NOTE 1--ORGANIZATION AND BUSINESS:
The MainStay Funds (the "Trust") was organized on January 9, 1986 as a Massachusetts business trust. The Trust is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company and is
comprised of twenty-three funds (collectively referred to as the "Funds"). These financial statements and notes relate only to
MainStay Convertible Fund (the "Fund").
The Fund currently offers three classes of shares. Class A shares, whose distribution commenced on January 3, 1995, are offered at
net asset value per share plus an initial sales charge. No sales charge applies on investments of $1 million or more (and certain other
qualified purchases) in Class A shares, but a contingent deferred sales charge is imposed on certain redemptions of such shares
within one year of the date of purchase. Class B shares and Class C shares are offered without an initial sales charge, although a
declining contingent deferred sales charge may be imposed on redemptions made within six years of purchase of Class B shares and
within one year of purchase of Class C shares. Distribution of Class B shares and Class C shares commenced on May 1, 1986 and
September 1, 1998, respectively. Class A shares, Class B shares and Class C shares bear the same voting (except for issues that
relate solely to one class), dividend, liquidation and other rights and conditions except that the Class B shares and Class C shares are
subject to higher distribution fee rates. Each class of shares bears distribution and/or service fee payments under a distribution plan
pursuant to Rule 12b-1 under the 1940 Act.
The Fund's investment objective is to seek capital appreciation together with current income.
The Fund's principal investments include high yield securities (sometimes called "junk bonds"), which are generally considered
speculative because they present a greater risk of loss, including default, than higher quality debt securities. These securities pay a