AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 2008
REGISTRATION NO.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------

FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[ ] PRE-EFFECTIVE AMENDMENT NO. [ ] POST-EFFECTIVE AMENDMENT NO.
(Check appropriate box or boxes)
ECLIPSE FUNDS
(Exact Name of Registrant as Specified in Charter)

51 MADISON AVENUE, NEW YORK, NEW YORK 10010
(Address of Principal Executive Offices)

(212) 576-7000
(Registrant's Area Code and Telephone Number)
MARGUERITE E.H. MORRISON, ESQ.
ECLIPSE FUNDS
51 MADISON AVENUE
NEW YORK, NEW YORK 10010
(Name and Address of Agent for Service)

WITH COPIES TO:

<Table>

MARGUERITE E. H. MORRISON, ESQ. SANDER M. BIEBER, ESQ.
ECLIPSE FUNDS DECHERT LLP
51 MADISON AVENUE 1775 I STREET, N.W.
NEW YORK, NEW YORK 10010 WASHINGTON, D.C. 20006

Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective under the Securities Act of 1933.

It is proposed that this filing will become effective on November 3, 2008
pursuant to Rule 488 under the Securities Act of 1933.

Title of securities being registered: Investor Class shares, Class A
shares, Class B shares, Class C shares and Class I shares of beneficial
interest, par value $0.01 per share, of the following series of the Registrant:
MainStay Small Cap Opportunity Fund.

An indefinite amount of the Registrant's securities has been registered
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. In reliance upon such Rule, no filing fee is being paid at
this time.

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- --------------------------------------------------------------------------------

THE MAINSTAY FUNDS
MAINSTAY SMALL CAP VALUE FUND
51 MADISON AVENUE
NEW YORK, NEW YORK 10010

SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, JANUARY 20, 2009

To Our Shareholders:

The Board of Trustees of The MainStay Funds (the "Trust") has called a
Special Meeting of Shareholders ("Special Meeting") of the MainStay Small Cap
Value Fund (the "Small Cap Value Fund"). The Special Meeting is scheduled for
11:30 am, Eastern Time, on Tuesday, January 20, 2009, at the offices of New York
Life Investment Management LLC ("NYLIM"), 169 Lackawanna Avenue, Parsippany, New
Jersey 07054.

The Trust, a Massachusetts business trust, currently offers 21 separate
series of funds. The accompanying Notice of Special Meeting and Proxy Statement
relate solely to the Small Cap Value Fund.

At the Special Meeting, as shareholders of the Small Cap Value Fund, a
series of the Trust, you will be asked to consider and vote upon the following
proposal:

1. To approve an Agreement and Plan of Reorganization providing for
(i) the acquisition of all assets and the assumption of the liabilities of
the Small Cap Value Fund by the MainStay Small Cap Opportunity Fund, a
series of Eclipse Funds, (the "Small Cap Opportunity Fund" and collectively
with Small Cap Value Fund, the "Funds"), in exchange for shares of the
Small Cap Opportunity Fund having an aggregate net asset value equal to the
aggregate net asset value of the shares of the Small Cap Opportunity Fund;
and (ii) the subsequent redemption of the shares and liquidation and
dissolution of the Small Cap Value Fund; and

2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.

This transaction is contingent upon the approval by the shareholders of
Small Cap Opportunity Fund of MacKay Shields LLC, an affiliate of NYLIM, as that
Fund's subadvisor. The Board of Trustees of the Trust, after careful
consideration, unanimously approved the proposal and recommends that
shareholders vote "FOR" the proposal.

If the transaction described in proposal #1 (the "Reorganization") takes
place, you will become a shareholder of the Small Cap Opportunity Fund on the
date that the Reorganization occurs. THE BOARD OF TRUSTEES BELIEVES THAT THE
REORGANIZATION WOULD BENEFIT THE SHAREHOLDERS OF THE

SMALL CAP VALUE FUND WITH THE POTENTIAL FOR COST SAVINGS DUE TO ECONOMIES OF
SCALE FROM COMBINED PORTFOLIO ASSETS.

NYLIM, the investment adviser to the Funds, believes that this initiative
also will create a stronger, more cohesive family of funds.

As a shareholder of the Small Cap Value Fund, you are being asked to
consider and vote upon an Agreement and Plan of Reorganization. The accompanying
document describes the proposed transaction and compares the strategies and
expenses of the Funds for your evaluation.

A Proxy Statement/Prospectus that describes the Reorganization is enclosed.
Your vote is very important to us regardless of the number of shares of the
Small Cap Value Fund you own. Whether or not you plan to attend the Special
Meeting in person, please read the Proxy Statement/Prospectus and cast your vote
promptly. You may cast your vote by simply completing, signing and returning the
enclosed proxy card by mail in the postage-paid envelope provided or follow the
instructions on the voting instruction card for authorizing your proxy on the
Internet or by touch-tone telephone. If you have any questions before you vote,
please contact the Small Cap Value Fund by calling toll-free 800-MAINSTAY (624-
6782). It is important that your vote be received no later than the time of the
Special Meeting on Tuesday, January 20, 2009.

We appreciate your participation and prompt response in this matter and
thank you for your continued support.

Sincerely,

/s/ STEPHEN P. FISHER

Stephen P. Fisher
President
The MainStay Funds

THE MAINSTAY FUNDS
MAINSTAY SMALL CAP VALUE FUND
51 MADISON AVENUE
NEW YORK, NEW YORK 10010

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 20, 2009

TO OUR SHAREHOLDERS:

NOTICE IS HEREBY GIVEN that a SPECIAL MEETING OF SHAREHOLDERS ("Special
Meeting") of the MainStay Small Cap Value Fund (the "Small Cap Value Fund"), a
series of The MainStay Funds, a Massachusetts business trust (the "Trust"), will
be held at the offices of New York Life Investment Management LLC, 169
Lackawanna Avenue, Parsippany, New Jersey 07054, on Tuesday, January 20, 2009 at
11:30 a.m. Eastern Time.

At the Special Meeting, as shareholders of the Small Cap Value Fund, a
series of the Trust, will be asked to consider and vote upon the following
proposal:

1. To approve an Agreement and Plan of Reorganization providing for
(i) the acquisition of all assets and the assumption of the liabilities of
the Small Cap Value Fund by the MainStay Small Cap Opportunity Fund, a
series of Eclipse Funds (the "Small Cap Opportunity Fund" and collectively
with Small Cap Value Fund, the "Funds"), in exchange for shares of the
Small Cap Opportunity Fund having an aggregate net asset value equal to the
aggregate net asset value of the shares of the Small Cap Opportunity Fund;
and (ii) the subsequent redemption of the shares and liquidation and
dissolution of the Small Cap Value Fund; and

2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.

This transaction is contingent upon the approval by the shareholders of
Small Cap Opportunity Fund of MacKay Shields LLC, an affiliate of NYLIM, as that
Fund's subadvisor.

Your attention is directed to the accompanying combined Proxy
Statement/Prospectus for further information regarding the Special Meeting and
Proposal #1 above. You may vote at the Special Meeting if you are the record
owner of shares of the Small Cap Value Fund as of the close of business on
October 22, 2008 (the "Record Date"). If you attend the Special Meeting, you may
vote your shares in person. Even if you do not attend the Special Meeting, you
may authorize your proxy by simply completing, signing and returning the
enclosed proxy card by mail in the postage-paid envelope provided or by
following the instructions on the

voting instruction card for authorizing your proxy on the Internet or by touch-
tone telephone.

Your vote is very important to us. Whether or not you plan to attend the
Special Meeting in person, please vote the enclosed proxy. If you have any
questions, please contact the Small Cap Value Fund for additional information by
calling toll-free 800-MAINSTAY (624-6782).

By Order of the Board of Trustees

/s/ MARGUERITE E. H. MORRISON
---------------------------------------
Marguerite E. H. Morrison
Secretary
[November 17, 2008]

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IMPORTANT NOTICE:
YOUR VOTE IS VERY IMPORTANT TO US NO MATTER HOW MANY SHARES YOU OWN. PLEASE VOTE
BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE
ACCOMPANYING POSTAGE-PAID RETURN ENVELOPE OR BY FOLLOWING THE ENCLOSED
INSTRUCTIONS TO AUTHORIZE YOUR PROXY ON THE INTERNET OR OVER THE TELEPHONE. YOU
CAN HELP AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATIONS BY PROMPTLY
VOTING THE ENCLOSED PROXY.

------------

QUESTIONS AND ANSWERS RELATING TO THE PROPOSAL

WHAT ARE THE PROPOSED CHANGES TO THE SMALL CAP VALUE FUND?

You are being asked to approve the reorganization (the "Reorganization") of the
Small Cap Value Fund with and into the Small Cap Opportunity Fund. Should the
Reorganization take place, the Small Cap Value Fund will subsequently be
liquidated and dissolved.

IS THE REORGANIZATION CONTINGENT UPON THE OCCURRENCE OF ANY EVENTS OTHER THAN
SHAREHOLDER APPROVAL?

Yes. The Reorganization is contingent upon the approval by shareholders of the
Small Cap Opportunity Fund of MacKay Shields LLC ("MacKay Shields"), an
affiliate of NYLIM, as that Fund's subadvisor.

WHAT WILL I RECEIVE IN EXCHANGE FOR MY SHARES IF THE REORGANIZATION IS APPROVED?

If the Reorganization takes place, you will become a shareholder of the Small
Cap Opportunity Fund on the date that the Reorganization occurs and will hold
shares of the Small Cap Opportunity Fund in exchange for the shares that you
hold in the Small Cap Value Fund.

WHAT DID THE TRUSTEES CONSIDER WHEN THEY APPROVED THE REORGANIZATION?

- the Reorganization is contingent upon the approval by shareholders of the
Small Cap Opportunity Fund of MacKay Shields as that Fund's subadvisor;

- prior to the Reorganization, the investment objective, strategies and
process of the Small Cap Opportunity Fund will be changed to be similar
to those of the Small Cap Value Fund;

- the longer operating history and larger size of Small Cap Opportunity
Fund;

- the declining asset size of Small Cap Value Fund;

- the management fee and total expense cap structure of Small Cap
Opportunity Fund;

- the costs of the Reorganization will be borne by the Small Cap Value
Fund;

- the terms of the agreements relating to the Reorganization, including
valuation procedures, expenses and potential unassumed liabilities;

- the Reorganization is structured as a tax free reorganization that will
not cause a taxable event for shareholders. However, the Small Cap Value
Fund will pay its annual dividend and capital gains distributions, if
any, to shareholders as required, prior to the Reorganization;

- alternatives to the Reorganization and other factors;

- the nature, extent, and quality of the services to be provided by NYLIM
and MacKay Shields;

- the relative investment performance of each Fund;

- the costs of the services to be provided, and profits to be realized, by
NYLIM and its affiliates from NYLIM's relationship with each Fund;

- the extent to which economies of scale may be realized, and the extent to
which economies of scale may benefit shareholders; and

- the reasonableness of each Fund's management fee levels and overall total
ordinary operating expenses, particularly as compared to similar
portfolios.

WILL THERE BE ANY CHANGES TO THE PORTFOLIO MANAGERS AS A RESULT OF THE PROPOSED
CHANGES?

No. Currently, the Small Cap Opportunity Fund is managed by NYLIM with Tony H.
Elavia serving as the portfolio manager. The Small Cap Value Fund is also
managed by NYLIM. However, MacKay Shields serves as that Fund's subadvisor with
Jordan D. Alexander and Stephen A. Friscia, Jr., serving as portfolio managers.

Currently, Small Cap Opportunity Fund does not have a subadvisor. However, at a
special meeting scheduled to be held on Tuesday, January 20, 2009, shareholders
of the Small Cap Opportunity Fund are being asked to approve MacKay Shields as
the new subadvisor. The Reorganization is contingent upon this approval. If
MacKay Shields is approved as subadvisor to the Small Cap Opportunity Fund,
Jordan D. Alexander and Stephen A. Friscia, Jr., will serve as portfolio
managers of the Small Cap Opportunity Fund.

WILL THE INVESTMENT OBJECTIVE AND STRATEGY OF THE SMALL CAP OPPORTUNITY FUND BE
DIFFERENT FROM THE SMALL CAP VALUE FUND?

No. If the shareholders of Small Cap Opportunity Fund approve MacKay Shields as
subadvisor, that Fund will adopt principal investment strategies that are
identical to those of Small Cap Value Fund prior to the Reorganization.

WHAT ARE THE TAX IMPLICATIONS FOR THE REORGANIZATION?

The Reorganization is structured as a tax-free reorganization that will not
cause a taxable event for shareholders. However, the Small Cap Value Fund will
pay its annual dividend and capital gains distributions to shareholders as
required prior to the Reorganization. Small Cap Value Fund shareholders may be
responsible for the tax consequences of these distributions.

IF APPROVED, WHEN WILL THE REORGANIZATION OCCUR?

If approved by shareholders and all contingencies occur, the Reorganization will
take place on or about February 13, 2009.

WILL SMALL CAP VALUE SHAREHOLDERS BEAR THE EXPENSES OF THE REORGANIZATION?

All of the expenses relating to the Reorganization will be borne by the Small
Cap Value Fund.

HAS THE BOARD OF TRUSTEES OF THE SMALL CAP VALUE FUND APPROVED THE
REORGANIZATION?

Yes, the Board of Trustees of the Small Cap Value Fund has approved the
Reorganization and recommends that shareholders vote "FOR" the Reorganization.

INSTRUCTIONS FOR SIGNING PROXY CARDS

THE FOLLOWING GENERAL RULES FOR SIGNING PROXY CARDS MAY BE OF ASSISTANCE TO
YOU AND MAY HELP AVOID THE TIME AND EXPENSE INVOLVED IN VALIDATING YOUR VOTE IF
YOU FAIL TO SIGN YOUR PROXY CARD PROPERLY.

1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the proxy card.

2. JOINT ACCOUNTS: Both parties must sign: the names of the parties
signing should conform exactly to the names shown in the registration on
the proxy card.

3. ALL OTHER ACCOUNTS: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration.

FOR EXAMPLE:

<Table>
<Caption>
REGISTRATION VALID
- ------------ -------------------------------

CORPORATE ACCOUNTS
(1) ABC Corp. ................. ABC Corp. John Doe, Treasurer
(2) ABC Corp. ................. John Doe
(3) ABC Corp. c/o John Doe..... John Doe
(4) ABC Corp. Profit Sharing
Plan......................... John Doe
PARTNERSHIP ACCOUNTS
(1) The XYZ Partnership........ Jane B. Smith, Partner
(2) Smith and Jones, Limited
Partnership.................. Jane B. Smith, General Partner
TRUST ACCOUNTS
(1) ABC Trust.................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d
12/28/78..................... Jane B. Doe, Trustee u/t/d/
12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust f/b/o
John B. Smith, Jr.
UGMA/UTMA.................... John B. Smith, Custodian f/b/o/
John B. Smith Jr., UGMA/UTMA
(2) Estate of John B. Smith.... John B. Smith, Jr., Executor
Estate of John B. Smith
</Table>

PLEASE CHOOSE ONE OF THE FOLLOWING OPTIONS TO VOTE YOUR SHARES:

1. AUTHORIZE YOUR PROXY THROUGH THE INTERNET. You may authorize your
proxy by logging into the Internet site located on your proxy card and
following the instructions on the website. In order to log in you will need
the control number found on your proxy card.

2. AUTHORIZE YOUR PROXY BY TELEPHONE. You may authorize your proxy by
telephone by calling the toll-free number located on your proxy card.
Please make sure to have your proxy card available at the time of the call.

3. VOTE BY MAIL. You may cast your vote by signing, dating, and
mailing the enclosed proxy card in the postage-paid return envelope
provided.

4. VOTE IN PERSON AT THE SPECIAL MEETING.

PROXY STATEMENT/PROSPECTUS
JANUARY 20, 2009

THE MAINSTAY FUNDS

ECLIPSE FUNDS
51 MADISON AVENUE
NEW YORK, NEW YORK 10010
(212) 576-7000

PROXY STATEMENT FOR:
MAINSTAY SMALL CAP VALUE FUND

PROSPECTUS FOR:
MAINSTAY SMALL CAP OPPORTUNITY FUND

INTRODUCTION

This combined Proxy Statement/Prospectus is being furnished in connection
with the solicitation of proxies by the Board of Trustees of The MainStay Funds
(the "Trust"), a Massachusetts business trust, on behalf of the MainStay Small
Cap Value Fund (the "Small Cap Value Fund"), for a Special Meeting of
Shareholders of the Small Cap Value Fund ("Special Meeting"). The Special
Meeting will be held on Tuesday, January 20, 2009 at 11:30 a.m., Eastern Time,
at the offices of New York Life Investment Management LLC ("NYLIM" or the
"Manager"), 169 Lackawanna Avenue, Parsippany, New Jersey 07054.

As is more fully described in this Proxy Statement/Prospectus, the purpose
of the Special Meeting is to vote on a proposed reorganization (the
"Reorganization") as described below:

1. To approve an Agreement and Plan of Reorganization providing for
(i) the acquisition of all assets and the assumption of the liabilities of
the Small Cap Value Fund by the MainStay Small Cap Opportunity Fund, a
series of Eclipse Funds (the "Small Cap Opportunity Fund" and collectively
with Small Cap Value Fund, the "Funds"), in exchange for shares of the
Small Cap Opportunity Fund having an aggregate net asset value equal to the
aggregate net asset value of the shares of the Small Cap Opportunity Fund;
and (ii) the subsequent redemption of the shares and liquidation and
dissolution of the Small Cap Value Fund; and

2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.

The Reorganization is contingent upon the approval by shareholders of the
Small Cap Opportunity Fund of MacKay Shields LLC ("MacKay Shields"), an
affiliate of NYLIM, as that Fund's subadvisor.

Because shareholders of the Small Cap Value Fund are being asked to approve
the Agreement and Plan of Reorganization that will result in a transaction in
which the Small Cap Value Fund shareholders will hold shares of the Small Cap
Opportunity Fund, this Proxy Statement/Prospectus also serves as a Prospectus
for the Small Cap Opportunity Fund, a series of Eclipse Funds.

Each Fund offers Investor Class, Class A, Class B, Class C and Class I
shares (each a "Class"). Holders of a Class of shares of the Small Cap Value
Fund will receive shares of the same Class of shares of the Small Cap
Opportunity Fund in an amount equal to the value of their Small Cap Value Fund
shares. See "Information About The Reorganization" below.

This Proxy Statement/Prospectus, which should be read and retained for
future reference, sets forth information that shareholders of the Small Cap
Value Fund should know about the Small Cap Opportunity Fund before voting on the
Reorganization. A Statement of Additional Information ("SAI") relating to this
Proxy Statement/Prospectus, dated NOVEMBER 17, 2008 containing additional
information about the Reorganization and the parties thereto, has been filed
with the U.S. Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. For a more detailed discussion of the investment
objectives, policies and restrictions of the Funds, see the Prospectus and SAI
for Small Cap Value Fund, dated February 28, 2008, and the Prospectus and SAI
for Small Cap Opportunity Fund, dated February 28, 2008, as supplemented from
time to time, which also are incorporated herein by reference.

Each Fund also provides periodic reports to its shareholders that highlight
certain important information about the Funds, including investment results and
financial information. The annual reports for each Fund dated October 31, 2007
and the semi-annual reports for each Fund dated April 30, 2008 are incorporated
herein by reference. You may receive a copy of the most recent Prospectus, SAI
and annual report and any subsequently available semi-annual report for each of
the Funds, without charge, by contacting MainStay Investments, 169 Lackawanna
Avenue, Parsippany, New Jersey 07054, by calling toll-free 800-MAINSTAY (624-
6782), or by visiting our website at mainstayinvestments.com.

You may review and copy information about each Fund (including the SAI) at
the SEC's Public Reference Room in Washington, D.C. You may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-202-551-
8090. Reports and other information about the Funds are also available on the
EDGAR Database on the SEC's Internet site at http://www.sec.gov. You may obtain
copies of this information, after paying a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.

THE U.S. SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES, OR DETERMINED THAT THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

<Table>
<Caption>
PAGE
----

SUMMARY......................................................................... 15
The Reorganization............................................................ 15
Board Recommendation.......................................................... 17
COMPARATIVE INFORMATION RELATING TO THE REORGANIZATION.......................... 17
Comparison of Investment Objectives, Strategies, Risk Factors and Management.. 17
Description of Fund Classes................................................... 20
Purchase, Redemption and Exchange Features.................................... 20
Comparison of Fees and Expenses............................................... 21
Examples...................................................................... 27
Performance of the Small Cap Opportunity Fund................................. 28
INFORMATION ABOUT THE REORGANIZATION............................................ 31
The Reorganization Agreement.................................................. 31
Reasons for the Reorganization................................................ 32
Board Considerations.......................................................... 32
Contingent Events............................................................. 33
Tax Considerations............................................................ 33
Expenses of the Reorganization................................................ 34
Material Differences in the Rights of Fund Shareholders....................... 35
INFORMATION ABOUT MANAGEMENT OF THE FUNDS....................................... 36
The Board of Trustees......................................................... 36
The Investment Adviser........................................................ 36
Subadvisors................................................................... 37
Advisory and Subadvisory Fees................................................. 38
Portfolio Managers............................................................ 38
MORE ABOUT INVESTMENT STRATEGIES AND RISKS...................................... 40
SHAREHOLDER GUIDE............................................................... 44
VOTING INFORMATION.............................................................. 83
Voting of Proxies............................................................. 83
Quorum Requirements........................................................... 84
Votes Necessary to Approve the Proposal....................................... 84
Effect of Abstentions and Broken "Non-Votes".................................. 84
Adjournments.................................................................. 84
Payment of Solicitation Expenses.............................................. 84
Other Matters to Come Before the Special Meeting.............................. 85
Future Shareholder Proposals.................................................. 85
</Table>

<Table>
<Caption>
PAGE
----

OTHER INFORMATION............................................................... 85
Financial Highlights.......................................................... 85
Form of Organization.......................................................... 86
Distributor................................................................... 86
Custodian..................................................................... 86
Independent Registered Public Accounting Firm................................. 86
Shareholder Reports........................................................... 87
Information Requirements...................................................... 87
Security Ownership of Management and Principal Shareholders................... 87
Vote of The MainStay Funds Shares by NYLIM.................................... 87
Capitalization................................................................ 88
EXHIBITS
Form of Agreement and Plan of Reorganization for the MainStay Small Cap
Opportunity Fund and MainStay Small Cap Value Fund......................... A-1
Financial Highlights of the Small Cap Opportunity Fund........................ B-1
Principal Shareholders of the Funds........................................... C-1
</Table>

SUMMARY

This Summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Proxy Statement/Prospectus and the
Agreement and Plan of Reorganization ("Reorganization Agreement"), a copy of
which is attached to this Proxy Statement/Prospectus as Exhibit A. Shareholders
should read this entire Proxy Statement/Prospectus carefully. For more complete
information regarding each Fund, please read each Fund's Prospectus.

THE REORGANIZATION

At a meeting on September 24-25, 2008, the Boards of Trustees of the Trust
and Eclipse Funds, in each case by a unanimous vote, approved the Reorganization
Agreement. Subject to the approval of the shareholders of the Small Cap Value
Fund, the Reorganization Agreement provides for:

- the acquisition of all of the assets and the assumption of all of the
liabilities of the Small Cap Value Fund by the Small Cap Opportunity Fund
in exchange for shares of beneficial interest stock of the Small Cap
Opportunity Fund having an aggregate net asset value equal to the
aggregate net asset value of the shares of the Small Cap Value Fund;

- the distribution of shares of the Small Cap Opportunity Fund to the
shareholders of the Small Cap Value Fund; and

- the subsequent liquidation and dissolution of the Small Cap Value Fund.

The Reorganization is subject to approval by the shareholders of the Small
Cap Value Fund. The Reorganization, if approved by shareholders, is scheduled to
be effective upon the close of business on February 13, 2009, or on such later
date as the parties may agree ("Closing Date"). As a result of the
Reorganization, each shareholder of the Small Cap Value Fund will become the
owner of the number of full and fractional shares of the Small Cap Opportunity
Fund, having an aggregate net asset value equal to the aggregate net asset value
of the shareholder's Small Cap Value Fund shares as of the close of business on
the Closing Date. Holders of a Class of shares of the Small Cap Value Fund will
receive shares of the same Class of shares of the Small Cap Opportunity Fund in
an amount equal to the value of their Small Cap Value Fund shares. See
"Information About The Reorganization" below.

The Reorganization is also subject to approval by shareholders of the Small
Cap Opportunity Fund of MacKay Shields, an affiliate of NYLIM, as that Fund's
subadvisor.

The Reorganization is intended to qualify as a tax-free reorganization for
federal income tax purposes. See "Information About The

Reorganization" below. Immediately prior to the Reorganization, the Small Cap
Value Fund, to the extent necessary, will pay dividends and capital gain
distributions to shareholders. Small Cap Value Fund shareholders may be
responsible for the tax consequences of these distributions.

The Reorganization will not affect your right to purchase and redeem
shares, to exchange among other series of the MainStay Funds with which you
would have been able to exchange prior to the Reorganization, and to receive
dividends and other distributions (except that after the Reorganization, you
will receive any dividends and distributions from the Small Cap Opportunity Fund
rather than the Small Cap Value Fund).

IN CONSIDERING WHETHER TO APPROVE THE REORGANIZATION YOU SHOULD NOTE THAT:

- Both Funds will have the same investment objectives, strategies and
rules. If the shareholders of Small Cap Opportunity Fund approve MacKay
Shields as subadvisor, that Fund will adopt principal investment
strategies that are identical to those of Small Cap Value Fund
immediately prior to the Reorganization. Both Funds are classified in the
Morningstar Small Value category;

- Total assets in the Small Cap Value Fund and the Small Cap Opportunity
Fund as of July 31, 2008 were $53 million and $359 million, respectively.

- Shareholders of the Small Cap Value Fund are expected to benefit from
potential economies-of-scale with two investment portfolios becoming one
larger investment portfolio.

- Although Small Cap Value Fund will pay substantially all of the expenses
of the Reorganization, NYLIM indirectly will bear the expenses associated
with the Reorganization under the terms of an existing contractual
expense limitation agreement. However, NYLIM may be able to recoup the
amount of such fee waiver or expense reimbursement from the Fund under
the Fund's contractual expense limitation arrangement.

- The Reorganization will not result in a dilution of the economic
interests of Small Cap Value Fund shareholders because Small Cap Value
Fund shareholders will receive Small Cap Opportunity Fund shares with the
same aggregate value as their Small Cap Value Fund shares.

- Currently, the Small Cap Opportunity Fund is managed by NYLIM with Tony
H. Elavia serving as the portfolio manager. The Small Cap Value Fund is
also managed by NYLIM. However, MacKay Shields serves as that Fund's
subadvisor with Jordan D. Alexander and Stephen A. Friscia, Jr., serving
as newly appointed portfolio

managers. Messrs. Alexander and Friscia became portfolio managers of
Small Cap Value Fund on August 11, 2008.

- Currently, Small Cap Opportunity Fund does not have a subadvisor.
However, at a special meeting scheduled to be held on Tuesday, January
20, 2009, shareholders of the Small Cap Opportunity Fund are being asked
to approve MacKay Shields as the new subadvisor. The reorganization is
contingent upon this approval. If MacKay Shields is approved as
subadvisor to the Small Cap Opportunity Fund, Jordan D. Alexander and
Stephen A. Friscia, Jr., will serve as portfolio managers of the Small
Cap Opportunity Fund.

Approval of the Reorganization will require the affirmative vote of the
holders of a majority of the outstanding shares of the Small Cap Value Fund
entitled to vote and present in person or by proxy, as specified under the
Investment Company Act of 1940, as amended (the "1940 Act") and the rules
thereunder. See "VOTING INFORMATION" below.

BOARD RECOMMENDATION

For the reasons set forth below in "Reasons for the Reorganization," the
Trustees of the Trust have concluded that the Reorganization would be in the
best interests of the shareholders of the Small Cap Value Fund, and that the
interests of the Small Cap Value Fund's existing shareholders would not be
diluted as a result of the Reorganization.

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE "FOR" THE
REORGANIZATION.

COMPARATIVE INFORMATION RELATING TO THE
REORGANIZATION

COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES, RISK FACTORS AND MANAGEMENT

This section sets forth the investment objectives, principal investment
strategies, risk factors and management of the Small Cap Value Fund. If the
shareholders of Small Cap Opportunity Fund approve MacKay Shields as subadvisor,
that Fund will adopt principal investment strategies that are identical to those
of Small Cap Value Fund immediately prior to the Reorganization.

Additional information may be found in each Fund's SAI, which are
incorporated herein by reference and available by calling toll-free 800-MAINSTAY
(624-6782) or by visiting our website at mainstayinvestments.com.

INVESTMENT OBJECTIVE

The Small Cap Value Fund's investment objective is to seek long-term
capital appreciation by investing primarily in securities of small-cap
companies.

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT PROCESS

The Small Cap Value Fund normally invests at least 80% of its assets in
companies with market capitalizations at the time of investment comparable to
companies in the Russell 2000(R) Value Index and invests primarily in common
stocks and securities convertible into common stock. The Small Cap Value Fund
may also engage in the lending of portfolio securities.

MacKay Shields, the Small Cap Value Fund's subadvisor, uses an investment
selection process that focuses on stocks that meet three criteria: inexpensive
valuations, free cash flow, and multiple sources of potential growth or
earnings. MacKay Shields looks for stocks that are inexpensive relative to the
benchmark, their peer group or historical valuations. MacKay Shields takes a
long-term approach to investing, and relies primarily on its proprietary
fundamental research. The portfolio is constructed using this bottom-up process.
Stocks will be sold either when they meet MacKay Shields' price objective, or
when MacKay Shields believes that there is a negative change in the fundamental
performance of the issuer.

PRINCIPAL RISKS

Investment in common stocks and other equity securities is particularly
subject to the risk of changing economic, stock market, industry and company
conditions and the risks inherent in management's ability to anticipate such
changes that can adversely affect the value of the Small Cap Value Fund's
holdings. Opportunities for greater gain often come with greater risk of loss.
Some of the securities, therefore, may carry above-average risk, compared to
common stock indices such as the Dow Jones Industrial Average and the S&P 500(R)
Index. In comparison to stocks of companies with larger capitalizations, stocks
of small-capitalization companies may have:

- more price volatility,

- greater spreads between their bid and ask prices,

- significantly lower trading volumes, and/or

- cyclical, static or moderate growth prospects.

Small-capitalization companies may be more vulnerable to adverse business
or market developments than large-capitalization companies.

The principal risk of investing in value stocks is that they may never
reach what MacKay Shields believes is their full value or that they may even go
down in value. In addition, different types of stocks tend to shift in and out
of favor depending on market and economic conditions, and therefore the Small
Cap Value Fund's performance may be lower or higher than that of funds that
invest in other types of equity securities (such as those emphasizing growth
stocks).

The principal risk of securities lending is that the financial institution
that borrows securities from the Small Cap Value Fund could go bankrupt or
otherwise default on its commitment under the securities lending agreement and
the Small Cap Value Fund might not be able to recover the loaned securities or
their value.

Due to its trading strategies, the Small Cap Value Fund may experience a
portfolio turnover rate of over 100%. Funds with high turnover rates (over 100%)
often have higher transaction costs (which are paid by the Fund) and may
generate short-term capital gains (on which you will pay taxes, even if you do
not sell any shares by year-end).

<Table>
<Caption>
SMALL CAP
AS OF JULY 31, 2008 OPPORTUNITY FUND SMALL CAP VALUE FUND
- ------------------- -------------------- --------------------

NET ASSETS $359 MILLION $53 MILLION
NUMBER OF HOLDINGS 318 124
PORTFOLIO COMPOSITION 98.7% - EQUITIES 98.3% - EQUITIES
1.3% - CASH 1.7% - CASH
PRIMARY BENCHMARK RUSSELL 2000(R) RUSSELL 2000(R)
VALUE INDEX(1) VALUE INDEX(1)
SECONDARY BENCHMARK NONE NONE
% OF AUM IN TOP 10 9.6% 13.5%
HOLDINGS
PORTFOLIO TURNOVER 134% 189%
RATE
INVESTMENT MANAGER NYLIM NYLIM
SUBADVISOR None MacKay Shields
LLC(1)
PORTFOLIO MANAGER(S) Tony H. Elavia(2) Jordan D. Alexander
and Stephen A.
Friscia, Jr.
</Table>

TOP TEN HOLDINGS:

SMALL CAP OPPORTUNITY FUND

<Table>
<Caption>
% NET
NAME ASSETS
- ---- ------

Ceradyne Inc. ............. 1.05%
ASPEN Insurance Holdings
Ltd. .................... 1.05%
IPC Holdings Ltd. ......... 1.04%
UMB Financial Corp. ....... 0.98%
Platinum Underwriters
Hldg. ................... 0.98%
Corp Office PPTYS TR
Inc. .................... 0.97%
WGL Holdings Inc. ......... 0.92%
Cash America INTL Inc. .... 0.90%
National Retail
Properties............... 0.90%
Portland General Electric
Co. ..................... 0.90%
</Table>

SMALL CAP VALUE FUND

<Table>
<Caption>
% NET
NAME ASSETS
- ---- ------

Talbots, Inc. ............. 1.58%
Old Dominion Freight
Lines ................... 1.50%
Emergent Biosolution,
Inc ..................... 1.34%
Aventine Renewable Energy
Holdings, Inc. .......... 1.33%
KBW, Inc. ................. 1.30%
Complete Production
Services, Inc. .......... 1.29%
ICF International, Inc. ... 1.18%
Gencorp, Inc. ............. 1.18%
International Bancshares
Corp .................... 1.16%
Olin Corporation .......... 1.11%
</Table>

- --------

(1) The Russell 2000(R) Value Index measures the performance of those Russell
2000(R) Index companies with lower price-to-book ratios and lower
forecasted growth values. The Russell 2000(R) Index measures the
performance of the 2,000 smallest companies in the Russell 3000(R) Index,
which represents approximately 8% of the total market capitalization of
the Russell 3000(R) Index. The Russell 3000(R) Index measures the
performance of the 3,000 largest U.S. companies based on total market
capitalization, which 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.

(2) Pending shareholder approval of MacKay Shields as subadvisor, Jordan D.
Alexander and Stephen A. Friscia, Jr. will become portfolio managers of
Small Cap Opportunity Fund prior to the Reorganization.

DESCRIPTION OF FUND CLASSES

As noted above, both Funds offer Investor Class, Class A, Class B, Class C
and Class I shares. The Investor Class, Class A, Class B, Class C and Class I
shares of each Fund have the same class-specific features.

PURCHASE, REDEMPTION AND EXCHANGE FEATURES

The Funds have the same policies with respect to purchases, redemptions and
exchanges by shareholders. See the "Shareholder Guide" for a detailed
description of purchase, redemption and exchange features.

COMPARISON OF FEES AND EXPENSES

The following discussion describes and compares the fees and expenses of
the Funds. Expenses of the Funds are based upon the operating expenses as of
April 30, 2008, adjusted to give effect to current expense limitations. Pro
forma fees combined show estimated fees of Small Cap Opportunity Fund after
giving effect to the proposed Reorganization and proposed changes in fees and
expense limitations. Pro forma numbers are estimated in good faith and are
hypothetical.

INVESTOR CLASS

<Table>
<Caption>
SMALL CAP SMALL
OPPORTUNITY SMALL CAP COMPANY
SHAREHOLDER FEES (FEES PAID FUND VALUE FUND VALUE FUND
DIRECTLY FROM SHAREHOLDER'S INVESTOR INVESTOR CLASS PRO FORMA
INVESTMENT CLASS SHARES SHARES COMBINED
- --------------------------- ------------ -------------- ----------

Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of Offering
price)........................ 5.50% 5.50% 5.50%
Maximum Deferred Sales Charge
(Load) (as a percentage of the
lesser of the original
offering price or redemption
proceeds)..................... None None None
Redemption Fee/Exchange Fee (as
a percentage of redemption
proceeds)..................... None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Maximum Account Fee............. None None None
Management Fees(1).............. 1.00% 0.85% 0.85%
Distribution and/or Service
(12b-1) Fees(2)............... 0.25% 0.25% 0.25%
Other Expenses(3)............... 0.56% 0.71% 0.55%
Total Annual Fund Operating
Expenses...................... 1.81% 1.81% 1.65%
Less Waivers/ Reimbursements.... (0.01)% (0.16)% (0.02)%
Net Fund Operating Expenses(4).. 1.80% 1.65% 1.63%
</Table>

CLASS A

<Table>
<Caption>
SMALL CAP SMALL CAP
SHAREHOLDER FEES (FEES PAID OPPORTUNITY SMALL CAP VALUE FUND
DIRECTLY FROM SHAREHOLDER'S FUND CLASS A VALUE FUND PRO FORMA
INVESTMENT SHARES CLASS A SHARES COMBINED
- --------------------------- ------------ -------------- ----------

Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of Offering
price)....................... 5.50% 5.50% 5.50%
Maximum Deferred Sales Charge
(Load) (as a percentage of
the lesser of the original
offering price or redemption
proceeds).................... None None None
Redemption Fee (as a percentage
of redemption proceeds)...... None None None
Maximum Account Fee............ None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees(1)............. 1.00% 0.85% 0.85%
Distribution and/or Service
(12b-1) Fees(2).............. 0.25% 0.25% 0.25%
Other Expenses(3).............. 0.50% 0.68% 0.51%
Total Annual Fund Operating
Expenses..................... 1.75% 1.78% 1.60%
Less Waivers/ Reimbursements... (0.20)% (0.23)% (0.07)%
Net Fund Operating
Expenses(4).................. 1.55% 1.55% 1.53%
</Table>

CLASS B

<Table>
<Caption>
SMALL CAP SMALL CAP
SHAREHOLDER FEES (FEES PAID OPPORTUNITY SMALL CAP VALUE FUND
DIRECTLY FROM SHAREHOLDER'S FUND CLASS B VALUE FUND PRO FORMA
INVESTMENT SHARES CLASS B SHARES COMBINED
- --------------------------- ------------ -------------- ----------

Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of Offering
price)....................... None None None
Maximum Deferred Sales Charge
(Load) (as a percentage of
the lesser of the original
offering price or redemption
proceeds).................... 5.00% 5.00% 5.00%
Redemption Fee (as a percentage
of redemption proceeds)...... None None None
Maximum Account Fee............ None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees(1)............. 1.00% 0.85% 0.85%
Distribution and/or Service
(12b-1) Fees(2).............. 1.00% 1.00% 1.00%
Other Expenses(3).............. 0.56% 0.71% 0.55%
Total Annual Fund Operating
Expenses..................... 2.56% 2.56% 2.40%
Less Waivers/Reimbursements.... (0.16)% (0.16)% (0.02)%
Net Fund Operating
Expenses(4).................. 2.40% 2.40% 2.38%
</Table>

CLASS C

<Table>
<Caption>
SMALL CAP SMALL CAP
SHAREHOLDER FEES (FEES PAID OPPORTUNITY SMALL CAP VALUE FUND
DIRECTLY FROM SHAREHOLDER'S FUND CLASS C VALUE FUND PRO FORMA
INVESTMENT SHARES CLASS C SHARES COMBINED
- --------------------------- ------------ -------------- ----------

Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of Offering
price)....................... None None None
Maximum Deferred Sales Charge
(Load) (as a percentage of
the lesser of the original
offering price or redemption
proceeds).................... 1.00% 1.00% 1.00%
Redemption Fee (as a percentage
of redemption proceeds)...... None None None
Maximum Account Fee............ None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees(1)............. 1.00% 0.85% 0.85%
Distribution and/or Service
(12b-1) Fees(2).............. 1.00% 1.00% 1.00%
Other Expenses(3).............. 0.56% 0.71% 0.55%
Total Annual Fund Operating
Expenses..................... 2.56% 2.56% 2.40%
Less Waivers/Reimbursements.... (0.16)% (0.16)% (0.02)%
Net Fund Operating
Expenses(4).................. 2.40% 2.40% 2.38%
</Table>

CLASS I

<Table>
<Caption>
SMALL CAP SMALL CAP
SHAREHOLDER FEES (FEES PAID OPPORTUNITY SMALL CAP VALUE FUND
DIRECTLY FROM SHAREHOLDER'S FUND CLASS I VALUE FUND PRO FORMA
INVESTMENT SHARES CLASS I SHARES COMBINED
- --------------------------- ------------ -------------- ----------

Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering
price)........................ None None None
Maximum Deferred Sales Charge
(Load) (as a percentage of the
lesser of the original
offering price or redemption
proceeds)..................... None None None
Redemption Fee (as a percentage
of redemption proceeds)....... None None None
Maximum Account Fee............. None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees(1).............. 1.00% 0.85% 0.85%
Distribution and/or Service
(12b-1) Fees(2)............... None None None
Other Expenses(3)............... 0.50% 0.68% 0.51%
Total Annual Fund Operating
Expenses...................... 1.50% 1.53% 1.35%
Less Waivers/ Reimbursements.... (0.31)% (0.29)% (0.18)%
Net Fund Operating Expenses(4).. 1.19% 1.24% 1.17%
</Table>

- --------

(1) The management fee for the Funds is an annual percentage of the Funds'
average daily net assets.

Currently, NYLIM has contractually agreed to waive a portion of its
management fee of the Small Cap Opportunity Fund so that the management
fee is 1.00% for assets up to $1.5 billion; and 0.95% on the remainder of
assets. Without this waiver, the actual management fee would be 1.00%.

Effective upon consummation of the Reorganization, NYLIM has agreed to
contractually reduce its management fee for the Small Cap Opportunity Fund
to 0.85% for assets up to $1.5 billion and 0.80% on the remainder of the
assets.

NYLIM has contractually agreed to waive a portion of its management fee of
the Small Cap Value Fund so that the management fee does not exceed 0.60%
on assets up to $1.0 billion and 0.55% on assets in excess of $1.0
billion. Without this waiver, the actual management fee

would be 0.85% on assets up to $1.0 billion and 0.80% on assets in excess
of $1.0 billion.

(2) Because the 12b-1 fee is an ongoing fee charged against the assets of the
Funds, long-term shareholders may indirectly pay an amount that is more
than the economic equivalent of paying other types of sales charges.

(3) "Other Expenses" include, among other things, fees payable for transfer
agency services, which may differ between the classes. "Other Expenses"
also include each Fund's share of the fees and expenses of any other fund
in which that Fund may invest. These fees and expenses are less than 0.01%
of the average net assets of either Fund. For more information, see
"Shareholder Guide -- Information on Fees" in this Proxy
Statement/Prospectus.

(4) Net Annual Fund Operating expenses include current expense cap structure
for Small Cap Value Fund and Small Cap Opportunity Fund. Net Annual Fund
Operating Expenses for Small Cap Opportunity Fund Pro Forma Combined
include new class specific expense caps (effective February 13, 2009 for
Small Cap Opportunity Fund).

Pursuant to an expense cap agreement effective February 13, 2009, NYLIM
will waive a portion of the Small Cap Opportunity Fund's management fee or
reimburse the expenses of the appropriate class of the Fund so that the class'
total ordinary operating expenses (total annual operating expenses excluding
taxes, interest, litigation, extraordinary expenses, and brokerage and other
transaction expenses relating to the purchase or sale of portfolio investments)
do not exceed the following amounts of average daily net assets for each class
of the Small Cap Opportunity Fund: Investor Class, 1.63%; Class A, 1.53%; Class
B, 2.38%; Class C, 2.38% and Class I, 1.17%.

Effective April 1, 2008, the Funds were subject to a similar expense cap
agreement with the following total expense limits for Small Cap Opportunity
Fund: Investor Class, 1.80%; Class A, 1.70%; Class B, 2.55%; Class C, 2.55% and
Class I, 1.19%, and the following total expense limits for the Small Cap Value
Fund: Investor Class, 1.65%; Class A, 1.55%; Class B, 2.40%; Class C, 2.40% and
Class I, 1.24%.

Effective May 1, 2008, the expense limits for Small Cap Opportunity Fund
were changed as follows: Investor Class, 1.80%; Class A, 1.55%; Class B, 2.40%;
Class C, 2.40% and Class I, 1.19%.

NYLIM may recoup the amount of any management fee waivers or expense
reimbursements from the Funds pursuant to the agreements if such action does not
cause the Fund to exceed existing expense limitations and the recoupment is made
within three years after the year in which NYLIM incurred the expense. The Total
Annual Fund Operating

Expenses for the Small Cap Opportunity Fund may differ from the amounts shown in
the Financial Highlights section of this Proxy Statement/Prospectus, which
reflect only the operating expenses of that Fund and do not include the Fund's
share of the fees and expenses of any other fund in which the Fund invests.

EXAMPLES

The following examples are intended to help you compare the costs of
investing in each Fund and the combined Fund with the cost of investing in other
mutual funds. The examples assume that you invest $10,000 in each Fund and in
the combined Fund after the Reorganization for the time periods indicated and
reflects what you would pay at the end of each time period shown or if you
continued to hold them. The examples also assume that your investment has a 5%
return each year, that each Fund's operating expenses remain the same and that
all dividends and distributions are reinvested. Your actual costs may be higher
or lower than those shown.

SMALL CAP OPPORTUNITY FUND

<Table>
<Caption>
CLASS B -- CLASS C --
ASSUMING ASSUMING
CLASS B -- REDEMPTION CLASS C -- REDEMPTION
ASSUMING AT THE END ASSUMING AT THE END
EXPENSES INVESTOR NO OF EACH NO OF EACH
AFTER CLASS CLASS A REDEMPTIONS PERIOD REDEMPTIONS PERIOD CLASS I
- -------- -------- ------- ----------- ---------- ----------- ---------- -------

1 YEAR......... $ 723 $ 699 $ 243 $ 743 $ 243 $ 343 $ 121
3 YEARS........ $1,087 $1,052 $ 781 $1,081 $ 781 $ 781 $ 444
5 YEARS........ $1,475 $1,429 $1,346 $1,546 $1,346 $1,346 $ 789
10 YEARS....... $2,559 $2,483 $2,700 $2,700 $2,883 $2,883 $1,764
</Table>

SMALL CAP VALUE FUND

1 YEAR......... $ 709 $ 699 $ 243 $ 743 $ 243 $ 343 $ 126
3 YEARS........ $1,073 $1,058 $ 781 $1,081 $ 781 $ 781 $ 455
5 YEARS........ $1,462 $1,441 $1,346 $1,546 $1,346 $1,346 $ 807
10 YEARS....... $2,547 $2,511 $2,700 $2,700 $2,883 $2,883 $1,799
</Table>

SMALL CAP OPPORTUNITY FUND -- PRO FORMA COMBINED

1 YEAR......... $ 707 $ 697 $ 241 $ 741 $ 241 $ 341 $ 119
3 YEARS........ $1,040 $1,021 $ 747 $1,047 $ 747 $ 747 $ 410
5 YEARS........ $1,396 $1,367 $1,279 $1,479 $1,279 $1,279 $ 722
10 YEARS....... $2,395 $2,340 $2,549 $2,549 $2,735 $2,735 $1,608
</Table>

PERFORMANCE OF SMALL CAP OPPORTUNITY FUND

The bar chart and table (below) indicate some of the risks of investing in
the Small Cap Opportunity Fund. The bar chart shows you how the Small Cap
Opportunity Fund's calendar year performance has varied over the last ten years.
The table below shows how the Small Cap Opportunity Fund's average annual total
returns (before and after taxes) for one, five and ten year periods compare to
those of a broad-based securities market index. Average Annual Total Returns
reflect actual sales loads, service and/or distribution fees. Absent expense
limitations and/or fee waivers, performance would have been lower. Performance
data for the classes varies based on differences in their fee and expense
structures. Performance figures for Class A and B shares, first offered on
January 1, 2004, include the historical performance of Class I shares from
January 1, 1998 through December 31, 2003, adjusted for differences in certain
contractual expenses and fees. Performance figures for Class C shares, first
offered on January 1, 2004, include the historical performance of the L Class
shares (which were redesignated as Class C shares on January 1, 2004) from
December 30, 2002 through December 31, 2003 and the historical performance of
the Class I shares from January 1, 1998 through December 29, 2002, adjusted for
differences in certain contractual expenses and fees. As with all mutual funds,
past performance (before and after taxes) is not necessarily an indication of
how the Small Cap Opportunity Fund will perform in the future. Performance
figures for Investor Class shares, first offered on February 28, 2008, include
the historical performance of Class A shares from January 1, 1998 through
December 31, 2007, adjusted for differences in expenses and fees. Unadjusted,
the performance shown for the newer classes might have been lower. Additionally,
the shareholders of Small Cap Opportunity Fund are being asked to approve MacKay
Shields as a new subadvisor to the Fund at a special meeting on January 20,
2009.

Small Cap Opportunity Fund Bar Chart

The following are the best and worst quarterly returns of the Small Cap
Opportunity Fund's Class I shares during the last ten years (1999-2007):

<Table>
<Caption>
RETURN QUARTER/YEAR
------ ------------

Highest return/best quarter............. 21.15% 4Q/03
Lowest return/worst quarter............. -16.91% 3Q/98
</Table>

SMALL CAP OPPORTUNITY FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDED DECEMBER 31, 2007)

<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------

Small Cap Opportunity Fund
Return before Taxes
Investor Class.................... -22.00% 13.29% 6.95%
Class A........................... -22.00% 13.29% 6.95%
Class B........................... -21.67% 13.44% 6.71%
Class C........................... -18.83% 13.72% 6.72%
Class I........................... -17.09% 15.04% 7.91%
</Table>

<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------

Return after Taxes on
Distributions(1)
Class I........................... -18.79% 13.12% 6.39%
Return after Taxes on Distributions
and Sale of Fund Shares(1)
Class I........................... -9.01% 12.67% 6.35%
Russell 2000(R) Value Index(2)
(reflects no deductions for fees,
expenses or taxes)................ -9.78% 15.80% 9.06%
</Table>

- --------

(1) Prior to January 1, 2004, the Fund offered L Class shares, which were
subject to a front-end sales charge of 1.00%. The L Class shares also were
subject to a contingent deferred sales charge (CDSC) on redemptions of L
Class shares within 1 year of purchase. As of January 1, 2004, all
outstanding L Class shares of the Fund were redesignated as Class C
shares. Average annual total returns for Class C shares for the period of
December 30, 2003 to December 31, 2003 therefore are for the L Class
shares and reflect the fees and expenses of the L Class shares for that
period. After-tax returns are calculated using the historical highest
individual federal marginal tax rates and do not reflect the impact of
state and local taxes. In some cases, the return after taxes may exceed
the return before taxes due to an assumed tax benefit from any losses on a
sale of Fund shares at the end of the measurement period. Actual after-tax
returns depend on an investor's tax situation and may differ from those
shown, and after-tax returns are not relevant to investors who hold their
fund shares through tax-deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax returns are shown for the Class
I shares of the Fund. After-tax returns for the Investor Class, Class A, B
and C shares may vary.

(2) The Russell 2000(R) Value Index measures the performance of those Russell
2000 companies with lower price-to-book ratios and lower forecasted growth
values. The Russell 2000(R) Index measures the performance of the 2,000
smallest companies in the Russell 3000(R) Index, which, in turn, measures
the performance of the 3,000 largest U.S. companies based on total market
capitalization. Total returns assume reinvestment of all dividends and
capital gains. You cannot invest directly in an index.

INFORMATION ABOUT THE REORGANIZATION

THE REORGANIZATION AGREEMENT

The terms and conditions under which the proposed transactions may be
consummated are set forth in the Reorganization Agreement. Significant
provisions of the Reorganization Agreement are summarized below; however, this
summary is qualified in its entirety by reference to the Reorganization
Agreement, a form of which is attached as Exhibit A.

The Reorganization Agreement contemplates the transfer of all of the assets
of the Small Cap Value Fund and the assumption of all of the liabilities of the
Small Cap Value Fund by the Small Cap Opportunity Fund in exchange for shares of
the Small Cap Opportunity Fund having an aggregate net asset value equal to the
aggregate net asset value of the Small Cap Value Fund. The Small Cap Value Fund
would then distribute to its shareholders the portion of the shares of the Small
Cap Opportunity Fund to which each such shareholder is entitled, with each
shareholder receiving shares of the Small Cap Opportunity Fund having an
aggregate net asset value equal to the aggregate net asset value of the shares
of the Small Cap Value Fund held by that shareholder as of the close of business
on the day of the closing of the Reorganization. Thereafter, the Small Cap Value
Fund would be liquidated and dissolved.

If shareholders of the Small Cap Value Fund approve the Reorganization and
all contingencies occur, NYLIM intends to transition the Small Cap Value Fund's
portfolio securities prior to the Closing Date to more closely align with the
holdings of the Small Cap Opportunity Fund. To accomplish this transition, NYLIM
intends to sell certain of the Small Cap Value Fund's portfolio securities to
the extent desirable from the perspective of the portfolio of the Small Cap
Opportunity Fund. However, NYLIM does not anticipate any significant costs or
turnover as a result of this transition.

Dividend and capital gain distributions to Small Cap Value Fund
shareholders made prior to the reorganization may result in tax consequences for
the Small Cap Value Fund shareholders.

Until the Closing Date, shareholders of the Small Cap Value Fund will
continue to be able to redeem or exchange their shares. Redemption or exchange
requests received after the Closing Date will be treated as requests received by
the Small Cap Opportunity Fund for the redemption or exchange of its shares.

The obligations of the Funds under the Reorganization Agreement are subject
to various conditions, including approval of the shareholders of the Small Cap
Value Fund. The Reorganization Agreement also requires that each of the Funds
take, or cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to

consummate and make effective the transaction contemplated by the Reorganization
Agreement. The Reorganization Agreement may be terminated by the Boards of
Trustees of either Fund if circumstances should develop that, in the opinion of
either Board, make proceeding with the Agreement inadvisable for the Fund over
which it proceeds. Please refer to Exhibit A to review the terms and conditions
of the Reorganization Agreement.

The Reorganization is contingent upon the approval by the shareholders of
Small Cap Opportunity Fund of MacKay Shields as that Fund's subadvisor.

REASONS FOR THE REORGANIZATION

NYLIM recommended the Reorganization to the Boards of both Funds because
NYLIM believes that the Reorganization will benefit the Small Cap Value Fund
shareholders through potential cost savings in economies of scale resulting from
combined portfolio assets, and it expects that all shareholders will benefit in
the long term from the potential to grow portfolio assets with MacKay Shields as
the subadvisor. Finally, NYLIM believes that the Reorganization also will create
a stronger, more cohesive family of funds through the harmonization and
rationalization of similar investment products.

BOARD CONSIDERATIONS

The Reorganization was presented to the Boards of the Funds for
consideration at meetings held on September 24-25, 2008. In evaluating the
Reorganization, the Boards considered a number of factors, including the
following:

- the Reorganization is contingent upon the approval by shareholders of the
Small Cap Opportunity Fund of MacKay Shields as that Fund's subadvisor;

- prior to the reorganization, the investment objective, strategies and
process of the Small Cap Opportunity Fund will be changed to be similar
to those of the Small Cap Value Fund;

- the longer operating history and larger size of Small Cap Opportunity
Fund;

- the declining asset size of Small Cap Value Fund;

- the management fee and total expense cap structure of Small Cap
Opportunity Fund;

- the costs of the Reorganization will be borne by the Small Cap Value
Fund;

- the terms of the agreements relating to the Reorganization, including
valuation procedures, expenses and potential unassumed liabilities;

- the Reorganization is structured as a tax-free reorganization that will
not cause a taxable event for shareholders. However, the Small Cap Value
Fund will pay its annual dividend and capital gains distributions to
shareholders as required, prior to the Reorganization;

- alternatives to the Reorganization and other factors;

- the nature, extent, and quality of the services to be provided by NYLIM
and MacKay Shields;

- the relative investment performance of each Fund;

- the costs of the services to be provided, and profits to be realized, by
NYLIM and its affiliates from NYLIM's relationship with each Fund;

- the extent to which economies of scale may be realized, and the extent to
which economies of scale may benefit shareholders; and

- the reasonableness of each Fund's management fee levels and overall total
ordinary operating expenses, particularly as compared to similar
portfolios.

The Boards also acknowledged the future potential benefits to NYLIM,
including that NYLIM's costs to administer both Funds may be reduced if the
Reorganization is approved. Based on the foregoing, the Boards, determined that
the interests of the shareholders of the Funds will not be diluted as a result
of the Reorganization, and that the Reorganization is in the best interests of
the Funds.

CONTINGENT EVENTS

The Reorganization is contingent upon the approval by the shareholders of
the Small Cap Opportunity Fund of MacKay Shields, as that Fund's subadvisor.

TAX CONSIDERATIONS

The Reorganization is intended to qualify for Federal income tax purposes
as a tax-free reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"). Accordingly, pursuant to this treatment, neither
the Small Cap Value Fund nor its shareholders, nor the Small Cap Opportunity
Fund nor its shareholders, are expected to recognize any gain or loss for
Federal income tax purposes from the Reorganization.

As a condition to the closing of the Reorganization, the Funds will receive
an opinion from the law firm of Dechert LLP to the effect that the
Reorganization will qualify as a tax-free reorganization for federal income tax
purposes. That opinion will be based in part upon certain assumptions and upon
representations made by the Funds.

Immediately prior to the Reorganization, the Small Cap Value Fund, to the
extent necessary, will pay a dividend or capital gains which, together with all
previous distributions, is intended to have the effect of distributing to its
shareholders all of its investment company taxable income for taxable years
ending on or prior to the Closing Date (computed without regard to any deduction
for dividends paid) and all of its net capital gain, if any, realized in taxable
years ending on or prior to the Closing Date (after reduction for any available
capital loss carryforward). Small Cap Value Fund shareholders may be responsible
for the tax consequences of these distributions.

EXPENSES OF THE REORGANIZATION

Except as discussed below, the expenses relating to the Reorganization will
be borne by the Small Cap Value Fund. No expenses shall be borne by the Small
Cap Opportunity Fund. NYLIM and the Funds' Boards believe that the anticipated
benefit to the Small Cap Value Fund, as a result of the Reorganization as
enumerated in the Proxy Statement/Prospectus, support the Small Cap Value Fund
bearing the costs of the Reorganization.

The costs of the Reorganization shall include, but not be limited to, costs
associated with obtaining any necessary order of exemption from the 1940 Act,
preparation of the Registration Statement, printing and distributing the Proxy
Statement/Prospectus, legal fees, accounting fees, securities registration fees,
and expenses of holding one or more shareholder meetings. Transaction costs
associated with the portfolio adjustments that would occur between the time of
shareholder approval of the Reorganization and the Closing Date will be borne by
the Small Cap Value Fund. The Small Cap Value Fund does not anticipate that
there will be any significant portfolio adjustments needed as part of the
Reorganization. Notwithstanding any of the foregoing, expenses will in any event
be paid by the party directly incurring such expenses if and to the extent that
the payment by another person of such expenses would result in the
disqualification of such party as a "regulated investment company" within the
meaning of Section 851 of the Code.

It has been determined that since the Funds are in the same business, to
the extent that the Small Cap Opportunity Fund may hold 1/3 of the assets of
the Small Cap Value Fund consistent with the Small Cap Opportunity Fund's
investment objective, policies, strategies and restrictions,

then the Small Cap Opportunity Fund would not be required to hold the Small Cap
Value Fund's assets.

MATERIAL DIFFERENCES IN THE RIGHTS OF FUND SHAREHOLDERS

Each Fund is organized as a series of a Massachusetts business trust and is
governed by substantially similar Declarations of Trust and Bylaws. Furthermore,
the Funds currently have substantially similar Management Agreements. If the
shareholders of the Small Cap Opportunity Fund approve MacKay Shields as the new
subadvisor, an occurrence upon which this Reorganization is contingent, the
Funds will have substantially similar subadvisory agreements. As such, there are
no material differences in the rights of either Fund's shareholders.

INFORMATION ABOUT MANAGEMENT OF
THE FUNDS

THE BOARD OF TRUSTEES

The Funds are represented by the same group of Trustees who oversee the
actions of NYLIM and, if applicable, any subadvisors and decide on general
policies. Each Fund's Board also oversees the Fund's officers, who conduct and
supervise the daily business of the Funds.

THE INVESTMENT ADVISER

NYLIM, 169 Lackawanna Avenue, Parsippany, New Jersey 07054, is the
investment manager of each of the Funds. NYLIM was formed as an independently
managed, indirect, wholly-owned subsidiary of New York Life Insurance Company in
April 2000. As of August 31, 2008, NYLIM managed approximately $246 billion in
assets.

In conformity with the stated policies of the Funds and pursuant to
Management Agreements with each Fund, NYLIM administers each Fund's business
affairs and manages the investment operations and composition of each Fund,
subject to the supervision of the Fund's Board of Trustees. NYLIM, with the
approval of the Board of Trustees, and where required, the shareholders of the
applicable Fund, may recommend subadvisors to the applicable Fund's Board of
Trustees based upon its continuing quantitative and qualitative evaluation of
the subadvisor's skill in managing assets using specific investment styles and
strategies. NYLIM also coordinates the investment activities of the subadvisors
to help ensure compliance with regulatory restrictions.

In addition, NYLIM provides administrative and legal services to each of
the Funds. NYLIM provides offices and conducts clerical, recordkeeping and
bookkeeping services, and keeps most of the financial, legal, and accounting
records required to be maintained by the Funds excluding those maintained by the
Funds' Custodian (as defined below) and/or MacKay Shields. NYLIM pays the
salaries and expenses of all personnel affiliated with the Funds except for the
members of the Board and all the operational expenses that are not the
responsibility of the Funds, including the fee paid to the MacKay Shields.

Section 15(a) of the 1940 Act requires that all contracts pursuant to which
persons serve as investment advisors to investment companies be approved by
shareholders. As interpreted, this requirement also applies to the appointment
of a subadvisor to the Funds.

A discussion regarding the basis for the Boards of Trustees' approval of
the Management Agreements of the Funds and Subadvisory Agreement of the Small
Cap Value Fund is available in the Funds' Annual Reports covering the fiscal
period ended October 31, 2007.

SUBADVISOR

MacKay Shields, 9 West 57th Street, New York, New York 10019, is the
subadvisor to the Small Cap Value Fund. MacKay Shields is a wholly-owned
subsidiary of New York Life Insurance Company. As of August 31, 2008, MacKay
Shields managed approximately $35 billion in assets.

If approved by shareholders at a special meeting scheduled to be held on
Tuesday, January 20, 2009, and pursuant to the terms of a subadvisory agreement,
MacKay Shields will act as the subadvisor to the Small Cap Opportunity Fund, and
as such, under the supervision of NYLIM, will be responsible for making specific
decisions about buying, selling and holding securities, selecting broker and
brokerage firms, maintaining accurate records, and, if possible, negotiating
favorable commissions and fees with the brokers and brokerage firms. Small Cap
Opportunity Fund does not currently have a subadvisor.

For providing these services, MacKay Shields will be paid one half of the
management fee payable to NYLIM with respect to the Small Cap Opportunity Fund,
net of management fee waivers, expense limitations and reimbursements. NYLIM
will pay the fees of MacKay Shields, not Small Cap Opportunity Fund. The
subadvisory agreement can be terminated by NYLIM or by the Board of Trustees, in
which case MacKay Shields would no longer manage Small Cap Opportunity Fund.

The current subadvisory agreement with MacKay Shields relating to Small Cap
Value Fund contains similar terms and conditions. NYLIM pays the fees of MacKay
Shields, not Small Cap Value Fund.

MacKay Shields has discretion to purchase and sell securities for Small Cap
Value Fund in accordance with that Fund's investment objectives, policies and
restrictions. If approved by shareholders, MacKay Shields will have the same
discretion for Small Cap Opportunity Fund. Although MacKay Shields is subject to
general supervision by the Fund's Board of Trustees and NYLIM, these parties do
not evaluate the investment merits of specific securities transactions.

ADVISORY AND SUBADVISORY FEES

The following table describes the annual advisory fees paid to NYLIM by
both Funds and the annual subadvisory fees paid by NYLIM to MacKay Shields,
assuming approval of MacKay Shields as subadvisor by the shareholders of Small
Cap Opportunity Fund.

<Table>
<Caption>
EFFECTIVE FEE RATE
PAID TO INVESTMENT
MANAGER FOR THE
INVESTMENT PERIOD ENDED FEE RECEIVED
FUND MANAGER OCTOBER 31, 2007(1) SUBADVISOR BY SUBADVISOR
- ---- ---------- ------------------- -------------- -----------------

SMALL CAP NYLIM N/A MacKay Shields One half of the
OPPORTUNITY management fee
FUND payable to NYLIM
with respect to
the Fund, net of
management fee
waivers, expense
limitations and
reimbursements.
SMALL CAP VALUE NYLIM 0.425% MacKay Shields One half of the
FUND management fee
payable to NYLIM
with respect to
the Fund, net of
management fee
waivers, expense
limitations and
reimbursements.
</Table>

- --------

(1) Currently, NYLIM has contractually agreed to waive a portion of its
management fee of the Small Cap Opportunity Fund so that the management
fee is 1.00% for assets up to $1.5 billion; and 0.95% on the remainder of
assets. Without this waiver, the actual management fee would be 1.00%.

Effective upon consummation of the Reorganization, NYLIM has agreed to
contractually reduce its management fee for the Small Cap Opportunity Fund to
0.85% for assets up to $1.0 billion and 0.80% on the remainder of the assets.

NYLIM has contractually agreed to waive a portion of its management fee of
the Small Cap Value Fund so that the management fee does not exceed 0.60% on
assets up to $1.0 billion and 0.55% on assets in excess of $1.0 billion. Without
this waiver, the actual management fee would be 0.85% on assets up to $1.0
billion and 0.80% on assets in excess of $1.0 billion.

PORTFOLIO MANAGERS

NYLIM and MacKay Shields use teams of portfolio managers and analysts
acting together to manage the Funds' investments. The senior members of each
Fund's management team who are jointly and primarily

responsible for the Fund's day-to-day management are set forth below. Additional
information regarding the portfolio manager's compensation, other accounts
managed by these portfolio managers and their ownership of shares of the Funds
each manages is available in the Funds' SAIs.

SMALL CAP OPPORTUNITY FUND -- TONY H. ELAVIA

TONY H. ELAVIA Mr. Elavia is a portfolio manager of the Balanced, Income
Manager, Conservative Allocation, Moderate Allocation, Moderate Growth
Allocation and Growth Allocation Funds. Mr. Elavia became the portfolio manager
of the Small Cap Opportunity Fund on September 26, 2008. He has been an employee
of NYLIM since September 2004 and is a Senior Managing Director. Mr. Elavia is
also Chief Investment Officer of NYLIM Equity Investors Group, a division of
NYLIM. Prior to joining NYLIM, Mr. Elavia spent five years as a Managing
Director and Senior Portfolio Manager of the Large Cap Growth team of Putnam
Investments in Boston, Massachusetts. Mr. Elavia holds a Ph.d. and M.A. in
Economics from the University of Houston and a M.S. and B.C. from the University
of Baroda in Vadodara, India.

SMALL CAP VALUE FUND -- JORDAN D. ALEXANDER AND STEPHEN A. FRISCIA, JR.

Jordan D. Alexander joined MacKay Shields in August 2008 as a Managing
Director. Immediately prior to joining MacKay Shields, he was a portfolio
manager with Bear Stearns Asset Management from June 2006 through July 2008.
Prior to that, Mr. Alexander was a portfolio manager at BKF Asset Management
Inc. from December 2003 through June 2006; a senior analyst at Palisade Capital
Management from June 2003 through December 2003; a portfolio manager and
research analyst at Evergreen Investment Management Company, LLC from September
1998 through June 2003; an Associate Research Analyst at PaineWebber, Inc. from
August 1995 through September 1998; and a Senior Financial Analyst and Auditor
at Arthur Andersen & Co., LLP from July 1990 through August 1995. He earned a BA
from Binghamton University and an MBA from New York University -- Stern School
of Business. He holds the Chartered Financial Analyst and Certified Public
Accountant designations.

Stephen A. Friscia, Jr., joined MacKay Shields in August 2008 as a Managing
Director. Immediately prior to joining MacKay Shields, he was a portfolio
manager with Bear Stearns Asset Management from June 2006 through July 2008.
Prior to that, Mr. Friscia was a portfolio manager at BKF Asset Management Inc.
from December 2003 through June 2006; a senior analyst at Palisade Capital
Management from June 2003 through December 2003; and a co-portfolio manager,
equity research analyst, fixed income securities analyst and accountant at
Evergreen Investment Management Company, LLC from April 1993 through May 2003.
Mr. Friscia earned a BS from State University of New York New Paltz and an MBA
from

Pace University -- Lubin School of Business. He holds the Chartered Financial
Analyst designation.

Shareholders of the Small Cap Opportunity Fund are being asked to approve
MacKay Shields as the new subadvisor. If MacKay Shields is approved as
subadvisor, Jordan D. Alexander and Stephen A. Friscia, Jr., will serve as
portfolio managers. Messrs. Alexander and Friscia are the current portfolio
managers for the Small Cap Value Fund

MORE ABOUT INVESTMENT STRATEGIES AND RISKS

Information about each Fund's principal investments, investment practices
and principal risks appears at the beginning of this Proxy Statement/Prospectus.
The information below further describes the investment practices and risks
pertinent to the Funds. Additional information about the investment practices of
the Funds and risks pertinent to these practices is included in the SAIs to this
Proxy Statement/Prospectus (see the back cover of this Proxy Statement/
Prospectus).

INVESTMENT POLICIES

The Small Cap Value Fund normally invests at least 80% of its assets in
companies with market capitalizations at the time of investment comparable to
companies in the Russell 2000(R) Value Index and invests primarily (at least
65%) in common stocks and securities convertible into common stock. The Fund may
also engage in the lending of portfolio securities.

If the shareholders of Small Cap Opportunity approve MacKay Shields as
subadvisor, that Fund will adopt investment policies identical to those of Small
Cap Value Fund immediately prior to the Reorganization.

For the purpose of testing the 80% requirement, "assets" means a Fund's net
assets plus any borrowings for investment purposes. Under normal circumstances,
the 80% requirement must be complied with at the time the Fund invests its
assets. If the Fund, under normal circumstances, no longer meets the 80%
requirement as a result of circumstances beyond its control, such as changes in
the value of portfolio holdings, it would not have to sell its holdings but
would have to make any new investments in such a way as to bring the portfolio
into compliance with the 80% requirement. Where other than normal circumstances
exist, the Fund would not be subject to such constraints on new investments.

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

Each Fund may invest in ADRs. ADRs, which are typically issued by a U.S.
financial institution (a "depositary"), evidence ownership interests in a
security or pool of securities issued by a foreign company which are

held by a depositary. ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets. Because ADRs are not denominated in the same currency as the
underlying securities into which they may be converted, they are subject to
currency risks. In addition, depositary receipts involve many of the same risks
of investing directly in foreign securities.

OPTIONS AND FUTURES TRANSACTIONS

While both Funds have the ability to invest in certain derivative
transactions such as options and futures, neither Fund has invested a
substantial portion of its assets in derivatives as part of its principal
investments. The value of derivative securities is based on certain underlying
equity or fixed-income securities, interest rates, currencies or indices and
include options, futures, options on futures and swap agreements. The use of
these transactions is a highly specialized activity that involves investment
techniques and risks that are different from those of ordinary securities
transactions. Derivative securities may be hard to sell at an advantageous price
or time and are very sensitive to changes in the underlying security, interest
rate, currency or index. As a result, derivatives can be highly volatile. If the
subadvisor is wrong about its expectations of changes in interest rates or
market conditions, the use of derivatives could result in a loss. When using
derivative instruments, there is a risk that a Fund will lose money if the
contract counterparty does not make the required payments or otherwise fails to
comply with the terms of the contract.

RISK MANAGEMENT TECHNIQUES

Various techniques can be used to increase or decrease a Fund's exposure to
changing security prices, interest rates, currency exchange rates, commodity
prices or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling futures contracts and
options on futures contracts, entering into foreign currency transactions (such
as foreign currency forward contracts and options on foreign currencies) and
purchasing put or call options on securities and securities indices. These
practices can be used in an attempt to adjust the risk and return
characteristics of a Fund's portfolio of investments. For example, to gain
exposure to a particular market, a Fund may be able to purchase a futures
contract with respect to that market. The use of such techniques in an attempt
to reduce risk is known as "hedging." If the subadvisor of a Fund judges market
conditions incorrectly or employs a strategy that does not correlate well with
the Fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques may
increase the volatility of a Fund and may involve a small investment of cash
relative to the magnitude of the risk assumed. In

addition, these techniques could result in a loss if the counterparty to the
transaction does not perform as promised.

REAL ESTATE INVESTMENT TRUSTS (REITS)

The Funds may invest in REITs. Investment in REITs carries with it many of
the risks associated with direct ownership of real estate, including declines in
property values, extended vacancies, increases in property taxes, and changes in
interest rates. In addition to these risks, REITs are dependent upon management
skills, may not be diversified, may experience substantial cost in the event of
borrower or lessee defaults, and are subject to heavy cash flow dependency.

FOREIGN SECURITIES

Generally, foreign securities are issued by companies organized outside the
U.S. and are traded in markets outside the U.S. These foreign securities can be
subject to most, if not all, of the risks of foreign investing. For example,
foreign investments may be more difficult to sell than U.S. investments.
Investments in foreign securities involve difficulties in receiving or
interpreting financial and economic information, possible imposition of taxes,
higher brokerage and custodian fees, possible currency exchange controls or
other government restrictions, including possible seizure or nationalization of
foreign deposits or assets. 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. Some securities may be issued by companies organized
outside the U.S. but are traded in U.S. securities markets and are denominated
in U.S. dollars. For example, ADRs and shares of some large foreign-based
companies are traded on principal U.S. exchanges. Other securities are not
traded in the U.S. but are denominated in U.S. dollars. These securities are
subject to some but not all of the risks of foreign investing. For example,
foreign trading market or currency risks will not apply to dollar denominated
securities traded in U.S. securities markets. Many of the foreign securities in
which the Funds invest are denominated in foreign currencies. Changes in foreign
currency exchange rates will affect the value of securities denominated or
quoted in foreign currencies. Exchange rate movements can be large and can
endure for extended periods of time, affecting either favorably or unfavorably
the value of the Funds' assets. However, a Fund may engage in foreign currency
transactions to attempt to protect itself against fluctuations in currency
exchange rates in relation to the U.S. dollar.

LENDING OF PORTFOLIO SECURITIES

Portfolio securities may be loaned to brokers, dealers and financial
institutions to realize additional income under guidelines adopted by the Board.
A risk of lending portfolio securities, as with other extensions of

credit, is the possible loss of rights in the collateral should the borrower
fail financially. In determining whether to lend securities, NYLM or the
subadvisor or its agent will consider all relevant facts and circumstances,
including the creditworthiness of the borrower.

TEMPORARY DEFENSIVE INVESTMENTS

In times of unusual or adverse market conditions, for temporary defensive
purposes or for liquidity purposes, each Fund may invest outside the scope of
its principal investment strategies. Under such conditions, a Fund may not
invest in accordance with its investment objective or principal investment
strategies and, as a result, there is no assurance that the Fund will achieve
its investment objective. Under such conditions, each Fund may invest without
limit in money market securities and other investments.

PORTFOLIO TURNOVER

Portfolio turnover measures the amount of trading a Fund does during the
year. Due to their trading strategies, the Funds may experience a portfolio
turnover rate of over 100%. The portfolio turnover rate for the Small Cap
Opportunity Fund is found in the Financial Highlights section of this Proxy
Statement/Prospectus. The portfolio turnover rate for the Small Cap Value Fund
is found in its prospectus dated February 28, 2008. The use of certain
investment strategies may generate increased portfolio turnover. Funds with high
turnover rates (at or over 100%) often have higher transaction costs (which are
paid by the Fund) and may generate short-term capital gains (on which you'll pay
taxes, even if you don't sell any shares by year-end).

SHAREHOLDER GUIDE

The following pages are intended to help you understand the costs
associated with buying, holding and selling the Small Cap Opportunity Fund's
shares. Except as discussed under "Comparison of Fees and Expenses" above, the
costs of the Small Cap Opportunity Fund do not differ materially from those of
the Small Cap Value Fund.

BEFORE YOU INVEST:

DECIDING WHICH MAINSTAY CLASS OF SHARES TO BUY

This Proxy Statement/Prospectus offers Investor Class, Class A, Class B,
Class C and Class I shares of the Small Cap Opportunity Fund. Each share class
represents an interest in the same portfolio of securities, but each class has
its own sales charge and expense structure, providing you with different choices
for meeting the needs of your situation. Depending on how you wish to purchase
shares of the Fund, the share classes available to you may vary.

The decision as to which class of shares is best suited to your needs
depends on a number of factors that you should discuss with your financial
advisor. Important factors to consider include:

- how much you plan to invest;

- how long you plan to hold your shares;

- total expenses associated with each class of shares; and

- whether you qualify for any reduction or waiver of sales charge.

As with any business, running a mutual fund involves costs. There are
regular Fund operating costs, such as investment advisory fees, marketing and
distribution expenses, and custodial, transfer agency, legal and accounting
fees. These fund-wide operating costs are typically paid from the assets of the
Small Cap Opportunity Fund, and thus, all investors in the Fund indirectly share
the costs. These expenses for the Fund are presented earlier in this Proxy
Statement/Prospectus in the table titled "Comparison of Fees and Expenses,"
under the heading "Annual Fund Operating Expenses." As the fee table shows,
certain costs are borne equally by each share class. In cases where services or
expenses are class-specific, the costs may be allocated differently among the
share classes. Most significant among the class specific costs are:

- Distribution and/or Service (12b-1) Fee -- named after the SEC rule that
permits their payment, "12b-1 fees" are paid by a class of shares to the
Funds' distributor, NYLIFE Distributors LLC (the "Distributor"), for
distribution and/or shareholder services such as marketing and selling
Fund shares, compensating brokers and others who sell Fund shares,
advertising, printing and mailing of

prospectuses, responding to shareholder inquiries, etc. NYLIM, MacKay
Shields and the Distributor are affiliates.

An important point to keep in mind about 12b-1 fees and shareholder service
fees is that they reduce the value of your shares, and therefore, will
proportionately reduce the returns you receive on your investment and any
dividends that are paid.

In addition to regular Fund operating costs, there are costs associated
with an individual investor's transactions and account, such as the compensation
paid to your financial advisor for helping you with your investment decisions.
The Small Cap Opportunity Fund typically covers such costs by imposing sales
charges and other fees directly on the investor either at the time of purchase
or upon redemption. These charges and fees for the Fund are presented earlier in
this Proxy Statement/Prospectus in the table under the heading "Comparison of
Fees and Expenses." Such charges and fees include:

- Initial Sales Charge -- also known as a "front-end sales load," refers to
a charge that is deducted from your initial investment in Investor Class
and Class A shares and is used to compensate the Distributor and/or your
financial advisor for their efforts and assistance to you in connection
with the purchase. The key point to keep in mind about a front-end sales
load is that it reduces the amount available to purchase Fund shares.

- Contingent Deferred Sales Charge -- also known as a "CDSC" or "back-end
sales load," refers to a sales load that is deducted from the proceeds
when you redeem Fund shares (that is, sell shares back to the Fund). The
amount of the CDSC that you pay will depend on how long you hold your
shares and decreases to zero if you hold your shares long enough.
Although you pay no sales charge at the time of your purchase, the
Distributor typically pays your financial advisor a commission up-front.
In part to compensate the Distributor for this expense over time, you
will pay a higher ongoing 12b-1 fee. Over time, these fees may cost you
more than paying an initial sales charge.

Distribution and/or service (12b-1) fees, shareholder service fees, initial
sales charges and contingent deferred sales charges are each discussed in more
detail in this Shareholder Guide. The following table gives you a summary of the
differences among share classes of the Small

Cap Opportunity Fund with respect to such fees and other important factors:

SUMMARY OF IMPORTANT DIFFERENCES AMONG SHARE CLASSES -- SMALL CAP OPPORTUNITY
FUND

<Table>
<Caption>
INVESTOR
CLASS CLASS A CLASS B CLASS C CLASS I
-------- -------- --------------- --------------- -------

INITIAL SALES CHARGE... Yes Yes None None None
CONTINGENT DEFERRED
SALES CHARGE......... None(1) None(1) Sliding scale 1% on sale of None
during the shares held for
first six years one year or
after less
purchase
ONGOING DISTRIBUTION
AND/OR SERVICE FEE... 0.25% 0.25% 0.75% 0.75% None
distribution distribution
and 0.25% and 0.25%
service service
(1.00% total) (1.00% total)
SHAREHOLDER SERVICE
FEE.................. None None None None None
REDEMPTION FEE......... None None None None None
CONVERSION FEATURE..... See See Yes None None
Below(2) Below(2)
PURCHASE MAXIMUM(3).... None None $100,000 $1,000,000 None
</Table>

- --------

(1) Except on certain redemptions on purchases made without an initial sales
charge.

(2) Investor Class and Class A shares may be subject to automatic conversions.
Please see "Investor Class Share Considerations" and "Class A Shares
Considerations" for more information.

(3) Per transaction. Does not apply to purchases by certain retirement plans.

The following discussion is not intended to be investment advice or a
recommendation because each investor's financial situation and considerations
are different. This analysis can best be made by discussing your situation and
the factors mentioned above with your financial advisor. Generally, however,
Class A shares are more economical if you intend to invest larger amounts
($100,000 or more) and hold your shares long-term (more than six years). Class C
shares may be more economical if you intend to hold your shares for a shorter
term (six years or less). Class I shares are the most economical, regardless of
amount invested or intended holding period, but are offered only to certain
institutional investors or through certain financial intermediary accounts. For

information regarding Fund classes with respect to the Reorganization, see the
"Description of Fund Classes" in this Proxy Statement/Prospectus.

INVESTOR CLASS SHARE CONSIDERATIONS

- Your Investor Class shares may convert automatically to Class A shares.
Investor Class share balances are examined Fund-by-Fund on a quarterly
basis. If at that time, the value of your Investor Class shares in any
one Fund equals or exceeds $25,000, whether by shareholder action or
change in market value, or if you have otherwise become eligible to
invest in Class A shares, your Investor Class shares of that Fund will be
automatically converted into Class A shares. Please note that you may not
aggregate your holdings of Investor Class shares in multiple Funds or
rely on a Right of Accumulation or Letter of Intent (each discussed
below) in order to qualify for this conversion feature. To discuss ways
to qualify for this automatic conversion, please contact your investment
advisor/plan administrator or the Funds by calling toll-free 800-MAINSTAY
(624-6782).

- Please also note that if your account balance falls below $25,000,
whether by shareholder action or change in market value, after conversion
to Class A shares or you no longer qualify to hold Class A shares, your
account may be converted back to Investor Class shares. Please see "Class
A Share Considerations" for more details.

- The conversion is based on the relevant NAVs of the two classes at the
time of the conversion and no sales load or other charge is imposed. The
Funds expect all share conversions to be made on a tax-free basis. The
Funds reserve the right to modify or eliminate the share class conversion
feature. When a conversion occurs, reinvested dividends and capital gains
convert proportionately with the shares that are converting.

- When you invest in Investor Class shares, you pay the public offering
price, which is the share price, or NAV, plus the initial sales charge
that may apply to your purchase. The amount of the initial sales charge
is based on the size of your investment (see "Information on Sales
Charges"). We also describe below how you may reduce or eliminate the
initial sales charge (see "Sales Charge Reductions and Waivers on
Investor Class Shares").

- Since some of your investment goes to pay an up-front sales charge when
you purchase Investor Class shares, you purchase fewer shares than you
would with the same investment in other share classes. Nevertheless,
you're usually better off purchasing Investor

Class shares rather than Class B or Class C shares and paying an up-front
sales charge if you:

- plan to own the shares for an extended period of time, since the higher
ongoing service and/or distribution (12b-1) fees on Class B and Class C
shares may eventually exceed the cost of the up-front sales charge; or

- qualify for a reduced or waived sales charge.

CLASS A SHARE CONSIDERATIONS

- Generally, Class A shares have a minimum investment amount of $25,000 per
Fund. Class A share balances are examined Fund-by-Fund on a semi-annual
basis. If at that time, the value of your Class A shares in any one Fund
is less than $25,000 ($10,000 in the case of IRA or 403(b)(7) accounts
that are making required minimum distributions via MainStay's systematic
withdrawal plan), whether by shareholder action or change in market
value, or if you are otherwise no longer eligible to hold Class A shares,
your Class A shares of that Fund will be converted automatically into
Investor Class shares. Please note that you may not aggregate holdings of
Class A shares in multiple Funds/Accounts or rely on a Right of
Accumulation or Letter of Intent (each discussed below) in order to avoid
this conversion feature.

- When you invest in Class A shares, you pay the public offering price,
which is the share price, or NAV, plus the initial sales charge that may
apply to your purchase. The amount of the initial sales charge is based
on the size of your investment (see "Information on Sales Charges"). We
also describe below how you may reduce or eliminate the initial sales
charge (see "Sales Charge Reductions and Waivers on Investor Class Shares
and Class A Shares").

- Since some of your investment goes to pay an up-front sales charge when
you purchase Class A shares, you purchase fewer shares than you would
with the same investment in other share classes. Nevertheless, you're
usually better off purchasing Class A shares

rather than Class B or Class C shares and paying an up-front sales charge
if you:

- qualify for a reduced or waived sales charge.

CLASS B SHARE CONSIDERATIONS

- You pay no initial sales charge on an investment in Class B shares.
However, you pay higher ongoing service and/or distribution fees. Over
time these fees may cost you more than paying an initial sales charge on
Investor Class or Class A shares. Consequently, it is important that you
consider your investment goals and the length of time you intend to hold
your shares when comparing your share class options.

- Due to the availability of sales charge discounts for Investor Class and
Class A shares, and the higher ongoing fees for Class B shares, Investor
Class and Class A shares may be more economical than Class B shares if
you, your spouse, and/or your children under the age of 21 intend to
invest more than $50,000.

- The more economical share class will depend on a variety of factors,
including:

- your personal situation (e.g., total amount available to invest,
anticipated holding period for the shares to be purchased); and

- external factors such as the type of fund(s) purchased (index fund,
actively managed fixed income fund or actively managed equity fund),
fund expenses and the actual performance of the fund(s) purchased.

- You should consult with your financial advisor to assess your intended
purchase in light of your particular circumstances.

- The Fund will generally not accept a purchase order for Class B shares in
the amount of $100,000 or more.

- In most circumstances, you will pay a contingent deferred sales charge
("CDSC") if you sell Class B shares within six years of buying them (see
"Information on Sales Charges"). There are exceptions, which are
described in the SAIs.

- Selling Class B shares during the period in which the CDSC applies can
significantly diminish the overall return on an investment.

- If you intend to hold your shares less than six years, Class C shares
will generally be more economical than Class B shares of most Funds.

- When you sell Class B shares, to minimize your sales charges, the Fund
first redeems the shares that have no sales charges (appreciation on the
original value of your shares, fully aged shares, and any shares received
through the reinvestment of dividends and capital gains) and then the
shares you have held longest.

- Class B shares convert to Class A shares, or Investor Class shares if you
are not eligible to hold Class A shares, at the end of the calendar
quarter eight years after the date they were purchased. This reduces
distribution and/or service fees from 1.00% to 0.25% of average daily net
assets.

- The conversion is based on the relevant NAV of the two classes, and no
sales load or other charge is imposed. The Funds expect all share
conversions to be made on a tax-free basis. The Funds reserve the right
to modify or eliminate this share class conversion feature. When a
conversion occurs, reinvested dividends and capital gains convert
proportionately with the shares that are converting.

CLASS C SHARE CONSIDERATIONS

- You pay no initial sales charge on an investment in Class C shares.
However, you will pay higher ongoing service and/or distribution fees
over the life of your investment.

- In most circumstances, you will pay a 1% CDSC if you redeem shares held
for one year or less.

- When you sell your Class C shares, to minimize your sales charges, the
Fund first redeems the appreciation of the original value of your shares,
then fully aged shares, then any shares you received through reinvestment
of dividends and capital gains and then shares you have held longest.

- Unlike Class B shares, Class C shares will never convert to Investor
Class or Class A shares. As a result, long-term Class C shareholders pay
higher ongoing service and/or distribution fees over the life of their
investment.

- The Funds will generally not accept a purchase order for Class C shares
in the amount of $1,000,000 or more.

CLASS I SHARE CONSIDERATIONS

- You pay no initial sales charge or CDSC on an investment in Class I
shares.

- You do not pay any ongoing service or distribution fees.

- You may buy Class I shares if you are an:

- INSTITUTIONAL INVESTOR

- certain employer-sponsored, association or other group retirement
plans or employee benefit trusts with a service arrangement through
NYLIM Retirement Plan Services or NYLIFE Distributors LLC;

- certain financial institutions, endowments, foundations or
corporations with a service arrangement through NYLIFE Distributors
LLC or its affiliates; or

- purchases through a program sponsored by a financial intermediary
firm (such as a broker-dealer, investment adviser or financial
institution) with a contractual arrangement with NYLIFE Distributors
LLC.

- INDIVIDUAL INVESTOR -- who is initially investing at least $5 million
in any single MainStay Fund.

- EXISTING CLASS I SHAREHOLDER

For more information on eligible investors for Class I shares, see the
Fund's SAI.

INFORMATION ON SALES CHARGES

INVESTOR CLASS SHARES AND CLASS A SHARES

The initial sales charge you pay when you buy Investor Class shares or
Class A shares differs depending upon the amount you invest, as indicated in the
following table. The sales charge may be reduced or eliminated for larger
purchases, as described below, or as described under "Sales Charge Reductions
and Waivers on Investor Class Shares and Class A Shares." Any applicable sales
charge will be deducted directly from your investment. All or a portion of the
sales charge may be retained

by the Distributor or allocated to your dealer/financial advisor as a
concession.

SALES CHARGES(1) AS A TYPICAL DEALER
PERCENTAGE OF CONCESSION
OFFERING NET AS A % OF

<Table>
<Caption>
SALES CHARGES(1) AS PERCENTAGE
OF TYPICAL DEALER
-------------------------------- CONCESSION AS A %
PURCHASE AMOUNT OFFERING PRICE NET INVESTMENT OF OFFERING PRICE
- --------------- -------------- -------------- -----------------

Less than $50,000........ 5.50% 5.82% 4.75%
$50,000 to $99,999....... 4.50% 4.71% 4.00%
$100,000 to $249,999..... 3.50% 3.63% 3.00%
$250,000 to $499,999..... 2.50% 2.56% 2.00%
$500,000 to $999,999..... 2.00% 2.04% 1.75%
$1,000,000 or more(2).... None None None
</Table>

- --------

(1) The sales charge you pay may differ slightly from the amounts listed here
due to rounding calculations.

(2) No sales charge applies on investments of $1 million or more, but a CDSC
of 1% may be imposed on certain redemptions of such shares within one year
of the date of purchase. The Fund's Distributor may pay a commission to
dealers on these purchases from its own resources.

CLASS B SHARES

Class B shares are sold without an initial sales charge. However, if Class
B shares are redeemed within six years of their purchase, a CDSC will be
deducted from the redemption proceeds, except under circumstances described in
the SAIs. Additionally, Class B shares have higher ongoing service and/or
distribution fees and, over time, these fees may cost you more than paying an
initial sales charge. The Class B CDSC and the higher ongoing service and/or
distribution fees are paid to compensate the Distributor for its expenses in
connection with the sale of Class B shares. The amount of the CDSC will depend
on the number of years you

have held the shares that you are redeeming, according to the following
schedule:

<Table>
<Caption>
CONTINGENT DEFERRED SALES CHARGE (CDSC) AS A
FOR SHARES SOLD IN THE: % OF AMOUNT REDEEMED
FOR SHARES SOLD IN THE: SUBJECT TO CHARGE
- ----------------------- --------------------------------------------

First year.................. 5.00%
Second year................. 4.00%
Third year.................. 3.00%
Fourth year................. 2.00%
Fifth year.................. 2.00%
Sixth year.................. 1.00%
Thereafter.................. None
</Table>

There are exceptions, which are described in the applicable SAI.

CLASS C SHARES

Class C shares are sold without an initial sales charge. However, if Class
C shares are redeemed within one year of purchase, a CDSC of 1.00% will be
deducted from the redemption proceeds, except under circumstances described in
each Fund's SAI. Additionally, Class C shares have higher ongoing service and/or
distribution fees, and over time, these fees may cost you more than paying an
initial sales charge. The Class C CDSC and the higher ongoing service and/or
distribution fees are paid to compensate the Distributor for its expenses in
connection with the sale of Class C shares.

COMPUTING CONTINGENT DEFERRED SALES CHARGE ON CLASS B AND CLASS C

A CDSC may be imposed on redemptions of Class B and Class C shares of a
Fund, at the rate previously described, at the time of any redemption by a
shareholder that reduces the current value of the shareholder's Class B or Class
C account in the Fund to an amount that is lower than the amount of all payments
by the shareholder for the purchase of Class B shares in the Fund during the
preceding six years or Class C shares in the Fund for the preceding year.

However, no such charge will be imposed to the extent that the net asset
value of the Class B or Class C shares redeemed does not exceed:

- the current aggregate net asset value of Class B or Class C shares of the
Fund purchased more than six years prior to the redemption for Class B
shares or more than one year prior to the redemption for Class C shares;
plus

- the current aggregate net asset value of Class B or Class C shares of the
Fund purchased through reinvestment of dividends or distributions; plus

- increases in the net asset value of the investor's Class B shares of the
Fund above the total amount of payments for the purchase of Class B
shares of the Fund made during the preceding six years for Class B shares
or one year for Class C shares.

There are exceptions, which are described in the SAIs.

SALES CHARGE REDUCTIONS AND WAIVERS ON INVESTOR CLASS SHARES AND CLASS A SHARES

Reducing the Initial Sales Charge on Investor Class Shares and Class A Shares

You may be eligible to buy Investor Class and Class A shares of the Small
Cap Opportunity Fund at one of the reduced sales charge rates shown in the table
above through a Right of Accumulation or a Letter of Intent, as described below.
You may also be eligible for a waiver of the initial sales charge as set forth
below. The Fund reserves the right to modify or eliminate these programs at any
time. However, please note the Right of Accumulation or Letter of Intent may
only be used to reduce sales charges and may not be used to satisfy investment
minimums or to avoid the automatic conversion feature of Investor Class or Class
A shares.

RIGHT OF ACCUMULATION

A Right of Accumulation allows you to reduce the initial sales charge, as
shown in the table above, by combining the amount of your current purchase with
the current market value of investments made by you, your spouse, and your
children under age 21 in Investor Class, Class A, Class B or Class C shares of
most MainStay Funds. You may not include investments of previously non-
commissioned shares in the MainStay Cash Reserves Fund, MainStay Money Market
Fund, or MainStay Principal Preservation Fund (which are offered in a separate
prospectus), investments in Class I shares, or your interests in any MainStay
Fund held through a 401(k) plan or other employee benefit plan.

For example, if you currently own $45,000 worth of Class C shares of a
MainStay Fund, your spouse owns $50,000 worth of Class B shares of another
MainStay Fund, and you wish to invest $10,000 in a MainStay Fund, using your
Right of Accumulation you can invest that $10,000 in Investor Class or Class A
shares (if eligible) and pay the reduced sales charge rate normally applicable
to a $105,000 investment.

For more information, see "Purchase, Redemption, Exchanges and
Repurchase -- Reduced Sales Charges" in the Small Cap Opportunity Fund's SAI.

LETTER OF INTENT

Where the Right of Accumulation allows you to use prior investments to
reach a reduced initial sales charge, a Letter of Intent allows you to qualify
for a discount by combining your current purchase amount with purchases you,
your spouse, or children under age 21 intend to make in the near future. A
Letter of Intent is a written statement to the Distributor of your intention to
purchase Investor Class, Class A, Class B, or Class C shares of one or more
MainStay Funds (excluding the MainStay Cash Reserves Fund, MainStay Money Market
Fund, or MainStay Principal Preservation Fund not previously invested in another
Fund) over a 24-month period. The total amount of your intended purchases will
determine the reduced sales charge rate that will apply to Investor Class or
Class A shares (if eligible) of the Funds purchased during that period. You can
include purchases made up to 90 days before the date of the Letter of Intent.
You can also apply a Right of Accumulation to these purchases.

Your Letter of Intent goal must be at least $100,000. Submitting a Letter
of Intent does not obligate you to purchase the specified amount of shares. If
you do not meet your intended purchase goal, however, the initial sales charge
that you paid on your purchases will be recalculated to reflect the actual value
of shares you purchased. A certain portion of your shares will be held in escrow
by the Funds' Transfer Agent for this purpose. For more information, see
"Purchase, Redemption, Exchanges and Repurchase -- Letter of Intent" in the
Small Cap Opportunity Fund's SAI.

YOUR RESPONSIBILITY

To receive the reduced sales charge, you must inform the Funds' Distributor
of your eligibility and holdings at the time of your purchase if you are buying
shares directly from the Small Cap Opportunity Fund. If you are buying shares
through a financial intermediary firm, you must tell your financial advisor of
your eligibility for Right of Accumulation or a Letter of Intent at the time of
your purchase.

To combine shares of eligible MainStay Funds held in accounts at other
intermediaries under your Right of Accumulation or a Letter of Intent, you may
be required to provide the Distributor or your financial advisor a copy of each
account statement showing your current holdings of each eligible MainStay Fund,
including statements for accounts held by you, your spouse, or your minor
children, as described above. The Distributor or intermediary through which you
are buying shares will

combine the value of all your eligible MainStay Fund holdings based on the
current net asset value per share to determine what Investor Class or Class A
sales charge rate you may qualify for on your current purchase. IF YOU DO NOT
INFORM THE DISTRIBUTOR OR YOUR FINANCIAL ADVISOR OF ALL OF THE HOLDINGS OR
PLANNED PURCHASES THAT MAKE YOU ELIGIBLE FOR A SALES CHARGE REDUCTION OR DO NOT
PROVIDE REQUESTED DOCUMENTATION, YOU MAY NOT RECEIVE A DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED.

More information on Investor Class and Class A share sales charge discounts
is available in the Small Cap Opportunity Fund's SAI (see "Purchase, Redemption,
Exchanges and Repurchase") or on the internet at www.mainstayfunds.com (under
the "Shareholder Services" tab).

"Spouse" with respect to Right of Accumulation and Letter of Intent is
defined as the person to whom you are legally married. We also consider your
spouse to include the following: i) an individual of the same gender with whom
you have been joined in a civil union, or legal contract similar to marriage;
ii) a domestic partner, who is an individual (including one of the same gender)
to whom you are not related by blood and with whom you have shared a primary
residence for at least six months in a relationship as a couple where you, your
domestic partner or both of you provide for the personal or financial welfare of
the other without a fee; or iii) an individual with whom you have a common law
marriage, which is a marriage in a state where such marriages are recognized
between a man and a woman arising from the fact that the two live together and
hold themselves out as being married.

Group Retirement Plan Purchases

You will not pay an initial sales charge if you purchase Investor Class
shares or Class A shares through a group retirement or other benefit plan (other
than non- ERISA 403(b)(7) plans and IRA plans) that meets certain criteria,
including:

- 50 or more participants; or

- an aggregate investment in shares of any class of the MainStay Funds of
$1,000,000 or more; or

- holds either Investor Class or Class A and Class B shares as a result of
the Class B share conversion feature.

However, Investor Class shares or Class A shares purchased through a group
retirement or other benefit plan (other than non-ERISA 403(b)(7) plans and IRA
plans) will be subject to a contingent deferred sales charge upon redemption. If
your plan currently holds Class B shares, please consult your recordkeeper or
other plan administrative service provider concerning their ability to maintain
shares in two different classes.

Purchases Through Financial Services Firms

You may be eligible for elimination of the initial sales charge if you
purchase shares through a financial services firm (such as a broker-dealer,
investment advisor or financial institution) that has a contractual arrangement
with the Distributor. The Small Cap Opportunity Fund has authorized these firms
(and other intermediaries that the firms may designate) to accept orders. When
an authorized firm or its designee has received your order, it is considered
received by the Fund and will be priced at the next computed NAV. Financial
services firms may charge transaction fees or other fees and may modify other
features such as minimum investment amounts and exchange privileges. Please read
their program materials for any special provisions or additional service
features that may apply to investing in the Small Cap Opportunity Fund through
these firms.

529 Plans

When shares of the Small Cap Opportunity Fund are sold to a qualified
tuition program operating under Section 529 of the Internal Revenue Code, such a
program may purchase Investor Class shares or Class A shares without an initial
sales load.

Other Waivers

There are other categories of purchasers who do not pay initial sales
charges on Class A shares, such as personnel of the Funds and of New York Life
Insurance Company ("New York Life") and its affiliates or shareholders who owned
shares of the Service Class of any MainStay Fund as of December 31, 2003. These
categories are described in the Small Cap Opportunity Fund's SAI.

Contingent Deferred Sales Charge on Certain Investor Class and Class A Share
Redemptions

If your initial sales charge is eliminated, we may impose a CDSC of 1% if
you redeem or exchange your shares within one year. The Funds' Distributor may
pay a commission to dealers on these purchases from its own resources.

For more information about these considerations, call your financial
advisor or the Small Cap Opportunity Fund's transfer agent, NYLIM Service
Company LLC ("MainStay Investments"), an affiliate of New York Life Investment
Management LLC, toll-free at 800-MAINSTAY (624-6782), and read the information
under "Purchase, Redemption, Exchanges and Repurchase" in the Small Cap
Opportunity Fund's SAI.

INFORMATION ON FEES

Rule 12b-1 Plans

The Small Cap Opportunity Fund has adopted a distribution plan under Rule
12b-1 of the 1940 Act for certain classes of shares pursuant to which service
and/or distribution fees are paid to the Distributor. The Investor Class and
Class A 12b-1 plans typically provide for payment for distribution or service
activities of up to 0.25% of the average annual net assets of Investor Class or
Class A shares of the Fund, respectively. The Class B and Class C 12b-1 plans
each provide for payment of both distribution and service activities of up to
1.00% of the average annual net assets of Class B and C shares of the Fund,
respectively. The distribution fee is intended to pay the Distributor for
distribution services, which include any activity or expense primarily intended
to result in the sale of Fund shares. The service fee is paid to the Distributor
for providing shareholders with personal services and maintaining shareholder
accounts. The portion of the 12b-1 fee dedicated to service activities is in
addition to the 0.10% of annual net assets paid from the Plan, with regard to
certain classes. The Distributor may pay all or a portion of the 12b-1 fee to
your investment professional. Because Rule 12b-1 fees are ongoing, over time
they will increase the cost of an investment in the Small Cap Opportunity Fund
and may cost more than other types of sales charges.

Small Account Fee

The Small Cap Opportunity Fund may have a relatively large number of
shareholders with small account balances. Small accounts adversely impact the
cost of providing transfer agency services. In an effort to reduce total
transfer agency expenses, the Small Cap Opportunity Fund has implemented a small
account fee. Each shareholder with an account balance of less than $1,000 will
be charged an annual per account fee of $20 (assessed semi-annually). The fee
may be deducted directly from your fund balance. This small account fee will not
apply to certain types of accounts including:

- Class A share accounts, retirement plan services bundled accounts and
investment-only retirement accounts;

- accounts with active AutoInvest plans or systematic investment programs
where the Fund deducts directly from the client's checking or savings
account;

- NYLIM SIMPLE IRA Plan Accounts, SEP IRA Accounts and 403(b)(7) accounts
that have been funded/established for less than 1 year;

- accounts serviced by unaffiliated broker/dealers or third party
administrators (other than NYLIM SIMPLE IRA Plan Accounts); and

- certain Investor Class accounts where the small account balance is due
solely to the conversion from Class B shares.

This small account fee will be deducted on or about March 1st and September
1st of each year. The Small Cap Opportunity Fund may, from time to time,
consider and implement additional measures to increase average shareholder
account size and/or otherwise reduce the cost of transfer agency services.
Please contact the Fund by calling toll-free 800-MAINSTAY (624-6782) for more
information.

COMPENSATION TO DEALERS

Financial intermediary firms and their associated financial advisors are
paid in different ways for the services they provide to the Small Cap
Opportunity Fund and its shareholders. Such compensation varies depending upon
the Fund sold, the amount invested, the share class purchased, the amount of
time that shares are held, and/or the services provided.

- The Distributor pays sales concessions to dealers, as described in the
tables under "Information on Sales Charges" above, on the purchase price
of Investor Class or Class A shares sold subject to a sales charge. The
Distributor retains the difference between the sales charge that you pay
and the portion that is paid to dealers as a sales concession.

- The Distributor or an affiliate, from its own resources, pays a sales
concession of up to 1.00% on the purchase price of Investor Class or
Class A shares, sold at net asset value, to dealers at the time of sale.

- From its own resources, the Distributor pays a sales concession of 4.00%
on purchases of Class B shares to dealers at the time of sale.

- The Distributor pays a sales concession of 1.00% on purchases of Class C
shares to dealers from its own resources at the time of sale.

- The Distributor pays, pursuant to a 12b-1 plan, distribution-related and
other service fees to qualified dealers for providing certain shareholder
services.

- In addition to the payments described above, the Distributor or an
affiliate, from its own resources, may pay other significant amounts to
certain financial intermediary firms, including an affiliated broker-
dealer, in connection with the sale of any class of Small Cap Opportunity
Fund shares and/or shareholder or account servicing arrangements. These
sales and/or servicing fee arrangements vary and may amount to payments
of up to 0.40% on new sales and/or up to 0.20% annually on assets held.

- The Distributor may pay a finder's fee or other compensation to third
parties in connection with the sale of Small Cap Opportunity Fund shares
and/or shareholder or account servicing arrangements.

- The Distributor or an affiliate may sponsor training or informational
meetings or provide other non-monetary benefits for financial
intermediary firms and their associated financial advisors.

- The Distributor or an affiliate may also make payments for recordkeeping
and other administrative services to financial intermediaries that sell
Small Cap Opportunity Fund shares.

- Wholesale representatives of the Distributor visit brokerage firms on a
regular basis to educate financial advisors about the Small Cap
Opportunity Fund and to encourage the sale of the Fund's shares to their
clients. The costs and expenses associated with these efforts may include
travel, lodging, sponsorship at educational seminars and conferences,
entertainment and meals to the extent permitted by law.

Although the Small Cap Opportunity Fund may use financial firms that sell
the Fund's shares to make transactions for a Fund's portfolio, the Small Cap
Opportunity Fund and NYLIM do not consider the sale of Small Cap Opportunity
Fund shares as a factor when choosing financial firms to effect those
transactions.

Payments made from the Distributor's or an affiliate's own resources do not
increase the price or decrease the amount or value of the shares you purchase.
However, if investment advisers, distributors or affiliates of mutual funds make
such payments in differing amounts, financial intermediary firms and their
financial advisors may have financial incentives for recommending a particular
mutual fund or a particular share class of that fund over other mutual funds.
For example, payments made by the Distributor or an affiliate, as described
above, may be used by the financial intermediary firm to reduce or eliminate
transaction charges associated with purchases of fund shares.

For more information regarding any of the types of compensation described
above, see the Small Cap Opportunity Fund's SAI or consult with your financial
intermediary firm or financial advisor. YOU SHOULD REVIEW CAREFULLY ANY
DISCLOSURE BY YOUR FINANCIAL INTERMEDIARY FIRM AS TO COMPENSATION RECEIVED BY
THAT FIRM AND/OR YOUR FINANCIAL ADVISOR.

BUYING, SELLING AND EXCHANGING MAINSTAY FUND SHARES

This section discusses how you buy, sell or exchange your shares in one
class for another for the Small Cap Opportunity Fund. The policies and
procedures for the Small Cap Value Fund are not substantially different.

HOW TO OPEN YOUR ACCOUNT WITH MAINSTAY INVESTMENTS

Investor Class, Class A, B or C Shares

Return your completed MainStay Funds application in good order with a check
payable to the MainStay Funds for the amount of your investment to your
financial advisor or directly to MainStay Funds, P.O. Box 8401, Boston,
Massachusetts 02266-8401. GOOD ORDER MEANS ALL THE NECESSARY INFORMATION,
SIGNATURES AND DOCUMENTATION HAVE BEEN FULLY COMPLETED [SIDEBAR]. If you place
your order by phone, MainStay Investments must receive your completed
application and check in good order within three business days. Please note that
if you select Class A shares on your application and you are not eligible to
invest in Class A shares, we will treat your application as being in good order
but will invest you in Investor Class shares of the same Fund. Similarly, if you
select Investor Class shares and you are eligible to invest in Class A shares we
will treat your application as being in good order but will invest you in Class
A shares of the same Fund.

Class I

If you are participating in a company savings plan, such as a 401(k) plan,
profit sharing plan, defined benefit plan or other employee-directed plan, your
company will provide you with the information you need to open an account and
buy or sell Class I shares of the Small Cap Opportunity Fund.

If you are investing through a financial intermediary firm, the firm will
assist you with opening an account. Your financial advisor may place your order
by phone. MainStay Investments must receive your completed application and check
in good order within three business days.

All Classes

You buy shares at net asset value ("NAV") (plus, for Investor Class and
Class A shares, any applicable sales charge). NAV is generally calculated as of
the close of regular trading (usually 4:00 pm Eastern time) on the New York
Stock Exchange (the "Exchange") every day the Exchange is open. When you buy
shares, you must pay the NAV next calculated after MainStay Investments receives
your order in good order. Alternatively, MainStay Funds has arrangements with
certain financial intermediary firms such that purchase orders through these
entities are considered received in good order when received by the financial
intermediary firm together with the purchase price of the shares ordered. The
order will then be priced at a Fund's NAV next computed after receipt in good
order by these entities. Such financial intermediary firms are responsible for
timely transmitting the purchase order to the Funds.

When you open your account, you may also want to choose certain buying and
selling options, including transactions by wire. In most cases, these choices
can be made later in writing, but it may be quicker and more convenient to
decide on them when you open your account.

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens a new account and
to determine whether such person's name appears on government lists of known or
suspected terrorists and terrorist organizations. As a result, the Small Cap
Opportunity Fund, or your financial advisor on its behalf, must obtain the
following information for each person who opens a new account:

- - Name;

- - Date of birth (for individuals);

- - Residential or business street address (although post office boxes are still
permitted for mailing); and

- - Social security number, taxpayer identification number, or other identifying
number.

You may also be asked for a copy of your driver's license, passport or
other identifying document in order to verify your identity. In addition, it may
be necessary to verify your identity by cross referencing your identification
information with a consumer report or other electronic database. Additional
information may be required to open accounts for corporations and other
entities.

FEDERAL LAW PROHIBITS THE SMALL CAP OPPORTUNITY FUND AND OTHER FINANCIAL
INSTITUTIONS FROM OPENING A NEW ACCOUNT UNLESS THEY RECEIVE THE MINIMUM
IDENTIFYING INFORMATION LISTED ABOVE.

After an account is opened, the Small Cap Opportunity Fund may restrict
your ability to purchase additional shares until your identity is verified. The
Small Cap Opportunity Fund also may close your account or take other appropriate
action if it is unable to verify your identity within a reasonable time. If your
account is closed for this reason, your shares will be redeemed at the NAV next
calculated after the account is closed.

INVESTMENT MINIMUMS AND ELIGIBILITY REQUIREMENTS

The following minimums apply if you are investing in the Small Cap
Opportunity Fund. A minimum initial investment amount may be waived for
purchases by the Board, Directors and employees of New York Life and its
affiliates and subsidiaries. The Fund may also waive investment minimums for
certain qualified purchases and accept additional

investments of smaller amounts at its discretion. Please see the Small Cap
Opportunity Fund's SAIs for additional information.

Investor Class Shares

The following minimums apply if you are investing in Investor Class shares
of the Fund:

- $1,000 for initial and $50 for subsequent purchases of Small Cap
Opportunity Fund, or

- if through AutoInvest, a monthly systematic investment plan: $500 for
initial and $50 minimum for subsequent purchases OR no initial and $100
subsequent monthly purchases.

Additionally, certain types of retirement plan accounts, including SIMPLE
IRA Plan accounts (beginning on or about May 1, 2008), may only be eligible to
hold Investor Class shares. Please contact your investment advisor/plan
administrator or the Funds by calling toll-free 800-MAINSTAY (624-6782) for more
information.

Please note that your Investor Class shares may be converted into Class A
shares automatically. See "Investor Class Share Considerations" for more
details.

Class A Shares

The following minimum applies if you are investing in Class A shares
directly or through 403(b) plan accounts:

- $25,000 minimum initial investment with no minimum subsequent purchase
amount requirement for Small Cap Opportunity Fund.

- Effective September 15, 2008, $15,000 minimum initial investment with no
minimum subsequent purchase amount for investors that, in the aggregate,
have assets of $100,000 or more invested in any share classes of any of
the MainStay Funds. To qualify for this investment minimum, all
aggregated accounts must be tax reportable under the same tax
identification number. You may not aggregate your holdings with the
holdings of any other person or entity to qualify for this investment
minimum. Please note that accounts held through broker/dealers or other
types of institutions may not be aggregated to qualify for this
investment minimum. We will only aggregate those accounts held directly
with the Funds. Please contact your investment advisor or the Fund by
calling 800-MAINSTAY (624-6782) for more information.

Additionally, please note that if you qualify for this exception, you must
also maintain the aggregate assets of $100,000 or more invested in any share
classes of any of the MainStay Funds and an account balance at

or above $15,000 per Fund to avoid having your account automatically convert
into Investor Class shares.

Broker/dealers (and their affiliates) or certain service providers with
customer accounts that primarily trade on an omnibus level or through National
Securities Clearing Corporation's Fund/SERV network (Levels 1-3 only), certain
retirement plan accounts, including investment-only plan accounts, board
members, Directors and employees of New York Life and its affiliates and
subsidiaries and employees of the Fund's subadvisors are not subject to the
minimum investment requirement for Class A shares. Please contact your
investment advisor/plan administrator or the Funds by calling toll-free 800-
MAINSTAY (624-6782) for more information.

Please note that your Class A shares may be converted into Investor Class
shares automatically. Please see "Class A Share Considerations" for more
details.

Class B and C Shares

The following minimums apply if you are investing in Class B or C shares of
the Fund:

- $1,000 for initial and $50 for subsequent purchases of Small Cap
Opportunity Fund, or

- if through AutoInvest, a monthly systematic investment plan: $500 for
initial and $50 minimum for subsequent purchases OR no initial and $100
subsequent monthly purchases.

Class I Shares

The following minimums apply if you are investing in Class I shares of the
Fund:

- Individual Investors -- $5 million for initial purchases of Small Cap
Opportunity Fund and no minimum subsequent purchase amount, and

- Institutional Investors -- no minimum initial or subsequent purchase
amounts.

BUYING AND SELLING MAINSTAY SHARES

OPENING YOUR ACCOUNT -- INDIVIDUAL SHAREHOLDERS

<Table>
<Caption>
HOW DETAILS
------------------------- -------------------------

BY WIRE: You or your registered The wire must include:
representative should
call MainStay Investments - name(s) of investor(s);
toll-free at 800-MAINSTAY
(624-6782) to obtain an
account number and wiring - your account number;
instructions. Wire the and
purchase amount to:
- Fund Name and Class of
State Street Bank & Trust shares.
Company
Your bank may charge a
- ABA #011-0000-28 fee for the wire
transfer.
- MainStay Funds
(DDA #99029415)

- Attn: Custody and
Shareholder Services

To buy shares the same
day, MainStay Investments
must receive your wired
money by 4:00 pm eastern
time.

BY PHONE: Have your investment - MainStay Investments
professional call must receive your
MainStay Investments application and check,
toll-free at 800-MAINSTAY payable to MainStay
(624-6782) between 8:00 Funds, in good order
am and 6:00 pm Eastern within three business
time any day the New York days. If not, MainStay
Stock Exchange is open. Investments can cancel
Call before 4:00 pm to your order and hold you
buy shares at the current liable for costs
day's NAV. incurred in placing it.

Be sure to write on your
check:

- name(s) of investor(s).

- your account number;
and

- Fund name and Class of
shares.
</Table>

<Table>
<Caption>
HOW DETAILS
------------------------- -------------------------

BY MAIL: Return your completed Make your check payable
MainStay Funds to MainStay Funds.
Application with a check
for the amount of your - $1,000 minimum for
investment to: Investor Class, Class B
MainStay Funds and Class C shares.
P.O. Box 8401
Boston, MA 02266-8401 - $25,000 minimum for
Class A shares.

- $5 million for Class I
shares.

Send overnight orders to:
MainStay Funds Be sure to write on your
c/o Boston Financial Data check:
Services
30 Dan Road - name(s) of investor(s);
Canton, and
MA 02021-2809
- Fund name and Class of
shares.

BY WIRE: Wire the purchase amount The wire must include:
to:

State Street Bank & Trust
Company. - name(s) of investor(s);

- ABA #011-0000-28 - your account number;
and

- MainStay Funds (DDA - Fund Name and Class of
#99029415) shares.

- Attn: Custody and Your bank may charge a
Shareholder Services. fee for the wire
transfer.

To buy shares the same
day, MainStay Investments
must receive your wired
money by 4:00 pm eastern
time.

ELECTRONI- Call MainStay Investments Eligible investors can
CALLY: toll-free at 800-MAINSTAY purchase shares by using
electronic
(624-6782) between 8:00 debits from a designated
am and 6:00 pm Eastern bank account.
time any day the New York
Stock Exchange is open to - The maximum ACH
make an ACH purchase; purchase amount is
call before 4:00 pm to $100,000.
buy shares at the current
day's NAV; or
Visit us at
mainstayinvestments.com.

BY MAIL: Address your order to: Make your check payable
MainStay Funds to MainStay Funds.
P.O. Box 8401
Boston, - $50 minimum (for
MA 02266-8401 Investor Class, Class B
and C shares).
Send overnight orders to:
MainStay Funds Be sure to write on your
c/o Boston Financial Data check:
Services
30 Dan Road - name(s) of investor(s);
Canton, - your account number;
MA 02021-2809 and
- Fund name and Class of
shares.
</Table>

SELLING SHARES -- INDIVIDUAL SHAREHOLDERS

<Table>
<Caption>
HOW DETAILS
------------------------- -------------------------

BY - You may sell (redeem)
CONTACT- your shares through
ING YOUR your financial advisor
FINANCIAL or by any of the
ADVISOR: methods described
below.
</Table>

<Table>
<Caption>
HOW DETAILS
------------------------- -------------------------

BY PHONE: TO RECEIVE PROCEEDS BY - MainStay Investments
CHECK: will only send checks
to the account owner at
Call MainStay Investments the owner's address of
toll-free at 800-MAINSTAY record and generally
(624-6782) between 8:00 will not send checks to
am and 6:00 pm Eastern addresses on record for
time any day the New York 30 days or less.
Stock Exchange is open.
Call before 4:00 pm - The maximum order
Eastern time to sell MainStay Investments
shares at the current can process by phone is
day's NAV. $100,000.

TO RECEIVE PROCEEDS BY - Generally, after
WIRE: receiving your sell
order by phone,
Call MainStay Investments MainStay Investments
toll-free at 800-MAINSTAY will send the proceeds
(624-6782) between 8:00 by bank wire to your
am and 6:00 pm eastern designated bank account
time any day the New York the next business day,
Stock Exchange is open. although it may take up
Eligible investors may to seven days to do so.
sell shares and have Your bank may charge
proceeds electronically you a fee to receive
credited to a designated the wire transfer.
bank account.
- MainStay Investments
must have your bank
account information on
file.

- There is an $11 fee for
wire redemptions.

- MainStay Investments
does not charge a fee
for wire redemptions of
Class I shares.

- The minimum wire
transfer amount is
$1,000.

TO RECEIVE PROCEEDS - MainStay Investments
ELECTRONICALLY BY ACH: must have your bank
account information on
Call MainStay Investments file.
toll-free at 800-MAINSTAY
(624-6782) between 8:00 - Proceeds may take 2-3
am and 6:00 pm astern days to reach your bank
time any day banks and account.
the New York Stock
Exchange are open. - There is no fee from
Visit us at MainStay Investments
www.mainstayfunds.com for this transaction.

- The maximum ACH
transfer amount is
$100,000.
</Table>

<Table>
<Caption>
HOW DETAILS
------------------------- -------------------------

BY MAIL: Address your order to: Write a letter of
MainStay Funds instruction that
P.O. Box 8401 includes:
Boston,
MA 02266-8401 - your name(s) and
signature(s);
Send overnight orders to:
MainStay Funds - your account number;
c/o Boston Financial Data
Services - Fund name and Class of
30 Dan Road shares; and
Canton,
MA 02021-2809 - dollar or share amount
you want to sell.

Obtain a MEDALLION
SIGNATURE GUARANTEE or
other documentation, as
required.

There is a $15 fee for
Class A shares ($25 for
Investor Class, Class B
and Class C shares for
checks mailed to you via
overnight service.
</Table>

GENERAL POLICIES

The following are MainStay Investments' general policies regarding the
purchase and sale of Fund shares. Certain retirement plans and/or financial
intermediaries may adopt different policies. Consult your plan or account
documents for the policies applicable to you.

WHEN YOU BUY AND SELL SHARES DIRECTLY FROM THE FUND, YOU WILL RECEIVE
CONFIRMATION STATEMENTS THAT DESCRIBE YOUR TRANSACTION. YOU SHOULD REVIEW THE
INFORMATION ON THE CONFIRMATION STATEMENTS CAREFULLY. IF YOU NOTICE AN ERROR,
YOU SHOULD CALL MAINSTAY INVESTMENTS IMMEDIATELY. IF YOU FAIL TO NOTIFY MAINSTAY
INVESTMENTS WITHIN ONE YEAR OF THE TRANSACTION, YOU MAY BE REQUIRED TO BEAR THE
COSTS OF CORRECTION. [SIDEBAR]

Buying Shares

- - All investments must be in U.S. dollars with funds drawn on a U.S. bank. We
will not accept any payment in the following forms: travelers checks, personal
money orders, credit card convenience checks, cash or starter checks.

- - MainStay Investments does not accept third-party checks, and it reserves the
right to limit the number of checks processed at one time.

- - If your investment check or ACH purchase does not clear, your order will be
canceled and your account will be responsible for any losses or fees the Fund
incurs as a result. Your account will be charged a $20 fee

for each returned check or ACH purchase. In addition, the Fund may also redeem
shares to cover any losses it incurs as a result. If an AutoInvest payment is
returned unpaid for two consecutive periods, the privilege will be suspended
until you notify us to reinstate it.

- - The Fund may, in its discretion, reject, restrict or cancel, in whole or in
part, without prior notice, any order for the purchase of shares.

- - To limit the Fund's expenses, we no longer issue share certificates.

Selling Shares

- If you have share certificates, you must return them with a written
redemption request.

- Your shares will be sold at the next NAV calculated after MainStay
Investments receives your request in good order. MainStay Investments
will make the payment within seven days after receiving your request in
good order.

- If you buy shares by check or by ACH purchase and quickly decide to sell
them, the Fund may withhold payment for 10 days from the date the check
or ACH purchase order is received.

- When you sell Class B or Class C shares, or Investor Class or Class A
shares when applicable, the Fund will recover any applicable sales
charges either by selling additional shares, if available, or by reducing
your proceeds by the amount of those charges.

- There will be no redemption during any period in which the right of
redemption is suspended or date of payment is postponed because the New
York Stock Exchange is closed or trading on the Exchange is restricted or
the SEC deems an emergency to exist.

- Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone order as long as MainStay
Investments takes reasonable measures to verify the order.

- Reinvestment won't relieve you of any tax consequences on gains realized
from a sale. The deductions for losses, however, may be denied.

- MainStay Investments requires a written order to sell shares if an
account has submitted a change of address during the previous 30 days,
unless the proceeds of the sell order are directed to your bank account
on file with the Funds.

- MainStay Investments requires a written order to sell shares and a
Medallion Signature Guarantee if:

- MainStay Investments does not have on file required bank information to
wire funds;

- the proceeds from the sale will exceed $100,000;

- the proceeds of the sale are to be sent to an address other than the
address of record; or

- the proceeds are to be payable to someone other than the account
holder(s).

- In the interest of all shareholders, the Fund reserves the right to:

- change or discontinue its exchange privileges upon notice to
shareholders, or temporarily suspend this privilege without notice
under extraordinary circumstances;

- change or discontinue the systematic withdrawal plan upon notice to
shareholders;

- close accounts with balances less than $100 invested in Investor Class
shares or $500 invested in Class B or C shares (by redeeming all shares
held and sending proceeds to the address of record); and/or

- change the minimum investment amounts.

- There is no fee for wire redemptions of Class I shares.

Additional Information

The policies and fees described in this Prospectus govern transactions with
the MainStay Funds. If you invest through a third party -- bank, broker, 401(k),
financial advisor or financial supermarket -- there may be transaction fees for,
and you may be subject to, different investment minimums or limitations on
buying or selling shares. Accordingly, the net yield to investors who purchase
through financial intermediaries may be less than the net yield earned by
investors who invest in a Fund directly. Consult a representative of your plan
or financial institution if in doubt.

From time to time any of the Funds may close and reopen to new investors or
new share purchases at its discretion. Due to the nature of their portfolio
investments, certain Funds may be more likely to close and reopen than others.
If a Fund is closed, either to new investors or new share purchases, and you
redeem your total investment in the Fund, your account will be closed and you
will not be able to make any additional investments in the Fund. If a Fund is
closed to new investors, you may not exchange shares of other MainStay Funds for
shares of that Fund unless you are already a shareholder of such Fund.

Medallion Signature Guarantees

A Medallion Signature Guarantee helps protect against fraud. To protect
your account, the Fund and MainStay Investments from fraud, Medallion Signature
Guarantees are required to enable MainStay Investments to verify the identity of
the person who has authorized redemption proceeds to be sent to a third party or
a bank not previously established on the account. Medallion Signature Guarantees
are also required for redemptions of $100,000 or more from an account, and for
share transfer requests. Medallion Signature Guarantees must be obtained from
certain eligible financial institutions that are participants in the Securities
Transfer Association Medallion Program (STAMP), the Stock Exchange Medallion
Program (SEMP), or the New York Stock Exchange Medallion Signature Program
(MSP). Eligible guarantor institutions provide Medallion Signature Guarantees
that are covered by surety bonds in various amounts. It is your responsibility
to ensure that the Medallion Signature Guarantee that you acquire is sufficient
to cover the total value of your transaction(s). If the surety bond amount is
not sufficient to cover the requested transaction(s), the Medallion Signature
Guarantee will be rejected.

Signature guarantees that are not a part of these programs will not be
accepted. Please note that a notary public stamp or seal is not acceptable.
Shareholders may contact MainStay Investments toll-free at 800-MAINSTAY (624-
6782) for further details.

Investing for Retirement

You can purchase shares of any of the MainStay Funds for retirement plans
providing tax-deferred investments for individuals and institutions. You can use
MainStay Funds in established plans or the Distributor may provide the required
plan documents for selected plans. A plan document must be adopted for a plan to
be in existence.

Custodial services are available for IRA, Roth IRA and Coverdell Education
Savings Accounts (CESA) (previously named Education IRA) as well as SEP and
SIMPLE IRA plans and for 403(b)(7) TSA Custodial Accounts. Plan administration
is also available for select qualified retirement plans. An investor should
consult with his or her tax adviser before establishing any tax-deferred
retirement plan.

Not all MainStay Funds are available for all types of retirement plans or
through all distribution channels. Please contact the Funds at 800-MAINSTAY
(624-6782) for further details.

Purchases-In-Kind

You may purchase shares of the Fund by transferring securities to the Fund
in exchange for Fund shares ("in kind purchase"). In kind

purchases may be made only upon the Fund's approval and determination that the
securities are acceptable investments for the Fund, and are purchased consistent
with the Fund's procedures relating to in kind purchases.

Redemptions-In-Kind

The Fund reserves the right to pay certain large redemptions, either
totally or partially, by a distribution-in-kind of securities (instead of cash)
from the Fund's portfolio, in accordance with the 1940 Act and rules and
interpretations of the SEC thereunder.

THE REINVESTMENT PRIVILEGE MAY HELP YOU AVOID SALES CHARGES

REINVESTMENT WON'T RELIEVE YOU OF ANY TAX CONSEQUENCES ON GAINS REALIZED
FROM A SALE. THE DEDUCTIONS FOR LOSSES MAY HOWEVER BE DENIED AND, IN SOME CASES,
SALES CHARGES MAY NOT BE TAKEN INTO ACCOUNT IN COMMUTING GAINS OR LOSSES IF THE
REINVESTMENT PRIVILEGE IS EXERCISED. [SIDEBAR]

CONVENIENT, YES...BUT NOT RISK-FREE. TELEPHONE REDEMPTION PRIVILEGES ARE
CONVENIENT, BUT YOU GIVE UP SOME SECURITY. WHEN YOU SIGN THE APPLICATION TO BUY
SHARES, YOU AGREE THAT THE FUND WILL NOT BE LIABLE FOR FOLLOWING PHONE
INSTRUCTIONS THAT IT REASONABLY BELIEVES ARE GENUINE. WHEN USING THE MAINSTAY
AUDIO RESPONSE SYSTEM OR THE INTERNET, YOU BEAR THE RISK OF ANY LOSS FROM YOUR
ERRORS UNLESS THE FUND OR MAINSTAY INVESTMENTS FAILS TO USE ESTABLISHED
SAFEGUARDS FOR YOUR PROTECTION. THESE SAFEGUARDS ARE AMONG THOSE CURRENTLY IN
PLACE AT MAINSTAY FUNDS:

- ALL PHONE CALLS WITH SERVICE REPRESENTATIVES ARE TAPE RECORDED; AND

- WRITTEN CONFIRMATION OF EVERY TRANSACTION IS SENT TO YOU ADDRESS OF
RECORD.

MAINSTAY INVESTMENTS AND THE FUND RESERVE THE RIGHT TO SHUT DOWN THE
MAINSTAY AUDIO RESPONSE SYSTEM OR THE SYSTEM MIGHT SHUT ITSELF DOWN DUE TO
PROBLEMS. [SIDEBAR]

When you sell shares, you have the right -- for 90 days -- to reinvest any
or all of the money in the same account and class of shares without paying
another sales charge (so long as (1) those shares haven't been reinvested once
already and (2) your account is not subject to a 60-day block as described in
"Excessive Purchases and Redemptions or Exchanges". If you paid a sales charge
when you redeemed, you'll receive a pro rata credit for reinvesting in the same
account and class of shares.

Shareholder Services

Automatic Services

Buying or selling shares automatically is easy with the services described
below. You select your schedule and amount, subject to certain restrictions. You
can set up most of these services on your application by accessing your
shareholder account on the internet at mainstayinvestments.com, contacting your
financial advisor for instructions, or by calling MainStay Investments toll-free
at 800-MAINSTAY (624-6782) for a form.

Systematic Investing -- Individual Shareholders Only

MainStay offers four automatic investment plans:

1. AutoInvest

If you obtain authorization from your bank, you can automatically debit your
designated bank account to:

- - make regularly scheduled investments; and/or

- - purchase shares whenever you choose.

2. Dividend reinvestment

Automatically reinvest dividends and distributions from one MainStay Fund into
the same Fund or the same Class of any other MainStay Fund. Accounts established
with dividend reinvestment must meet the initial minimum investment amounts and
any other eligibility requirements of the selected share class.

3. Payroll deductions

If your employer offers this option, you can make automatic investments through
payroll deduction.

4. Systematic exchange

Automatically reinvest a share or dollar amount from one MainStay Fund into any
other MainStay Fund. Funds established with a systematic exchange must meet the
initial minimum investment amounts and any other eligibility requirements of the
selected share class. Please see "Exchanging Shares Among MainStay Funds" for
more information.

Systematic Withdrawal Plan -- Individual Shareholders Only

Withdrawals must be at least $100. You must have at least $10,000 in your
account for Investor Class, Class B and C shares at the time of the initial
request and shares must not be in certificate form. The above minimums are
waived for IRA and 403(b)(7) accounts where the systematic withdrawal represents
required minimum distributions. The Funds

will not knowingly permit systematic withdrawals if, at the same time, you are
making periodic investments.

Exchanging Shares Among MainStay Funds

SELLING AND EXCHANGING SHARES MAY RESULT IN A GAIN OR LOSS AND THEREFORE
MAY BE SUBJECT TO TAXES. CONSULT YOUR TAX ADVISOR ON THE CONSEQUENCES. [SIDEBAR]

You exchange shares when you sell all or a portion of shares in one
MainStay Fund and use the proceeds to purchase shares of the same class of
another MainStay Fund at NAV. An exchange of shares of one MainStay Fund for
shares of another MainStay Fund will be treated as a sale of shares of the first
MainStay Fund and as a purchase of shares of the second MainStay Fund. Any gain
on the transaction may be subject to taxes. You may make exchanges from one
MainStay Fund to another by phone. There is also a systematic exchange program
that allows you to make regularly scheduled, systematic exchanges from one
MainStay Fund to the same class of another (investment minimums and other
eligibility requirements will apply). When you redeem exchanged shares without a
corresponding purchase of another MainStay Fund, you may have to pay any
applicable contingent deferred sales charge. Generally, you may not exchange
shares between classes. However, you may exchange between Class A and Investor
Class shares of the same or any other MainStay Fund (investment minimums and
other eligibility requirements will apply). If you choose to sell Class B or
Class C shares and then separately buy Investor Class or Class A shares, you may
have to pay a deferred sales charge on the Class B or Class C shares, as well as
pay an initial sales charge on the purchase of Investor Class or Class A shares.

MAINSTAY INVESTMENTS TRIES TO MAKE INVESTING EASY BY OFFERING A VARIETY OF
PROGRAMS TO BUY, SELL AND EXCHANGE FUND SHARES. THESE PROGRAMS MAKE IT
CONVENIENT TO ADD TO YOUR INVESTMENT AND EASY TO ACCESS YOUR MONEY WHEN YOU NEED
IT. [SIDEBAR]

You also may exchange shares of a MainStay Fund for shares of an identical
class, if offered, of any series of certain other open-end

investment companies sponsored, advised, or administered by NYLIM or any
affiliate thereof, which are offered in separate prospectuses, including:

<Table>

- - MainStay 130/30 Core Fund - MainStay Institutional Bond
- - MainStay 130/30 Growth Fund Fund
- - MainStay 130/30 High Yield - MainStay Intermediate Term
Fund Bond Fund
- - MainStay 130/30 - MainStay International
International Fund Equity Fund
- - MainStay All Cap Growth - MainStay Large Cap Growth
Fund Fund
- - MainStay Balanced Fund - MainStay MAP Fund
- - MainStay Capital - MainStay Mid Cap Core Fund
Appreciation Fund - MainStay Mid Cap Growth
- - MainStay Cash Reserves Fund Fund
- - MainStay Common Stock Fund - MainStay Mid Cap Value Fund
- - MainStay Conservative - MainStay Moderate
Allocation Fund Allocation Fund
- - MainStay Convertible Fund - MainStay Moderate Growth
- - MainStay Diversified Income Allocation Fund
Fund - MainStay Money Market Fund
- - MainStay Floating Rate Fund - MainStay Principal
- - MainStay Global High Income Preservation Fund
Fund - MainStay Retirement 2010
- - MainStay Government Fund Fund
- - MainStay Growth Allocation - MainStay Retirement 2020
Fund Fund
- - MainStay Growth Equity - MainStay Retirement 2030
Fund* Fund
- - MainStay High Yield - MainStay Retirement 2040
Corporate Bond Fund Fund
- - MainStay ICAP Equity Fund - MainStay Retirement 2050
- - MainStay ICAP Global Fund Fund
- - MainStay ICAP International - MainStay S&P 500 Index Fund
Fund - MainStay Short Term Bond
- - MainStay ICAP Select Equity Fund
Fund - MainStay Small Cap Growth
- - MainStay Income Manager Fund
Fund - MainStay Tax Free Bond Fund
- - MainStay Indexed Bond Fund - MainStay Total Return Fund
- MainStay Value Fund
</Table>

- --------

* Offered only to residents of Connecticut, Maryland, New Jersey, and New
York.

You may not exchange shares of one MainStay Fund for shares of another
MainStay Fund that is closed to new investors unless you are already a
shareholder of that Fund. You may not exchange shares of one MainStay Fund for
shares of another MainStay Fund that is closed to new share purchases or not
offered for sale in your state.

Before making an exchange request, read the prospectus of the Fund you wish
to purchase by exchange. You can obtain a prospectus for any fund by contacting
your broker, financial advisor or other financial institution or by calling the
Funds at 800-MAINSTAY (624-6782).

The exchange privilege is not intended as a vehicle for short term trading,
nor are the Funds designed for professional market timing organizations or other
entities or individuals that use programmed frequent exchanges in response to
market fluctuations. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders (see "Excessive
Purchases and Redemptions or Exchanges").

The Funds reserve the right to revise or terminate the exchange privilege,
limit the amount or number of exchanges or reject any exchange consistent with
the requirements of the 1940 Act and rules and interpretations of the SEC
thereunder.

In certain circumstances you may have to pay a sales charge.

In addition, if you exchange Class B or Class C shares of the Fund into
Class B or Class C shares of the MainStay Money Market Fund (which is offered in
a separate prospectus) or you exchange Investor Class shares or Class A shares
of the Fund subject to the 1% CDSC into Investor Class shares or Class A shares
of the MainStay Money Market Fund, the holding period for purposes of
determining the CDSC stops until you exchange back into Investor Class, Class A,
Class B or Class C shares, as applicable, of another MainStay Fund. The holding
period for purposes of determining conversion of Class B shares into Investor
Class or Class A shares also stops until you exchange back into Class B shares
of another non-money market MainStay Fund.

Certain clients of NYLIFE Securities who purchased more than $50,000 of
Class B shares of the Fund between January 1, 2003 and June 27, 2007, have the
right to convert their Class B shares for Class A shares of the same Fund at the
net asset value next computed and without imposition of a contingent deferred
sales charge.

When you exchange your shares, you may incur a redemption fee. Please see
"Shareholder Guide -- Redemption Fee" for more information.

Excessive Purchases and Redemptions or Exchanges

SEEK PROFESSIONAL ASSISTANCE. YOUR FINANCIAL ADVISOR CAN HELP YOU KEEP YOUR
INVESTMENT GOALS COORDINATED WITH YOUR TAX CONSIDERATIONS. BUT FOR TAX COUNSEL,
ALWAYS RELY ON YOUR TAX ADVISER. FOR ADDITIONAL INFORMATION ON FEDERAL, STATE
AND LOCAL TAXATION, SEE THE FUND'S STATEMENT OF ADDITIONAL INFORMATION.
[SIDEBAR]

DO NOT OVERLOOK SALES CHARGES. THE AMOUNT YOU PAY IN SALES CHARGES REDUCES
GAINS AND INCREASES LOSSES FOR TAX PURPOSES. [SIDEBAR]

The Small Cap Opportunity Fund is not intended to be used as a vehicle for
excessive or short-term trading (such as market timing). The interests of the
Fund's shareholders and the Fund's ability to manage its

investments may be adversely affected by excessive purchases and redemptions or
exchanges of Fund shares over the short term. When large dollar amounts are
involved, excessive trading may disrupt efficient implementation of the Fund's
investment strategies or negatively impact Fund performance. For example, NYLIM
or the Fund's subadvisor might have to maintain more of the Fund's assets in
cash or sell portfolio securities at inopportune times to meet unanticipated
redemptions. By realizing profits through short-term trading, shareholders that
engage in excessive purchases and redemptions or exchanges of Fund shares may
dilute the value of shares held by long-term shareholders. Funds investing in
securities that are thinly traded, trade infrequently, or are relatively
illiquid (such as foreign securities, high-yield debt securities and small cap
securities) may attract investors seeking to profit from short-term trading
strategies that exploit the special valuation issues applicable to these types
of holdings to a greater degree than other types of funds, and thus, may be more
vulnerable to the risks associated with such activity. Accordingly, the Fund's
Board has adopted and implemented policies and procedures designed to
discourage, detect and prevent frequent purchases and redemptions or exchanges
of Fund shares in order to protect long-term Fund shareholders. These policies
are discussed more fully below. There is the risk that the Fund's policies and
procedures will prove ineffective in whole or in part to detect or prevent
excessive or short-term trading. The Fund may change its policies or procedures
at any time without prior notice to shareholders.

The Fund reserves the right to restrict, reject or cancel, without prior
notice, any purchase or exchange order for any reason, including any purchase or
exchange order accepted by any investor's financial intermediary firm. Any such
rejection or cancellation of an order placed through a financial intermediary
will occur, under normal circumstances, within one business day of the financial
intermediary transmitting the order to the Funds. In addition, the Fund reserves
the right to reject, limit, or impose other conditions (that are more
restrictive than those otherwise stated in this prospectus) on purchases or
exchanges or to close or otherwise limit accounts based on a history of frequent
purchases and redemptions of Fund shares that could adversely affect the Fund or
its operations, including those from any individual or group who, in the Fund's
judgment, is likely to harm Fund shareholders. Pursuant to the Fund's policies
and procedures, the Fund may permit short-term purchases or exchanges that it
believes, in the exercise of its judgment, are not disruptive or harmful to the
Fund's long-term shareholders. For example, transactions conducted through
systematic investment or withdrawal plans and trades within a money market fund
are not subject to the surveillance procedures. Exceptions are subject to the
advance approval by the Fund's Chief Compliance Officer, among others, and are
subject to Board oversight. Apart from trading permitted or exceptions granted
in accordance with the Fund's policies and procedures, the

Fund does not accommodate, nor does it have any arrangement to permit, frequent
purchases and redemptions of Fund shares.

The Fund, through MainStay Investments and the Distributor, maintains
surveillance procedures to detect excessive or short-term trading in Fund
shares. As part of this surveillance process, the Fund examines transactions in
Fund shares that exceed certain monetary thresholds or numerical limits within a
specified period of time. The Fund also may consider the history of trading
activity in all accounts known to be under common ownership, control, or
influence. To the extent identified under these surveillance procedures, the
Fund will place a "block" on any account if, during any 60-day period, there is
(1) a purchase or exchange into the account following a redemption or exchange
from such account or (2) a redemption or exchange from the account following a
purchase or exchange into such account. An account that is blocked will not be
permitted to place future purchase or exchange requests for an additional 60-day
period in the Fund. The Fund may modify its surveillance procedures and criteria
from time to time without prior notice, as necessary or appropriate to improve
the detection of excessive or short-term trading or to address specific
circumstances. In certain instances when deemed appropriate the Fund may rely on
a financial intermediary to apply its market timing procedures to an omnibus
account. Routine allocation and rebalancing activities made by certain asset
allocation programs, funds-of-funds, or other collective investment strategies
may not be subject to the surveillance procedures if the managers of such
strategies represent to the satisfaction of the Fund's Chief Compliance Officer
that such investment programs and strategies are consistent with the foregoing.

In addition to these measures, the Fund may from time to time impose a
redemption fee on redemptions or exchanges of Fund shares made within a certain
period of time in order to deter excessive or short-term trading and to offset
certain costs associated with such trading, which fee is described under
"Information on Fees -- Redemption Fee."

While the Fund discourages excessive or short-term trading, there is no
assurance that the Fund or its procedures will be able to effectively detect
such activity or participants engaging in such activity, or, if it is detected,
to prevent its recurrence. The Fund's ability to reasonably detect all such
trading may be limited, for example, where the Fund must rely on the cooperation
of and/or information provided by financial intermediaries or retirement plans
or where the costs of surveillance on certain trading exceeds the anticipated
benefit of such surveillance to Fund shareholders.

Fair Valuation and Portfolio Holdings Disclosure

Determining the Fund's Share Prices (NAV) and the Valuation of Securities.

The Fund generally calculates the value of its investments (also known as
its net asset value, or NAV) at the close of regular trading on the New York
Stock Exchange (usually 4:00 pm Eastern time) every day the Exchange is open.
The net asset value per share for a class of shares is determined by dividing
the value of a Fund's net assets attributable to that class by the number of
shares of that class outstanding on that day. The value of the Fund's
investments is generally based on current market prices. If current market
values are not available or, in the judgment of NYLIM, do not accurately reflect
the fair value of a security, investments will be valued by another method that
the Board believes in good faith accurately reflects fair value. Changes in the
value of a Fund's portfolio securities after the close of trading on the
principal markets in which the portfolio securities trade will not be reflected
in the calculation of NAV unless NYLIM, in consultation with the subadvisor (if
applicable), deems a particular event could materially affect the NAV. In this
case, an adjustment in the valuation of the securities may be made in accordance
with procedures adopted by the Board. A Fund may invest in portfolio securities
that are primarily listed on foreign exchanges that trade on weekends or other
days when the Fund does not price its shares. The NAV of the Fund's shares may
change on days when shareholders will not be able to purchase or redeem shares.

The Board has adopted valuation procedures for the Fund and has delegated
day-to-day responsibility for fair value determinations to the Fund's Valuation
Committee. Determinations of the Valuation Committee are subject to review and
ratification by the Board at its next scheduled meeting after the fair
valuations are determined. Fair value determinations may be based upon
developments related to a specific security or events affecting securities
markets. Fair valuation involves subjective judgments, and it is possible that
the fair value determined for a security may differ materially from the value
that could be realized upon the sale of the security.

The Fund expects to use fair value pricing for securities actively traded
on U.S. exchanges only under very limited circumstances. The Fund may use fair
value pricing more frequently for foreign securities. Where foreign securities
markets close earlier than U.S. markets, the value of the securities may be
affected by significant events or volatility in the U.S. markets occurring after
the close of those foreign securities markets. To account for this, certain of
the Fund's fair valuation procedures include a procedure whereby foreign
securities may be valued based on third-party vendor modeling tools to the
extent available.

Portfolio Holdings Information

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities holdings is available in the
Fund's SAI. MainStay Funds publish quarterly a list of each Fund's ten

largest holdings and publish monthly a complete schedule of the Fund's portfolio
holdings on the internet at www.mainstayinvestments.com. You may also obtain
this information by calling toll-free 800-MAINSTAY (624-6782). Disclosure of the
Fund's portfolio holdings is made available as of the last day of each calendar
month, no earlier than 30 days after the end of the reported month. In addition,
disclosure of the Fund's top ten holdings is made quarterly no earlier than 15
days after the end of each calendar quarter. The Fund's quarterly top ten
holdings information is also provided in the Annual Report and Semi-annual
Report to Fund shareholders and in the quarterly holdings report to the SEC on
Form N-Q.

FUND EARNINGS

Dividends and Interest

Most funds earn either dividends from stocks, interest from bonds and other
securities, or both. A mutual fund, however, always pays this income to you as
"dividends." The dividends paid by the Fund will vary based on the income from
its investments and the expenses incurred by the Fund.

MainStay Investments reserves the right to automatically reinvest dividend
distributions of less than $10.00.

When the Fund Pays Dividends

BUY AFTER THE DIVIDEND PAYMENT. AVOID BUYING SHARES SHORTLY BEFORE A
DIVIDEND PAYMENT. PART OF YOUR INVESTMENT MAY BE RETURNED IN THE FORM OF A
DIVIDEND, WHICH MAY BE TAXABLE. [SIDEBAR]

The Fund declares and pay any dividends, to the extent income is available,
at least once a year, typically in December. Dividends are normally paid on the
last business day of the month after a dividend is declared. You begin earning
dividends the next business day after MainStay Investments receives your
purchase request in good order.

Capital Gains

The Fund earns capital gains when it sells securities at a profit.

When the Fund Pays Capital Gains

The Fund will normally distribute any capital gains to shareholders in
December.

How to Take Your Earnings

IF YOU INTEND TO REINVEST DIVIDENDS AND/OR CAPITAL GAINS IN ANOTHER FUND,
YOU MUST FIRST ESTABLISH AN ACCOUNT IN THAT CLASS OF SHARES OF THE

FUND. THERE IS NO SALES CHARGE ON SHARES PURCHASED THROUGH THE AUTOMATIC
REINVESTMENT OF DIVIDENDS OR CAPITAL GAINS. [SIDEBAR]

You may receive your portion of MainStay Fund earnings in one of seven
ways. You can make your choice at the time of application, and change it as
often as you like by notifying your financial advisor (if permitted by the
broker-dealer) or MainStay Investments directly. The seven choices are:

1. Reinvest dividends and capital gains in:

- - the same Fund; or

- - another MainStay Fund of your choice (other than a Fund that is closed, either
to new investors or to new share purchases).

2. Take the dividends in cash and reinvest the capital gains in the same Fund.

3. Take the capital gains in cash and reinvest the dividends in the same Fund.

4. Take a percentage of dividends or capital gains in cash and reinvest the
remainder in the same Fund.

5. Take dividends and capital gains in cash.

6. Reinvest all or a percentage of the capital gains in another MainStay Fund
(other than a Fund that is closed, either to new investors or to new share
purchases) and reinvest the dividends in the original Fund.

7. Reinvest all or a percentage of the dividends in another MainStay Fund (other
than a Fund that is closed, either to new investors or to new share purchases)
and reinvest the capital gains in the original Fund.

If you do not make one of these choices on your application, your earnings
will be automatically reinvested in the same class of shares of the same Fund.

UNDERSTAND THE TAX CONSEQUENCES

Most of Your Earnings are Taxable

Virtually all of the dividends and capital gains distributions you receive
from the Fund are taxable, whether you take them as cash or automatically
reinvest them. The Fund's realized earnings are taxed based on the length of
time the Fund holds its investments, regardless of how long you hold Fund
shares. If the Fund realizes long-term capital gains, the earnings distributions
are taxed as long-term capital gains; earnings from short-term capital gains and
income generated on debt investments and other sources are generally taxed as
ordinary income upon distribution. Earnings of the Fund, if any, will generally
be a result of capital gains that may be taxed as either long-term capital gains
or short-

term capital gains (taxed as ordinary income). Earnings generated by interest
received on fixed income securities generally will be a result of income
generated on debt investments and will be taxable as ordinary income.

For individual shareholders, a portion of the dividends received from the
Fund may be treated as "qualified dividend income," which is currently taxable
to individuals at a maximum rate of 15%, to the extent that such Fund receives
qualified dividend income from domestic corporations and certain qualified
foreign corporations and that certain holding period and other requirements are
met. The shareholder must also generally satisfy a more than 60 day holding
period requirement with respect to each distribution of qualified dividends in
order to qualify for the 15% rate on such distribution. The favorable treatment
of any qualified income is scheduled to expire after 2010.

MainStay Investments will mail your tax report each year by January 31.
This report will tell you which dividends and redemption proceeds should be
treated as taxable ordinary income, which, if any, as tax-exempt income, and
which, if any, as long-term capital gains.

The Fund may be required to withhold U.S. Federal income tax at the rate of
28% of all taxable distributions payable to you if you fail to provide the Funds
with your correct taxpayer identification number or to make required
certifications, or if you have been notified by the IRS that you are subject to
backup withholding. Such withholding is not an additional tax and any amounts
withheld may be credited against your U.S. Federal income tax liability.

If the Fund's distributions exceed its income and capital gains realized in
any year, such excess distributions will constitute a return of capital for
federal income tax purposes. A return of capital generally will not be taxable
to you at the time of the distribution, but will reduce the cost basis of your
shares and result in a higher reported capital gain or a lower reported capital
loss when you sell your shares.

However, if the Fund has available capital loss carryforwards to offset its
capital gains realized in any year, and its distributions exceed its income
alone, all or a portion of the excess distributions may not be treated, for tax
purposes, as a return of capital, and would be taxable to shareholders.

Exchanges

An exchange of shares of one MainStay Fund for shares of another will be
treated as a sale of shares of the first MainStay Fund and a purchase of shares
of the second MainStay Fund. Any gain on the transaction may be subject to
taxation.

VOTING INFORMATION

This Proxy Statement/Prospectus is furnished in connection with a
solicitation of proxies by the Board to be used at the Special Meeting.

This Proxy Statement/Prospectus, along with a Notice of the Special Meeting
and a proxy card, is first being mailed to shareholders of the Small Cap Value
Fund on or about November 17, 2008. Only shareholders of record as of the close
of business on the Record Date, October 22, 2008, will be entitled to notice of,
and to vote at, the Special Meeting. If the enclosed form of proxy card is
properly executed and returned in time to be voted at the Special Meeting, the
proxies named therein will vote the shares represented by the proxy in
accordance with the instructions marked thereon. Unmarked but properly executed
proxy cards will be voted FOR the proposed Reorganization and in the discretion
of the proxy holders on any other matters.

A proxy may be revoked at any time on or before the Special Meeting by
written notice to the Secretary of the Trust at the address on the cover of this
Proxy Statement/Prospectus or by attending and voting at the Special Meeting.
Unless revoked, all valid and executed proxies will be voted in accordance with
the specifications thereon or, in the absence of such specifications, for
approval of the Reorganization Agreement and the Reorganization contemplated
thereby.

VOTING OF PROXIES. If you attend the Special Meeting you may vote in
person. If you do not plan to attend the Special Meeting, please cast your vote
by completing, signing, and returning the enclosed proxy card by mail in the
envelope provided.

You may also authorize your proxy on the Internet or by touch-tone
telephone. These options require you to input a control number, which is located
on each proxy card. After inputting the control number, you will be prompted to
authorize your proxy on the Proposal. You will have an opportunity to review
your authorization and make any necessary changes before submitting your
authorization and terminating your telephone call or Internet connection.

Timely and properly completed and submitted proxies will be voted as
instructed by shareholders. A shareholder who executes and returns a proxy may
revoke the proxy at any time prior to the date the proxy is to be exercised by
(1) delivering to the Small Cap Value Fund written notice of the revocation, (2)
delivering to the Small Cap Value Fund a proxy with a later date, or (3) voting
in person at the Special Meeting.

In the event a shareholder signs and returns the proxy but does not
indicate his or her vote as to a Proposal, such proxy will be voted FOR the
proposed Reorganization and in the discretion of the proxy holder with regard to
any other proposal.

QUORUM REQUIREMENTS. A quorum of shareholders is necessary to hold a valid
meeting and to consider the Proposal. The presence in person or by proxy of the
holders of the majority of outstanding shares of the Small Cap Value Fund on the
Record Date shall constitute a quorum. The following chart reflects the total
number of shares outstanding as of the Record Date for each class of the Small
Cap Value Fund:

<Table>
<Caption>
NUMBER OF SHARES OUTSTANDING
------------------------------------------------------
INVESTOR CLASS CLASS A CLASS B CLASS C CLASS I
-------------- ------- ------- ------- -------

SMALL CAP VALUE FUND [ ] [ ] [ ] [ ] [ ]
------- ------- ------- ------- -------

</Table>

VOTES NECESSARY TO APPROVE THE PROPOSAL. Approval of the proposal will
require the affirmative vote of the holders of a "majority of the outstanding
voting securities" of the Small Cap Value Fund, which is defined in the 1940 Act
as the lesser of : (1) 67% of the voting securities of the Small Cap Value Fund
present at the meeting, if more than 50% of the outstanding voting securities of
the Small Cap Value Fund are present in person or by proxy, or (2) more than 50%
of the outstanding voting securities of the Small Cap Value Fund.

EFFECT OF ABSTENTIONS AND BROKER "NON-VOTES." The Small Cap Value Fund
expects that, before the Special Meeting, broker-dealer firms holding shares of
the Fund in "street name" for their customers will request voting instructions
from their customers and beneficial owners. If a shareholder abstains from
voting as to any matter, or if a broker returns a "non-vote" proxy indicating a
lack of authority to vote on a matter, then the shares represented by such
abstention or broker non-vote will be considered to be present at the Special
Meeting for purposes of determining the existence of a quorum.

Abstentions and broker non-votes will not, however, be counted as votes in
favor of the Proposal. Therefore, abstentions and broker non-votes will have the
effect of a "no" vote with respect to the Proposal.

ADJOURNMENTS. If a quorum is not present at the Special Meeting or if a
quorum is present but sufficient votes to approve the Proposal have not been
received at the time of the Special Meeting, the persons named as proxies may
propose one or more adjournments of the Special Meeting in accordance with
applicable law to permit further solicitation of votes. The persons named as
proxies will vote in favor of adjournment with respect to those proxies that may
be voted in favor of a Proposal(s) and will vote against any such adjournment
with respect to those proxies which have been voted against the Proposal(s).

PAYMENT OF SOLICITATION EXPENSES. The cost of the Special Meeting,
including costs of solicitation of proxies and voting instructions, will be
borne by the Small Cap Value Fund and are estimated to be between [$ ] and
[$ ]. The Small Cap Value Fund or NYLIM, on its behalf, has retained
[ ] to provide proxy solicitation services in

connection with the Special Meeting. The Small Cap Value Fund may incur
additional expenses as a result of this proxy solicitation. Proxies will be
solicited via regular mail and also may be solicited via telephone, e-mail or
other personal contact by personnel of NYLIM, the Trust, their respective
affiliates, or, in NYLIM's discretion, a commercial firm retained for this
purpose.

OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING. The Small Cap Value Fund
does not know of any matters to be presented at the Special Meeting other than
those described in this Proxy Statement. If any other matters come before the
Special Meeting, including any Proposal to adjourn the Special Meeting to permit
the continued solicitation of proxies in favor of the Reorganization, it is the
intention of the Small Cap Value Fund that proxies not containing specific
restrictions to the contrary will be voted as described above under
"Adjournments" with respect to proposals to adjourn the Special Meeting to
solicit additional proxies in favor of the Reorganization and in the discretion
of the proxy holder on any other matters.

FUTURE SHAREHOLDER PROPOSALS. A shareholder may request inclusion in the
Trust's proxy statement and on the Trust's proxy card for shareholder meetings
certain proposals for action which the shareholder intends to introduce at such
meeting. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
proposals to the Trust at 51 Madison Avenue, New York, New York 10010. Any
shareholder proposals must be presented a reasonable time before the proxy
materials for the next meeting are sent to shareholders to be considered for
inclusion in the proxy materials. The timely submission of a proposal does not
guarantee its inclusion in the proxy statement and is subject to limitations
under the federal securities laws. The Trust is not required to hold regular
meetings of shareholders, and in order to minimize its costs, does not intend to
hold meetings of shareholders unless so required by applicable law, regulation,
regulatory policy, or unless otherwise deemed advisable by the Board or the
Trust's management.

Therefore, it is not practicable to specify a date by which proposals must
be received in order to be incorporated in an upcoming proxy statement for a
meeting of shareholders.

OTHER INFORMATION

FINANCIAL HIGHLIGHTS

The fiscal year end of each Trust is October 31.

The financial highlights of the Small Cap Opportunity Fund are contained in
Exhibit B have been derived from financial statements

audited by KPMG LLP, the Small Cap Opportunity Fund and Small Cap Value Fund's
independent registered public accounting firm.

FORM OF ORGANIZATION

The Small Opportunity Fund is a diversified series of the Eclipse Funds, an
open-end management investment company, organized as Massachusetts business
trust. Small Cap Opportunity Fund is governed by a Board of Trustees consisting
of seven members, all "non-interested" persons as defined in the 1940 Act, as
amended. For more information on the history of the Fund, please see the Fund's
Statement of Additional Information.

The Small Cap Value Fund is a diversified series of The MainStay Funds, an
open-end management investment company, organized as Massachusetts business
trust. Small Cap Value Fund is governed by a Board of Trustees consisting of
seven members, all "non-interested" persons as defined in the 1940 Act, as
amended. For more information on the history of the Fund, please see the Fund's
Statements of Additional Information.

DISTRIBUTOR

NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, New Jersey
07054, a limited liability company organized under the laws of Delaware, serves
as each Fund's distributor and principal underwriter (the "Distributor")
pursuant to a Amended and Restated Master Distribution Agreement, dated June 18,
2007. The Distribution Agreement provides that the Distributor will use its best
efforts to distribute the Funds' shares. The Distributor is a wholly-owned
subsidiary of NYLIM.

CUSTODIAN

Pursuant to an agreement with NYLIM, State Street Bank & Trust Company
("State Street"), One Lincoln Street, Boston, Massachusetts 02111-2900 serves as
the Custodian for each Fund's assets. State Street also provides sub-
administration and sub-accounting services for the Funds. These services include
calculating the Funds' daily net asset values, maintaining general ledger and
sub-ledger accounts for the calculation of the Funds' respective net asset
values, and assisting NYLIM in conducting various aspects of the Funds'
administrative operations. For providing these non-custody services to the
Funds, State Street is compensated by NYLIM. Custodian fees and expenses are
paid by the Funds.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP, 1601 Market Street, Philadelphia, PA 19103-2499, serves as the
Funds' independent registered public accounting firm. KPMG is

responsible for auditing the annual financial statements of the Funds.
Representatives of KPMG LLP are not expected to be present at the Special
Meeting, but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.

SHAREHOLDER REPORTS

The Funds will furnish, without charge, upon request, a printed version of
the most recent annual reports to shareholders of the Funds (and any subsequent
semi-annual reports). Such requests may be directed to the Funds by contacting
the Distributor of the Funds' shares by writing NYLIFE Distributors LLC, Attn:
MainStay Funds, 169 Lackawanna Avenue, Parsippany, New Jersey 07054, or by
calling toll-free 800-MAINSTAY (624-6782). Please include the name of the
specific Fund for which you request reports.

INFORMATION REQUIREMENTS

Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and certain other federal securities statutes,
and files reports and other information with the SEC. Proxy materials, reports
and other information filed by the Funds can be inspected and copied at the
Public Reference Facilities maintained by the SEC at 100 F Street, NE,
Washington, D.C. 20549. The SEC maintains an Internet website (at
http://www.sec.gov), which contains other information about the Funds.

SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS

As of the Record Date, (1) the current officers and Trustees of Eclipse
Funds, in the aggregate beneficially owned less than 1% of a class of shares of
the Small Cap Opportunity Fund, and (2) the current officers and Trustees of The
MainStay Funds, in the aggregate beneficially owned less than 1% of a class of
shares of the Small Cap Value Fund. A list of the 5% shareholders of the Small
Cap Opportunity Fund and the Small Cap Value Fund as of the Record Date are
listed in Exhibit C.

VOTE OF FUND SHARES BY NYLIM

MainStay Asset Allocation Funds and MainStay Retirement Funds may receive
the proxy statement as shareholders of the Small Cap Value Fund. In that event,
NYLIM and/or its affiliates have the discretion to vote some of the Small Cap
Value Fund's shares on the Proposal, in accordance with the recommendations of
an independent service provider or vote the shares in the same proportion as the
other shareholders of the Small Cap Value Fund. The Small Cap Value Fund has
been advised by NYLIM

that these shares will be voted pursuant to established policies and procedures
designed to address potential conflicts of interest.

CAPITALIZATION

The following tables show the capitalization of the Small Cap Value Fund
and the Small Cap Opportunity Fund as of April 30, 2008, and on a pro forma
basis as of that date, giving effect to the proposed acquisition of assets at
net asset value.

<Table>
<Caption>
AS OF APRIL 30, 2008
-----------------------------------------------------------
SMALL CAP
OPPORTUNITY PRO
FORMA COMBINED
SMALL CAP SMALL CAP PRO FORMA AFTER
NET ASSETS OPPORTUNITY FUND VALUE FUND ADJUSTMENTS REORGANIZATION
- ---------- ---------------- ----------- ----------- ---------------

INVESTOR CLASS..... $ 14,615,751 $10,849,516 $-- $ 25,465,267
CLASS A............ $144,732,484 $23,915,751 $-- $168,648,235
CLASS B............ $ 20,595,841 $19,917,399 $-- $ 40,513,240
CLASS C............ $ 27,455,923 $ 4,556,456 $-- $ 32,012,379
CLASS I............ $248,027,740 $ 7,332 $-- $248,035,072
TOTAL.............. $455,427,739 $59,246,454 $-- $514,674,193
</Table>

NET ASSET VALUE PER SHARE

<Table>
<Caption>
SMALL CAP
OPPORTUNITY PRO
FORMA COMBINED
SMALL CAP SMALL CAP PRO FORMA AFTER
NET ASSETS OPPORTUNITY FUND VALUE FUND ADJUSTMENTS REORGANIZATION
- ---------- ---------------- ---------- ----------- ---------------

INVESTOR CLASS...... $13.63 $8.86 $-- $13.63
CLASS A............. $13.62 $8.84 $-- $13.62
CLASS B............. $13.08 $7.92 $-- $13.08
CLASS C............. $13.09 $7.92 $-- $13.09
CLASS I............. $13.87 $8.95 $-- $13.87
</Table>

SHARES OUTSTANDING

INVESTOR CLASS...... 1,072,556 1,224,521 796,003 1,868,559
CLASS A............. 10,626,245 2,705,106 1,755,929 12,382,174
CLASS B............. 1,574,523 2,516,122 1,522,737 3,097,260
CLASS C............. 2,098,010 575,422 348,087 2,446,097
CLASS I............. 17,886,568 819 529 17,887,097
TOTAL............... 33,257,908 7,021,990 4,423,285 37,681,193
</Table>

EXHIBIT A

THE MAINSTAY FUNDS

FORM OF AGREEMENT AND PLAN OF REORGANIZATION

MAINSTAY SMALL CAP VALUE FUND
MAINSTAY SMALL CAP OPPORTUNITY FUND

The Boards of Trustees of Eclipse Funds and The MainStay Funds, each a
Massachusetts business trust ("Boards of Trustees"), deem it advisable that the
MainStay Small Cap Opportunity Fund (the "Acquiring Fund") and the MainStay
Small Cap Value Fund (the "Acquired Fund"), a series of Eclipse Funds and The
MainStay Funds, respectively, engage in the reorganization described below.

This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation ("Plan") within the meaning of Section 368(a)(1) of the United
States Internal Revenue Code of 1986, as amended ("Code"). The reorganization
and liquidation will consist of the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for Investor Class, Class
A, Class B, Class C and Class I shares of beneficial interest of the Acquiring
Fund ("Acquiring Fund Shares"), the assumption by the Acquiring Fund of all
liabilities of the Acquired Fund, and the distribution of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in complete liquidation of the
Acquired Fund, as provided herein ("Reorganization"), all upon the terms and
conditions hereinafter set forth in this Agreement.

WHEREAS, the Acquired Fund and the Acquiring Fund are each a series of an
open-end, registered investment company of the management type and the Acquired
Fund owns securities that generally are assets of the character in which the
Acquiring Fund is permitted to invest;

WHEREAS, the Board of Trustees of Eclipse Funds has determined, with
respect to the Acquiring Fund, that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the Acquiring Fund is in the best interests of the
Acquiring Fund and its shareholders and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of this
transaction; and

WHEREAS, the Board of Trustees of The MainStay Funds has determined, with
respect to the Acquired Fund, that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the Acquiring Fund is in the best interests of the Acquired
Fund and its shareholders and that the interests of the existing shareholders of
the Acquired Fund would not be diluted as a result of this transaction;

A-1

WHEREAS, the Boards of Trustees of the Acquiring Fund and the Acquired Fund
have agreed that the proposed reorganization be contingent upon the approval by
the shareholders of the Acquiring Fund of MacKay Shields LLC, an affiliate of
New York Life Investment Management LLC ("NYLIM"), as subadvisor.

NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:

1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND

1.1 Subject to the requisite approval of the Acquired Fund's shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
transfer all of its respective assets, as set forth in paragraph 1.2, to the
Acquiring Fund, and the Acquiring Fund agrees in exchange therefore: (i) to
deliver to the Acquired Fund the number of full and fractional Investor Class,
Class A, Class B, Class C and Class I Acquiring Fund Shares, determined by
dividing the value of the Acquired Fund's net assets with respect to each
corresponding class (Investor Class, Class A, Class B, Class C and Class I,
respectively), computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of one Acquiring Fund Share of the
corresponding class, computed in the manner and as of the time and date set
forth in paragraph 2.2; and (ii) to assume all liabilities of the Acquired Fund,
as set forth in paragraph 1.3. Such transactions shall take place on the date of
the closing provided for in paragraph 3.1 ("Closing Date").

1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or interests
receivable that are owned by the Acquired Fund and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund on the Closing Date
(collectively, "Assets").

1.3 The Acquired Fund will endeavor to discharge all of its liabilities and
obligations prior to the Closing Date. The Acquiring Fund shall also assume all
of the liabilities of the Acquired Fund, whether accrued or contingent, known or
unknown, existing at the Valuation Date as defined in paragraph 2.1
(collectively, "Liabilities"). On or as soon as practicable prior to the Closing
Date, the Acquired Fund will declare and pay to its shareholders of record one
or more dividends and/or other distributions so that it will have distributed
substantially all (and in no event less than 98%) of its investment company
taxable income (computed without

A-2

regard to any deduction for dividends paid) and realized net capital gain, if
any, for the current taxable year through the Closing Date.

1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Fund will distribute to its respective shareholders of record with
respect to each class of shares, determined as of immediately after the close of
business on the Closing Date ("Acquired Fund Shareholders"), on a pro rata basis
within that class, the Acquiring Fund Shares of the corresponding class received
by the Acquired Fund pursuant to paragraph 1.1, and will completely liquidate.
Such distribution and liquidation will be accomplished, with respect to each
class of the Acquired Fund's shares, by the transfer of the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the Acquiring Fund in
the names of the Acquired Fund Shareholders. The aggregate net asset value of
Investor Class, Class A, Class B, Class C and Class I Acquiring Fund Shares to
be so credited to Investor Class, Class A, Class B, Class C and Class I Acquired
Fund Shareholders, respectively, shall, with respect to each class, be equal to
the aggregate net asset value of the shares of beneficial interest of the
Acquired Fund ("Acquired Fund Shares") of the corresponding class owned by
Acquired Fund Shareholders on the Closing Date. All issued and outstanding
shares of the Acquired Fund will simultaneously be redeemed and canceled on the
books of the Acquired Fund, although share certificates representing interests
in Investor Class, Class A, Class B, Class C and Class I shares of the Acquired
Fund will represent a number of the corresponding class of Acquiring Fund Shares
after the Closing Date, as determined in accordance with paragraph 2.3. The
Acquiring Fund shall not issue certificates representing the Investor Class,
Class A, Class B, Class C and Class I Acquiring Fund Shares in connection with
such exchange.

1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's Transfer Agent, as defined in paragraph 3.3.

1.6 Any reporting responsibility of the Acquired Fund, including, but not
limited to, the responsibility for filing regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission ("Commission"), any
state securities commission, and any Federal, state or local tax authorities or
any other relevant regulatory authority, is and shall remain the responsibility
of the Acquired Fund up to and including the Closing Date.

2. VALUATION

2.1 The value of the Assets shall be the value of such Assets computed as
of immediately after the close of business of the New York Stock Exchange and
after the declaration of any dividends on the Closing Date (such time and date
being hereinafter called the "Valuation Date"), using

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the valuation procedures set forth in the then-current prospectus and statement
of additional information with respect to the Acquired Fund, and valuation
procedures established by the Acquired Fund's Board of Trustees.

2.2 The net asset value of an Acquiring Fund Share shall be the net asset
value per share computed with respect to that class as of the Valuation Date,
using the valuation procedures set forth in the Acquiring Fund's then-current
prospectus and statement of additional information, and valuation procedures
established by the Acquiring Fund's Board of Trustees.

2.3 The number of the Investor Class, Class A, Class B, Class C and Class I
Acquiring Fund Shares to be issued (including fractional shares, if any) in
exchange for the Acquired Fund's Assets shall be determined with respect to each
such class by dividing the value of the net assets with respect to the Investor
Class, Class A, Class B, Class C and Class I of the Acquired Fund, as the case
may be, determined using the same valuation procedures referred to in paragraph
2.1, by the net asset value of an Acquiring Fund Share of the same class,
determined in accordance with paragraph 2.2.

2.4 All computations of value shall be made by NYLIM, in its capacity as
administrator for the Acquired Fund and the Acquiring Fund, and shall be subject
to confirmation by each Fund's record keeping agent and by each Fund's
independent accountants.

3. CLOSING AND CLOSING DATE

3.1 The Closing Date shall be February 13, 2009 or such other date as the
parties may agree. All acts taking place at the closing of the transactions
provided for in this Agreement ("Closing") shall be deemed to take place
simultaneously as of immediately after the close of business on the Closing Date
unless otherwise agreed to by the parties. The close of business on the Closing
Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be held at the
offices of the Funds or at such other time and/or place as the parties may
agree.

3.2 The MainStay Funds shall direct State Street Bank and Trust Company as
custodian for the Acquired Fund ("Custodian"), to deliver, at the Closing, a
certificate of an authorized officer stating that (i) the Assets shall have been
delivered in proper form to the Acquiring Fund within two business days prior to
or on the Closing Date, and (ii) all necessary taxes in connection with the
delivery of the Assets, including all applicable Federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
The Acquired Fund's portfolio securities represented by a certificate or other
written instrument shall be presented by the Custodian to those persons at the
Custodian who have primary responsibility for the safekeeping of the assets of
the Acquiring

A-4

Fund, which Custodian also serves as the custodian for the Acquiring Fund. Such
presentation shall be made for examination no later than five business days
preceding the Closing Date, and shall be transferred and delivered by the
Acquired Fund as of the Closing Date for the account of the Acquiring Fund duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof. The Custodian shall deliver to those persons at the Custodian
who have primary responsibility for the safekeeping of the assets of the
Acquiring Fund as of the Closing Date by book entry, in accordance with the
customary practices of the Custodian and of each securities depository, as
defined in Rule 17f-4 under the Investment Company Act of 1940, as amended
("1940 Act"), in which the Acquired Fund's Assets are deposited, the Acquired
Fund's Assets deposited with such depositories. The cash to be transferred by
the Acquired Fund shall be delivered by wire transfer of Federal funds on the
Closing Date.

3.3 The MainStay Funds shall direct NYLIM Service Company, LLC, in its
capacity as transfer agent for the Acquired Fund ("Transfer Agent"), to deliver
at the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders and the number
and percentage ownership of outstanding Investor Class, Class A, Class B, Class
C and Class I shares owned by each such shareholder immediately prior to the
Closing. The Acquiring Fund shall issue and deliver to the Secretary of the
Acquired Fund prior to the Closing Date a confirmation evidencing that the
appropriate number of Acquiring Fund Shares will be credited to the Acquired
Fund on the Closing Date, or provide other evidence satisfactory to the Acquired
Fund as of the Closing Date that such Acquiring Fund Shares have been credited
to the Acquired Fund's accounts on the books of the Acquiring Fund. At the
Closing each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.

3.4 In the event that on the Valuation Date (a) the New York Stock Exchange
or another primary trading market for portfolio securities of the Acquiring Fund
or the Acquired Fund (each, an "Exchange") shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Boards of the Trusts, accurate appraisal of the value of the net assets of the
Acquired Fund or the Acquiring Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.

4. REPRESENTATIONS AND WARRANTIES

4.1 Except as has been fully disclosed to the Acquiring Fund in a written
instrument executed by an officer of The MainStay Funds, The

A-5

MainStay Funds, on behalf of the Acquired Fund, represents and warrants to the
Acquiring Fund, as follows:

(a) The Acquired Fund is duly organized as a series of The MainStay
Funds, which is a business trust duly organized, validly existing and in
good standing under the laws of Massachusetts, with power under The
MainStay Funds' Declaration of Trust and Bylaws, as amended from time to
time, to own all of its Assets and to carry on its business as it is now
being conducted; and

(b) The MainStay Funds is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the
registration of Investor Class, Class A, Class B, Class C and Class I
Acquired Fund Shares under the Securities Act of 1933, as amended ("1933
Act"), is in full force and effect;

(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired
Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the Securities Exchange Act of 1934, as
amended ("1934 Act"), and the 1940 Act, and such as may be required by
state securities laws;

(d) The current prospectus and statement of additional information of
the Acquired Fund and each prospectus and statement of additional
information of the Acquired Fund used at all times prior to the date of
this Agreement conforms or conformed at the time of its use in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act
and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not materially misleading;

(e) On the Closing Date, The MainStay Funds, on behalf of the Acquired
Fund, will have good and marketable title to the Assets and full right,
power, and authority to sell, assign, transfer and deliver such Assets
hereunder free of any liens or other encumbrances, and upon delivery and
payment for such Assets, Eclipse Funds, on behalf of the Acquiring Fund,
will acquire good and marketable title thereto, subject to no restrictions
on the full transfer thereof, including such restrictions as might arise
under the 1933 Act, other than as disclosed to the Acquiring Fund;

(f) The MainStay Funds is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a
material violation of its Declaration of Trust or By-Laws, or of any

A-6

agreement, indenture, instrument, contract, lease or other undertaking to
which The MainStay Funds, on behalf of the Acquired Fund, is a party or by
which it is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which The MainStay Funds, on behalf
of the Acquired Fund, is a party or by which it is bound;

(g) All material contracts or other commitments of the Acquired Fund
(other than this Agreement and certain investment contracts, including
options, futures, and forward contracts) will terminate without liability
to the Acquired Fund on or prior to the Closing Date;

(h) Except as otherwise disclosed in writing to and accepted by
Eclipse Funds, on behalf of the Acquiring Fund, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to its knowledge, threatened
against the Acquired Fund or any of its properties or assets that, if
adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The MainStay Funds, on behalf of
the Acquired Fund, knows of no facts which might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;

(i) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets, and Schedule of Investments of the Acquired Fund
dated [ ], 200[ ] have been audited by KPMG LLP, independent
accountants, and are in accordance with accounting principles generally
accepted in the United States of America ("GAAP") consistently applied, and
such statements (copies of which have been furnished to the Acquiring Fund)
present fairly, in all material respects, the financial condition of the
Acquired Fund as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Acquired Fund required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP as
of such date not disclosed therein;

(j) Since [ ], 200[ ], there has not been any material
adverse change in the Acquired Fund's financial condition, assets,
liabilities or business, other than changes occurring in the ordinary
course of business, or any incurrence by the Acquired Fund of indebtedness
maturing more than one year from the date such indebtedness was incurred,
except as otherwise disclosed to and accepted by the Acquiring Fund. For
the purposes of this subparagraph (j), a decline in net asset value per
share of Acquired

A-7

Fund Shares due to declines in market values of securities held by the
Acquired Fund, the discharge of the Acquired Fund's liabilities, or the
redemption of the Acquired Fund's shares by shareholders of the Acquired
Fund shall not constitute a material adverse change;

(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund
required by law to have been filed by such date (including any extensions)
shall have been filed and are or will be correct in all material respects,
and all Federal and other taxes shown as due or required to be shown as due
on said returns and reports shall have been paid or provision shall have
been made for the payment thereof, and to the best of the Acquired Fund's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;

(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been (or will be) eligible to and has computed (or
will compute) its Federal income tax under Section 852 of the Code, and
will have distributed all of its investment company taxable income and net
capital gain (as defined in the Code) that has accrued through the Closing
Date, and before the Closing Date will have declared dividends sufficient
to distribute all of its investment company taxable income and net capital
gain for the period ending on the Closing Date;

(m) All issued and outstanding shares of the Acquired Fund are, and on
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Trust and have been offered and sold in
every state and the District of Columbia in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. All of the issued and outstanding shares of the
Acquired Fund will, at the time of Closing, be held by the persons and in
the amounts set forth in the records of the Transfer Agent, on behalf of
the Acquired Fund, as provided in paragraph 3.3. The Acquired Fund does not
have outstanding any options, warrants or other rights to subscribe for or
purchase any of the shares of the Acquired Fund, nor is there outstanding
any security convertible into any of the Acquired Fund's shares;

(n) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Trustees of the Trust, on behalf of the
Acquired Fund, and, subject to the approval of the shareholders of the
Acquired Fund, this Agreement will constitute a

A-8

valid and binding obligation of the Trust, on behalf of the Acquired Fund,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;

(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any Federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary
in connection with the transactions contemplated hereby, shall be accurate
and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations thereunder
applicable thereto; and

(p) The combined proxy statement and prospectus ("Proxy Statement") to
be included in the Registration Statement referred to in paragraph 5.6,
insofar as it relates to the Acquired Fund, will, on the effective date of
the Registration Statement and on the Closing Date (i) not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
materially misleading, provided, however, that the representations and
warranties of this subparagraph (p) shall not apply to statements in or
omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished by the
Acquiring Fund for use therein, and (ii) comply in all material respects
with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the
rules and regulations thereunder.

4.2 Except as has been fully disclosed to the Acquired Fund in a written
instrument executed by an officer of Eclipse Funds, Eclipse Funds, on behalf of
the Acquiring Fund, represents and warrants to the Acquired Fund, as follows:

(a) The Acquiring Fund is duly organized as series of Eclipse Funds,
which is a trust duly organized, validly existing, and in good standing
under the laws of the Massachusetts with power under its Declaration of
Trust and By-Laws to own all of its properties and assets and to carry on
its business as it is now being conducted;

(b) The Eclipse Funds is a registered investment company classified as
a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration
of the Investor Class, Class A, Class B, Class C and Class I Acquiring Fund
Shares under the 1933 Act, is in full force and effect;

A-9

(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may
be required by state securities laws;

(d) The current prospectus and statement of additional information of
the Acquiring Fund and each prospectus and statement of additional
information of the Acquiring Fund used at all times prior to the date of
this Agreement conforms or conformed at the time of its use in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act
and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not materially misleading;

(e) On the Closing Date, Eclipse Funds, on behalf of the Acquiring
Fund, will have good and marketable title to the Acquiring Fund's assets,
free of any liens or other encumbrances, except those liens or encumbrances
as to which the Acquired Fund has received notice and necessary
documentation at or prior to the Closing;

(f) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a
material violation of Eclipse Funds' Declaration of Trust or By-Laws or of
any agreement, indenture, instrument, contract, lease or other undertaking
to which Eclipse Funds, on behalf of the Acquiring Fund, is a party or by
which it is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which Eclipse Funds, on behalf of
the Acquiring Fund, is a party or by which it is bound;

(g) Except as otherwise disclosed in writing to and accepted by The
MainStay Funds, on behalf of the Acquired Fund, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to the Acquiring Fund's
knowledge, threatened against Eclipse Funds, on behalf of the Acquiring
Fund, or any of the Acquiring Fund's properties or assets that, if
adversely determined, would materially and adversely affect the Acquiring
Fund's financial condition or the conduct of its business. Eclipse Funds,
on behalf of the Acquiring Fund, knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which

A-10

materially and adversely affects the Acquiring Fund's business or its
ability to consummate the transactions herein contemplated;

(h) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets and Schedule of Investments of the Acquiring Fund
dated [ ], 200[ ] have been audited by KPMG LLP, independent
accountants, and are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Fund)
present fairly, in all material respects, the financial condition of the
Acquiring Fund as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Acquiring Fund required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP as
of such date not disclosed therein;

(i) Since [ ], 200[ ], there has not been any material
adverse change in the Acquiring Fund's financial condition, assets,
liabilities or business, other than changes occurring in the ordinary
course of business, or any incurrence by the Acquiring Fund of indebtedness
maturing more than one year from the date such indebtedness was incurred,
except as otherwise disclosed to and accepted by the Acquired Fund. For
purposes of this subparagraph (i), a decline in net asset value per share
of the Acquiring Fund's shares due to declines in market values of
securities held by the Acquiring Fund, the discharge of the Acquiring
Fund's liabilities, or the redemption of the Acquiring Fund's shares by
shareholders of the Acquiring Fund, shall not constitute a material adverse
change;

(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Fund
required by law to have been filed by such date (including any extensions)
shall have been filed and are or will be correct in all material respects,
and all Federal and other taxes shown as due or required to be shown as due
on said returns and reports shall have been paid or provision shall have
been made for the payment thereof, and to the best of the Acquiring Fund's
knowledge no such return is currently under audit and no assessment has
been asserted with respect to such returns;

(k) For each taxable year of its operation (including the taxable year
that includes the Closing Date), the Acquiring Fund has met (or will meet)
the requirements of Subchapter M of the Code for qualification as a
regulated investment company, has been eligible to (or will be eligible to)
and has computed (or will compute) its Federal income tax under Section 852
of the Code, and has distributed all of its investment company taxable
income and net capital gain (as defined in the Code) for periods ending
prior to the Closing Date;

A-11

(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Trust and have been offered and sold in every
state and the District of Columbia in compliance in all material respects
with applicable registration requirements of the 1933 Act and state
securities laws. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any
Acquiring Fund Shares;

(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Board of Trustees of Eclipse Funds, on
behalf of the Acquiring Fund, and this Agreement will constitute a valid
and binding obligation of the Acquiring Fund, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;

(n) The Investor Class, Class A, Class B, Class C and Class I
Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for
the account of the Acquired Fund Shareholders, pursuant to the terms of
this Agreement, will on the Closing Date have been duly authorized and,
when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable by the Acquiring
Fund; and

(o) The information to be furnished by the Acquiring Fund for use in
the registration statements, proxy materials and other documents that may
be necessary in connection with the transactions contemplated hereby shall
be accurate and complete in all material respects and shall comply in all
material respects with Federal securities and other laws and regulations
applicable thereto; and

(p) The Proxy Statement to be included in the Registration Statement
(and any amendment or supplement thereto), insofar as it relates to the
Acquiring Fund and the Acquiring Fund Shares, will, from the effective date
of the Registration Statement through the date of the Special Meeting of
shareholders of the Acquired Fund contemplated therein and on the Closing
Date (i) not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which such
statements were made, not materially misleading, provided, however, that
the representations and warranties of this subparagraph (p) shall not apply
to statements in or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity

A-12

with information that was furnished by the Acquired Fund for use therein,
and (ii) comply in all material respects with the provisions of the 1933
Act, the 1934 Act, and the 1940 Act and the rules and regulations
thereunder.

5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions, and any other distribution
that may be advisable.

5.2 The MainStay Funds will call a Special Meeting of the shareholders of
the Acquired Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
Eclipse Funds will call a meeting of the shareholders of the Acquiring Fund to
approve MacKay Shields LLC, an affiliate of NYLIM, as subadvisor.

5.3 The Acquired Fund covenants that the Investor Class, Class A, Class B,
Class C and Class I Acquiring Fund Shares to be issued hereunder are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.

5.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.

5.5. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.

5.6. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of the Proxy Statement (referred to in
paragraph 4.1(p)) to be included in a Registration Statement on Form N-14
("Registration Statement"), in compliance with the 1933 Act, the 1934 Act and
the 1940 Act, in connection with the Special Meeting of the shareholders of the
Acquired Fund to consider approval of this Agreement and the transactions
contemplated herein.

5.7. As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to its respective shareholders
consisting of the Investor Class, Class A, Class B, Class C and Class I
Acquiring Fund Shares received at the Closing.

5.8 The Acquiring Fund and the Acquired Fund shall each use their
reasonable best efforts to fulfill or obtain the fulfillment of the conditions

A-13

precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.

5.9 The MainStay Funds, on behalf of the Acquired Fund, covenants that it
will, from time to time, as and when reasonably requested by the Acquiring Fund,
execute and deliver or cause to be executed and delivered all such assignments
and other instruments, and will take or cause to be taken such further action as
Eclipse Funds, on behalf of the Acquiring Fund, may reasonably deem necessary or
desirable in order to vest in and confirm (a) The MainStay Funds', on behalf of
the Acquired Fund, title to and possession of the Acquiring Fund Shares to be
delivered hereunder, and (b) Eclipse Funds', on behalf of the Acquiring Fund,
title to and possession of all the Assets and otherwise to carry out the intent
and purpose of this Agreement.

5.10 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

The obligations of The MainStay Funds, on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at The
MainStay Funds' election, to the performance by Eclipse Funds, on behalf of the
Acquiring Fund, of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:

6.1. All representations and warranties of Eclipse Funds, on behalf of the
Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;

6.2. Eclipse Funds, on behalf of the Acquiring Fund, shall have delivered
to the Acquired Fund a certificate executed in the name of the Acquiring Fund by
its President or Vice President and its Treasurer or Assistant Treasurer, in a
form reasonably satisfactory to The MainStay Funds, and dated as of the Closing
Date, to the effect that the representations and warranties of Eclipse Funds, on
behalf of the Acquiring Fund, made in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as The MainStay
Funds shall reasonably request;

6.3. Eclipse Funds, on behalf of the Acquiring Fund, shall have performed
all of the covenants and complied with all of the provisions

A-14

required by this Agreement to be performed or complied with by Eclipse, on
behalf of the Acquiring Fund, on or before the Closing Date; and

6.4. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Investor Class, Class A, Class B, Class C and
Class I Acquiring Fund Shares to be issued in connection with the Reorganization
after such number has been calculated in accordance with paragraph 1.1.

6.5 The shareholders of the Acquiring Fund shall have approved MacKay
Shields LLC as subadvisor.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND

The obligations of Eclipse Funds, on behalf of the Acquiring Fund, to
complete the transactions provided for herein shall be subject, at Eclipse
Funds' election, to the performance by The MainStay Funds, on behalf of the
Acquired Fund, of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:

7.1. All representations and warranties of The MainStay Funds, on behalf of
the Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;

7.2. The MainStay Funds shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's Assets and Liabilities, as of the Closing Date,
certified by the Treasurer of The MainStay Funds;

7.3. The MainStay Funds, on behalf of the Acquired Fund, shall have
delivered to the Acquiring Fund a certificate executed in the name of the
Acquired Fund by its President or Vice President and its Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to the Acquiring Fund and dated as
of the Closing Date, to the effect that the representations and warranties of
The MainStay Funds, on behalf of the Acquired Fund, made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as Eclipse Funds shall reasonably request;

7.4 The MainStay Funds, on behalf of the Acquired Fund, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by The MainStay Funds, on
behalf of the Acquired Fund, on or before the Closing Date;

A-15

7.5 The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Investor Class, Class A, Class B, Class C and
Class I Acquiring Fund Shares to be issued in connection with the Reorganization
after such number has been calculated in accordance with paragraph 1.1; and

7.6 The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of their investment company taxable income and all of their net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing Date; and (ii) any undistributed investment
company taxable income and net realized capital gains from any period to the
extent not otherwise already distributed.

7.7 The shareholders of the Acquiring Fund shall have approved MacKay
Shields LLC as subadvisor.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND

If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to The MainStay Funds, on behalf of the
Acquired Fund, or Eclipse Funds, on behalf of the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:

8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of The MainStay Funds'
Declaration of Trust and By-Laws, applicable Massachusetts law and the 1940 Act,
and certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, The MainStay Funds and Eclipse Funds, on behalf of either the Acquired
Fund or the Acquiring Fund, respectively, may not waive the conditions set forth
in this paragraph 8.1;

8.2 On the Closing Date no action, suit or other proceeding shall be
pending or, to Eclipse Funds' or The MainStay Funds' knowledge, threatened
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein;

8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
Eclipse Funds and The Mainstay Funds to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent,

A-16

order or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may for itself waive any of such conditions;

8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and

8.5 The parties shall have received the opinion of counsel to The MainStay
Funds, on behalf of the Acquired Fund, substantially to the effect that, based
upon certain facts, assumptions, and representations, the transaction
contemplated by this Agreement shall constitute a tax-free reorganization for
Federal income tax purposes. The delivery of such opinion is conditioned upon
receipt by counsel to The MainStay Funds of representations it shall request of
The MainStay Funds. Notwithstanding anything herein to the contrary, The
MainStay Funds and Eclipse Funds, on behalf of either the Acquired Fund or the
Acquiring Fund, respectively, may not waive the condition set forth in this
paragraph 8.5.

9. INDEMNIFICATION

9.1 Eclipse Funds, out of the Acquiring Fund's assets and property, agrees
to indemnify and hold harmless the Acquired Fund from and against any and all
losses, claims, damages, liabilities or expenses (including, without limitation,
the payment of reasonable legal fees and reasonable costs of investigation) to
which the Acquired Fund may become subject, insofar as such loss, claim, damage,
liability or expense (or actions with respect thereto) arises out of or is based
on any breach by the Acquiring Fund of any of its representations, warranties,
covenants or agreements set forth in this Agreement.

9.2 The MainStay Funds, out of the Acquired Fund's assets and property,
agrees to indemnify and hold harmless the Acquiring Fund from and against any
and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which the Acquiring Fund may become subject, insofar as such
loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Acquired Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.

10. BROKERAGE FEES AND EXPENSES

10.1 The Acquiring Fund and the Acquired Fund, represent and warrant to
each other that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.

A-17

10.2 The expenses relating to the proposed Reorganization will be borne by
the Acquired Fund. No such expenses shall be borne by the Acquiring Fund, except
for brokerage fees and expenses incurred in connection with the Reorganization.
The costs of the Reorganization shall include, but not be limited to, costs
associated with obtaining any necessary order of exemption from the 1940 Act, if
any, preparation of the Registration Statement, printing and distributing the
Proxy Statement, legal fees, accounting fees, securities registration fees, and
expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.

11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

11.1 Eclipse Funds and The MainStay Funds agree that they have not made any
representation, warranty or covenant, on behalf of either the Acquiring Fund or
the Acquired Fund, respectively, not set forth herein and that this Agreement
constitutes the entire agreement between the parties.

11.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of the Acquired
Fund and Acquiring Fund in Sections 9.1 and 9.2 shall survive the Closing.

12. TERMINATION

This Agreement may be terminated and the transactions contemplated hereby
may be abandoned by resolution of the Board of Trustees of Eclipse Funds and The
MainStay Funds, on behalf of either the Acquiring Fund or the Acquired Fund,
respectively, at any time prior to the Closing Date, if circumstances should
develop that, in the opinion of the Board, make proceeding with the Agreement
inadvisable.

13. AMENDMENTS

This Agreement may be amended, modified or supplemented in such manner as
may be deemed necessary or advisable by the authorized officers of Eclipse Funds
and The MainStay Funds, on behalf of either the Acquiring Fund or the Acquired
Fund, respectively; provided, however, that following the Special Meeting of the
shareholders of the Acquired Fund called by The MainStay Funds, pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the

A-18

provisions for determining the number of Investor Class, Class A, Class B, Class
C and Class I Acquiring Fund Shares to be issued to the Investor Class, Class A,
Class B, Class C and Class I Acquired Fund Shareholders, respectively, under
this Agreement to the detriment of such shareholders without their further
approval.

14. NOTICES

Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, electronic delivery (i.e., e-mail) personal service or prepaid or
certified mail addressed to the Funds, 169 Lackawanna Avenue, Parsippany, New
Jersey 07054, Attn: Marguerite E. H. Morrison, in each case with a copy to
Dechert LLP, 1775 I Street, N.W., Washington, D.C. 20006, Attn: Sander M.
Bieber.

15. HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY

15.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

15.2 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to its principles of conflicts
of laws.

15.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement. Except as expressly provided otherwise in this Plan, the Acquired
Fund will pay or cause to be paid all out-of pocket fees and expenses incurred
in connection with the transactions contemplated under this Plan, including, but
not limited to, accountants' fees, legal fees, registration fees, printing
expenses, transfer taxes (if any) and the fees of banks and transfer agents.

A-19

IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
executed as of the [ ] day of [ ] 2009.

<Table>

Eclipse Funds The MainStay Funds
On behalf of the Acquiring On behalf of the Acquired
Fund: Mainstay Fund: Mainstay
Small Cap Opportunity Fund Small Cap Value Fund

By: -------------------------- By: --------------------------
</Table>

NYLIM agrees to the provisions set forth in the last paragraph of this Plan.

NEW YORK LIFE
INVESTMENT MANAGEMENT LLC

By: ---------------------------------------------------------
Stephen P. Fisher
President and Chief Executive Officer

A-20

EXHIBIT B

FINANCIAL HIGHLIGHTS OF SMALL CAP OPPORTUNITY FUND

The financial highlights tables are intended to help you understand the
financial performance of the Small Cap Opportunity Fund for the past five years.
Certain information reflects financial results for a single Fund share. The
total returns presented in the table represent the rate that an investor would
have earned or lost on an investment in the Fund for the stated period (assuming
reinvestment of all dividends and distributions).

Information for the Small Cap Opportunity Fund has been audited by KPMG
LLP, whose report, along with the Fund's financial statements, are in the annual
report of the Trusts, which are available upon request.

B-1

FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS

<Table>
<Caption>
INVESTOR CLASS CLASS A
-------------- -------------------------------------------------------------
FEBRUARY 28, JANUARY 2,
2008* 2004*
THROUGH SIX MONTHS YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ENDED ----------------------------- OCTOBER 31,
2008** APRIL 30, 2008** 2007 2006 2005 2004
-------------- ---------------- -------- -------- -------- -----------

Net asset value at
beginning of period.. $ 13.86 $ 18.65 $ 19.87 $ 19.60 $ 18.58 $ 16.78
------- -------- -------- -------- -------- -------
Net investment income
(loss)(a)............ 0.01 0.09 0.07 (0.07) (0.08) (0.09)
Net realized and
unrealized gain
(loss) on
investments.......... (0.24) (2.99) (1.29) 2.14 4.01 1.89
------- -------- -------- -------- -------- -------
Total from investment
operations........... (0.23) (2.90) (1.22) 2.07 3.93 1.80
------- -------- -------- -------- -------- -------
Less dividends and
distributions:
From net investment
income............ -- (0.12) -- -- -- --
From net realized
gain on
investments....... -- (2.01) -- (1.80) (2.91) --
------- -------- -------- -------- -------- -------
Total dividends and
distributions........ -- (2.13) -- (1.80) (2.91) --
------- -------- -------- -------- -------- -------
Net asset value at end
of period............ $ 13.63 $ 13.62 $ 18.65 $ 19.87 $ 19.60 $ 18.58
======= ======== ======== ======== ======== =======
Total investment
return(c)............ (1.66)%(d) (16.86)%(d) (6.09)% 11.20% 22.66% 10.73%(d)
Ratios (to average net
assets)/Supplemental
Data:
Net investment income
(loss)............ 0.64%+ 1.17%+ 0.33% (0.39)% (0.44)% (0.36)%+
Net expenses......... 1.80%+ 1.70%+ 1.66% 1.64% 1.66% 1.87%+#
Expenses (before
waiver/reimburse-
ment)............. 1.94%+ 1.96%+ 1.66% 1.64% 1.66% 1.87%+#
Portfolio turnover
rate................. 75% 75% 134% 124% 159% 132%
Net assets at end of
period (in 000's).... $14,616 $144,732 $301,031 $502,182 $194,615 $24,621
</Table>

- --------

* Commencement of operations.

** Unaudited.

+ Annualized.

# Includes transfer agent fees paid directly which amounted to 0.02% and
0.08% of average net assets for the years or periods ended October 31,
2004 and October 31, 2003, respectively, and custodian fees and other
expenses paid indirectly which amounted to less than 0.01% of average
net assets for the years indicated.

(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 assumes the
reinvestments of dividends and distributions. Class I shares are not
subject to sales charges.

(d) Total return in not annualized.

B-2

FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS

<Table>
<Caption>
CLASS B
----------------------------------------------------------
JANUARY 2,
SIX MONTHS 2004*
ENDED YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ----------------------------- OCTOBER 31,
2008** 2007 2006 2005 2004
---------- ------- ------- ------- -----------

$ 17.94 $ 19.25 $ 19.18 $ 18.38 $ 16.71
------- ------- ------- ------- -------

0.03 (0.08) (0.21) (0.22) (0.19)

(2.88) (1.23) 2.08 3.93 1.86
------- ------- ------- ------- -------

(2.85) (1.31) 1.87 3.71 1.67
------- ------- ------- ------- -------

-- -- -- -- --

(2.01) -- (1.80) (2.91) --
------- ------- ------- ------- -------

$ 13.08 $ 17.94 $ 19.25 $ 19.18 $ 18.38
======= ======= ======= ======= =======
(17.15)%(d) (6.81)% 10.32% 21.59% 9.99%(d)

0.41%+ (0.41)% (1.12)% (1.19)% (1.12)%+
2.46%+ 2.41% 2.39% 2.41% 2.62%+#

2.72%+ 2.41% 2.39% 2.41% 2.62%+#
75% 134% 124% 159% 132%

$20,596 $32,502 $46,112 $48,496 $14,905
</Table>

B-3

FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS

<Table>
<Caption>
CLASS C
---------------------------------------------------------------------------
DECEMBER 30,
SIX MONTHS 2002*
ENDED YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ------------------------------------------- OCTOBER 31,
2008** 2007 2006 2005 2004 2003
---------- ------- -------- ------- ------ ------------

Net asset value at
beginning of period.. $ 17.94 $ 19.26 $ 19.19 $ 18.37 $16.15 $11.46
------- ------- -------- ------- ------ ------
Net investment income
(loss)(a)............ 0.03 (0.09) (0.21) (0.22) (0.25) (0.05)
Net realized and
unrealized gain
(loss) on
investments.......... (2.87) (1.23) 2.08 3.95 3.28 4.74
------- ------- -------- ------- ------ ------
Total from investment
operations........... (2.84) (1.32) 1.87 3.73 3.03 4.69
------- ------- -------- ------- ------ ------
Less dividends and
distributions:
From net investment
income............ -- -- -- -- -- --
From net realized
gain on
investments....... (2.01) -- (1.80) (2.91) (0.81) --
------- ------- -------- ------- ------ ------
Total dividends and
distributions........ (2.01) -- (1.80) (2.91) (0.81) --
------- ------- -------- ------- ------ ------
Net asset value at end
of period............ $ 13.09 $ 17.94 $ 19.26 $ 19.19 $18.37 $16.15
======= ======= ======== ======= ====== ======
Total investment
return(c)............ (17.14)%(d) (6.80)% 10.32% 21.72% 19.29% 40.92%(d)
Ratios (to average net
assets)/Supplemental
Data:
Net investment income
(loss)............ 0.40%+ (0.44)% (1.14)% (1.19)% (1.13)% (0.47)%+
Net expenses......... 2.46%+ 2.41% 2.39% 2.41% 2.62%# 2.27%+#
Expenses (before
waiver/reimburse-
ment)............. 2.72%+ 2.41% 2.39% 2.41% 2.62%# 2.34%+#
Portfolio turnover
rate................. 75% 134% 124% 159% 132% 135%
Net assets at end of
period (in 000's).... $27,456 $54,264 $120,414 $48,316 $5,518 $ 2
</Table>

- --------

* Commencement of operations.

** Unaudited.

+ Annualized.

(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 assumes the
reinvestments of dividends and distributions. Class I shares are not
subject to sales charges.

(d) Total return in not annualized.

B-4

FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS

<Table>
<Caption>
CLASS I
----------------------------------------------------------------------

SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------
2008** 2007 2006 2005 2004 2003
---------- -------- -------- -------- -------- --------

$ 19.03 $ 20.18 $ 19.79 $ 18.67 $ 16.26 $ 11.58
-------- -------- -------- -------- -------- --------

0.12 0.17 0.02 0.01 0.06 0.07

(3.04) (1.32) 2.17 4.02 3.21 4.74
-------- -------- -------- -------- -------- --------

(2.92) (1.15) 2.19 4.03 3.27 4.81
-------- -------- -------- -------- -------- --------

(0.23) (0.00)(b) -- -- (0.05) (0.13)

(2.01) -- (1.80) (2.91) (0.81) --
-------- -------- -------- -------- -------- --------

(2.24) (0.00)(b) (1.80) (2.91) (0.86) (0.13)
-------- -------- -------- -------- -------- --------

$ 13.87 $ 19.03 $ 20.18 $ 19.79 $ 18.67 $ 16.26
======== ======== ======== ======== ======== ========
(16.58)%(d) (5.69)% 11.73% 23.15% 20.72% 42.04%

1.68%+ 0.81% 0.09% 0.06% 0.32% 0.53%
1.19%+ 1.19% 1.17% 1.16% 1.18%# 1.27%#

1.52%+ 1.35% 1.17% 1.16% 1.18%# 1.34%#
75% 134% 124% 159% 132% 135%

$248,028 $631,108 $862,439 $317,602 $194,476 $163,362
</Table>

B-5

EXHIBIT C

As of the Record Date, the following persons owned of record of
beneficially 5% or more of the outstanding shares of a class of the Small Cap
Opportunity Fund or the Small Cap Value Fund, as applicable:

[TO FOLLOW]

C-1

MAINSTAY FUNDS
MAINSTAY SMALL CAP OPPORTUNITY FUND

- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 17, 2008

- --------------------------------------------------------------------------------

<Table>

Acquisition of the Assets and By and in Exchange for Shares
Liabilities of MainStay Small MainStay Small Cap Opportunity
Cap Value Fund ("MainStay Small Fund ("MainStay Small Cap
Cap Value Fund" or "Acquired Opportunity Fund" or "Acquiring
Fund") (a series of The Fund") (a series of Eclipse
MainStay Funds) 51 Madison Funds) 51 Madison Avenue New
Avenue New York, New York 10010 York, New York 10010
</Table>

This Statement of Additional Information is available to the shareholders
of the MainStay Small Cap Value Fund (the "Acquired Fund" and together with the
Small Cap Value Fund, the "Acquiring Fund," the "Funds") in connection with
proposed transactions whereby all of the assets and liabilities of the MainStay
Small Cap Value Fund will be transferred to the MainStay Small Cap Opportunity
Fund in exchange for shares of the MainStay Small Cap Opportunity Fund.

This Statement of Additional Information of the Acquiring Fund consists of
this cover page, the accompanying pro forma financial statements and related
notes and the following documents, each of which was filed electronically with
the Securities and Exchange Commission and is incorporated by reference herein:

1. The Statement of Additional Information for the Acquired Fund dated
February 28, 2008, as filed on February 22, 2008(0000950123-08-001998);

2. The Statement of Additional Information for the Acquiring Fund dated
February 28, 2008, as filed on February 22, 2008 (0000950123-08-002007);

3. The Financial Statements of the Acquired Fund as included in The
MainStay Funds' Annual Report for the year ended October 31, 2007, as
filed on January 7, 2008 (0000950123-08-000133); and

4. The Financial Statements of the Acquiring Fund as included in Eclipse
Funds' Annual Report for the year ended October 31, 2007, as filed on
January 7, 2008 (0000950123-08-000135).

This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated November 17, 2008, relating to the reorganization of
the Acquired Fund may be obtained, without charge, by contacting MainStay
Investments, 169 Lackawanna Avenue, Parsippany,

New Jersey 07054, by calling toll-free 800-624-6782, or by visiting our website
at mainstayinvestments.com.

As described in the Proxy Statement/Prospectus dated November 17, 2008, the
Board of Trustees of The MainStay Funds has called a Special Meeting of
shareholders of the MainStay Small Cap Value Fund to approve an Agreement and
Plan of Reorganization providing for (i) the acquisition of all assets and the
assumption of the liabilities of the Small Cap Value Fund, a series of The
MainStay Funds, by the Small Cap Opportunity Fund, a series of Eclipse Funds, in
exchange for shares of the Small Cap Opportunity Fund having an aggregate net
asset value equal to the aggregate net asset value of the shares of the same
class of the Small Cap Opportunity Fund; and (ii) the subsequent redemption of
the shares and liquidation and dissolution of the Small Cap Value Fund.

REORGANIZATION BETWEEN MAINSTAY SMALL CAP OPPORTUNITY FUND AND MAINSTAY SMALL
CAP VALUE FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
AT APRIL 30, 2008 (UNAUDITED)

<Table>
<Caption>
MAINSTAY
SMALL CAP MAINSTAY
OPPORTUNITY SMALL CAP PRO FORMA
FUND VALUE FUND PORTFOLIO
----------------------------- --------------------------- -----------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------ --------------- ---------- --------------- ------------ ---------------

COMMON STOCKS (97.7%)+
AEROSPACE & DEFENSE
(1.1%)
Ceradyne, Inc. (a).... 106,463 $ 4,147,798 106,463 $ 4,147,798
Curtiss-Wright
Corp. ............. 15,138 718,904 15,138 718,904
Hexcel (a)............ 26,300 $ 588,594 26,300 588,594
Teledyne Technologies,
Inc. (a)........... 253 14,859 253 14,859
------------- ------------ -------------
4,881,561 588,594 5,470,155
------------- ------------ -------------
AIR FREIGHT &
LOGISTICS (0.2%)
Dynamex, Inc. (a)..... 18,604 467,519 18,604 467,519
Pacer International,
Inc. .............. 38,506 714,671 38,506 714,671
------------- -------------
1,182,190 1,182,190
------------- -------------
AIRLINES (0.1%)
Republic Airways
Holdings,
Inc. (a)........... 26,000 438,360 26,000 438,360
------------ -------------
AUTO COMPONENTS (1.4%)
Aftermarket Technology
Corp. (a).......... 25,881 592,934 25,881 592,934
American Axel &
Manufacturing
Holdings, Inc. .... 21,200 426,968 21,200 426,968
Amerigon, Inc. (a).... 24,124 354,140 24,124 354,140
ArvinMeritor,
Inc. (b)........... 37,000 552,780 37,000 552,780
Cooper Tire & Rubber
Co. ............... 88,758 1,166,280 88,758 1,166,280
Lear Corp. (a)........ 118,690 3,390,973 118,690 3,390,973
Raser Technologies,
Inc. (a)(b)........ 57,748 627,143 57,748 627,143
------------- ------------ -------------
6,131,470 979,748 7,111,218
------------- ------------ -------------
BEVERAGES (0.1%)
Central European
Distribution
Corp. (a)(b)....... 10,349 630,461 10,349 630,461
------------- -------------
BIOTECHNOLOGY (0.9%)
Applera
Corp. -- Celera
Group (a).......... 118,261 1,582,332 118,261 1,582,332
Emergent Biosolutions,
Inc. (a)........... 19,326 181,858 19,326 181,858
Ligand
Pharmaceuticals,
Inc. Class B (a)... 152,824 618,937 152,824 618,937
Martek
Bioscience-
s (a)(b)........... 49,822 1,756,724 49,822 1,756,724
Telik, Inc. (a)(b).... 167,719 353,887 167,719 353,887
------------- -------------
4,493,738 4,493,738
------------- -------------
</Table>

BUILDING PRODUCTS
(0.3%)
NCI Building Systems,
Inc. (a)(b)........ 17,000 $ 410,380 17,000 $ 410,380
Simpson Manufacturing
Co., Inc. (b)...... 21,300 562,107 21,300 562,107
Universal Forest
Products, Inc. .... 13,100 454,701 13,100 454,701
------------ -------------
1,427,188 1,427,188
------------ -------------
CAPITAL MARKETS (1.6%)
Capital Southwest
Corp. (b).......... 8,415 $ 1,000,880 8,415 1,000,880
Epoch Holding Corp. .. 9,728 115,666 9,728 115,666
GFI Group, Inc. ...... 5,000 58,750 5,000 58,750
Hercules Technology
Growth Capital,
Inc. .............. 173,437 1,760,386 69,600 706,440 243,037 2,466,826
KBW, Inc. (a)(b)...... 27,000 640,980 27,000 640,980
Knight Capital Group,
Inc. Class A (a)... 46,000 860,660 46,000 860,660
Kohlberg Capital
Corp. (b).......... 32,986 331,179 32,986 331,179
MCG Capital Corp. .... 202,643 1,552,245 202,643 1,552,245
NGP Capital Resources
Co. (b)............ 50,500 814,565 50,500 814,565
Prospect Capital
Corp. (b).......... 25,300 375,452 25,300 375,452
------------- ------------ -------------
4,819,106 3,398,097 8,217,203
------------- ------------ -------------
CHEMICALS (2.4%)
Flotek Industries,
Inc. (a)(b)........ 61,803 1,156,952 61,803 1,156,952
Innospec, Inc. (b).... 80,079 1,632,811 80,079 1,632,811
Koppers Holdings,
Inc. .............. 18,463 894,348 18,463 894,348
LSB Industries,
Inc. (a)(b)........ 25,253 386,623 25,253 386,623
Olin Corp. ........... 23,873 481,518 32,000 645,440 55,873 1,126,958
& OM Group, Inc. (a).... 92,774 5,080,304 92,774 5,080,304
Spartech Corp. ....... 35,211 314,786 35,211 314,786
Tronox, Inc. Class A.. 55,100 176,320 55,100 176,320
W.R. Grace & Co. (a).. 48,735 1,235,920 48,735 1,235,920
Westlake Chemical
Corp. (b).......... 21,000 350,910 21,000 350,910
Zoltek Cos.,
Inc. (a)(b)........ 7,466 199,118 7,466 199,118
------------- ------------ -------------
11,382,380 1,172,670 12,555,050
------------- ------------ -------------
COMMERCIAL BANKS
(9.4%)
1st Source Corp. ..... 20,148 399,333 20,148 399,333
Ameris Bancorp........ 47,008 704,180 47,008 704,180
Arrow Financial
Corp. ............. 12,522 291,262 12,522 291,262
BancFirst Corp. ...... 32,382 1,416,065 32,382 1,416,065
Banco Latinoamericano
de Exportaciones
S.A. .............. 181,441 3,411,091 181,441 3,411,091
Bank of Granite
Corp. ............. 19,032 199,836 19,032 199,836
Banner Corp. ......... 18,767 405,367 18,767 405,367
</Table>

Camden National
Corp. ............. 7,086 $ 235,113 7,086 $ 235,113
Center Financial
Corp. ............. 40,900 $ 425,769 40,900 425,769
Chemical Financial
Corp. (b).......... 22,353 542,731 22,353 542,731
City Holding Co. ..... 67,284 2,797,669 67,284 2,797,669
Columbia Bancorp, OR.. 7,487 77,640 7,487 77,640
Community
Bancorp/NV (a)(b).. 46,504 516,194 46,504 516,194
Community Bank System,
Inc. (b)........... 91,510 2,332,590 91,510 2,332,590
Community Trust
Bancorp, Inc. ..... 22,549 677,823 22,549 677,823
F.N.B. Corp. (b)...... 42,177 652,056 42,177 652,056
First Bancorp North
Carolina........... 21,685 408,112 21,685 408,112
First Commonwealth
Financial
Corp. (b).......... 53,600 667,320 53,600 667,320
First Community
Bancorp............ 20,900 449,141 20,900 449,141
First Community
Bancshares,
Inc. (b)........... 32,510 1,086,484 32,510 1,086,484
First Financial
Bankshares,
Inc. (b)........... 16,070 722,989 16,070 722,989
First Financial Corp.,
IN (b)............. 12,724 404,623 12,724 404,623
First Merchants
Corp. ............. 94,382 2,413,348 94,382 2,413,348
First Regional
Bancorp (a)........ 17,053 253,237 28,700 426,195 45,753 679,432
Great Southern
Bancorp, Inc. (b).. 23,581 355,601 23,581 355,601
Greene County
Bancshares,
Inc. (b)........... 18,300 366,549 18,300 366,549
Hancock Holding
Co. (b)............ 6,158 254,141 6,158 254,141
Heartland Financial
USA, Inc. ......... 2,601 58,523 2,601 58,523
Horizon Financial
Corp. (b).......... 35,283 433,275 35,283 433,275
Independent Bank
Corp. ............. 17,075 499,102 22,965 671,267 40,040 1,170,369
Intervest Bancshares
Corp. ............. 23,905 247,178 23,905 247,178
Lakeland Financial
Corp. (b).......... 33,435 778,701 30,700 715,003 64,135 1,493,704
MainSource Financial
Group, Inc. ....... 14,559 215,619 14,559 215,619
Mercantile Bank
Corp. ............. 2,992 29,800 2,992 29,800
MetroCorp Bancshares,
Inc. .............. 4,937 64,230 4,937 64,230
National Penn
Bancshares, Inc. .. 36,651 611,705 36,651 611,705
Old National
Bancorp (b)........ 33,800 578,318 33,800 578,318
Oriental Financial
Group, Inc. ....... 194,375 3,654,250 194,375 3,654,250
Pacific Capital
Bancorp (b)........ 35,580 725,120 35,580 725,120
Peoples Bancorp,
Inc. .............. 12,887 312,768 12,887 312,768
Preferred Bank........ 42,216 494,349 42,216 494,349
PremierWest
Bancorp (b)........ 16,778 155,197 16,778 155,197
Renasant Corp. ....... 30,102 697,463 30,102 697,463
Sandy Spring Bancorp,
Inc. (b)........... 26,900 685,950 26,900 685,950
Seacoast Banking Corp.
of Florida (b)..... 17,717 186,206 17,717 186,206
</Table>

Shore Bancshares,
Inc. .............. 1,342 $ 30,531 1,342 $ 30,531
Simmons First National
Corp. Class A (b).. 20,888 668,625 27,500 $ 880,275 48,388 1,548,900
Southside Bancshares,
Inc. (b)........... 8,720 210,420 8,720 210,420
Southwest Bancorp,
Inc. .............. 39,312 691,891 39,312 691,891
StellarOne Corp. ..... 12,709 204,742 12,709 204,742
Sterling Financial
Corp. ............. 82,281 1,004,651 82,281 1,004,651
Susquehanna
Bancshares, Inc. .. 131,849 2,622,477 131,849 2,622,477
Taylor Capital Group,
Inc. .............. 23,572 351,694 23,572 351,694
Tompkins Financial
Corp. ............. 8,742 422,851 8,742 422,851
Trico Bancshares...... 2,643 44,957 2,643 44,957
Trustmark Corp. ...... 63,695 1,387,277 63,695 1,387,277
UMB Financial Corp. .. 47,136 2,339,831 47,136 2,339,831
Union Bankshares
Corp. ............. 10,674 204,514 10,674 204,514
Univest Corp. of
Pennsylvania....... 6,456 165,403 6,456 165,403
W Holding Co.,
Inc. (b)........... 188,446 197,868 188,446 197,868
Washington Trust
Bancorp, Inc. ..... 14,984 362,313 14,984 362,313
Westamerica
Bancorp (b)........ 22,379 1,307,829 22,379 1,307,829
Wilshire Bancorp,
Inc. .............. 69,269 570,777 69,269 570,777
------------- ------------ -------------
42,224,115 6,151,294 48,375,409
------------- ------------ -------------
COMMERCIAL SERVICES &
SUPPLIES (3.7%)
ABM Industries,
Inc. .............. 155,619 3,258,662 155,619 3,258,662
Bowne & Co., Inc. .... 114,994 1,913,500 114,994 1,913,500
Casella Waste Systems,
Inc. Class A (a)... 44,800 477,568 44,800 477,568
CBIZ, Inc. (a)(b)..... 123,265 1,093,361 123,265 1,093,361
CDI Corp. ............ 75,649 2,057,653 75,649 2,057,653
COMSYS IT Partners,
Inc. (a)........... 25,300 206,954 25,300 206,954
Consolidated Graphics,
Inc. (a)........... 44,971 2,615,963 44,971 2,615,963
Deluxe Corp. ......... 54,022 1,148,508 54,022 1,148,508
Diamond Management
Consultants, Inc.
& Technology....... 50,897 313,017 50,897 313,017
GeoEye, Inc. (a)...... 19,503 449,154 19,503 449,154
IKON Office Solutions,
Inc. .............. 55,977 612,948 55,977 612,948
PHH Corp. (a)......... 51,433 1,009,630 51,433 1,009,630
Spherion Corp. (a).... 122,766 606,464 122,766 606,464
Standard Parking
Corp. (a).......... 49,107 1,052,363 49,107 1,052,363
Standard Register Co.
(The).............. 12,579 119,249 12,579 119,249
TrueBlue, Inc. (a).... 32,700 416,271 32,700 416,271
Viad Corp. ........... 50,453 1,587,251 50,453 1,587,251
------------- ------------ -------------
18,044,677 893,839 18,938,516
------------- ------------ -------------
</Table>

COMMUNICATIONS
EQUIPMENT (0.3%)
Avocent Corp. (a)..... 57,283 $ 1,117,591 57,283 $ 1,117,591
Mastec, Inc. (a)...... 48,500 $ 397,215 48,500 397,215
MRV Communications,
Inc. (a)........... 91,393 143,487 91,393 143,487
------------- ------------ -------------
1,261,078 397,215 1,658,293
------------- ------------ -------------
COMPUTERS &
PERIPHERALS (1.2%)
Electronics for
Imaging,
Inc. (a)(b)........ 144,426 2,082,623 144,426 2,082,623
Imation Corp. (b)..... 39,519 923,954 39,519 923,954
Novatel Wireless,
Inc. (a)........... 46,084 411,069 46,084 411,069
Palm, Inc. (b)........ 191,360 1,102,234 191,360 1,102,234
Quantum Corp. (a)..... 734,492 1,285,361 734,492 1,285,361
Silicon Graphics,
Inc. (a)(b)........ 16,000 172,800 16,000 172,800
------------- -------------
5,978,041 5,978,041
------------- -------------
CONSTRUCTION &
ENGINEERING (0.4%)
EMCOR Group,
Inc. (a)........... 20,261 507,741 20,261 507,741
Michael Baker
Corp. (a).......... 8,213 172,966 8,213 172,966
Northwest Pipe
Co. (a)(b)......... 18,200 773,864 18,200 773,864
Perini Corp. (a)...... 14,389 520,594 14,389 520,594
------------- ------------ -------------
1,201,301 773,864 1,975,165
------------- ------------ -------------
CONSUMER FINANCE
(1.0%)
Cardtronics,
Inc. (a)........... 2,052 17,011 2,052 17,011
Cash America
International,
Inc. .............. 83,292 3,397,481 83,292 3,397,481
EZCORP, Inc. Class
A (a).............. 95,203 1,155,764 40,800 495,312 136,003 1,651,076
QC Holdings, Inc. .... 13,489 118,299 13,489 118,299
------------- ------------ -------------
4,688,555 495,312 5,183,867
------------- ------------ -------------
CONTAINERS & PACKAGING
(1.3%)
Chesapeake Corp. (a).. 51,600 226,008 51,600 226,008
Myers Industries,
Inc. .............. 64,557 812,127 64,557 812,127
Rock-Tenn Co. Class
A.................. 70,248 2,383,515 20,600 698,958 90,848 3,082,473
Silgan Holdings,
Inc. .............. 43,554 2,320,557 43,554 2,320,557
------------- ------------ -------------
5,516,199 924,966 6,441,165
------------- ------------ -------------
DISTRIBUTORS (0.1%)
Building Materials
Holding Corp. (b).. 19,967 93,046 19,967 93,046
LKQ Corp. (a)......... 7,366 160,284 7,366 160,284
------------- -------------
253,330 253,330
------------- -------------
</Table>

DIVERSIFIED CONSUMER
SERVICES (2.0%)
Bright Horizons Family
Solutions,
Inc. (a)........... 25,454 $ 1,206,774 25,454 $ 1,206,774
Capella Education
Co. (a)(b)......... 24,895 1,605,479 24,895 1,605,479
Coinstar, Inc. (a).... 27,082 863,645 27,082 863,645
DeVry, Inc. .......... 43,875 2,500,875 43,875 2,500,875
Matthews International
Corp. Class A...... 2,389 118,112 2,389 118,112
Pre-Paid Legal
Services,
Inc. (a)........... 10,000 $ 437,400 10,000 437,400
Stewart Enterprises,
Inc. Class A....... 88,089 601,648 88,089 601,648
Strayer Education,
Inc. .............. 16,070 2,984,038 16,070 2,984,038
------------- ------------ -------------
9,880,571 437,400 10,317,971
------------- ------------ -------------
DIVERSIFIED FINANCIAL
SERVICES (0.3%)
Ampal American Israel
Class A (a)(b)..... 11,156 68,833 11,156 68,833
Compass Diversified
Holdings........... 49,416 605,840 49,416 605,840
Medallion Financial
Corp. ............. 43,900 373,589 43,900 373,589
Primus Guaranty,
Ltd. (a)(b)........ 138,679 618,508 138,679 618,508
------------- ------------ -------------
1,293,181 373,589 1,666,770
------------- ------------ -------------
DIVERSIFIED
TELECOMMUNICATION
SERVICES (2.0%)
Atlantic Tele-Network,
Inc. .............. 36,690 1,142,160 36,690 1,142,160
Cincinnati Bell,
& Inc. (a)........... 953,048 4,422,143 953,048 4,422,143
Consolidated
Communications
Holdings, Inc. .... 35,200 503,360 35,200 503,360
Iowa
Telecommunications
Services,
Inc. (b)........... 25,000 433,000 25,000 433,000
NTELOS Holdings
Corp. ............. 77,335 2,001,430 77,335 2,001,430
Premiere Global
Services,
Inc. (a)........... 125,297 1,819,312 125,297 1,819,312
------------- ------------ -------------
9,385,045 936,360 10,321,405
------------- ------------ -------------
ELECTRIC UTILITIES
(3.8%)
ALLETE, Inc. (b)...... 84,067 3,511,479 84,067 3,511,479
Central Vermont Public
Service Corp. (b).. 22,411 522,176 22,411 522,176
El Paso Electric
Co. (a)............ 117,550 2,653,104 117,550 2,653,104
Empire District
Electric Co.
(The).............. 26,669 555,515 25,500 531,165 52,169 1,086,680
IDACORP, Inc. (b)..... 17,600 570,944 17,600 570,944
MGE Energy, Inc. ..... 20,000 695,800 20,000 695,800
Portland General
Electric Co. ...... 151,245 3,629,880 20,900 501,600 172,145 4,131,480
</Table>

Sierra Pacific
Resources.......... 105,826 $ 1,442,408 105,826 $ 1,442,408
UniSource Energy
Corp. ............. 17,700 $ 552,948 17,700 552,948
& Westar Energy, Inc. .. 194,478 4,509,945 194,478 4,509,945
------------- ------------ -------------
16,824,507 2,852,457 19,676,964
------------- ------------ -------------
ELECTRICAL EQUIPMENT
(0.9%)
GrafTech
International,
& Ltd. (a)........... 248,726 4,887,466 248,726 4,887,466
------------- -------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS (2.9%)
Agilysys, Inc. ....... 52,001 569,931 52,001 569,931
Anixter International,
Inc. (a)(b)........ 31,938 1,819,508 31,938 1,819,508
CTS Corp. ............ 20,943 235,609 20,943 235,609
Insight Enterprises,
Inc. (a)........... 145,782 1,758,131 24,900 300,294 170,682 2,058,425
Kemet Corp. (a)....... 2,394 9,744 2,394 9,744
Methode Electronics,
Inc. .............. 10,398 112,714 10,398 112,714
MTS Systems Corp. .... 721 24,788 721 24,788
Multi-Fineline
Electronix,
Inc. (a)(b)........ 6,957 131,487 6,957 131,487
Newport Corp. (a)..... 34,204 393,688 34,204 393,688
Park Electrochemical
Corp. (b).......... 80,555 2,183,041 27,500 745,250 108,055 2,928,291
Plexus Corp. (a)...... 87,906 2,117,656 87,906 2,117,656
ScanSource, Inc. (a).. 11,935 298,017 21,300 531,861 33,235 829,878
SYNNEX Corp. (a)...... 28,300 675,804 28,300 675,804
Technitrol, Inc. ..... 103,607 2,175,747 21,500 451,500 125,107 2,627,247
Zygo Corp. (a)........ 44,200 515,372 44,200 515,372
------------- ------------ -------------
11,830,061 3,220,081 15,050,142
------------- ------------ -------------
ENERGY EQUIPMENT &
SERVICES (3.7%)
Basic Energy Services,
Inc. (a)........... 35,200 816,640 35,200 816,640
Bristow Group,
Inc. (a)........... 35,599 1,877,847 35,599 1,877,847
Bronco Drilling Co.,
Inc. (a)(b)........ 66,057 1,136,180 66,057 1,136,180
Complete Production
Services,
Inc. (a)........... 36,600 988,566 36,600 988,566
Dawson Geophysical
Co. (a)............ 38,350 2,774,239 38,350 2,774,239
Gulfmark Offshore,
Inc. (a)........... 63,694 3,808,901 63,694 3,808,901
Hornbeck Offshore
Services,
Inc. (a)(b)........ 24,128 1,203,263 24,128 1,203,263
Oil States
International,
Inc. (a)(b)........ 39,659 1,985,330 39,659 1,985,330
T-3 Energy Services,
Inc. (a)........... 13,755 726,264 13,755 726,264
Trico Marine Services,
Inc. (a)(b)........ 71,341 2,688,842 71,341 2,688,842
W-H Energy Services,
Inc. (a)........... 11,957 924,157 11,957 924,157
------------- ------------ -------------
17,125,023 1,805,206 18,930,229
------------- ------------ -------------
</Table>

FOOD & STAPLES
RETAILING (0.8%)
Great Atlantic &
Pacific Tea Co.,
Inc. (The) (a)(b).. 23,200 $ 638,464 23,200 $ 638,464
Ingles Markets, Inc.
Class A............ 26,959 $ 615,204 26,959 615,204
Longs Drug Stores
Corp. ............. 14,304 573,018 14,304 573,018
Village Super Market.. 1,672 78,734 1,672 78,734
Winn-Dixie Stores,
Inc. (a)(b)........ 115,463 2,047,159 115,463 2,047,159
------------- ------------ -------------
3,314,115 638,464 3,952,579
------------- ------------ -------------
FOOD PRODUCTS (3.0%)
Cal-Maine Foods,
Inc. (b)........... 134,414 3,971,934 134,414 3,971,934
Chiquita Brands
International,
Inc. (a)(b)........ 185,216 4,213,664 185,216 4,213,664
Fresh Del Monte
Produce, Inc. (a).. 117,410 3,720,723 117,410 3,720,723
Imperial Sugar
Co. (b)............ 57,122 900,814 57,122 900,814
Reddy Ice Holdings,
Inc. (b)........... 42,543 563,269 42,543 563,269
Seaboard Corp. (b).... 1,283 2,155,440 1,283 2,155,440
------------- -------------
15,525,844 15,525,844
------------- -------------
GAS UTILITIES (1.2%)
Laclede Group, Inc.
(The).............. 25,100 949,282 25,100 949,282
New Jersey Resources
Corp. (b).......... 26,767 852,513 26,767 852,513
Nicor, Inc. (b)....... 13,716 481,706 13,716 481,706
WGL Holdings, Inc. ... 118,861 3,898,641 118,861 3,898,641
------------- ------------ -------------
5,232,860 949,282 6,182,142
------------- ------------ -------------
HEALTH CARE EQUIPMENT
& SUPPLIES (1.2%)
Align Technology,
Inc. (a)(b)........ 53,948 662,481 53,948 662,481
CONMED Corp. (a)...... 19,084 487,024 19,084 487,024
Invacare Corp. ....... 26,000 469,040 26,000 469,040
Inverness Medical
Innovations,
Inc. (a)(b)........ 46,711 1,728,307 46,711 1,728,307
STERIS Corp. ......... 38,068 1,054,864 38,068 1,054,864
Zoll Medical
Corp. (a).......... 45,951 1,533,844 45,951 1,533,844
------------- ------------ -------------
5,466,520 469,040 5,935,560
------------- ------------ -------------
HEALTH CARE PROVIDERS
& SERVICES (2.1%)
AMERIGROUP Corp. (a).. 27,585 716,934 27,585 716,934
AMN Healthcare
Services,
Inc. (a)........... 4,386 63,992 4,386 63,992
AmSurg Corp. (a)...... 12,996 331,918 12,996 331,918
Centene Corp. (a)..... 78,341 1,439,124 78,341 1,439,124
Cross Country
Healthcare,
Inc. (a)........... 108,702 1,300,076 108,702 1,300,076
HealthExtras,
Inc. (a)........... 37,604 1,061,185 37,604 1,061,185
</Table>

Kindred Healthcare,
Inc. (a)........... 74,963 $ 1,778,872 74,963 $ 1,778,872
Magellan Health
Services,
Inc. (a)........... 20,850 804,602 20,850 804,602
MedCath Corp. (a)..... 4,452 82,629 4,452 82,629
Molina Healthcare,
Inc. (a)(b)........ 52,283 1,298,187 52,283 1,298,187
MWI Veterinary Supply,
Inc. (a)........... 26,242 904,562 26,242 904,562
RehabCare Group,
Inc. (a)........... 10,612 180,404 10,612 180,404
Res-Care, Inc. (a).... 44,681 727,854 44,681 727,854
------------- -------------
10,690,339 10,690,339
------------- -------------
HEALTH CARE TECHNOLOGY
(0.4%)
Allscripts Healthcare
Solutions,
Inc. (a)(b)........ 184,775 2,062,089 184,775 2,062,089
------------- -------------
HOTELS, RESTAURANTS &
LEISURE (1.5%)
Ameristar Casinos,
Inc. (b)........... 24,700 $ 424,099 24,700 424,099
Bally Technologies,
Inc. (a)(b)........ 57,956 1,952,538 57,956 1,952,538
Bob Evans Farms,
Inc. .............. 19,929 559,407 19,929 559,407
Domino's Pizza,
Inc. .............. 45,500 604,240 45,500 604,240
Jack in the Box,
Inc. (a)........... 82,729 2,213,001 82,729 2,213,001
Luby's, Inc. (a)...... 68,000 510,680 68,000 510,680
Papa John's
International,
Inc. (a)(b)........ 56,504 1,525,608 56,504 1,525,608
------------- ------------ -------------
6,250,554 1,539,019 7,789,573
------------- ------------ -------------
HOUSEHOLD DURABLES
(1.8%)
American Greetings
Corp. Class A...... 104,927 1,878,193 104,927 1,878,193
Avatar Holdings,
Inc. (a)(b)........ 3,560 145,462 3,560 145,462
Beazer Homes USA,
Inc. (b)........... 18,654 206,500 18,654 206,500
CSS Industries,
Inc. .............. 6,294 196,813 6,294 196,813
Furniture Brands
International,
Inc. (b)........... 20,400 276,420 20,400 276,420
Hooker Furniture
Corp. ............. 27,600 578,772 27,600 578,772
National Presto
Industries, Inc. .. 25,063 1,358,164 25,063 1,358,164
Tarragon Corp. (a).... 67,527 164,766 67,527 164,766
Tempur-Pedic
International,
Inc. (b)........... 45,894 509,882 45,894 509,882
Tupperware Brands
Corp. ............. 95,349 3,756,751 95,349 3,756,751
------------- ------------ -------------
8,216,531 855,192 9,071,723
------------- ------------ -------------
INDUSTRIAL
CONGLOMERATES
(0.2%)
Walter Industries,
Inc. .............. 12,800 887,808 12,800 887,808
------------ -------------
</Table>

INSURANCE (6.5%)
Aspen Insurance
Holdings,
& Ltd. (b)........... 169,513 $ 4,405,643 169,513 $ 4,405,643
First Mercury
Financial
Corp. (a).......... 9,119 144,080 9,119 144,080
FPIC Insurance Group,
Inc. (a)........... 3,817 177,605 3,817 177,605
Hallmark Financial
Services,
Inc. (a)........... 18,351 198,741 18,351 198,741
Horace Mann Educators
Corp. ............. 56,349 953,425 56,349 953,425
Infinity Property &
Casualty Corp. .... 14,000 $ 542,640 14,000 542,640
IPC Holdings, Ltd. ... 139,729 4,067,511 139,729 4,067,511
LandAmerica Financial
Group, Inc. (b).... 75,900 2,178,330 75,900 2,178,330
Max Capital Group,
Ltd. .............. 141,823 3,320,076 141,823 3,320,076
Odyssey Re Holdings
Corp. ............. 90,754 3,247,178 90,754 3,247,178
Phoenix Cos., Inc.
& (The).............. 360,028 4,680,364 360,028 4,680,364
Platinum Underwriters
Holdings, Ltd. .... 121,965 4,374,885 121,965 4,374,885
Presidential Life
Corp. ............. 31,100 527,456 31,100 527,456
RLI Corp. ............ 11,800 566,400 11,800 566,400
Safety Insurance
Group, Inc. ....... 19,082 685,044 19,082 685,044
Security Capital
Assurance, Ltd. ... 19,692 19,692 19,692 19,692
Selective Insurance
Group, Inc. ....... 17,137 365,361 17,137 365,361
United America
Indemnity, Ltd.
Class A (a)........ 21,929 339,022 21,929 339,022
Zenith National
Insurance Corp. ... 73,740 2,738,704 73,740 2,738,704
------------- ------------ -------------
31,530,300 2,001,857 33,532,157
------------- ------------ -------------
INTERNET & CATALOG
RETAIL (0.9%)
Gaiam, Inc. (a)....... 12,044 211,974 12,044 211,974
Netflix, Inc. (a)(b).. 21,600 690,768 21,600 690,768
Priceline.com,
Inc. (a)(b)........ 29,960 3,824,094 29,960 3,824,094
------------- ------------ -------------
4,036,068 690,768 4,726,836
------------- ------------ -------------
INTERNET SOFTWARE &
SERVICES (1.2%)
CMGI, Inc. (a)........ 62,801 868,538 62,801 868,538
Infospace, Inc. ...... 83,658 1,008,915 83,658 1,008,915
Internap Network
Services
Corp. (a).......... 62,237 299,360 62,237 299,360
Openwave Systems,
Inc. .............. 387,261 828,739 387,261 828,739
Perficient, Inc. (a).. 65,305 599,500 65,305 599,500
S1 Corp. (a).......... 130,848 884,532 130,848 884,532
</Table>

Travelzoo, Inc. (a)... 23,025 $ 256,499 23,025 $ 256,499
United Online, Inc. .. 157,449 1,681,555 157,449 1,681,555
------------- -------------
6,427,638 6,427,638
------------- -------------
IT SERVICES (1.6%)
CIBER, Inc. (a)....... 239,922 1,501,912 239,922 1,501,912
CSG Systems
International,
Inc. (a)........... 183,096 2,215,462 183,096 2,215,462
Global Cash Access,
Inc. (a)........... 124,283 768,069 124,283 768,069
infoUSA, Inc. ........ 58,700 $ 332,829 58,700 332,829
MPS Group, Inc. (a)... 242,744 2,604,643 242,744 2,604,643
TNS, Inc. (a)......... 39,000 897,000 39,000 897,000
------------- ------------ -------------
7,090,086 1,229,829 8,319,915
------------- ------------ -------------
LEISURE EQUIPMENT &
PRODUCTS (0.1%)
Arctic Cat, Inc. (b).. 34,100 258,478 34,100 258,478
Sturm, Ruger & Co.,
Inc. (a)........... 24,512 184,330 24,512 184,330
------------- ------------ -------------
184,330 258,478 442,808
------------- ------------ -------------
LIFE SCIENCES TOOLS &
SERVICES (0.3%)
Albany Molecular
Research (a)....... 26,212 304,583 26,212 304,583
Bio-Rad Laboratories,
Inc. Class A (a).. 10,001 833,583 10,001 833,583
Varian, Inc. (a)...... 4,508 229,592 4,508 229,592
------------- -------------
1,367,758 1,367,758
------------- -------------
MACHINERY (3.2%)
Ampco-Pittsburgh
Corp. ............. 4,007 181,197 4,007 181,197
Cascade Corp. ........ 13,352 577,474 13,352 577,474
Chart Industries,
Inc. (a)........... 78,393 3,185,892 78,393 3,185,892
Dynamic Materials
Corp. ............. 59,010 2,775,240 59,010 2,775,240
Hardinge, Inc. ....... 18,079 301,558 18,079 301,558
L.B. Foster Co. Class
A (a).............. 74,549 2,393,023 74,549 2,393,023
Lindsay Corp. (b)..... 31,680 3,298,522 31,680 3,298,522
Miller Industries,
Inc./TN (a)........ 26,900 303,432 26,900 303,432
NACCO Industries, Inc.
Class A............ 29,842 2,682,796 29,842 2,682,796
Watts Water
Technologies, Inc.
Class A (b)........ 23,500 631,445 23,500 631,445
Xerium Technologies,
Inc. (b)........... 9,091 15,364 69,600 117,624 78,691 132,988
------------- ------------ -------------
15,411,066 1,052,501 16,463,567
------------- ------------ -------------
</Table>

MARINE (0.5%)
Genco Shipping &
Trading, Ltd. (b).. 13,900 $ 940,335 13,900 $ 940,335
TBS International,
Ltd. (a)(b)........ 45,746 $ 1,838,074 45,746 1,838,074
------------- ------------ -------------
1,838,074 940,335 2,778,409
------------- ------------ -------------
MEDIA (1.1%)
Cinemark Holdings,
Inc. (b)........... 13,984 207,103 13,984 207,103
DG FastChannel,
Inc. (a)(b)........ 54,692 1,020,006 54,692 1,020,006
Entravision
Communications
Corp. Class A (a).. 52,465 366,730 52,465 366,730
Lin TV Corp. Class
A (a).............. 49,617 497,162 49,617 497,162
LodgeNet Interactive
Corp. (a)(b)....... 20,600 126,072 20,600 126,072
Morningstar,
Inc. (a)........... 31,573 1,830,603 31,573 1,830,603
New Frontier Media,
Inc. .............. 84,300 442,575 84,300 442,575
Playboy Enterprises,
Inc. Class B (a)... 68,900 576,004 68,900 576,004
Sinclair Broadcast
Group, Inc. Class
A (b).............. 43,700 384,123 43,700 384,123
------------- ------------ -------------
3,921,604 1,528,774 5,450,378
------------- ------------ -------------
METALS & MINING (1.1%)
A.M. Castle & Co. .... 83,102 2,568,683 83,102 2,568,683
Apex Silver Mines,
Ltd. (a)(b)........ 4,626 46,491 4,626 46,491
Compass Minerals
International,
Inc. .............. 7,180 452,340 7,180 452,340
Horsehead Holding
Corp. (a).......... 14,088 197,514 14,088 197,514
Kaiser Aluminum
Corp. ............. 10,776 739,557 10,776 739,557
Royal Gold, Inc. ..... 5,328 150,729 5,328 150,729
Worthington
Industries,
Inc. (b)........... 56,595 1,019,276 37,800 680,778 94,395 1,700,054
------------- ------------ -------------
5,174,590 680,778 5,855,368
------------- ------------ -------------
MULTILINE RETAIL
(0.0%).............
Tuesday Morning
Corp. (a)(b)....... 39,200 213,248 39,200 213,248
------------ -------------
OIL, GAS & CONSUMABLE
FUELS (5.9%)
Alpha Natural
Resources,
Inc. (a)........... 17,600 856,240 17,600 856,240
Bois d'Arc Energy,
Inc. (a)........... 68,972 1,648,431 68,972 1,648,431
Brigham Exploration
Co. (a)............ 92,000 868,480 92,000 868,480
Callon Petroleum
Co. (a)............ 26,800 536,000 44,900 898,000 71,700 1,434,000
Clayton Williams
Energy, Inc. (a)... 3,452 218,132 3,452 218,132
Comstock Resources,
Inc. (a)........... 21,877 995,185 21,877 995,185
Contango Oil & Gas
Co. (a)............ 15,335 1,175,121 15,335 1,175,121
Delek US Holdings,
Inc. .............. 24,216 267,102 24,216 267,102
Foundation Coal
Holdings, Inc. .... 11,500 689,770 11,500 689,770
</Table>

Global Partners,
L.P./MA (b)........ 17,100 $ 346,446 17,100 $ 346,446
Golar LNG, Ltd. (b)... 77,440 $ 1,553,446 77,440 1,553,446
International Coal
Group,
Inc. (a)(b)........ 321,206 2,556,800 321,206 2,556,800
Knightsbridge Tanker,
Ltd. .............. 18,556 535,526 18,556 535,526
Meridian Resource
Corp. (a).......... 40,700 86,284 40,700 86,284
& Penn Virginia Corp. .. 85,149 4,470,323 8,700 456,750 93,849 4,927,073
RAM Energy Resources,
Inc. (a)(b)........ 150,500 760,025 150,500 760,025
Rosetta Resources,
Inc. (a)........... 51,000 1,111,290 51,000 1,111,290
Stone Energy
& Corp. (a).......... 76,992 4,691,892 13,200 804,408 90,192 5,496,300
Swift Energy Co. (a).. 63,595 3,315,843 63,595 3,315,843
VAALCO Energy,
Inc. (a)........... 54,277 351,715 54,277 351,715
Warren Resources,
Inc. (a)(b)........ 95,371 1,171,156 95,371 1,171,156
------------- ------------ -------------
24,684,246 5,680,119 30,364,365
------------- ------------ -------------
PAPER & FOREST
PRODUCTS (0.6%)
Buckeye Technologies,
Inc. (a)........... 288,487 2,489,643 47,300 408,199 335,787 2,897,842
Neenah Paper, Inc. ... 5,482 125,976 5,482 125,976
------------- ------------ -------------
2,615,619 408,199 3,023,818
------------- ------------ -------------
PERSONAL PRODUCTS
(0.1%)
American Oriental
Bioengineering,
Inc. (a)(b)........ 20,478 196,998 20,478 196,998
Prestige Brands
Holdings,
Inc. (a)(b)........ 35,300 316,994 35,300 316,994
------------- ------------ -------------
196,998 316,994 513,992
------------- ------------ -------------
PHARMACEUTICALS (0.4%)
Obagi Medical
Products,
Inc. (a)........... 56,318 451,107 56,318 451,107
Par Pharmaceutical
Cos., Inc. (a)..... 26,612 453,735 26,612 453,735
ViroPharma,
Inc. (a)(b)........ 138,717 1,270,648 138,717 1,270,648
------------- -------------
2,175,490 2,175,490
------------- -------------
REAL ESTATE INVESTMENT
TRUSTS (10.4%)
Agree Realty Corp. ... 42,354 1,128,311 42,354 1,128,311
Alesco Financial,
Inc. .............. 152,199 525,087 152,199 525,087
Anthracite Capital,
Inc. (b)........... 330,174 2,575,357 330,174 2,575,357
Anworth Mortgage Asset
Corp. (b).......... 310,289 2,072,731 310,289 2,072,731
Associated Estates
Realty Corp. ...... 73,289 886,797 54,100 654,610 127,389 1,541,407
CBRE Realty Finance,
Inc. .............. 8,497 32,968 8,497 32,968
Chimera Investment
Corp. ............. 127,914 1,774,167 127,914 1,774,167
Crystal River Capital,
Inc. (b)........... 21,900 180,675 21,900 180,675
Deerfield Capital
Corp. ............. 1 1 1 1
</Table>

DiamondRock
Hospitality Co. ... 288,375 $ 3,676,781 288,375 $ 3,676,781
Dupont Fabros
Technology......... 107,269 1,930,842 107,269 1,930,842
Equity One, Inc. (b).. 68,347 1,688,171 68,347 1,688,171
Extra Space Storage,
Inc. .............. 33,833 569,409 33,833 569,409
FelCor Lodging Trust,
Inc. .............. 29,690 $ 373,797 29,690 373,797
First Industrial
Realty Trust,
Inc. (b)........... 22,769 687,852 22,769 687,852
Franklin Street
Properties
Corp. (b).......... 26,031 384,478 26,031 384,478
Friedman, Billings,
Ramsey Group,
Inc. .............. 233,713 581,945 233,713 581,945
Class A GMH
Communities Trust.. 63,694 601,271 63,694 601,271
Investors Real Estate
Trust (b).......... 139,773 1,425,685 139,773 1,425,685
JER Investors Trust,
Inc. (b)........... 40,800 314,160 40,800 314,160
LaSalle Hotel
& Properties......... 153,678 4,928,453 153,678 4,928,453
Lexington Realty
Trust (b).......... 96,682 1,392,221 96,682 1,392,221
National Health
Investors, Inc. ... 93,663 2,865,151 93,663 2,865,151
National Retail
Properties,
& Inc. (b)........... 205,398 4,705,668 205,398 4,705,668
Nationwide Health
Properties,
Inc. (b)........... 114,000 4,106,280 114,000 4,106,280
Newcastle Investment
Corp. (b).......... 17,400 172,086 17,400 172,086
NorthStar Realty
Finance Corp. (b).. 29,700 307,989 29,700 307,989
OMEGA Healthcare
Investors,
Inc. (b)........... 205,376 3,594,080 205,376 3,594,080
Parkway Properties,
Inc. .............. 15,180 602,039 14,600 579,036 29,780 1,181,075
Potlatch Corp. ....... 81,623 3,657,527 81,623 3,657,527
Ramco-Gershenson
Properties Trust... 41,930 942,167 41,930 942,167
Resource Capital
Corp. (b).......... 26,100 226,809 26,100 226,809
Saul Centers, Inc. ... 9,159 457,034 16,500 823,350 25,659 1,280,384
U-Store-It Trust...... 171,907 2,074,917 171,907 2,074,917
Winthrop Realty Trust,
Inc. .............. 14,740 64,119 14,740 64,119
------------- ------------ -------------
49,931,509 3,632,512 53,564,021
------------- ------------ -------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT
(0.2%)
Grubb & Ellis Co. .... 27,810 170,753 27,810 170,753
Tejon Ranch (a)(b).... 14,592 616,658 14,592 616,658
------------- -------------
787,411 787,411
------------- -------------
ROAD & RAIL (0.5%)
Frozen Food Express
Industries, Inc. .. 59,500 453,390 59,500 453,390
Genesee & Wyoming,
Inc. Class A (a)... 16,956 604,990 16,956 604,990
</Table>

Old Dominion Freight
Line, Inc. (a)..... 15,800 $ 485,060 15,800 $ 485,060
P.A.M. Transportation
Services,
Inc. (a)........... 27,800 395,872 27,800 395,872
Werner Enterprises,
Inc. (b)........... 26,108 507,801 26,108 507,801
------------- ------------ -------------
$ 604,990 1,842,123 2,447,113
------------- ------------ -------------
SEMICONDUCTORS &
SEMICONDUCTOR
EQUIPMENT (1.9%)
Brooks Automation,
Inc. (a)........... 224,236 2,323,085 224,236 2,323,085
Kulicke & Soffa
Industries,
Inc. (a)(b)........ 251,797 1,659,342 251,797 1,659,342
MKS Instruments,
Inc. (a)........... 132,028 3,016,840 132,028 3,016,840
OmniVision
Technologies,
Inc. (a)(b)........ 9,662 154,978 9,662 154,978
Pericom Semiconductor
Corp. (a).......... 15,122 257,679 15,122 257,679
Rudolph Technologies,
Inc. (a)........... 39,600 402,336 39,600 402,336
Silicon Image,
Inc. (a)........... 51,934 310,046 51,934 310,046
Trident Microsystems,
Inc. (a)........... 374,663 1,626,037 374,663 1,626,037
------------- ------------ -------------
9,348,007 402,336 9,750,343
------------- ------------ -------------
SOFTWARE (0.4%)
Mentor Graphics
Corp. (a).......... 170,031 1,712,212 170,031 1,712,212
Quality Systems,
Inc. (b)........... 18,759 602,539 18,759 602,539
------------- -------------
2,314,751 2,314,751
------------- -------------
SPECIALTY RETAIL
(1.3%)
Asbury Automotive
Group, Inc. ....... 53,063 883,499 53,063 883,499
Books-A-Million,
Inc. .............. 78,973 639,681 78,973 639,681
Brown Shoe Co.,
Inc. .............. 22,800 380,304 22,800 380,304
Charming Shoppes,
Inc. (a)........... 52,300 269,868 52,300 269,868
CSK Auto Corp. (a).... 32,800 391,304 32,800 391,304
Dress Barn, Inc. (a).. 27,100 364,766 27,100 364,766
Haverty Furniture
Cos., Inc. (b)..... 45,200 412,676 45,200 412,676
Rent-A-Center,
Inc. (a)........... 86,620 1,864,929 86,620 1,864,929
Select Comfort
Corp. (a)(b)....... 71,708 216,558 71,708 216,558
Sonic Automotive,
Inc. .............. 62,923 1,276,708 62,923 1,276,708
Talbots, Inc. (b)..... 26,400 211,992 26,400 211,992
------------- ------------ -------------
4,881,375 2,030,910 6,912,285
------------- ------------ -------------
TEXTILES, APPAREL &
LUXURY GOODS (2.0%)
Deckers Outdoor
Corp. (a).......... 19,119 2,639,760 19,119 2,639,760
Fossil, Inc. (a)...... 72,307 2,587,868 72,307 2,587,868
Heelys, Inc. (a)...... 17,069 74,250 17,069 74,250
Maidenform Brands,
Inc. (a)........... 86,235 1,284,902 86,235 1,284,902
</Table>

Steven Madden,
Ltd. (a)(b)........ 18,600 $ 351,726 18,600 $ 351,726
Warnaco Group, Inc.
(The) (a)(b)....... 73,895 $ 3,409,515 73,895 3,409,515
------------- ------------ -------------
9,996,295 351,726 10,348,021
------------- ------------ -------------
THRIFTS & MORTGAGE
FINANCE (2.0%)
Bank Mutual Corp. .... 90,623 1,014,071 90,623 1,014,071
BankUnited Financial
Corp. Class A (b).. 24,700 97,071 24,700 97,071
Brookline Bancorp,
Inc. .............. 148,951 1,608,671 148,951 1,608,671
Centerline Holding
Co., L.P. (b)...... 93,497 318,825 93,497 318,825
Clayton Holdings,
Inc. (a)(b)........ 94,811 548,008 94,811 548,008
Corus Bankshares,
Inc. (b)........... 406,587 2,980,283 406,587 2,980,283
Dime Community
Bancshares......... 42,694 797,097 42,694 797,097
Flushing Financial
Corp. ............. 9,907 193,385 9,907 193,385
Franklin Bank
Corp. (a).......... 2,138 3,314 2,138 3,314
Northwest Bancorp,
Inc. (b)........... 32,759 845,182 32,759 845,182
Ocwen Financial
Corp. (a)(b)....... 91,143 450,246 91,143 450,246
PFF Bancorp,
Inc. (b)........... 59,962 226,656 59,962 226,656
TierOne Corp. (b)..... 8,092 72,504 8,092 72,504
TrustCo Bank Corp.,
NY (b)............. 45,483 397,067 45,483 397,067
United Community
Financial Corp. ... 64,000 525,440 64,000 525,440
------------- ------------ -------------
9,058,242 1,019,578 10,077,820
------------- ------------ -------------
TOBACCO (0.3%)
Alliance One
International,
Inc. (a)(b)........ 145,056 892,094 145,056 892,094
Vector Group,
Ltd. (b)........... 36,770 633,547 36,770 633,547
------------- -------------
1,525,641 1,525,641
------------- -------------
TRADING COMPANIES &
DISTRIBUTORS (1.7%)
Applied Industrial
Technologies,
Inc. .............. 121,009 2,923,577 121,009 2,923,577
Electro Rent Corp. ... 45,000 607,950 45,000 607,950
Kaman Corp. Class A... 24,150 654,465 24,150 654,465
Rush Enterprises, Inc.
Class A (a)........ 16,896 272,364 41,100 617,733 57,996 890,097
TAL International
Group, Inc. ....... 5,044 122,115 5,044 122,115
UAP Holding Corp. .... 95,657 3,722,014 95,657 3,722,014
------------- ------------ -------------
7,694,535 1,225,683 8,920,218
------------- ------------ -------------
</Table>

WIRELESS
TELECOMMUNICATION
SERVICES (0.2%)
Syniverse Holdings,
Inc. (a)........... 47,543 $ 746,901 47,543 $ 746,901
USA Mobility,
Inc. (a)........... 53,440 381,562 53,440 381,562
------------- -------------
1,128,463 1,128,463
------------- -------------
Total Common Stocks
(Cost
$538,224,265)...... 444,597,994 $ 58,111,793 502,709,787
------------- ------------ -------------

NUMBER NUMBER NUMBER
OF RIGHTS VALUE OF RIGHTS VALUE OF RIGHTS VALUE
------------ --------------- ---------- --------------- ------------ ---------------

RIGHTS (0.0%) /\
REAL ESTATE INVESTMENT
TRUSTS (0.0%) /\
Winthrop Realty Trust,
Inc. Expires
5/12/08 (f)........ 1,474 166 1,474 166
------------- -------------
Total Rights (Cost
$0)................ 166 166
------------- -------------

SHARES VALUE SHARES VALUE SHARES VALUE
------------ --------------- ---------- --------------- ------------ ---------------

SHORT-TERM INVESTMENTS
(27.8%)
INVESTMENT COMPANY
(25.5%)
State Street Navigator
Securities Lending
Prime
Portfolio (c)...... 113,468,252 113,468,252 18,132,173 18,132,173 131,600,425 131,600,425
------------- ------------ -------------
Total Investment
Company
(Cost
$131,600,425)...... 113,468,252 18,132,173 131,600,425
------------- ------------ -------------

PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
------------ --------------- ---------- --------------- ------------ ---------------

U.S. GOVERNMENT (2.3%)
United States Treasury
Bills
1.32%, due
7/17/08 (d)........ $ 7,600,000 7,578,621 $ 7,600,000 7,578,621
1.348%, due
7/31/08 (d)(e)..... 4,200,000 4,185,775 4,200,000 4,185,775
------------- -------------
Total U.S. Government
(Cost
$11,764,829)....... 11,764,396 11,764,396
------------- -------------
Total Short-Term
Investments
(Cost
$143,365,254)...... 125,232,648 18,132,173 143,364,821
------------- ------------ -------------
Total Investments
(Cost
$681,589,519) (h).. 125.1% 569,830,808 128.7% 76,243,966 125.5% 646,074,774
Liabilities in Excess
of Cash and Other
Assets............. (25.1) (114,403,069) (28.7) (16,997,512) (25.5) (131,400,581)
------------ ------------- ---------- ------------ ------------ -------------
Net Assets............ 100.0% $ 455,427,739 100.0% $ 59,246,454 100.0% $ 514,674,193
============ ============= ========== ============ ============ =============

</Table>

<Table>
<Caption>
CONTRACTS UNREALIZED CONTRACTS UNREALIZED CONTRACTS UNREALIZED
LONG APPRECIATION(G) LONG APPRECIATION(G) LONG APPRECIATION(G)
------------ --------------- ---------- --------------- ------------ ---------------

FUTURES CONTRACTS
(0.0%)
Russell 2000 Index
Mini June 2008..... 161 $ 160,709 161 $ 160,709
------------- -------------
Total Futures
Contracts
(Settlement Value
$11,551,750)....... $ 160,709 $ 160,709
============= =============

</Table>

- --------

+ Percentages indicated are based on Fund net assets.

& Among the Fund's 10 largest holdings, excluding short-term investments.
May be subject to change daily.

/\ Less than one-tenth of a percent.

] All of the Fund's liquid assets are "earmarked" to cover potential
senior securities transactions which may include, but are not limited
to, swaps, forwards, TBAs, options and futures. These securities are
marked-to-market daily and reviewed against the value of the Fund's
potential senior securities holdings to ensure proper coverage for these
transactions.

(a) Non-income producing security.

(b) Represents a security, or a portion thereof, which is out on loan. The
aggregate market value of such securities is $125,417,688; cash
collateral of $131,600,425 (included in liabilities) was received with
which the Fund purchased highly liquid short-term investments.

(d) Interest rate presented is yield to maturity.

(e) Represents a security, which is segregated, as collateral for futures
contracts.

(f) Fair valued security. The total market value of the security at April
30, 2008 is $166 which represents less than one tenth of a percent of
the Fund's net assets.

(g) Represents the difference between the value of the contracts at the time
they were opened and the value at April 30, 2008.

(h) At April 30, 2008, cost is $691,101,667 for federal income tax purposes
and net unrealized depreciation is as follows:

<Table>

Gross unrealized
appreciation............. $ 35,875,148
Gross unrealized
depreciation............. (80,902,041)
------------
Net unrealized
depreciation............. $(45,026,893)
============

</Table>

REORGANIZATION BETWEEN MAINSTAY SMALL CAP OPPORTUNITY FUND AND
MAINSTAY SMALL CAP VALUE FUND

PRO FORMA STATEMENT OF ASSETS & LIABILITIES
AT APRIL 30, 2008 (UNAUDITED)

<Table>
<Caption>
MAINSTAY
SMALL CAP MAINSTAY
OPPORTUNITY SMALL CAP PRO FORMA
FUND VALUE FUND ADJUSTMENTS FUND
------------- ------------ ----------- -------------

ASSETS:
Investment in securities, at
value........................ $ 569,830,808(a) $ 76,243,966(b) $ -- $ 646,074,774(c)
Cash........................... 276,346 617,589 -- 893,935
Receivables:
Investment securities sold... -- 664,308 -- 664,308
Dividends and interest....... 966,685 68,808 -- 1,035,493
Fund shares sold............. 291,270 11,619 -- 302,889
Other assets................... 47,868 42,399 -- 90,267
------------- ------------ ---------- -------------
Total assets.............. 571,412,977 77,648,689 -- 649,061,666
------------- ------------ ---------- -------------
LIABILITIES:
Securities lending collateral.. 113,468,252 18,132,173 -- 131,600,425
Payables:...................... --
Fund shares redeemed......... 1,028,408 81,051 -- 1,109,459
Transfer agent............... 840,197 59,581 -- 899,778
Manager...................... 279,373 29,125 -- 308,498
Shareholder communication.... 137,675 39,574 -- 177,249
Professional fees............ 95,988 24,729 -- 120,717
NYLIFE Distributors.......... 73,802 27,584 -- 101,386
Variation margin on futures
contracts................. 26,023 -- 26,023
Custodian.................... 20,826 7,282 -- 28,108
Trustees..................... 8,533 757 -- 9,290
Accrued expenses............... 6,161 379 -- 6,540
------------- ------------ ---------- -------------
Total liabilities......... 115,985,238 18,402,235 -- 134,387,473
------------- ------------ ---------- -------------
Net assets..................... $ 455,427,739 $ 59,246,454 $ -- $ 514,674,193
============= ============ ========== =============
COMPOSITION OF NET ASSETS:
Share of beneficial interest
outstanding (par value of
$.01 per share) unlimited
number of shares authorized.. $ 332,579 $ 70,220 $ -- $ 402,799
Additional paid-in capital..... 639,418,499 75,912,738 -- 715,331,237
Accumulated undistributed net
investment income............ 2,644,561 343,479 -- 2,988,040
Accumulated net realized loss
on investments and futures
transactions................. (166,570,046) (2,123,801) -- (168,693,847)
Net unrealized depreciation on
investments and futures
contracts.................... (20,397,854) (14,956,182) -- (35,354,036)
------------- ------------ ---------- -------------
Net assets..................... $ 455,427,739 $ 59,246,454 $ -- $ 514,674,193
============= ============ ========== =============
</Table>

<Table>
<Caption>
MAINSTAY
SMALL CAP MAINSTAY
OPPORTUNITY SMALL CAP PRO FORMA
FUND VALUE FUND ADJUSTMENTS FUND
------------- ------------ ----------- -------------

INVESTOR CLASS
Net assets applicable to
outstanding shares........... $ 14,615,751 $ 10,849,516 $ -- $ 25,465,267
============= ============ ========== =============
Shares of capital stock
outstanding.................. 1,072,556 1,224,521 796,003(d) 1,868,559
============= ============ ========== =============
Net asset value per share
outstanding.................. $ 13.63 $ 8.86 $ -- $ 13.63
Maximum sales charge (5.50% of
offering price).............. 0.79 0.52 -- 0.79
------------- ------------ ---------- -------------
Maximum offering price per
share outstanding............ $ 14.42 $ 9.38 $ -- $ 14.42
============= ============ ========== =============
CLASS A
Net assets applicable to
outstanding shares........... $ 144,732,484 $ 23,915,751 $ -- $ 168,648,235
============= ============ ========== =============
Shares of beneficial interest
outstanding.................. 10,626,245 2,705,106 1,755,929(d) 12,382,174
============= ============ ========== =============
Net asset value per share
outstanding.................. $ 13.62 $ 8.84 $ -- $ 13.62
Maximum sales charge (5.50% of
offering price).............. 0.79 0.51 -- 0.79
------------- ------------ ---------- -------------
Maximum offering price per
share outstanding............ $ 14.41 $ 9.35 $ -- $ 14.41
============= ============ ========== =============
CLASS B
Net assets applicable to
outstanding shares........... $ 20,595,841 $ 19,917,399 $ -- $ 40,513,240
============= ============ ========== =============
Shares of beneficial interest
outstanding.................. 1,574,523 2,516,122 1,522,737(d) 3,097,260
============= ============ ========== =============
Net asset value and offering
price per share outstanding.. $ 13.08 $ 7.92 $ -- $ 13.08
============= ============ ========== =============
CLASS C
Net assets applicable to
outstanding shares........... $ 27,455,923 $ 4,556,456 $ -- $ 32,012,379
============= ============ ========== =============
Shares of beneficial interest
outstanding.................. 2,098,010 575,422 348,087(d) 2,446,097
============= ============ ========== =============
Net asset value and offering
price per share outstanding.. $ 13.09 $ 7.92 $ -- $ 13.09
============= ============ ========== =============
CLASS I
Net assets applicable to
outstanding shares........... $ 248,027,740 $ 7,332 $ -- $ 248,035,072
============= ============ ========== =============
Shares of beneficial interest
outstanding.................. 17,886,568 819 529(d) 17,887,097
============= ============ ========== =============
Net asset value and offering
price per share outstanding.. $ 13.87 $ 8.95 $ -- $ 13.87
============= ============ ========== =============

</Table>

- --------

(a) Identified cost $590,389,371 including $108,303,608 market value of
securities loaned.

(b) Identified cost $91,200,148 including $17,114,080 market value of
securities loaned.

(d) Reflects share adjustments, net of retired shares of MainStay Small Cap
Value Fund.
(Calculation: Net Assets/NAV per share)

REORGANIZATION BETWEEN MAINSTAY SMALL CAP OPPORTUNITY FUND AND
MAINSTAY SMALL CAP VALUE FUND

PRO FORMA STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 1, 2007 THROUGH APRIL 30, 2008 (UNAUDITED)

<Table>
<Caption>
MAINSTAY
SMALL CAP MAINSTAY
OPPORTUNITY SMALL CAP PRO FORMA
FUND VALUE FUND ADJUSTMENTS FUND
------------- ------------ ----------- -------------

INVESTMENT INCOME:
INCOME:
Dividends.................. $ 21,984,683(a)$ 1,923,885 $ -- $ 23,908,568(a)
Income from securities
loaned -- net........... 3,119,158 285,189 -- 3,404,347
Interest................... 638,204 41,888 -- 680,092
------------- ------------ ----------- -------------
Total income............ 25,742,045 2,250,962 -- 27,993,007
------------- ------------ ----------- -------------
EXPENSES:
Manager.................... 9,825,842 659,379 68,349(b) 10,553,570
Recordkeeping.............. -- 29,169 (29,169)(c) --
Transfer agent -- Investor
Class................... 7,319 5,256 63,597(d) 76,172
Transfer agent -- Class A.. 1,352,679 166,207 (416,482)(d) 1,102,404
Transfer agent -- Class B
and C................... 407,572 139,311 (154,197)(d) 392,686
Transfer agent -- Classes
I....................... 2,288,329 5 (1,236,000)(d) 1,052,334
Shareholder communication.. 283,256 50,560 -- 333,816
Professional fees.......... 158,617 48,322 (39,329)(c) 167,610
Custodian.................. 87,941 17,948 53,618(c) 159,507
Registration............... 146,969 50,837 -- 197,806
Distribution/Service -- In-
vestor Class............ 3,088 2,279 -- 5,367
Distribution/Service -- -
Class A................. 747,619 105,178 -- 852,797
Service -- Class B......... 79,553 69,735 -- 149,288
Service -- Class C......... 142,957 16,720 -- 159,677
Distribution -- Class B.... 238,661 209,207 -- 447,868
Distribution -- Class C.... 428,872 50,159 -- 479,031
Trustees................... 49,892 4,308 -- 54,200
Miscellaneous.............. 104,223 10,937 -- 115,160
------------- ------------ ----------- -------------
Total expenses before
waiver/reimbursement.. 16,353,389 1,635,517 (1,689,613) 16,299,293
------------- ------------ ----------- -------------
Expense
waiver/reimbursement
from Manager............ (1,958,983) (214,033) 1,244,476(b) (928,540)
------------- ------------ ----------- -------------
Net expenses............ 14,394,406 1,421,484 (445,137) 15,370,753
------------- ------------ ----------- -------------
Net investment income........ 11,347,639 829,478 445,137 12,622,254
============= ============ =========== =============
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain (loss) on:
Investments.................. (168,924,174) 1,200,715 -- (167,723,459)
Futures transactions......... (1,749,433) -- -- (1,749,433)
------------- ------------ ----------- -------------
Net realized gain on
investments and futures
transactions............... (170,673,607) 1,200,715 -- (169,472,892)
------------- ------------ ----------- -------------
Net change in unrealized
appreciation (depreciation)
on:
Investments.................. (145,608,444) (17,430,024) -- (163,038,468)
Futures contracts............ 370,014 -- -- 370,014
------------- ------------ ----------- -------------
Net change in unrealized
depreciation on investments
and futures contracts...... (145,238,430) (17,430,024) -- (162,668,454)
------------- ------------ ----------- -------------
Net realized and unrealized
gain on investments........ (315,912,037) (16,229,309) -- (332,141,346)
------------- ------------ ----------- -------------
Net decrease in net assets
resulting from operations.. $(304,564,398) $(15,399,831) $ 445,137 $(319,519,092)
============= ============ =========== =============

</Table>

- --------

(a) Dividends recorded net of foreign withholding taxes in the amount of
$107.

(b) Reflects adjustment in expenses due to an increase in management fees.

(c) Reflects adjustment in expenses based on NYLIM's 2008 acquisition of
MainStay Small Cap Value Fund and an overall change in expenses.

(d) Reflects adjustment in expenses based on NYLIM's 2008 acquisition of
MainStay Small Cap Value Fund, as well as the application of a new cost
structure for transfer agency fees implemented in 2007. This would have
been the estimated transfer agency costs incurred had the new cost
structure been applied in 2007, using reasonable assumptions.
Significant decrease was due to a reduction in the number of shareholder
accounts as the Fund experienced increased shareholder redemptions.

REORGANIZATION BETWEEN MAINSTAY SMALL CAP OPPORTUNITY FUND AND MAINSTAY SMALL
CAP VALUE FUND

PRO FORMA NOTES TO THE FINANCIAL STATEMENTS
AT APRIL 30, 2008 (UNAUDITED)

NOTE 1 -- BASIS OF COMBINATION:

At meetings on September 24, 2008 and September 25, 2008, the Board of
Trustees of the Eclipse Funds and the Board of Trustees of the MainStay Funds
(the "Trust"), approved the combination whereby, the MainStay Small Cap
Opportunity Fund ("Small Cap Opportunity Fund"), a series of Eclipse Funds, will
acquire all of the assets of MainStay Small Cap Value Fund, a series of the
Trust, and assume the liabilities of such Fund, in exchange for a number of
shares of Small Cap Opportunity Fund equal in value to the net assets of the
Small Cap Value Fund (the "Reorganization").The Reorganization is subject to the
approval of the shareholders of Small Cap Value Fund. The Reorganization is also
subject to the approval by the shareholders of Small Cap Opportunity Fund of
Mackay Shields LLC, as that Fund's Subadvisor.

The Reorganization will be accounted for as a tax-free reorganization. The
unaudited pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of what the
actual combined financial statements would have been had the reorganization
occurred at April 30, 2008. The unaudited pro forma portfolio of investments,
and statement of assets and liabilities reflect the financial position of Small
Cap Opportunity Fund and Small Cap Value Fund at April 30, 2008. The unaudited
pro forma statement of operations reflects the results of operations of Small
Cap Opportunity Fund and Small Cap Value Fund for the period ended April 30,
2008. These statements have been derived from the Fund's respective books and
records utilized in calculating daily net asset value at the date indicated
above for Small Cap Opportunity Fund and Small Cap Value Fund under generally
accepted accounting principles in the United States. The historical cost of
investment securities will be carried forward to the surviving entity, which is
the Small Cap Opportunity Fund.

The unaudited pro forma portfolio of investments, statement of assets and
liabilities and statement of operations should be read in conjunction with the
historical financial statements of each Fund that are incorporated by reference
in the Statements of Additional Information.

NOTE 2 -- SECURITY VALUATION:

The net asset value per share of each class of shares of the Fund is
calculated on each day the New York Stock Exchange (the "Exchange") is

REORGANIZATION BETWEEN MAINSTAY SMALL CAP OPPORTUNITY FUND AND MAINSTAY SMALL
CAP VALUE FUND

PRO FORMA NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

open for trading as of the close of regular trading on the Exchange. The net
asset value per share of each class of shares of the Fund is determined by
taking the current market value of total assets attributable to that class,
subtracting the liabilities attributable to that class, and dividing the result
by the outstanding shares of that class.

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 each day the Funds are open for business ("valuation date"). Such
securities not traded on the valuation date are valued at the mean of the latest
quoted bid and asked prices. Prices normally are taken from the principal market
in which each security trades. Futures contracts are valued at the last posted
settlement price on the market where such futures are primarily traded.
Temporary cash investments acquired over 60 days prior 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 which mature 60 days or less are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued by methods deemed in good faith by the Fund's Board
of Trustees to represent fair value. Equity and non-equity securities which may
be valued in this manner include, but are not limited to: (i) a security the
trading for which has been halted or suspended; (ii) a debt security that has
recently gone into default and for which there is not a current market
quotation; (iii) a security of an issuer that has entered into a restructuring;
(iv) a security that has been de-listed from a national exchange; (v) a security
the market price of which is not available from an independent pricing source
or, if so provided, does not, in the opinion of the Fund's Manager or Subadvisor
(if applicable), reflect the security's market value; and (vi) a security where
the trading on that security's principal market is temporarily closed at a time
when, under normal conditions, it would be open. At April 30, 2008, the Small
Cap Opportunity Fund held a security with a value of $166, that was valued in
such a manner.

NOTE 3 -- CAPITAL SHARES:

The unaudited pro forma net asset value per share assumes retired shares of
common stock in connection with the proposed acquisition of Small Cap Value Fund
by Small Cap Opportunity Fund as of April 30, 2008. The number of retired shares
was calculated by dividing the net asset

REORGANIZATION BETWEEN MAINSTAY SMALL CAP OPPORTUNITY FUND AND MAINSTAY SMALL
CAP VALUE FUND

PRO FORMA NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

value of each Class of Small Cap Value Fund by the respective Class net asset
value per share of Small Cap Opportunity Fund. As of April 30, 2008, the number
of outstanding shares of the Small Cap Value Fund was 7,021,990 (1,224,521
Investor Class, 2,705,106 Class A, 2,516,122 Class B, 575,422 Class C, and 819
Class I shares). If the Reorganization was effected on April 30, 2008,
shareholders of the Small Cap Value Fund would have received 4,423,285 (796,003
Investor Class, 1,755,929 Class A, 1,522,737 Class B, 348,087 Class C, and 529
Class I shares) shares of the Small Cap Opportunity Fund in the Reorganization.

NOTE 4 -- UNAUDITED PRO FORMA ADJUSTMENTS:

The accompanying unaudited pro forma financial statements reflect changes
in portfolio shares as if the Reorganization had taken place on April 30, 2008.
Small Cap Value Fund expenses were adjusted assuming Small Cap Opportunity
Fund's fee structure was in effect for the period ended April 30, 2008.

NOTE 5 -- USE OF ESTIMATES:

In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.

NOTE 6 -- FEDERAL INCOME TAXES:

Each of the Funds is treated as a separate entity for federal income tax
purposes. The Trust's 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 tax provision is required.

PART C. OTHER INFORMATION

ITEM 15. INDEMNIFICATION

New York Life Insurance Company maintains Directors & Officers Liability
Insurance coverage. The policy covers the Directors, Officers and Trustees of
New York Life, its subsidiaries and certain affiliates, including Eclipse
Funds. Subject to the policy's terms, conditions, deductible and retentions,
Directors, Officers and Trustees are covered for claims made against them while
acting in their capacities as such. The primary policy is issued by
Zurich-American Insurance Company, and the excess policies are issued by various
insurance companies. The issuing insurance companies may be changed from time to
time and there is no assurance that any or all of the current coverage will be
maintained by New York Life.

Eclipse Funds incorporates herein by reference the response to Item 27 disclosed
in the Registration Statement on Form N-1A of Eclipse Funds filed with the
Commission on September 19, 1986.

In addition, each Trustee has entered into a written agreement with the
Registrant pursuant to which the Registrant is contractually obligated to
indemnify the Trustee to the fullest extent permitted by law and by the charter
and or Declaration and By-laws of the Registrant.

ITEM 16. EXHIBITS

(1). Charter Documents

a. Agreement and Declaration of Trust of Eclipse Funds - Previously
filed with the Trust's Initial Registration Statement No.
33-08865 on September 19, 1986.*

b. Amendment to Agreement and Declaration of Trust of Eclipse Funds
- Previously filed with the Pre-Effective Amendment No. 1 to the
Trust's Registration Statement No. 33-08865 on January 9, 1987.*

c. Second Amendment to Agreement and Declaration of Trust of Eclipse
Funds. - Previously filed with Post-Effective Amendment No. 17 to
the Trust's Registration Statement No. 33-08865 on February 27,
1998.*

d. Certificate of Designation for Eclipse Funds - Previously filed
with Post-Effective Amendment No. 12 to the Trust's Registration
Statement No. 33-08865 on October 13, 1994.*

e. Certificate of Redesignation of Series relating to Mid Cap Value
Fund (formerly Growth and Income Fund) and Small Cap Value Fund
(formerly Equity Fund) for Eclipse Funds - Previously filed with
Post-Effective Amendment No. 19 to the Trust's Registration
Statement No. 33-08865 on April 30, 1999.*

f. Third Amendment to the Declaration of Trust of Eclipse Funds -
Previously filed with Post-Effective Amendment No. 23 to the
Trust's Registration Statement No. 33-08865 on February 25,
2002.*

g. Fourth Amendment to the Declaration of Trust - Previously filed
with Post-Effective Amendment No. 25 to the Trust's Registration
Statement No. 33-08865 on November 7, 2002.*

h. Fifth Amendment to the Declaration of Trust - Previously filed
with Post-Effective Amendment No. 30 to the Trust's Registration
Statement No. 33-08865 on December 31, 2003.*

i. Redesignation of Series of Shares of Beneficial Interest -
Previously filed with Post-Effective Amendment No. 30 to the
Trust's Registration Statement No. 33-08865 on December 31,
2003.*

j. Certificate of Termination - Previously filed with Post-Effective
Amendment No. 30 to the Trust's Registration Statement No.
33-08865 on December 31, 2003.*

k. Sixth Amendment to the Declaration of Trust - Previously filed
with Post-Effective Amendment No. 37 to the Trust's Registration
Statement No. 33-08865 on February 16, 2007.*

l. Establishment and Designation of Class of Shares of
Beneficial Interest, Par Value $0.01 Per Share - Previously filed
with Post-Effective Amendment No. 39 to the Trust's Registration
Statement No. 33-08865 on February 22, 2008.*

(2) By-Laws

a. By-Laws of Eclipse Funds - Previously filed with the Trust's
Registration Statement No. 33-08865 on September 19, 1986.*

(3) Not applicable.

(4) Form of Agreement and Plan of Reorganization - filed herewith as Exhibit A
to the Proxy Statement/Prospectus.

(5) See the Declaration of Trust, as amended and Supplemented from time to
time and the Amended and Restated By-laws (See above).

(6) Investment Advisory Contracts

a. Amended and Restated Management Agreement as of May 1, 2006
between Eclipse Funds and New York Life Investment Management
LLC - Previously filed with Post-Effective Amendment No. 37
to the Trust's Registration Statement No. 33-08865 on
February 16, 2007.*

b. Expense Limitation Agreement between Eclipse Funds and New York
Life Investment Management LLC - Previously filed with
Post-Effective Amendment No. 37 to the Trust's Registration
Statement No. 33-08865 on February 16, 2007.*

c. Form of Expense Limitation Agreement, dated April 1, 2008,
between Eclipse Funds and New York Life Investment Management LLC
- Previously filed with Post-Effective Amendment No. 39 to the
Trust's Registration Statement No. 33-08865 on February 22,
2008.*

(7) Underwriting Contracts

a. Distribution Agreement between Eclipse Funds and NYLIFE
Distributors, Inc. - Previously filed with Post-Effective
Amendment No. 21 to the Trust's Registration Statement
No. 33-08865 on December 29, 2000.*

b. Form of Soliciting Dealer Agreement - Previously filed with
Post-Effective Amendment No. 36 to the Trust's Registration
Statement No. 33-36962 on April 7, 2006.*

(8) Not applicable.

(9) Custody Agreements

a. Master Custodian Agreement between Eclipse Funds and Investors
Bank & Trust Company - Previously filed with Post-Effective
Amendment No. 36 to the Trust's Registration Statement
No. 33-36962 on April 7, 2006.*

b. Amendment to Custodian Agreement with Investors Bank & Trust
Company dated September 27, 2006 - Previously filed with
Post-Effective Amendment No. 37 to the Trust's Registration
Statement No. 33-08865 on February 16, 2007.*

(i) Amendment to Custodian Agreement with State Street Bank and
Trust Company dated December 7, 2007 - Previously filed
with Post-Effective Amendment No. 39 to the Trust's
Registration Statement No. 33-08865 on February 22, 2008.*

(ii) Extension Agreement (with regard to Custodian Agreement)
dated January 31, 2008, between New York Life Investment
Management LLC and State Street Bank and Trust - Previously
filed with Post-Effective Amendment No. 39 to the Trust's
Registration Statement No. 33-08865 on February 22, 2008.*

c. Delegation Agreement with Investors Bank and Trust Company dated
June 30, 2005 - Previously filed with Post-Effective Amendment
No. 37 to the Trust's Registration Statement No. 33-08865 on
February 16, 2007.*

(i) Amendment to Delegation Agreement with Investors Bank and
Trust Company dated September 27, 2006 - Previously filed
with Post-Effective Amendment No. 37 to the Trust's
Registration Statement No. 33-08865 on February 16, 2007.*

(ii) Amendment to Delegation Agreement with State Street Bank
and Trust Company dated June 18, 2007 - Previously filed
with Post-Effective Amendment No. 55 to the Company's
Registration Statement No. 33-36962 on June 18, 2007*

(iii) Amendment to Delegation Agreement with State Street Bank
and Trust Company, dated December 7, 2007 - Previously
filed with Post-Effective Amendment No. 39 to the Trust's
Registration Statement No. 33-08865 on February 22, 2008.*

(10) Rule 12b-1 Plans

(a) Form of Plan of Distribution Pursuant to Rule 12b-1 for Class A
shares of Eclipse Funds - Previously filed with Post-Effective
Amendment No. 36 to the Trust's Registration Statement No.
33-36962 on April 7, 2006.*

(b) Form of Plan of Distribution Pursuant to Rule 12b-1 for Class B
shares of Eclipse Funds - Previously filed with Post-Effective
Amendment No. 36 to the Trust's Registration Statement No.
33-36962 on April 7, 2006.*

(c) Form of Plan of Distribution Pursuant to Rule 12b-1 for Class C
shares of Eclipse Funds - Previously filed with Post-Effective
Amendment No. 36 to the Trust's Registration Statement No.
33-36962 on April 7, 2006.*

(d) Form of Plan of Distribution Pursuant to Rule 12b-1 for Class R2
shares of Eclipse Funds - Previously filed with Post-Effective
Amendment No. 36 to the Trust's Registration Statement No.
33-36962 on April 7, 2006.*

(e) Plan of Distribution pursuant to Rule 12b-1 for Class R3 shares
of Eclipse Funds - Previously filed with Post-Effective Amendment
No. 36 to the Trust's Registration Statement No. 33-36962 on
April 7, 2006.*

(f) Form of Plan of Distribution Pursuant to Rule 12b-1 for Investor
Class shares of Eclipse Funds - Previously filed with
Post-Effective Amendment No. 39 to the Trust's Registration
Statement No. 33-08865 on February 22, 2008.*

b. Rule 18f-3 Plans

(i) Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 -
- Previously filed with Post-Effective Amendment No. 37 to the
Trust's Registration Statement No. 33-08865 on
February 16, 2007.*

(ii) Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 -
Previously filed with Post-Effective Amendment No. 39 to the
Trust's Registration Statement No. 33-08865 on February 22,
2008.*

(11) Opinion and consent of counsel as to the legality of the shares being
registered - Filed herewith

(12) Opinion and consent of counsel regarding tax matters - To be filed by
amendment

(13) Other Material Contracts

a. Copy of Transfer Agency Agreement between Eclipse Funds and
Investors Fiduciary Trust Company. - Previously filed with
Post-Effective Amendment No. 6 to the Company's Registration
Statement No. 33-08865 on April 30, 1990.*

b. Transfer Agency and Service Agreement between Eclipse Funds and
NYLIM Shareholder Services LLC (d/b/a Eclipse Shareholder
Services LLC) - Previously filed with Post-Effective Amendment
No. 21 to the Trust's Registration Statement No. 33-08865 on
December 29, 2000.*

c. Copy of Administration Contract between Eclipse Funds and NYLIFE
Securities Inc. - Previously filed with Post-Effective Amendment
No. 9 to the Trust's Registration Statement No. 33-08865 on April
30, 1991.*

d. Sub-Transfer Agency and Service Agreement between Mainstay
Shareholder Services, Inc. and Boston Financial Data Services,
Inc. - Previously filed with Post-Effective Amendment No. 21 to
the Trust's Registration Statement No. 33-08865 on December 29,
2000.*

(i) Amended Fee Schedule to Sub-Transfer Agency and Service
Agreement between NYLIM Service Company LLC (formerly
Mainstay Shareholder Services, Inc.) and Boston Financial
Data Services, Inc. - Previously filed with Post-Effective
Amendment No. 21 to the Trust's Registration Statement No.
33-08865 on December 29, 2000.*

e. Shareholder Services Plan for Eclipse Funds (Class R1 shares)-
Previously filed with Post-Effective Amendment No. 36 to the
Trust's Registration Statement No. 33-36962 on April 7, 2006.*

f. Shareholder Services Plan for Eclipse Funds (Class R2 shares)-
Previously filed with Post-Effective Amendment No. 36 to the
Trust's Registration Statement No. 33-36962 on April 7, 2006.*

g. Shareholder Services Plan for Eclipse Funds (Class R3 shares) -
Previously filed with Post-Effective Amendment No. 36 to the
Trust's Registration Statement No. 33-36962 on April 7, 2006.*

h. Master Fund Sub-Accounting and Sub-Administration Agreement
between New York Life Investment Management LLC and Investors
Bank & Trust Company - Previously filed with Post-Effective
Amendment No. 36 to the Trust's Registration Statement No.
33-36962 on April 7, 2006.*

i. Amendment to Fund Sub-Accounting and Sub-Administration Agreement
between New York Life Investment Management LLC and Investors
Bank and Trust Company - Previously filed with Post-Effective
Amendment No. 37 to the Trust's Registration Statement No.
33-08865 on February 16, 2007.*

(i) Amendment to Fund Sub-Accounting and Sub-Administration
Agreement, dated December 7, 2007, between New York Life
Investment Management and State Street Bank and Trust
Company - Previously filed with Post-Effective Amendment
No. 39 to the Trust's Registration Statement No. 33-08865
on February 22, 2008.*

(ii) Extension Agreement (related to Fund Sub-Accounting and
Sub-Administration Agreement) dated January 11, 2008,
between New York Life Investment Management and State
Street Bank and Trust Company - Previously filed with
Post-Effective Amendment No. 39 to the Trust's Registration
Statement No. 33-08865 on February 22, 2008.*

j. Form of Indemnification Agreement - Previously filed with
Post-Effective Amendment No. 36 to the Trust's Registration
Statement No. 33-36962 on April 7, 2006.*

(14) Other Opinions

a. Consent of Independent Registered Public Accounting Firm - Filed
herewith

(15) Not applicable.

(16) Powers of Attorney - filed herewith

(17) Additional Exhibits - Not applicable

Item 17. Undertakings

(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of the prospectus which is a part
of this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reoffering by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the securities Act
of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.

(3) The undersigned Registrant agrees to file in a Post-Effective Amendment to
this Registration Statement a final tax opinion upon the closing of the
transaction.

SIGNATURES

As required by the Securities Act of 1933, this registration Statement
has been signed on behalf of the registrant, in the City of Parsippany and the
State of New Jersey on the 30th day of September, 2008.

ECLIPSE FUNDS

/s/ Stephen P. Fisher
-------------------------------
Stephen P. Fisher
President

As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on
September 30, 2008.

SIGNATURE TITLE
- --------- -----

/s/ Susan B. Kerley* Trustee
- ---------------------------------
Susan B. Kerley

/s/ John Y. Kim* Trustee
- ---------------------------------
John Y. Kim

/s/ Alan R. Latshaw* Trustee
- ---------------------------------
Alan R. Latshaw

/s/ Peter Meenan* Trustee
- ---------------------------------
Peter Meenan

/s/ Richard H. Nolan, Jr.* Trustee
- ---------------------------------
Richard H. Nolan, Jr.

/s/ Richard S. Trutanic* Trustee
- ---------------------------------
Richard S. Trutanic

/s/ Roman L. Weil* Trustee
- ---------------------------------
Roman L. Weil

/s/ John A. Weisser* Trustee
- ---------------------------------
John A. Weisser

/s/ Jack R. Benintende Treasurer and Principal Financial
- --------------------------------- and Accounting Officer
Jack R. Benintende

By: /s/ Jeffrey A. Engelsman
- --------------------------------------

Jeffrey A. Engelsman
As Attorney-in-Fact*

* Pursuant to Powers of Attorney filed herewith.