------
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (0.5%)
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENT (0.5%)
Bank of New York (The)
0.90%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $930,070
(Collateralized by
Federal National Mortgage Association
3.917%, due 3/1/33
with a Principal Amount of
$1,129,351 and a
Market Value of $1,127,459
including accrued interest) $ 930,000 $ 930,000
-------------
Total Short-Term Investment (Cost $930,000) 930,000
-------------
Total Investments (Cost $177,627,536) (e) 100.6% 200,222,832(f)
Liabilities in Excess of
Cash and Other Assets (0.6) (1,120,723)
-------- -------------
Net Assets 100.0% $ 199,102,109
======== =============
</Table>
<Table>
(a) Non-income producing security.
(b) Exchange Traded Fund -- represents a basket of
securities that are traded on an exchange.
(c) ADR -- American Depositary Receipt.
(d) Less than one tenth of a percent.
(e) The cost for federal income tax purposes is
$177,631,905.
(f) At April 30, 2004 net unrealized appreciation was
$22,590,927, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $29,559,836 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $6,968,909.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
85
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $177,627,536) $200,222,832
Cash 5,046
Receivables:
Investment securities sold 7,317,807
Fund shares sold 993,904
Dividends and interest 111,112
Other assets 28,327
------------
Total assets 208,679,028
------------
LIABILITIES:
Payables:
Investment securities purchased 6,725,988
Fund shares redeemed 2,608,380
Manager 175,255
Transfer agent 10,010
NYLIFE Distributors 6,442
Custodian 2,036
Accrued expenses 48,808
------------
Total liabilities 9,576,919
------------
Net assets $199,102,109
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per share)
1 billion shares authorized:
Class A $ 3,515
Class B 3,516
Class C 961
Class I 109,229
Additional paid-in capital 146,294,327
Accumulated undistributed net investment
income 8,053
Accumulated undistributed net realized gain
on investments 30,087,212
Net unrealized appreciation on investments 22,595,296
------------
Net assets $199,102,109
============
CLASS A
Net assets applicable to outstanding shares $ 5,964,422
============
Shares of capital stock outstanding 351,502
============
Net asset value per share outstanding $ 16.97
Maximum sales charge (5.50% of offering price) 0.99
------------
Maximum offering price per share outstanding $ 17.96
============
CLASS B
Net assets applicable to outstanding shares $ 5,923,454
============
Shares of capital stock outstanding 351,612
============
Net asset value and offering price per share
outstanding $ 16.85
============
CLASS C
Net assets applicable to outstanding shares $ 1,617,871
============
Shares of capital stock outstanding 96,060
============
Net asset value and offering price per share
outstanding $ 16.84
============
CLASS I
Net assets applicable to outstanding shares $185,596,362
============
Shares of capital stock outstanding 10,922,850
============
Net asset value and offering price per share
outstanding $ 16.99
============
</Table>
86 MainStay Small Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Dividends (a) $ 1,465,513
Interest 21,517
------------
Total income 1,487,030
------------
EXPENSES:
Manager 996,135
Transfer agent 71,400
Professional 27,042
Registration 23,141
Custodian 22,004
Shareholder communication 20,621
Trustees 16,367
Distribution -- Class B 6,815
Distribution -- Class C 1,902
Service -- Class A 2,601
Service -- Class B 2,272
Service -- Class C 634
Service -- Service Class 573
Miscellaneous 14,365
------------
Total expenses before reimbursement 1,205,872
Fees paid indirectly (See Note 2(D)) (42,247)
------------
Net expenses 1,163,625
------------
Net investment income 323,405
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 30,151,180
Net change in unrealized depreciation on
investments (14,074,188)
------------
Net realized and unrealized gain on
investments 16,076,992
------------
Net increase in net assets resulting from
operations $ 16,400,397
============
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $93.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
87
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE
IN NET ASSETS:
Operations:
Net investment income $ 323,405 $ 653,795
Net realized gain on investments 30,151,180 14,921,032
Net change in unrealized
depreciation on investments (14,074,188) 30,247,013
---------------------------
Net increase in net assets
resulting from operations 16,400,397 45,821,840
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Class I (528,959) (1,275,510)
Service Class (2,412) (1,461)
From net realized gain on investments:
Class C (75) --
Class I (8,784,719) --
Service Class (58,962) --
---------------------------
Total dividends and distributions
to shareholders (9,375,127) (1,276,971)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 7,459,250 --
Class B 6,397,595 --
Class C 1,700,145 1,149
Class I 89,271,484 123,830,893
Service Class 150,100 853,598
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Class C 74 --
Class I 8,970,887 1,237,937
Service Class 61,284 1,461
---------------------------
114,010,819 125,925,038
Cost of shares redeemed:
Class A (1,255,362) --
Class B (152,430) --
Class C (1,050) (102)
Class I (83,612,671) (117,287,648)
Service Class (1,347,714) (16,449)
---------------------------
(86,369,227) (117,304,199)
---------------------------
Increase in net assets derived
from capital share transactions 27,641,592 8,620,839
---------------------------
Net increase in net assets 34,666,862 53,165,708
</Table>
<Table>
<Caption>
2004 2003
NET ASSETS:
Beginning of period $164,435,247 $111,269,539
---------------------------
End of period $199,102,109 $164,435,247
===========================
Accumulated undistributed net
investment income at end of period $ 8,053 $ 216,019
===========================
</Table>
88 MainStay Small Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
This page intentionally left blank
89
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
----------- ----------- -------------------------
JANUARY 1, JANUARY 1, DECEMBER 30,
2004** 2004** SIX MONTHS 2002**
THROUGH THROUGH ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31,
2004*** 2004*** 2004*** 2003
Net asset value at beginning of period $16.78 $16.71 $16.15 $ 11.46
------ ------ ------ -------
Net investment income (loss) (0.02)(d) (0.06)(d) (0.13)(d) (0.05)(d)
Net realized and unrealized gain (loss) on
investments 0.21 0.20 1.63 4.74
------ ------ ------ -------
Total from investment operations 0.19 0.14 1.50 4.69
------ ------ ------ -------
Less dividends and distributions:
From net investment income -- -- -- --
From net realized gain on investments -- -- (0.81) --
------ ------ ------ -------
Total dividends and distributions -- -- (0.81) --
------ ------ ------ -------
Net asset value at end of period $16.97 $16.85 $16.84 $ 16.15
====== ====== ====== =======
Total investment return (b) 1.13% 0.84% 9.36% 40.92%
Ratios (to average net
assets)/Supplemental Data:
Net investment income (loss) (0.63%)++ (1.12%)++ (1.12%)++ (0.47%)++
Net expenses 1.92%++# 2.67%++# 2.67%++# 2.27%++#
Expenses (before reimbursement) 1.92%++# 2.67%++# 2.67%++# 2.34%++#
Portfolio turnover rate 68% 68% 68% 135%
Net assets at end of period (in 000's) $5,964 $5,923 $1,618 $ 2
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Less than 0.01% of average net assets.
++ Annualized.
# Includes transfer agent fees paid indirectly which amounted
to 0.05%, 0.08%, 0.07% and 0.08% of average net assets for
the six months ended April 30, 2004, the years ended October
31, 2003 and October 31, 2002 and the ten months ended
October 31, 2001, respectively, and custodian fees and other
expenses paid indirectly which amounted to 0.02% of average
net assets for the year ended December 31, 2000 and less
than 0.01% of average net assets for the other years
indicated.
(a) Less than one cent per share.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
(c) Restated.
(d) Per share data based on average shares outstanding during
the period.
</Table>
90 MainStay Small Cap Opportunity Fund The notes to the financial statements
are an integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------------------------------------
SIX JANUARY 1,
MONTHS 2001
ENDED THROUGH
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, YEAR ENDED DECEMBER 31,
2004*** 2003 2002 2001* 2000 1999 1998
$ 16.26 $ 11.58 $ 11.04 $ 10.65 $ 11.76 $ 11.93 $ 14.19
-------- -------- -------- -------- -------- -------- --------
0.03(d) 0.07(d) 0.15 0.08 (0.00)(a) 0.01 (0.00)(a)
1.56 4.74 0.50 0.31 (1.11) 0.35 0.42
-------- -------- -------- -------- -------- -------- --------
1.59 4.81 0.65 0.39 (1.11) 0.36 0.42
-------- -------- -------- -------- -------- -------- --------
(0.05) (0.13) (0.11) -- -- (0.01) --
(0.81) -- -- -- -- (0.52) (2.68)
-------- -------- -------- -------- -------- -------- --------
(0.86) (0.13) (0.11) -- -- (0.53) (2.68)
-------- -------- -------- -------- -------- -------- --------
$ 16.99 $ 16.26 $ 11.58 $ 11.04 $ 10.65 $ 11.76 $ 11.93
======== ======== ======== ======== ======== ======== ========
9.86% 42.04% 5.84% 3.66% (9.44%) 3.05% 3.40%
0.36%++ 0.53% 1.08% 0.70%++ (0.00%)+ 0.05% (0.00%)+
1.19%++# 1.27%# 1.26%# 1.23%++#(c) 1.21%# 1.18%# 1.14%#
1.19%++# 1.34%# 1.27%# 1.23%++#(c) 1.21%# 1.18%# 1.14%#
68% 135% 103% 77% 105% 56% 73%
$185,596 $163,362 $111,181 $108,105 $157,630 $251,229 $201,492
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
91
MAINSTAY CASH RESERVES FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
AVERAGE LIPPER MONEY MARKET FUND(1) 0.17% 0.37% 2.75% 3.86%
AVERAGE LIPPER INSTITUTIONAL MONEY MARKET FUND(1) 0.34 0.71 3.19 4.26
</Table>
CLASS I SHARES(2)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 0.31% 0.65% 3.15% 4.14%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
AVERAGE LIPPER MONEY MARKET
MAINSTAY CASH RESERVES FUND FUND
--------------------------- ---------------------------
4/30/94 1000.00 1000.00
1048.00 1045.00
1105.00 1099.00
1161.00 1151.00
1223.00 1208.00
1285.00 1264.00
1352.00 1325.00
1434.00 1398.00
1473.00 1429.00
1491.00 1440.00
4/30/04 1500.00 1446.00
</Table>
-- MainStay Cash Reserves Fund
-- Average Lipper money market fund
SWEEP SHARES CLASS(2)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 0.06% 0.15% 2.64% 3.57%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
AVERAGE LIPPER INSTITUTIONAL
MAINSTAY CASH RESERVES FUND MONEY MARKET FUND
--------------------------- ----------------------------
4/30/94 1000.00 1000.00
1042.00 1045.00
1091.00 1099.00
1139.00 1151.00
1194.00 1208.00
1247.00 1264.00
1305.00 1325.00
1377.00 1398.00
1408.00 1429.00
1418.00 1440.00
4/30/04 1420.00 1510.00
</Table>
-- MainStay Cash Reserves Fund
-- Average Lipper institutional money market fund
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price and reinvestment of dividend and capital-gain
distributions. The graphs assume an initial investment of $1,000. Class I shares
are sold with no initial sales charge or CDSC, have no annual 12b-1 fees, and
are generally available to corporate and institutional investors with a minimum
initial investment of $5 million. Sweep Shares Class shares are sold with no
initial sales charge or CDSC, have an annual 12b-1 fee of .25%, and are
available only through financial institutions participating in a sweep account
arrangement. Performance figures reflect certain fee waivers and/or expense
limitations, without which total returns may have been lower. The fee waivers
and/or expense limitations are voluntary and may be discontinued at any time.
Performance for the Sweep Shares Class shares, first offered 12/8/98, includes
the performance of Class I shares from inception (1/2/91) through 12/7/98.
1. MainStay Cash Reserves Fund, going forward, will measure its Sweep Shares
Class performance against the average Lipper institutional money market fund.
Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
2. As of 4/30/04, MainStay Cash Reserves Fund had an effective 7-day yield and
current yield of 0.62% for the Class I shares and 0.12% for the Sweep Shares
Class. These yields reflect certain expense limitations. Had these expense
limitations not been in effect, the effective 7-day yield and the current
7-day yield would have been 0.51% and 0.50% for the Class I Shares and 0.01%
and 0.01% for the Sweep Shares Class. These expense limitations are voluntary
and may be terminated or revised at any time. The current yield is more
reflective of the Fund's earnings than the total return.
92 MainStay Cash Reserves Fund
$1,000 INVESTED IN MAINSTAY CASH RESERVES FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(1) $1,000 $1,003 $2 $1,048 $3
- ------------------------------------------------------------------------------------------------------------------------
SWEEP SHARES(1) $1,000 $1,001 $5 $1,045 $5
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
www.mainstayfunds.com 93
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Mark C. Boyce and David E. Clement,
CFA, of New York Life Investment Management LLC
MAINSTAY CASH RESERVES FUND (FORMERLY ECLIPSE MONEY MARKET FUND)
WHAT MAJOR FACTORS INFLUENCED THE MONEY MARKETS DURING THE SIX MONTHS ENDED
APRIL 30, 2004?
The sustained war in Iraq, ongoing tensions in the Middle East, and growing
domestic budget deficits continued to influence the financial markets. The money
markets, although relatively quiet, were affected by the overall low level of
interest rates.
The Federal Reserve remained largely out of sight from the money markets. The
targeted federal funds rate remained at 1.0% for the entire period. From
November through March, the LIBOR(1) 30-day to one-year yield curve flattened by
approximately 10 basis points, reflecting the likelihood of no Federal Open
Market Committee action. In April, however, the financial markets began to
anticipate that the FOMC might move to tighten interest rates, and the LIBOR
curve steepened by approximately 47 basis points. Aside from this rise late in
the period, yields on most short-term debt instruments remained relatively
stable.
HOW DID FEDERAL RESERVE POLICY INFLUENCE THE FUND'S DURATION POSITIONING DURING
THE SEMIANNUAL PERIOD?
The Federal Reserve's accommodative monetary policy kept the money market yield
curve relatively flat for most of the semiannual period, making it difficult to
find attractive investment opportunities with more than a six-month maturity. As
a result of current market conditions and the uncertainty regarding when the
Federal Reserve might tighten interest rates, we managed the Fund's duration
using a laddered maturity approach.
WHAT IS A LADDERED MATURITY?
A laddered portfolio staggers maturities to allow different securities in the
portfolio to come due at progressive dates. The strategy was designed to help
the Fund react to future interest-rate increases. The decision caused the Fund's
weighted average maturity to decline to 74 days at the end of April 2004 from 82
days at the end of October 2003.
HOW DID THE FUND INVEST DURING THE REPORTING PERIOD?
We continued to seek opportunities for yield enhancement by investing in
short-term corporate notes. For example, the Fund purchased corporate notes of
Bank One, Minnesota Mining & Manufacturing, AIG SunAmerica, and Lehman Brothers
Holdings.
During the reporting period, we purchased a General Electric floating-rate
security and a DaimlerChrysler asset-backed security. We also purchased Yankee
certificates of deposit in the longer maturity range (four months or longer).
Some names included Toronto Dominion Bank, Barclay's Bank, and Deutsche Bank. A
portion of the Fund's assets were invested in callable agency securities.
DID THE FUND CHANGE ITS ASSET CLASS WEIGHTINGS?
During the six-month reporting period, significant weighting changes included an
increase in the Fund's exposure to short-term corporate notes and a decrease in
the Fund's exposure to asset-backed securities.
WHAT DO YOU ANTICIPATE GOING FORWARD?
In the coming quarter, we expect the Federal Reserve to remain on hold, as it
continues to review economic data in search of a clearer picture of the
economy's potential. In our opinion, the risks appear slanted toward a stronger
economy with inflationary pressure, which will likely lead to Federal Reserve
tightening in the fall.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
Past performance is no guarantee of future results and yields will fluctuate.
Investment objectives may not be met, as the underlying investment options are
subject to market risk and fluctuations in value. An investment in the Fund is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund.
1. The London interbank offered rate (LIBOR) is a floating interest rate that is
widely used as a base rate in bank, corporate, and government lending
agreements.
94 MainStay Cash Reserves Fund
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Commercial Paper 64.80
Certificates of Deposit 9.60
Medium-Term Notes 9.50
Corporate Bonds 7.90
U.S. Government & Federal Agency 4.70
Asset-Backed Securities 2.10
Bank Note 1.50
Liabilities in Excess of Cash and Other Assets -0.10
</Table>
www.mainstayfunds.com 95
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
SHORT-TERM INVESTMENTS (100.1%)+
- ---------------------------------------------------------------------------------
ASSET-BACKED SECURITIES (2.1%)
Carmax Auto Owner Trust
Series 2003-2 Class A1
1.13%, due 11/15/04 (c) $ 500,306 $ 500,306
CIT Equipment Collateral
Series 2003-EF1 Class A1
1.139%, due 10/15/04 (c) 907,908 907,908
DaimlerChrysler Auto Trust
Series 2003-B 1 Class A1
1.14%, due 12/8/04 (c) 4,322,633 4,322,633
GE Commercial Equipment Financing LLC
Series 2003-1 Class A1
1.06%, due 9/20/04 (b)(c) 2,870,987 2,870,987
Nissan Auto Lease Trust
Series 2002-A Class A1
1.166%, due 10/15/04 (c) 912,846 912,846
Whole Auto Loan Trust
Series 2003-1 Class A1
1.10%, due 9/15/04 (c) 899,358 899,358
-------------
10,414,038
-------------
BANK NOTE (1.5%)
Bank One Corp.
1.17%, due 6/16/04 (c) 7,475,000 7,475,000
-------------
CERTIFICATES OF DEPOSIT (9.6%) (D)
Barclay's Bank PLC NY
1.14%, due 10/4/04 (c) 7,000,000 7,000,000
Deutsche Bank NY
1.11%, due 12/17/04 (c) 10,000,000 9,992,136
Rabobank Nederland N.V. NY
1.18%, due 7/30/04 (c) 25,000,000 25,000,604
Toronto Dominion Bank
1.41%, due 1/5/05 (c) 5,000,000 5,000,000
-------------
46,992,740
-------------
COMMERCIAL PAPER (64.8%)
Archer-Daniels-Midland Co.
1.05%, due 6/22/04 (a) 6,225,000 6,215,922
Bank of America Corp.
1.11%, due 7/6/04 10,000,000 9,980,267
Barton Capital Corp.
1.03%, due 5/14/04 (a) 5,000,000 4,998,426
Cafco LLC
1.02%, due 5/25/04 (a) 6,105,000 6,101,194
Chevron Texaco Funding Corp.
1.00%, due 5/6/04 10,000,000 9,999,167
Ciesco LP
1.02%, due 5/7/04 12,855,000 12,853,543
</Table>
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
COMMERCIAL PAPER (CONTINUED)
Citigroup Global Markets Holdings, Inc.
1.02%, due 5/4/04 $ 9,923,000 $ 9,922,719
1.03%, due 6/2/04 10,000,000 9,991,417
Coca-Cola Enterprises, Inc.
1.04%, due 7/2/04 (a) 10,000,000 9,982,667
Countrywide Home Loans, Inc
1.04%, due 5/7/04 2,186,000 2,185,747
CXC, Inc.
1.075%, due 8/23/04 (a) 8,308,000 8,280,214
Delaware Funding Corp.
1.03%, due 5/20/04 (a) 3,929,000 3,927,089
E.I. Du Pont de Nemours & Co.
1.00%, due 5/5/04 6,735,000 6,734,626
Edison Asset Securitization LLC
1.05%, due 6/1/04 (a) 10,000,000 9,991,542
1.12%, due 10/4/04 (a) 10,980,000 10,927,394
Govco, Inc.
1.03%, due 6/18/04 (a) 10,000,000 9,986,839
1.06%, due 7/19/04 (a) 10,000,000 9,977,328
HBOS Treasury Services PLC
1.06%, due 8/9/04 4,173,000 4,160,959
Ing U.S. Funding LLC
1.03%, due 6/7/04 8,235,000 8,226,753
J.P. Morgan Chase & Co.
1.04%, due 6/2/04 2,700,000 2,697,660
Lehman Brothers Holdings, Inc.
1.10%, due 9/20/04 2,000,000 1,991,444
Liberty Street Funding Co.
1.05%, due 6/3/04 (a) 10,000,000 9,990,958
Marsh & McLennan Cos., Inc.
1.05%, due 7/7/04 (a) 7,091,000 7,077,557
Morgan Stanley Dean Witter & Co.
1.02%, due 5/5/04 5,153,000 5,152,708
National Rural Utilities Cooperative Finance Corp.
1.03%, due 5/13/04 10,000,000 9,997,139
Nordea North America, Inc.
1.08%, due 8/17/04 10,000,000 9,968,200
PACCAR Financial Corp.
1.02%, due 5/18/04 11,805,000 11,799,983
Park Avenue Receivables Corp.
1.02%, due 5/19/04 (a) 10,000,000 9,995,467
Province of Quebec
1.05%, due 7/26/04 7,782,000 7,762,934
1.17%, due 6/8/04 (a) 5,203,000 5,196,912
</Table>
+ Percentages indicated are based on Fund net assets.
96 MainStay Cash Reserves Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
SHORT-TERM INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
xRepublic of Italy
1.06%, due 9/2/04 $ 5,942,000 $ 5,920,655
1.065%, due 8/23/04 5,000,000 4,983,355
Royal Bank of Canada
1.10%, due 10/4/04 10,000,000 9,952,944
Societe Generale North America
1.04%, due 6/3/04 13,302,000 13,290,087
Three Rivers Funding Corp.
1.03%, due 5/17/04 (a) 13,730,000 13,724,500
Toyota Credit Puerto Rico
1.03%, due 5/12/04 8,398,000 8,395,837
Toyota Motor Credit Corp.
1.05%, due 6/3/04 3,275,000 3,272,039
Windmill Funding Corp.
1.03%, due 5/3/04 (a) 5,040,000 5,040,000
1.03%, due 5/11/04 (a) 8,000,000 7,998,169
World Omni Vehicle
Leasing, Inc.
1.06%, due 5/3/04 (a) 7,363,000 7,363,000
-------------
316,015,361
-------------
CORPORATE BONDS (7.9%)
3M Co.
5.639%, due 12/13/04 (a) 10,000,000 10,263,511
Abbott Laboratories
5.13%, due 7/1/04 5,000,000 5,031,719
AIG SunAmerica Global Financing
5.20%, due 5/10/04 (a) 5,000,000 5,003,933
Diageo Capital PLC
6.625%, due 6/24/04 3,000,000 3,022,958
Lehman Brothers Holdings, Inc. Series G
7.75%, due 1/15/05 (b)(c) 5,050,000 5,278,213
Tennessee Valley Authority
4.75%, due 7/15/04 5,000,000 5,036,704
Wachovia Corp.
7.10%, due 8/15/04 5,000,000 5,082,564
-------------
38,719,602
-------------
MEDIUM-TERM NOTES (9.5%)
American Honda Finance Corp.
1.06%, due 9/16/04 (a)(b)(c) 10,000,000 10,000,000
General Electric Capital Corp. Series A
1.26%, due 9/15/04 (b)(c) 3,400,000 3,402,542
1.323%, due 9/24/04 (b)(c) 5,000,000 5,003,361
</Table>
<Table>
<Caption>
PRINCIPAL AMORTIZED
AMOUNT COST
MEDIUM-TERM NOTES (CONTINUED)
Household Finance Corp.
1.12%, due 8/18/04 (b)(c) $ 10,000,000 $ 10,000,000
Lehman Brothers Holdings, Inc.
Series A
1.07%, due 5/16/05 (b)(c) 7,000,000 7,000,000
Series G
1.513%, due 9/20/04 (b)(c) 5,000,000 5,006,965
Merrill Lynch & Co., Inc. Series B
5.35%, due 6/15/04 (c) 5,800,000 5,828,037
-------------
46,240,905
-------------
U.S. GOVERNMENT & FEDERAL AGENCIES (4.7%)
Federal Home Loan
Mortgage Corp.
5.00%, due 5/15/04 5,000,000 5,006,222
Federal National Mortgage Association
1.75%, due 5/23/04 10,000,000 10,000,000
U.S. Treasury Bill
0.935%, due 5/6/04 169,000 168,987
U.S. Treasury Notes
1.10%, due 4/30/04 5,000,000 5,010,021
1.625%, due 3/31/05 3,000,000 3,007,692
-------------
23,192,922
-------------
Total Short-Term Investments
(Amortized Cost $489,050,568) (e) 100.1% 489,050,568
Liabilities in Excess of
Cash and Other Assets (0.1) (274,857)
------ ------------
Net Assets 100.0% $ 488,775,711
======== ===============
</Table>
<Table>
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at April
30, 2004.
(c) Coupon interest bearing security.
(d) Yankee certificate of deposit (CD) -- dollar-denominated
CD issued in the United States by foreign banks and
corporations.
(e) The cost stated also represents the aggregate cost for
federal income tax purposes.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
97
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
The table below sets forth the diversification of Cash Reserves Fund investments
by industry.
INDUSTRY DIVERSIFICATION
<Table>
<Caption>
AMORTIZED
COST PERCENT +
Agency $ 39,133,636 8.0%
Automobile -- Sequential 5,221,990 1.1
Beverages -- Non-Alcoholic 9,982,667 2.0
Beverages -- Wine/Spirits 3,022,958 0.6
Chemicals -- Diversified 6,734,626 1.4
Commercial Banks -- Central U.S. 7,475,000 1.5
Commercial Banks -- Eastern U.S. 41,992,740 8.6
Commercial Banks -- Europe 13,290,087 2.7
Commercial Banks -- Non-U.S. 5,000,000 1.0
Diversified Financial Services 21,245,091 4.3
Diversified Manufacturing 10,263,511 2.1
Finance -- Auto Loans 26,485,175 5.4
Finance -- Consumer Loans 10,000,000 2.0
Finance -- Equipment Loans 907,907 0.2
Finance -- Investment Banker/ Broker 55,267,878 11.3
Finance -- Mortgage Loan/ Banker 2,185,748 0.5
Finance -- Other Services 48,352,610 9.9
Finance -- Receivables 107,024,066 21.9
Food -- Flour & Grain 6,215,922 1.3
Insurance Brokers 7,077,557 1.5
Life/Health Insurance 5,003,933 1.0
Medical -- Drugs 5,031,719 1.0
Money Center Banks 14,113,903 3.0
Oil Companies Integrated 9,999,167 2.0
Regional Authority 12,959,847 2.7
Super -- Regional Banks -- U.S. 15,062,830 3.1
------------ ------
489,050,568 100.1
Liabilities in Excess of Cash and Other Assets (274,857) (0.1)
------------ ------
Net Assets $ 488,775,711 100.0%
============= =========
</Table>
+ Percentages indicated are based on Fund net assets.
98 MainStay Cash Reserves Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(amortized cost $489,050,568) $489,050,568
Cash 395
Receivables:
Investment securities sold 8,159,000
Interest 1,442,869
Fund shares sold 688,959
Other assets 23,796
------------
Total assets 499,365,587
------------
LIABILITIES:
Payables:
Investment securities purchased 7,362,350
Fund shares redeemed 2,625,683
Manager 163,198
NYLIFE Distributors 120,967
Shareholder communication 66,808
Transfer agent 31,766
Custodian 13,221
Directors 2,016
Accrued expenses 69,432
Dividend payable 134,435
------------
Total liabilities 10,589,876
------------
Net assets $488,775,711
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
8 billion shares authorized
Class I $ 216,996
Sweep Shares Class 271,777
Additional paid-in capital 488,286,428
Accumulated undistributed net realized gain on
investments 510
------------
Net assets $488,775,711
============
CLASS I
Net assets applicable to outstanding shares $216,983,072
============
Shares of capital stock outstanding 216,996,077
============
Net asset value and offering price per share
outstanding $ 1.00
============
SWEEP SHARES CLASS
Net assets applicable to outstanding shares $271,792,639
============
Shares of capital stock outstanding 271,776,956
============
Net asset value and offering price per share
outstanding $ 1.00
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
99
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Interest $2,809,951
----------
EXPENSES:
Manager 1,247,763
Distribution -- Sweep Shares Class 342,718
Service -- Sweep Shares Class 342,718
Service -- Service Class 6,946
Professional 76,343
Shareholder communication 67,704
Transfer agent 57,538
Custodian 25,496
Directors 20,898
Registration 3,083
Portfolio pricing 1,573
Miscellaneous 25,216
----------
Total expenses before reimbursement 2,217,996
Expense reimbursement from Manager (277,846)
----------
Net expenses 1,940,150
----------
Net investment income 869,801
----------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (39)
----------
Net increase in net assets resulting from
operations $ 869,762
==========
</Table>
100 MainStay Cash Reserves Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
DECREASE
IN NET ASSETS:
Operations:
Net investment income $ 869,801 $ 3,273,616
Net realized gain (loss) on
investments (39) 8,311
-------------------------------
Net increase in net assets
resulting from operations 869,762 3,281,927
-------------------------------
Dividends and distributions to shareholders:
From net investment income:
Class I (686,684) (2,263,628)
Service Class (10,765) (85,667)
Sweep Shares Class (172,352) (924,321)
From net realized gain on investments:
Class I (3,421) (8,060)
Service Class (230) (313)
Sweep Shares Class (4,111) (7,760)
-------------------------------
Total dividends and distributions
to shareholders (877,563) (3,289,749)
-------------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class I 257,328,463 490,606,863
Service Class 2,796,267 29,010,391
Sweep Shares Class 71,596,624 97,731,999
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions:
Class I 573,579 2,250,176
Service Class 6,148 84,448
Sweep Shares Class 144,513 932,002
-------------------------------
332,445,594 620,615,879
Cost of shares redeemed:
Class I (261,973,693) (601,715,257)
Service Class (20,300,483) (23,255,832)
Sweep Shares Class (72,800,453) (117,116,374)
-------------------------------
(355,074,629) (742,087,463)
-------------------------------
Decrease in net assets derived
from capital share
transactions (22,629,035) (121,471,584)
-------------------------------
Net decrease in net assets (22,636,836) (121,479,406)
NET ASSETS:
Beginning of period 511,412,547 632,891,953
-------------------------------
End of period $ 488,775,711 $ 511,412,547
===============================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
101
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
--------------------------------------------------------------------------------
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
2004*** 2003 2002 2001 2000
Net asset value at beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.00(a) 0.01 0.02 0.04 0.06
Net realized gain on investments 0.00(a) 0.00(a) 0.00(a) -- --
-------- -------- -------- -------- --------
Total from investment operations 0.00(a) 0.01 0.02 0.04 0.06
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income (0.00)(a) (0.01) (0.02) (0.04) (0.06)
From net realized gain on
investments (0.00)(a) (0.00)(a) (0.00)(a) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (0.00)(a) (0.01) (0.02) (0.04) (0.06)
-------- -------- -------- -------- --------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return (b) 0.31% 0.83% 1.65% 4.67% 5.98%
Ratios (to average net assets)/
Supplemental Data:
Net investment income 0.63%+ 0.84% 1.61% 4.50% 5.81%
Net expenses 0.50%+ 0.50% 0.50% 0.50% 0.50%
Expenses (before reimbursement) 0.61%+ 0.60% 0.62% 0.61% 0.57%
Net assets at end of period (in
000's) $216,983 $221,058 $329,921 $199,495 $160,942
<Caption>
CLASS I
--------------------------
JANUARY 1,
1999
THROUGH YEAR ENDED
OCTOBER 31, DECEMBER 31,
1999* 1998
Net asset value at beginning of
period $ 1.00 $ 1.00
-------- --------
Net investment income 0.04 0.05
Net realized gain on investments -- --
-------- --------
Total from investment operations 0.04 0.05
-------- --------
Less dividends and distributions:
From net investment income (0.04) (0.05)
From net realized gain on
investments -- --
-------- --------
Total dividends and distributions (0.04) (0.05)
-------- --------
Net asset value at end of period $ 1.00 $ 1.00
======== ========
Total investment return (b) 3.96% 5.25%
Ratios (to average net assets)/
Supplemental Data:
Net investment income 4.68%+ 5.12%
Net expenses 0.50%+ 0.50%
Expenses (before reimbursement) 0.62%+ 0.63%
Net assets at end of period (in
000's) $246,713 $194,338
</Table>
<Table>
<Caption>
SWEEP SHARES CLASS
----------------------------------------------------------------------------------
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
2004*** 2003 2002 2001 2000
Net asset value at beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.00(a) 0.00(a) 0.01 0.04 0.05
Net realized gain on investments 0.00(a) 0.00(a) 0.00(a) -- --
-------- -------- -------- -------- --------
Total from investment operations 0.00(a) 0.00(a) 0.01 0.04 0.05
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income (0.00)(a) (0.00)(a) (0.01) (0.04) (0.05)
From net realized gain on
investments (0.00)(a) (0.00)(a) (0.00)(a) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (0.00)(a) (0.00)(a) (0.01) (0.04) (0.05)
-------- -------- -------- -------- --------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return (b) 0.06% 0.33% 1.14% 4.15% 5.46%
Ratios (to average net assets)/
Supplemental Data:
Net investment income 0.13%+ 0.34% 1.11% 4.00% 5.31%
Net expenses 1.00%+ 1.00% 1.00% 1.00% 1.00%
Expenses (before reimbursement) 1.11%+ 1.10% 1.12% 1.11% 1.07%
Net assets at end of period (in
000's) $271,793 $272,856 $291,312 $285,034 $221,935
<Caption>
SWEEP SHARES CLASS
--------------------------
JANUARY 1, DECEMBER 8,
1999 1998
THROUGH THROUGH
OCTOBER 31, DECEMBER 31,
1999* 1998**
Net asset value at beginning of
period $ 1.00 $ 1.00
-------- --------
Net investment income 0.04 0.00(a)
Net realized gain on investments -- --
-------- --------
Total from investment operations 0.04 0.00(a)
-------- --------
Less dividends and distributions:
From net investment income (0.04) (0.00)(a)
From net realized gain on
investments -- --
-------- --------
Total dividends and distributions (0.04) (0.00)(a)
-------- --------
Net asset value at end of period $ 1.00 $ 1.00
======== ========
Total investment return (b) 3.53% 0.31%
Ratios (to average net assets)/
Supplemental Data:
Net investment income 4.18%+ 4.62%+
Net expenses 1.00%+ 1.00%+
Expenses (before reimbursement) 1.12%+ 1.13%+
Net assets at end of period (in
000's) $152,268 $ 6,957
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Sweep Shares Class first offered on December 8, 1998.
*** Unaudited.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
</Table>
102 MainStay Cash Reserves Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
MAINSTAY INDEXED BOND FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
CITIGROUP BROAD INVESTMENT GRADE (BIG) BOND INDEX(1) 1.32% 1.88% 6.65% 7.35%
AVERAGE LIPPER GENERAL U.S. GOVERNMENT FUND(2) 0.56 -0.25 5.31 6.07
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -2.13% -2.11% 5.23% 6.12%
Excluding sales charges 0.90 0.92 5.87 6.44
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY INDEXED BOND FUND CITIGROUP BIG BOND INDEX
-------------------------- ------------------------
04/30/94 970.00 1000.00
1033.00 1073.00
1115.00 1164.00
1181.00 1248.00
1299.00 1385.00
1362.00 1472.00
1371.00 1490.00
1525.00 1674.00
1630.00 1805.00
1795.00 1994.00
04/30/04 1811.00 2032.00
</Table>
-- MainStay Indexed Bond Fund
-- Citigroup BIG Bond Index
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 1.02% 1.17% 6.13% 6.70%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY INDEXED BOND FUND CITIGROUP BIG BOND INDEX
-------------------------- ------------------------
4/30/94 1000.00 1000.00
1067.00 1073.00
1155.00 1164.00
1226.00 1248.00
1352.00 1385.00
1420.00 1472.00
1433.00 1490.00
1598.00 1674.00
1712.00 1805.00
1890.00 1994.00
4/30/04 1912.00 2032.00
</Table>
-- MainStay Indexed Bond Fund
-- Citigroup BIG Bond Index
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 3% and an annual 12b-1
fee of .25%. Class I shares are sold with no initial sales charge or CDSC, have
no annual 12b-1 fee, and are generally available to corporate and institutional
investors with a minimum initial investment of $5 million. Performance figures
reflect certain fee waivers and/or expense limitations, without which total
returns may have been lower. The fee waivers and/or expense limitations are
voluntary and may be discontinued at any time. Performance for Class A shares,
first offered 1/1/04, includes the historical performance of Class I shares from
inception (1/2/91) through 12/31/03 adjusted to reflect the applicable sales
charge and fees and expenses for such shares.
1. The Citigroup Broad Investment Grade (BIG) Bond Index--the Citigroup BIG Bond
Index--is an unmanaged index that is considered representative of the U.S.
investment-grade bond market. Results assume reinvestment of all income and
capital gains. An investment cannot be made directly into an index.
2. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
www.mainstayfunds.com 103
$1,000 INVESTED IN MAINSTAY INDEXED BOND FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $ 998 $2 $1,048 $3
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,010 $2 $1,048 $3
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares were first offered on January 1, 2004. Expenses paid during
the period reflect ongoing costs for the four-month period ending April 30,
2004. Had Class A shares been offered for the six months ended April 30,
2004, based on a hypothetical 5% return, expenses paid during the period
would be $4, and the ending account value would be $1,046.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
104 MainStay Indexed Bond Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Paul Cunningham and Eric Greenman of
the New York Life Investment Management LLC
MAINSTAY INDEXED BOND FUND
WHAT ECONOMIC FORCES AFFECTED THE INVESTMENT-GRADE BOND MARKET DURING THE SIX
MONTHS ENDED APRIL 30, 2004?
Generally, the economy expanded. Real gross domestic product, which had grown at
an unusually high 8.2% in the third quarter 2003, advanced 4.1% in the fourth
quarter. According to preliminary estimates, real gross domestic product grew at
a seasonally adjusted annual rate of 4.4% in the first quarter of 2004.
Through much of the reporting period, disappointing payroll figures grabbed
national headlines and dominated the market's attention. This changed in early
April 2004, however, when the U.S. Department of Labor announced that some
308,000 jobs had been added in March.
HOW DID THE FEDERAL RESERVE RESPOND TO SIGNS OF ECONOMIC GROWTH?
The Federal Reserve maintained its accommodative fiscal policy. The targeted
federal funds rate remained at 1.0%, its lowest level since 1958. As the
probability of "an unwelcome fall in inflation" diminished, the Federal Open
Market Committee began to suggest that removing its policy accommodation was a
possibility, and investors began to anticipate that the FOMC might tighten
monetary policy in the future by raising the targeted federal funds rate.
HOW DID THE OVERALL BOND MARKET PERFORM DURING THE REPORTING PERIOD?
As a result of the weak job market, the five-year Treasury yield fell
approximately 40 basis points, or 0.40%, during the first five months of the
reporting period. When the employment outlook improved, however, Treasury yields
reversed course, rising roughly 85 basis points in April 2004. Volatility in the
Treasury market clouded the outlook and led to increased volatility elsewhere in
the bond market.
Corporate credits provided the strongest performance within the Citigroup Broad
Investment Grade (BIG) Bond Index,(1) returning 1.86% overall, AAA-rated
bonds(2) gained only 0.93%, AA-rated bonds gained 1.04%, and A-rated bonds
gained 1.37%. BBB-rated bonds led the way returning 2.62%.
Mortgage-backed bonds were also relatively strong, returning 1.44% for the six
months ended April 30, 2004. Asset-backed securities returned 1.06%, bonds
issued by government-sponsored entities returned 0.92%, and U.S. Treasuries
returned 0.77%.
HOW DID YOU POSITION THE FUND DURING THE REPORTING PERIOD?
As indexed-fund managers, we seek to track the performance of the Citigroup
(BIG) Bond Index. Since the Fund's portfolio does not contain every security in
the Index, however, its performance may vary. The Fund also incurs real-world
expenses that a hypothetical index does not, so there may be times when the Fund
underperforms the Index. During the reporting period, some of the Fund's
underperformance relative to the Citigroup BIG Bond Index resulted from sector
and issuer selection.
As in the past, one of the indexing strategies we utilized was to diversify the
Fund's holdings in the corporate sector. We are currently buying positions as
low as less than 0.1% of the portfolio (primarily BBB credits) to minimize
issuer overweights, while striving to achieve neutrality among industries,
credit rating categories, and the overall corporate sector.
Past performance is no guarantee of future results. Investment objectives may
not be met, as underlying investment options are subject to market risk and
fluctuations in value. Index funds generally seek to reflect the performance of
an index or an allocation among indices, unlike other funds, whose objectives
may, in some cases, involve seeking to outperform an index or other benchmark.
1. See footnote on page 103 for more information on the Citigroup BIG Bond
Index.
2. Debt rated AAA has the highest rating assigned by Standard & Poor's, and in
the opinion of Standard & Poor's, the obligor's capacity to meet its
financial commitment on the obligation is extremely strong. Debt rated AA by
Standard & Poor's is deemed by Standard & Poor's to differ from the
highest-rated issues only in small degree. In the opinion of Standard &
Poor's, the obligor's capacity to meet its financial commitment on the
obligation is very strong. Debt rated A by Standard & Poor's is deemed by
Standard & Poor's to be somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories. In the opinion of Standard & Poor's, however, the obligor's
capacity to meet its financial commitment on the obligation is still strong.
Debt rated BBB by Standard & Poor's is deemed by Standard & Poor's to exhibit
adequate protection parameters. It is the opinion of Standard & Poor's,
however, that adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation than would be the case for debt in higher-rated
categories. When applied to Fund holdings, ratings are based solely on the
creditworthiness of the bonds in the portfolio and are not meant to represent
the security or safety of the Fund.
www.mainstayfunds.com 105
WHAT IS YOUR OUTLOOK FOR THE ECONOMY AND THE BOND MARKET GOING FORWARD?
As we move into the second half of 2004, several factors may have an impact on
performance in the investment-grade bond market. Economic reports that indicate
continuing strength in the economy, an improving job market, and/or potential
inflation may increase the likelihood of Federal Reserve tightening before the
November elections rather than after. Perceived and actual progress in the
economic cycle will impact Treasury rates as well as securities that typically
trade at a spread to Treasuries. Global issues--including Iraq, terrorist
threats, and other sources of uncertainty--could result in rotation to or from
different quality sectors.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
<Caption>
U.S. GOVERNMENT & FEDERAL AGENCIES 68.3
Corporate Bonds 20.70
Short-Term Investments 14.10
Foreign Corporate Bonds 4.00
Yankee Bonds 1.40
Asset-Backed Securities 1.00
Liabilities in Excess of Cash and Other Assets -9.50
</Table>
106 MainStay Indexed Bond Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (95.4%)+
ASSET-BACKED SECURITIES (1.0%)
- ----------------------------------------------------------------------------------
AIRLINES (0.1%)
Northwest Airlines, Inc.
Series 2000-1 Class G
8.072%, due 10/1/19 $ 183,001 $ 201,476
---------------
CONSUMER FINANCE (0.5%)
MBNA Credit Card
Master Note Trust
Series 2002-A1
Class A1
4.95%, due 1/15/07 1,000,000 1,051,446
---------------
DIVERSIFIED FINANCIAL SERVICES (0.4%)
Bank One Issuance Trust Series 2002-A3 Class A3
3.59%, due 9/15/07 1,000,000 1,004,908
---------------
Total Asset-Backed Securities
(Cost $2,222,569) 2,257,830
---------------
CORPORATE BONDS (20.7%)
- ----------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.7%)
Boeing Co. (The)
6.125%, due 2/15/33 250,000 245,168
General Dynamics Corp.
4.25%, due 5/15/13 100,000 93,841
Goodrich Corp.
6.45%, due 12/15/07 100,000 109,088
Honeywell International, Inc.
7.50%, due 3/1/10 100,000 115,418
Litton Industries, Inc.
8.00%, due 10/15/09 100,000 116,342
Lockheed Martin Corp.
7.65%, due 5/1/16 250,000 295,034
Northrop Grumman Corp.
7.125%, due 2/15/11 100,000 112,437
Raytheon Co.
5.50%, due 11/15/12 100,000 101,318
6.75%, due 8/15/07 150,000 164,380
United Technologies Corp.
6.35%, due 3/1/11 250,000 274,275
---------------
1,627,301
---------------
AUTO COMPONENTS (0.0%) (E)
Delphi Corp.
6.50%, due 5/1/09 100,000 106,186
---------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
AUTOMOBILES (0.6%)
DaimlerChrysler North America Holdings, Inc.
4.05%, due 6/4/08 $ 250,000 $ 245,567
6.40%, due 5/15/06 250,000 265,990
8.50%, due 1/18/31 250,000 288,928
General Motors Corp.
8.375%, due 7/15/33 500,000 540,759
---------------
1,341,244
---------------
BEVERAGES (0.4%)
Anheuser-Busch Cos., Inc.
5.95%, due 1/15/33 250,000 248,612
Coca-Cola Enterprises, Inc.
8.50%, due 2/1/22 252,000 321,140
Pepsi Bottling Holdings, Inc.
5.625%, due 2/17/09 (a) 250,000 268,073
---------------
837,825
---------------
BUILDING PRODUCTS (0.1%)
Masco Corp.
6.75%, due 3/15/06 100,000 107,240
---------------
CAPITAL MARKETS (2.0%)
Bear Stearns Cos.,
Inc. (The)
5.70%, due 11/15/14 250,000 254,407
Credit Suisse FirstBoston USA, Inc.
4.625%, due 1/15/08 250,000 257,350
6.50%, due 1/15/12 250,000 273,067
FPL Group Capital, Inc.
7.375%, due 6/1/09 250,000 284,518
Goldman Sachs Group, Inc. (The)
4.75%, due 7/15/13 250,000 237,820
5.70%, due 9/1/12 250,000 257,752
6.875%, due 1/15/11 250,000 278,173
J.P. Morgan Chase & Co.
6.75%, due 2/1/11 500,000 558,557
Lehman Brothers Holdings, Inc.
6.625%, due 2/5/06 250,000 267,053
7.00%, due 2/1/08 250,000 278,464
Merrill Lynch & Co., Inc. Series B
5.30%, due 9/30/15 250,000 246,606
6.00%, due 2/17/09 250,000 269,319
</Table>
<Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
107
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
CAPITAL MARKETS (CONTINUED)
Morgan Stanley Dean Witter & Co.
3.625%, due 4/1/08 $ 250,000 $ 248,478
6.10%, due 4/15/06 250,000 266,436
6.60%, due 4/1/12 250,000 275,176
Salomon, Smith Barney Holdings, Inc.
6.875%, due 6/15/05 504,000 531,840
---------------
4,785,016
---------------
CHEMICALS (0.3%)
Dow Chemical Co. (The)
6.00%, due 10/1/12 100,000 105,595
E.I. du Pont de Nemours & Co.
4.75%, due 11/15/12 250,000 249,130
Eastman Chemical Co.
7.25%, due 1/15/24 100,000 106,407
ICI Wilmington, Inc.
4.375%, due 12/1/08 100,000 99,241
Praxair, Inc.
3.95%, due 6/1/13 100,000 92,207
Rohm & Haas Co.
7.85%, due 7/15/29 100,000 120,446
---------------
773,026
---------------
COMMERCIAL BANKS (2.1%)
ABN-Amro Bank N.V.
7.55%, due 6/28/06 403,000 446,841
Bank of America Corp.
3.875%, due 1/15/08 250,000 251,964
7.40%, due 1/15/11 500,000 574,947
Bank One Corp.
5.90%, due 11/15/11 250,000 267,036
6.875%, due 8/1/06 250,000 271,989
Bankers Trust Corp.
8.25%, due 5/1/05 250,000 264,840
Branch Banking & Trust Co.
Wilson, North Carolina
4.875%, due 1/15/13 100,000 98,255
Fleet National Bank
5.75%, due 1/15/09 250,000 267,632
Key Bank National Association
5.00%, due 7/17/07 100,000 104,879
National City Bank of Pennsylvania
6.25%, due 3/15/11 250,000 273,221
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL BANKS (CONTINUED)
PNC Funding Corp.
7.50%, due 11/1/09 $ 100,000 $ 115,150
SunTrust Banks, Inc.
5.05%, due 7/1/07 250,000 262,000
U.S. Bank National Association
6.375%, due 8/1/11 250,000 274,718
UFJ Bank Ltd.
7.40%, due 6/15/11 100,000 111,465
Union Bank of Switzerland-New York
7.25%, due 7/15/06 250,000 273,959
Wachovia Bank National Association
4.85%, due 7/30/07 500,000 523,042
Wells Fargo Bank N.A.
6.45%, due 2/1/11 500,000 551,453
---------------
4,933,391
---------------
COMMERCIAL SERVICES & SUPPLIES (0.2%)
Cendant Corp.
6.25%, due 1/15/08 200,000 216,011
Science Applications International Corp.
6.25%, due 7/1/12 100,000 107,553
Waste Management, Inc.
7.00%, due 10/15/06 100,000 108,792
7.125%, due 12/15/17 100,000 108,893
---------------
541,249
---------------
COMMUNICATIONS EQUIPMENT (0.1%)
Motorola, Inc.
7.50%, due 5/15/25 100,000 108,097
7.60%, due 1/1/07 100,000 108,564
---------------
216,661
---------------
COMPUTERS & PERIPHERALS (0.2%)
Hewlett-Packard Co.
3.625%, due 3/15/08 250,000 249,200
International Business Machines Corp.
4.25%, due 9/15/09 150,000 151,306
6.50%, due 1/15/28 100,000 105,485
---------------
505,991
---------------
CONSTRUCTION MATERIALS (0.0%) (E)
CRH America, Inc.
5.30%, due 10/15/13 100,000 99,264
---------------
</Table>
108 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
CONSUMER FINANCE (2.1%)
American Express Credit Corp.
3.00%, due 5/16/08 $ 250,000 $ 242,996
Aristar, Inc.
6.875%, due 5/15/11 100,000 114,193
Capital One Bank
6.875%, due 2/1/06 100,000 106,613
CitiFinancial Credit Co.
8.70%, due 6/15/10 227,000 274,313
Deere (John) Capital Corp.
7.00%, due 3/15/12 250,000 282,997
Ford Motor Credit Co.
6.50%, due 1/25/07 250,000 265,111
7.00%, due 10/1/13 250,000 257,108
7.25%, due 10/25/11 250,000 265,278
7.375%, due 2/1/11 500,000 534,663
7.875%, due 6/15/10 504,000 553,703
General Motors Acceptance Corp.
5.85%, due 1/14/09 100,000 103,149
6.125%, due 9/15/06 250,000 263,829
6.75%, due 1/15/06 250,000 264,726
6.875%, due 8/28/12 250,000 260,665
Household Finance Corp.
5.75%, due 1/30/07 250,000 266,245
6.375%, due 10/15/11 250,000 271,248
6.40%, due 6/17/08 250,000 272,942
MBNA America Bank
5.375%, due 1/15/08 300,000 313,763
SLM Corp.
5.625%, due 8/1/33 100,000 91,423
---------------
5,004,965
---------------
DIVERSIFIED FINANCIAL SERVICES (0.8%)
CIT Group, Inc.
7.75%, due 4/2/12 250,000 288,690
Citigroup, Inc.
5.00%, due 3/6/07 250,000 262,332
5.875%, due 2/22/33 250,000 238,162
Mellon Funding Corp.
5.00%, due 12/1/14 250,000 245,248
National Rural Utilities
Cooperative Finance Corp.
5.75%, due 8/28/09 250,000 266,396
NiSource Finance Corp.
7.625%, due 11/15/05 100,000 107,413
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
Verizon Global Funding Corp.
6.125%, due 6/15/07 $ 250,000 $ 269,703
7.75%, due 12/1/30 250,000 286,060
---------------
1,964,004
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.9%)
ALLTEL Corp.
7.00%, due 7/1/12 250,000 280,798
AT&T Corp.
8.75%, due 11/15/31 250,000 264,580
BellSouth Corp.
6.875%, due 10/15/31 250,000 264,845
CenturyTel, Inc., Series H
8.375%, due 10/15/10 100,000 114,532
Citizens Communications Co.
9.25%, due 5/15/11 100,000 105,243
SBC Communications, Inc.
6.25%, due 3/15/11 250,000 269,734
Sprint Capital Corp.
8.375%, due 3/15/12 500,000 586,824
Verizon Pennsylvania Series A
5.65%, due 11/15/11 250,000 258,328
---------------
2,144,884
---------------
ELECTRIC UTILITIES (1.3%)
American Electric Power Co., Inc.
5.375%, due 3/15/10 200,000 206,813
Arizona Public Service Co.
6.375%, due 10/15/11 100,000 107,486
CenterPoint Energy Houston Electric LLC, Series K2
6.95%, due 3/15/33 100,000 108,415
Consolidated Edison Co. of New York, Series 2002 A
5.625%, due 7/1/12 100,000 104,812
Consumers Energy Co. Series B
5.375%, due 4/15/13 100,000 98,423
Dominion Resources, Inc.
5.00%, due 3/15/13 100,000 97,199
Series B
6.25%, due 6/30/12 400,000 426,739
DTE Energy Co.
7.05%, due 6/1/11 100,000 110,199
Exelon Corp.
6.75%, due 5/1/11 200,000 220,790
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
109
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
ELECTRIC UTILITIES (CONTINUED)
FirstEnergy Corp.
Series B
6.45%, due 11/15/11 $ 200,000 $ 210,560
MidAmerican Energy Holdings Co.
5.875%, due 10/1/12 100,000 103,368
Northern States Power Co.
6.875%, due 8/1/09 100,000 111,738
Oncor Electric Delivery Co.
6.375%, due 5/1/12 100,000 108,341
7.00%, due 9/1/22 100,000 107,623
Pepco Holdings, Inc.
6.45%, due 8/15/12 100,000 106,574
Progress Energy, Inc.
6.85%, due 4/15/12 250,000 274,324
PSI Energy, Inc.
5.00%, due 9/15/13 100,000 97,579
Southern California Edison Co.
5.00%, due 1/15/14 100,000 98,104
Southern Power Co.
Series B
6.25%, due 7/15/12 100,000 106,574
Union Electric Co.
4.65%, due 10/1/13 100,000 96,659
Wisconsin Energy Corp.
6.50%, due 4/1/11 100,000 108,961
---------------
3,011,281
---------------
ELECTRICAL EQUIPMENT (0.1%)
Emerson Electric Co.
7.125%, due 8/15/10 250,000 285,417
---------------
ENERGY EQUIPMENT & SERVICES (0.1%)
Halliburton Co.
5.50%, due 10/15/10 100,000 102,195
Transocean, Inc.
7.375%, due 4/15/18 100,000 114,933
---------------
217,128
---------------
FOOD & STAPLES RETAILING (0.4%)
Albertson's, Inc.
8.00%, due 5/1/31 100,000 114,742
Kroger Co. (The)
5.50%, due 2/1/13 250,000 252,568
Safeway, Inc.
5.80%, due 8/15/12 100,000 102,727
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOOD & STAPLES RETAILING (CONTINUED)
Wal-Mart Stores, Inc.
6.875%, due 8/10/09 $ 250,000 $ 282,234
7.55%, due 2/15/30 100,000 119,892
---------------
872,163
---------------
FOOD PRODUCTS (0.9%)
Archer-Daniels-Midland Co.
8.125%, due 6/1/12 250,000 303,208
Campbell Soup Co.
4.875%, due 10/1/13 100,000 98,477
ConAgra Foods, Inc.
6.00%, due 9/15/06 100,000 106,459
7.875%, due 9/15/10 100,000 116,518
General Mills, Inc.
5.125%, due 2/15/07 100,000 104,921
H.J. Heinz Finance Co.
6.625%, due 7/15/11 250,000 278,929
Kellogg Co.
Series B
6.00%, due 4/1/06 100,000 106,156
Kraft Foods, Inc.
6.25%, due 6/1/12 250,000 267,794
Sara Lee Corp.
6.25%, due 9/15/11 250,000 273,692
Tyson Foods, Inc.
7.25%, due 10/1/06 140,000 151,502
Unilever Capital Corp.
6.875%, due 11/1/05 285,000 304,307
---------------
2,111,963
---------------
GAS UTILITIES (0.2%)
KeySpan Corp.
4.65%, due 4/1/13 100,000 96,453
Kinder Morgan Energy Partners, L.P.
6.75%, due 3/15/11 100,000 109,380
7.125%, due 3/15/12 150,000 168,159
Sempra Energy
6.00%, due 2/1/13 100,000 104,473
---------------
478,465
---------------
HEALTH CARE PROVIDERS & SERVICES (0.2%)
HCA, Inc.
6.75%, due 7/15/13 100,000 102,811
7.125%, due 6/1/06 100,000 106,330
Lion Connecticut Holdings, Inc.
7.625%, due 8/15/26 254,000 285,086
---------------
494,227
---------------
</Table>
110 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (0.1%)
Harrah's Operating Co., Inc.
8.00%, due 2/1/11 $ 100,000 $ 115,525
---------------
HOUSEHOLD DURABLES (0.1%)
Centex Corp.
7.50%, due 1/15/12 100,000 113,978
Pulte Homes, Inc.
7.875%, due 8/1/11 100,000 114,631
---------------
228,609
---------------
HOUSEHOLD PRODUCTS (0.1%)
Procter & Gamble Co. (The)
6.875%, due 9/15/09 250,000 284,090
---------------
INDUSTRIAL CONGLOMERATES (0.2%)
Textron, Inc.
6.375%, due 7/15/04 504,000 508,699
---------------
INSURANCE (0.5%)
AIG SunAmerican Global Financing VI
6.30%, due 5/10/11(a) 250,000 270,211
Allstate Corp. (The)
7.20%, due 12/1/09 100,000 115,003
Aon Corp.
7.375%, due 12/14/12 100,000 112,376
Chubb Corp. (The)
5.20%, due 4/1/13 100,000 99,483
Hartford Financial Services
Group, Inc. (The)
7.90%, due 6/15/10 100,000 116,785
MetLife, Inc.
6.125%, due 12/1/11 100,000 108,158
SAFECO Corp.
4.20%, due 2/1/08 100,000 102,048
Travelers Property Casualty Corp.
5.00%, due 3/15/13 100,000 97,903
UnumProvident Corp.
7.625%, due 3/1/11 100,000 102,725
---------------
1,124,692
---------------
INTERNET & CATALOG RETAIL (0.0%) (E)
InterActive Corp.
7.00%, due 1/15/13 100,000 108,804
---------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
IT SERVICES (0.1%)
Computer Sciences Corp.
5.00%, due 2/15/13 $ 100,000 $ 98,597
Electronic Data Systems Corp.
Series B
6.00%, due 8/1/13 100,000 92,939
First Data Corp.
4.70%, due 8/1/13 100,000 97,557
---------------
289,093
---------------
MACHINERY (0.1%)
Caterpillar, Inc.
8.00%, due 2/15/23 250,000 304,230
---------------
MEDIA (1.2%)
Belo Corp.
8.00%, due 11/1/08 100,000 114,607
Clear Channel Communications, Inc.
6.00%, due 11/1/06 100,000 106,391
7.65%, due 9/15/10 100,000 114,267
Comcast Cable Communications, Inc.
7.125%, due 6/15/13 250,000 277,068
Comcast Corp.
5.50%, due 3/15/11 250,000 256,133
7.05%, due 3/15/33 100,000 105,199
Cox Communications, Inc.
7.75%, due 8/15/06-11/1/10 200,000 224,809
Liberty Media Corp.
8.25%, due 2/1/30 100,000 115,438
News America, Inc.
6.55%, due 3/15/33 100,000 101,555
7.25%, due 5/18/18 100,000 111,010
Time Warner, Inc.
5.625%, due 5/1/05 250,000 259,072
6.625%, due 5/15/29 250,000 246,479
6.75%, due 4/15/11 250,000 272,017
Viacom, Inc.
5.625%, due 8/15/12 250,000 260,293
Walt Disney Co. (The)
6.375%, due 3/1/12 250,000 270,698
---------------
2,835,036
---------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
111
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
METALS & MINING (0.2%)
Alcoa, Inc.
6.00%, due 1/15/12 $ 250,000 $ 269,671
Phelps Dodge Corp.
8.75%, due 6/1/11 100,000 120,601
---------------
390,272
---------------
MULTILINE RETAIL (0.2%)
Federated Department Stores, Inc.
6.625%, due 9/1/08 100,000 109,487
May Department Stores Co. (The)
6.70%, due 9/15/28 100,000 103,118
Target Corp.
5.875%, due 3/1/12 150,000 159,754
7.00%, due 7/15/31 100,000 111,373
---------------
483,732
---------------
MULTI-UTILITIES & UNREGULATED POWER (0.3%)
Constellation Energy Group, Inc.
6.125%, due 9/1/09 100,000 107,246
Duke Energy Corp.
6.45%, due 10/15/32 250,000 245,768
Pacific Electric & Gas Co.
6.05%, due 3/1/34 150,000 141,855
PSE&G Power LLC
7.75%, due 4/15/11 100,000 115,134
Scana Corp.
6.25%, due 2/1/12 100,000 107,593
---------------
717,596
---------------
OIL & GAS (1.2%)
Amerada Hess Corp.
7.30%, due 8/15/31 100,000 101,894
Amoco Co.
6.50%, due 8/1/07 250,000 274,681
Anadarko Petroleum Corp.
5.375%, due 3/1/07 250,000 264,041
Burlington Resources, Inc.
7.375%, due 3/1/29 104,000 117,500
Conoco, Inc.
6.35%, due 4/15/09 250,000 274,351
ConocoPhillips
5.90%, due 10/15/32 250,000 243,276
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
OIL & GAS (CONTINUED)
Devon Financing Corp. ULC
6.875%, due 9/30/11 $ 200,000 $ 222,049
Enterprise Products Partners L.P.
Series B
6.875%, due 3/1/33 100,000 98,690
Kerr-McGee Corp.
6.625%, due 10/15/07 100,000 108,735
Marathon Oil Corp.
6.80%, due 3/15/32 100,000 105,428
Occidental Petroleum Corp.
7.20%, due 4/1/28 100,000 111,969
Pemex Project Funding Master Trust
7.375%, due 12/15/14 350,000 365,750
Texaco Capital, Inc.
9.75%, due 3/15/20 176,000 252,252
Union Oil Co. of California
7.35%, due 6/15/09 100,000 113,671
Valero Energy Corp.
7.50%, due 4/15/32 100,000 112,382
---------------
2,766,669
---------------
PAPER & FOREST PRODUCTS (0.3%)
International Paper Co.
5.25%, due 4/1/16 100,000 94,732
5.85%, due 10/30/12 100,000 103,236
MeadWestvaco Corp.
6.85%, due 4/1/12 100,000 108,505
Weyerhaeuser Co.
6.75%, due 3/15/12 200,000 219,251
7.375%, due 3/15/32 100,000 109,552
---------------
635,276
---------------
PHARMACEUTICALS (0.5%)
Bristol-Myers Squibb Co.
5.75%, due 10/1/11 250,000 263,840
Merck & Co., Inc.
4.375%, due 2/15/13 250,000 242,797
Pfizer, Inc.
4.65%, due 3/1/18 250,000 233,039
Schering-Plough Corp.
6.50%, due 12/1/33 100,000 101,420
Wyeth
5.50%, due 3/15/13 250,000 250,155
---------------
1,091,251
---------------
</Table>
112 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
REAL ESTATE (0.2%)
Boston Properties, Inc.
6.25%, due 1/15/13 $ 100,000 $ 105,605
EOP Operating LP
7.75%, due 11/15/07 175,000 198,093
ERP Operating LP
6.95%, due 3/2/11 100,000 110,888
Simon Property Group, L.P.
5.375%, due 8/28/08 100,000 104,550
---------------
519,136
---------------
ROAD & RAIL (0.4%)
Burlington Northern Santa Fe Corp.
6.75%, due 7/15/11 100,000 111,616
7.125%, due 12/15/10 100,000 112,706
CSX Corp.
6.30%, due 3/15/12 100,000 106,645
7.95%, due 5/1/27 100,000 116,913
Norfolk Southern Corp.
7.80%, due 5/15/27 250,000 289,842
Union Pacific Corp.
6.125%, due 1/15/12 100,000 106,939
---------------
844,661
---------------
SPECIALTY RETAIL (0.1%)
Lowe's Cos., Inc.
6.875%, due 2/15/28 100,000 109,597
---------------
THRIFTS & MORTGAGE FINANCE (0.9%)
Countrywide Home Loans, Inc.
3.25%, due 5/21/08 250,000 242,694
5.625%, due 5/15/07 100,000 106,080
General Electric Capital Corp.
5.00%, due 6/15/07 250,000 262,145
6.00%, due 6/15/12 750,000 799,713
6.75%, due 3/15/32 250,000 269,152
Series A
6.80%, due 11/1/05 250,000 266,658
Washington Mutual, Inc.
7.50%, due 8/15/06 250,000 274,661
---------------
2,221,103
---------------
TOBACCO (0.0%) (E)
Altria Group, Inc.
7.65%, due 7/1/08 100,000 110,373
---------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
TRANSPORTATION INFRASTRUCTURE (0.1%)
International Lease Finance Corp.
Series O
4.375%, due 11/1/09 $ 250,000 $ 250,697
---------------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
AT&T Wireless Services, Inc.
7.35%, due 3/1/06 150,000 162,310
8.125%, due 5/1/12 100,000 116,638
8.75%, due 3/1/31 100,000 121,993
Cingular Wireless LLC
6.50%, due 12/15/11 100,000 107,762
---------------
508,703
---------------
Total Corporate Bonds
(Cost $48,137,418) 48,906,735
---------------
FOREIGN CORPORATE BONDS (4.0%)
- ----------------------------------------------------------------------------------
BEVERAGES (0.1%)
Diageo Capital PLC
3.375%, due 3/20/08 250,000 246,532
---------------
CAPITAL MARKETS (0.2%)
Kreditanstalt fuer Wiederaufbau
3.375%, due 1/23/08 550,000 551,138
---------------
COMMERCIAL BANKS (0.4%)
Bank of Tokyo-Mitsubishi, Ltd.
8.40%, due 4/15/10 100,000 119,829
HSBC Holding PLC
7.50%, due 7/15/09 250,000 286,890
International Bank of
Reconstruction & Development
Series C
(zero coupon), due 3/11/31 504,000 94,781
Korea Development Bank
4.25%, due 11/13/07 100,000 101,016
Landwirtschaftliche Rentenbank
Series E
3.25%, due 6/16/08 250,000 246,215
Royal Bank of Scotland Group PLC
5.00%, due 11/12/13 100,000 98,609
---------------
947,340
---------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
113
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN CORPORATE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (0.1%)
Hanson Australia Funding
5.25%, due 3/15/13 $ 100,000 $ 98,182
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.7%)
British Telecommunications PLC
8.375%, due 12/15/10 250,000 297,572
Deutsche Telekom International Finance BV
5.25%, due 7/22/13 100,000 99,264
8.50%, due 6/15/10 250,000 295,394
France Telecom S.A.
9.75%, due 3/1/31 250,000 320,613
Koninklijke (Royal) KPN N.V.
8.00%, due 10/1/10 100,000 116,968
Telecom Italia Capital
6.375%, due 11/15/33 (a) 100,000 98,082
Telefonica Europe B.V.
7.35%, due 9/15/05 150,000 159,836
8.25%, due 9/15/30 100,000 122,777
Telefonos de Mexico, S.A. de C.V.
4.50%, due 11/19/08 (a) 100,000 98,827
---------------
1,609,333
---------------
FOREIGN GOVERNMENTS (2.0%)
Canadian Government
5.25%, due 11/5/08 500,000 533,052
Malaysian Government
7.50%, due 7/15/11 100,000 113,850
Province of British Columbia
5.375%, due 10/29/08 250,000 266,153
Province of Nova Scotia
5.75%, due 2/27/12 250,000 266,961
Province of Ontario
6.00%, due 2/21/06 511,000 541,050
Republic of Chile
5.50%, due 1/15/13 100,000 100,620
Republic of Finland
4.75%, due 3/6/07 250,000 261,405
Republic of Italy
Series DTC
4.375%, due 10/25/06 250,000 258,511
5.625%, due 6/15/12 750,000 800,938
Republic of Korea
8.875%, due 4/15/08 250,000 293,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN GOVERNMENTS (CONTINUED)
Republic of Poland
5.25%, due 1/15/14 $ 100,000 $ 99,250
Republic of South Africa
7.375%, due 4/25/12 100,000 109,750
United Mexican States
6.375%, due 1/16/13 550,000 556,874
7.50%, due 1/14/12 250,000 272,500
Series A
8.50%, due 2/1/06 250,000 273,750
---------------
4,747,664
---------------
INSURANCE (0.1%)
Axa
8.60%, due 12/15/30 105,000 130,501
---------------
MEDIA (0.1%)
Intelsat Ltd.
7.625%, due 4/15/12 100,000 99,657
Thomson Corp. (The)
6.20%, due 1/5/12 100,000 108,078
---------------
207,735
---------------
METALS & MINING (0.1%)
BHP Finance USA Ltd.
4.80%, due 4/15/13 100,000 98,658
Inco Ltd.
5.70%, due 10/15/15 100,000 99,912
---------------
198,570
---------------
MULTI-UTILITIES & UNREGULATED POWER (0.1%)
Hydro-Quebec
Series JL
6.30%, due 5/11/11 250,000 275,806
---------------
OIL & GAS (0.0%) (E)
EnCana Corp.
4.75%, due 10/15/13 100,000 96,088
---------------
WIRELESS TELECOMMUNICATION SERVICES (0.1%)
Vodafone Group PLC
7.75%, due 2/15/10 250,000 289,505
---------------
Total Foreign Corporate Bonds
(Cost $9,315,124) 9,398,394
---------------
</Table>
114 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (68.3%)
- ----------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (1.3%)
Series 405
1.625%, due 4/15/05 $ 2,000,000 $ 2,000,090
Series 430
2.875%, due 9/15/06 1,000,000 1,003,202
---------------
3,003,292
---------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (5.8%)
1.50%, due 8/15/05 1,500,000 1,492,422
1.875%, due 2/15/06 2,000,000 1,984,554
2.75%, due 8/15/06 1,000,000 1,001,850
2.875%, due 12/15/06 3,000,000 3,000,645
4.50%, due 7/15/13 1,000,000 967,787
5.25%, due 1/15/06 3,000,000 3,145,722
6.25%, due 7/15/32 2,000,000 2,124,014
---------------
13,716,994
---------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (12.5%)
4.50%, due 9/1/18-8/1/33 2,925,588 2,863,022
4.50%, due 6/15/19-5/15/34 TBA (b) 1,000,000 960,000
5.00%, due 5/1/18-11/1/33 6,595,984 6,537,923
5.50%, due 3/1/17-11/1/33 1,548,530 1,586,017
*5.50%, due 5/15/34-6/15/34 TBA (b) 9,500,000 9,479,536
6.00%, due 12/1/13-4/1/33 3,556,678 3,668,078
6.00%, due 5/15/34 TBA (b) 1,000,000 1,022,812
6.50%, due 4/1/11-7/1/32 1,996,533 2,089,321
7.00%, due 11/1/04-3/1/32 963,305 1,017,008
7.50%, due 9/1/11-2/1/32 351,044 376,927
8.00%, due 7/1/26 21,131 22,998
---------------
29,623,642
---------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION (5.5%)
*1.875%, due 9/15/05 $ 4,000,000 $ 3,993,692
3.25%, due 8/15/08 2,000,000 1,959,854
4.25%, due 7/15/07 3,000,000 3,089,700
4.625%, due 10/15/13 2,000,000 1,947,108
5.00%, due 1/15/07 1,500,000 1,577,899
6.21%, due 8/6/38 475,000 503,052
---------------
13,071,305
---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (17.4%)
4.50%, due 4/1/18-11/1/33 5,754,644 5,648,860
4.50%, due 5/15/19 TBA (b) 1,000,000 984,062
5.00%, due 10/1/17-11/1/33 4,060,158 4,054,342
*5.00%, due 5/15/19-5/15/34 TBA (b) 6,500,000 6,315,313
5.50%, due 6/1/16-12/1/33 6,893,201 6,910,409
5.50%, due 5/15/19-5/15/34 TBA (b) 2,000,000 2,009,219
6.00%, due 6/1/16-5/1/33 5,461,520 5,605,205
6.00%, due 5/15/34 TBA (b) 1,500,000 1,534,218
6.50%, due 3/1/11-9/1/32 5,000,416 5,217,140
7.00%, due 2/1/09-5/1/32 2,093,977 2,217,754
7.50%, due 1/1/28-8/1/31 249,064 266,441
8.00%, due 7/1/07-1/1/28 211,639 229,830
9.50%, due 3/1/16-9/1/19 212,666 235,530
---------------
41,228,323
---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (4.3%)
5.00%, due 7/5/33-8/15/33 1,432,842 1,394,112
5.50%, due 3/15/33-9/15/33 2,221,086 2,223,957
5.50%, due 5/15/34 TBA (b) 500,000 500,000
6.00%, due 3/20/29-12/15/32 1,598,905 1,641,401
6.00%, due 5/15/34 TBA (b) 500,000 512,500
6.50%, due 2/15/29-10/15/32 1,820,111 1,901,592
7.00%, due 3/15/07-8/15/32 1,097,993 1,167,064
7.50%, due 8/15/08-3/15/32 505,631 543,384
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
115
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- ----------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (CONTINUED)
8.00%, due 6/15/26-11/15/30 $ 187,999 $ 205,221
8.50%, due 7/15/26-11/15/26 18,091 19,903
---------------
10,109,134
---------------
UNITED STATES TREASURY BONDS (5.1%)
*5.375%, due 2/15/31 4,500,000 4,559,063
6.00%, due 2/15/26 2,500,000 2,703,515
6.25%, due 5/15/30 1,007,000 1,131,655
7.50%, due 11/15/16 403,000 501,027
8.50%, due 2/15/20 201,000 273,839
8.75%, due 5/15/17-8/15/20 756,000 1,047,690
8.875%, due 2/15/19 302,000 421,243
9.875%, due 11/15/15 302,000 439,056
10.375%, due 11/15/12 252,000 312,411
11.25%, due 2/15/15 201,000 313,458
12.75%, due 11/15/10 201,000 232,830
---------------
11,935,787
---------------
UNITED STATES TREASURY NOTES (16.4%)
*1.125%, due 6/30/05 3,500,000 3,476,347
*1.625%, due 10/31/05-2/28/06 8,000,000 7,948,048
*2.00%, due 5/15/06 5,000,000 4,966,405
2.125%, due 8/31/04 1,000,000 1,003,477
*2.375%, due 8/15/06 5,000,000 4,985,350
*2.625%, due 11/15/06 5,000,000 4,996,485
2.875%, due 6/30/04 1,511,000 1,515,663
*4.00%, due 2/15/14 5,250,000 5,043,281
4.75%, due 11/15/08 1,007,000 1,059,750
5.00%, due 2/15/11 648,000 683,564
6.00%, due 8/15/09 327,000 362,715
6.125%, due 8/15/07 705,000 773,489
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
UNITED STATES TREASURY NOTES (CONTINUED)
6.75%, due 5/15/05 $ 1,511,000 $ 1,589,501
7.50%, due 2/15/05 302,000 316,180
---------------
38,720,255
---------------
Total U.S. Government & Federal Agencies
(Cost $161,926,179) 161,408,732(d)
---------------
YANKEE BONDS (1.4%) (F)
- ----------------------------------------------------------------------------------
COMMERCIAL BANKS (0.6%)
Abbey National PLC
7.95%, due 10/26/29 100,000 120,184
Australia & New Zealand Banking Group Ltd.
7.55%, due 9/15/06 353,000 387,997
Inter-American Development Bank
6.80%, due 10/15/25 604,000 685,315
Santander Financial Issuances
6.375%, due 2/15/11 250,000 272,184
---------------
1,465,680
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.1%)
TELUS Corp.
7.50%, due 6/1/07 100,000 110,504
---------------
FOREIGN GOVERNMENTS (0.3%)
Province of Manitoba
5.50%, due 10/1/08 250,000 266,413
Province of Quebec
Series NJ
7.50%, due 7/15/23 302,000 367,637
---------------
634,050
---------------
GAS UTILITIES (0.0%) (E)
TransCanada Pipelines Ltd.
4.00%, due 6/15/13 100,000 92,052
---------------
INDUSTRIAL CONGLOMERATES (0.1%)
Tyco International Group SA
6.375%, due 10/15/11 250,000 263,254
---------------
METALS & MINING (0.0%) (E)
Alcan, Inc.
6.45%, due 3/15/11 100,000 108,565
---------------
</Table>
116 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
YANKEE BONDS (CONTINUED)
- ----------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (0.0%) (E)
United Utilities PLC
5.375%, due 2/1/19 $ 100,000 $ 94,395
---------------
OIL & GAS (0.2%)
Canadian National Resources Ltd.
5.45%, due 10/1/12 100,000 102,014
Norsk Hydro ASA
7.25%, due 9/23/27 250,000 284,454
Petro-Canada
4.00%, due 7/15/13 100,000 90,553
---------------
477,021
---------------
ROAD & RAIL (0.1%)
Canadian National Railway Co.
6.375%, due 10/15/11 100,000 108,955
---------------
Total Yankee Bonds
(Cost $3,203,833) 3,354,476
---------------
Total Long-Term Bonds
(Cost $224,805,123) 225,326,167
---------------
SHORT-TERM INVESTMENTS (14.1%) (C)
- ----------------------------------------------------------------------------------
COMMERCIAL PAPER (13.1%)
Ciesco LP
1.021%, due 5/7/04 5,000,000 4,999,149
Countrywide Home Loans, Inc.
1.051%, due 5/13/04 5,711,000 5,709,001
E.I. du Pont de Nemours & Co.
1.00%, due 5/3/04 1,816,000 1,815,899
Morgan Stanley Dean Witter & Co.
1.03%, due 5/10/04 3,000,000 2,999,227
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
South Carolina Electric & Gas Co.
1.051%, due 5/19/04 $ 5,000,000 $ 4,997,374
Three Rivers Funding Corp.
1.031%, due 5/17/04 5,000,000 4,997,710
UBS Finance Delaware LLC
1.02%, due 5/3/04 5,570,000 5,569,685
---------------
Total Commercial Paper (Cost $31,088,045) 31,088,045
---------------
U.S. GOVERNMENT (1.0%)
United States Treasury Bills
0.983%, due 8/26/04 2,000,000 1,993,662
1.010%, due 9/2/04 300,000 298,966
---------------
Total U.S. Government (Cost $2,292,431) 2,292,628
---------------
Total Short-Term
Investments (Cost $33,380,476) 33,380,673
---------------
Total Investments (Cost $258,185,599) (g) 109.5% 258,706,840(h)
Liabilities in Excess of Cash and Other Assets (9.5) (22,538,246)
------ ------------
Net Assets 100.0% $ 236,168,594
======= ===============
<Caption>
CONTRACTS UNREALIZED
LONG DEPRECIATION (I)
FUTURES CONTRACTS (-0.1%)
- -----------------------------------------------------------------------------------
United States Treasury Note
June 2004 (5 Year) 69 $ (129,284)
---------------
Total Futures Contracts
(Settlement Value
$7,585,688) (d) $ (129,284)
===============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
117
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
(a) May be sold to institutional investors only.
(b) TBA: Securities purchased on a forward commitment basis
with an approximate principal amount and maturity date.
The actual principal amount and maturity date will be
determined upon settlement. The market value of these
securities at April 30, 2004 is $23,305,160.
(c) Segregated, partially segregated or designated as
collateral for futures contracts and TBAs.
(d) The combined market value of U.S. Government and Federal
Agencies investments and settlement value of U.S.
Treasury Note futures contracts represents 71.8% of net
assets.
(e) Less than one tenth of a percent.
(f) Yankee bond--dollar-denominated bond issued in the
United States by foreign banks and corporations.
(g) The cost for federal income tax purposes is
$258,332,733.
(h) At April 30, 2004 net unrealized appreciation was
$374,107, based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $3,365,841 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $2,991,734.
(i) Represents the difference between the value of the con-
tracts at the time they were opened and the value at
April 30, 2004.
</Table>
118 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $258,185,599) $258,706,840
Cash 188
Receivables:
Investment securities sold 7,235,381
Interest 2,011,348
Fund shares sold 481,032
Other assets 15,936
------------
Total assets 268,450,725
------------
LIABILITIES:
Payables:
Investment securities purchased 31,449,356
Manager 65,442
Fund shares redeemed 36,928
Transfer agent 19,038
Custodian 15,043
NYLIFE Distributors 8,587
Variation margin on futures contracts 2,879
Directors 60
Accrued expenses 65,619
Dividend payable 619,179
------------
Total liabilities 32,282,131
------------
Net assets $236,168,594
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
500 million shares authorized
Class A $ 3,895
Class I 17,916
Additional paid-in capital 238,286,131
Accumulated undistributed net investment
income 619,925
Accumulated net realized loss on investments
and futures contracts (3,151,230)
Net unrealized appreciation on investments and
futures contracts 391,957
------------
Net assets $236,168,594
============
CLASS A
Net assets applicable to outstanding shares $ 42,155,147
============
Shares of capital stock outstanding 3,894,542
============
Net asset value per share outstanding $ 10.82
Maximum sales charge (3.00% of offering price) 0.33
------------
Maximum offering price per share outstanding $ 11.15
============
CLASS I
Net assets applicable to outstanding shares $194,013,447
============
Shares of capital stock outstanding 17,916,454
============
Net asset value and offering price per share
outstanding $ 10.83
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
119
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 4,446,300
-----------
EXPENSES:
Manager 567,360
Professional 40,263
Transfer agent 33,960
Service -- Class A 32,884
Service -- Service Class 14,118
Portfolio pricing 32,307
Custodian 30,300
Shareholder communication 14,647
Directors 12,171
Registration 1,958
Miscellaneous 20,218
-----------
Total expenses before reimbursement 800,186
Expense reimbursement from Manager (185,823)
-----------
Net expenses 614,363
-----------
Net investment income 3,831,937
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from:
Security transactions 507,290
Futures transactions 179,292
-----------
Net realized gain on investments 686,582
-----------
Net change in unrealized appreciation on
investments:
Security transactions (2,398,196)
Futures transactions (161,486)
-----------
Net unrealized loss on investments (2,559,682)
-----------
Net realized and unrealized loss on investments (1,873,100)
-----------
Net increase in net assets resulting from
operations $ 1,958,837
===========
</Table>
120 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 3,831,937 $ 5,782,093
Net realized gain on investments
and futures contracts 686,582 1,010,704
Net change in unrealized
appreciation (depreciation) on
investments and futures contracts (2,559,682) (1,651,848)
---------------------------
Net increase in net assets
resulting from operations 1,958,837 5,140,949
---------------------------
Dividends to shareholders:
From net investment income:
Class A (402,182) --
Class I (2,980,190) (5,405,294)
Service Class (156,873) (688,954)
---------------------------
Total dividends to shareholders (3,539,245) (6,094,248)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 52,974,525 --
Class I 31,698,052 114,645,556
Service Class 5,080,305 27,017,252
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Class A 298,392 --
Class I 2,461,381 5,371,984
Service Class 156,825 688,954
---------------------------
92,669,480 147,723,746
Cost of shares redeemed:
Class A (45,076,253) --
Class I (22,988,783) (60,146,907)
Service Class (1,721,780) (14,596,471)
---------------------------
(69,786,816) (74,743,378)
---------------------------
Increase in net assets derived
from capital share transactions 22,882,664 72,980,368
---------------------------
Net increase in net assets 21,302,256 72,027,069
NET ASSETS:
Beginning of period 214,866,338 142,839,269
---------------------------
End of period $236,168,594 $214,866,338
===========================
Accumulated undistributed net
investment income at end of period $ 619,925 $ 327,233
===========================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
121
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS I
---------- ---------------------------------------------------------------------------------------
JANUARY 1, SIX JANUARY 1,
2004** MONTHS 1999
THROUGH ENDED THROUGH YEAR ENDED
APRIL 30, APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
2004*** 2004*** 2003 2002 2001 2000 1999* 1998
Net asset value at
beginning of period $ 10.95 $ 10.89 $ 10.86 $ 11.21 $ 10.73 $ 10.76 $ 10.93 $ 10.74
------- -------- -------- -------- ------- -------- -------- --------
Net investment income 0.12 0.18 0.39 0.52(c) 0.65(c)(d) 0.72 0.62 0.69
Net realized and
unrealized gain
(loss) on investments (0.14) (0.07) 0.04 0.08 0.72(d) 0.00(b) (0.79) 0.19
------- -------- -------- -------- ------- -------- -------- --------
Total from investment
operations (0.02) 0.11 0.43 0.60 1.37 0.72 (0.17) 0.88
------- -------- -------- -------- ------- -------- -------- --------
Less dividends:
From net investment
income (0.11) (0.17) (0.40) (0.95) (0.89) (0.75) -- (0.69)
------- -------- -------- -------- ------- -------- -------- --------
Net asset value at end
of period $ 10.82 $ 10.83 $ 10.89 $ 10.86 $ 11.21 $ 10.73 $ 10.76 $ 10.93
======= ======== ======== ======== ======= ======== ======== ========
Total investment return
(a) (0.23%) 1.02% 3.97% 5.92% 13.44% 7.27% (1.56%) 8.21%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income 3.17%+ 3.42%+ 3.39% 4.83% 6.00%(d) 6.63% 6.42%+ 6.37%
Net expenses 0.75%+ 0.50%+ 0.50% 0.50% 0.50% 0.50% 0.50%+ 0.50%
Expenses (before
reimbursement) 0.91%+ 0.66%+ 0.68% 0.74% 0.71% 0.63% 0.62%+ 0.65%
Portfolio turnover rate 45% 45% 110% 56% 57% 20% 31% 14%
Net assets at end of
period (in 000's) $42,155 $194,013 $184,051 $125,169 $81,890 $136,033 $145,427 $156,244
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Total return is calculated exclusive of sales charges and is
not annualized.
(b) Less than one cent per share.
(c) Per share data based on average shares outstanding during
the period.
(d) As required, effective November 1, 2000, the Fund has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended October 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to November 1, 2000 have
not been restated to reflect this change in presentation.
</Table>
<Table>
<Caption>
CLASS I
-------
Decrease net investment income ($0.02)
Increase net realized and unrealized gains and losses 0.02
Decrease ratio of net investment income (0.16%)
</Table>
122 MainStay Indexed Bond Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
MAINSTAY INTERMEDIATE TERM BOND FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
LEHMAN BROTHERS(R) AGGREGATE BOND INDEX(1) 1.25% 1.82% 6.66% 7.34%
AVERAGE LIPPER INTERMEDIATE INVESTMENT GRADE FUND(2) 1.17 1.91 5.86 6.55
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -3.73% -3.42% 4.22% 5.55%
Excluding sales charges 0.81 1.14 5.18 6.04
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY INTERMEDIATE TERM LEHMAN BROTHERS AGGREGATE
BOND FUND BOND INDEX
-------------------------- -------------------------
4/30/94 955.00 1000.00
1011.00 1073.00
1090.00 1166.00
1159.00 1248.00
1269.00 1385.00
1333.00 1472.00
1325.00 1490.00
1478.00 1675.00
1552.00 1806.00
1697.00 1995.00
4/30/04 1716.00 2031.00
</Table>
-- MainStay Intermediate Term Bond Fund
-- Lehman Brothers Aggregate Bond Index
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -4.41% -4.40% 4.08% 5.27%
Excluding sales charges 0.55 0.50 4.42 5.27
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY INTERMEDIATE TERM LEHMAN BROTHERS AGGREGATE
BOND FUND BOND INDEX
-------------------------- -------------------------
4/30/94 1000.00 1000.00
1052.00 1073.00
1125.00 1166.00
1187.00 1248.00
1290.00 1385.00
1346.00 1472.00
1327.00 1490.00
1470.00 1675.00
1532.00 1806.00
1662.00 1995.00
4/30/04 1671.00 2031.00
</Table>
-- MainStay Intermediate Term Bond Fund
-- Lehman Brothers Aggregate Bond Index
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -0.44% -0.48% 4.42% 5.27%
Excluding sales charges 0.55 0.50 4.42 5.27
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY INTERMEDIATE TERM LEHMAN BROTHERS AGGREGATE
BOND FUND BOND INDEX
-------------------------- -------------------------
4/30/94 1000.00 1000.00
1052.00 1073.00
1125.00 1166.00
1187.00 1248.00
1290.00 1385.00
1346.00 1472.00
1327.00 1490.00
1470.00 1675.00
1532.00 1806.00
1662.00 1995.00
4/30/04 1671.00 2031.00
</Table>
-- MainStay Intermediate Term Bond Fund
-- Lehman Brothers Aggregate Bond Index
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 4.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A, B, and C shares, first
offered 1/1/04, includes the historical performance of Class I shares from
inception (1/2/91) through 12/31/03 adjusted to reflect the applicable sales
charge (or CDSC) and fees and expenses for such shares.
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 123
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 0.93% 1.38% 5.43% 6.29%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY INTERMEDIATE TERM LEHMAN BROTHERS AGGREGATE
BOND FUND BOND INDEX
-------------------------- -------------------------
4/30/94 1000.00 1000.00
1062.00 1073.00
1146.00 1166.00
1222.00 1248.00
1341.00 1385.00
1413.00 1472.00
1407.00 1490.00
1573.00 1675.00
1656.00 1806.00
1815.00 1995.00
4/30/04 1840.00 2031.00
</Table>
-- MainStay Intermediate Term Bond Fund
-- Lehman Brothers Aggregate Bond Index
1. The Lehman Brothers(R) Aggregate Bond Index is an unmanaged index that
includes the following other unmanaged Lehman Brothers(R) indices: the
Government Index, the Corporate Index, the Mortgage-Backed Securities Index
and the Asset-Backed Securities Index. To qualify for inclusion in the Lehman
Brothers(R) Aggregate Bond Index, securities must be U.S. dollar denominated
and investment grade and have a fixed-rate coupon, a remaining maturity of at
least one year, and a par amount outstanding of at least $150 million.
Results assume reinvestment of all income and capital-gains. An investment
cannot be made directly into an index.
2. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
124 MainStay Intermediate Term Bond Fund
$1,000 INVESTED IN MAINSTAY INTERMEDIATE TERM BOND FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $ 997 $4 $1,046 $4
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $ 995 $6 $1,044 $6
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(1,2) $1,000 $ 995 $6 $1,044 $6
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,009 $4 $1,046 $4
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares, Class B shares and Class C shares were first offered on
January 1, 2004. Expenses paid during the period reflect ongoing costs for
the four-month period ending April 30, 2004. Had these shares been offered
for the six months ended April 30, 2004, based on a hypothetical 5% return,
expenses paid during the period would be $5, $9 and $9, respectively, and the
ending account value would be $1,045, $1,041 and $1,041, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
www.mainstayfunds.com 125
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Gary Goodenough and Christopher Harms
of MacKay Shields LLC
MAINSTAY INTERMEDIATE TERM BOND FUND
(FORMERLY ECLIPSE BOND FUND)
WHAT ECONOMIC FACTORS INFLUENCED THE BOND MARKET DURING THE SIX MONTHS ENDED
APRIL 30, 2004?
The Federal Reserve maintained the targeted federal funds rate at an
accommodative 1.0%, and for much of the period, economic data was mixed. In
April 2004, however, key economic releases showed that core inflation had risen
at a 0.4% monthly rate, nonfarm payrolls had grown by 308,000, and first-
quarter 2004 real gross domestic product had surpassed the 4.1% annualized
growth rate in the fourth quarter of 2003. The risk of deflation appeared to be
waning, while trend-level growth seemed to be firming.
HOW DID THESE FACTORS AFFECT TREASURY YIELDS?
Quite a bit. The two-year, five-year, 10-year, and 30-year benchmark Treasury
issues began the reporting period with yields of 1.8%, 3.2%, 4.3%, and 5.1%,
respectively. Over the next five months, benchmark Treasury yields drifted lower
on inconclusive economic data. In April, interest rates turned sharply higher as
the bond market began to brace for a less stimulative monetary policy. At the
end of the reporting period, the benchmark rates had risen to 2.3%, 3.6%, 4.5%,
and 5.3%, respectively.
HOW DID YOU POSITION THE FUND'S PORTFOLIO?
During the period, there were only modest changes to the Fund's overall asset
allocation. The adjustments we made served to reduce the Fund's overall
duration. Early in the reporting period, we shortened the Fund's duration by
swapping longer-maturity Treasuries for shorter-maturity issues and by selling
some longer-duration lower-coupon mortgage-backed securities. The Fund's
duration fell from 4.61 years to 4.49 years, consistent with our view that
interest rates would gradually rise as 2004 unfolded. To reinforce our view that
interest rates were likely to rise, we purchased mortgage-backed securities
collateralized by balloon loans, because the durations of these securities are
less prone to lengthen when interest rates rise.
WERE THERE ANY PARTICULAR HOLDINGS THAT ENHANCED RESULTS?
The Fund's corporate-bond exposure focused on industries that were aggressively
rationalizing excess capacity to improve their pricing power. We had particular
success with a few triple-B rated issuers,(1) such as Medco Health Solutions and
Fund American. These gains were partially offset by the Fund's holdings in
Citizens Communications, a telecommunications company that unexpectedly
announced its intent to explore strategic alternatives. To protect the portfolio
from increased credit risk, we sold a portion of the position and are closely
monitoring the performance of our remaining holdings in the company.
WHAT IS YOUR OUTLOOK FOR THE ECONOMY AND INTEREST RATES?
We expect employment data to play a role in Federal Reserve decisions, and we
anticipate market turbulence around the time when payroll data is released. Over
the longer term, we expect interest rates to gradually trend higher until the
Federal Reserve initiates a tightening cycle. Even then, interest rates may
remain unsettled until the Federal Reserve specifies the kinds of conditions
that would prompt a neutral stand.
We continue to favor corporate bonds for their total-return potential. If
default rates continue to decline and our economic outlook remains positive, we
may increase the Fund's allocation to high-yield corporate bonds. A portion of
these purchases may include emerging-market bonds. In particular, we will target
areas where globalization and free-trade policies have lowered market barriers.
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value. Foreign securities may be subject to greater risks than
U.S. investments, including currency fluctuations, less-liquid trading markets,
greater price volatility, political and economic instability, less publicly
available information, and changes in tax or currency laws or monetary policy.
These risks are likely to be greater in emerging markets than in developed
markets.
1. Debt rated BBB by Standard & Poor's is deemed by Standard & Poor's to exhibit
adequate protection parameters. It is the opinion of Standard & Poor's,
however, that adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation than would be the case for debt in higher- rated
categories. When applied to Fund holdings, ratings are based solely on the
creditworthiness of the bonds in the portfolio and are not meant to represent
the security or safety of the Fund.
126 MainStay Intermediate Term Bond Fund
The core themes in the Fund's portfolio--positioning for higher interest rates,
tighter credit spreads, and crossover buying from Treasuries to higher-yielding
high-quality sectors, such as asset-backed securities--are working well. We
believe this is an effective strategy and we plan to stay the course.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government & Federal Agencies 61.0
Short-Term Investments (collateral from securities lending
is 12.3%) 31.1
Corporate Bonds 24.3
Asset-Backed Securities 4.2
Foreign Corporate Bonds 3.7
Foreign Government Bonds 1.0
Yankee Bond 0.6
Municipal Bond 0.2
Liabilities in Excess of Cash and Other Assets -26.1
</Table>
www.mainstayfunds.com 127
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM INVESTMENTS (95.0%)+
ASSET-BACKED SECURITIES (4.2%)
- -------------------------------------------------------------------------------
CONSUMER FINANCE (2.3%)
BMW Vehicle Owner Trust
Series 2003-A Class A3
1.94%, due 2/25/07 $ 825,000 $ 826,077
Harley-Davidson Motorcycle Trust
Series 2004-1 Class A2
2.53%, due 11/15/11 1,695,000 1,670,284
Volkswagen Auto Loan Enhanced Trust
Series 2003-2 Class A3
2.27%, due 10/22/07 1,495,000 1,493,878
-------------
3,990,239
-------------
CONSUMER LOANS (0.4%)
Atlantic City Electric Transition Funding LLC
Series 2002-1 Class A4
5.55%, due 10/20/23 675,000 682,760
-------------
DIVERSIFIED FINANCIAL SERVICES (0.6%)
Capital One Master Trust
Series 2001-5 Class A
5.30%, due 6/15/09 460,000 484,646
DaimlerChrysler Auto Trust
Series 2001-D Class A3
3.15%, due 11/6/05 535,779 537,438
-------------
1,022,084
-------------
MULTI-UTILITIES & UNREGULATED POWER (0.7%)
Public Service of New Hampshire Funding LLC
Pass-Through Certificates
Series 2002-1 Class A
4.58%, due 2/1/08 1,128,274 1,168,767
-------------
THRIFTS & MORTGAGE FINANCE (0.2%)
Vanderbilt Mortgage Finance
Series 1999-B Class 1A4
6.545%, due 4/7/18 416,567 432,914
-------------
Total Asset-Backed Securities
(Cost $7,276,872) 7,296,764
-------------
CORPORATE BONDS (24.3%)
- -------------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.3%)
General Dynamics Corp.
4.50%, due 8/15/10 600,000 599,734
-------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
AUTOMOBILES (0.8%)
DaimlerChrysler N.A. Holding Corp.
6.50%, due 11/15/13 $ 715,000 $ 737,500
General Motors Corp.
8.375%, due 7/15/33 600,000 648,910
-------------
1,386,410
-------------
BEVERAGES (0.5%)
Miller Brewing Co.
4.25%, due 8/15/08 (c) 825,000 827,838
-------------
BUILDING PRODUCTS (0.1%)
Masco Corp.
6.50%, due 8/15/32 195,000 199,314
-------------
CAPITAL MARKETS (2.5%)
Bear Stearns Cos., Inc. (The)
4.00%, due 1/31/08 450,000 453,759
Goldman Sachs Group, Inc. (The)
5.25%, due 10/15/13 1,670,000 1,641,396
6.345%, due 2/15/34 810,000 774,229
Morgan Stanley
3.625%, due 4/1/08 630,000 626,164
4.75%, due 4/1/14 830,000 775,461
-------------
4,271,009
-------------
COMMERCIAL BANKS (1.5%)
Bank of America Corp.
5.125%, due 11/15/14 970,000 950,662
BankBoston N.A.
7.00%, due 9/15/07 520,000 575,016
FleetBoston Financial Corp.
3.85%, due 2/15/08 500,000 502,669
PNC Funding Corp.
5.25%, due 11/15/15 615,000 601,988
-------------
2,630,335
-------------
COMMERCIAL SERVICES & SUPPLIES (0.2%)
Waste Management, Inc.
5.00%, due 3/15/14 395,000 379,793
-------------
COMPUTERS & PERIPHERALS (0.2%)
International Business Machines Corp.
8.375%, due 11/1/19 330,000 422,267
-------------
</Table>
<Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
</Table>
128 MainStay Intermediate Term Bond Fund The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -------------------------------------------------------------------------------
CONSUMER FINANCE (1.9%)
Capital One Bank
5.75%, due 9/15/10 $ 355,000 $ 368,885
Ford Motor Credit Co.
5.80%, due 1/12/09 80,000 81,481
7.00%, due 10/1/13 1,315,000 1,352,385
General Motors Acceptance Corp.
6.875%, due 8/28/12 460,000 479,623
7.75%, due 1/19/10 410,000 450,947
Household Finance Corp.
7.25%, due 5/15/06 208,000 226,367
MBNA Corp.
6.25%, due 1/17/07 370,000 396,106
-------------
3,355,794
-------------
CONTAINERS & PACKAGING (0.2%)
Rock-Tenn Co.
8.20%, due 8/15/11 345,000 404,608
-------------
DIVERSIFIED FINANCIAL SERVICES (1.3%)
FGIC Corp.
6.00%, due 1/15/34 (c) 530,000 516,037
Glencore Funding, Inc.
6.00%, due 4/15/14 (c) 855,000 808,002
J Paul Getty Trust
Series 2003
5.875%, due 10/1/33 460,000 451,809
NiSource Finance Corp.
5.40%, due 7/15/14 435,000 429,246
-------------
2,205,094
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.1%)
Citizens Communications Co.
9.00%, due 8/15/31 740,000 726,415
9.25%, due 5/15/11 380,000 399,925
Sprint Capital Corp.
8.75%, due 3/15/32 650,000 776,433
-------------
1,902,773
-------------
ELECTRIC UTILITIES (1.1%)
American Electric Power Co., Inc.
Series C
5.375%, due 3/15/10 215,000 222,324
CenterPoint Energy, Inc.
Series B
5.875%, due 6/1/08 380,000 387,001
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRIC UTILITIES (CONTINUED)
Southern California Edison Co.
6.00%, due 1/15/34 $ 265,000 $ 255,660
Tenaska Virginia Partners L.P.
6.119%, due 3/30/24 (c) 990,000 982,704
-------------
1,847,689
-------------
ELECTRICAL EQUIPMENT (0.2%)
Emerson Electric Co.
6.00%, due 8/15/32 340,000 339,044
-------------
ENERGY EQUIPMENT & SERVICES (0.7%)
Entergy-Koch, L.P.
3.65%, due 8/20/06 (c) 1,195,000 1,194,362
-------------
FOOD & STAPLES RETAILING (1.1%)
CVS Corp.
5.789%, due 1/10/26 (c) 437,746 431,937
Safeway, Inc.
4.125%, due 11/1/08 355,000 350,987
6.15%, due 3/1/06 670,000 709,276
Wal-Mart Stores, Inc.
7.55%, due 2/15/30 290,000 347,687
-------------
1,839,887
-------------
FOOD PRODUCTS (0.3%)
Cargill, Inc.
5.00%, due 11/15/13 (c) 570,000 553,521
-------------
HEALTH CARE PROVIDERS & SERVICES (1.0%)
Highmark, Inc.
6.80%, due 8/15/13 (c) 920,000 984,559
Medco Health Solutions, Inc.
7.25%, due 8/15/13 615,000 663,562
-------------
1,648,121
-------------
INSURANCE (0.7%)
Fund American Cos., Inc.
5.875%, due 5/15/13 850,000 854,910
Marsh & McLennan Cos., Inc.
7.125%, due 6/15/09 345,000 389,631
-------------
1,244,541
-------------
MEDIA (2.9%)
AT&T Broadband Corp.
9.455%, due 11/15/22 370,000 480,934
Liberty Media Corp.
3.50%, due 9/25/06 250,000 250,483
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
129
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -------------------------------------------------------------------------------
MEDIA (CONTINUED)
Tele-Communications, Inc.
9.80%, due 2/1/12 $ 810,000 $ 1,034,052
Time Warner Entertainment Co. L.P.
10.15%, due 5/1/12 1,714,000 2,218,386
Time Warner, Inc.
6.875%, due 6/15/18 510,000 539,996
8.05%, due 1/15/16 455,000 526,239
-------------
5,050,090
-------------
MULTILINE RETAIL (0.9%)
Target Corp.
6.35%, due 11/1/32 990,000 1,020,515
8.60%, due 1/15/12 390,000 483,400
-------------
1,503,915
-------------
MULTI-UTILITIES & UNREGULATED POWER (1.4%)
Pacific Electric & Gas Co.
6.05%, due 3/1/34 570,000 539,049
PSE&G Power LLC
6.875%, due 4/15/06 1,805,000 1,937,886
-------------
2,476,935
-------------
OIL & GAS (1.1%)
Kern River Funding Corp.
4.893%, due 4/30/18 (c) 650,760 634,725
Tosco Corp.
8.125%, due 2/15/30 975,000 1,210,422
-------------
1,845,147
-------------
PERSONAL PRODUCTS (0.2%)
Estee Lauder Cos., Inc.
5.75%, due 10/15/33 395,000 380,884
-------------
PHARMACEUTICALS (0.7%)
Wyeth
5.50%, due 2/1/14 935,000 932,043
6.50%, due 2/1/34 310,000 308,305
-------------
1,240,348
-------------
REAL ESTATE (0.8%)
HRPT Properties Trust
5.75%, due 2/15/14 845,000 836,331
iStar Financial, Inc.
5.125%, due 4/1/11 (c) 280,000 266,700
Rouse Co. (The)
3.625%, due 3/15/09 290,000 277,920
-------------
1,380,951
-------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
THRIFTS & MORTGAGE FINANCE (0.6%)
Washington Mutual, Inc.
4.00%, due 1/15/09 $ 990,000 $ 975,726
-------------
Total Corporate Bonds
(Cost $42,689,238) 42,106,130
-------------
FOREIGN CORPORATE BONDS (3.7%)
- -------------------------------------------------------------------------------
BERMUDA (0.2%)
Arch Capital Group Ltd.
7.35%, due 5/1/34 325,000 330,148
-------------
BRAZIL (0.5%)
CIA Brazileira de Bebidas
10.50%, due 12/15/11 800,000 916,000
-------------
CANADA (0.2%)
Inco Ltd.
5.70%, due 10/15/15 345,000 344,700
-------------
CAYMAN ISLANDS (0.6%)
Hutchison Whamp
International Ltd.
5.45%, due 11/24/10 (c) 990,000 976,269
-------------
CHILE (0.2%)
Corporacion Nacional del Cobre-Codelco, Inc.
5.50%, due 10/15/13 (c) 330,000 328,309
-------------
GERMANY (0.2%)
Citibank Global Markets Deutschland for Severstal
9.25%, due 4/19/14 (c) 335,000 308,200
-------------
MEXICO (0.4%)
Telefonos de Mexico S.A. de C.V.
4.50%, due 11/19/08 (c) 350,000 345,894
8.25%, due 1/26/06 315,000 340,912
-------------
686,806
-------------
NETHERLANDS (0.1%)
Coca-Cola HBC Finance B.V.
5.125%, due 9/17/13 260,000 258,742
-------------
</Table>
130 MainStay Intermediate Term Bond Fund The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN CORPORATE BONDS (CONTINUED)
- -------------------------------------------------------------------------------
SINGAPORE (0.2%)
PSA Corp. Ltd.
7.125%, due 8/1/05 (c) $ 80,000 $ 84,808
Singapore Powerassets Ltd.
5.00%, due 10/22/13 (c) 305,000 297,411
-------------
382,219
-------------
UNITED KINGDOM (1.1%)
HSBC Holdings PLC
Tier II
5.25%, due 12/12/12 615,000 620,455
Vodafone Group PLC
3.95%, due 1/30/08 1,190,000 1,199,246
-------------
1,819,701
-------------
Total Foreign Corporate Bonds
(Cost $6,329,448) 6,351,094
-------------
FOREIGN GOVERNMENT BONDS (1.0%)
- -------------------------------------------------------------------------------
CANADA (0.4%)
Province of Quebec
5.00%, due 7/17/09 570,000 592,310
-------------
MEXICO (0.6%)
United Mexican States
1.84%, due 1/13/09 380,000 380,000
4.625%, due 10/8/08 90,000 89,550
6.625%, due 3/3/15 245,000 246,837
7.50%, due 1/14/12 240,000 261,600
-------------
977,987
-------------
RUSSIA (0.0%) (B)
Russian Federation
5.00%, due 3/31/30 68,000 62,356
-------------
Total Foreign Government Bonds
(Cost $1,573,231) 1,632,653
-------------
MUNICIPAL BOND (0.2%)
- -------------------------------------------------------------------------------
TEXAS (0.2%)
Harris County Texas
Industrial Development Corp.
Solid Waste Deer Park
5.683%, due 3/1/23 390,000 393,615
-------------
Total Municipal Bond
(Cost $390,000) 393,615
-------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (61.0%)
- -------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (8.1%)
3.00%, due 8/1/10 (g) $ 503,592 $ 490,338
* 5.00%, due 8/1/33 (g) 3,248,327 3,151,747
5.50%, due 2/1/33 (g) 2,824,583 2,822,671
* 5.50%, due 6/14/34 TBA (d) 7,580,000 7,539,735
-------------
14,004,491
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (6.0%)
4.00%, due 9/2/08 (g) 780,000 779,779
4.625%, due 5/1/13 670,000 641,193
4.75%, due 1/2/07 1,585,000 1,651,667
5.25%, due 8/1/12 1,845,000 1,860,432
* 5.50%, due 5/2/06 2,860,000 3,015,695
6.25%, due 2/1/11 255,000 276,457
6.625%, due 9/15/09 790,000 885,242
7.00%, due 7/15/05 1,175,000 1,246,552
-------------
10,357,017
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (23.6%)
4.00%, due 5/18/19 TBA (d) 1,775,000 1,705,665
* 4.50%, due 4/1/18-11/1/18 (g) 7,852,865 7,739,583
5.00%, due 9/1/17 (g) 2,075,008 2,090,695
5.00%, due 5/13/34 TBA (d) 1,655,000 1,603,281
5.50%, due 2/1/17-11/1/33 (g) 7,131,318 7,164,142
5.50%, due 5/18/19-6/15/34 TBA (d) 3,900,000 3,911,515
6.00%, due 8/1/17-3/1/33 (g) 2,396,356 2,459,063
* 6.00%, due 5/15/34-6/15/34 TBA (d) 9,520,000 9,719,813
6.50%, due 6/1/31-6/1/32 (g) 1,489,036 1,550,017
7.00%, due 2/1/32-4/1/32 (g) 1,669,014 1,764,384
7.50%, due 8/1/31 (g) 1,060,115 1,133,984
-------------
40,842,142
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (3.0%)
6.00%, due 2/15/29-8/15/32 (g) 3,381,052 3,469,083
6.50%, due 7/15/28-5/15/29 (g) 424,720 444,137
7.50%, due 12/15/28-8/15/30 (g) 1,169,830 1,257,991
-------------
5,171,211
-------------
UNITED STATES TREASURY BONDS (1.9%)
5.375%, due 2/15/31 910,000 921,944
6.875%, due 8/15/25 (e) 1,960,000 2,338,754
-------------
3,260,698
-------------
UNITED STATES TREASURY NOTES (18.4%)
* 3.00%, due 2/15/08 (e) 8,745,000 8,682,491
4.25%, due 11/15/13 1,345,000 1,319,467
* 4.375%, due 5/15/07 (e) 4,520,000 4,713,334
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
131
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- -------------------------------------------------------------------------------
UNITED STATES TREASURY NOTES (CONTINUED)
* 4.625%, due 5/15/06 (e) $ 5,955,000 $ 6,222,278
4.875%, due 2/15/12 (e) 265,000 275,496
* 5.75%, due 11/15/05-8/15/10 4,745,000 5,024,080
* 6.00%, due 8/15/09 5,100,000 5,657,017
-------------
31,894,163
-------------
Total U.S. Government &
Federal Agencies
(Cost $106,272,782) 105,529,722
-------------
YANKEE BOND (0.6%) (h)
- -------------------------------------------------------------------------------
INSURANCE (0.6%)
Montpelier Re Holdings Ltd.
6.125%, due 8/15/13 1,010,000 1,021,634
-------------
Total Yankee Bond
(Cost $1,009,332) 1,021,634
-------------
Total Long-Term Investments
(Cost $165,540,903) 164,331,612
-------------
</Table>
<Table>
SHARES VALUE
<Caption>
WARRANTS (0.0%) (b)
- -------------------------------------------------------------------------------
MEDIA (0.0%) (b)
Ono Finance PLC
Strike Price $0.01
Expire 2/15/11 (a)(c)(i) 60 1
Ziff Davis Media, Inc.
Strike Price $0.001
Expire 8/12/12 (a)(c) 1,210 121
-------------
Total Warrants
(Cost $2,393) 122
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (31.1%)
- -------------------------------------------------------------------------------
COMMERCIAL PAPER (11.8%)
American Express Credit Corp.
1.02%, due 5/4/04 $ 2,000,000 1,999,830
American General Finance Corp.
1.00%, due 5/6/04 1,000,000 999,861
1.01%, due 5/4/04 2,500,000 2,499,790
1.02%, due 5/7/04 2,080,000 2,079,646
General Electric Capital Corp.
1.02%, due 5/6/04 1,600,000 1,599,773
1.02%, due 5/11/04 725,000 724,795
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
Merrill Lynch & Co., Inc.
1.00%, due 5/4/04 $ 1,000,000 $ 999,917
Morgan Stanley
1.03%, due 5/24/04 4,000,000 3,997,368
UBS Finance Delaware LLC
1.02%, due 5/3/04 5,445,000 5,444,691
-------------
Total Commercial Paper
(Cost $20,345,671) 20,345,671
-------------
FEDERAL AGENCIES (2.4%)
Federal Home Loan Bank
0.92%, due 5/3/04 3,210,000 3,209,836
Federal National Mortgage Association
0.91%, due 5/3/04 980,000 979,950
-------------
Total Federal Agencies
(Cost $4,189,786) 4,189,786
-------------
<Caption>
SHARES VALUE
INVESTMENT COMPANIES (4.6%)
AIM Institutional Funds
Group (f) 54,000 54,000
Merrill Lynch Premier Institutional Fund 7,925,245 7,925,245
-------------
Total Investment Companies
(Cost $7,979,245) 7,979,245
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (1.5%)
Bank of America Securities LLC
1.1874%, due 5/3/04 (f) $ 2,650,000 2,650,000
-------------
Total Master Note
(Cost $2,650,000) 2,650,000
-------------
REPURCHASE AGREEMENTS (10.8%)
Countrywide Securities Corp.
1.1324%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $5,505,190 (f)
(Collateralized by
Various Bonds
with a Principal Amount of
$5,755,235 and a
Market Value of $5,730,949) 5,500,000 5,500,000
</Table>
132 MainStay Intermediate Term Bond Fund The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
xCredit Suisse First Boston LLC
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $5,004,635 (f)
(Collateralized by
Various Bonds
with a Principal Amount of $4,862,777 and a
Market Value of $5,100,128) $ 5,000,000 $ 5,000,000
Lehman Brothers, Inc.
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $2,001,854 (f)
(Collateralized by
Various Bonds
with a Principal Amount of
$2,628,126 and a
Market Value of $2,099,358) 2,000,000 2,000,000
Merrill Lynch Pierce Fenner & Smith, Inc.
1.1424%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $2,101,999 (f)
(Collateralized by
Various Bonds
with a Principal Amount of
$2,060,228 and a
Market Value of $2,205,054) 2,100,000 2,100,000
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co., Inc.
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $4,003,708 (f)
(Collateralized by
Various Bonds
with a Principal Amount of
$5,166,621 and a
Market Value of $4,192,505) $ 4,000,000 $ 4,000,000
-------------
Total Repurchase Agreements
(Cost $18,600,000) 18,600,000
-------------
Total Short-Term Investments
(Cost $53,764,702) 53,764,702
-------------
Total Investments
(Cost $219,307,998) (j) 126.1% 218,096,436(k)
Liabilities in Excess of
Cash and Other Assets (26.1) (45,119,547)
------- -------------
Net Assets 100.0% $ 172,976,889
======== ===============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) TBA: Securities purchased on a forward commitment basis
with an approximate principal amount and maturity date.
The actual principal amount and maturity date will be
determined upon settlement. The market value of these
securities at April 30, 2004 is $45,006,697.
(e) Represents securities out on loan or a portion which is
out on loan.
(f) Represents security or a portion thereof, purchased with
cash collateral received for securities on loan.
(g) Segregated or partially segregated as collateral for
TBAs.
(h) Yankee bond--dollar-denominated bond issued in the
United States by foreign banks and corporations.
(i) Illiquid security.
(j) The cost for federal income tax purposes is
$219,456,492.
(k) At April 30, 2004 net unrealized depreciation was
$1,360,056, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $1,247,715 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $2,607,771.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
133
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $219,307,998) including
$20,257,176 market value of securities
loaned $218,096,436
Cash 857
Receivables:
Investment securities sold 6,636,167
Dividends and interest 1,678,660
Fund shares sold 138,750
Other assets 17,572
------------
Total assets 226,568,442
------------
LIABILITIES:
Securities lending collateral 21,304,000
Payables:
Investment securities purchased 31,624,348
Manager 86,633
Fund shares redeemed 41,234
Custodian 5,470
NYLIFE Distributors 3,023
Accrued expenses 43,998
Dividend payable 482,847
------------
Total liabilities 53,591,553
------------
Net assets $172,976,889
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Class A $ 679
Class B 158
Class C 76
Class I 16,832
Additional paid-in capital 183,520,547
Accumulated undistributed net investment
income 148,175
Accumulated net realized loss on investments (9,498,016)
Net unrealized depreciation on investments (1,211,562)
------------
Net assets $172,976,889
============
CLASS A
Net assets applicable to outstanding shares $ 6,604,048
============
Shares of capital stock outstanding 678,660
============
Net asset value per share outstanding $ 9.73
Maximum sales charge (4.50% of offering price) 0.46
------------
Maximum offering price per share outstanding $ 10.19
============
CLASS B
Net assets applicable to outstanding shares $ 1,541,970
============
Shares of capital stock outstanding 158,297
============
Net asset value and offering price per share
outstanding $ 9.74
============
CLASS C
Net assets applicable to outstanding shares $ 736,170
============
Shares of capital stock outstanding 75,620
============
Net asset value and offering price per share
outstanding $ 9.74
============
CLASS I
Net assets applicable to outstanding shares $164,094,701
============
Shares of capital stock outstanding 16,832,450
============
Net asset value and offering price per share
outstanding $ 9.75
============
</Table>
134 MainStay Intermediate Term Bond Fund The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 3,273,201
Income from securities loaned -- net 14,523
-----------
Total income 3,287,724
-----------
EXPENSES:
Manager 604,999
Professional 29,819
Transfer agent 19,135
Custodian 14,685
Registration 12,688
Directors 10,254
Shareholder communication 8,906
Portfolio pricing 7,529
Service -- Class A 4,768
Service -- Class B 642
Service -- Class C 254
Service -- Service Class 2,607
Distribution -- Class B 1,928
Distribution -- Class C 762
Miscellaneous 8,684
-----------
Total expenses before reimbursement 727,660
Expense reimbursement from Manager (111,445)
-----------
Net expenses 616,215
-----------
Net investment income 2,671,509
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 1,494,753
Net change in unrealized appreciation on
investments (3,263,649)
-----------
Net realized and unrealized loss on investments (1,768,896)
-----------
Net increase in net assets resulting from
operations $ 902,613
===========
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
135
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 2,671,509 $ 4,993,706
Net realized gain on investments 1,494,753 2,529,860
Net change in unrealized
appreciation on investments (3,263,649) (117,475)
---------------------------
Net increase in net assets
resulting from operations 902,613 7,406,091
---------------------------
Dividends to shareholders:
From net investment income:
Class A (62,726) --
Class B (7,340) --
Class C (3,096) --
Class I (2,630,024) (4,956,086)
Service Class (34,690) (216,223)
---------------------------
Total dividends to shareholders (2,737,876) (5,172,309)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 7,245,488 --
Class B 1,597,611 --
Class C 754,721 --
Class I 30,900,927 25,071,012
Service Class 122,232 2,413,628
Net asset value of shares issued in
connection with acquisition of
Eclipse Core Bond Plus Fund 26,793,396 --
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Class A 43,858 --
Class B 2,890 --
Class C 1,025 --
Class I 1,926,941 4,950,953
Service Class 34,517 214,243
---------------------------
69,423,606 32,649,836
Cost of shares redeemed:
Class A (593,855) --
Class B (22,718) --
Class C (2,834) --
Class I (26,859,814) (29,935,885)
Service Class (5,930,466) (2,840,675)
---------------------------
(33,409,687) (32,776,560)
---------------------------
Increase (decrease) in net assets
derived from capital share
transactions 36,013,919 (126,724)
---------------------------
Net increase in net assets 34,178,656 2,107,058
</Table>
<Table>
<Caption>
2004 2003
NET ASSETS:
Beginning of period $138,798,233 $136,691,175
---------------------------
End of period $172,976,889 $138,798,233
===========================
Accumulated undistributed net
investment income at end of period $ 148,175 $ 146,030
===========================
</Table>
136 MainStay Intermediate Term Bond Fund The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
This page intentionally left blank
137
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
---------- ---------- ----------
JANUARY 1, JANUARY 1, JANUARY 1,
2004** 2004** 2004**
THROUGH THROUGH THROUGH
APRIL 30, APRIL 30, APRIL 30,
2004*** 2004*** 2004***
Net asset value at beginning of period $ 9.86 $ 9.86 $ 9.86
------ ------ ------
Net investment income 0.11 0.08 0.08
Net realized and unrealized gain (loss) on
investments (0.14) (0.12) (0.12)
------ ------ ------
Total from investment operations (0.03) (0.04) (0.04)
------ ------ ------
Less dividends:
From net investment income (0.10) (0.08) (0.08)
------ ------ ------
Net asset value at end of period $ 9.73 $ 9.74 $ 9.74
====== ====== ======
Total investment return (b) (0.31%) (0.45%) (0.45%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income 3.01%+ 2.26%+ 2.26%+
Net expenses 1.07%+ 1.82%+ 1.82%+
Expenses (before reimbursement) 1.21%+ 1.96%+ 1.96%+
Portfolio turnover rate 97% 97% 97%
Net assets at end of period (in 000's) $6,604 $1,542 $ 736
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
(c) Per share data based on average shares outstanding during
the period.
(d) As required, effective November 1, 2000, the Fund has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended October 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to November 1, 2000 have
not been restated to reflect this change in presentation.
</Table>
<Table>
<Caption>
CLASS I
-------
Decrease net investment income ($0.02)
Increase net realized and unrealized gains and losses 0.02
Decrease ratio of net investment income (0.21%)
</Table>
138 MainStay Intermediate Term Bond Fund The notes to the financial
statements are an integral part of, and should be read in conjunction with, the
financial statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
----------------------------------------------------------------------------------------------------
JANUARY 1,
SIX MONTHS 1999
ENDED THROUGH YEAR ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
2004*** 2003 2002 2001 2000 1999* 1998
$ 9.83 $ 9.66 $ 10.32 $ 9.75 $ 9.75 $ 9.91 $ 9.71
-------- -------- -------- -------- -------- -------- --------
0.17 0.36(c) 0.45(c) 0.55(c)(d) 0.57 0.47 0.57
(0.08) 0.18 (0.30) 0.76(d) (0.01) (0.63) 0.20
-------- -------- -------- -------- -------- -------- --------
0.09 0.54 0.15 1.31 0.56 (0.16) 0.77
-------- -------- -------- -------- -------- -------- --------
(0.17) (0.37) (0.81) (0.74) (0.56) (0.00)(a) (0.57)
-------- -------- -------- -------- -------- -------- --------
$ 9.75 $ 9.83 $ 9.66 $ 10.32 $ 9.75 $ 9.75 $ 9.91
======== ======== ======== ======== ======== ======== ========
0.93% 5.69% 1.73% 14.06% 6.21% (1.61%) 7.93%
3.33%+ 3.66% 4.62% 5.53%(d) 6.05% 5.55%+ 5.57%
0.75%+ 0.75% 0.75% 0.75% 0.75% 0.75%+ 0.75%
0.89%+ 0.90% 0.91% 0.88% 0.83% 0.85%+ 0.86%
97% 153% 159% 257% 361% 245% 335%
$164,095 $133,041 $130,813 $116,344 $193,466 $174,521 $182,402
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
139
MAINSTAY SHORT TERM BOND FUND INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
CITIGROUP 1-3 YEAR TREASURY INDEX(1) 0.53% 1.09% 5.17% 5.75%
AVERAGE LIPPER SHORT U.S. GOVERNMENT FUND(2) 0.41 0.51 4.44 5.12
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -2.68% -2.45% 3.81% 4.72%
Excluding sales charges 0.33 0.57 4.44 5.04
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY SHORT TERM BOND CITIGROUP 1-3 YEAR TREASURY
FUND INDEX
------------------------ ---------------------------
4/30/94 970.00 1000.00
1021.00 1056.00
1083.00 1128.00
1143.00 1197.00
1215.00 1283.00
1276.00 1359.00
1311.00 1408.00
1436.00 1544.00
1502.00 1641.00
1577.00 1729.00
4/30/04 1586.00 1748.00
</Table>
-- MainStay Short Term Bond Fund
-- Citigroup 1-3 Year Treasury Index
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 0.45% 0.82% 4.69% 5.28%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY SHORT TERM BOND CITIGROUP 1-3 YEAR TREASURY
FUND INDEX
------------------------ ---------------------------
4/30/94 1000.00 1000.00
1054.00 1056.00
1120.00 1128.00
1186.00 1197.00
1264.00 1283.00
1330.00 1359.00
1370.00 1408.00
1504.00 1544.00
1577.00 1641.00
1659.00 1729.00
4/30/04 1672.00 1748.00
</Table>
-- MainStay Short Term Bond Fund
-- Citigroup 1-3 Year Treasury Index
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 3% and an annual 12b-1
fee of .25%. Class I shares are sold with no initial sales charge or CDSC, have
no annual 12b-1 fee, and are generally available to corporate and institutional
investors with a minimum initial investment of $5 million. Performance figures
reflect certain fee waivers and/or expense limitations, without which total
returns may have been lower. The fee waivers and/or expense limitations are
voluntary and may be discontinued at any time. Performance for Class A shares,
first offered 1/1/04, includes the historical performance of Class I shares from
inception (1/2/91) through 12/31/03 adjusted to reflect the applicable sales
charge and fees and expenses for such shares.
1. The Citigroup 1-3 Year Treasury Index is an unmanaged index comprised of U.S.
Treasury notes and bonds with maturities of one year or greater, but less
than three years (minimum amount outstanding is $1 billion per issue).
Results assume reinvestment of all income and capital gains. An investment
cannot be made directly into an index.
2. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
140 MainStay Short Term Bond Fund
$1,000 INVESTED IN MAINSTAY SHORT TERM BOND FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $ 998 $3 $1,047 $3
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,005 $3 $1,047 $3
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares were first offered on January 1, 2004. Expenses paid during
the period reflect ongoing costs for the four-month period ending April 30,
2004. Had Class A shares been offered for the six months ended April 30,
2004, based on a hypothetical 5% return, expenses paid during the period
would be $4, and the ending account value would be $1,046.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
www.mainstayfunds.com 141
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Claude Athaide, Ph.D., CFA, and Gary
Goodenough of MacKay Shields LLC
MAINSTAY SHORT TERM BOND FUND
WHAT MAJOR FACTORS AFFECTED THE SHORT-TERM BOND MARKET DURING THE SIX MONTHS
ENDED APRIL 30, 2004?
Although the Federal Reserve remained accommodative throughout the reporting
period, economic developments had a major impact on the performance of
short-term bonds.
HOW STRONG WAS THE ECONOMY DURING THE REPORTING PERIOD?
Real U.S. gross domestic product grew at a seasonally adjusted annual rate of
4.1% in the fourth quarter of 2003. Preliminary estimates show that GDP rose
4.4% in the first quarter of 2004. Personal consumption grew at 3.9% while
consumption of durable goods fell 4.2%. Personal consumption has now lagged
overall GDP growth for three quarters. Meanwhile, capital spending grew for
three quarters in a row, with spending on equipment and software advancing at a
double-digit pace during the reporting period.
WERE THERE ANY SIGNIFICANT DEVELOPMENTS IN PRODUCTIVITY AND EMPLOYMENT?
Productivity rose 5.4% while unit labor costs fell at a 1.3% rate over the year
ending March 31, 2004. High productivity enabled firms to meet most of the
pickup in demand without much additional hiring. As a result, corporate profits
rebounded strongly during the semiannual period, increasing 7.2% in the fourth
quarter of 2003 alone. As productivity starts to slow down (it was 3.5% in the
first quarter of this year), employers will have to increase hiring. The March
and April employment reports showed that nonfarm payrolls increased by 625,000
during those two months. The economy has now added approximately 215,000 jobs
per month in 2004.
HOW DID THE SHORT-TERM BOND MARKET REACT TO THE EMPLOYMENT GAINS?
The strength of the March employment figures, along with a positive retail
report and unexpectedly high inflation data, led to a sharp rise in bond yields
during the month of April. The yield on the benchmark two-year Treasury note
rose 73 basis points during the month to finish the reporting period at 2.31%.
HOW WAS THE FUND POSITIONED DURING THE SEMIANNUAL PERIOD?
We positioned the Fund for a flattening yield curve during the period. In fact,
the spread between one-year and five-year constant-maturity Treasury rates
decreased from nearly 200 basis points at the end of October 2003 to a low of
148 basis points in the middle of March, when the rate on the five-year Treasury
fell to 2.64%. Unfortunately, the yield spread between one-year and five-year
Treasuries increased during the last six weeks of the reporting period to 211
basis points, and the performance of the Fund lagged that of its benchmark index
during that span.
DID THE FUND CHANGE ITS ASSET CLASS WEIGHTINGS?
As interest rates rose and yield spreads widened, we used the opportunity to
increase the Fund's exposure to federal agency bonds. Indeed, during the month
of April, we increased the Fund's allocation to federal agency securities from
19.8% on October 31, 2003, to approximately 29% of net assets.
HOW DID THE FUND INVEST DURING THE REPORTING PERIOD?
The Fund continued to invest in a wide range of securities, including
asset-backed securities, mortgage-backed securities, corporate bonds, foreign
corporate bonds, U.S. government securities, and federal agency obligations.
WHAT DO YOU ANTICIPATE GOING FORWARD?
At the end of the six-month period, the Federal Reserve maintained that the
upside and downside risks to economic growth and price stability were about
equal. The Federal Open Market Committee has since suggested that "policy
accommodation can be removed at a pace that is likely to be measured." While
payrolls have finally increased after months of anemic growth, we believe that
strong wage growth will be necessary to sustain spending in the months ahead, as
the effects of the tax cuts fade and higher rates make mortgages less likely to
be refinanced.
We are only slightly defensive on interest rates at this juncture. Evidence from
the federal funds futures market shows that extensive Federal Reserve tightening
has already been priced into the market. The hurdles to profit from a
more-aggressive duration
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value.
142 MainStay Short Term Bond Fund
posture are quite high, and the opportunity to capture higher yields may become
significantly limited. In the coming weeks, we may continue to increase the
Fund's exposure to federal agency bonds. To take advantage of widening swap
rates, we may also seek opportunities among securities that are priced off swap
rates and have two- or three-year maturities. Certain credit-card asset-backed
securities and commercial mortgage-backed securities fit this profile.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
U.S. Government & Federal Agencies 72.60
Short-Term Investments (collateral from securities lending 40.00
is 33.2%)
Corporate Bonds 14.80
Asset-Backed Securities 3.20
Foreign Corporate Bonds 1.40
Liabilities in Excess of Cash and Other Assets -32.0
</Table>
www.mainstayfunds.com 143
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (92.0%)+
ASSET-BACKED SECURITIES (3.2%)
- ---------------------------------------------------------------------------------
CONSUMER FINANCE (1.7%)
BMW Vehicle Owner Trust
Series 2003-A Class A3
1.94%, due 2/25/07 $ 190,000 $ 190,248
Discover Card Master Trust I
Series 1999-5 Class A
1.28%, due 12/18/06 (b) 415,000 415,085
First USA Credit Card Master Trust
Series 1997-2 Class A
1.23%, due 1/17/07 (b) 150,000 150,001
Harley-Davidson Motorcycle Trust
Series 2002-1 Class A2
4.50%, due 1/15/10 500,000 516,161
MBNA Master Credit Card Trust
Series 1997-J Class A
1.22%, due 2/15/07 (b) 400,000 400,184
Volkswagen Auto Loan Enhanced Trust
Series 2003-2 Class A3
2.27%, due 10/22/07 310,000 309,767
-------------
1,981,446
-------------
CONSUMER LOANS (1.0%)
Atlantic City Electric Transition Funding LLC
Series 2002-1 Class A1
2.89%, due 7/20/08 1,128,744 1,130,160
-------------
DIVERSIFIED FINANCIAL SERVICES (0.2%)
Capital One Master Trust
Series 2001-5 Class A
5.30%, due 6/15/09 110,000 115,894
DaimlerChrysler Auto Trust
Series 2001-D Class A3
3.15%, due 11/6/05 118,289 118,655
-------------
234,549
-------------
THRIFTS & MORTGAGE FINANCE (0.3%)
Vanderbilt Mortgage Finance
Series 1999-B Class 1A4
6.545%, due 4/7/18 291,597 303,039
-------------
Total Asset-Backed Securities
(Cost $3,639,618) 3,649,194
-------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (14.8%)
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.3%)
General Dynamics Corp.
2.125%, due 5/15/06 $ 375,000 $ 370,554
*Honeywell International
6.875%, due 10/3/05 1,000,000 1,064,482
-------------
1,435,036
-------------
BEVERAGES (0.6%)
Coca-Cola Co. (The)
4.00%, due 6/1/05 630,000 642,917
-------------
CAPITAL MARKETS (0.7%)
Merrill Lynch & Co., Inc.
6.55%, due 8/1/04 750,000 759,515
-------------
COMMERCIAL BANKS (1.4%)
*Bank of America Corp.
7.50%, due 9/15/06 960,000 1,056,299
Wachovia Corp.
6.70%, due 6/21/04 250,000 251,794
Wells Fargo & Co.
6.625%, due 7/15/04 250,000 252,632
-------------
1,560,725
-------------
CONSUMER FINANCE (0.9%)
*Household Finance Corp.
6.50%, due 1/24/06 1,000,000 1,067,253
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.4%)
BellSouth Telecommunications, Inc.
6.50%, due 6/15/05 470,000 493,514
-------------
ELECTRIC UTILITIES (0.6%)
Alabama Power Co.
2.65%, due 2/15/06 625,000 626,380
-------------
ELECTRICAL EQUIPMENT (0.2%)
Emerson Electric Co.
7.875%, due 6/1/05 300,000 317,983
-------------
FOOD & STAPLES RETAILING (0.7%)
*Wal-Mart Stores, Inc.
5.45%, due 8/1/06 750,000 793,364
-------------
FOOD PRODUCTS (1.1%)
*Cargill, Inc.
6.25%, due 5/1/06 (a) 1,210,000 1,289,463
-------------
</Table>
<Table>
+ Percentages indicated are based on Fund net assets.
V Fund's 10 largest holdings. May be subject to change daily.
</Table>
144 MainStay Short Term Bond Fund The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- ---------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (1.8%)
*Quest Diagnostics, Inc.
6.75%, due 7/12/06 $ 1,860,000 $ 2,010,147
-------------
INSURANCE (0.6%)
Marsh & McLennan Cos., Inc.
6.625%, due 6/15/04 630,000 633,716
-------------
MEDIA (0.2%)
Liberty Media Corp.
3.50%, due 9/25/06 180,000 180,348
-------------
MULTI-UTILITIES & UNREGULATED POWER (1.2%)
PSE&G Power LLC
6.875%, due 4/15/06 200,000 214,724
*Public Service Electric & Gas Co.
Series WW
6.25%, due 1/1/07 1,065,000 1,144,000
-------------
1,358,724
-------------
PHARMACEUTICALS (2.5%)
Abbot Laboratories
V 3.50%, due 2/17/09 1,250,000 1,225,098
5.125%, due 7/1/04 595,000 598,671
*Merck & Co., Inc.
Series E
4.125%, due 1/18/05 1,000,000 1,018,236
-------------
2,842,005
-------------
THRIFTS & MORTGAGE FINANCE (0.6%)
Countrywide Home Loans, Inc.
Series J
5.25%, due 6/15/04 350,000 351,535
Washington Mutual, Inc.
5.625%, due 1/15/07 285,000 301,883
-------------
653,418
-------------
Total Corporate Bonds
(Cost $16,709,596) 16,664,508
-------------
FOREIGN CORPORATE BONDS (1.4%)
- ---------------------------------------------------------------------------------
COMMERCIAL BANKS (0.9%)
*Landwirtschaftliche Rentenbank
4.50%, due 10/23/06 1,000,000 1,038,928
-------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED TELECOMMUNICATION SERVICES (0.2%)
Telefonos de Mexico S.A. de C.V.
8.25%, due 1/26/06 $ 200,000 $ 216,452
-------------
TRANSPORTATION INFRASTRUCTURE (0.3%)
PSA Corp. Ltd.
7.125%, due 8/1/05 (a) 300,000 318,028
-------------
Total Foreign Corporate Bonds
(Cost $1,578,748) 1,573,408
-------------
U.S. GOVERNMENT & FEDERAL AGENCIES (72.6%)
- ---------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK (2.2%)
2.125%, due 8/15/05 1,000,000 1,002,905
2.25%, due 9/1/06 500,000 494,874
3.875%, due 12/15/04 1,000,000 1,015,712
-------------
2,513,491
-------------
FEDERAL HOME LOAN BANK (3.4%)
Series 392
2.50%, due 3/15/06 750,000 751,820
Series 430
2.875%, due 9/15/06 1,275,000 1,279,083
Series 419
3.50%, due 4/22/08 500,000 493,726
Series 253
3.625%, due 10/15/04 500,000 505,529
Series 2704
4.125%, due 11/15/04 500,000 507,595
Series 7R04
4.625%, due 8/13/04 250,000 252,447
-------------
3,790,200
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (7.3%)
Series 3
2.15%, due 2/17/06 3,080,000 3,070,461
2.375%, due 2/15/07 (c) 3,105,000 3,052,842
2.50%, due 12/4/06 1,735,000 1,719,571
4.00%, due 8/2/06 350,000 352,236
-------------
8,195,110
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(COLLATERALIZED MORTGAGE OBLIGATION) (0.2%)
Series 1364 Class K
5.00%, due 9/15/07 203,535 207,265
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITY) (0.1%)
5.00%, due 1/1/07 116,927 119,432
-------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
145
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (CONTINUED)
- ---------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (13.7%)
1.75%, due 6/16/06 $ 4,726,000 $ 4,638,796
2.50%, due 6/15/06 (c) 3,110,000 3,102,418
3.15%, due 5/28/08 330,000 323,771
3.25%, due 11/15/07 400,000 397,996
4.00%, due 9/2/08 (c) 3,125,000 3,124,113
5.50%, due 5/2/06 3,720,000 3,922,513
-------------
15,509,607
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (1.0%)
4.50%, due 11/1/18 889,141 876,314
7.50%, due 4/1/31 194,648 208,934
-------------
1,085,248
-------------
OVERSEAS PRIVATE INVESTMENT CORPORATION (1.3%)
3.74%, due 4/15/15 1,532,723 1,503,524
-------------
STUDENT LOAN MORTGAGE ASSOCIATION (0.7%)
1.379%, due 8/27/04 (b) 800,000 801,003
-------------
UNITED STATES TREASURY NOTES (42.7%)
3.00%, due 11/15/07 (c) 1,875,000 1,870,386
3.50%, due 11/15/06 (c) 10,830,000 11,056,759
4.375%, due 5/15/07 300,000 312,832
4.625%, due 5/15/05 (c) 11,675,000 12,199,009
5.75%, due 11/15/05 (c) 11,835,000 12,498,872
6.75%, due 5/15/05 9,780,000 10,288,100
-------------
48,225,958
-------------
Total U.S. Government &
Federal Agencies
(Cost $82,543,116) 81,950,838
-------------
Total Long-Term Bonds
(Cost $104,471,078) 103,837,948
-------------
SHORT-TERM INVESTMENTS (40.0%)
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER (2.6%)
UBS Finance Delaware LLC
1.02%, due 5/3/04 2,895,000 2,894,836
-------------
Total Commercial Paper
(Cost $2,894,836) 2,894,836
-------------
<Caption>
SHARES VALUE
INVESTMENT COMPANIES (5.0%)
AIM Institutional Funds Group (d) 2,941,340 $ 2,941,340
Merrill Lynch Premier Institutional Fund 2,735,000 2,735,000
-------------
Total Investment Companies
(Cost $5,676,340) 5,676,340
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
MASTER NOTE (4.4%)
Banc of America Securities LLC
1.1874%, due 5/3/04 (d) $ 5,000,000 5,000,000
-------------
Total Master Note
(Cost $5,000,000) 5,000,000
-------------
REPURCHASE AGREEMENTS (26.2%)
Banc One Capital Markets, Inc.
1.180%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$4,500,148 (d)
(Collateralized by
Various Bonds
with a Principal Amount of
$4,905,216 and a
Market Value of $4,590,023) 4,500,000 4,500,000
Countrywide Securities Corp.
1.1324%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$5,000,157 (d)
(Collateralized by
Various Bonds
with a Principal Amount of
$5,232,032 and a
Market Value of $5,209,954) 5,000,000 5,000,000
Credit Suisse First Boston LLC
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity $5,000,155 (d)
(Collateralized by
Various Bonds
with a Principal Amount of
$4,862,777 and a
Market Value of $5,100,128) 5,000,000 5,000,000
</Table>
146 MainStay Short Term Bond Fund The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
xLehman Brothers, Inc.
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$5,000,155 (d)
(Collateralized by
Various Bonds
with a Principal Amount of
$6,570,316 and a
Market Value of $5,248,394) $ 5,000,000 $ 5,000,000
Merrill Lynch Pierce Fenner & Smith, Inc.
1.1424%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$5,010,159 (d)
(Collateralized by
Various Bonds
with a Principal Amount of
$4,915,115 and a
Market Value of $5,260,629) 5,010,000 5,010,000
Morgan Stanley & Co., Inc.
1.1124%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$5,000,155 (d)
(Collateralized by
Various Bonds
with a Principal Amount of
$6,458,277 and a
Market Value of $5,240,631) 5,000,000 5,000,000
-------------
Total Repurchase Agreements (Cost $29,510,000) 29,510,000
-------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT (1.8%)
UNITED STATES TREASURY BILLS (1.8%)
0.96%, due 5/6/04 $ 1,000,000 $ 999,940
1.00%, due 5/20/04 1,000,000 999,624
-------------
Total U.S. Government (Cost $1,999,336) 1,999,564
-------------
Total Short-Term Investments (Cost $45,080,512) 45,080,740
-------------
Total Investments
(Cost $149,551,590) (e) 132.0% 148,918,688(f)
Liabilities in Excess of
Cash and Other Assets (32.0) (36,067,226)
-------- ---------------
Net Assets 100.0% $ 112,851,462
======== ===============
</Table>
<Table>
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at April
30, 2004.
(c) Represents securities out on loan or a portion which is
out on loan.
(d) Represents security or a portion thereof, purchased with
cash collateral received for securities on loan.
(e) The cost for federal income tax purposes is
$149,554,951.
(f) At April 30, 2004 net unrealized depreciation was
$636,263, based on cost for federal income tax purposes.
This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $106,290 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $742,553.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
147
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value (identified
cost $149,551,590) including $35,885,614
market value of securities loaned $148,918,688
Cash 1,138
Receivables:
Investment securities sold 2,110,000
Interest 1,633,744
Fund shares sold 829,440
Other assets 14,292
------------
Total assets 153,507,302
------------
LIABILITIES:
Securities lending collateral 37,451,340
Payables:
Investment securities purchased 2,894,754
Fund shares redeemed 43,013
Manager 40,169
Transfer agent 8,579
NYLIFE Distributors 2,199
Custodian 1,142
Accrued expenses 27,818
Dividend payable 186,826
------------
Total liabilities 40,655,840
------------
Net assets $112,851,462
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
500 million shares authorized
Class A $ 1,077
Class I 11,115
Additional paid-in capital 115,845,653
Accumulated net investment loss (202,651)
Accumulated net realized loss on investments (2,170,830)
Net unrealized depreciation on investments (632,902)
------------
Net assets $112,851,462
============
CLASS A
Net assets applicable to outstanding shares $ 9,968,542
============
Shares of capital stock outstanding 1,077,387
============
Net asset value per share outstanding $ 9.25
Maximum sales charge (3.00% of offering price) 0.29
------------
Maximum offering price per share outstanding $ 9.54
============
CLASS I
Net assets applicable to outstanding shares $102,882,920
============
Shares of capital stock outstanding 11,114,950
============
Net asset value and offering price per share
outstanding $ 9.26
============
</Table>
148 MainStay Short Term Bond Fund The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Interest $1,032,212
Income from securities loaned -- net 22,186
----------
Total income 1,054,398
----------
EXPENSES:
Manager 291,267
Transfer agent 18,335
Professional 16,153
Registration 11,775
Custodian 8,665
Directors 7,781
Service -- Class A 7,176
Service -- Service Class 294
Shareholder communication 3,963
Portfolio pricing 3,438
Miscellaneous 7,905
----------
Total expenses before reimbursement 376,752
Expense reimbursement from Manager (78,121)
----------
Net expenses 298,631
----------
Net investment income 755,767
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 164,185
Net change in unrealized appreciation on
investments (714,361)
----------
Net realized and unrealized loss on investments (550,176)
----------
Net increase in net assets resulting from
operations $ 205,591
==========
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
149
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE)
IN NET ASSETS:
Operations:
Net investment income $ 755,767 $ 749,725
Net realized gain on investments 164,185 502,623
Net change in unrealized
appreciation (depreciation) on
investments (714,361) (521,961)
---------------------------
Net increase in net assets resulting
from operations 205,591 730,387
---------------------------
Dividends to shareholders:
From net investment income:
Class A (52,670) --
Class I (903,951) (759,656)
Service Class (1,708) (11,669)
Taxable distributions in excess of net investment
income:
Class I -- (62,926)
Service Class -- (967)
---------------------------
Total dividends to shareholders (958,329) (835,218)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 18,820,634 --
Class I 13,873,192 16,685,453
Service Class 17,020 244,951
Net asset value of shares issued in connection
with acquisition of Eclipse Ultra Short Duration
Fund:
Class I 74,520,760 --
Service Class 218,328 --
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Class A 33,145 --
Class I 384,615 821,284
Service Class 1,608 12,636
---------------------------
107,869,302 17,764,324
Cost of shares redeemed:
Class A (8,794,360) --
Class I (20,763,849) (19,072,157)
Service Class (780,868) (447,045)
---------------------------
(30,339,077) (19,519,202)
---------------------------
Increase (decrease) in net assets
derived from capital share
transactions 77,530,225 (1,754,878)
---------------------------
Net increase (decrease) in net
assets 76,777,487 (1,859,709)
NET ASSETS:
Beginning of period 36,073,975 37,933,684
---------------------------
End of period $112,851,462 $ 36,073,975
===========================
Accumulated net investment loss at
end of period $ (202,651) $ (89)
===========================
</Table>
150 MainStay Short Term Bond Fund The notes to the financial statements are
an integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS I
---------- -----------------------------------------------------------------------------------
JANUARY 1, JANUARY 1,
2004** SIX MONTHS 1999
THROUGH ENDED THROUGH YEAR ENDED
APRIL 30, APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
2004*** 2004*** 2003 2002 2001 2000 1999* 1998
Net asset value at beginning of
period $ 9.32 $ 9.31 $ 9.34 $ 9.57 $ 9.36 $ 9.63 $ 9.43 $ 9.39
------ -------- ------- ------- ------- ------- ------- -------
Net investment income 0.02 0.07 0.19 0.29(a) 0.47(e) 0.57(a) 0.47 0.56
Net realized and unrealized
gain (loss) on investments (0.04) (0.03) (0.01) 0.00(d) 0.48(e) (0.03) (0.27) 0.04
------ -------- ------- ------- ------- ------- ------- -------
Total from investment
operations (0.02) 0.04 0.18 0.29 0.95 0.54 0.20 0.60
------ -------- ------- ------- ------- ------- ------- -------
Less dividends:
From net investment income (0.05) (0.09) (0.21) (0.52) (0.74) (0.81) -- (0.56)
------ -------- ------- ------- ------- ------- ------- -------
Net asset value at end of
period $ 9.25 $ 9.26 $ 9.31 $ 9.34 $ 9.57 $ 9.36 $ 9.63 $ 9.43
====== ======== ======= ======= ======= ======= ======= =======
Total investment return (b) (0.18%) 0.45% 1.94% 3.21% 10.68% 6.05% 2.12% 6.37%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.29%+ 1.57%+ 2.02% 3.13% 4.93%(e) 6.20% 5.42%+ 5.95%
Net expenses 0.88%+ 0.60%+ 0.60% 0.60% 0.60% 0.61%(c) 0.60%+ 0.60%
Expenses (before
reimbursement) 1.04%+ 0.76%+ 0.98% 0.96% 1.03% 0.99% 0.85%+ 0.89%
Portfolio turnover rate 91% 91% 173% 228% 149% 165% 105% 125%
Net assets at end of period (in
000's) $9,969 $102,883 $35,532 $37,201 $30,065 $31,146 $48,150 $42,219
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Per share data based on average shares outstanding during
the period.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
(c) The effect of non-reimbursable interest expense on the
expense ratio was 0.01%.
(d) Less than one cent per share.
(e) As required, effective November 1, 2000, the Fund has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended October 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to November 1, 2000 have
not been restated to reflect this change in presentation.
</Table>
<Table>
<Caption>
CLASS I
-------
Decrease net investment income ($0.12)
Increase net realized and unrealized gains and losses 0.12
Decrease ratio of net investment income (1.26%)
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
151
MAINSTAY ASSET MANAGER FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
ASSET MANAGER COMPOSITE INDEX(1) 4.21% 14.06% 1.26% 9.73%
S&P 500(R) INDEX(2) 6.27 22.88 -2.26 11.36
CITIGROUP BROAD INVESTMENT GRADE (BIG) BOND INDEX(3) 1.32 1.88 6.65 7.35
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND(4) 4.29 17.01 1.36 8.77
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -1.19% 7.96% -0.23% 9.07%
Excluding sales 4.56 14.24 0.90 9.69
charges
</Table>
(In thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ASSET ASSET MANAGER
MANAGER FUND S&P 500 INDEX COMPOSITE INDEX CITIGROUP BIG INDEX
-------------- ------------- --------------- -------------------
4/30/94 945 1000 1000 1000
1040 1175 1131 1073
1285 1530 1366 1164
1516 1914 1606 1248
1983 2700 2052 1385
2278 3289 2377 1472
2468 3622 2547 1490
2370 3152 2451 1674
2262 2754 2327 1805
2086 2388 2219 1994
4/30/04 2383 2934 2531 2032
</Table>
<Table>
-- MainStay Asset Manager Fund -- Asset Manager Composite Index
-- S&P 500 Index -- Citigroup BIG Bond Index
</Table>
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -0.77% 8.46% -0.10% 8.94%
Excluding sales charges 4.23 13.46 0.21 8.94
</Table>
(In thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ASSET ASSET MANAGER
MANAGER FUND S&P 500 INDEX COMPOSITE INDEX CITIGROUP BIG INDEX
-------------- ------------- --------------- -------------------
4/30/94 1000 1000 1000 1000
1094 1175 1131 1073
1341 1530 1366 1164
1571 1914 1606 1248
2041 2700 2052 1385
2330 3289 2377 1472
2508 3622 2547 1490
2392 3152 2451 1674
2267 2754 2327 1805
2075 2388 2219 1994
4/30/04 2354 2934 2531 2032
</Table>
<Table>
-- MainStay Asset Manager Fund -- Asset Manager Composite Index
-- S&P 500 Index -- Citigroup BIG Bond Index
</Table>
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 3.05% 12.32% 0.15% 8.89%
Excluding sales charges 4.05 13.32 0.15 8.89
</Table>
(In thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ASSET ASSET MANAGER
MANAGER FUND S&P 500 INDEX COMPOSITE INDEX CITIGROUP BIG INDEX
-------------- ------------- --------------- -------------------
4/30/94 1000 1000 1000 1000
1093 1175 1131 1073
1340 1530 1366 1164
1570 1914 1606 1248
2038 2700 2052 1385
2326 3289 2377 1472
2502 3622 2547 1490
2385 3152 2451 1674
2261 2754 2327 1805
2068 2388 2219 1994
4/30/04 2343 2934 2531 2032
</Table>
<Table>
-- MainStay Asset Manager Fund -- Asset Manager Composite Index
-- S&P 500 Index -- Citigroup BIG Bond Index
</Table>
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Performance figures reflect
certain fee waivers and/or expense limitations, without which total returns may
have been lower. The fee waivers and/or expense limitations are voluntary and
may be discontinued at any time. Performance for Class A and B shares, first
offered 1/1/04, includes the historical performance of Class I shares
THE DISCLOSURE AND FOOTNOTES ON THE NEXT PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
152 MainStay Asset Manager Fund
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 4.69% 14.53% 1.12% 9.91%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
MAINSTAY ASSET ASSET MANAGER
MANAGER FUND S&P 500 INDEX COMPOSITE INDEX CITIGROUP BIG INDEX
-------------- ------------- --------------- -------------------
4/30/94 1000 1000 1000 1000
1103 1175 1131 1073
1365 1530 1366 1164
1614 1914 1606 1248
2114 2700 2052 1385
2434 3289 2377 1472
2641 3622 2547 1490
2540 3152 2451 1674
2431 2754 2327 1805
2246 2388 2219 1994
4/30/04 2573 2934 2531 2032
</Table>
<Table>
-- MainStay Asset Manager Fund -- Asset Manager Composite Index
-- S&P 500 Index -- Citigroup BIG Bond Index
</Table>
from inception (1/2/91) through 12/31/03 adjusted to reflect the applicable
sales charge (or CDSC) and fees and expenses for such shares. Prior to 1/1/04,
the Fund offered Class L shares, which were subject to a 1% sales charge and a
1% CDSC on redemptions within one year of purchase. Performance for Class L
shares, first offered 12/30/02, includes the historical performance Class I
shares from inception through 12/29/02 adjusted to reflect the applicable sales
charge, CDSC, and fees and expenses for such shares. Effective 1/1/04, all
outstanding Class L shares of the Fund were converted to and/or redesignated
Class C shares.
1. The Asset Manager Composite Index is comprised of the S&P 500(R) Index, the
Citigroup Broad Investment Grade (BIG) Bond Index, and the Citigroup 1-Month
T-Bill Index weighted 60%/30%/10%, respectively. The S&P 500(R) Index is an
unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock market performance. The Citigroup Broad Investment Grade
(BIG) Bond Index--The Citigroup BIG Bond Index--is an unmanaged,
capitalization-weighted index that contains approximately 5,500 individually
priced fixed-income securities and is generally considered representative of
the U.S. bond market. An investment cannot be made directly into an index.
2. "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. and has been
licensed for use. Standard & Poor's does not sponsor, endorse, sell, or
promote the Fund or represent the advisability of investing in the Fund. The
S&P 500(R) is an unmanaged index and is widely regarded as the standard for
measuring large-cap U.S. stock-market performance. Results assume
reinvestment of all income and capital gains. An investment cannot be made
directly into an index.
3. The Citigroup Broad Investment Grade (BIG) Bond Index--the Citigroup BIG Bond
Index--is an unmanaged index that is considered representative of the U.S.
investment-grade bond market. Results assume reinvestment of all income and
capital gains. An investment cannot be made directly into an index.
4. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 153
$1,000 INVESTED IN MAINSTAY ASSET MANAGER FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $1,006 $3 $1,047 $4
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $1,003 $6 $1,044 $6
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(3) $1,000 $1,041 $9 $1,041 $9
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,047 $4 $1,046 $4
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares and Class B shares were first offered on January 1, 2004.
Expenses paid during the period reflect ongoing costs for the four-month
period ending April 30, 2004. Had Class A shares and Class B shares been
offered for the six months ended April 30, 2004, based on a hypothetical 5%
return, expenses paid during the period would be $5 and $9, respectively, and
the ending account value would be $1,045 and $1,041, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
154 MainStay Asset Manager Fund
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio managers Elias Belessakos, Ph.D. and Jefferson
C. Boyce of New York Life Investment Management LLC
MAINSTAY ASSET MANAGER FUND
HOW DO YOU DECIDE HOW TO ALLOCATE THE FUND'S PORTFOLIO?
We use a proprietary model to assess potential opportunities and allocate assets
within the portfolio's percentage constraints. We use a disciplined methodology
based on the model to estimate expected returns, volatilities, and correlations
on domestic and foreign stock markets and on domestic fixed-income securities.
HOW DID YOU POSITION THE FUND DURING THE SIX MONTHS ENDED APRIL 30, 2004?
During the reporting period, the Fund had an average allocation of 53% to
stocks, 37% to bonds, and 10% to cash. Within the equity allocation, U.S.
equities were underweighted relative to the Fund's custom benchmark(1) at 42% of
net assets and international equities and REITs were overweighted at 10% and 1%,
respectively.
HOW DID THE FUND'S INTERNATIONAL EQUITIES PERFORM?
Within our menu of available assets, international equities had the highest
positive return for the six-month period. The Fund invests in international
equities through foreign futures. During the reporting period, the Japanese
equity market, as measured by the Topix Index,(2) generated the best results,
returning 14.36%. Unfortunately, the Fund's underweighted position in Japanese
stocks reduced the amount of incremental return the portfolio achieved. Our
decision to invest in Italian and Spanish equities, however, proved beneficial
as these markets earned 8.35% and 13.75%, respectively, in local currency terms.
These positions were funded in part by underweighting U.S. large-cap equities.
The U.S. large-cap equity market (as measured by the S&P 500(R) Index),(3)
returned 6.27% for the period, which made the Fund's underweighted position
beneficial. The worst performing portion of the Fund's international allocation
came in Hong Kong, where the Hang Seng Index fell 2.03%. The Fund's slightly
overweighted position in Hong Kong stocks detracted from performance.
HOW DID YOU ALLOCATE THE REST OF THE FUND'S U.S. EQUITY HOLDINGS?
We held an overweighted position in domestic small-cap stocks (as measured by
the S&P SmallCap 600(R) Index)(4) and in mid-cap stocks (as measured by the S&P
MidCap 400(R) Index). This enhanced results, as these market sectors
outperformed their large-cap counterparts, returning 8.47% and 6.93%,
respectively. Real estate investment trusts (as measured by the Morgan Stanley
REIT(R) Index)(5) returned only 2.78%, so the Fund's small but overweighted REIT
position detracted from performance.
HOW DID THE FUND'S BOND ALLOCATION AFFECT PERFORMANCE?
Our decision to overweight bonds and underweight U.S. large-cap stocks detracted
from the Fund's results. The Citigroup BIG Bond Index returned a relatively low
1.32% for the period versus the 6.27% return for the S&P 500(R) Index.
HOW DID THE ACTIVELY MANAGED SEGMENTS OF THE FUND IMPACT RESULTS?
The assets allocated by the model to large-cap equities in an actively managed
enhanced-index-fund strategy made a positive contribution to returns by
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value. Foreign securities may be subject to greater risks that
U.S. investments, including currency fluctuations, less-liquid trading markets,
greater price volatility, political and economic instability, less publicly
available information, and changes in tax or currency laws or monetary policy.
These risks are likely to be greater in emerging markets than in developed
markets. The Fund may invest in derivatives, which may increase the volatility
of the Fund's net asset value and may result in a loss to the Fund.
1. See footnote on page 152 for more information on the Asset Manager Composite
Index.
2. Returns for individual sectors and markets reflect major unmanaged indices
considered representative of the specific sectors or markets. Results assume
reinvestment of all income and capital gains. An investment cannot be made
directly into an index.
3. "S&P 500(R) Index," "S&P MidCap 400(R) Index," and "S&P SmallCap 600(R)
Index" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use. Each index is unmanaged and is considered generally
representative of a different capitalization segment of the U.S. stock
market. Results assume reinvestment of all income and capital gains. An
investment cannot be made directly into an index.
4. See footnote on page 152 for more information on the Citigroup BIG Bond
Index.
5. The Morgan Stanley REIT(R) Index is an unmanaged, capitalization-weighted
index of the most actively traded real estate investment trusts (REITs), and
is designed to measure real estate equity performance. An investment cannot
be made directly into an index.
www.mainstayfunds.com 155
outperforming the S&P 500(R) Index during the reporting period. The allocations
made to the actively managed mid-cap strategy, however, did not fare as well.
Indeed, the mid-cap portion of the portfolio lagged the S&P MidCap 400(R) Index
for the period. Similarly, the allocation made to the actively managed
fixed-income strategy detracted from results when the portfolio underperformed
the Citigroup BIG Bond Index.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 60.40
U.S. Government and Federal Agencies 21.60
Short-Term Investments 10.20
Corporate Bonds 6.70
Foreign Bonds 1.20
Real Estate Investment Trusts 1.20
Asset-Backed Security 0.30
Yankee Bonds 0.10
Liabilities in Excess of Cash and Other Assets -1.70
</Table>
156 MainStay Asset Manager Fund
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (29.9%)+
ASSET-BACKED SECURITY (0.3%)
- -----------------------------------------------------------------------------
CONSUMER FINANCE (0.3%)
Citibank Credit Card Issuance Trust Series 2003-A2
Class A2
2.70%, due 1/15/06 $1,000,000 $ 1,004,292
------------
Total Asset-Backed Security
(Cost $1,008,867) 1,004,292
------------
CORPORATE BONDS (6.7%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.2%)
Honeywell International, Inc.
7.50%, due 3/1/10 100,000 115,418
Lockheed Martin Corp.
8.20%, due 12/1/09 100,000 118,782
Northrop Grumman Corp.
7.125%, due 2/15/11 100,000 112,437
Raytheon Co.
6.75%, due 8/15/07 100,000 109,586
United Technologies Corp.
6.35%, due 3/1/11 250,000 274,275
------------
730,498
------------
AUTOMOBILES (0.2%)
DaimlerChrysler North America Holdings, Inc.
7.30%, due 1/15/12 250,000 276,488
General Motors Corp.
8.375%, due 7/15/33 250,000 270,379
------------
546,867
------------
BEVERAGES (0.2%)
Anheuser-Busch Cos., Inc.
5.75%, due 4/1/10 100,000 106,621
Coca-Cola Enterprises, Inc.
7.00%, due 5/15/98 250,000 271,256
Pepsi Bottling Holdings, Inc.
5.625%, due 2/17/09 (c) 100,000 107,229
------------
485,106
------------
BUILDING PRODUCTS (0.0%) (B)
Masco Corp.
6.75%, due 3/15/06 100,000 107,240
------------
CAPITAL MARKETS (0.6%)
Bear Stearns Cos., Inc. (The)
5.70%, due 1/15/07 250,000 265,509
Credit Suisse FirstBoston
USA, Inc.
4.625%, due 1/15/08 250,000 257,350
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CAPITAL MARKETS (CONTINUED)
Goldman Sachs Group, Inc. (The)
5.70%, due 9/1/12 $ 150,000 $ 154,652
6.125%, due 2/15/33 100,000 96,190
J.P. Morgan Chase & Co.
5.75%, due 1/2/13 250,000 258,863
Lehman Brothers Holdings, Inc.
7.00%, due 2/1/08 250,000 278,464
Merrill Lynch & Co., Inc., Series B
4.00%, due 11/15/07 250,000 253,255
Morgan Stanley
6.60%, due 4/1/12 250,000 275,176
------------
1,839,459
------------
CHEMICALS (0.1%)
Dow Chemical Co. (The)
5.75%, due 11/15/09 100,000 105,680
E.I. du Pont de Nemours & Co.
6.875%, due 10/15/09 100,000 113,177
------------
218,857
------------
COMMERCIAL BANKS (0.6%)
Bank of America Corp.
3.875%, due 1/15/08 500,000 503,928
Bank One Corp., Series A
6.00%, due 2/17/09 250,000 270,032
FleetBoston Financial Corp.
3.85%, due 2/15/08 250,000 251,334
U.S. Bancorp, Series N
3.95%, due 8/23/07 250,000 254,393
Wachovia Bank National Association
4.85%, due 7/30/07 250,000 261,521
Wells Fargo Bank NA, San Francisco
6.45%, due 2/1/11 250,000 275,726
------------
1,816,934
------------
COMMERCIAL SERVICES & SUPPLIES (0.1%)
Cendant Corp.
6.25%, due 1/15/08 100,000 108,005
Waste Management, Inc.
7.375%, due 8/1/10 100,000 113,683
------------
221,688
------------
COMMUNICATIONS EQUIPMENT (0.0%) (B)
Motorola, Inc.
5.80%, due 10/15/08 100,000 102,893
------------
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
157
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (0.1%)
International Business Machines Corp.
4.25%, due 9/15/09 $ 250,000 $ 252,176
------------
CONSUMER FINANCE (0.8%)
American General Finance Corp. Series H
4.50%, due 11/15/07 250,000 257,495
Ford Motor Credit Co.
6.50%, due 1/25/07 500,000 530,222
7.375%, due 2/1/11 250,000 267,331
General Motors Acceptance Corp.
6.125%, due 8/28/07 350,000 369,848
Household Finance Corp.
5.75%, due 1/30/07 500,000 532,492
John Deere Capital Corp.
3.90%, due 1/15/08 250,000 251,139
MBNA Corp.
6.125%, due 3/1/13 100,000 105,313
SLM Corp.
5.625%, due 8/1/33 100,000 91,424
------------
2,405,264
------------
DIVERSIFIED FINANCIAL SERVICES (0.6%)
Boeing Capital Corp.
5.75%, due 2/15/07 250,000 265,756
CIT Group, Inc.
5.50%, due 11/30/07 250,000 264,152
Citigroup, Inc.
3.50%, due 2/1/08 500,000 496,789
5.875%, due 2/22/33 250,000 238,162
National Rural Utilities Cooperative Finance Corp.
5.75%, due 8/28/09 250,000 266,396
UFJ Finance Aruba AEC
6.75%, due 7/15/13 100,000 105,591
Verizon Global Funding Corp.
7.75%, due 12/1/30 100,000 114,424
------------
1,751,270
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.4%)
Ameritech Capital Funding
6.55%, due 1/15/28 100,000 100,588
AT&T Corp.
8.05%, due 11/15/11 100,000 109,726
BellSouth Corp.
6.00%, due 10/15/11 250,000 266,636
Citizens Communications Co.
9.25%, due 5/15/11 100,000 105,243
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
GTE South, Inc., Series C
6.00%, due 2/15/08 $ 300,000 $ 319,588
SBC Communications, Inc.
5.75%, due 5/2/06 150,000 158,723
Sprint Capital Corp.
6.125%, due 11/15/08 150,000 160,617
8.75%, due 3/15/32 100,000 119,451
------------
1,340,572
------------
ELECTRIC UTILITIES (0.3%)
American Electric Power Co., Inc.
Series C
5.375%, due 3/15/10 100,000 103,407
Consumers Energy Co., Series B
5.375%, due 4/15/13 100,000 98,423
Dominion Resources, Inc. Series B
6.25%, due 6/30/12 100,000 106,685
DTE Energy Co., Series A
6.65%, due 4/15/09 100,000 108,906
FirstEnergy Corp., Series A
5.50%, due 11/15/06 100,000 104,344
Northern States Power Co.
6.875%, due 8/1/09 100,000 111,738
Oncor Electric Delivery Co.
7.00%, due 9/1/22 100,000 107,624
Peco Energy Co.
3.50%, due 5/1/08 100,000 98,921
Progress Energy, Inc.
7.10%, due 3/1/11 100,000 111,447
------------
951,495
------------
FOOD & STAPLES RETAILING (0.2%)
Albertson's, Inc.
7.50%, due 2/15/11 100,000 113,579
Kroger Co. (The)
8.05%, due 2/1/10 100,000 116,427
Safeway, Inc.
6.50%, due 3/1/11 100,000 107,644
Wal-Mart Stores, Inc.
4.55%, due 5/1/13 150,000 145,475
7.55%, due 2/15/30 100,000 119,892
------------
603,017
------------
FOOD PRODUCTS (0.2%)
Archer-Daniels-Midland Co.
8.125%, due 6/1/12 100,000 121,283
ConAgra Foods, Inc.
6.75%, due 9/15/11 100,000 110,455
General Mills, Inc.
3.875%, due 11/30/07 100,000 100,266
</Table>
158 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
FOOD PRODUCTS (CONTINUED)
Kellogg Co., Series B
6.00%, due 4/1/06 $ 100,000 $ 106,156
Kraft Foods, Inc.
5.25%, due 6/1/07 100,000 105,079
Unilever Capital Corp.
7.125%, due 11/1/10 100,000 114,436
------------
657,675
------------
GAS UTILITIES (0.0%) (B)
Kinder Morgan Energy Partners, L.P.
7.125%, due 3/15/12 100,000 112,106
------------
HEALTH CARE PROVIDERS & SERVICES (0.0%) (B)
HCA, Inc.
8.75%, due 9/1/10 100,000 114,744
------------
HOUSEHOLD PRODUCTS (0.0%) (B)
Procter & Gamble Co. (The)
4.75%, due 6/15/07 100,000 104,509
------------
INSURANCE (0.1%)
Allstate Corp. (The)
7.20%, due 12/1/09 100,000 115,003
Berkshire Hathaway, Inc.
4.625%, due 10/15/13 (c) 100,000 96,848
------------
211,851
------------
MACHINERY (0.0%) (B)
Caterpillar, Inc.
7.25%, due 9/15/09 100,000 114,257
------------
MEDIA (0.5%)
Clear Channel
Communications, Inc.
4.25%, due 5/15/09 100,000 99,178
Comcast Cable
Communications, Inc.
6.75%, due 1/30/11 250,000 273,973
Cox Enterprises, Inc.
7.875%, due 9/15/10 (c) 100,000 114,866
Liberty Media Corp.
7.875%, due 7/15/09 100,000 113,664
News America Holdings
9.25%, due 2/1/13 100,000 126,941
Time Warner, Inc.
7.625%, due 4/15/31 250,000 273,597
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
MEDIA (CONTINUED)
Viacom, Inc.
7.70%, due 7/30/10 $ 250,000 $ 289,789
Walt Disney Co., (The), Series B
6.75%, due 3/30/06 100,000 106,742
------------
1,398,750
------------
METALS & MINING (0.1%)
Alcoa, Inc.
4.25%, due 8/15/07 250,000 256,844
------------
MULTILINE RETAIL (0.1%)
Federated Department Stores, Inc. 7.00%, due
2/15/28 100,000 105,747
Target Corp.
7.00%, due 7/15/31 100,000 111,373
------------
217,120
------------
MULTI-UTILITIES & UNREGULATED POWER (0.1%)
Constellation Energy Group, Inc.
6.35%, due 4/1/07 100,000 107,458
Duke Energy Corp.
6.25%, due 1/15/12 100,000 105,923
PSE&G Power LLC
7.75%, due 4/15/11 100,000 115,134
------------
328,515
------------
OIL & GAS (0.2%)
Amerada Hess Corp.
7.30%, due 8/15/31 100,000 101,894
Anadarko Petroleum Corp.
7.20%, due 3/15/29 100,000 110,144
Devon Financing Corp. ULC
6.875%, due 9/30/11 100,000 111,024
Marathon Oil Corp.
6.85%, due 3/1/08 100,000 110,351
Occidental Petroleum Corp.
5.875%, due 1/15/07 100,000 106,643
Pemex Project Funding
Master Trust
7.375%, due 12/15/14 100,000 104,500
Valero Energy Corp.
6.125%, due 4/15/07 100,000 107,448
------------
752,004
------------
PAPER & FOREST PRODUCTS (0.1%)
International Paper Co.
6.75%, due 9/1/11 100,000 109,871
Weyerhaeuser Co.
6.75%, due 3/15/12 100,000 109,626
------------
219,497
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
159
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
PHARMACEUTICALS (0.2%)
Bristol-Myers Squibb Co.
4.00%, due 8/15/08 (c) $ 250,000 $ 250,671
Pharmacia Corp.
6.60%, due 12/1/28 100,000 109,016
Wyeth
5.50%, due 3/15/13 100,000 100,062
------------
459,749
------------
REAL ESTATE (0.1%)
EOP Operating LP
7.00%, due 7/15/11 100,000 110,980
Simon Property Group, L.P.
6.375%, due 11/15/07 100,000 109,372
------------
220,352
------------
ROAD & RAIL (0.2%)
Burlington Northern Santa Fe Corp.
7.125%, due 12/15/10 100,000 112,706
CSX Corp.
7.45%, due 5/1/07 100,000 111,026
Norfolk Southern Corp.
6.75%, due 2/15/11 100,000 111,032
Union Pacific Corp.
6.65%, due 1/15/11 100,000 110,285
------------
445,049
------------
THRIFTS & MORTGAGE FINANCE (0.4%)
Countrywide Home Loans, Inc.
5.625%, due 5/15/07 100,000 106,080
General Electric Capital Corp.
6.00%, due 6/15/12 500,000 533,142
6.75%, due 3/15/32 250,000 269,152
Washington Mutual, Inc.
7.50%, due 8/15/06 250,000 274,662
------------
1,183,036
------------
TOBACCO (0.0%) (B)
Altria Group, Inc.
7.20%, due 2/1/07 100,000 107,826
------------
WIRELESS TELECOMMUNICATION SERVICES (0.0%) (B)
AT&T Wireless Services, Inc. 7.875%, due 3/1/11 100,000 115,182
------------
Total Corporate Bonds
(Cost $20,353,814) 20,392,402
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FOREIGN BONDS (1.2%)
- -----------------------------------------------------------------------------
BEVERAGES (0.0%) (B)
Diageo Capital PLC
3.375%, due 3/20/08 $ 100,000 $ 98,613
------------
CAPITAL MARKETS (0.1%)
Kreditanstalt fuer Wiederaufbau
3.375%, due 1/23/08 250,000 250,517
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%)
British Telecommunications PLC 8.875%, due
12/15/30 100,000 126,503
Deutsche Telekom International Finance BV
8.50%, due 6/15/10 250,000 295,394
France Telecom S.A.
8.20%, due 3/1/06 150,000 163,147
9.75%, due 3/1/31 100,000 128,245
Koninklijke (Royal) KPN N.V.
8.00%, due 10/1/10 100,000 116,968
Telecom Italia Capital
6.375%, due 11/15/33 (c) 100,000 98,082
------------
928,339
------------
FOREIGN GOVERNMENTS (0.6%)
Malaysian Government
8.75%, due 6/1/09 100,000 118,940
Province of Ontario
5.50%, due 10/1/08 250,000 266,413
Province of Quebec
7.50%, due 9/15/29 250,000 305,217
Republic of Italy Series DTC
5.625%, due 6/15/12 500,000 533,959
United Mexican States
6.375%, due 1/16/13 500,000 506,250
------------
1,730,779
------------
INSURANCE (0.1%)
Axa
8.60%, due 12/15/30 100,000 124,286
------------
OIL & GAS (0.1%)
Conoco Funding Co.
6.35%, due 10/15/11 250,000 275,703
------------
WIRELESS TELECOMMUNICATION SERVICES (0.0%) (B)
Vodafone Group PLC
7.75%, due 2/15/10 100,000 115,802
------------
Total Foreign Bonds
(Cost $3,543,128) 3,524,039
------------
</Table>
160 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & FEDERAL AGENCIES (21.6%)
- -----------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (2.3%)
*1.625%, due 4/15/05 $4,000,000 $ 4,000,180
2.75%, due 3/14/08 2,000,000 1,944,168
2.875%, due 9/15/06 1,000,000 1,003,202
------------
6,947,550
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (1.8%)
2.75%, due 8/15/06 1,500,000 1,502,775
3.625%, due 9/15/08 1,000,000 993,189
4.875%, due 11/15/13 1,000,000 990,873
5.50%, due 9/15/11 1,000,000 1,053,552
6.25%, due 7/15/32 1,000,000 1,062,007
------------
5,602,396
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (3.4%)
4.50%, due 7/1/18-8/1/33 972,853 936,744
4.50%, due 6/17/34 TBA (e) 500,000 490,625
5.00%, due 12/1/18-11/1/33 1,462,515 1,437,544
5.50%, due 12/1/17-10/1/33 1,309,009 1,333,517
5.50%, due 5/14/33-6/14/34 TBA (e) 2,000,000 1,995,001
6.00%, due 5/1/16-1/1/28 879,615 917,141
6.50%, due 11/1/16-6/1/32 1,918,120 2,002,685
7.00%, due 3/1/26-7/1/32 484,382 511,778
7.50%, due 7/1/11-5/1/32 509,624 547,003
7.75%, due 10/1/07 59,830 62,909
8.00%, due 10/1/11-11/1/11 80,704 86,739
------------
10,321,686
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (5.5%)
4.50%, due 5/1/18-11/1/18 2,416,214 2,381,358
5.00%, due 10/1/17-11/1/33 2,693,925 2,696,198
5.00%, due 5/13/34 TBA (e) 2,500,000 2,421,875
5.50%, due 6/1/33-7/1/33 3,618,461 3,612,843
5.50%, due 5/14/33 TBA (e) 500,000 498,750
6.00%, due 4/1/19-4/1/33 2,697,803 2,762,779
6.00%, due 5/15/34 TBA (e) 500,000 511,406
6.50%, due 7/1/29-8/1/32 845,144 880,096
7.00%, due 5/1/26-7/1/30 292,884 309,784
7.50%, due 7/1/11-10/1/15 317,559 340,340
8.00%, due 7/1/09-11/1/11 136,925 147,139
8.50%, due 8/1/26-10/1/26 16,647 18,160
9.00%, due 6/1/26-9/1/26 44,167 48,760
------------
16,629,488
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (1.5%)
5.00%, due 8/15/33 $ 474,346 $ 461,523
5.50%, due 8/15/33 910,850 912,027
6.00%, due 1/15/33 565,238 579,527
6.00%, due 5/21/33 TBA (e) 500,000 512,500
6.50%, due 4/15/29-7/15/32 722,471 754,894
7.00%, due 7/15/11-6/15/28 720,328 769,233
7.50%, due 3/15/26-10/15/30 414,743 445,772
8.00%, due 8/15/26-10/15/26 77,619 84,941
8.50%, due 11/15/26 28,069 30,881
9.00%, due 11/15/26 9,109 10,134
------------
4,561,432
------------
UNITED STATES TREASURY BONDS (1.5%)
5.25%, due 2/15/29 2,650,000 2,606,111
5.375%, due 2/15/31 2,000,000 2,026,250
------------
4,632,361
------------
UNITED STATES TREASURY NOTES (5.6%)
1.625%, due 2/28/06 2,000,000 1,978,750
*1.875%, due 11/30/05 5,000,000 4,986,135
*4.00%, due 2/15/14 4,750,000 4,562,969
*4.625%, due 5/15/06 3,000,000 3,134,649
7.00%, due 7/15/06 2,100,000 2,303,355
------------
16,965,858
------------
Total U.S. Government &
Federal Agencies
(Cost $65,443,118) 65,660,771
------------
YANKEE BONDS (0.1%) (D)
- -----------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.0%) (B)
Tyco International Group S.A.
6.125%, due 1/15/09 100,000 105,545
------------
OIL & GAS (0.1%)
Burlington Resources, Inc.
6.50%, due 12/1/11 100,000 110,400
Norsk Hydro ASA
7.25%, due 9/23/27 100,000 113,782
------------
224,182
------------
Total Yankee Bonds
(Cost $319,659) 329,727
------------
Total Long-Term Bonds
(Cost $90,668,586) 90,911,231
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
161
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (60.4%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (0.6%)
AAR Corp. 582 $ 5,907
Alliant Techsystems, Inc. (a) 658 39,013
Armor Holdings, Inc. (a) 506 16,718
Boeing Co. (The) 18,776 801,547
Cubic Corp. 488 11,517
Curtiss-Wright Corp. 353 16,626
DRS Technologies, Inc. (a) 479 13,532
EDO Corp. 360 8,172
Engineered Support Systems, Inc. 441 21,446
Esterline Technologies Corp. (a) 383 9,479
GenCorp, Inc. 799 8,477
Goodrich Corp. 5,553 159,871
Honeywell International, Inc. 4,970 171,863
InVision Technologies, Inc. (a) 289 14,358
Kaman Corp. Class A 413 5,134
Mercury Computer
Systems, Inc. (a) 386 8,646
Moog, Inc. Class A (a) 441 14,553
Precision Castparts Corp. 3,063 137,866
Raytheon Co. 6,591 212,626
Teledyne Technologies, Inc. (a) 588 11,160
Triumph Group, Inc. (a) 290 9,323
United Technologies Corp. 314 27,086
------------
1,724,920
------------
AIR FREIGHT & LOGISTICS (0.7%)
CNF, Inc. 394 14,405
EGL, Inc. (a) 795 14,739
FedEx Corp. 7,509 539,972
Forward Air Corp. (a) 389 12,946
J.B. Hunt Transport Services, Inc. 8,880 281,141
Ryder System, Inc. 2,973 109,377
United Parcel Service, Inc. Class B 16,420 1,151,863
------------
2,124,443
------------
AIRLINES (0.0%) (B)
Alaska Air Group, Inc. (a) 1,517 33,571
Atlantic Coast Airlines
Holdings, Inc. (a) 828 5,423
Delta Air Lines, Inc. 2,276 14,157
Frontier Airlines, Inc. (a) 607 5,512
JetBlue Airways Corp. (a) 810 22,421
Mesa Air Group, Inc. (a) 576 4,072
SkyWest, Inc. 970 17,654
------------
102,810
------------
AUTO COMPONENTS (0.3%)
ArvinMeritor, Inc. 3,696 76,470
Bandag, Inc. 1,970 85,793
BorgWarner, Inc. 786 64,405
Cooper Tire & Rubber Co. 1,164 24,898
</Table>
<Table>
<Caption>
SHARES VALUE
AUTO COMPONENTS (CONTINUED)
Dana Corp. 4,981 $ 100,417
Delphi Corp. 24,630 251,226
Goodyear Tire & Rubber Co. (The) 216 1,881
Intermet Corp. 458 1,855
Lear Corp. (a) 3,793 229,932
Midas, Inc. 270 4,930
Modine Manufacturing Co. 305 8,388
Standard Motor Products, Inc. 303 4,424
Tower Automotive, Inc. (a) 1,029 5,268
Visteon Corp. 5,500 59,730
------------
919,617
------------
AUTOMOBILES (0.6%)
Coachmen Industries, Inc. 271 4,317
Ford Motor Co. 86,526 1,329,039
General Motors Corp. 11,037 523,375
Monaco Coach Corp. (a) 531 13,843
Thor Industries, Inc. 976 27,191
Winnebago Industries, Inc. 576 16,606
------------
1,914,371
------------
BEVERAGES (0.9%)
Adolph Coors Co. Class B 1,719 112,956
Coca-Cola Co. (The) 20,565 1,039,972
Coca-Cola Enterprises, Inc. 21,541 581,607
Pepsi Bottling Group, Inc. (The) 10,749 314,623
PepsiAmericas, Inc. 14,044 281,301
PepsiCo, Inc. 5,633 306,942
------------
2,637,401
------------
BIOTECHNOLOGY (0.3%)
Amgen, Inc. (a) 2,947 165,828
ArQule, Inc. (a) 563 3,738
Biogen Idec, Inc. (a) 5,005 295,295
Enzo Biochem, Inc. (a) 546 7,944
Gilead Sciences, Inc. (a) 1,851 112,596
IDEXX Laboratories, Inc. (a) 594 36,389
Millennium Pharmaceuticals, Inc. (a) 7,991 119,785
Protein Design Labs, Inc. (a) 8,656 211,899
Regeneron Pharmaceuticals, Inc. (a) 952 11,929
Savient Pharmaceuticals, Inc. (a) 1,087 4,076
Techne Corp. (a) 699 27,233
------------
996,712
------------
BUILDING PRODUCTS (0.3%)
American Standard Cos., Inc. (a) 1,141 120,022
Apogee Enterprises, Inc. 502 5,592
ElkCorp 357 9,896
Griffon Corp. (a) 540 11,853
Lennox International, Inc. 987 16,493
Masco Corp. 15,680 439,197
</Table>
162 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
BUILDING PRODUCTS (CONTINUED)
Simpson Manufacturing Co., Inc. (a) 421 $ 21,959
Universal Forest Products, Inc. 324 8,777
York International Corp. 3,849 150,881
------------
784,670
------------
CAPITAL MARKETS (1.5%)
A.G. Edwards, Inc. 7,774 284,451
Bank of New York Co., Inc. (The) 7,919 230,760
Bear Stearns Cos., Inc. (The) 1,585 127,022
E*TRADE Financial Corp. (a) 31,803 361,282
Federated Investors, Inc. Class B 854 25,108
Investment Technology
Group, Inc. (a) 785 11,249
Investors Financial Services Corp. 1,401 54,457
LaBranche & Co., Inc. 2,342 22,881
Legg Mason, Inc. 2,272 209,160
Lehman Brothers Holdings, Inc. 10,768 790,371
Merrill Lynch & Co., Inc. 31,715 1,719,904
Morgan Stanley 5,852 300,734
Raymond James Financial, Inc. 4,850 121,832
S&P 500 Index-SPDR Trust, Series 1 (h) 2,209 245,111
S&P MidCap 400 Index-MidCap SPDR Trust, Series 1
(h) 200 21,300
SWS Group, Inc. 310 5,034
Waddell & Reed Financial, Inc. Class A 3,470 77,138
------------
4,607,794
------------
CHEMICALS (0.8%)
Arch Chemicals, Inc. 410 11,976
Cabot Corp. 3,205 108,329
Cambrex Corp. 470 11,618
Crompton Corp. 4,716 29,334
Dow Chemical Co. (The) 24,009 952,917
Engelhard Corp. 4,254 123,536
FMC Corp. (a) 3,910 167,700
Georgia Gulf Corp. 593 18,893
H.B. Fuller Co. 519 14,221
Headwaters, Inc. (a) 561 12,897
IMC Global, Inc. (a) 4,278 53,774
International Flavors &
Fragrances, Inc. 168 6,090
MacDermid, Inc. 516 16,708
Material Sciences Corp. (a) 253 2,454
Monsanto Co. 12,424 429,746
Olin Corp. 2,727 47,095
OM Group, Inc. 518 13,183
Omnova Solutions, Inc. 714 3,392
</Table>
<Table>
<Caption>
SHARES VALUE
CHEMICALS (CONTINUED)
Penford Corp. 153 $ 2,499
PolyOne Corp. 1,676 11,464
PPG Industries, Inc. 3,822 226,683
Quaker Chemical Corp. 169 4,269
Rohm & Haas Co. 296 11,479
Schulman (A.), Inc. 539 10,780
Valspar Corp. (The) 397 19,711
Wellman, Inc. 570 4,611
------------
2,315,359
------------
COMMERCIAL BANKS (3.5%)
Associated Banc-Corp. 1,514 61,998
Bank of America Corp. 28,232 2,272,394
Bank of Hawaii Corp. 1,261 55,131
Bank One Corp. 47,729 2,356,381
BB&T Corp. 12,932 446,025
Boston Private Financial
Holdings, Inc. 415 9,670
Cathay Bancorp, Inc. 1 47
CCBT Financial Cos., Inc. 1,633 54,640
Charter One Financial, Inc. 1,751 58,431
Chittenden Corp. 622 18,921
Commerce Bancorp, Inc. 2,545 145,090
Community First Bankshares, Inc. 639 20,562
Compass Bancshares, Inc. 1,958 75,109
East West Bancorp, Inc. 408 22,983
First BanCorp 682 25,139
First Horizon National Corp. 3,289 144,584
First Midwest Bancorp, Inc. 793 26,764
First Republic Bank 266 10,135
Gold Banc Corp., Inc. 672 10,994
Greater Bay Bancorp 1,949 55,293
Hudson United Bancorp 763 27,262
Irwin Financial Corp. 511 12,085
KeyCorp 3,298 97,951
M&T Bank Corp. 3,495 297,075
Marshall & Ilsley Corp. 869 31,953
National City Corp. 14,080 488,154
PNC Financial Services Group, Inc. (The) 4,748 252,119
Provident Bankshares Corp. 450 12,677
Provident Financial Group, Inc. 10,840 426,878
Regions Financial Corp. 11,203 388,856
Republic Bancorp, Inc. 1,153 15,001
Riggs National Corp. 522 9,443
Silicon Valley Bancshares (a) 1,292 44,393
South Financial Group, Inc. (The) 1,003 27,783
Southwest Bancorporation of Texas, Inc. 582 23,670
Sterling Bancshares, Inc. 807 10,257
Susquehanna Bancshares, Inc. 668 15,631
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
163
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
COMMERCIAL BANKS (CONTINUED)
TCF Financial Corp. 5,246 $ 259,939
Trust Company of New Jersey (The) 2,385 88,293
TrustCo Bank Corp. of NY 1,270 16,015
U.S. Bancorp 15,088 386,856
UCBH Holdings, Inc. 767 28,394
Umpqua Holdings Corp. 495 9,380
Union Planters Corp. 1,475 41,005
United Bankshares, Inc. 786 23,588
Unizan Financial Corp. 1,580 38,473
Wachovia Corp. 18,668 854,061
Wells Fargo & Co. 16,023 904,659
Whitney Holding Corp. 688 28,208
Wintrust Financial Corp. 341 16,194
Zions Bancorp 460 25,999
------------
10,772,543
------------
COMMERCIAL SERVICES & SUPPLIES (1.3%)
ABM Industries, Inc. 828 15,285
Administaff, Inc. (a) 487 8,523
Allied Waste Industries, Inc. (a) 11,729 147,668
Angelica Corp. 158 3,634
Arbitron, Inc. (a) 509 18,960
Banta Corp. 1,578 70,189
Bowne & Co., Inc. 616 10,429
Brady Corp. Class A 424 16,477
Brink's Co. (The) 5,146 142,699
Career Education Corp. (a) 3,825 244,800
CDI Corp. 355 11,452
Cendant Corp. (a) 47,790 1,131,667
Central Parking Corp. 660 12,599
Coinstar, Inc. (a) 393 6,779
Consolidated Graphics, Inc. (a) 245 9,143
Copart, Inc. (a) 4,498 85,282
CPI Corp. 145 2,224
Donnelley (R.R.) & Sons Co. 1,572 46,248
Dun & Bradstreet Corp. (The) (a) 952 49,742
G&K Services, Inc. Class A 379 14,364
H&R Block, Inc. 1,418 63,966
Heidrick & Struggles
International, Inc. (a) 334 8,293
Herman Miller, Inc. 1,567 41,181
Imagistics International, Inc. (a) 310 12,552
Insurance Auto Auctions, Inc. (a) 206 3,240
Ionics, Inc. (a) 385 8,882
ITT Educational Services, Inc. (a) 75 3,025
John H. Harland Co. 473 14,573
Korn/Ferry International (a) 801 11,999
Kroll, Inc. (a) 701 20,778
Labor Ready, Inc. (a) 735 9,290
</Table>
<Table>
<Caption>
SHARES VALUE
COMMERCIAL SERVICES & SUPPLIES (CONTINUED)
Manpower, Inc. 1,575 $ 73,868
MemberWorks, Inc. (a) 176 5,194
Mobile Mini, Inc. (a) 261 5,024
NCO Group, Inc. (a) 473 10,737
New England Business
Service, Inc. (a) 237 8,226
On Assignment, Inc. (a) 450 2,295
Pitney Bowes, Inc. 6,940 303,625
Pre-Paid Legal Services, Inc. (a) 317 7,925
PRG-Schultz International, Inc. 1,125 5,288
Rollins, Inc. 969 23,014
Roto-Rooter, Inc. 180 8,712
School Specialty, Inc. (a) 343 12,221
Sotheby's Holdings, Inc. Class A (a) 3,426 44,504
SOURCECORP, Inc. (a) 295 7,579
Spherion Corp. (a) 1,089 10,727
Standard Register Co. (The) 517 7,621
Sylvan Learning Systems, Inc. (a) 2,205 77,726
Tetra Tech, Inc. (a) 912 15,148
United Rentals, Inc. (a) 8,530 146,716
United Stationers, Inc. 567 21,546
Viad Corp. 6,459 161,217
Volt Information Sciences, Inc. (a) 278 7,175
Waste Connections, Inc. (a) 478 19,249
Waste Management, Inc. 22,728 645,475
Watson Wyatt & Co. Holdings (a) 602 15,791
------------
3,892,546
------------
COMMUNICATIONS EQUIPMENT (2.1%)
3Com Corp. (a) 15,681 96,595
Adaptec, Inc. (a) 1,826 14,279
ADC Telecommunications, Inc. (a) 2,740 6,850
ADTRAN, Inc. 25 613
Advanced Fibre
Communications, Inc. (a) 346 5,778
Andrew Corp. (a) 2,635 44,663
Audiovox Corp. Class A (a) 419 6,327
Avaya, Inc. (a) 11,390 155,815
Bel Fuse, Inc. Class B 201 6,207
Black Box Corp. 301 15,336
Brooktrout, Inc. 220 2,231
Cable Design Technologies Corp. 746 6,363
C-COR.net Corp. 665 6,038
Cisco Systems, Inc. 103,862 2,167,600
CommScope, Inc. (a) 6,609 115,724
Corning, Inc. 37,640 415,169
Digi International, Inc. 361 3,509
Harmonic, Inc. 1,242 8,210
Harris Corp. 4,892 220,384
Inter-Tel, Inc. 457 10,941
</Table>
164 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (CONTINUED)
JDS Uniphase Corp. 4,185 $ 12,722
Lucent Technologies, Inc. 69,735 235,007
Motorola, Inc. 98,503 1,797,680
Network Equipment
Technology, Inc. 411 3,514
PC-Tel, Inc. (a) 363 4,022
Plantronics, Inc. 4,684 177,758
Polycom, Inc. 7,168 136,765
Powerwave Technologies, Inc. 335 2,268
QUALCOMM, Inc. 10,897 680,627
Scientific-Atlanta, Inc. 1,176 38,091
SCM Microsystems, Inc. (a) 271 1,702
Symmertricom, Inc. (a) 770 6,168
Tellabs, Inc. (a) 192 1,676
Tollgrade Communications, Inc. (a) 243 2,960
ViaSat, Inc. (a) 479 10,528
------------
6,420,120
------------
COMPUTERS & PERIPHERALS (1.4%)
Avid Technology, Inc. (a) 516 24,753
Dell, Inc. (a) 9,372 325,302
EMC Corp. (a) 12,498 139,478
Gateway, Inc. (a) 483 2,328
Hewlett-Packard Co. 56,747 1,117,916
Hutchinson Technology, Inc. (a) 473 11,631
International Business
Machines Corp. 22,768 2,007,455
Lexmark International, Inc. (a) 1,010 91,365
NCR Corp. (a) 4,455 199,094
Network Appliance, Inc. (a) 834 15,529
Pinnacle Systems, Inc. (a) 1,154 9,082
SanDisk Corp. (a) 3,874 89,528
SBS Technologies, Inc. (a) 261 3,889
Storage Technology Corp. (a) 9,743 255,949
Sun Microsystems, Inc. (a) 5,526 21,550
------------
4,314,849
------------
CONSTRUCTION & ENGINEERING (0.1%)
Dycom Industries, Inc. (a) 2,649 62,463
EMCOR Group, Inc. (a) 274 11,207
Granite Construction, Inc. (a) 118 2,342
Insituform Technologies, Inc. Class A (a) 483 7,844
Quanta Services, Inc. (a) 8,717 47,682
Shaw Group, Inc. (The) (a) 1,010 12,120
URS Corp. (a) 684 17,668
------------
161,326
------------
CONSTRUCTION MATERIALS (0.1%)
Florida Rock Industries, Inc. 733 29,166
Martin Marietta Materials, Inc. 3,615 156,349
</Table>
<Table>
<Caption>
SHARES VALUE
CONSTRUCTION MATERIALS (CONTINUED)
Texas Industries, Inc. 385 $ 12,978
Vulcan Materials Co. 4,804 222,137
------------
420,630
------------
CONSUMER FINANCE (0.4%)
American Express Co. 145 7,098
AmeriCredit Corp. (a) 17,393 281,941
Capital One Financial Corp. 8,998 589,639
Cash America International, Inc. 472 10,095
MBNA Corp. 7,550 184,069
Providian Financial Corp. 11,244 136,390
Rewards Network, Inc. (a) 415 4,071
------------
1,213,303
------------
CONTAINERS & PACKAGING (0.2%)
Aptargroup, Inc. 618 24,287
Ball Corp. 597 39,402
Caraustar Industries, Inc. 510 6,452
Chesapeake Corp. 281 6,382
Longview Fibre Co. 2,853 29,899
Myers Industries, Inc. 550 7,761
Pactiv Corp. (a) 1,235 28,343
Rock-Tenn Co. 637 9,490
Sealed Air Corp. (a) 2,886 141,645
Sonoco Products Co. 1,546 38,434
Temple-Inland, Inc. 2,567 158,564
------------
490,659
------------
DISTRIBUTORS (0.0%) (B)
Advanced Marketing Services, Inc. 341 3,386
------------
DIVERSIFIED FINANCIAL SERVICES (1.2%)
Citigroup, Inc. (f) 58,082 2,793,163
Financial Federal Corp. 338 10,579
GATX Corp. 5,433 127,676
Moody's Corp. 3,517 226,882
Piper Jaffray Cos., Inc. (a) 324 15,688
Principal Financial Group, Inc. 15,229 537,584
------------
3,711,572
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (2.3%)
ALLTEL Corp. 3,671 184,798
AT&T Corp. 5,932 101,734
BellSouth Corp. 57,567 1,485,804
Cincinnati Bell, Inc. 16,472 65,064
Citizens Communications Co. 5,050 65,852
Commonwealth Telephone Enterprises, Inc. 371 15,456
General Communication, Inc. Class A (a) 1,023 9,105
Qwest Communications International, Inc. 36,946 148,523
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
165
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
SBC Communications, Inc. 60,407 $ 1,504,134
Sprint Corp. (FON Group) 52,925 946,828
Verizon Communications, Inc. 67,701 2,555,036
------------
7,082,334
------------
ELECTRIC UTILITIES (1.7%)
Alliant Energy Corp. 2,324 57,775
Ameren Corp. 1,423 62,214
American Electric Power Co., Inc. 15,467 470,815
CenterPoint Energy, Inc. 14,466 156,088
Central Vermont Public
Service Corp. 213 4,292
CH Energy Group, Inc. 288 13,334
Cleco Corp. 864 15,509
CMS Energy Corp. (a) 227 1,886
DPL, Inc. 14,039 247,367
DTE Energy Co. 226 8,819
Duquesne Light Holdings, Inc. 8,346 156,654
Edison International 15,415 360,711
El Paso Electric Co. (a) 881 12,466
Entergy Corp. 5,412 295,495
Exelon Corp. 780 52,213
FirstEnergy Corp. 2,066 80,781
Great Plains Energy, Inc. 6,366 198,683
Green Mountain Power Corp. 119 3,043
IDACORP, Inc. 3,968 117,651
Northeast Utilities 12,480 229,008
NSTAR 3,083 149,217
OGE Energy Corp. 3,039 73,088
Pepco Holdings, Inc. 12,468 236,144
PG&E Corp. 19,653 540,851
Pinnacle West Capital Corp. 3,130 122,258
PNM Resources, Inc. 1,426 41,611
PPL Corp. 5,593 239,660
Progress Energy, Inc. 7,730 330,612
Puget Energy, Inc. 1,289 28,306
Southern Co. (The) 6,647 191,168
TECO Energy, Inc. 2,973 37,846
TXU Corp. 15,290 522,001
UIL Holdings Corp. 264 11,925
UniSource Energy Corp. 615 15,024
Xcel Energy, Inc. 10,877 181,972
------------
5,266,487
------------
ELECTRICAL EQUIPMENT (0.1%)
A.O. Smith Corp. 532 15,906
Acuity Brands, Inc. 759 18,573
Baldor Electric Co. 599 13,525
Belden, Inc. 464 8,115
C&D Technologies, Inc. 467 7,239
</Table>
<Table>
<Caption>
SHARES VALUE
ELECTRICAL EQUIPMENT (CONTINUED)
Hubbell, Inc.
Class A 70 $ 2,982
Class B 4,990 224,251
Intermagnetics General Corp. (a) 303 7,430
MagneTek, Inc. (a) 421 2,905
Regal-Beloit Corp. 457 9,145
Rockwell Automation, Inc. 963 31,480
Roper Industries, Inc. 611 29,664
Thomas & Betts Corp. (a) 461 11,082
Vicor Corp. (a) 764 10,620
Woodward Governor Co. 203 12,655
------------
405,572
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.8%)
Aeroflex, Inc. 1,205 15,159
Agilent Technologies, Inc. (a) 18,677 504,466
Agilysys, Inc. 587 6,886
Anixter International, Inc. (a) 608 17,814
Arrow Electronics, Inc. (a) 7,599 192,103
Artesyn Technologies, Inc. (a) 707 6,511
Avnet, Inc. (a) 13,287 287,531
BEI Technologies, Inc. 260 5,481
Bell Microproducts, Inc. (a) 474 3,090
Benchmark Electronics, Inc. (a) 681 18,407
CDW Corp. 253 15,810
Checkpoint Systems, Inc. (a) 599 9,626
Cognex Corp. 735 23,358
Coherent, Inc. (a) 545 13,325
CTS Corp. 632 8,248
Daktronics, Inc. (a) 300 6,369
Electro Scientific
Industries, Inc. (a) 509 10,404
FLIR Systems, Inc. (a) 560 26,270
Global Imaging Systems, Inc. (a) 392 13,571
Itron, Inc. (a) 374 7,996
Keithley Instruments, Inc. 271 5,650
KEMET Corp. (a) 1,800 22,284
Littelfuse, Inc. (a) 400 15,360
Methode Electronics, Inc. 651 7,382
Molex, Inc. 4,456 132,700
Park Electrochemical Corp. 361 8,509
Paxar Corp. (a) 713 11,750
PerkinElmer, Inc. 5,546 106,761
Photon Dynamics, Inc. (a) 295 9,145
Planar Systems, Inc. (a) 261 3,182
Plexus Corp. (a) 1,702 24,475
RadiSys Corp. (a) 326 6,086
Rogers Corp. (a) 295 17,612
Sanmina-SCI Corp. (a) 21,203 212,454
Solectron Corp. (a) 31,230 153,027
Tech Data Corp. (a) 1,668 56,712
</Table>
166 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (CONTINUED)
xTechnitrol, Inc. (a) 734 $ 15,612
Tektronix, Inc. 661 19,566
Thermo Electron Corp. (a) 1,282 37,434
Trimble Navigation Ltd. (a) 832 20,842
Varian, Inc. (a) 232 9,521
Veeco Instruments, Inc. (a) 535 12,171
Vishay Intertechnology, Inc. (a) 9,523 165,700
X-Rite, Inc. 367 4,947
------------
2,271,307
------------
ENERGY EQUIPMENT & SERVICES (0.1%)
Atwood Oceanics, Inc. (a) 253 9,272
Cal Dive International, Inc. (a) 688 18,604
CARBO Ceramics, Inc. 284 18,369
Dril-Quip, Inc. (a) 316 5,429
FMC Technologies, Inc. (a) 123 3,352
Hanover Compressor Co. (a) 4,232 52,054
Hydril (a) 416 10,591
Input/Output, Inc. (a) 916 7,227
Lone Star Technologies, Inc. (a) 520 10,660
Maverick Tube Corp. (a) 716 16,203
Oceaneering International, Inc. (a) 442 12,376
Offshore Logistics, Inc. (a) 411 9,021
Schlumberger Ltd. 3,044 178,165
SEACOR Holdings, Inc. (a) 343 14,228
TETRA Technologies, Inc. (a) 395 9,445
Unit Corp. (a) 731 20,651
Veritas DGC, Inc. (a) 612 12,503
W-H Energy Services, Inc. (a) 498 9,153
------------
417,303
------------
FOOD & STAPLES RETAILING (1.9%)
Albertson's, Inc. 14,352 335,263
BJ's Wholesale Club, Inc. (a) 4,653 112,742
Casey's General Stores, Inc. 910 15,070
Costco Wholesale Corp. (a) 14,723 551,376
CVS Corp. 3,328 128,561
Duane Reade, Inc. (a) 439 7,327
Great Atlantic & Pacific
Tea Co., Inc. (The) (a) 704 5,631
Kroger Co. (The) (a) 28,984 507,220
Longs Drug Stores Corp. 1,742 34,143
Nash Finch Co. 214 4,423
Performance Food Group Co. (a) 781 27,437
Ruddick Corp. 1,192 24,317
Safeway, Inc. (a) 20,272 465,242
SUPERVALU, Inc. 6,307 194,193
United Natural Foods, Inc. (a) 712 17,836
*Wal-Mart Stores, Inc. (a)(f) 53,731 3,062,667
</Table>
<Table>
<Caption>
SHARES VALUE
FOOD & STAPLES RETAILING (CONTINUED)
Whole Foods Market, Inc. (a) 3,673 $ 293,803
Winn-Dixie Stores, Inc. 1,434 10,927
------------
5,798,178
------------
FOOD PRODUCTS (1.2%)
American Italian Pasta Co. Class A (a) 327 10,124
Archer-Daniels-Midland Co. 16,095 282,628
Campbell Soup Co. 3,097 85,570
ConAgra Foods, Inc. 21,090 609,290
Corn Products International, Inc. 615 26,137
Dean Foods Co. (a) 4,574 153,595
Delta and Pine Land Co. 650 15,769
Flowers Foods, Inc. 738 18,074
H.J. Heinz Co. 11,395 435,175
Hain Celestial Group, Inc. (a) 622 12,316
Hormel Foods Corp. 5,181 157,969
International Multifoods Corp. (a) 352 8,747
Interstate Bakeries Corp. 2,750 31,075
J&J Snack Foods Corp. (a) 159 6,079
J.M. Smucker Co. (The) 2,513 131,430
Lancaster Colony Corp. 252 10,408
Lance, Inc. 532 8,038
Ralcorp Holdings, Inc. (a) 528 18,380
Sara Lee Corp. 37,216 858,945
Smithfield Foods, Inc. (a) 4,113 109,406
Tootsie Roll Industries, Inc. 1,812 63,130
Tyson Foods, Inc. Class A 31,037 581,633
------------
3,633,918
------------
GAS UTILITIES (0.2%)
AGL Resources, Inc. 2,646 75,676
Atmos Energy Corp. 845 20,821
Cascade Natural Gas Corp. 199 4,085
Kinder Morgan, Inc. 4,823 290,393
Laclede Group, Inc. (The) 349 9,629
New Jersey Resources Corp. 459 17,492
Northwest Natural Gas Co. 470 13,818
NUI Corp. 293 4,881
Peoples Energy Corp. 292 12,206
Piedmont Natural Gas Co., Inc. 634 25,677
Sempra Energy 3,384 107,442
Southern Union Co. (a) 1,242 24,418
Southwest Gas Corp. 618 14,090
Southwestern Energy Co. (a) 650 16,347
UGI Corp. 860 27,090
WGL Holdings, Inc. 1,881 53,195
------------
717,260
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
167
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.1%)
Advanced Medical Optics, Inc. (a) 531 $ 16,748
American Medical Systems Holdings, Inc. (a) 602 15,628
Analogic Corp. 245 11,601
Apogent Technologies, Inc. (a) 8,037 260,560
Applera Corp. Applied Biosystems Group (a) 4,326 80,334
ArthroCare Corp. (a) 377 8,863
Bausch & Lomb, Inc. 1,812 113,848
Beckman Coulter, Inc. 5,197 290,200
Becton, Dickinson & Co. 9,117 460,864
BioLase Technology, Inc. (a) 406 5,229
Biosite, Inc. (a) 283 11,212
C.R. Bard, Inc. 407 43,252
CONMED Corp. (a) 530 13,080
Cooper Cos., Inc. 536 28,944
Cyberonics, Inc. (a) 100 2,369
Cytyc Corp. (a) 9,017 192,964
Datascope Corp. 270 8,942
DENTSPLY International, Inc. 622 30,142
Diagnostic Products Corp. 491 20,946
Guidant Corp. 4,874 307,111
Haemonetics Corp. (a) 440 12,421
Hillenbrand Industries, Inc. 4,212 284,310
Hologic, Inc. (a) 362 7,258
ICU Medical, Inc. (a) 247 8,242
Immucor, Inc. (a) 331 8,159
INAMED Corp. (a) 588 34,598
Integra LifeSciences Holdings (a) 488 15,616
Invacare Corp. 529 21,070
Medtronic, Inc. 119 6,005
Mentor Corp. (a) 747 23,680
Merit Medical Systems, Inc. (a) 439 6,897
Osteotech, Inc. (a) 306 2,032
PolyMedica Corp. 454 12,639
Possis Medical, Inc. (a) 325 8,265
Resmed, Inc. (a) 570 28,090
Respironics, Inc. (a) 590 30,922
Sola International, Inc. (a) 545 11,183
Stryker Corp. 3,423 338,637
SurModics, Inc. (a) 319 7,139
Sybron Dental Specialties, Inc. (a) 642 18,779
Theragenics Corp. (a) 535 2,803
Varian Medical Systems, Inc. (a) 521 44,723
Viasys Healthcare, Inc. (a) 549 10,651
VISX, Inc. (a) 3,824 83,707
Vital Signs, Inc. 236 7,583
</Table>
<Table>
<Caption>
SHARES VALUE
HEALTH CARE EQUIPMENT & SUPPLIES (CONTINUED)
Wilson Greatbatch
Technologies, Inc. (a) 387 $ 13,352
Zimmer Holdings, Inc. (a) 5,719 456,662
------------
3,428,260
------------
HEALTH CARE PROVIDERS & SERVICES (2.0%)
Accredo Health, Inc. (a) 816 31,538
Aetna, Inc. 7,236 598,779
American Healthways, Inc. (a) 560 13,569
AMERIGROUP Corp. (a) 422 17,517
AmerisourceBergen Corp. 3,532 204,468
AmSurg Corp. (a) 546 13,197
Anthem, Inc. (a) 1,161 102,841
Apria Healthcare Group, Inc. (a) 2,547 73,456
Caremark Rx, Inc. (a) 8,795 297,711
Centene Corp. (a) 350 11,725
Cerner Corp. (a) 603 25,820
CIGNA Corp. 6,591 425,185
Community Health
Systems, Inc. (a) 778 20,065
Covance, Inc. (a) 2,843 95,923
Coventry Health Care, Inc. (a) 5,530 231,375
Cross Country Healthcare, Inc. 588 9,696
Cryolife, Inc. (a) 472 2,700
Curative Health Services, Inc. (a) 227 2,633
Dendrite International, Inc. (a) 739 12,667
First Health Group Corp. (a) 4,353 72,695
Health Net, Inc. (a) 6,618 168,362
Hooper Holmes, Inc. 1,184 6,524
Humana, Inc. (a) 5,064 82,493
IMS Health, Inc. 2,500 63,125
LifePoint Hospitals, Inc. (a) 1,154 41,267
Lincare Holdings, Inc. (a) 329 11,426
Manor Care, Inc. 4,205 136,410
McKesson Corp. 1,262 41,469
Medco Health Solutions, Inc. (a) 7,394 261,748
NDC Health Corp. 638 14,591
Odyssey Healthcare, Inc. (a) 657 11,036
Omnicare, Inc. 801 33,226
Orthodontic Centers of
America, Inc. (a) 918 6,582
Owens & Minor, Inc. 668 16,232
Oxford Health Plans, Inc. (a) 1,528 83,184
PacifiCare Health Systems, Inc. (a) 9,217 329,600
PAREXEL International Corp. (a) 469 9,164
Pediatrix Medical Group, Inc. (a) 395 28,243
Pharmaceutical Product Development, Inc. (a) 953 28,180
Priority Healthcare Corp. (a) 726 14,556
Province Healthcare Co. (a) 890 14,231
Quest Diagnostics, Inc. 815 68,745
</Table>
168 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
RehabCare Group, Inc. (a) 294 $ 6,012
Renal Care Group, Inc. (a) 775 38,347
Sierra Health Services, Inc. (a) 469 17,423
Sunrise Senior Living, Inc. (a) 345 10,902
Tenet Healthcare Corp. (a) 11,410 134,182
Triad Hospitals, Inc. (a) 5,108 173,723
United Surgical Partners International, Inc. (a) 467 16,915
UnitedHealth Group, Inc. 26,474 1,627,622
Universal Health Services, Inc. Class B (a) 2,366 103,867
US Oncology, Inc. (a) 1,413 21,054
WellPoint Health Networks, Inc. (a) 2,454 274,087
------------
6,158,088
------------
HOTELS, RESTAURANTS & LEISURE (1.2%)
Applebee's International, Inc. 1,967 76,280
Argosy Gaming Co. (a) 500 18,595
Aztar Corp. (a) 585 15,151
Bally Total Fitness
Holding Corp. (a) 621 2,559
Boyd Gaming Corp. 3,290 77,315
Brinker International, Inc. (a) 6,612 254,298
Caesars Entertainment, Inc. (a) 25,264 334,748
CBRL Group, Inc. 4,083 153,317
CEC Entertainment, Inc. (a) 649 22,176
Extended Stay America, Inc. 668 12,993
GTECH Holdings Corp. 3,520 214,438
Harrah's Entertainment, Inc. 1,745 92,799
IHOP Corp. 395 14,674
International Game Technology 13,109 494,734
International Speedway Corp. Class A 2,701 113,793
Jack In The Box, Inc. (a) 658 17,819
Landry's Restaurants, Inc. 504 16,874
LoneStar Steakhouse &
Saloon, Inc. 379 11,654
Mandalay Resort Group 5,434 312,183
Marcus Corp. (The) 539 8,732
McDonald's Corp. 28,652 780,194
Multimedia Games, Inc. (a) 100 2,228
O'Charley's, Inc. (a) 380 7,178
Outback Steakhouse, Inc. 1,427 62,688
P.F. Chang's China Bistro, Inc. (a) 434 21,205
Panera Bread Co. Class A (a) 503 20,558
Papa John's International, Inc. (a) 328 10,972
Pinnacle Entertainment, Inc. (a) 603 6,886
Prime Hospitality Corp. (a) 818 8,221
RARE Hospitality
International, Inc. (a) 612 16,750
</Table>
<Table>
<Caption>
SHARES VALUE
HOTELS, RESTAURANTS & LEISURE (CONTINUED)
Ruby Tuesday, Inc. 4,136 $ 123,749
Ryan's Family Steak
Houses, Inc. (a) 770 13,968
Shuffle Master, Inc. (a) 456 14,934
Six Flags, Inc. (a) 7,276 54,061
Sonic Corp. (a) 659 21,266
Starwood Hotels & Resorts Worldwide, Inc. 268 10,664
Steak n Shake Co. (The) (a) 494 9,312
Triarc Cos., Inc. Class B (a) 1,050 10,972
WMS Industries, Inc. (a) 493 13,922
Yum! Brands, Inc. (a) 7,786 302,019
------------
3,776,879
------------
HOUSEHOLD DURABLES (1.0%)
A.T. Cross Co. Class A (a) 368 2,164
American Greetings Corp. Class A (a) 1,077 22,078
Applica, Inc. (a) 423 4,746
Bassett Furniture Industries, Inc. 207 3,714
Black & Decker Corp. (The) 1,595 92,271
Centex Corp. 5,857 280,843
Champion Enterprises, Inc. (a) 1,188 12,937
D.R. Horton, Inc. 20,334 585,619
Department 56, Inc. (a) 234 3,760
Enesco Group, Inc. (a) 251 3,255
Ethan Allen Interiors, Inc. 634 26,355
Fedders Corp. 530 2,867
Fleetwood Enterprises, Inc. (a) 657 9,526
Fortune Brands, Inc. 3,432 261,690
Furniture Brands International, Inc. 875 24,622
Harman International
Industries, Inc. 2,603 197,438
Hovnanian Enterprises, Inc. Class A (a) 2,482 89,278
Interface, Inc. Class A (a) 937 7,993
La-Z-Boy, Inc. 910 18,964
Lennar Corp. 8,932 418,464
Libbey, Inc. 248 6,490
M.D.C. Holdings, Inc. 551 34,046
Maytag Corp. 3,090 86,211
Mohawk Industries, Inc. (a) 1,533 118,256
National Presto Industries, Inc. 122 4,967
NVR, Inc. (a) 109 49,159
Pulte Homes, Inc. 3,923 192,894
Russ Berrie & Co., Inc. 377 10,756
Salton, Inc. (a) 200 1,810
Skyline Corp. 153 6,539
Snap-on, Inc. 611 20,640
Standard Pacific Corp. 559 28,196
Stanley Works (The) 1,923 81,747
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
169
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
HOUSEHOLD DURABLES (CONTINUED)
xToll Brothers, Inc. (a) 4,787 $ 189,422
Toro Co. (The) 417 24,249
Tupperware Corp. 462 8,653
Whirlpool Corp. 2,731 178,908
------------
3,111,527
------------
HOUSEHOLD PRODUCTS (1.0%)
Clorox Co. (The) 1,712 88,647
Colgate-Palmolive Co. 14,628 846,669
Kimberly-Clark Corp. 13,915 910,737
Procter & Gamble Co. (The) 9,683 1,023,977
WD-40 Co. 304 9,226
------------
2,879,256
------------
INDUSTRIAL CONGLOMERATES (2.2%)
3M Co. 779 67,368
ALLETE, Inc. 1,852 63,987
Carlisle Cos., Inc. 242 14,338
*General Electric Co. (f) 151,023 4,523,139
Standex International Corp. 219 5,891
Textron, Inc. 6,452 356,021
Tredegar Corp. 696 9,250
Tyco International Ltd. 57,896 1,589,245
------------
6,629,239
------------
INSURANCE (5.0%)
ACE, Ltd. 10,634 466,195
AFLAC, Inc. 24,248 1,023,993
Allmerica Financial Corp. (a) 4,760 165,458
Allstate Corp. (The) 13,260 608,634
Ambac Financial Group, Inc. 4,100 282,900
American Financial Group, Inc. 6,728 206,550
*American International Group, Inc. 54,813 3,927,351
AmerUs Group Co. 3,740 144,364
Aon Corp. 8,189 213,405
Arthur J. Gallagher & Co. (a) 101 3,255
Cincinnati Financial Corp. 4,596 188,384
Delphi Financial Group, Inc. Class A 519 20,843
Everest Re Group Ltd. 3,968 337,994
Fidelity National Financial, Inc. 13,730 502,518
First American Corp. 8,657 234,778
Hartford Financial Services
Group, Inc. (The) 12,345 754,033
HCC Insurance Holdings, Inc. 5,391 172,620
Hilb, Rogal and Hamilton Co. 622 22,299
Horace Mann Educators Corp. 2,883 45,004
LandAmerica Financial Group, Inc. 340 14,011
Lincoln National Corp. 7,017 314,923
Loews Corp. 8,760 508,168
Marsh & McLennan Cos., Inc. 526 23,723
</Table>
<Table>
<Caption>
SHARES VALUE
INSURANCE (CONTINUED)
MBIA, Inc. 370 $ 21,789
MetLife, Inc. 32,265 1,113,142
MONY Group, Inc. (The) 327 10,121
Ohio Casualty Corp. (a) 3,705 72,692
Old Republic International Corp. 7,617 176,867
Philadelphia Consolidated
Holding Corp. 369 21,306
Presidential Life Corp. 536 8,624
Progressive Corp. (The) 6,253 547,263
Protective Life Corp. 7,649 275,058
Prudential Financial, Inc. (a) 17,010 747,419
RLI Corp. 459 15,950
SAFECO Corp. 4,382 191,888
SCPIE Holdings, Inc. 237 1,955
Selective Insurance Group, Inc. 494 17,665
St. Paul Travelers Cos., Inc. (The) 19,717 801,890
StanCorp Financial Group, Inc. 1,089 67,376
Stewart Information
Services Corp. (a) 327 11,609
Torchmark Corp. 3,730 194,109
UICI (a) 848 14,679
Unitrin, Inc. 7,523 298,287
UnumProvident Corp. 7,527 117,045
W. R. Berkley Corp. 9,163 371,101
XL Capital Ltd. Class A 123 9,391
Zenith National Insurance Corp. 343 14,790
------------
15,303,419
------------
INTERNET & CATALOG RETAIL (0.0%) (B)
Insight Enterprises, Inc. (a) 844 14,129
J. Jill Group, Inc. (a) 350 7,413
------------
21,542
------------
INTERNET SOFTWARE & SERVICES (0.0%) (B)
Internet Security Systems, Inc. (a) 410 5,449
j2 Global Communications, Inc. (a) 418 9,681
Netegrity, Inc. (a) 631 5,300
Retek, Inc. (a) 1,641 11,454
WebEx Communications, Inc. (a) 764 17,144
Websense, Inc. (a) 401 11,830
Yahoo!, Inc. (a) 934 47,130
Zix Corp. (a) 497 7,445
------------
115,433
------------
IT SERVICES (0.5%)
Acxiom Corp. (a) 9,482 219,413
Affiliated Computer Services, Inc. Class A (a) 1,064 51,604
American Management
Systems, Inc. (a) 774 14,946
BISYS Group, Inc. (The) (a) 2,462 35,699
CACI International, Inc. Class A (a) 493 22,431
</Table>
170 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
IT SERVICES (CONTINUED)
Carreker Corp. (a) 421 $ 3,065
CheckFree Corp. (a) 2,331 70,023
CIBER, Inc. (a) 1,157 10,124
Cognizant Technology
Solutions Corp. (a) 3,151 136,312
Convergys Corp. (a) 4,482 65,079
CSG Systems International, Inc. (a) 4,228 70,988
DST Systems, Inc. (a) 3,378 149,139
eFunds Corp. (a) 855 13,731
Electronic Data Systems Corp. 14,230 260,267
Gartner, Inc. Class A (a) 9,731 116,188
Global Payments, Inc. 636 30,515
Intrado, Inc. (a) 270 4,641
Keane, Inc. (a) 1,917 27,221
ManTech International Corp. Class A (a) 572 14,357
MAXIMUS, Inc. (a) 382 13,370
MPS Group, Inc. (a) 6,657 72,828
Pegasus Solutions, Inc. (a) 457 4,890
StarTek, Inc. 260 8,437
Titan Corp. (The) (a) 1,893 36,346
Unisys Corp. (a) 2,618 34,113
------------
1,485,727
------------
LEISURE EQUIPMENT & PRODUCTS (0.3%)
Action Performance Cos., Inc. 327 5,127
Arctic Cat, Inc. 399 9,476
Brunswick Corp. 2,914 119,794
Concord Camera Corp. (a) 511 2,581
Eastman Kodak Co. 10,846 279,718
Hasbro, Inc. 6,280 118,629
Huffy Corp. (a) 254 564
JAKKS Pacific, Inc. (a) 449 7,799
K2, Inc. (a) 495 7,257
Mattel, Inc. 13,192 223,736
Meade Instruments Corp. (a) 477 1,693
Nautilus Group, Inc. (The) 595 9,568
Polaris Industries, Inc. 742 31,832
SCP Pool Corp. (a) 594 23,885
Sturm, Ruger & Co., Inc. 492 5,368
------------
847,027
------------
MACHINERY (0.8%)
Albany International Corp. Class A 597 18,208
Astec Industries, Inc. (a) 352 6,280
Barnes Group, Inc. 412 11,227
Briggs & Stratton Corp. 372 26,040
Caterpillar, Inc. 1,513 117,605
CLARCOR, Inc. 432 19,017
Crane Co. 469 14,450
</Table>
<Table>
<Caption>
SHARES VALUE
MACHINERY (CONTINUED)
Cummins, Inc. 1,306 $ 78,112
CUNO, Inc. (a) 305 13,438
Deere & Co. 6,597 448,860
Dionex Corp. (a) 354 18,065
Donaldson Co., Inc. 598 16,403
Eaton Corp. 1,797 106,706
Flowserve Corp. (a) 4,629 98,922
Gardner Denver, Inc. (a) 294 7,709
Graco, Inc. 4,371 123,262
Harsco Corp. 1,651 71,868
IDEX Corp. 560 26,460
Ingersoll-Rand Co. Class A 166 10,715
ITT Industries, Inc. 271 21,488
JLG Industries, Inc. 786 11,625
Kaydon Corp. 512 14,321
Kennametal, Inc. 773 33,363
Lindsay Manufacturing Co. 205 4,848
Lydall, Inc. (a) 290 2,830
Manitowoc Co., Inc. (The) 483 14,688
Milacron, Inc. 814 3,199
Mueller Industries, Inc. (a) 575 19,291
Navistar International Corp. (a) 1,618 73,053
Nordson Corp. 3,062 105,823
Oshkosh Truck Corp. 596 30,515
PACCAR, Inc. 2,281 128,785
Parker-Hannifin Corp. 928 51,309
Pentair, Inc. 1,053 62,748
Reliance Steel & Aluminum Co. 547 18,062
Robbins & Myers, Inc. 263 5,749
SPX Corp. (a) 6,221 275,901
Stewart & Stevenson
Services, Inc. 522 8,341
Tecumseh Products Co. Class A 394 15,315
Thomas Industries, Inc. 315 10,631
Timken Co. (The) 1,494 32,958
Trinity Industries, Inc. 3,872 117,283
Valmont Industries, Inc. 434 8,897
Wabash National Corp. (a) 543 13,798
Watts Water Technologies, Inc. Class A 498 12,196
Wolverine Tube, Inc. (a) 296 3,617
------------
2,333,981
------------
MARINE (0.0%) (B)
Kirby Corp. (a) 441 15,215
------------
MEDIA (1.0%)
4Kids Entertainment, Inc. (a) 236 5,156
Advo, Inc. 549 17,223
Comcast Corp. Class A (a) 11,688 351,809
Information Holdings, Inc. (a) 381 9,468
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
171
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
MEDIA (CONTINUED)
xMcGraw-Hill Cos., Inc. (The) 2,481 $ 195,652
Media General, Inc. Class A 502 36,084
Thomas Nelson, Inc. 257 6,723
Time Warner, Inc. (a) 99,755 1,677,879
Viacom, Inc. Class B 11,022 426,000
Washington Post Co. (The) Class B 172 158,240
------------
2,884,234
------------
METALS & MINING (0.4%)
Alcoa, Inc. 10,093 310,360
Allegheny Technologies, Inc. 998 10,200
Arch Coal, Inc. 3,512 107,502
Brush Engineered
Materials, Inc. (a) 296 4,789
Carpenter Technology Corp. 1,323 36,131
Castle (A.M.) & Co. (a) 381 3,562
Century Aluminum Co. (a) 502 9,940
Cleveland-Cliffs, Inc. (a) 189 8,955
Commercial Metals Co. 511 13,388
Commonwealth Industries, Inc. 386 3,049
Freeport-McMoRan Copper & Gold, Inc. Class B 7,383 225,181
IMCO Recycling, Inc. (a) 365 3,234
Massey Energy Co. 1,283 30,048
Newmont Mining Corp. 404 15,110
Peabody Energy Corp. 482 22,601
Phelps Dodge Corp. (a) 4,272 281,226
Quanex Corp. 294 11,995
RTI International Metals, Inc. (a) 372 5,450
Ryerson Tull, Inc. 444 5,213
Steel Dynamics, Inc. (a) 807 19,424
Steel Technologies, Inc. 175 3,376
United States Steel Corp. 4,223 120,904
------------
1,251,638
------------
MULTILINE RETAIL (0.8%)
Big Lots, Inc. (a) 925 13,098
Dillard's, Inc. Class A 3,269 55,017
Dollar General Corp. 450 8,442
Dollar Tree Stores, Inc. (a) 18 485
Federated Department Stores, Inc. 8,586 420,714
Fred's, Inc. 656 12,182
J.C. Penney Co., Inc. Holding Co. 11,007 372,697
May Department Stores Co. (The) 13,628 419,743
Neiman Marcus Group Inc. (The) Class A (a) 2,769 134,684
Class B (a) 492 22,263
Nordstrom, Inc. 6,478 230,811
Saks, Inc. (a) 15,444 222,394
</Table>
<Table>
<Caption>
SHARES VALUE
MULTILINE RETAIL (CONTINUED)
Sears, Roebuck and Co. 11,505 $ 460,775
Shopko Stores, Inc. 532 7,054
------------
2,380,359
------------
MULTI-UTILITIES & UNREGULATED POWER (0.4%)
AES Corp. (The) (a) 29,414 255,019
Aquila, Inc. (a) 4,163 17,693
Avista Corp. 882 14,906
Duke Energy Corp. 7,134 150,242
Dynegy, Inc. Class A (a) 5,721 22,655
Energen Corp. 616 25,472
Energy East Corp. 571 13,447
MDU Resources Group, Inc. 2,337 52,349
National Fuel Gas Co. 4,588 112,360
Questar Corp. 7,888 279,787
Sierra Pacific Resources (a) 9,547 67,593
Vectren Corp. 472 11,399
Westar Energy, Inc. 6,984 142,543
Williams Cos., Inc. (The) 17,602 181,301
------------
1,346,766
------------
OFFICE ELECTRONICS (0.2%)
Gerber Scientific, Inc. (a) 396 2,376
Xerox Corp. (a) 37,502 503,652
------------
506,028
------------
OIL & GAS (4.6%)
Amerada Hess Corp. 4,247 302,089
Anadarko Petroleum Corp. 5,899 316,068
Ashland, Inc. 1,636 78,364
Burlington Resources, Inc. 2,125 142,949
Cabot Oil & Gas Corp. 588 20,992
ChevronTexaco Corp. 28,294 2,588,901
Cimarex Energy Co. (a) 699 19,285
ConocoPhillips 25,844 1,842,677
Devon Energy Corp. 4,590 280,908
Evergreen Resources, Inc. (a) 716 28,733
*ExxonMobil Corp. (f) 112,339 4,780,024
Forest Oil Corp. (a) 2,280 59,850
Frontier Oil Corp. 478 8,499
Marathon Oil Corp. 10,268 344,594
Murphy Oil Corp. 2,698 184,813
Newfield Exploration Co. (a) 1,667 87,818
Noble Energy, Inc. 4,502 207,542
Nuevo Energy Co. (a) 354 12,213
Occidental Petroleum Corp. 6,317 298,162
Overseas Shipholding Group, Inc. 4,126 135,209
Patina Oil & Gas Corp. 1,162 32,304
Pioneer Natural Resources Co. (a) 4,402 143,989
Plains Resources, Inc. (a) 431 7,767
Pogo Producing Co. 5,171 255,034
Prima Energy Corp. (a) 232 8,614
</Table>
172 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
OIL & GAS (CONTINUED)
xRemington Oil & Gas Corp. (a) 489 $ 10,709
Spinnaker Exploration Co. (a) 558 19,904
St. Mary Land & Exploration Co. 514 18,581
Stone Energy Corp. (a) 443 21,796
Sunoco, Inc. 2,435 153,162
Swift Energy Co. (a) 501 10,867
Tom Brown, Inc. (a) 797 38,160
Unocal Corp. 10,103 364,112
Valero Energy Corp. 9,088 579,451
Vintage Petroleum, Inc. 1,174 17,692
Western Gas Resources, Inc. 737 40,130
Westport Resources Corp. (a) 6,708 229,615
XTO Energy, Inc. 7,076 188,929
------------
13,880,506
------------
PAPER & FOREST PRODUCTS (0.4%)
Boise Cascade Corp. 1,547 52,181
Buckeye Technologies, Inc. (a) 676 7,098
Deltic Timber Corp. 217 7,380
Georgia-Pacific Corp. 12,002 421,270
Louisiana-Pacific Corp. (a) 4,995 117,832
Pope & Talbot, Inc. 280 4,648
Potlatch Corp. 3,179 120,421
Rayonier, Inc. 5,739 223,821
Schweitzer-Mauduit
International, Inc. 270 8,367
Wausau-Mosinee Paper Corp. 866 12,150
Weyerhaeuser Co. 5,205 308,136
------------
1,283,304
------------
PERSONAL PRODUCTS (0.4%)
Alberto-Culver Co. 1,143 53,904
Avon Products, Inc. 1,862 156,408
Gillette Co. (The) 20,824 852,118
Nature's Sunshine Products, Inc. 238 3,451
NBTY, Inc. (a) 1,132 42,065
------------
1,107,946
------------
PHARMACEUTICALS (3.5%)
Abbott Laboratories 28,051 1,234,805
Alpharma, Inc. 871 18,927
CIMA Labs, Inc. (a) 265 8,385
IVAX Corp. (a) 4,683 99,748
Johnson & Johnson 25,872 1,397,864
King Pharmaceuticals, Inc. (a) 5,038 86,905
Lilly (Eli) & Co. 6,705 494,896
Medicis Pharmaceutical Corp. Class A 934 40,087
Merck & Co., Inc. 19,738 927,686
MGI Pharma, Inc. (a) 598 36,968
Mylan Laboratories, Inc. 1,310 30,012
</Table>
<Table>
<Caption>
SHARES VALUE
PHARMACEUTICALS (CONTINUED)
Noven Pharmaceuticals, Inc. (a) 411 $ 8,072
Perrigo Co. 3,376 72,820
*Pfizer, Inc. (f) 145,528 5,204,081
Sepracor, Inc. (a) 671 32,081
Valeant Pharmaceuticals International (a) 8,556 197,644
Wyeth 22,165 843,822
------------
10,734,803
------------
ROAD & RAIL (0.3%)
Arkansas Best Corp. 453 11,773
Burlington Northern
Santa Fe Corp. 8,274 270,560
CSX Corp. 1,675 51,523
Heartland Express, Inc. 852 20,917
Kansas City Southern 1,128 15,623
Knight Transportation, Inc. (a) 683 17,593
Landstar System, Inc. (a) 508 22,840
Norfolk Southern Corp. 6,137 146,183
Swift Transportation Co., Inc. (a) 1,904 32,216
Union Pacific Corp. 1,656 97,588
USF Corp. 498 16,559
Werner Enterprises, Inc. 4,820 96,352
Yellow Roadway Corp. (a) 801 27,274
------------
827,001
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.1%)
Actel Corp. (a) 456 9,084
Advanced Energy
Industries, Inc. (a) 590 7,812
Advanced Micro Devices, Inc. (a) 9,215 131,037
Alliance Semiconductor Corp. (a) 612 3,543
Altera Corp. (a) 1,536 30,735
Applied Materials, Inc. (a) 5,824 106,172
Atmel Corp. (a) 48,367 282,463
ATMI, Inc. (a) 564 12,453
Axcelis Technologies, Inc. (a) 1,660 17,447
Broadcom Corp. Class A (a) 11,728 442,849
Brooks Automation, Inc. (a) 758 12,613
Cohu, Inc. 388 6,790
Credence Systems Corp. (a) 559 6,227
Cree, Inc. (a) 1,546 28,678
Cymer, Inc. (a) 605 19,348
Cypress Semiconductor Corp. (a) 11,418 159,510
DSP Group, Inc. (a) 518 12,836
DuPont Photomasks, Inc. (a) 330 6,824
ESS Technology, Inc. (a) 707 7,579
Exar Corp. (a) 740 11,292
Fairchild Semiconductor International, Inc. (a) 12,117 235,918
FEI Co. (a) 601 12,008
Helix Technology Corp. 477 8,395
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
173
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONTINUED)
Integrated Device
Technology, Inc. (a) 5,291 $ 71,164
Intel Corp. 94,807 2,439,384
International Rectifier Corp. (a) 6,529 258,810
Kopin Corp. (a) 1,270 6,325
Kulicke & Soffa Industries, Inc. (a) 914 9,076
Lam Research Corp. (a) 3,034 67,173
Lattice Semiconductor Corp. (a) 1,560 11,107
LSI Logic Corp. (a) 3,960 29,462
LTX Corp. (a) 3,067 33,522
Micrel, Inc. (a) 2,644 32,310
Microchip Technology, Inc. 181 5,072
Micron Technology, Inc. (a) 1,559 21,234
Microsemi Corp. (a) 1,060 11,522
National Semiconductor Corp. (a) 4,492 183,229
Pericom Semiconductor Corp. (a) 469 4,948
Phototronics, Inc. (a) 586 8,726
PMC-Sierra, Inc. (a) 3,182 38,661
Power Integrations, Inc. (a) 541 13,325
Rudolph Technologies, Inc. (a) 299 4,805
Semtech Corp. (a) 4,688 98,542
Silicon Laboratories, Inc. (a) 1,582 74,591
Skyworks Solutions, Inc. (a) 2,531 21,665
Standard Microsystems Corp. (a) 307 7,319
Supertex, Inc. (a) 227 3,453
Teradyne, Inc. (a) 1,511 30,794
Texas Instruments, Inc. 47,620 1,195,262
Three-Five Systems, Inc. (a) 381 1,939
TriQuint Semiconductor, Inc. (a) 11,234 61,675
Ultratech, Inc. (a) 418 6,734
Varian Semiconductor Equipment Associates, Inc.
(a) 629 20,480
------------
6,343,922
------------
SOFTWARE (1.9%)
Activision, Inc. (a) 8,873 133,627
ANSYS, Inc. (a) 275 10,189
Ascential Software Corp. (a) 2,962 50,354
Autodesk, Inc. 3,758 125,893
BARRA, Inc. (a) 352 14,379
BMC Software, Inc. (a) 9,484 164,073
Cadence Design Systems, Inc. (a) 4,837 62,010
Captaris, Inc. (a) 546 3,019
Catapult Communications Corp. (a) 230 4,326
Citrix Systems, Inc. (a) 1,081 20,593
Computer Associates
International, Inc. (a) 11,623 311,613
Compuware Corp. (a) 6,043 46,229
Concord Communications, Inc. (a) 311 3,810
EPIQ Systems, Inc. (a) 324 4,617
</Table>
<Table>
<Caption>
SHARES VALUE
SOFTWARE (CONTINUED)
FactSet Research Systems, Inc. 567 $ 22,544
FileNET Corp. (a) 667 18,316
Hyperion Solutions Corp. (a) 651 24,985
Jack Henry & Associates, Inc. 2,670 48,567
JDA Software Group, Inc. (a) 522 6,854
Kronos, Inc. (a) 516 18,824
Manhattan Associates, Inc. (a) 543 14,590
MapInfo Corp. (a) 275 3,039
MICROS Systems, Inc. (a) 317 13,907
*Microsoft Corp. (f) 130,882 3,399,006
Midway Games, Inc. (a) 1,121 9,282
MRO Software, Inc. (a) 448 5,972
Novell, Inc. (a) 5,808 55,989
NYFIX, Inc. (a) 559 2,795
Oracle Corp. (a) 6,204 69,609
Phoenix Technologies Ltd. (a) 434 2,465
Progress Software Corp. (a) 632 12,956
QRS Corp. (a) 283 1,480
Radiant Systems, Inc. (a) 495 2,203
Reynolds & Reynolds Co. (The) Class A 3,044 86,937
Roxio, Inc. (a) 563 2,196
RSA Security, Inc. (a) 6,014 96,344
SERENA Software, Inc. (a) 659 11,710
SPSS, Inc. (a) 316 4,494
Sybase, Inc. (a) 4,623 79,053
Symantec Corp. (a) 9,556 430,498
Take-Two Interactive
Software, Inc. (a) 762 22,014
TALX Corp. 247 5,738
THQ, Inc. (a) 704 13,052
Transaction Systems
Architects, Inc. Class A (a) 4,031 85,578
VERITAS Software Corp. (a) 4,279 114,121
Verity, Inc. (a) 683 8,469
------------
5,648,319
------------
SPECIALTY RETAIL (1.5%)
Aaron Rents, Inc. 598 17,318
Abercrombie & Fitch Co. Class A (a) 3,034 95,419
American Eagle Outfitters, Inc. (a) 2,074 53,281
AnnTaylor Stores Corp. (a) 2,057 83,370
AutoNation, Inc. (a) 6,854 116,655
AutoZone, Inc. (a) 4,169 365,079
Barnes & Noble, Inc. (a) 5,972 178,384
Best Buy Co., Inc. 3,534 191,720
Borders Group, Inc. (a) 8,575 205,543
Building Materials Holding Corp. 238 3,913
Burlington Coat Factory Warehouse Corp. 814 15,433
</Table>
174 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
SPECIALTY RETAIL (CONTINUED)
Cato Corp. (The) Class A 371 $ 7,427
Chico's FAS, Inc. (a) 3,427 139,582
Children's Place Retail Stores, Inc. (The) (a) 486 12,801
Christopher & Banks Corp. 683 12,219
Circuit City Stores, Inc. 3,290 38,427
Claire's Stores, Inc. 8,528 173,801
Cost Plus, Inc. (a) 391 14,154
Dress Barn, Inc. (The) (a) 533 8,965
Electronics Boutique
Holdings Corp. (a) 454 12,281
Gap, Inc. (The) 27,837 612,692
Genesco, Inc. (a) 397 8,833
Goody's Family Clothing, Inc. 595 7,432
Group 1 Automotive, Inc. (a) 413 14,273
Guitar Center, Inc. (a) 415 17,231
Gymboree Corp. (The) (a) 538 9,496
Hancock Fabrics, Inc. 337 5,008
Haverty Furniture Cos., Inc. 401 7,246
Hibbett Sporting Goods, Inc. (a) 100 2,428
Home Depot, Inc. (The) 14,825 521,692
Hot Topic, Inc. (a) 803 17,875
Jo-Ann Stores, Inc. Class A (a) 387 10,940
Limited Brands 13,284 274,182
Linens 'n Things, Inc. (a) 751 24,362
Men's Wearhouse, Inc. (The) (a) 623 15,880
Michaels Stores, Inc. 1,810 90,554
Movie Gallery, Inc. (a) 594 11,535
Pacific Sunwear of
California, Inc. (a) 1,333 28,620
Payless ShoeSource, Inc. (a) 2,615 37,002
Pep Boys-Manny, Moe & Jack (The) 1,010 27,745
PETsMART, Inc. 2,706 74,956
Pier 1 Imports, Inc. 1,927 39,812
RadioShack Corp. 7,732 237,836
Regis Corp. 945 41,032
Rent-A-Center, Inc. (a) 1,249 36,558
Ross Stores, Inc. 375 11,437
Select Comfort Corp. (a) 600 14,544
Sherwin-Williams Co. (The) 1,258 47,867
Staples, Inc. (a) 9,138 235,395
Stein Mart, Inc. (a) 728 9,260
TBC Corp. (a) 397 11,092
Too, Inc. (a) 627 10,998
Toys "R" Us, Inc. (a) 8,599 132,855
Tractor Supply Co. (a) 635 24,803
Ultimate Electronics, Inc. (a) 262 1,114
Urban Outfitters, Inc. (a) 681 31,442
</Table>
<Table>
<Caption>
SHARES VALUE
SPECIALTY RETAIL (CONTINUED)
Wet Seal, Inc. (The) Class A (a) 541 $ 2,981
Zale Corp. (a) 443 24,773
------------
4,479,553
------------
TEXTILES, APPAREL & LUXURY GOODS (0.3%)
Ashworth, Inc. (a) 312 2,652
Brown Shoe Co., Inc. 326 11,925
Coach, Inc. (a) 8,377 356,860
Fossil, Inc. (a) 1,190 29,131
Haggar Corp. 155 3,044
Jones Apparel Group, Inc. 995 36,417
Kellwood Co. 448 17,674
K-Swiss, Inc. Class A 644 12,564
NIKE, Inc. Class B 3,384 243,479
Oshkosh B' Gosh, Inc. Class A 217 5,017
Oxford Industries, Inc. 294 11,460
Phillips-Van Heusen Corp. 554 10,011
Quiksilver, Inc. (a) 950 20,549
Reebok International Ltd. 462 16,808
Russell Corp. 593 9,862
Stride Rite Corp. (The) 721 7,736
Timberland Co. (The) Class A (a) 1,569 98,408
Unifi, Inc. (a) 1,313 3,282
Wolverine World Wide, Inc. 672 18,063
------------
914,942
------------
THRIFTS & MORTGAGE FINANCE (1.3%)
Anchor BanCorp Wisconsin, Inc. 429 10,416
Astoria Financial Corp. 2,901 99,852
BankUnited Financial Corp. (a) 541 14,299
Brookline Bancorp, Inc. 1,053 14,910
Commercial Federal Corp. 718 18,424
Countrywide Financial Corp. 6,636 393,515
Dime Community Bancshares 696 11,902
Downey Financial Corp. 476 22,967
Fannie Mae 20,173 1,386,289
FirstFed Financial Corp. (a) 311 12,571
Flagstar Bancorp, Inc. 1,030 21,043
Freddie Mac 9,426 550,478
Fremont General Corp. 1,293 27,864
Golden West Financial Corp. 3,586 376,924
GreenPoint Financial Corp. 4,537 176,943
Independence Community
Bank Corp. 1,133 41,275
IndyMac Bancorp, Inc. 885 28,462
MAF Bancorp, Inc. 562 22,958
New Century Financial Corp. 591 25,076
New York Community
Bancorp, Inc. 4,023 100,857
Seacoast Financial Services Corp. 432 13,971
Sovereign Bancorp, Inc. 10,836 216,503
Sterling Financial Corp. (a) 343 11,322
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
175
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (CONTINUED)
Washington Federal, Inc. 1,233 $ 28,803
Washington Mutual, Inc. 5,934 233,740
Waypoint Financial Corp. 574 14,855
Webster Financial Corp. 1,310 56,985
------------
3,933,204
------------
TOBACCO (0.9%)
Altria Group, Inc. 46,720 2,587,354
DIMON, Inc. 818 5,669
R.J. Reynolds Tobacco
Holdings, Inc. 3,998 258,950
Universal Corp. 178 8,943
------------
2,860,916
------------
TRADING COMPANIES & DISTRIBUTORS (0.0%) (B)
Applied Industrial
Technologies, Inc. 347 9,119
Hughes Supply, Inc. 497 27,777
Lawson Products, Inc. 173 6,029
Watsco, Inc. 476 13,876
------------
56,801
------------
WATER UTILITIES (0.0%) (B)
American States Water Co. 278 6,436
Aqua America, Inc. 1,874 38,323
------------
44,759
------------
WIRELESS TELECOMMUNICATION SERVICES (0.7%)
AT&T Wireless Services, Inc. (a) 81,340 1,123,306
Boston Communications
Group, Inc. (a) 325 3,497
Metro One Telecommunications, Inc. (a) 220 387
Nextel Communications, Inc. Class A (a) 34,800 830,328
Telephone & Data Systems, Inc. 4,051 267,204
------------
2,224,722
------------
Total Common Stocks
(Cost $142,717,684) 183,936,706(i)
------------
REAL ESTATE INVESTMENT TRUSTS (1.2%)
- -----------------------------------------------------------------------------
Acadia Realty Trust 406 5,099
Alexandria Real Estate
Equities, Inc. 299 16,989
AMB Property Corp. 1,223 37,057
American Financial Realty Trust 1,577 23,340
American Land Lease, Inc. 111 2,148
Amli Residential Properties Trust 300 7,590
Apartment Investment & Management Co. Class A 1,376 38,762
</Table>
<Table>
<Caption>
SHARES VALUE
Archstone-Smith Trust 3,044 $ 83,497
Arden Realty, Inc. 938 26,470
Associated Estates Realty Corp. 305 2,486
Avalonbay Communities, Inc. 1,112 55,189
Bedford Property Investors, Inc. 263 7,125
Boston Properties, Inc. 1,642 77,174
Boykin Lodging Co. 273 2,154
Brandywine Realty Trust 644 16,319
BRE Properties, Inc. Class A 773 24,504
Camden Property Trust 578 24,461
Capital Automotive REIT 1,075 30,240
CarrAmerica Realty Corp. 767 21,867
Catellus Development Corp. 1,609 34,674
CBL & Associates Properties, Inc. 442 22,210
Cedar Shopping Centers, Inc. 257 2,994
Centerpoint Properties Corp. 336 24,226
Chelsea Property Group, Inc. 635 32,385
Colonial Properties Trust 880 31,045
Commercial Net Lease Realty 1,580 26,212
Cornerstone Realty Income
Trust, Inc. 868 6,536
Corporate Office Properties Trust 460 9,361
Correctional Properties Trust 173 4,526
Cousins Properties, Inc. 709 19,937
Crescent Real Estate Equity Co. 1,449 22,416
Developers Diversified
Realty Corp. 1,357 44,442
Duke Realty Corp. 2,160 62,986
EastGroup Properties, Inc. 283 8,193
Entertainment Properties Trust 311 10,406
Equity Inns, Inc. 638 5,232
Equity Office Properties Trust 20,211 508,711
Equity One, Inc. 999 16,384
Equity Residential 4,365 119,863
Essex Property Trust, Inc. 761 46,383
Federal Realty Investment Trust 802 29,738
FelCor Lodging Trust, Inc. 925 9,250
First Industrial Realty Trust, Inc. 578 19,450
Gables Residential Trust 929 29,542
General Growth Properties, Inc. 3,432 93,042
Getty Realty Corp. 402 8,647
Glenborough Realty Trust, Inc. 943 17,719
Glimcher Realty Trust 548 11,590
Health Care Property
Investors, Inc. 2,066 49,377
Health Care REIT, Inc. 719 22,965
Healthcare Realty Trust, Inc. 589 21,116
Heritage Property Investment Trust 658 16,700
Highwoods Properties, Inc. 3,016 68,011
Home Properties, Inc. 440 16,430
Hospitality Properties Trust 1,592 62,215
Host Marriot Corp. 5,100 60,690
</Table>
176 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
- -----------------------------------------------------------------------------
HRPT Properties Trust 2,515 $ 24,018
Innkeepers USA Trust 593 4,536
Investors Real Estate Trust 562 5,395
Keystone Property Trust 420 8,543
Kilroy Realty Corp. 938 29,406
Kimco Realty Corp. 1,730 73,940
Koger Equity, Inc. 338 7,081
Kramont Realty Trust 376 5,945
LaSalle Hotel Properties 330 7,260
Lexington Corporate Properties Trust 1,463 27,051
Liberty Property Trust 1,319 48,209
Macerich Co. (The) 917 38,395
Mack-Cali Realty Corp. 1,871 69,882
Maguire Properties, Inc. 623 14,198
Manufactured Home Communities 351 10,986
Mid-America Apartment Communities, Inc. 282 9,095
Mills Corp. (The) 783 31,790
Mission West Properties, Inc. 282 3,330
Monmouth Real Estate
Investment Corp. Class A 229 1,839
Nationwide Health Properties, Inc. 922 16,716
New Plan Excel Realty Trust 2,776 62,293
OMEGA Healthcare Investors, Inc. 543 5,023
One Liberty Properties, Inc. 139 2,558
Pan Pacific Retail Properties, Inc. 588 25,831
Parkway Properties, Inc. 162 6,431
Pennsylvania Real Estate Investment Trust 535 17,307
Post Properties, Inc. 590 15,865
Prentiss Properties Trust 650 20,826
Price Legacy Corp. 565 10,565
ProLogis 2,844 83,670
PS Business Parks, Inc. 338 12,827
Public Storage, Inc. 1,999 83,538
Ramco-Gershenson Properties Trust 228 5,399
Realty Income Corp. 554 21,191
Reckson Associates Realty Corp. 914 21,726
Regency Centers Corp. 872 33,058
Rouse Co. (The) 1,597 69,150
Saul Centers, Inc. 245 6,125
Senior Housing Properties Trust 917 13,709
Shurgard Storage Centers, Inc. Class A 1,490 49,617
</Table>
<Table>
<Caption>
SHARES VALUE
Simon Property Group, Inc. 3,177 $ 153,163
Sizeler Property Investors, Inc. 207 2,064
SL Green Realty Corp. 550 22,440
Sovran Self Storage, Inc. 204 6,889
Summit Properties, Inc. 462 10,455
Sun Communities, Inc. 287 10,031
Tanger Factory Outlet Centers, Inc. 167 6,379
Taubman Centers, Inc. 779 15,190
Town & Country Trust 258 6,032
Trizec Properties, Inc. 2,204 31,561
U.S. Restaurant Properties, Inc. 312 4,980
United Dominion Realty Trust, Inc. 1,854 33,279
United Mobile Homes, Inc. 127 1,831
Universal Health Realty Income Trust 186 4,849
Urstadt Biddle Properties Class A 292 4,053
Ventas, Inc. 1,306 28,850
Vornado Realty Trust 1,864 94,039
Washington Real Estate Investment Trust 615 16,728
Weingarten Realty Investors 1,327 38,364
Winston Hotels, Inc. 410 3,776
------------
Total Real Estate Investment Trusts
(Cost $3,058,282) 3,597,352
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (10.2%)
- ------------------------------------------------------------------------------
COMMERCIAL PAPER (2.1%)
Coca-Cola Co., (The)
1.02%, due 6/10/04 $ 1,500,000 1,498,333
Dealers Capital Access Trust
1.03%, due 6/16/04 300,000 299,594
Hitachi Credit America Corp.
1.00%, due 5/13/04 500,000 499,832
International Lease Finance Corp.
0.98%, due 5/17/04 700,000 699,679
Three Rivers Funding Corp.
1.04%, due 5/17/04 600,000 599,725
UBS Finance Delaware LLC
1.02%, due 5/3/04 2,750,000 2,749,844
------------
Total Commercial Paper
(Cost $6,347,007) 6,347,007
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
177
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
U.S. GOVERNMENT & FEDERAL AGENCIES (8.1%)
Freddie Mac Discount Notes
0.97%, due 5/18/04 (f) $ 500,000 $ 499,771
0.97%, due 5/20/04 (f) 585,000 584,700
1.00%, due 5/4/04 (f) 1,600,000 1,599,867
United States Treasury Bills
0.90%, due 5/13/04 (f) 2,000,000 1,999,400
0.91%, due 7/15/04 (f) 8,500,000 8,483,799
0.92%, due 7/8/04 (f) 11,600,000 11,580,071
------------
Total U.S. Government &
Federal Agencies
(Cost $24,747,914) 24,747,608
------------
Total Short-Term Investments
(Cost $31,094,921) 31,094,615
------------
Total Investments
(Cost $267,539,473) (j) 101.7% 309,539,904(k)
Liabilities in Excess of
Cash and Other Assets (1.7) (5,086,846)
----------- ------------
Net Assets 100.0% $304,453,058
=========== ============
</Table>
<Table>
<Caption>
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION)(L)
FUTURES CONTRACTS (-0.1%)
- --------------------------------------------------------------------------------------
CANADA (-0.1%)
Standard & Poor's Toronto
Stock Exchange 60 Index
June 2004 129 $ (376,330)
------------------
ITALY (0.2%)
Milan MIB 30 Index
June 2004 92 552,549
------------------
SPAIN (-0.1%)
IBEX 35 Index
May 2004 154 (430,911)
------------------
UNITED STATES (-0.3%)
United States Treasury Note
June 2004 (10 Year) 226 (715,355)
------------------
Total Contracts Long (Settlement Value
$63,659,286) (970,047)
------------------
</Table>
<Table>
<Caption>
UNREALIZED
CONTRACTS APPRECIATION/
SHORT (DEPRECIATION)(L)
UNITED STATES (0.2%)
Standard & Poor's 500 Index
June 2004 226 $ 490,194
Standard & Poor's
MidCap 400 Index
June 2004 41 263,804
------------------
Total Contracts Short
(Settlement Value $74,450,250) 753,998
------------------
Total Futures Contracts
(Settlement Value $10,790,964) (g)(i) $ (216,049)
==================
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) Yankee bond -- dollar-denominated bond issued in the
United States by foreign banks and corporations.
(e) TBA: Securities purchased on a forward commitment basis
with an approximate principal amount and maturity date.
The actual principal amount and maturity date will be
determined upon settlement. The market value of these
securities at April 30, 2004 is $6,430,157.
(f) Segregated, partially segregated or designated as
collateral for futures contracts and TBAs.
(g) The combined market value of U.S. Government & Federal
Agencies investments and settlement value of U.S.
Treasury Note futures contracts represents 29.7% of net
assets.
(h) Exchange Traded Fund -- represents a basket of
securities that are traded on an exchange.
(i) The combined market value of common stocks and settle-
ment value of Index futures contracts represents 36.0%
of net assets.
(j) The cost for federal income tax purposes is
$267,989,792.
(k) At April 30, 2004 net unrealized appreciation was
$41,550,112, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $44,686,853 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $3,136,741.
(l) Represents the difference between the value of the con-
tracts at the time they were opened and the value at
April 30, 2004.
</Table>
178 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $267,539,473) $309,539,904
Cash 98,386
Receivable due from broker for futures
contracts 587,468
Receivables:
Investment securities sold 14,614,531
Dividends and interest 1,042,759
Fund shares sold 785,747
Variation margin on futures contracts 211,379
Other assets 41,927
------------
Total assets 326,922,101
------------
LIABILITIES:
Payables:
Investment securities purchased 21,746,832
Fund shares redeemed 311,994
Transfer agent 194,115
Manager 101,213
Custodian 25,070
NYLIFE Distributors 15,947
Directors 594
Accrued expenses 73,278
------------
Total liabilities 22,469,043
------------
Net assets $304,453,058
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1
billion shares authorized
Class A $ 3,710
Class B 715
Class C 117
Class I 20,244
Additional paid-in capital 324,874,393
Accumulated undistributed net investment
income 2,144,423
Accumulated net realized loss on investments,
futures contracts and foreign currency
transactions (64,381,315)
Net unrealized appreciation on investments
and futures contracts 41,784,382
Net unrealized appreciation on foreign
currency transactions 6,389
------------
Net assets $304,453,058
============
CLASS A
Net assets applicable to outstanding shares $ 45,406,444
============
Shares of capital stock outstanding 3,709,559
============
Net asset value per share outstanding $ 12.24
Maximum sales charge (5.50% of offering price) 0.71
------------
Maximum offering price per share outstanding $ 12.95
============
CLASS B
Net assets applicable to outstanding shares $ 8,695,542
============
Shares of capital stock outstanding 715,204
============
Net asset value and offering price per share
outstanding $ 12.16
============
CLASS C
Net assets applicable to outstanding shares $ 1,425,366
============
Shares of capital stock outstanding 117,332
============
Net asset value and offering price per share
outstanding $ 12.15
============
CLASS I
Net assets applicable to outstanding shares $248,925,706
============
Shares of capital stock outstanding 20,244,124
============
Net asset value and offering price per share
outstanding $ 12.30
============
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
179
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 1,987,257
Dividends 1,625,415
-----------
Total income 3,612,672
-----------
EXPENSES:
Manager 983,034
Transfer agent 346,941
Custodian 83,996
Professional 50,942
Service -- Class A 32,619
Service -- Class B 2,892
Service -- Class C 480
Service -- Service Class 16,452
Interest 24,448
Shareholder communication 22,782
Registration 19,760
Directors 14,506
Distribution -- Class B 8,677
Distribution -- Class C 1,439
Miscellaneous 55,294
-----------
Total expenses before reimbursement 1,664,262
Expense reimbursement from Manager (346,444)
-----------
Net expenses 1,317,818
-----------
Net investment income 2,294,854
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions 21,075,273
Futures transactions (1,779,495)
Foreign currency transactions 25,506
-----------
Net realized gain on investments and foreign
currency transactions 19,321,284
-----------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions (9,388,160)
Futures transactions 1,342,636
Foreign currency transactions 5,945
-----------
Net unrealized loss on investments and foreign
currency transactions (8,039,579)
-----------
Net realized and unrealized gain on investments
and foreign currency transactions 11,281,705
-----------
Net increase in net assets resulting from
operations $13,576,559
===========
</Table>
180 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 2,294,854 $ 5,894,252
Net realized gain (loss) on
investments, futures contracts and
foreign currency transactions 19,321,284 (40,206,427)
Net change in unrealized
appreciation (depreciation) on
investments and foreign currency
transactions (8,039,579) 76,291,934
----------------------------
Net increase in net assets
resulting from operations 13,576,559 41,979,759
----------------------------
Dividends to shareholders:
From net investment income:
Class C (757) --
Class I (5,321,732) (7,843,185)
Service Class (680,408) (396,933)
----------------------------
Total dividends to shareholders (6,002,897) (8,240,118)
----------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 48,989,988 --
Class B 8,975,948 --
Class C 1,457,015 41,320
Class I 20,734,460 41,070,189
Service Class 869,829 14,487,283
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Class C 757 --
Class I 5,295,326 5,250,193
Service Class 634,600 396,273
----------------------------
86,957,923 61,245,258
Cost of shares redeemed:
Class A (3,621,058) --
Class B (113,795) --
Class C (52,935) (90)
Class I (46,556,820) (214,366,458)
Service Class (38,107,319) (4,423,693)
----------------------------
(88,451,927) (218,790,241)
----------------------------
Decrease in net assets derived
from capital share transactions (1,494,004) (157,544,983)
----------------------------
Net increase (decrease) in net
assets 6,079,658 (123,805,342)
</Table>
<Table>
<Caption>
2004 2003
NET ASSETS:
Beginning of period $298,373,400 $ 422,178,742
----------------------------
End of period $304,453,058 $ 298,373,400
============================
Accumulated undistributed net
investment income at end of period $ 2,144,423 $ 5,852,466
============================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
181
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
------------ ------------ -------------------------
JANUARY 1, JANUARY 1, DECEMBER 30,
2004** 2004** SIX MONTHS 2002**
THROUGH THROUGH ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31,
2004*** 2004*** 2004*** 2003
Net asset value at beginning of period $ 12.17 $12.12 $11.86 $10.64
------- --------- -------- ------
Net investment income 0.08 0.02 0.03 0.06(d)
Net realized and unrealized gain (loss) on
investments (0.01) 0.02 0.45 1.16
Net realized and unrealized gain (loss) on
foreign currency transactions (0.00)(a) (0.00)(a) (0.00)(a) (0.00)(a)
------- --------- -------- ------
Total from investment operations 0.07 0.04 0.48 1.22
------- --------- -------- ------
Less dividends and distributions:
From net investment income -- -- (0.19) --
From net realized gain on investments -- -- -- --
------- --------- -------- ------
Total dividends and distributions -- -- (0.19) --
------- --------- -------- ------
Net asset value at end of period $ 12.24 $12.16 $12.15 $11.86
======= ========= ======== ======
Total investment return (b) 0.58% 0.33% 4.05% 11.47%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.35%+ 0.60%+ 0.60%+ 0.65%+
Net expenses 1.04%+ 1.79%+ 1.79%+ 1.83%+
Expenses (before reimbursement) 1.27%+ 2.02%+ 2.02%+ 2.06%+
Portfolio turnover rate 49% 49% 49% 113%
Net assets at end of period (in 000's) $45,406 $8,696 $1,425 $ 46
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is calculated exclusive of sales charges and is
not annualized.
(c) As required, effective November 1, 2000, the Fund has
adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began amortizing premium
on debt securities. The effect of this change for the year
ended October 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to November 1, 2000,
have not been restated to reflect this change in
presentation.
</Table>
<Table>
<Caption>
CLASS I
--------
Decrease net investment income ($0.01)
Increase net realized and unrealized gains and losses 0.01
Decrease ratio of net investment income (0.06%)
</Table>
<Table>
(d) Per share data based on average shares outstanding during
the period.
</Table>
182 MainStay Asset Manager Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I
------------------------------------------------------------------------------------------------------
JANUARY 1,
SIX MONTHS 1999
ENDED THROUGH YEAR ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
2004*** 2003 2002 2001 2000 1999* 1998
$ 11.99 $ 10.81 $ 12.11 $ 15.21 $ 14.57 $ 15.36 $ 14.83
-------- -------- -------- -------- -------- -------- --------
0.10 0.18(d) 0.22 0.37(c) 0.51 0.41 0.43
0.46 1.22 (1.25) (2.09)(c) 1.08 0.41 2.70
(0.00)(a) (0.00)(a) (0.00)(a) (0.00)(a) (0.01) (0.03) 0.02
-------- -------- -------- -------- -------- -------- --------
0.56 1.40 (1.03) (1.72) 1.58 0.79 3.15
-------- -------- -------- -------- -------- -------- --------
(0.25) (0.22) (0.27) (0.50) (0.50) (0.01) (0.43)
-- -- -- (0.88) (0.44) (1.57) (2.19)
-------- -------- -------- -------- -------- -------- --------
(0.25) (0.22) (0.27) (1.38) (0.94) (1.58) (2.62)
-------- -------- -------- -------- -------- -------- --------
$ 12.30 $ 11.99 $ 10.81 $ 12.11 $ 15.21 $ 14.57 $ 15.36
======== ======== ======== ======== ======== ======== ========
4.69% 13.17% (8.78%) (12.12%) 11.18% 5.58% 21.31%
1.56%+ 1.65% 1.84% 2.66%(c) 3.45% 3.40%+ 2.64%
0.83%+ 0.83% 0.83% 0.83% 0.83% 0.78%+ 0.80%
1.06%+ 1.06% 0.94% 0.87% 0.83% 0.78%+ 0.80%
49% 113% 4% 15% 49% 18% 55%
$248,926 $262,438 $399,199 $452,246 $561,329 $513,860 $500,449
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
183
MAINSTAY BALANCED FUND
INVESTMENT AND PERFORMANCE COMPARISON
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LESS OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. FOR CURRENT TO THE MOST RECENT MONTH-END PERFORMANCE
INFORMATION, PLEASE CONTACT 1-800-MAINSTAY (1-800-624-6782) OR VISIT
WWW.MAINSTAYFUNDS.COM.
<Table>
<Caption>
SIX ONE FIVE TEN
BENCHMARKS MONTHS YEAR YEARS YEARS
BALANCED COMPOSITE INDEX(1) 5.38% 20.93% 7.57% 11.00%
MERRILL LYNCH CORPORATE AND GOVERNMENT 1-10 YEARS BOND
INDEX(2) 1.07 2.03 6.59 6.92
RUSSELL MIDCAP INDEX(3) 7.25 35.45 6.09 12.58
S&P 500(R)INDEX(4) 6.27 22.88 -2.26 11.36
LIPPER BALANCED FUNDS INDEX(5) 4.74 16.18 2.01 8.61
AVERAGE LIPPER BALANCED FUND(6) 4.13 15.15 1.44 8.32
</Table>
CLASS A SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -2.09% 12.94% 5.09% 9.27%
Excluding sales charges 3.61 19.52 6.28 9.89
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
BALANCED ML CORP &
MAINSTAY COMPOSITE GOV'T 1-10 YR RUSSELL
BALANCED FUND INDEX BOND INDEX MIDCAP INDEX S&P 500 INDEX
------------- --------- ------------- ------------ -------------
4/30/94 945 1000 1000 1000 1000
1014 1096 1066 1123 1175
1187 1310 1150 1469 1530
1336 1484 1224 1630 1914
1743 1891 1334 2298 2700
1789 1972 1419 2434 3289
1653 1936 1442 2824 3622
1925 2260 1615 2832 3152
2102 2447 1731 2812 2754
2030 2348 1914 2414 2388
4/30/04 2426 2840 1953 3270 2934
<Caption>
AVERAGE
LIPPER
BALANCED FUND
-------------
4/30/94 1000
1089
1296
1473
1861
2068
2171
2176
2089
1966
4/30/04 2284
</Table>
<Table>
-- MainStay Balanced -- S&P 500 Index -- Russell Midcap
Fund Index
-- Lipper Balanced
-- ML Corp & Gov't -- Balanced Composite Fund Index
1-10 Yr Bond Index Index
</Table>
CLASS B SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges -1.71% 13.68% 5.17% 9.08%
Excluding sales charges 3.29 18.68 5.50 9.08
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
BALANCED ML CORP &
MAINSTAY COMPOSITE GOV'T 1-10 YR RUSSELL
BALANCED FUND INDEX BOND INDEX MIDCAP INDEX S&P 500 INDEX
------------- --------- ------------- ------------ -------------
4/30/94 1000 1000 1000 1000 1000
1065 1096 1066 1123 1175
1237 1310 1150 1469 1530
1383 1484 1224 1630 1914
1791 1891 1334 2298 2700
1826 1972 1419 2434 3289
1673 1936 1442 2824 3622
1934 2260 1615 2832 3152
2097 2447 1731 2812 2754
2010 2348 1914 2414 2388
4/30/04 2386 2840 1953 3270 2934
<Caption>
AVERAGE
LIPPER
BALANCED FUND
-------------
4/30/94 1000
1089
1296
1473
1861
2068
2171
2176
2089
1966
4/30/04 2284
</Table>
<Table>
-- MainStay Balanced -- S&P 500 Index -- Russell Midcap
Fund Index
-- Lipper Balanced
-- ML Corp & Gov't -- Balanced Composite Fund Index
1-10 Yr Bond Index Index
</Table>
CLASS C SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges 2.26% 17.70% 5.50% 9.09%
Excluding sales charges 3.26 18.70 5.50 9.09
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
BALANCED ML CORP &
MAINSTAY COMPOSITE GOV'T 1-10 YR RUSSELL
BALANCED FUND INDEX BOND INDEX MIDCAP INDEX S&P 500 INDEX
------------- --------- ------------- ------------ -------------
4/30/94 1000 1000 1000 1000 1000
1065 1096 1066 1123 1175
1237 1310 1150 1469 1530
1383 1484 1224 1630 1914
1791 1891 1334 2298 2700
1826 1972 1419 2434 3289
1674 1936 1442 2824 3622
1935 2260 1615 2832 3152
2098 2447 1731 2812 2754
2011 2348 1914 2414 2388
4/30/04 2387 2840 1953 3270 2934
<Caption>
AVERAGE
LIPPER
BALANCED FUND
-------------
4/30/94 1000
1089
1296
1473
1861
2068
2171
2176
2089
1966
4/30/04 2284
</Table>
<Table>
-- MainStay Balanced -- S&P 500 Index -- Russell Midcap
Fund Index
-- Lipper Balanced
-- ML Corp & Gov't -- Balanced Composite Fund Index
1-10 Yr Bond Index Index
</Table>
THE DISCLOSURE AND FOOTNOTES ON THE NEXT TWO PAGES ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
184 MainStay Balanced Fund
CLASS I SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 3.75% 19.82% 6.54% 10.16%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
BALANCED ML CORP &
MAINSTAY COMPOSITE GOV'T 1-10 YR RUSSELL
BALANCED FUND INDEX BOND INDEX MIDCAP INDEX S&P 500 INDEX
------------- --------- ------------- ------------ -------------
4/30/94 1000 1000 1000 1000 1000
1076 1096 1066 1123 1175
1262 1310 1150 1469 1530
1425 1484 1224 1630 1914
1863 1891 1334 2298 2700
1917 1972 1419 2434 3289
1775 1936 1442 2824 3622
2072 2260 1615 2832 3152
2269 2447 1731 2812 2754
2196 2348 1914 2414 2388
4/30/04 2632 2840 1953 3270 2934
<Caption>
AVERAGE
LIPPER
BALANCED FUND
-------------
4/30/94 1000
1089
1296
1473
1861
2068
2171
2176
2089
1966
4/30/04 2284
</Table>
<Table>
-- MainStay Balanced -- S&P 500 Index -- Russell Midcap
Fund Index
-- Lipper Balanced
-- ML Corp & Gov't -- Balanced Composite Fund Index
1-10 Yr Bond Index Index
</Table>
CLASS R1 SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 3.67% 19.66% 6.43% 10.04%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
BALANCED ML CORP &
MAINSTAY COMPOSITE GOV'T 1-10 YR RUSSELL
BALANCED FUND INDEX BOND INDEX MIDCAP INDEX S&P 500 INDEX
------------- --------- ------------- ------------ -------------
4/30/94 1000 1000 1000 1000 1000
1075 1096 1066 1123 1175
1260 1310 1150 1469 1530
1420 1484 1224 1630 1914
1856 1891 1334 2298 2700
1908 1972 1419 2434 3289
1764 1936 1442 2824 3622
2058 2260 1615 2832 3152
2251 2447 1731 2812 2754
2177 2348 1914 2414 2388
4/30/04 2604 2840 1953 3270 2934
<Caption>
AVERAGE
LIPPER
BALANCED FUND
-------------
4/30/94 1000
1089
1296
1473
1861
2068
2171
2176
2089
1966
4/30/04 2284
</Table>
<Table>
-- MainStay Balanced -- S&P 500 Index -- Russell Midcap
Fund Index
-- Lipper Balanced
-- ML Corp & Gov't -- Balanced Composite Fund Index
1-10 Yr Bond Index Index
</Table>
CLASS R2 SHARES
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX ONE FIVE TEN
TOTAL RETURNS MONTHS YEAR YEARS YEARS
- ---------------------------------------------------------
With sales charges N/A N/A N/A N/A
Excluding sales charges 3.58% 19.42% 6.18% 9.78%
</Table>
(in thousands, with sales charges)
<Table>
<Caption>
BALANCED ML CORP &
MAINSTAY COMPOSITE GOV'T 1-10 YR RUSSELL
BALANCED FUND INDEX BOND INDEX MIDCAP INDEX S&P 500 INDEX
------------- --------- ------------- ------------ -------------
4/30/94 1000 1000 1000 1000 1000
1072 1096 1066 1123 1175
1254 1310 1150 1469 1530
1410 1484 1224 1630 1914
1838 1891 1334 2298 2700
1884 1972 1419 2434 3289
1739 1936 1442 2824 3622
2023 2260 1615 2832 3152
2207 2447 1731 2812 2754
2129 2348 1914 2414 2388
4/30/04 2543 2840 1953 3270 2934
<Caption>
AVERAGE
LIPPER
BALANCED FUND
-------------
4/30/94 1000
1089
1296
1473
1861
2068
2171
2176
2089
1966
4/30/04 2284
</Table>
<Table>
-- MainStay Balanced -- S&P 500 Index -- Russell Midcap
Fund Index
-- Lipper Balanced
-- ML Corp & Gov't -- Balanced Composite Fund Index
1-10 Yr Bond Index Index
</Table>
Performance tables and graphs do not reflect the deduction of taxes that a
shareholder would pay on distributions or Fund-share redemptions. Total returns
reflect change in share price, reinvestment of dividend and capital-gain
distributions, and maximum applicable sales charges explained in this paragraph.
The graphs assume an initial investment of $1,000 and reflect the deduction of
all sales charges that would have applied for the period of investment. Class A
shares are sold with a maximum initial sales charge of 5.5% and an annual 12b-1
fee of .25%. Class B shares are sold with no initial sales charge, are subject
to a contingent deferred sales charge (CDSC) of up to 5% if redeemed within the
first six years of purchase, and have an annual 12b-1 fee of 1.00%. Class C
shares are sold with no initial sales charge, are subject to a CDSC of 1% if
redeemed within one year of purchase, and have an annual 12b-1 fee of 1.00%.
Class I shares are sold with no initial sales charge or CDSC, have no annual
12b-1 fee, and are generally available to corporate and institutional investors
with a minimum initial investment of $5 million. Class R1 shares are sold with
no initial sales charge or CDSC and have no annual 12b-1 fee. Class R2 shares
are sold with no initial sales charge or CDSC and have an annual 12b-1 fee of
..25%. Class R1 and R2 shares are available only through corporate-sponsored
retirement programs, which include certain minimum program requirements.
Performance figures reflect certain fee waivers and/or expense limitations,
without which total returns may have been lower. The fee waivers and/or expense
limitations are voluntary and may be discontinued at any time. Performance for
Class A, B, R1, and R2 shares, first offered 1/2/04, includes the historical
performance of Class I shares from inception (5/1/89) through 12/31/03 adjusted
to reflect the applicable sales charge (or CDSC) and fees and expenses for such
shares. Prior to 1/1/04, the Fund offered Class L shares, which were subject to
a 1% sales charge and a 1% CDSC on redemptions within one year of purchase.
Performance for Class L shares, first offered 12/30/02, includes the historical
performance of Class I shares from inception through 12/29/02 adjusted to
reflect the applicable sales charge, CDSC, and fees and expenses for such
shares. Effective 1/1/04, all outstanding Class L shares of the Fund were
converted to and/or redesignated Class C shares.
THE DISCLOSURE AND FOOTNOTES ON THE FOLLOWING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
www.mainstayfunds.com 185
1. The Fund's Balanced Composite Index is comprised of the Russell Midcap(R)
Value Index and the Merrill Lynch Corporate and Government 1-10 Years Bond
Index weighted 60%/40%. Results assume reinvestment of all income and capital
gains. An investment cannot be made directly into an index or a composite.
2. The Merrill Lynch Corporate & Government 1-10 Years Bond Index is a
market-capitalization-weighted index including U.S. government and
fixed-coupon domestic investment-grade corporate bonds. Results assume
reinvestment of all income and capital gains. An investment cannot be made
directly into an index.
3. The Russell Midcap(R) Index is an unmanaged index that measures the
performance of the 800 smallest companies in the Russell 1000(R) Index,
which, in turn, is an unmanaged index that measures the performance of the
1,000 largest U.S. companies based on total market capitalization. Results
assume reinvestment of all income and capital gains. An investment cannot be
made directly into an index.
4. "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P 500(R)
is an unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock-market performance. Results assume reinvestment of all
income and capital gains. An investment cannot be made directly into an
index.
5. The Lipper Balanced Funds Index tracks the performance of the 30 largest
balanced funds, with adjustments for the reinvestment of capital gain and
income distribution. An investment cannot be made directly into an index.
6. Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with all dividend and capital-gain distributions reinvested.
THE DISCLOSURE AND FOOTNOTES ON THE PRECEDING PAGE ARE AN INTEGRAL PART OF THESE
GRAPHS AND SHOULD BE CAREFULLY READ IN CONJUNCTION WITH THEM.
186 MainStay Balanced Fund
$1,000 INVESTED IN MAINSTAY BALANCED FUND
- --------------------------------------------------------------------------------
Expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads),
redemption fees, or exchange fees. Therefore, the third column of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs had been included, your costs would have been higher.
<Table>
<Caption>
ENDING ACCOUNT
ENDING ACCOUNT VALUE
VALUE (BASED (BASED ON
BEGINNING ON ACTUAL EXPENSES HYPOTHETICAL EXPENSES
ACCOUNT RETURNS AND PAID 5% RETURN PAID
VALUE EXPENSES) DURING AND ACTUAL DURING
SHARE CLASS 11/1/03 4/30/04 PERIOD EXPENSES) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES(1,2) $1,000 $1,004 $ 4 $1,046 $ 4
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES(1,2) $1,000 $1,002 $ 7 $1,043 $ 7
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES(3) $1,000 $1,033 $10 $1,040 $10
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES(3) $1,000 $1,038 $ 5 $1,045 $ 5
- ------------------------------------------------------------------------------------------------------------------------
CLASS R1 SHARES(1,2) $1,000 $1,004 $ 3 $1,047 $ 3
- ------------------------------------------------------------------------------------------------------------------------
CLASS R2 SHARES(1,2) $1,000 $1,004 $ 4 $1,046 $ 4
- ------------------------------------------------------------------------------------------------------------------------
</Table>
1. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 121 (to
reflect the four-month period).
2. Class A shares, Class B shares, Class R1 shares and Class R2 shares were
first offered on January 1, 2004. Expenses paid during the period reflect
ongoing costs for the four-month period ending April 30, 2004. Had these
shares been offered for the six months ended April 30, 2004, based on a
hypothetical 5% return, expenses paid during the period would be $6, $10, $5
and $7, respectively, and the ending account value would be $1,044, $1,040,
$1,045 and $1,044, respectively.
3. Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, divided by 366, multiplied by 182 (to
reflect the one-half year period).
www.mainstayfunds.com 187
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Questions answered by portfolio manager Joan M. Sabella of New York Life
Investment Management LLC
MAINSTAY BALANCED FUND
WHAT MAJOR FACTORS INFLUENCED THE STOCK AND BOND MARKETS DURING THE SIX MONTHS
ENDED APRIL 30, 2004?
Stocks generally advanced as signs of a rebounding economy fueled investor
optimism. Mid-caps and small-caps tended to outperform and large-capitalization
issues. With weak job growth and low inflation, the Federal Reserve tried to
help the economy by leaving the targeted federal funds rate unchanged from its
45-year low set in June 2003. In March 2004, successes were recorded in job
growth, retail sales, and durable-goods orders, and Treasury notes dropped
significantly. By the end of April 2004, rising inflation had pushed the 10-year
Treasury yield to 4.51%, its highest level since September 2003.
HOW DID THE FUND INVEST DURING THE REPORTING PERIOD?
The Fund continued to invest approximately 60% of its assets in stocks and 40%
in fixed-income securities and cash equivalents. Equity investments included
dividend-paying mid-cap stocks that our proprietary quantitative model found to
be relatively undervalued and to have strong or improving operating
characteristics.
WHAT ABOUT THE FUND'S BOND INVESTMENTS?
We continued to select fixed-income securities based on their credit quality and
duration. The fixed-income portion of the portfolio maintained an
intermediate-term duration and a laddered maturity schedule.
WHAT WERE SOME OF THE FUND'S STRONG PERFORMERS DURING THE REPORTING PERIOD?
Software company Autodesk (+73.8%)(1) provided outstanding results. Other strong
performers included Mandalay Resort Group (+47.4%), Activision (+46.6%), MGIC
Investment (+43.6%), and Kmart Holding (+42.5%).
WHICH STOCKS UNDERPERFORMED?
Maxtor (-52.4%), which operates in the computers & peripherals industry, was the
Fund's worst-performing stock during the reporting period. Other poor performers
included Quanta Services (-33.1%), Citrix Systems (-24.3%), Ascential Software
(-23.7%), and Sears, Roebuck (-23.0%).
WERE THERE ANY SIGNIFICANT PURCHASES DURING THE REPORTING PERIOD?
The Fund purchases stocks that have relatively improving operating
characteristics and are relatively undervalued based on our proprietary model.
Among the securities that fit the Fund's purchase criteria during the reporting
period were Activision, Apogent Technologies, and Bausch & Lomb.
WHAT STOCKS DID THE FUND SELL?
The Fund sells stocks that exhibit deteriorating operating results and/or are
relatively overvalued. During the reporting period, AdvancePCS was acquired by
Caremark Rx in a stock and cash transaction. The Fund sold its entire position
in American Eagle Outfitters when weakening sales hampered earnings. The Fund's
position in JDS Uniphase was sold when declining demand caused operating results
to deteriorate.
DID THE FUND CHANGE ITS INDUSTRY GROUP WEIGHTINGS?
Weighting changes in the Fund result from a combination of security performance,
industry performance, and the Fund's proprietary security selection process.
From the end of October 2003 to the end of April 2004, the Fund increased its
weighting in the banks industry group from 7.23% to 9.98%. The shift reflected
new purchases and improved performance among banks relative to other industry
groups. Over the same period, the Fund decreased its technology hardware &
equipment industry group weighting from 7.39% to 4.32%. The decline reflected
the sale of selected positions and weaker relative performance.
CAN YOU TELL US MORE ABOUT THE FUND'S INDUSTRY GROUP WEIGHTINGS?
As of April 30, 2004, the Fund was overweighted relative to the Russell
Midcap(R) Value Index(2) in the health care equipment & services, consumer
Past performance is no guarantee of future results. Investment objectives may
not be met, as the underlying investment options are subject to market risk and
fluctuations in value.
1. Percentages reflect total returns of Fund holdings in the securities
mentioned, including purchases and sales, for the six months ended 4/30/04,
or for the portion of the reporting period such securities were held in the
Fund, if shorter.
2. The Russell Midcap(R) Value Index is an unmanaged index that measures the
performance of those Russell Midcap(R) companies with lower price-to-book
ratios and lower forecasted growth values. The Russell Midcap(R) Index is an
unmanaged index that measures the performance of the 800 smallest companies
in the Russell 1000(R) Index, which, in turn, is an unmanaged index that
measures the performance of the 1,000 largest U.S. companies based on total
market capitalization. Results assume reinvestment of all income and capital
gains. An investment cannot be made directly into an index.
188 MainStay Balanced Fund
durables & apparel, and software & services industry groups. The overweighted
position in software & services helped Fund performance, while the other
overweighted positions underperformed relative to related securities in the
benchmark index.
At the end of the reporting period, the Fund was underweighted relative to the
Russell Midcap(R) Value Index in the utilities, insurance, and real estate
industry groups. The Fund benefited from its relative underweighted position in
real estate. While the Fund's holdings in the utilities and insurance industry
groups had positive returns, they underperformed relative to securities in the
benchmark.
WHAT DO YOU ANTICIPATE GOING FORWARD?
The Fund will continue to focus on securities that fit its stated objective and
its valuation, quality, duration, and maturity parameters.
The opinions expressed are those of the portfolio manager as of the date of this
report and are subject to change. There is no guarantee that any forecasts made
will come to pass. This material does not constitute investment advice and is
not intended as an endorsement of any specific investment.
PORTFOLIO COMPOSITION AS OF APRIL 30, 2004
(PORTFOLIO COMPOSITION PIE CHART)
<Table>
Common Stocks 57.70
Corporate Bonds 32.70
Federal Agencies 7.30
Short-Term Investments 1.30
Cash and Other Assets (less liabilities) 1.00
</Table>
www.mainstayfunds.com 189
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
LONG-TERM BONDS (40.0%)+
CORPORATE BONDS (32.7%)
- -----------------------------------------------------------------------------
AEROSPACE & DEFENSE (2.2%)
General Dynamics Corp.
4.50%, due 8/15/10 $1,000,000 $ 999,556
Honeywell, Inc.
7.00%, due 3/15/07 1,272,000 1,402,309
7.125%, due 4/15/08 150,000 167,180
Rockwell International Corp.
6.625%, due 6/1/05 200,000 208,897
*United Technology Corp.
6.50%, due 6/1/09 2,550,000 2,819,545
------------
5,597,487
------------
BEVERAGES (2.1%)
Anheuser-Busch Cos., Inc.
5.375%, due 9/15/08 1,030,000 1,084,845
5.65%, due 9/15/08 520,000 552,286
5.75%, due 4/1/10 750,000 799,655
Coca-Cola Co. (The)
4.00%, due 6/1/05 500,000 510,252
Coca-Cola Enterprises, Inc.
6.625%, due 8/1/04 100,000 101,203
PepsiCo, Inc.
5.75%, due 1/15/08 2,000,000 2,163,182
------------
5,211,423
------------
CAPITAL MARKETS (2.8%)
Bear Stearns Cos., Inc. (The)
4.00%, due 1/31/08 1,250,000 1,260,441
Goldman Sachs Group, Inc. (The)
5.70%, due 9/1/12 1,000,000 1,031,009
J.P. Morgan & Co., Inc.
6.25%, due 2/15/11 300,000 324,161
J.P. Morgan Chase & Co.
5.35%, due 3/1/07 500,000 528,762
Lehman Brothers Holdings, Inc.
6.625%, due 2/5/06 573,000 612,086
Lehman Brothers, Inc.
7.625%, due 6/1/06 350,000 385,381
Merrill Lynch & Co., Inc. Series CPI
3.086%, due 3/2/09 (c) 500,000 492,890
Merrill Lynch & Co., Inc.
6.00%, due 2/17/09 500,000 538,638
7.00%, due 1/15/07 700,000 762,294
Morgan Stanley
5.80%, due 4/1/07 1,000,000 1,068,164
------------
7,003,826
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CHEMICALS (0.4%)
E.I. Du Pont de Nemours & Co.
3.375%, due 11/15/07 $ 921,000 $ 922,269
------------
COMMERCIAL BANKS (3.0%)
BankAmerica Corp.
7.125%, due 3/1/09 1,900,000 2,138,805
First Bank National Association
5.70%, due 12/15/08 500,000 534,629
Mellon Bank NA
7.625%, due 9/15/07 1,500,000 1,711,068
U.S. Bancorp
3.125%, due 3/15/08 500,000 490,315
Wachovia Corp.
4.95%, due 11/1/06 500,000 523,301
6.375%, due 1/15/09 1,500,000 1,639,982
Wells Fargo & Co.
3.50%, due 4/4/08 500,000 496,166
------------
7,534,266
------------
COMMERCIAL SERVICES & SUPPLIES (0.6%)
Pitney Bowes, Inc.
5.875%, due 5/1/06 1,295,000 1,374,854
------------
COMPUTERS & PERIPHERALS (1.2%)
Hewlett-Packard Co.
5.75%, due 12/15/06 750,000 799,887
International Business
Machines Corp.
4.875%, due 10/1/06 500,000 524,078
5.375%, due 2/1/09 1,096,000 1,161,369
5.50%, due 1/15/09 535,000 568,402
------------
3,053,736
------------
CONSUMER FINANCE (3.2%)
American Express Credit Corp.
3.00%, due 5/16/08 1,000,000 971,983
Caterpillar Financial Services Corp.
4.875%, due 6/15/07 830,000 870,220
Household Finance Corp.
5.875%, due 2/1/09 500,000 535,278
6.375%, due 8/1/10 500,000 544,335
</Table>
+ Percentages indicated are based on Fund net assets.
* Fund's 10 largest holdings. May be subject to change daily.
190 MainStay Balanced Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
CONSUMER FINANCE (CONTINUED)
John Deere Capital Corp.
3.125%, due 12/15/05 $ 500,000 $ 506,768
3.90%, due 1/5/08 250,000 251,139
4.50%, due 8/22/07 500,000 515,989
SLM Corp.
3.625%, due 3/17/08 500,000 497,485
4.00%, due 1/15/09 500,000 496,782
4.046%, due 1/31/14 (c) 1,000,000 986,370
Toyota Motor Credit Corp.
5.50%, due 12/15/08 1,690,000 1,815,596
------------
7,991,945
------------
DIVERSIFIED FINANCIAL SERVICES (1.7%)
Boeing Capital Corp.
5.75%, due 2/15/07 983,000 1,044,952
CIT Group, Inc.
4.75%, due 12/15/10 750,000 743,399
Citigroup, Inc.
5.00%, due 3/6/07 750,000 786,994
Heller Financial, Inc.
6.375%, due 3/15/06 250,000 269,395
Pitney Bowes Credit Corp.
5.75%, due 8/15/08 1,000,000 1,075,250
Wells Fargo Financial, Inc.
5.45%, due 5/3/04 350,000 350,000
6.85%, due 7/15/09 125,000 139,498
------------
4,409,488
------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.0%)
Bell Atlantic West Virginia, Inc.
7.00%, due 8/15/04 100,000 101,587
BellSouth Telecommunications, Inc.
5.875%, due 1/15/09 300,000 320,344
GTE North, Inc., Series F
6.375%, due 2/15/10 500,000 539,751
New York Telephone Co.
6.125%, due 1/15/10 1,000,000 1,050,564
Pacific Bell
6.875%, due 8/15/06 500,000 541,205
Southwestern Bell Telephone Co.
6.375%, due 11/15/07 100,000 108,515
------------
2,661,966
------------
ELECTRIC EQUIPMENT (0.8%)
Emerson Electric Co.
5.00%, due 10/15/08 300,000 311,850
5.85%, due 3/15/09 1,586,000 1,712,187
------------
2,024,037
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
ELECTRIC UTILITIES (0.0%) (B)
Potomac Electric Power Co.
6.50%, due 3/15/08 $ 100,000 $ 108,804
------------
FOOD & STAPLES RETAILING (1.1%)
Sysco Corp.
6.50%, due 6/15/05 500,000 523,385
Wal-Mart Stores, Inc.
6.875%, due 8/10/09 1,500,000 1,693,403
7.25%, due 6/1/13 400,000 465,738
------------
2,682,526
------------
FOOD PRODUCTS (2.0%)
Campbell Soup Co.
5.50%, due 3/15/07 750,000 796,961
ConAgra Foods, Inc.
7.40%, due 9/15/04 650,000 662,639
General Mills, Inc.
5.125%, due 2/15/07 500,000 524,604
Kellogg Co.
4.875%, due 10/15/05 645,000 669,084
Sara Lee Corp., Series C
6.00%, due 1/15/08 1,200,000 1,293,650
Unilever Capital Corp.
6.875%, due 11/1/05 1,100,000 1,174,514
------------
5,121,452
------------
HEALTH CARE PROVIDERS & SERVICES (0.4%)
Cardinal Health, Inc.
4.45%, due 6/30/05 580,000 593,958
6.00%, due 1/15/06 450,000 476,200
------------
1,070,158
------------
HOTELS, RESTAURANTS, & LEISURE (0.1%)
McDonald's Corp., Series G
4.15%, due 2/15/05 250,000 254,787
------------
HOUSEHOLD PRODUCTS (0.5%)
Colgate-Palmolive Co., Series E
3.98%, due 4/29/05 500,000 510,690
Procter & Gamble Co. (The)
4.00%, due 4/30/05 500,000 510,312
4.75%, due 6/15/07 250,000 261,272
------------
1,282,274
------------
INDUSTRIAL CONGLOMERATES (0.2%)
3M Co., Series C
4.15%, due 6/30/05 500,000 512,817
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
191
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------
INSURANCE (0.6%)
Loews Corp.
6.75%, due 12/15/06 $ 500,000 $ 532,749
Marsh & McLennan Cos., Inc.
6.625%, due 6/15/04 1,000,000 1,005,899
------------
1,538,648
------------
IT SERVICES (0.7%)
Computer Sciences Corp.
6.25%, due 3/15/09 335,000 365,353
First Data Corp.
5.625%, due 11/1/11 756,000 798,210
Series D
5.80%, due 12/15/08 525,000 566,013
------------
1,729,576
------------
MACHINERY (0.3%)
Illinois Tool Works, Inc.
5.75%, due 3/1/09 820,000 882,317
------------
MEDIA (0.4%)
Gannett Co., Inc.
4.95%, due 4/1/05 500,000 513,104
5.50%, due 4/1/07 500,000 532,615
------------
1,045,719
------------
MULTILINE RETAIL (1.2%)
Kohl's Corp.
6.30%, due 3/1/11 700,000 758,648
Target Corp.
5.375%, due 6/15/09 350,000 368,867
5.50%, due 4/1/07 1,350,000 1,437,001
5.95%, due 5/15/06 350,000 372,940
------------
2,937,456
------------
MULTI-UTILITIES & UNREGULATED POWER (0.6%)
IES Utilities, Inc., Series A
6.625%, due 8/1/09 1,500,000 1,643,421
------------
OIL & GAS (0.3%)
ChevronTexaco Capital Co.
3.50%, due 9/17/07 808,000 815,181
------------
PERSONAL PRODUCTS (0.8%)
Gillette Co. (The)
2.875%, due 3/15/08 500,000 486,961
3.50%, due 10/15/07 1,500,000 1,506,906
------------
1,993,867
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
PHARMACEUTICALS (2.8%)
Abbott Laboratories
5.125%, due 7/1/04 $ 500,000 $ 503,085
5.625%, due 7/1/06 1,000,000 1,062,019
Bristol-Myers Squibb Co.
4.75%, due 10/1/06 500,000 520,974
Johnson & Johnson
6.625%, due 9/1/09 1,500,000 1,687,896
Lilly (Eli) & Co.
5.50%, due 7/15/06 750,000 795,714
Merck & Co., Inc., Series E
4.125%, due 1/18/05 750,000 763,677
Pfizer, Inc.
3.625%, due 11/1/04 1,000,000 1,011,114
Pharmacia Corp.
5.875%, due 12/1/08 500,000 539,886
Warner-Lambert Co.
6.00%, due 1/15/08 250,000 273,920
------------
7,158,285
------------
SPECIALTY RETAIL (0.6%)
Home Depot, Inc. (The)
5.375%, due 4/1/06 1,280,000 1,348,193
Sherwin-Williams Co. (The)
6.85%, due 2/1/07 200,000 218,129
------------
1,566,322
------------
THRIFTS & MORTGAGE FINANCE (0.6%)
General Electric Capital Corp. Series A
4.25%, due 1/15/08 500,000 510,100
5.375%, due 3/15/07 1,000,000 1,059,524
------------
1,569,624
------------
TRANSPORTATION INFRASTRUCTURE (0.5%)
International Lease Finance Corp.
4.50%, due 5/1/08 500,000 510,217
5.625%, due 6/1/07 750,000 797,944
------------
1,308,161
------------
Total Corporate Bonds
(Cost $82,772,715) 83,006,692
------------
FEDERAL AGENCIES (7.3%)
- -----------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK (0.9%)
2.25%, due 9/1/06 500,000 494,874
3.47%, due 10/3/07 500,000 501,775
3.80%, due 9/4/07 500,000 507,421
3.875%, due 5/7/10 750,000 731,130
------------
2,235,200
------------
FEDERAL HOME LOAN BANK (2.3%)
2.50%, due 3/15/06 1,000,000 1,002,426
3.00%, due 10/30/08 1,000,000 1,002,536
</Table>
192 MainStay Balanced Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
FEDERAL AGENCIES (CONTINUED)
- -----------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (CONTINUED)
3.375%, due 2/15/08 $ 500,000 $ 496,072
3.50%, due 2/11/08 1,000,000 992,208
3.625%, due 11/14/06 750,000 750,486
3.75%, due 4/1/10 750,000 727,789
3.875%, due 2/12/10 250,000 244,882
6.21%, due 12/3/07 500,000 546,709
------------
5,763,108
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (0.2%)
3.25%, due 3/14/08 500,000 492,103
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(COLLATERALIZED MORTGAGE OBLIGATIONS) (1.9%)
Series 2734 Class JC
3.50%, due 11/15/23 1,500,000 1,492,670
Series 2579 Class PG
4.00%, due 3/15/27 500,000 496,336
Series 2719 Class WB
4.50%, due 8/15/21 1,179,211 1,152,800
Series 2589 Class GD
5.00%, due 9/15/28 500,000 494,695
Series 2600 Class MJ
5.00%, due 9/15/29 500,000 487,608
Series 1982 Class VC
6.50%, due 1/15/12 750,000 770,466
------------
4,894,575
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (0.8%)
3.066%, due 2/17/09 (c) 1,000,000 990,260
5.75%, due 6/15/05 1,000,000 1,043,904
------------
2,034,164
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(COLLATERALIZED MORTGAGE OBLIGATIONS) (0.6%)
Series 2003-17 Class QT
5.00%, due 8/25/27 1,180,000 1,176,703
Series 2003-32 Class PG
5.00%, due 10/25/27 500,000 509,445
------------
1,686,148
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(COLLATERALIZED MORTGAGE OBLIGATIONS) (0.6%)
Series 2003-19 Class BE
4.50%, due 11/20/28 $ 500,000 $ 488,786
Series 2003-50 Class PC
5.50%, due 3/16/32 1,000,000 1,000,473
------------
1,489,259
------------
Total Federal Agencies
(Cost $18,787,900) 18,594,557
------------
Total Long-Term Bonds
(Cost $101,560,615) 101,601,249
------------
<Caption>
SHARES VALUE
COMMON STOCKS (57.7%)
- -----------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.9%)
J.B. Hunt Transport Services, Inc. (a) 70,900 2,244,694
------------
AUTO COMPONENTS (0.9%)
Dana Corp. 107,300 2,163,168
------------
CAPITAL MARKETS (0.4%)
Bear Stearns Cos., Inc. (The) 2,702 216,538
Lehman Brothers Holdings, Inc. 10,800 792,720
------------
1,009,258
------------
COMMERCIAL BANKS (1.4%)
International Bancshares Corp. 32,100 1,710,930
Silicon Valley Bancshares (a) 56,000 1,924,160
------------
3,635,090
------------
COMMERCIAL SERVICES & SUPPLIES (2.3%)
*Cendant Corp. 101,600 2,405,888
Deluxe Corp. 32,800 1,354,968
Kelly Services, Inc. Class A 66,600 1,979,352
------------
5,740,208
------------
COMPUTERS & PERIPHERALS (1.6%)
Dell, Inc. (a) 25,700 892,047
InFocus Corp. (a) 185,800 1,517,986
Maxtor Corp. (a) 154,100 1,003,191
Sun Microsystems, Inc. (a) 152,800 595,920
------------
4,009,144
------------
CONSTRUCTION & ENGINEERING (0.6%)
Quanta Services, Inc. (a) 256,900 1,405,243
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
193
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
CONSUMER FINANCE (1.6%)
AmeriCredit Corp. (a) 61,100 $ 990,431
Student Loan Corp. (The) 4,100 580,560
WFS Financial, Inc. (a) 53,200 2,369,528
------------
3,940,519
------------
DIVERSIFIED FINANCIAL SERVICES (0.9%)
CIT Group, Inc. 63,200 2,172,184
------------
ELECTRIC UTILITIES (0.4%)
Edison International 48,300 1,130,220
------------
ELECTRICAL EQUIPMENT (0.2%)
American Power Conversion Corp. 24,300 453,438
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.5%)
Avnet, Inc. (a) 39,800 861,272
*Sanmina-SCI Corp. (a) 275,100 2,756,502
Solectron Corp. (a) 222,800 1,091,720
Tektronix, Inc. 58,700 1,737,520
------------
6,447,014
------------
FOOD & STAPLES RETAILING (0.9%)
Albertson's, Inc. 50,200 1,172,672
SUPERVALU, Inc. 39,600 1,219,284
------------
2,391,956
------------
FOOD PRODUCTS (2.2%)
Hershey Foods Corp. 19,900 1,768,911
Hormel Foods Corp. 42,500 1,295,825
Tyson Foods, Inc. Class A 127,600 2,391,224
------------
5,455,960
------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.3%)
Apogent Technologies, Inc. (a) 34,300 1,112,006
Bausch & Lomb, Inc. 36,500 2,293,295
------------
3,405,301
------------
HEALTH CARE PROVIDERS & SERVICES (3.9%)
Caremark Rx, Inc. (a) 37,152 1,257,595
Coventry Health Care, Inc. (a) 16,950 709,188
Health Net, Inc. (a) 37,000 941,280
HEALTHSOUTH Corp. (a) 117,500 511,125
*Humana, Inc. (a) 156,900 2,555,901
Manor Care, Inc. 53,400 1,732,296
PacifiCare Health Systems, Inc. (a) 59,200 2,116,992
------------
9,824,377
------------
HOTELS, RESTAURANTS & LEISURE (1.9%)
Bob Evans Farms, Inc. 55,400 1,698,564
CBRL Group, Inc. 21,500 807,325
</Table>
<Table>
<Caption>
SHARES VALUE
HOTELS, RESTAURANTS & LEISURE (CONTINUED)
Mandalay Resort Group 16,000 $ 919,200
Outback Steakhouse, Inc. 33,500 1,471,655
------------
4,896,744
------------
HOUSEHOLD DURABLES (5.1%)
Centex Corp. 15,800 757,610
Fortune Brands, Inc. 30,300 2,310,375
Hovnanian Enterprises, Inc. Class A (a) 18,000 647,460
KB HOME 7,200 496,296
La-Z-Boy, Inc. 59,600 1,242,064
M.D.C. Holdings, Inc. 38,610 2,385,712
NVR, Inc. (a) 2,800 1,262,800
Ryland Group, Inc. (The) 8,500 671,075
Stanley Works (The) 51,500 2,189,265
Toll Brothers, Inc. (a) 26,500 1,048,605
------------
13,011,262
------------
HOUSEHOLD PRODUCTS (0.6%)
Energizer Holdings, Inc. (a) 37,600 1,628,080
------------
INDUSTRIAL CONGLOMERATES (0.6%)
Alleghany Corp. (a) 5,916 1,552,714
------------
INSURANCE (0.9%)
MBIA, Inc. 25,800 1,519,362
Torchmark Corp. 13,600 707,744
------------
2,227,106
------------
LEISURE EQUIPMENT & PRODUCTS (1.1%)
Callaway Golf Co. 83,700 1,420,389
Hasbro, Inc. 67,500 1,275,075
------------
2,695,464
------------
MACHINERY (1.0%)
*Terex Corp. (a) 77,600 2,549,160
------------
METALS & MINING (1.0%)
*United States Steel Corp. 88,100 2,522,303
------------
MULTILINE RETAIL (1.7%)
Federated Department Stores, Inc. 15,700 769,300
Kmart Holding Corp. (a) 24,700 1,105,078
Neiman Marcus Group, Inc. (The) Class A 10,800 525,312
Saks, Inc. (a) 84,100 1,211,040
Sears, Roebuck and Co. 16,700 668,835
------------
4,279,565
------------
</Table>
194 MainStay Balanced Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
<Table>
<Caption>
SHARES VALUE
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (1.1%)
Calpine Corp. (a) 217,100 $ 942,214
Williams Cos., Inc. (The) 186,900 1,925,070
------------
2,867,284
------------
OIL & GAS (0.9%)
*Overseas Shipholding Group, Inc. 73,200 2,398,764
------------
PERSONAL PRODUCTS (0.6%)
Estee Lauder Cos., Inc. (The)
Class A 33,100 1,513,001
------------
PHARMACEUTICALS (0.7%)
Medicis Pharmaceutical Corp. Class A 15,900 682,428
Mylan Laboratories, Inc. 52,200 1,195,902
------------
1,878,330
------------
REAL ESTATE (3.1%)
AMB Property Corp. 27,200 824,160
Cousins Properties, Inc. 45,500 1,279,460
Equity Office Properties Trust 87,400 2,199,858
Hospitality Properties Trust 25,000 977,000
HRPT Properties Trust 79,900 763,045
LNR Property Corp. 13,300 667,926
Reckson Associates Realty Corp. 51,500 1,224,155
------------
7,935,604
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.4%)
Advanced Micro Devices, Inc. (a) 46,800 665,496
Novellus Systems, Inc. (a) 12,000 347,520
------------
1,013,016
------------
SOFTWARE (3.5%)
Activision, Inc. (a) 153,300 2,308,698
Ascential Software Corp. (a) 36,200 615,400
*Autodesk, Inc. 73,800 2,472,300
Cadence Design Systems, Inc. (a) 163,800 2,099,916
Citrix Systems, Inc. (a) 68,000 1,295,400
------------
8,791,714
------------
</Table>
<Table>
<Caption>
SHARES VALUE
SPECIALTY RETAIL (1.8%)
Barnes & Noble, Inc. (a) 17,200 $ 513,764
Circuit City Stores, Inc. 122,900 1,435,472
Home Depot, Inc. (The) 18,900 665,091
Sherwin-Williams Co. (The) 30,000 1,141,500
Zale Corp. (a) 13,200 738,144
------------
4,493,971
------------
TEXTILES, APPAREL & LUXURY GOODS (0.1%)
Reebok International Ltd. 8,800 320,144
------------
THRIFTS & MORTGAGE FINANCE (8.1%)
Astoria Financial Corp. 65,200 2,244,184
Countrywide Financial Corp. 36,600 2,170,380
Doral Financial Corp. 18,000 590,220
Freddie Mac 17,800 1,039,520
Fremont General Corp. 99,500 2,144,225
GreenPoint Financial Corp. 39,000 1,521,000
Independence Community
Bank Corp. 27,100 987,253
IndyMac Bancorp, Inc. 51,100 1,643,376
MGIC Investment Corp. 23,900 1,759,518
New Century Financial Corp. 44,600 1,892,378
New York Community
Bancorp, Inc. 58,000 1,454,060
*PMI Group, Inc. (The) 56,400 2,426,892
Radian Group, Inc. 14,500 674,395
------------
20,547,401
------------
TOBACCO (1.0%)
*R.J. Reynolds Tobacco
Holdings, Inc. 38,700 2,506,599
------------
WIRELESS TELECOMMUNICATION SERVICES (0.5%)
Crown Castle International Corp. (a) 97,700 1,362,915
------------
Total Common Stocks
(Cost $125,740,759) 146,418,915
------------
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
195
PORTFOLIO OF INVESTMENTS APRIL 30, 2004 UNAUDITED (CONTINUED)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM INVESTMENT (1.3%)
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENT (1.3%)
Bank of New York (The)
0.90%, dated 4/30/04
due 5/3/04
Proceeds at Maturity
$3,311,248
(Collateralized by Federal National Mortgage
Association
3.92%, due 3/1/33
with a Principal Amount of
$4,050,000 and a
Market Value of $4,043,216 including accrued
interest) $3,311,000 $ 3,311,000
------------
Total Short-Term Investment (Cost $3,311,000) 3,311,000
------------
Total Investments
(Cost $230,612,374) (d) 99.0% 251,331,164(e)
Cash and Other Assets,
Less Liabilities 1.0 2,525,300
------ ------------
Net Assets 100.0% $253,856,464
======== ===============
</Table>
<Table>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Floating rate. Rate shown is the rate in effect at April
30, 2004.
(d) The cost for federal income tax purposes is
$230,650,950.
(e) At April 30, 2004 net unrealized appreciation was
$20,680,214, based on cost for federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation for all investments on which there was an
excess of market value over cost of $26,928,343 and
aggregate gross unrealized depreciation for all
investments on which there was an excess of cost over
market value of $6,248,129.
</Table>
196 MainStay Balanced Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 UNAUDITED
<Table>
ASSETS:
Investment in securities, at value
(identified cost $230,612,374) $251,331,164
Cash 157,900
Receivables:
Investment securities sold 4,133,098
Fund shares sold 2,148,029
Dividends and interest 1,502,599
Other assets 32,344
------------
Total assets 259,305,134
------------
LIABILITIES:
Payables:
Investment securities purchased 3,461,540
Fund shares redeemed 1,732,703
Manager 154,683
NYLIFE Distributors 29,091
Transfer agent 14,249
Custodian 5,682
Accrued expenses 50,722
------------
Total liabilities 5,448,670
------------
Net assets $253,856,464
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per share) 1
billion shares authorized
Class A $ 20,799
Class B 8,059
Class C 3,599
Class I 71,198
Class R1 0(a)
Class R2 3
Additional paid-in capital 227,844,018
Accumulated undistributed net investment
income 350,324
Accumulated undistributed net realized gain on
investments 4,839,674
Net unrealized appreciation on investments 20,718,790
------------
Net assets $253,856,464
============
CLASS A
Net assets applicable to outstanding shares $ 50,934,288
============
Shares of capital stock outstanding 2,079,876
============
Net asset value per share outstanding $ 24.49
Maximum sales charge (5.50% of offering price) 1.43
------------
Maximum offering price per share outstanding $ 25.92
============
CLASS B
Net assets applicable to outstanding shares $ 19,718,729
============
Shares of capital stock outstanding 805,850
============
Net asset value and offering price per share
outstanding $ 24.47
============
CLASS C
Net assets applicable to outstanding shares $ 8,808,380
============
Shares of capital stock outstanding 359,895
============
Net asset value and offering price per share
outstanding $ 24.47
============
CLASS I
Net assets applicable to outstanding shares $174,387,350
============
Shares of capital stock outstanding 7,119,759
============
Net asset value and offering price per share
outstanding $ 24.49
============
CLASS R1
Net assets applicable to outstanding shares $ 1,004
============
Shares of capital stock outstanding 41
============
Net asset value and offering price per share
outstanding $ 24.49
============
CLASS R2
Net assets applicable to outstanding shares $ 6,713
============
Shares of capital stock outstanding 274
============
Net asset value and offering price per share
outstanding $ 24.49
============
</Table>
(a) Less than one dollar.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
197
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED
<Table>
INVESTMENT INCOME:
INCOME:
Interest $ 1,488,037
Dividends (a) 934,935
-----------
Total income 2,422,972
-----------
EXPENSES:
Manager 766,919
Transfer agent 72,979
Professional 30,791
Service -- Class A 28,083
Service -- Class B 6,350
Service -- Class C 3,209
Service -- Class R2 2
Service -- Service Class 9,160
Registration 23,253
Distribution -- Class B 19,051
Distribution -- Class C 9,628
Shareholder communication 17,051
Trustees 17,039
Custodian 11,422
Portfolio pricing 8,130
Shareholder Service Fee -- Class R2 1
Miscellaneous 11,148
-----------
Total expenses before reimbursement 1,034,216
Fees paid indirectly (See Note 2(D)) (39,765)
-----------
Net expenses 994,451
-----------
Net investment income 1,428,521
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 4,837,976
Net change in unrealized appreciation on
investments (1,764,485)
-----------
Net realized and unrealized gain on investments 3,073,491
-----------
Net increase in net assets resulting from
operations $ 4,502,012
===========
</Table>
(a) Dividends recorded net of foreign withholding taxes in the amount of $216.
198 MainStay Balanced Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2004 UNAUDITED AND THE YEAR ENDED OCTOBER 31,
2003
<Table>
<Caption>
2004 2003
INCREASE IN NET ASSETS:
Operations:
Net investment income $ 1,428,521 $ 2,103,504
Net realized gain on investments 4,837,976 2,537,414
Net change in unrealized
appreciation on investments (1,764,485) 20,612,974
---------------------------
Net increase in net assets
resulting from operations 4,502,012 25,253,892
---------------------------
Dividends and distributions to shareholders:
From net investment income:
Class A (108,754) --
Class B (21,575) --
Class C (11,143) (1,122)
Class I (1,124,246) (1,999,587)
Class R1 (3) --
Class R2 (8) --
Service Class (75,512) (77,541)
For net realized gain on investments:
Class C (5,621) --
Class I (2,044,047) --
Service Class (294,664) --
---------------------------
Total dividends and
distributions to shareholders (3,685,573) (2,078,250)
---------------------------
Capital share transactions:
Net proceeds from sale of shares:
Class A 58,330,966 --
Class B 21,005,120 --
Class C 8,820,803 353,212
Class I 40,928,038 86,550,426
Class R1 1,000 --
Class R2 6,870 --
Service Class 5,402,469 22,832,286
</Table>
<Table>
<Caption>
2004 2003
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Class A $ 104,938 $ --
Class B 19,681 --
Class C 15,086 1,122
Class I 3,153,403 1,990,309
Class R2 6 --
Service Class 369,947 77,104
---------------------------
138,158,327 111,804,459
Cost of shares redeemed:
Class A (6,775,570) --
Class B (658,824) --
Class C (128,868) (8,013)
Class I (19,454,655) (46,945,723)
Service Class (25,174,517) (4,863,174)
---------------------------
(52,192,434) (51,816,910)
---------------------------
Increase in net assets derived
from capital share
transactions 85,965,893 59,987,549
---------------------------
Net increase in net assets 86,782,332 83,163,191
NET ASSETS:
Beginning of period 167,074,132 83,910,941
---------------------------
End of period $253,856,464 $167,074,132
===========================
Accumulated undistributed net
investment income at end of period $ 350,324 $ 263,044
===========================
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
199
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS A CLASS B CLASS C
---------- ---------- --------------------------
JANUARY 1, JANUARY 1, DECEMBER 30,
2004** 2004** SIX MONTHS 2002**
THROUGH THROUGH ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31,
2004*** 2004*** 2004*** 2003
Net asset value at beginning of period $ 24.45 $ 24.46 $24.08 $20.27
------- ------- ------ ------
Net investment income 0.11(e) 0.06(e) 0.09(e) 0.15(e)
Net realized and unrealized gain (loss) on
investments (0.01) (0.01) 0.70 3.76
------- ------- ------ ------
Total from investment operations 0.10 0.05 0.79 3.91
------- ------- ------ ------
Less dividends and distributions:
From net investment income (0.06) (0.04) (0.08) (0.10)
From net realized gain on investments -- -- (0.32) --
------- ------- ------ ------
Total dividends and distributions (0.06) (0.04) (0.40) (0.10)
------- ------- ------ ------
Net asset value at end of period $ 24.49 $ 24.47 $24.47 $24.08
======= ======= ====== ======
Total investment return (a) 0.41% 0.21% 3.26% 19.32%
Ratios (to average net
assets)/Supplemental Data:
Net investment income 1.14%+ 0.39%+ 0.39%+ 0.78%+
Net expenses 1.25%+# 2.00%+# 2.00%+# 1.98%+#
Expenses (before reimbursement) 1.25%+# 2.00%+# 2.00%+# 2.03%+#
Portfolio turnover rate 11% 11% 11% 51%
Net assets at end of period (in 000's) $50,934 $19,719 $8,808 $ 372
</Table>
<Table>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Commencement of Operations.
*** Unaudited.
# Includes transfer agent fees paid indirectly which amounted
to 0.04%, 0.05%, 0.02% and 0.09% of average net assets for
the six months ended April 30, 2004, the years ended October
31, 2003 and October 31, 2002 and the ten months ended
October 31, 2001, respectively, and custodian fees and other
expenses paid indirectly which amounted to 0.01% of average
net assets for the year ended December 31, 2000.
+ Annualized.
(a) Total return is calculated exclusive of sales charges and is
not annualized.
(b) Less than one cent per share.
(c) Restated.
(d) As required, effective January 1, 2001, the Fund has adopted
the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began amortizing premium on debt
securities. The effect of this change for the ten months
ended October 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to January 1, 2001 have
not been restated to reflect this change in presentation.
</Table>
<Table>
<Caption>
CLASS I
-------
Decrease net investment income ($0.02)
Increase net realized and unrealized gains and losses 0.02
Decrease ratio of net investment income (0.09%)
</Table>
<Table>
(e) Per share data based on average shares outstanding during
the period.
</Table>
200 MainStay Balanced Fund The notes to the financial statements are an
integral part of, and should be read in conjunction with, the financial
statements.
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
CLASS I CLASS R1 CLASS R2
- ---------------------------------------------------------------------------------------------- ---------- ----------
JANUARY 1, JANUARY 1, JANUARY 1,
SIX MONTHS 2001 2004** 2004**
ENDED YEAR ENDED THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, OCTOBER 31, YEAR ENDED DECEMBER 31, APRIL 30, APRIL 30,
2004*** 2003 2002 2001* 2000 1999 1998 2004*** 2004***
$ 24.07 $ 20.41 $ 20.78 $ 20.82 $ 19.53 $ 21.37 $ 22.15 $24.45 $24.45
-------- -------- ------- ------- ------- ------- -------- ------ ------
0.18(e) 0.38(e) 0.48 0.45(d) 0.55 0.58 0.61 0.09(e) 0.08(e)
0.73 3.67 0.00(b) (0.08)(d) 1.29 (0.68) 1.14 0.02 0.02
-------- -------- ------- ------- ------- ------- -------- ------ ------
0.91 4.05 0.48 0.37 1.84 (0.10) 1.75 0.11 0.10
-------- -------- ------- ------- ------- ------- -------- ------ ------
(0.17) (0.39) (0.44) (0.41) (0.55) (0.58) (0.61) (0.07) (0.06)
(0.32) -- (0.41) -- -- (1.16) (1.92) -- --
-------- -------- ------- ------- ------- ------- -------- ------ ------
(0.49) (0.39) (0.85) (0.41) (0.55) (1.74) (2.53) (0.07) (0.06)
-------- -------- ------- ------- ------- ------- -------- ------ ------
$ 24.49 $ 24.07 $ 20.41 $ 20.78 $ 20.82 $ 19.53 $ 21.37 $24.49 $24.49
======== ======== ======= ======= ======= ======= ======== ====== ======
3.75% 20.13% 2.18% 1.80% 9.64% (0.36%) 8.03% 0.43% 0.40%
1.46%+ 1.78% 2.30% 2.59%+(d) 2.77% 2.61% 2.76% 1.38%+ 1.11%+
0.93%+# 0.99%# 0.96%# 1.03%+#(c) 0.95%# 0.94% 0.87% 1.01%+# 1.28%+#
0.93%+# 1.03%# 1.02%# 1.05%+#(c) 0.95%# 0.94% 0.97% 1.01%+# 1.28%+#
11% 51% 62% 48% 73% 33% 70% 11% 11%
$174,387 $147,519 $83,906 $64,086 $65,309 $77,169 $128,865 $ 1 $ 7
</Table>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements. www.mainstayfunds.com
201
NOTES TO FINANCIAL STATEMENTS UNAUDITED
NOTE 1 -- ORGANIZATION AND BUSINESS:
Eclipse Funds Inc. (the "Company"), was incorporated in the state of Maryland on
September 21, 1990. Eclipse Funds (the "Trust"), a Massachusetts business trust,
was established on July 30, 1986. The Company and the Trust (collectively the
"Funds") are registered as open-end management investment companies under the
Investment Company Act of 1940, as amended, ("Investment Company Act") and are
comprised of twelve separate investment portfolios (individually referred to as
a "Fund").
The Funds commenced operations on the dates indicated below:
<Table>
<Caption>
COMMENCEMENT
OF OPERATIONS FUNDS (THE COMPANY)
January 2, 1991 All Cap Growth, All Cap Value, S&P
500 Index, Cash Reserves, Indexed
Bond, Intermediate Term Bond, Short
Term Bond and Asset Manager Funds
---------------------------------------------------------
January 2, 2001 Mid Cap Core Fund
---------------------------------------------------------
</Table>
<Table>
<Caption>
COMMENCEMENT
OF OPERATIONS FUNDS (THE TRUST)
January 12, 1987 Small Cap Opportunity Fund
---------------------------------------------------------
May 1, 1989 Balanced Fund
---------------------------------------------------------
December 27, 1994 Mid Cap Opportunity Fund
---------------------------------------------------------
</Table>
On December 29, 2000, the Mid Cap Core Fund sold shares to NYLIFE Distributors
LLC ("NYLIFE Distributors"), an indirect wholly-owned subsidiary of New York
Life Insurance Company ("New York Life"), at a net asset value of $10.00. This
Fund commenced investment operations the following business day on January 2,
2001.
On October 28, 2003, the Tax Free Bond Fund ceased operations. On December 30,
2003, the Tax-Managed Equity Fund ceased operations. On January 29, 2004, the
International Broad Market and the International Equity Funds ceased operations.
These Funds were formerly portfolios of the Company.
On December 11, 2003 and pursuant to shareholder approval, the assets and
liabilities of the Eclipse Core Bond Plus Fund were acquired by the Eclipse Bond
Fund which was subsequently renamed MainStay Intermediate Term Bond Fund. Also
on December 11, 2003 and pursuant to shareholder approval, the assets and
liabilities of the Eclipse Ultra Short Duration Fund were acquired by the
Eclipse Short Term Bond Fund which was subsequently renamed MainStay Short Term
Bond Fund.
Effective January 1, 2004, each series of Eclipse Funds Inc. and Eclipse Funds
were rebranded as "MainStay."
Each Fund offers one or more of the following six classes of shares: Class A,
Class B, Class C, Class I, Class R1 and Class R2 shares. Balanced Fund offers
six classes of shares: Class A, Class B, Class C, Class I, Class R1 and Class
R2. All Cap Growth Fund, All Cap Value Fund, Mid Cap Core Fund, Mid Cap
Opportunity Fund, Small Cap Opportunity Fund, Intermediate Term Bond Fund and
Asset Manager Fund each offer four classes of shares: Class A, Class B, Class C
and Class I shares. S&P 500 Index Fund, Indexed Bond Fund and Short Term Bond
Fund each offer Class A and Class I shares. Cash Reserves Fund offers Class I
shares and another class of shares, the Sweep Shares Class.
Class A shares are offered at net asset value per share plus an initial sales
charge. No sales charge applies on investments of $1 million or more (and
certain other qualified purchases) in Class A shares, but a contingent deferred
sales charge is imposed on certain redemptions of such shares within one year of
the date of purchase. Class B shares and Class C shares are offered without an
initial sales charge, although a declining contingent deferred sales charge may
be imposed on redemptions made within six years of purchase of Class B shares
and a 1% contingent deferred sales charge may be imposed on redemptions made
within one year of purchase of Class C shares. The Class I, Class R1 and Class
R2 shares and the Sweep Shares Class are offered at net asset value without
imposition of a front-end sales charge or a contingent deferred sales charge.
Distribution of Class A, Class B, Class C, Class R1 and Class R2 shares each
commenced on January 1, 2004, except with respect to the Class C shares of Mid
Cap Opportunity Fund, Small Cap Opportunity Fund and Balanced Fund, the L Class
shares of which commenced operations on December 30, 2002 and were renamed the
Class C shares on January 1, 2004. Each Fund's No-Load Class shares were renamed
the Class I shares on January 1, 2004. Each Fund's Service Class shares ceased
operations on January 9, 2004.
Each class of shares bears the same voting (except for issues that relate solely
to one class), dividend, liquidation and other rights and conditions except that
the classes are subject to different distribution fee rates. Class A, Class B,
Class C, and Class R2 shares and the Sweep Shares Class each bear distribution
and/or service fee payments under a distribution plan pursuant to Rule 12b-1
under the Investment Company Act. In addition, the Class R1 and R2 shares and
the Sweep Shares Class each bear service fee payments under a shareholder
service plan.
The investment objectives for each of the Funds are as follows:
The ALL CAP GROWTH FUND seeks long-term growth of capital. Dividend income, if
any, is a consideration incidental to the Fund's objective of growth of capital.
The ALL CAP VALUE FUND seeks maximum long-term total return from a combination
of capital growth and income.
202 MainStay Funds
The MID CAP CORE FUND seeks long-term growth of capital.
The MID CAP OPPORTUNITY FUND seeks high total return.
The S&P 500 INDEX FUND seeks to provide investment results that correspond to
the total return performance (reflecting reinvestment of dividends) of common
stocks in the aggregate, as represented by the S&P 500(R) Index.
The SMALL CAP OPPORTUNITY FUND seeks high total return.
The CASH RESERVES FUND seeks a high level of current income while preserving
capital and maintaining liquidity.
The INDEXED BOND FUND seeks to provide investment results that correspond to the
total return performance of fixed income securities in the aggregate, as
represented by the Citigroup Broad Investment Grade ("BIG") Bond Index.
The INTERMEDIATE TERM BOND FUND seeks to maximize total return, consistent with
liquidity, low risk to principal and investment in debt securities.
The SHORT TERM BOND FUND seeks to maximize total return, consistent with
liquidity, preservation of capital and investment in short-term debt securities.
The ASSET MANAGER FUND seeks to maximize total return, consistent with certain
percentage constraints on amounts allocated to each asset class, from a
combination of common stocks, fixed income securities, and money market
investments.
The BALANCED FUND seeks high total return.
The ability of issuers of debt securities held by the Funds to meet their
obligations may be affected by economic developments in a specific industry or
region.
There are certain risks involved in investing in foreign securities that are in
addition to the usual risks inherent in domestic instruments. These risks
include those resulting from future adverse political and economic developments
and possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions. Foreign securities may also be less liquid
and more volatile than U.S. securities. There may also be difficulty in invoking
legal protections across borders. In addition, investment in emerging market
countries presents risks in greater degree than those presented by investment in
foreign issuers in countries with developed securities markets and more advanced
regulatory systems.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The Funds prepare their financial statements in accordance with generally
accepted accounting principles and follow the significant accounting policies
described below:
(A) SECURITIES VALUATION. Equity securities are valued at the latest quoted
sales prices as of the close of trading on the New York Stock Exchange
(generally 4:00 p.m. Eastern time) on the valuation date; such securities not
traded on the valuation date are valued at the mean of the latest quoted bid and
asked prices. Prices are taken from the primary market in which each security
trades. Debt securities are valued at prices supplied by a pricing agent or
brokers selected by the Fund's Manager, whose prices reflect broker/dealer
supplied valuations and electronic data processing techniques if such prices are
deemed by the Fund's Manager to be representative of market values at the
regular close of business of the Exchange. Options and futures contracts are
valued at the last sale price on the market where such options or futures
contracts are principally traded. Temporary cash investments acquired over 60
days to maturity are valued using the latest bid prices or using valuations
based on a matrix system (which considers such factors as security prices,
yields, maturities, and ratings), both as furnished by independent pricing
services. Other temporary cash investments are valued at amortized cost, which
approximates market value. Portfolio securities of Cash Reserves Fund are valued
at their amortized cost. Securities for which market quotations are not readily
available are valued by methods deemed by the Board of Directors and/or the
Board of Trustees to represent fair value.
Certain events may occur between the time that foreign markets close, on which
securities held by the Funds principally trade, and the time at which the Funds'
NAVs are calculated. Should the Manager or Subadvisor conclude that such events
may have affected the accuracy of the last price reported on the local foreign
market, the Manager or Subadvisor may, pursuant to procedures adopted by the
Company's Board of Directors and/or the Trust's Board of Trustees, adjust the
value of the local price to reflect the impact on the price of such securities
as a result of such events.
(B) FEDERAL INCOME TAXES. Each of the Funds is treated as a separate entity for
federal income tax purposes. The Funds' policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of the taxable income to the shareholders of
each Fund within the allowable time limits. Therefore, no federal income or
excise tax provision is required.
Investment income received by a Fund from foreign sources may be subject to
foreign income taxes. These foreign income taxes are withheld at the source.
www.mainstayfunds.com 203
NOTES TO FINANCIAL STATEMENTS UNAUDITED (CONTINUED)
(C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. For the Cash Reserves Fund, dividends are
declared daily and paid monthly and capital gain distributions, if any, are
declared and paid annually. For the Indexed Bond, Intermediate Term Bond and
Short Term Bond Funds, income dividends are declared and paid monthly and
capital gain distributions, if any, are declared and paid annually. For the
Balanced Fund, income dividends are declared and paid quarterly and capital gain
distributions, if any, are declared and paid annually. Each of the other Funds
intends to declare and pay, as a dividend, substantially all of their net
investment income and net realized capital gains no less frequently than once a
year. Income dividends and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles. These "book/tax differences" are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not require
reclassification.
(D) SECURITY TRANSACTIONS AND INVESTMENT INCOME. The Funds record security
transactions on the trade date. Realized gains and losses on security
transactions are determined using the identified cost method. Dividend income is
recognized on the ex-dividend date and interest income is accrued as earned.
Discounts and premiums on securities, other than short-term securities,
purchased for all Funds are accreted and amortized, respectively, on the
constant yield method over the life of the respective securities or, in the case
of a callable security, over the period to the first date of call. Discounts and
premiums on short-term securities are accreted and amortized, respectively, on
the straight line method.
Investment income and realized and unrealized gains and losses on investments of
a Fund are allocated to separate classes of shares based upon their relative net
assets on the date the income is earned or realized and unrealized gains and
losses are incurred.
New York Life Investment Management LLC ("NYLIM") has directed certain portfolio
trades to brokers who agreed to pay a portion of the expenses for the Mid Cap
Opportunity, Small Cap Opportunity and Balanced Funds. For the six months ended
April 30, 2004, the Funds' expenses (transfer agent fees and expenses) were
reduced by $3,310, $42,247 and $39,765, respectively, under these arrangements.
(E) EXPENSES. Expenses with respect to the Funds are allocated to the
individual Funds in proportion to the net assets of the respective Funds when
the expenses are incurred except where direct allocations of expenses can be
made. Expenses (other than expenses incurred under the Shareholder Services
Plans and the Distribution Plans) are allocated to separate classes of shares
based upon their relative net assets on the date the expenses are incurred. The
expenses borne by each Fund, including those of related parties to the Funds,
are shown on each Fund's Statement of Operations.
(F) USE OF ESTIMATES. The preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
(G) PURCHASED AND WRITTEN OPTIONS. Certain Funds may write covered call and put
options on their portfolio securities or foreign currencies. Premiums are
received and are recorded as liabilities. The liabilities are subsequently
adjusted to reflect the current value of the options written. Premiums received
from writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised or are canceled in closing
purchase transactions are added to the proceeds or netted against the amount
paid on the transaction to determine the realized gain or loss. By writing a
covered call option, in exchange for the premium, a Fund foregoes the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security or foreign currency increase. By writing a
covered put option, a Fund, in exchange for the premium, accepts the risk of a
decline in the market value of the underlying security or foreign currency below
the exercise price. A call option may be covered by the call writer's owning the
underlying security throughout the option period. A call option may also be
covered by the call writer's maintaining liquid assets valued at greater than
the exercise price of the call written, in a segregated account with its
custodian. When writing a covered call option, the Funds, in return for the
premium on the option, give up the opportunity to profit from a price increase
in the underlying securities above the exercise price, but, as long as the
obligation as a writer continues, have retained the risk of loss should the
price of the underlying security decline. After writing a put option, a Fund may
incur a loss equal to the difference between the exercise price of the option
and the sum of the market value of the underlying security plus the premium
received from the sale of the option.
Certain Funds may purchase call and put options on their portfolio securities or
foreign currencies. A Fund may purchase call options to protect against an
increase in the price of the security or foreign currency it anticipates
purchasing. A Fund may purchase put options on its securities or foreign
currencies to protect against a decline in the value of the security or foreign
currency or to close out covered written put positions. A Fund may also purchase
options to seek to enhance returns. Risks may arise from an imperfect
correlation between the change in
204 MainStay Funds
market value of the securities or foreign currencies held by the Fund and the
prices of options relating to the securities or foreign currencies purchased or
sold by the Fund and from the possible lack of a liquid secondary market for an
option. The maximum exposure to loss for any purchased option is limited to the
premium initially paid for the option (see Note 6).
(H) FUTURES CONTRACTS. A futures contract is an agreement to purchase or sell a
specified quantity of an underlying instrument at a specified future date and
price, or to make or receive a cash payment based on the value of a securities
index, foreign currency or interest rate. During the period the futures contract
is open, changes in the value of the contract are recognized as unrealized gains
or losses by "marking to market" such contract on a daily basis to reflect the
market value of the contract at the end of each day's trading. A Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known as
"variation margin". When the futures contract is closed, the Fund records a
realized gain or loss equal to the difference between the proceeds from (or cost
of) the closing transaction and the Fund's basis in the contract. Futures
contracts are used for hedging purposes or to seek to enhance returns (see Note
5).
(I) REPURCHASE AGREEMENTS. The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to determine that the
value, including accrued interest, exceeds the repurchase price. In the event of
the seller's default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
(J) MORTGAGE DOLLAR ROLLS. A mortgage dollar roll ("MDR") is a transaction in
which a Fund sells mortgage-backed securities ("MBS") from its portfolio to a
counterparty from whom it simultaneously agrees to buy a similar security on a
delayed delivery basis. The MDR transactions of a Fund are classified as
purchase and sale transactions. The securities sold in connection with the MDRs
are removed from the portfolio and a realized gain or loss is recognized. The
securities the Funds have agreed to acquire are included at market value in the
Portfolio of Investments and liabilities for such purchase commitments are
included as payables for investments purchased. The Fund maintains a segregated
account with its custodian containing securities from its portfolio having a
value not less than the repurchase price, including accrued interest. MDR
transactions involve certain risks, including the risk that the MBS returned to
the Fund at the end of the roll, while substantially similar, could be inferior
to what was initially sold to the counterparty.
(K) SECURITIES LENDING. Each Fund may lend its securities to broker-dealers and
financial institutions. The loans are collateralized by cash or securities at
least equal at all times to the market value of the securities loaned. The Fund
may bear the risk of delay in recovery of, or loss of rights in, the securities
loaned should the borrower of the securities experience financial difficulty.
The Fund receives compensation for lending its securities in the form of fees or
it retains a portion of interest on the investment of any cash received as
collateral. The Fund also continues to receive interest and dividends on the
securities loaned, and any gain or loss in the market price of the securities
loaned that may occur during the term of the loan will be for the account of the
Fund (see Note 6).
NOTE 3 -- FEES AND RELATED PARTY TRANSACTIONS:
(A) MANAGER AND SUBADVISOR. NYLIM (or the "Manager"), an indirect wholly-owned
subsidiary of New York Life, serves as manager and provides management services
to the Funds under Management Agreements. MacKay Shields LLC ("MacKay Shields"),
a registered investment adviser and an indirect wholly-owned subsidiary of New
York Life, serves as subadvisor to the All Cap Growth, All Cap Value,
Intermediate Term Bond and Short Term Bond Funds under a Sub-Advisory Agreement
with the Manager. The Mid Cap Core, Mid Cap Opportunity, S&P 500 Index, Small
Cap Opportunity, Cash Reserves, Indexed Bond, Asset Manager and Balanced Funds
are advised by NYLIM directly, without a subadvisor.
The Funds pay the Manager a monthly fee for the services performed and
facilities furnished at an annual rate of average daily net assets of that Fund
as follows:
<Table>
All Cap Growth Fund .85%
- ----------------------------------------------------------
All Cap Value Fund .85%
- ----------------------------------------------------------
Mid Cap Core Fund .85%
- ----------------------------------------------------------
Mid Cap Opportunity Fund .90%
- ----------------------------------------------------------
S&P 500 Index Fund .50%
- ----------------------------------------------------------
Small Cap Opportunity Fund 1.00%
- ----------------------------------------------------------
Cash Reserves Fund .50%
- ----------------------------------------------------------
Indexed Bond Fund .50%
- ----------------------------------------------------------
Intermediate Term Bond Fund .75%
- ----------------------------------------------------------
Short Term Bond Fund .60%
- ----------------------------------------------------------
Asset Manager Fund .65%
- ----------------------------------------------------------
Balanced Fund .75%
- ----------------------------------------------------------
</Table>
Pursuant to the terms of the Sub-Advisory Agreement between the Manager and the
Subadvisor, the Manager pays
www.mainstayfunds.com 205
NOTES TO FINANCIAL STATEMENTS UNAUDITED (CONTINUED)
the Subadvisor a monthly fee at an annual rate of average daily net assets of
the Company's Funds as follows:
<Table>
All Cap Growth Fund .25%
- ----------------------------------------------------------
All Cap Value Fund .25%
- ----------------------------------------------------------
Intermediate Term Bond Fund .20%
- ----------------------------------------------------------
Short Term Bond Fund .15%
- ----------------------------------------------------------
</Table>
The Manager voluntarily agreed (contractually agreed for the S&P 500 Index Fund)
to assume a portion of the Fund's operating expenses for the following Funds to
the extent the total expenses (excluding service fees and distribution fees) on
an annualized basis exceed the indicated percentages:
<Table>
All Cap Growth Fund .93%
- ----------------------------------------------------------
All Cap Value Fund .94%
- ----------------------------------------------------------
Mid Cap Core Fund 1.00%
- ----------------------------------------------------------
Mid Cap Opportunity Fund 1.04%
- ----------------------------------------------------------
S&P 500 Index Fund .30%
- ----------------------------------------------------------
Small Cap Opportunity Fund 1.19%
- ----------------------------------------------------------
Cash Reserves Fund .50%
- ----------------------------------------------------------
Indexed Bond Fund .50%
- ----------------------------------------------------------
Intermediate Term Bond Fund .75%
- ----------------------------------------------------------
Short Term Bond Fund .60%
- ----------------------------------------------------------
Asset Manager Fund .83%
- ----------------------------------------------------------
Balanced Fund .94%
- ----------------------------------------------------------
</Table>
In connection with the voluntary expense limitations and contractual waiver, the
Manager assumed the following expenses, which are shown on each Fund's Statement
of Operations, for the six months ended April 30, 2004:
<Table>
All Cap Growth Fund $ 142,260
- -----------------------------------------------------------
All Cap Value Fund 123,724
- -----------------------------------------------------------
Mid Cap Core Fund 47,608
- -----------------------------------------------------------
Mid Cap Opportunity Fund 73,243
- -----------------------------------------------------------
S&P 500 Index Fund 1,622,296
- -----------------------------------------------------------
Small Cap Opportunity Fund 0
- -----------------------------------------------------------
Cash Reserves Fund 277,846
- -----------------------------------------------------------
Indexed Bond Fund 185,823
- -----------------------------------------------------------
Intermediate Term Bond Fund 111,445
- -----------------------------------------------------------
Short Term Bond Fund 78,121
- -----------------------------------------------------------
Asset Manager Fund 346,444
- -----------------------------------------------------------
Balanced Fund 0
- -----------------------------------------------------------
</Table>
It was not necessary for the Manager to reimburse the Small Cap Opportunity and
Balanced Funds for expenses for the six months ended April 30, 2004.
These voluntary expense limitations may be terminated or revised at any time.
The contractual expense waiver is in effect through December 31, 2004. There is
no guarantee that this waiver will continue after this date.
(B) DISTRIBUTOR. NYLIFE Distributors serves as the Funds' distributor and
principal underwriter (the "Distributor") to the Class A, Class B, Class C,
Class R2 and the Sweep Shares Class of all Funds offering such shares, pursuant
to a Distribution Agreement.
(C) SALES CHARGES. The Funds were advised by the Distributor that the amount of
sales charges retained on sales of Class A shares was $130,729 for the six
months ended April 30, 2004. The Funds were also advised that the Distributor
retained contingent deferred sales charges on redemptions of Class A, Class B
and Class C shares of $272, $6,697 and $1,079, respectively, for the six months
ended April 30, 2004.
(D) DISTRIBUTION AND SERVICE FEES. The Company and the Trust, on behalf of the
Funds, each has a Distribution Agreement with the Distributor. The Funds, with
respect to Class A, Class B, Class C and Class R2 shares and the Sweep Shares
Class, has adopted distribution plans (the "Plans") in accordance with the
provisions of Rule 12b-1 under the Investment Company Act. The Plans provide
that the distribution and service fees are payable to the Distributor regardless
of the amounts actually expended by the Distributor for distribution of the
Fund's shares and service activities.
Pursuant to the Class A Plan and Class R2 Plan, the Distributor receives a
monthly fee from each applicable Fund at an annual rate of 0.25% of the average
daily net assets of the Fund's Class A and Class R2 shares, respectively, which
is an expense of the Class A and Class R2 shares of the Fund for distribution or
service activities as designated by the Distributor. Pursuant to the Class B and
Class C Plans, each applicable Fund pays the Distributor a monthly fee, which is
an expense of the Class B and Class C shares of the Fund, at the annual rate of
0.75% of the average daily net assets of the Fund's Class B and Class C shares,
respectively. The Class B and Class C Plans provide that the Class B and Class C
shares of the Funds also incur a service fee at the annual rate of 0.25% of the
average daily net asset value of the Class B or Class C shares of the Funds,
respectively. Pursuant to the Sweep Shares Class Plan for the Cash Reserves
Fund, the Distributor, NYLIFE Securities Inc., an indirect wholly-owned
subsidiary of New York Life, or any other broker-dealer or other financial
institution, is entitled to receive a monthly service fee from the Cash Reserves
Fund at an annual rate of 0.25% of the average daily net assets of the Fund's
Sweep Shares Class for account sweep and other distribution-related services.
In accordance with the Shareholder Services Plans for the Class R1 and Class R2
shares and the Sweep Shares Class shares, the Manager has agreed to provide,
through its affiliates or independent third parties, various distribution-
related, shareholder and administrative support services to shareholders of the
Class R1 and Class R2 shares and the Sweep Shares Class shares. For its
services, the Manager is entitled to a Shareholder Service Fee accrued daily and
paid monthly at an annual rate of 0.10% of the average daily net assets
attributable to the Class R1 and R2 shares
206 MainStay Funds
and at an annual rate of 0.25% of the average daily net assets attributable to
the Sweep Shares Class shares of the Cash Reserves Fund.
(E) TRANSFER, DIVIDEND DISBURSING AND SHAREHOLDER SERVICING AGENT. MainStay
Shareholder Services ("MSS"), a division of NYLIM Service Company LLC, an
affiliate of NYLIM and an indirect wholly-owned subsidiary of New York Life,
serves as the Funds' transfer, dividend disbursing and shareholder servicing
agent. MSS has entered into an agreement with Boston Financial Data Services
("BFDS"), by which BFDS will perform certain of the services for which MSS is
responsible. Transfer agent expenses shown on each Fund's Statement of
Operations, for the six months ended April 30, 2004 were as follows:
<Table>
All Cap Growth Fund $149,416
- -----------------------------------------------------------
All Cap Value Fund 107,047
- -----------------------------------------------------------
Mid Cap Core Fund 8,551
- -----------------------------------------------------------
Mid Cap Opportunity Fund 22,934
- -----------------------------------------------------------
S&P 500 Index Fund 192,002
- -----------------------------------------------------------
Small Cap Opportunity Fund 71,400
- -----------------------------------------------------------
Cash Reserves Fund 57,538
- -----------------------------------------------------------
Indexed Bond Fund 33,960
- -----------------------------------------------------------
Intermediate Term Bond Fund 19,135
- -----------------------------------------------------------
Short Term Bond Fund 18,335
- -----------------------------------------------------------
Asset Manager Fund 346,941
- -----------------------------------------------------------
Balanced Fund 72,979
- -----------------------------------------------------------
</Table>
(F) NON-INTERESTED DIRECTORS AND TRUSTEES FEES. Effective January 1, 2004,
Directors and Trustees, other than those affiliated with the Manager, New York
Life, MacKay Shields, NYLIFE Distributors or NYLIFE Securities Inc., are paid an
annual retainer of $62,000 plus reimbursement for travel and out-of-pocket
expenses. The Lead Director/Trustee and the Audit Committee Chair each receive
an additional annual retainer of $10,000. The retainers are paid in the
aggregate for the Company and the Trust.
(G) CAPITAL. The Funds have been advised that at April 30, 2004 affiliates of
New York Life owned a significant number of shares of the Funds with the
following values and percentages of net assets as follows:
<Table>
All Cap Growth Fund $276,487,489 86.0%
- ----------------------------------------------------------
All Cap Value Fund 100,319,247 64.0
- ----------------------------------------------------------
Mid Cap Core Fund 26,778,112 78.9
- ----------------------------------------------------------
Mid Cap Opportunity Fund 3,395 0.0*
- ----------------------------------------------------------
S&P 500 Index Fund 997,500,557 86.7
- ----------------------------------------------------------
Small Cap Opportunity Fund 57,283,802 28.8
- ----------------------------------------------------------
Cash Reserves Fund 163,944,063 33.5
- ----------------------------------------------------------
Indexed Bond Fund 198,702,349 84.1
- ----------------------------------------------------------
Intermediate Term Bond Fund 121,515,081 70.2
- ----------------------------------------------------------
Short Term Bond Fund $ 77,213,270 68.4%
- ----------------------------------------------------------
Asset Manager Fund 226,509,645 74.4
- ----------------------------------------------------------
Balanced Fund 79,550,054 31.3
- ----------------------------------------------------------
</Table>
* Less than one tenth of a percent.
From time to time, a Fund may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the Fund.
(H) OTHER. Fees for the cost of legal services provided to the Funds by the
Office of the General Counsel of NYLIM are charged to the Funds. For the six
months ended April 30, 2004, these fees, which are included in Professional fees
shown on the Statement of Operations, were as follows:
<Table>
All Cap Growth Fund $14,766
- -----------------------------------------------------------
All Cap Value Fund 6,870
- -----------------------------------------------------------
Mid Cap Core Fund 1,487
- -----------------------------------------------------------
Mid Cap Opportunity Fund 754
- -----------------------------------------------------------
S&P 500 Index Fund 48,726
- -----------------------------------------------------------
Small Cap Opportunity Fund 8,829
- -----------------------------------------------------------
Cash Reserves Fund 21,296
- -----------------------------------------------------------
Indexed Bond Fund 10,277
- -----------------------------------------------------------
Intermediate Term Bond Fund 7,303
- -----------------------------------------------------------
Short Term Bond Fund 4,310
- -----------------------------------------------------------
Asset Manager Fund 13,311
- -----------------------------------------------------------
Balanced Fund 9,815
- -----------------------------------------------------------
</Table>
NOTE 4 -- FEDERAL INCOME TAX:
At October 31, 2003, for federal income tax purposes, capital loss
carryforwards, as shown in the table below, were available to the extent
provided by regulations to offset future realized gains of each respective Fund
through the years indicated. To the extent that these loss carryforwards are
used to offset future capital gains, it is probable that the capital gains so
offset will not be distributed to shareholders.
<Table>
<Caption>
CAPITAL LOSS
AVAILABLE AMOUNT
THROUGH (000'S)
All Cap Growth Fund 2009 $24,144
2010 17,488
2011 2,904
- ---------------------------------------------------------
$44,536
- ---------------------------------------------------------
All Cap Value Fund 2010 $26,006
2011 6,872
- ---------------------------------------------------------
$32,878
- ---------------------------------------------------------
Mid Cap Core Fund 2009 $2,648
2010 1,900
- ---------------------------------------------------------
$4,548
- ---------------------------------------------------------
</Table>
www.mainstayfunds.com 207
NOTES TO FINANCIAL STATEMENTS UNAUDITED (CONTINUED)
<Table>
<Caption>
CAPITAL LOSS
AVAILABLE AMOUNT
THROUGH (000'S)
S&P 500 Index Fund 2010 $37,601
- ---------------------------------------------------------
Indexed Bond Fund 2004 $20
2005 44
2006 112
2007 1,728
2008 1,793
2009 105
- ---------------------------------------------------------
$3,802
- ---------------------------------------------------------
Intermediate Term Bond Fund 2007 $6,289
2008 3,661
2010 898
- ---------------------------------------------------------
$10,848
- ---------------------------------------------------------
Short Term Bond Fund 2004 $522
2005 204
2006 20
2007 536
2008 843
2009 14
2010 158
2011 35
- ---------------------------------------------------------
$2,332
- ---------------------------------------------------------
Asset Manager Fund 2009 $24,684
2010 15,722
2011 44,554
- ---------------------------------------------------------
$84,960
- ---------------------------------------------------------
</Table>
The Mid Cap Core, Mid Cap Opportunity, S&P 500 Index, Small Cap Opportunity,
Indexed Bond, Intermediate Term Bond, Short Term Bond, Asset Manager and
Balanced Funds utilized $483,802, $410,608, $2,205,464, $6,310,892, $93,241,
$2,228,126, $484,384, $41,059 and $196,218, respectively, of capital loss
carryforwards during the year ended October 31, 2003. In addition, the Short
Term Bond Fund had $1,286,041 of capital loss carryforwards that expired.
Dividends to shareholders from net investment income and distributions to
shareholders from net realized gains shown in the Statement of Changes in Net
Assets for the year ended October 31, 2003 represent tax-based distributions of
ordinary income and net long-term capital gain, respectively, except for the
Fund for which the tax components of the distributions are shown below.
<Table>
<Caption>
TAX-BASED
DISTRIBUTIONS FROM
ORDINARY INCOME
Cash Reserves Fund $3,289,749
</Table>
NOTE 5 -- FINANCIAL INVESTMENTS:
The S&P 500 Index Fund's, Indexed Bond Fund's and Asset Manager Fund's use of
futures contracts involves, to varying degrees, elements of market risk in
excess of the amount recognized in the Statement of Assets and Liabilities. The
contract or notional amounts and variation margin reflect the extent of the
Fund's involvement in open futures positions. Risks arise from the possible
imperfect correlation in movements in the price of futures contracts, interest
rates and the underlying hedged assets, and the possible inability of
counterparties to meet the terms of their contracts. However, the Fund's
activities in futures contracts are conducted through regulated exchanges which
minimize counterparty credit risks.
The S&P 500 Index Fund invests in stock index futures contracts to maintain cash
reserves while remaining fully invested, to facilitate trading, or to reduce
transaction costs. The Indexed Bond Fund invests in contracts for the future
delivery of debt securities in order to attempt to maintain cash reserves while
remaining fully invested, to facilitate trading, or to reduce transaction costs.
The Asset Manager Fund has entered into contracts for the future delivery of
debt securities and invests in stock index futures contracts to rebalance the
Fund's portfolio composition and risk profile to meet asset class constraints.
NOTE 6 -- FUND SECURITIES LOANED AND WRITTEN OPTIONS:
As of April 30, 2004, the following Funds had securities on loan and received
collateral as follows:
<Table>
<Caption>
MARKET
VALUE OF
SECURITIES CASH
FUND ON LOAN COLLATERAL
All Cap Growth Fund $ 6,048,599 $ 6,181,108
- ----------------------------------------------------------
All Cap Value Fund 2,030,400 2,162,367
- ----------------------------------------------------------
Intermediate Term Bond Fund 20,257,176 21,304,000
- ----------------------------------------------------------
Short Term Bond Fund 35,885,614 37,451,340
- ----------------------------------------------------------
</Table>
The cash collateral received for securities on loan was used to purchase highly
liquid short-term investments in accordance with the lending procedures of the
Funds.
As of April 30, 2004, the All Cap Value Fund had transactions in Written
Options:
<Table>
<Caption>
NUMBER OF
ALL CAP VALUE FUND CONTRACTS PREMIUM
Options outstanding at October 31,
2003 0 $ 0
- ----------------------------------------------------------
Options -- written (855) (101,940)
- ----------------------------------------------------------
Options -- buybacks 254 24,764
- ----------------------------------------------------------
Options -- expired 254 24,764
- ----------------------------------------------------------
Options outstanding at April 30,
2004 (347) $ (52,412)
- ----------------------------------------------------------
</Table>
NOTE 7 -- LINE OF CREDIT:
The Funds, and certain affiliated funds, with the exception of the Cash Reserves
Fund, maintain a line of credit of
208 MainStay Funds
$160,000,000 with a syndicate of banks in order to secure a source of funds for
temporary purposes to meet unanticipated or excessive shareholder redemption
requests. The Funds pay a commitment fee, at an annual rate of .075% of the
average commitment amount, regardless of usage, to The Bank of New York, which
acts as agent to the syndicate. Such commitment fees are allocated among the
Funds based upon net assets and other factors. Interest on any revolving credit
loan is charged based upon the Federal Funds Advances rate. There were no
borrowings on the line of credit during the six months ended April 30, 2004.
www.mainstayfunds.com 209
NOTES TO FINANCIAL STATEMENTS UNAUDITED (CONTINUED)
NOTE 8 -- PURCHASES AND SALES OF SECURITIES (IN 000'S):
During the six months ended April 30, 2004, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<Table>
<Caption>
ALL CAP ALL CAP MID CAP MID CAP
GROWTH FUND VALUE FUND CORE FUND OPPORTUNITY FUND
-------------------- ------------------- ------------------- ------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
U.S. Government securities $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------
All others 79,033 121,247 36,605 64,030 31,347 28,879 8,438 3,995
- -----------------------------------------------------------------------------------------------------------------
Total $79,033 $121,247 $36,605 $64,030 $31,347 $28,879 $8,438 $3,995
- -----------------------------------------------------------------------------------------------------------------
<Caption>
S&P 500
INDEX FUND
------------------
PURCHASES SALES
U.S. Government securities $ -- $ --
- --------------------------
All others 113,869 9,815
- --------------------------
Total $113,869 $9,815
- --------------------------
</Table>
NOTE 9 -- CAPITAL SHARE TRANSACTIONS (IN 000'S):
Transactions in capital shares were as follows:
<Table>
<Caption>
ALL CAP GROWTH FUND
-------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I CLASS I
------- ------- ------- -------------- ----------------
JANUARY 1, 2004* SIX MONTHS
THROUGH ENDED YEAR ENDED
APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003
Shares sold 678 67 11 1,053 3,014
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends and
distributions -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
678 67 11 1,053 3,014
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (601) (1) (--)(a) (3,375) (4,625)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (decrease) 77 66 11 (2,322) (1,611)
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MID CAP OPPORTUNITY FUND
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I CLASS C CLASS I
------- ------- ------- ------- ------------------ ----------------
JANUARY 1, 2004* SIX MONTHS DECEMBER 30, 2002*
THROUGH ENDED THROUGH YEAR ENDED
APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003 OCTOBER 31, 2003
Shares sold 106 79 54 151 --(a) 373
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends
and distributions -- -- -- 5 --(a) 14
- ---------------------------------------------------------------------------------------------------------------------------------
106 79 54 156 --(a) 387
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (3) (1) (--) (181) (--) (2,909)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (decrease) 103 78 54 (25) --(a) (2,522)
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CASH RESERVES FUND
----------------------------------------------------------
SWEEP SHARES SWEEP SHARES
CLASS I CLASS CLASS I CLASS
-------- ------------ -------- ------------
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 2004 OCTOBER 31, 2003
Shares sold 257,328 71,597 490,605 97,732
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in connection with acquisition of Core Bond
Plus Fund (b) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends and distributions 574 146 2,250 932
- -----------------------------------------------------------------------------------------------------------------------
257,902 71,743 492,855 98,664
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (261,974) (72,800) (601,715) (117,116)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (4,072) (1,057) (108,860) (18,452)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
SHORT TERM BOND FUND ASSET MANAGER FUND
---------------------------------------------------- ---------------------
CLASS A CLASS I CLASS I CLASS A CLASS B
---------------- -------------- ---------------- ------- -------
JANUARY 1, 2004* SIX MONTHS JANUARY 1, 2004*
THROUGH ENDED YEAR ENDED THROUGH
APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003 APRIL 30, 2004
Shares sold 2,018 1,495 1,782 4,072 724
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in connection with acquisition of
Ultra Short Duration Fund (b) -- 7,984 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends and
distributions 4 41 88 53 --
- ---------------------------------------------------------------------------------------------------------------------------------
2,022 9,520 1,870 4,125 724
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (1,024) (2,220) (2,037) (3,422) (9)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 998 7,300 (167) 703 715
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
* Commencement of Operations.
(a) Less than one thousand shares.
(b) On December 11, 2003 and pursuant to shareholder approval, the assets and
liabilities of the Eclipse Core Bond Plus Fund were acquired by the Eclipse
Bond Fund which was subsequently renamed MainStay Intermediate Term Bond
Fund. Also on December 11, 2003 and pursuant to shareholder approval, the
assets and liabilities of the Eclipse Ultra Short Duration Fund were
acquired by the Eclipse Short Term Bond Fund which was subsequently renamed
MainStay Short Term Bond Fund.
210 MainStay Funds
<Table>
<Caption>
SMALL CAP INDEXED BOND INTERMEDIATE TERM SHORT TERM ASSET MANAGER
OPPORTUNITY FUND FUND BOND FUND BOND FUND FUND
-------------------- ------------------- -------------------- ------------------- --------------------
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
$ -- $ -- $123,571 $97,455 $128,789 $114,683 $86,177 $35,931 $ 43,582 $ 36,725
- ------------------------------------------------------------------------------------------------------------------
161,674 130,352 6,748 871 34,955 32,503 10,657 37,210 95,992 109,299
- ------------------------------------------------------------------------------------------------------------------
$161,674 $130,352 $130,319 $98,326 $163,744 $147,186 $96,834 $73,141 $139,574 $146,024
- ------------------------------------------------------------------------------------------------------------------
<Caption>
BALANCED
FUND
-------------------
PURCHASES SALES
$ 5,915 $ 1,000
- ------------------------
96,976 20,827
- ------------------------
$102,891 $21,827
- ------------------------
</Table>
<Table>
<Caption>
ALL CAP VALUE FUND MID CAP CORE FUND
--------------------------------------------------------------- ---------------------------
CLASS A CLASS B CLASS C CLASS I CLASS I CLASS A CLASS B CLASS C
------- ------- ------- -------------- ---------------- ------- ------- -------
JANUARY 1, 2004* SIX MONTHS JANUARY 1, 2004*
THROUGH ENDED YEAR ENDED THROUGH
APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003 APRIL 30, 2004
725 119 34 1,221 3,321 58 77 7
- -------------------------------------------------------------------------------------------------
4 -- -- 172 169 -- -- --
- -------------------------------------------------------------------------------------------------
729 119 34 1,393 3,490 58 77 7
- -------------------------------------------------------------------------------------------------
(574) (3) (--) (3,755) (3,578) (--)(a) (1) (--)(a)
- -------------------------------------------------------------------------------------------------
155 116 34 (2,362) (88) 58 76 7
- -------------------------------------------------------------------------------------------------
<Caption>
MID CAP CORE FUND
---------------------------------
CLASS I CLASS I
-------------- ----------------
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 2004 OCTOBER 31, 2003
107 262
- --------------------------------------
2 1
- --------------------------------------
109 263
- --------------------------------------
(17) (133)
- --------------------------------------
92 130
- --------------------------------------
</Table>
<Table>
<Caption>
S&P 500 INDEX FUND SMALL CAP OPPORTUNITY FUND
---------------------------------------------------- -------------------------------------
CLASS A CLASS I CLASS I CLASS A CLASS B CLASS C CLASS I
---------------- -------------- ---------------- ------- ------- ------- -------
JANUARY 1, 2004* SIX MONTHS JANUARY 1, 2004* SIX MONTHS
THROUGH ENDED YEAR ENDED THROUGH ENDED
APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003 APRIL 30, 2004 APRIL 30, 2004
11,214 7,492 13,440 421 360 96 5,132
- -------------------------------------------------------------------------------------------------
81 382 384 -- -- -- 538
- -------------------------------------------------------------------------------------------------
11,295 7,874 13,824 421 360 96 5,670
- -------------------------------------------------------------------------------------------------
(10,065) (4,110) (7,611) (146) (9) (--) (4,794)
- -------------------------------------------------------------------------------------------------
1,230 3,764 6,213 275 351 96 876
- -------------------------------------------------------------------------------------------------
<Caption>
SMALL CAP OPPORTUNITY FUND
-------------------------------------
CLASS C CLASS I
------------------ ----------------
DECEMBER 30, 2002*
THROUGH YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2003
--(a) 9,363
- ------------------------------------------
-- 108
- ------------------------------------------
--(a) 9,471
- ------------------------------------------
(--)(a) (9,026)
- ------------------------------------------
--(a) 445
- ------------------------------------------
</Table>
<Table>
<Caption>
INDEXED BOND FUND INTERMEDIATE TERM BOND FUND
---------------------------------------------------- ----------------------------------------------------------------
CLASS A CLASS I CLASS I CLASS A CLASS B CLASS C CLASS I CLASS I
---------------- -------------- ---------------- ------- -------- ------- -------------- ----------------
JANUARY 1, 2004* SIX MONTHS JANUARY 1, 2004* SIX MONTHS
THROUGH ENDED YEAR ENDED THROUGH ENDED YEAR ENDED
APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003 APRIL 30, 2004 APRIL 30, 2004 OCTOBER 31, 2003
5,294 2,877 10,323 746 160 76 3,123 2,538
- ---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- 2,714 --
- ---------------------------------------------------------------------------------------------------------------------------
41 223 540 8 --(a) --(a) 194 502
- ---------------------------------------------------------------------------------------------------------------------------
5,335 3,100 10,863 754 160 76 6,031 3,040
- ---------------------------------------------------------------------------------------------------------------------------
(4,272) (2,092) (5,482) (662) (2) (--)(a) (2,733) (3,041)
- ---------------------------------------------------------------------------------------------------------------------------
1,063 1,008 5,381 92 158 76 3,298 (1)
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
ASSET MANAGER FUND BALANCED FUND
--------------------------------------------------------- -----------------------------------------------------------
CLASS C CLASS I CLASS C CLASS I CLASS A CLASS B CLASS C CLASS I CLASS R1 CLASS R2
------- ------- ------------------ ---------------- ------- ------- ------- ------- -------- --------
SIX MONTHS DECEMBER 30, 2002* JANUARY 1, 2004* SIX MONTHS JANUARY 1, 2004*
ENDED THROUGH YEAR ENDED THROUGH ENDED THROUGH
APRIL 30, 2004 OCTOBER 31, 2003 OCTOBER 31, 2003 APRIL 30, 2004 APRIL 30, 2004 APRIL 30, 2004
118 1,670 4 3,718 2,378 831 349 1,643 --(a) --(a)
- ---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- 437 -- 493 4 1 1 129 --(a) --(a)
- ---------------------------------------------------------------------------------------------------------------------------
118 2,107 4 4,211 2,382 832 350 1,772 --(a) --(a)
- ---------------------------------------------------------------------------------------------------------------------------
(4) (3,747) (--) (19,261) (1,246) (26) (5) (780) (--) (--)
- ---------------------------------------------------------------------------------------------------------------------------
114 (1,640) 4 (15,050) 1,136 806 345 992 --(a) --(a)
- ---------------------------------------------------------------------------------------------------------------------------
<Caption>
BALANCED FUND
-------------------------------------
CLASS C CLASS I
------------------ ----------------
DECEMBER 30, 2002*
THROUGH YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2003
15 4,059
- ------------------------------------------
-- --
- ------------------------------------------
--(a) 93
- ------------------------------------------
15 4,152
- ------------------------------------------
(--)(a) (2,134)
- ------------------------------------------
15 2,018
- ------------------------------------------
</Table>
www.mainstayfunds.com 211
NOTES TO FINANCIAL STATEMENTS UNAUDITED (CONTINUED)
NOTE 10 -- OTHER MATTERS:
(A) On August 27, 2003 KPMG LLP (KPMG) was selected to replace the predecessor
independent auditor as the Company's and the Trust's independent auditor for the
2003 fiscal year. The selection of KPMG as its independent auditor was
recommended by the Company's and the Trust's audit committee, comprised of all
independent Directors/Trustees, and was approved by the Company's Board of
Directors and the Trust's Board of Trustees.
The predecessor independent auditor's reports on the Company's and the Trust's
financial statements for the years ended October 31, 2002 and 2001 did not
contain an adverse opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles. During such
fiscal years, and through the date of engagement of KPMG, there were no
disagreements between the Company and the Trust and the predecessor independent
auditor on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which such disagreements, if not
resolved to the satisfaction of the predecessor independent auditor, would have
caused them to make reference to the subject matter of the disagreement in
connection with their reports on the financial statements for such years.
(B) NYLIM and mutual funds that NYLIM advises have received requests for
information from various government authorities and regulatory bodies regarding
market timing, late trading, operations, fees, expenses, and other matters.
NYLIM and the funds it advises are cooperating fully in responding to these
requests. Except as described below, neither NYLIM nor the funds advised by it
have any reason to believe that they have been targeted as the subject of any
governmental or regulatory enforcement action.
The SEC Staff has raised concerns relating to a guarantee provided to
shareholders of the MainStay Equity Index Fund and the fees and expenses of that
Fund, as well as the related guarantee disclosure to Fund shareholders. NYLIM
and the MainStay Equity Index Fund are currently seeking to resolve the SEC
Staff's concerns regarding these matters, although there can be no assurance at
this time as to the outcome of these efforts.
212 MainStay Funds
BOARD MEMBERS AND OFFICERS
The Board Members oversee the Funds, the Manager, and the Subadvisor.
Information pertaining to the Board Members and Officers is set forth below.
Each Board Member serves until his/her successor is elected and qualified or
until his/her resignation, death or removal. Officers serve a term of one year
and are elected annually by the Board Members. The business address of each
Board Member and Officer listed below is 51 Madison Avenue, New York, New York
10010.
<Table>
<Caption>
NUMBER OF FUNDS OTHER
POSITION(S) WITH IN FUND COMPLEX DIRECTORSHIPS
NAME AND COMPANY & LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DATE OF BIRTH TRUST TIME SERVED DURING PAST 5 YEARS BOARD MEMBER BOARD MEMBER
-----------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS OF THE COMPANY & TRUST
LAWRENCE GLACKEN Director 13 Years Retired 13 None
10/22/27 Trustee (Company)
4 Years
(Trust)
-----------------------------------------------------------------------------------------------------------------------
ROBERT P. Director 13 Years Trustee 13 None
MULHEARN Trustee (Company)
3/11/47 4 Years
(Trust)
-----------------------------------------------------------------------------------------------------------------------
SUSAN B. Director 13 Years President, Strategic Management 13 Director,
KERLEY(1) Trustee (Company) Advisors LLC. SSB/Citi Mutual
8/12/51 4 Years Funds.
(Trust)
-----------------------------------------------------------------------------------------------------------------------
PETER MEENAN(2) Director 2 Years President & Chief Executive 13 Trustee, The
12/5/41 Trustee (Company & Officer of Babson-United, Inc. Vantagepoint
Trust) since 2000; Head of Global Funds, Funds.
Citicorp, 1995-1999.
-----------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NUMBER OF FUNDS OTHER
POSITION(S) WITH IN FUND COMPLEX DIRECTORSHIPS
NAME AND COMPANY & LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DATE OF BIRTH TRUST TIME SERVED DURING PAST 5 YEARS OFFICER OFFICER
-----------------------------------------------------------------------------------------------------------------------
OFFICERS (WHO ARE NOT BOARD MEMBERS) OF THE COMPANY & TRUST
GARY E. President Date of Chief Executive Officer, Chairman, 55 None
WENDLANDT Election: and Manager, New York Life
10/8/50 May 24, Investment Management LLC
2004 (including predecessor advisory
organizations) and New York Life
Investment Management Holdings
LLC; Executive Vice President, New
York Life Insurance Company;
Executive Vice President and
Manager, NYLIFE LLC; Manager,
NYLIFE Distributors LLC; Vice
Chairman, McMorgan & Company LLC;
Manager, MacKay Shields LLC;
Executive Vice President, New York
Life Insurance and Annuity
Corporation; Chairman, Chief
Executive Officer, and Director,
MainStay VP Series Fund, Inc. (19
portfolios); Executive Vice
President and Chief Investment
Officer, MassMutual Life Insurance
Company (1993 to 1999).
-----------------------------------------------------------------------------------------------------------------------
</Table>
1. Ms. Kerley has been designated the Lead Independent Trustee/Director.
2. Mr. Meenan has been appointed Chairman of the Audit Committee.
www.mainstayfunds.com 213
<Table>
<Caption>
NUMBER OF FUNDS OTHER
POSITION(S) WITH IN FUND COMPLEX DIRECTORSHIPS
NAME AND COMPANY & LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DATE OF BIRTH TRUST TIME SERVED DURING PAST 5 YEARS OFFICER OFFICER
-----------------------------------------------------------------------------------------------------------------------
OFFICERS (WHO ARE NOT BOARD MEMBERS) OF THE COMPANY & TRUST
JEFFERSON C. Senior Vice 8 Years Senior Managing Director, New York 36 None
BOYCE President (Company) Life Investment Management LLC
9/17/57 4 Years (including predecessor advisory
(Trust) organizations); Senior Vice
President, New York Life Insurance
Company; Senior Vice President,
The MainStay Funds; Director,
NYLIFE Distributors, Inc.
-----------------------------------------------------------------------------------------------------------------------
PATRICK J. Treasurer and 8 Years Managing Director, New York Life 61 None
FARRELL Chief Financial (Company) Investment Management, LLC
9/27/59 and Accounting 4 Years (including predecessor advisory
Officer (Trust) organizations); Treasurer and
Chief Financial and Accounting
Officer, The MainStay Funds and
MainStay VP Series Fund; Assistant
Treasurer, McMorgan Fund (formerly
McM Funds).
-----------------------------------------------------------------------------------------------------------------------
ROBERT A. Secretary 3 Years Senior Managing Director, General 55 None
ANSELMI (Company) Counsel and Secretary, New York
10/19/46 4 Years Life Investment Management LLC
(Trust) (including predecessor advisory
organizations); Secretary, New
York Life Investment Management
Holdings LLC; Senior Vice
President, New York Life Insurance
Company; Vice President and
Secretary, McMorgan & Company LLC;
Secretary, NYLIFE Distributors,
Inc.; Secretary, MainStay VP
Series Fund, Inc. and The MainStay
Funds; Managing Director and
Senior Counsel, Lehman Brothers
Inc. (October 1998 to December
1999); General Counsel and
Managing Director, JP Morgan
Investment Management Inc. (1986
to 1998).
-----------------------------------------------------------------------------------------------------------------------
RICHARD W. Tax Vice 7 Years Vice President, New York Life 55 None
ZUCCARO President (Company) Insurance Company; Tax Vice
12/12/49 4 Years President, NYLIFE Securities Inc.;
(Trust) Vice President, New York Life
Insurance and Annuity Corporation,
NYLIFE Insurance Company of
Arizona, NYLIFE LLC, NYLIFE
Securities, Inc., NYLIFE
Distributors Inc.; Tax Vice
President, New York Life
International, Inc.; Tax Vice
President, MainStay VP Series
Fund, Inc. and The MainStay Funds.
-----------------------------------------------------------------------------------------------------------------------
</Table>
214 MainStay Funds
MAINSTAY FUNDS
EQUITY FUNDS
MainStay All Cap Growth Fund
MainStay All Cap Value Fund
MainStay Blue Chip Growth Fund
MainStay Capital Appreciation Fund
MainStay Common Stock Fund
MainStay Equity Index Fund(1)
MainStay MAP Fund
MainStay Mid Cap Core Fund
MainStay Mid Cap Growth Fund
MainStay Mid Cap Opportunity Fund
MainStay Mid Cap Value Fund
MainStay Research Value Fund
MainStay S&P 500 Index Fund
MainStay Small Cap Growth Fund
MainStay Small Cap Opportunity Fund
MainStay Small Cap Value Fund(2)
MainStay U.S. Large Cap Equity Fund
MainStay Value Fund
INCOME FUNDS
MainStay Cash Reserves Fund
MainStay Diversified Income Fund
MainStay Floating Rate Fund
MainStay Government Fund
MainStay High Yield Corporate Bond Fund
MainStay Indexed Bond Fund
MainStay Intermediate Term Bond Fund
MainStay Money Market Fund
MainStay Short Term Bond Fund
MainStay Tax Free Bond Fund
BLENDED FUNDS
MainStay Asset Manager Fund
MainStay Balanced Fund
MainStay Convertible Fund
MainStay Strategic Value Fund
MainStay Total Return Fund
INTERNATIONAL FUNDS
MainStay Global High Income Fund
MainStay International Bond Fund
MainStay International Equity Fund
1. Closed to new purchases as of January 1, 2002.
2. Closed to new investors as of December 1, 2001.
3. An affiliate of New York Life Investment Management LLC.
MANAGER
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
Parsippany, New Jersey
SUBADVISOR
MACKAY SHIELDS LLC(3)
New York, New York
LEGAL COUNSEL
DECHERT LLP
INDEPENDENT AUDITORS
KPMG LLP
www.mainstayfunds.com 215
(NEW YORK LIFE INVESTMENT MANAGEMENT LLC LOGO)
- ------------------------------------------------
/Not FDIC insured. / No bank guarantee. / May lose value.
NYLIFE DISTRIBUTORS LLC, 169 LACKAWANNA AVENUE,
PARSIPPANY, NEW JERSEY 07054
This report may only be distributed when preceded or accompanied
by a current Fund prospectus.
www.mainstayfunds.com SEC File Number: 811-04847 (Eclipse Funds)
(C) 2004 by NYLIFE Distributors LLC. All rights reserved.
SEC File Number: 811-06175 (Eclipse Funds Inc.)
NYLIM-AO5464 (RECYCLE LOGO) MS10g-06/04
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 10. Controls and Procedures.
(a) Based on an evaluation of the Disclosure Controls and Procedures (as defined
in Rule 30a-2(c) under the Investment Company Act of 1940, the "Disclosure
Controls") as of a date within 90 days prior to the filing date (the "Filing
Date") of this Form N-CSR (the "Report"), the Disclosure Controls are reasonably
designed to ensure that information required to be disclosed by the Registrant
in the Report is recorded, processed, summarized and reported by the Filing
Date, including ensuring that information required to be disclosed in the Report
is accumulated and communicated to the Registrant's management, including the
Registrant's principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no significant changes in the Registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, and there were no corrective actions with regard
to significant deficiencies and material weaknesses.
Item 11. Exhibits.
(a)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of 1940.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Section 906 of the Sarbanes-Oxley Act of 202.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ECLIPSE FUNDS
By: /s/ Gary E. Wendlandt
---------------------
GARY E. WENDLANDT
President
Date: June 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Gary E. Wendlandt
---------------------
GARY E. WENDLANDT
President
Date: June 29, 2004
By: /s/Patrick J. Farrell
---------------------
PATRICK J. FARRELL
Treasurer and
Chief Financial and Accounting Officer
Date: June 29, 2004
EXHIBIT INDEX
(a)(1) Certifications of principal executive officer and
principal financial officer as required by Rule 30a-2 under
the Investment Company Act of 1940.
(a)(2) Certification of principal executive officer and
principal financial officer as required by Section 906 of
the Sarbanes-Oxley Act of 2002.