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-two funds (collectively referred to as the "Funds").
These financial statements and notes relate only to MainStay Strategic Income Fund (the "Fund").
The Fund commenced operations on February 28, 1997, and currently offers two classes of shares. Class A
shares are offered at net asset value per share plus an initial sales charge. Class B 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. Class A shares and Class B 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 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 Investment Company Act of 1940.
The Fund's objective is to provide current income and competitive overall return by investing primarily in
domestic and foreign debt securities.
The Fund invests in high yield bonds. High yield securities run greater risks of price fluctuations, loss of principal
and interest, default or bankruptcy by the issuer, and other risks, which is why these securities are considered
Note 2--Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Fund:
Valuation of Fund Shares. The net asset value per share of each class of shares is calculated on each day the
New York Stock Exchange (the "Exchange") is open for trading as of the close of regular trading on the
Exchange. The net asset value per share of each class of shares is determined by