UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-22551
MAINSTAY MACKAY DEFINEDTERM
MUNICIPAL OPPORTUNITIES FUND
(Exact name of Registrant as specified in charter)
51 Madison Avenue, New York, NY 10010
(Address of principal executive offices) (Zip code)
J. Kevin Gao, Esq.
30 Hudson Street
Jersey City, New Jersey 07302
(Name and address of agent for service)
Registrant’s telephone number, including area code: (212) 576-7000
Date of fiscal year end: May 31
Date of reporting period: May 31, 2021
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Item 1. | Reports to Stockholders. |
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Not FDIC/NCUA Insured | Not a Deposit | May Lose Value | No Bank Guarantee | Not Insured by Any Government Agency |
President
Total Returns | One Year | Five Years | Since Inception 6/26/12 |
Net Asset Value (“NAV”)1 | 12.82% | 5.95% | 7.27% |
Market Price1 | 14.79 | 8.63 | 7.76 |
Bloomberg Barclays Municipal Bond Index2 | 4.74 | 3.52 | 3.68 |
Morningstar Muni National Long Category Average3 | 11.89 | 4.56 | 5.60 |
1. | Total returns assume dividends and capital gains distributions are reinvested. For periods of less than one year, total return is not annualized. |
2. | The Bloomberg Barclays Municipal Bond Index is considered representative of the broad market for investment-grade, tax-exempt bonds with a maturity of at least one year. Bonds subject to the alternative minimum tax or with floating or zero coupons are excluded. An investment cannot be made directly in an index. |
3. | The Morningstar Muni National Long Category Average is representative of funds that invest in bonds issued by various state and local governments to fund public projects. The income from these bonds is generally free from federal taxes. These portfolios have durations of more than 7 years. Results are based on average total returns of similar funds with all dividends and capital gain distributions reinvested. |
Fund Statistics (as of May 31, 2021) | |||
NYSE Symbol | MMD | Premium/Discount 1 | 7.67% |
CUSIP | 56064K100 | Total Net Assets (millions) | $590.7 |
Inception Date | 6/26/12 | Total Managed Assets (millions)2 | $927.4 |
Market Price | $22.89 | Leverage 3 | 36.31% |
NAV | $21.26 | Percent of AMT Bonds4 | 3.68% |
1. | Premium/Discount is the percentage (%) difference between the market price and the NAV. When the market price exceeds the NAV, the Fund is trading at a premium. When the market price is less than the NAV, the Fund is trading at a discount. |
2. | “Managed Assets” is defined as the Fund’s total assets, minus the sum of its accrued liabilities (other than Fund liabilities incurred for the purpose of creating effective leverage (i.e. tender option bonds) or Fund liabilities related to liquidation preference of any Preferred shares issued). |
3. | Leverage is based on the use of proceeds received from tender option bond transactions, issuance of Preferred shares, funds borrowed from banks or other institutions or derivative transactions, expressed as a percentage of Managed Assets. |
4. | Alternative Minimum Tax (“AMT”) is a separate tax computation under the Internal Revenue Code that, in effect, eliminates many deductions and credits and creates a tax liability for an individual who would otherwise pay little or no tax, expressed as a percentage of Managed Assets. |
Illinois | 13.8% |
Puerto Rico (a) | 13.1 |
California | 12.6 |
New York | 8.3 |
Michigan | 6.9 |
Florida | 4.6 |
Missouri | 4.5 |
New Jersey | 4.0 |
Nevada | 3.9 |
Colorado | 3.8 |
Pennsylvania | 3.3 |
Washington | 3.3 |
U.S. Virgin Islands | 3.2 |
Nebraska | 2.3 |
Kansas | 2.2 |
Indiana | 1.9% |
Guam | 1.7 |
South Carolina | 1.2 |
Wisconsin | 0.8 |
Texas | 0.6 |
Virginia | 0.5 |
New Hampshire | 0.5 |
District of Columbia | 0.3 |
Ohio | 0.3 |
Minnesota | 0.2 |
Arizona | 0.2 |
Other Assets, Less Liabilities | 2.0 |
100.0% |
† | As a percentage of Managed Assets. |
(a) | As of May 31, 2021, 88.9% of the Puerto Rico municipal securities held by the Fund were insured and all bonds continue to pay full principal and interest. |
1. | Chicago Board of Education, 5.50%-7.00%, due 4/1/34–12/1/46 (a) |
2. | Kansas City Industrial Development Authority, 4.00%, due 3/1/45–3/1/50 (a) |
3. | Los Angeles Department of Water & Power System Revenue, 5.00%, due 7/1/47 |
4. | City of Chicago IL, 5.00%-6.00%, due 1/1/25–1/1/49 |
5. | Great Lakes Water Authority Sewage Disposal System, 5.00%, due 7/1/34 |
6. | Virgin Islands Public Finance Authority, 4.50%-6.625%, due 10/1/24–10/1/32 (a) |
7. | Orange County Convention Center, 4.00%, due 10/1/33 |
8. | Commonwealth of Puerto Rico, 4.50%-6.00%, due 7/1/23–7/1/37 (a) |
9. | New York Transportation Development Corp., 4.00%-5.00%, due 8/1/31–7/1/36 (a) |
10. | Golden State Tobacco Securitization Corp., 5.30%, due 6/1/37 |
# | Some of these holdings have been transferred to a Tender Option Bond (“TOB”) Issuer in exchange for TOB Residuals and cash. |
(a) | Municipal security may feature credit enhancements, such as bond insurance. |
6 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
1. | See page 5 for more information on benchmark and peer group returns. |
2. | The yield curve is a line that plots the yields of various securities of similar quality—typically U.S. Treasury issues—across a range of maturities. The U.S. Treasury yield curve serves as a benchmark for other debt and is used in economic forecasting. |
3. | An obligation rated ‘AAA’ has the highest rating assigned by Standard & Poor’s (“S&P”), and in the opinion of S&P, the obligor’s capacity to meet its financial commitment on the obligation is extremely strong. An obligation rated ‘AA’ by S&P is deemed by S&P to differ from the highest-rated obligations only to a small degree. In the opinion of S&P, the obligor's capacity to meet its financial commitment on the obligation is very strong. When applied to Fund holdings, ratings are based solely on the creditworthiness of the bonds in the portfolio and are not meant to represent the security or safety of the Fund. |
4. | The terms “spread” and “yield spread” may refer to the difference in yield between a security or type of security and comparable U.S. Treasury issues. The terms may also refer to the difference in yield between two specific securities or types of securities at a given time. |
5. | Duration is a measure of the price sensitivity of a fixed-income investment to changes in interest rates. Duration is expressed as a number of years and is considered a more accurate sensitivity gauge than average maturity. |
6. | Modified duration is inversely related to the approximate percentage change in price for a given change in yield. Duration to worst is the duration of a bond computed using the bond’s nearest call date or maturity, whichever comes first. This measure ignores future cash flow fluctuations due to embedded optionality. |
7. | An obligation rated ‘A’ by S&P is deemed by S&P to be somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. In the opinion of S&P, however, the obligor's capacity to meet its financial commitment on the obligation is still strong. An obligation rated ‘BB’ by S&P is deemed by S&P to be less vulnerable to nonpayment than other speculative issues. In the opinion of S&P, however, the obligor faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. An obligation rated ‘B’ by S&P is deemed by S&P to be more vulnerable to nonpayment than obligations rated ‘BB’, but in the opinion of S&P, the obligor currently has the capacity to meet its financial commitment on the obligation. It is the opinion of S&P that adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. An obligation rated 'CC' by S&P is deemed by S&P to be currently highly vulnerable to nonpayment. The 'CC' rating is used when a default has not yet occurred, but S&P expects default to be a virtual certainty, regardless of the anticipated time to default. When applied to Fund holdings, ratings are based solely on the creditworthiness of the bonds in the portfolio and are not meant to represent the security or safety of the Fund. |
8 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Principal Amount | Value | |
Municipal Bonds 153.8% | ||
Arizona 0.3% (0.2% of Managed Assets) | ||
Industrial Development Authority of the City of Phoenix (The), Espiritu Community Development Corp., Revenue Bonds | ||
Series A | ||
6.25%, due 7/1/36 | $ 1,855,000 | $ 1,857,121 |
California 19.8% (12.6% of Managed Assets) | ||
California Municipal Finance Authority, LINXS APM Project, Revenue Bonds, Senior Lien | ||
Series A | ||
5.00%, due 12/31/36 (a) | 5,000,000 | 6,134,767 |
California Municipal Finance Authority, United Airlines, Inc. Project, Revenue Bonds | ||
4.00%, due 7/15/29 (a) | 2,405,000 | 2,791,517 |
City of Sacramento, Water Revenue Bonds | ||
5.00%, due 9/1/42 (b) | 19,500,000 | 21,562,049 |
Golden State Tobacco Securitization Corp., Asset-Backed, Revenue Bonds | ||
Series A-2 | ||
5.30%, due 6/1/37 (c) | 25,225,000 | 26,295,022 |
Los Angeles Department of Water & Power System Revenue, Revenue Bonds | ||
Series A | ||
5.00%, due 7/1/47 (b) | 28,900,000 | 35,155,422 |
University of California, Regents Medical Center, Revenue Bonds | ||
Series J | ||
5.00%, due 5/15/43 (b) | 23,260,000 | 25,047,773 |
116,986,550 | ||
Colorado 6.0% (3.8% of Managed Assets) | ||
City & County of Denver CO, Revenue Bonds | ||
Series A | ||
4.00%, due 8/1/51 (b) | 21,690,000 | 25,859,504 |
Copper Ridge Metropolitan District, Revenue Bonds | ||
5.00%, due 12/1/39 | 3,950,000 | 4,206,087 |
Dominion Water & Sanitation District, Tap Fee, Revenue Bonds | ||
6.00%, due 12/1/46 | 3,383,000 | 3,520,771 |
Principal Amount | Value | |
Colorado | ||
Sterling Ranch Community Authority Board, Revenue Bonds | ||
Series A, Insured: MUN GOVT GTD | ||
5.00%, due 12/1/30 | $ 1,750,000 | $ 1,872,669 |
35,459,031 | ||
District of Columbia 0.5% (0.3% of Managed Assets) | ||
Metropolitan Washington Airports Authority, Dulles Toll Road, Revenue Bonds, Second Lien | ||
Series C, Insured: AGC | ||
6.50%, due 10/1/41 (c) | 2,400,000 | 3,087,331 |
Florida 7.2% (4.6% of Managed Assets) | ||
JEA Electric System Revenue Bonds, Revenue Bonds | ||
Series C | ||
5.00%, due 10/1/37 (b) | 12,980,000 | 13,718,529 |
Orange County Convention Center, Revenue Bonds | ||
Series B | ||
4.00%, due 10/1/33 (b) | 25,000,000 | 28,758,657 |
42,477,186 | ||
Guam 2.7% (1.7% of Managed Assets) | ||
Antonio B Won Pat International Airport Authority, Revenue Bonds | ||
Series C, Insured: AGM | ||
6.00%, due 10/1/34 (a) | 3,425,000 | 3,745,134 |
Guam Government Waterworks Authority, Wastewater System, Revenue Bonds | ||
5.50%, due 7/1/43 | 7,550,000 | 8,358,644 |
Territory of Guam, Business Privilege Tax, Revenue Bonds | ||
Series B-1 | ||
5.00%, due 1/1/42 | 3,860,000 | 3,966,063 |
16,069,841 | ||
Illinois 21.7% (13.8% of Managed Assets) | ||
Chicago Board of Education, Unlimited General Obligation, Revenue Bonds | ||
Series A, Insured: AGM | ||
5.50%, due 12/1/39 (b) | 20,000,000 | 20,332,692 |
Chicago Board of Education, Unlimited General Obligation | ||
Series A | ||
7.00%, due 12/1/44 | 2,880,000 | 3,511,452 |
Principal Amount | Value | |
Illinois (continued) | ||
Chicago Board of Education, Dedicated Capital Improvement, Revenue Bonds | ||
Series A | ||
5.75%, due 4/1/34 | $ 8,000,000 | $ 9,715,424 |
Chicago Board of Education, Dedicated Capital Improvement, Unlimited General Obligation (d) | ||
Series A | ||
7.00%, due 12/1/46 | 4,000,000 | 5,218,785 |
Series B | ||
7.00%, due 12/1/42 | 3,500,000 | 4,591,015 |
Chicago O'Hare International Airport, Customer Facility Charge, Revenue Bonds, Senior Lien | ||
Insured: AGM | ||
5.75%, due 1/1/38 | 5,000,000 | 5,416,232 |
City of Chicago IL, Unlimited General Obligation | ||
Series A | ||
5.25%, due 1/1/27 | 3,000,000 | 3,428,460 |
Series A | ||
5.50%, due 1/1/49 | 5,000,000 | 6,086,932 |
Series A | ||
6.00%, due 1/1/38 | 7,180,000 | 8,740,090 |
Series C | ||
5.00%, due 1/1/25 | 1,435,000 | 1,469,065 |
Series E | ||
5.50%, due 1/1/42 | 2,000,000 | 2,236,796 |
City of Chicago IL, Wastewater Transmission, Revenue Bonds, Second Lien | ||
Series C | ||
5.00%, due 1/1/32 | 7,120,000 | 8,207,099 |
Metropolitan Pier & Exposition Authority, McCormick Place Expansion Project, Revenue Bonds | ||
Series A | ||
5.00%, due 6/15/57 | 4,665,000 | 5,521,480 |
Series B-1, Insured: AGM | ||
(zero coupon), due 6/15/44 | 10,000,000 | 5,342,322 |
Sales Tax Securitization Corp., Revenue Bonds | ||
Series C, Insured: BAM | ||
5.25%, due 1/1/48 (b) | 11,000,000 | 13,597,613 |
Principal Amount | Value | |
Illinois | ||
State of Illinois, Unlimited General Obligation | ||
5.25%, due 7/1/31 (b) | $ 20,000,000 | $ 21,573,557 |
5.50%, due 5/1/30 | 2,500,000 | 3,299,484 |
128,288,498 | ||
Indiana 3.0% (1.9% of Managed Assets) | ||
Indianapolis Local Public Improvement Bond Bank, Revenue Bonds | ||
Series A, Insured: AGM | ||
4.00%, due 6/1/39 (b) | 14,880,000 | 17,571,809 |
Kansas 3.4% (2.2% of Managed Assets) | ||
Kansas Development Finance Authority Revenue, Revenue Bonds, Sunbelt Obligated Group | ||
Series A | ||
5.00%, due 11/15/32 (b) | 19,290,000 | 20,140,393 |
Michigan 10.8% (6.9% of Managed Assets) | ||
City of Detroit MI, Great Lakes Water Authority Sewage Disposal System Revenue, Revenue Bonds, Senior Lien | ||
Series A | ||
5.25%, due 7/1/39 | 5,000,000 | 5,278,581 |
City of Detroit MI, Great Lakes Water Authority Water Supply System Revenue, Revenue Bonds, Senior Lien | ||
Series A | ||
5.25%, due 7/1/41 | 2,385,000 | 2,394,968 |
Great Lakes Water Authority Sewage Disposal System, Revenue Bonds, Senior Lien | ||
Series B, Insured: AGM | ||
5.00%, due 7/1/34 (b) | 24,940,000 | 30,065,413 |
Michigan Finance Authority, Trinity Health Group, Revenue Bonds | ||
5.25%, due 12/1/41 (b) | 21,630,000 | 25,894,484 |
63,633,446 | ||
Minnesota 0.3% (0.2% of Managed Assets) | ||
Blaine Minnesota Senior Housing & Healthcare, Crest View Senior Community Project, Revenue Bonds | ||
Series A | ||
5.75%, due 7/1/35 | 2,000,000 | 1,916,163 |
10 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Principal Amount | Value | |
Missouri 7.1% (4.5% of Managed Assets) | ||
Kansas City Industrial Development Authority, Kansas City International Airport Terminal, Revenue Bonds | ||
Series A | ||
4.00%, due 3/1/45 (b) | $ 31,510,000 | $ 36,174,564 |
Series A, Insured: AGM | ||
4.00%, due 3/1/50 (a) | 5,000,000 | 5,785,538 |
41,960,102 | ||
Nebraska 3.6% (2.3% of Managed Assets) | ||
Central Plains Energy Gas Project, Revenue Bonds | ||
5.25%, due 9/1/37 (b) | 20,000,000 | 21,166,453 |
Nevada 6.1% (3.9% of Managed Assets) | ||
Clark County School District, Tax Building, Limited General Obligation | ||
Series A, Insured: BAM | ||
5.00%, due 6/15/34 (b) | 9,680,000 | 12,121,116 |
Las Vegas Convention & Visitors Authority, Convention Center Expansion, Revenue Bonds | ||
Series B | ||
5.00%, due 7/1/43 (b) | 20,000,000 | 23,764,117 |
35,885,233 | ||
New Hampshire 0.7% (0.5% of Managed Assets) | ||
Manchester Housing and Redevelopment Authority, Inc., Revenue Bonds | ||
Series B, Insured: ACA | ||
(zero coupon), due 1/1/24 | 4,740,000 | 4,258,027 |
New Jersey 6.2% (4.0% of Managed Assets) | ||
New Jersey Economic Development Authority, Continental Airlines, Inc. Project, Revenue Bonds | ||
5.25%, due 9/15/29 (a) | 5,000,000 | 5,297,685 |
New Jersey Economic Development Authority, New Jersey Transit Transportation Project, Revenue Bonds | ||
Series A | ||
4.00%, due 11/1/39 | 3,400,000 | 3,918,391 |
Principal Amount | Value | |
New Jersey | ||
New Jersey Transportation Trust Fund Authority, Transportation Program, Revenue Bonds | ||
Series BB | ||
4.00%, due 6/15/44 | $ 1,000,000 | $ 1,131,326 |
Series BB | ||
4.00%, due 6/15/45 (b) | 17,000,000 | 19,452,281 |
New Jersey Turnpike Authority, Revenue Bonds | ||
Series A | ||
4.00%, due 1/1/51 (b) | 5,500,000 | 6,484,296 |
Tobacco Settlement Financing Corp., Revenue Bonds | ||
Series A | ||
5.00%, due 6/1/46 | 300,000 | 358,495 |
36,642,474 | ||
New York 13.0% (8.3% of Managed Assets) | ||
Metropolitan Transportation Authority, Revenue Bonds | ||
Series A-1 | ||
5.00%, due 11/15/45 (b) | 22,695,000 | 25,547,194 |
New York Liberty Development Corp., World Trade Center Project, Revenue Bonds | ||
Series AA, Class 3 | ||
7.25%, due 11/15/44 (b)(d) | 10,890,000 | 12,170,439 |
New York State Dormitory Authority, Personal Income Tax, Revenue Bonds | ||
Series A | ||
4.00%, due 3/15/40 | 7,000,000 | 8,448,306 |
New York Transportation Development Corp., American Airlines-JFK International Airport, Revenue Bonds | ||
5.00%, due 8/1/31 (a) | 5,000,000 | 5,035,368 |
New York Transportation Development Corp., LaGuardia Airport Terminal B Redevelopment Project, Revenue Bonds | ||
Series A, Insured: AGM | ||
4.00%, due 7/1/36 (b) | 20,000,000 | 21,983,255 |
Riverhead Industrial Development Agency, Riverhead Charter School, Revenue Bonds | ||
Series A | ||
7.00%, due 8/1/43 | 3,395,000 | 3,735,561 |
76,920,123 |
Principal Amount | Value | |
Ohio 0.5% (0.3% of Managed Assets) | ||
Buckeye Tobacco Settlement Financing Authority, Asset-Backed, Revenue Bonds, Senior Lien | ||
Series B-2 | ||
5.00%, due 6/1/55 | $ 2,500,000 | $ 2,898,095 |
Pennsylvania 5.2% (3.3% of Managed Assets) | ||
Allentown Neighborhood Improvement Zone Development Authority, City Center Project, Revenue Bonds | ||
5.00%, due 5/1/42 (d) | 1,000,000 | 1,190,666 |
City of Harrisburg PA, Unlimited General Obligation | ||
Series F, Insured: AMBAC | ||
(zero coupon), due 9/15/21 | 305,000 | 301,780 |
Commonwealth Financing Authority, Tobacco Master Settlement Payment, Revenue Bonds | ||
Insured: AGM | ||
4.00%, due 6/1/39 | 2,370,000 | 2,713,389 |
Pennsylvania Economic Development Financing Authority, Capital Region Parking System, Revenue Bonds | ||
Series B, Insured: County Guaranteed | ||
6.00%, due 7/1/53 (b) | 14,260,000 | 15,701,206 |
Pennsylvania Turnpike Commission, Revenue Bonds | ||
Series A, Insured: AGM | ||
4.00%, due 12/1/49 (b) | 7,470,000 | 8,702,969 |
Philadelphia Authority for Industrial Development, Nueva Esperanza, Inc., Revenue Bonds | ||
8.20%, due 12/1/43 | 2,000,000 | 2,246,896 |
30,856,906 | ||
Puerto Rico 20.6% (13.1% of Managed Assets) | ||
Children's Trust Fund, Asset-Backed, Revenue Bonds | ||
5.50%, due 5/15/39 | 12,965,000 | 13,274,605 |
Commonwealth of Puerto Rico, Public Improvement, Unlimited General Obligation (e) | ||
Insured: AGM | ||
4.50%, due 7/1/23 | 280,000 | 281,504 |
Insured: AGM | ||
5.125%, due 7/1/30 | 1,365,000 | 1,403,153 |
Series A, Insured: AGM | ||
5.00%, due 7/1/35 | 7,840,000 | 8,113,780 |
Principal Amount | Value | |
Puerto Rico | ||
Commonwealth of Puerto Rico, Public Improvement, Unlimited General Obligation (e) (continued) | ||
Series A, Insured: AGC | ||
5.25%, due 7/1/23 | $ 145,000 | $ 149,053 |
Series A, Insured: AGM | ||
5.375%, due 7/1/25 | 1,340,000 | 1,374,037 |
Series A, Insured: AGC | ||
5.50%, due 7/1/32 | 255,000 | 262,412 |
Series A, Insured: AGM | ||
6.00%, due 7/1/33 | 875,000 | 906,282 |
Series A, Insured: AGM | ||
6.00%, due 7/1/34 | 755,000 | 774,120 |
Series A-4, Insured: AGM | ||
5.25%, due 7/1/30 | 4,425,000 | 4,548,685 |
Series C, Insured: AGM | ||
5.50%, due 7/1/32 | 1,520,000 | 1,564,182 |
Series C, Insured: AGM | ||
5.75%, due 7/1/37 | 5,440,000 | 5,604,192 |
Series C-7, Insured: NATL-RE | ||
6.00%, due 7/1/27 | 2,615,000 | 2,697,425 |
Puerto Rico Convention Center District Authority, Hotel Occupancy Tax, Revenue Bonds (e) | ||
Series A, Insured: AGC | ||
4.50%, due 7/1/36 | 13,080,000 | 13,317,184 |
Series A, Insured: AGC | ||
5.00%, due 7/1/27 | 635,000 | 652,041 |
Series A, Insured: AMBAC | ||
5.00%, due 7/1/31 | 340,000 | 347,883 |
Puerto Rico Electric Power Authority, Revenue Bonds (e) | ||
Series DDD, Insured: AGM | ||
3.625%, due 7/1/23 | 755,000 | 756,664 |
Series DDD, Insured: AGM | ||
3.65%, due 7/1/24 | 2,830,000 | 2,836,137 |
Series PP, Insured: NATL-RE | ||
5.00%, due 7/1/24 | 1,130,000 | 1,153,584 |
Series PP, Insured: NATL-RE | ||
5.00%, due 7/1/25 | 165,000 | 169,207 |
Series TT, Insured: AGM | ||
5.00%, due 7/1/27 | 310,000 | 318,319 |
Puerto Rico Highway & Transportation Authority, Revenue Bonds (e) | ||
Series AA-1, Insured: AGM | ||
4.95%, due 7/1/26 | 6,195,000 | 6,323,741 |
Series D, Insured: AGM | ||
5.00%, due 7/1/32 | 960,000 | 985,762 |
12 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Principal Amount | Value | |
Puerto Rico (continued) | ||
Puerto Rico Highway & Transportation Authority, Revenue Bonds (e) (continued) | ||
Series N, Insured: AMBAC | ||
5.25%, due 7/1/31 | $ 3,485,000 | $ 3,777,049 |
Series N, Insured: AMBAC | ||
5.50%, due 7/1/29 | 1,025,000 | 1,128,053 |
Puerto Rico Municipal Finance Agency, Revenue Bonds | ||
Series A, Insured: AGM | ||
5.00%, due 8/1/21 | 810,000 | 814,126 |
Series A, Insured: AGM | ||
5.00%, due 8/1/22 | 835,000 | 857,408 |
Series A, Insured: AGM | ||
5.00%, due 8/1/27 | 2,770,000 | 2,844,335 |
Series A, Insured: AGM | ||
5.00%, due 8/1/30 | 1,685,000 | 1,730,218 |
Series A, Insured: AGM | ||
5.25%, due 8/1/21 | 230,000 | 231,299 |
Series C, Insured: AGC | ||
5.25%, due 8/1/21 | 3,775,000 | 3,802,342 |
Puerto Rico Public Buildings Authority, Government Facilities, Revenue Bonds (e) | ||
Series F, Insured: AGC | ||
5.25%, due 7/1/21 | 2,090,000 | 2,097,440 |
Series M-3, Insured: NATL-RE | ||
6.00%, due 7/1/27 | 10,000,000 | 10,315,200 |
Puerto Rico Sales Tax Financing Corp. Sales Tax, Revenue Bonds | ||
Series A-1 | ||
4.55%, due 7/1/40 | 2,500,000 | 2,809,264 |
Series A-1 | ||
4.75%, due 7/1/53 | 7,000,000 | 7,869,148 |
Series A-1 | ||
5.00%, due 7/1/58 | 13,440,000 | 15,332,425 |
121,422,259 | ||
South Carolina 1.8% (1.2% of Managed Assets) | ||
Patriots Energy Group Financing Agency, Gas Supply, Revenue Bonds | ||
Series A | ||
4.00%, due 10/1/48 (b)(f) | 10,000,000 | 10,876,032 |
Principal Amount | Value | |
Texas 0.9% (0.6% of Managed Assets) | ||
Harris County-Houston Sports Authority, Revenue Bonds, Senior Lien | ||
Series A, Insured: AGM, NATL-RE | ||
(zero coupon), due 11/15/38 | $ 175,000 | $ 81,159 |
Harris County-Houston Sports Authority, Revenue Bonds, Junior Lien | ||
Series H, Insured: NATL-RE | ||
(zero coupon), due 11/15/28 | 50,000 | 41,047 |
Series H, Insured: NATL-RE | ||
(zero coupon), due 11/15/38 | 260,000 | 120,489 |
Mission Economic Development Corp., Natgasoline LLC Project, Revenue Bonds, Senior Lien | ||
4.625%, due 10/1/31 (a)(d) | 5,000,000 | 5,301,197 |
5,543,892 | ||
U.S. Virgin Islands 5.0% (3.2% of Managed Assets) | ||
Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan, Revenue Bonds | ||
Series A | ||
5.00%, due 10/1/29 | 2,980,000 | 2,862,238 |
Series A | ||
5.00%, due 10/1/32 | 3,020,000 | 2,862,489 |
Series A, Insured: AGM | ||
5.00%, due 10/1/32 | 2,690,000 | 2,820,297 |
Virgin Islands Public Finance Authority, Matching Fund Loan, Revenue Bonds | ||
Series A, Insured: AGM | ||
5.00%, due 10/1/32 | 5,350,000 | 5,609,140 |
Virgin Islands Public Finance Authority, Matching Fund Loan - Diageo Project, Revenue Bonds | ||
Series A | ||
6.625%, due 10/1/29 | 2,395,000 | 2,413,786 |
Virgin Islands Public Finance Authority, Matching Fund Loan Note, Revenue Bonds, Senior Lien | ||
Series A | ||
5.00%, due 10/1/25 | 5,735,000 | 5,747,954 |
Series A-1 | ||
4.50%, due 10/1/24 | 375,000 | 370,872 |
Series A-1 | ||
5.00%, due 10/1/24 | 910,000 | 912,055 |
Series B | ||
5.00%, due 10/1/24 | 1,175,000 | 1,178,133 |
Series B | ||
5.00%, due 10/1/25 | 3,290,000 | 3,297,431 |
Principal Amount | Value | |
U.S. Virgin Islands (continued) | ||
Virgin Islands Public Finance Authority, Matching Fund Loan Note, Revenue Bonds, Sub. Lien | ||
Series B | ||
5.25%, due 10/1/29 | $ 1,355,000 | $ 1,334,072 |
29,408,467 | ||
Virginia 0.9% (0.5% of Managed Assets) | ||
Tobacco Settlement Financing Corp., Asset-Backed, Revenue Bonds, Senior Lien | ||
Series B-1 | ||
5.00%, due 6/1/47 | 5,000,000 | 5,025,708 |
Washington 5.2% (3.3% of Managed Assets) | ||
Washington Health Care Facilities Authority, Multicare Health System, Revenue Bonds | ||
Series A | ||
5.00%, due 8/15/44 (b) | 19,665,000 | 20,698,191 |
Washington State Convention Center Public Facilities District, Lodging Tax, Revenue Bonds | ||
4.00%, due 7/1/58 | 8,695,000 | 9,712,293 |
Washington State Housing Finance Commission, Single Family Program, Revenue Bonds | ||
Series 1N | ||
4.00%, due 6/1/49 | 160,000 | 176,895 |
30,587,379 | ||
Wisconsin 1.3% (0.8% of Managed Assets) | ||
Public Finance Authority, Bancroft NeuroHealth Project, Revenue Bonds | ||
Series A | ||
5.00%, due 6/1/36 (d) | 500,000 | 556,886 |
Principal Amount | Value | ||
Wisconsin | |||
Public Finance Authority, Ultimate Medical Academy Project, Revenue Bonds | |||
Series A | |||
5.00%, due 10/1/39 (d) | $ 5,750,000 | $ 6,954,615 | |
7,511,501 | |||
Total Investments (Cost $833,796,140) | 153.8% | 908,450,020 | |
Floating Rate Note Obligations (g) | (56.9) | (335,925,000) | |
Other Assets, Less Liabilities | 3.1 | 18,126,740 | |
Net Assets Applicable to Common Shares | 100.0% | $ 590,651,760 |
† | Percentages indicated are based on Fund net assets applicable to Common shares. |
(a) | Interest on these securities was subject to alternative minimum tax. |
(b) | All or portion of principal amount transferred to a Tender Option Bond (“TOB”) Issuer in exchange for TOB Residuals and cash. |
(c) | Step coupon—Rate shown was the rate in effect as of May 31, 2021. |
(d) | May be sold to institutional investors only under Rule 144A or securities offered pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. |
(e) | Bond insurance is paying principal and interest, since the issuer is in default. |
(f) | Coupon rate may change based on changes of the underlying collateral or prepayments of principal. Rate shown was the rate in effect as of May 31, 2021. |
(g) | Face value of Floating Rate Notes issued in TOB transactions. |
Abbreviation(s): |
ACA—ACA Financial Guaranty Corp. |
AGC—Assured Guaranty Corp. |
AGM—Assured Guaranty Municipal Corp. |
AMBAC—Ambac Assurance Corp. |
BAM—Build America Mutual Assurance Co. |
MUN GOVT GTD—Municipal Government Guaranteed |
NATL-RE—National Public Finance Guarantee Corp. |
14 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||
Asset Valuation Inputs | |||||||
Investments in Securities (a) | |||||||
Municipal Bonds | $ — | $ 908,450,020 | $ — | $ 908,450,020 |
(a) | For a complete listing of investments and their industries, see the Portfolio of Investments. |
Assets | |
Investment in securities, at value (identified cost $833,796,140) | $908,450,020 |
Cash | 6,412,915 |
Receivables: | |
Interest | 13,002,270 |
Common shares sold | 170,738 |
Other assets | 31,553 |
Total assets | 928,067,496 |
Liabilities | |
Payable for Floating Rate Note Obligations | 335,925,000 |
Payables: | |
Manager (See Note 3) | 471,699 |
Professional fees | 101,713 |
Shareholder communication | 31,094 |
Custodian | 13,040 |
Transfer agent | 10,886 |
Trustees | 225 |
Accrued expenses | 513 |
Interest expense and fees payable | 861,566 |
Total liabilities | 337,415,736 |
Net assets applicable to Common shares | $590,651,760 |
Common shares outstanding | 27,777,199 |
Net asset value per Common share (Net assets applicable to Common shares divided by Common shares outstanding) | $ 21.26 |
Net assets applicable to Common Shares consist of | |
Common shares, $0.001 par value per share, unlimited number of shares authorized | $ 27,777 |
Additional paid-in-capital | 528,960,205 |
528,987,982 | |
Total distributable earnings (loss) | 61,663,778 |
Net assets applicable to Common shares | $590,651,760 |
16 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Investment Income (Loss) | |
Income | |
Interest | $37,490,750 |
Expenses | |
Manager (See Note 3) | 5,492,366 |
Interest expense and fees | 3,480,667 |
Professional fees | 191,968 |
Insurance | 51,483 |
Shareholder communication | 46,921 |
Transfer agent | 44,696 |
Custodian | 27,303 |
Trustees | 14,127 |
Miscellaneous | 52,925 |
Total expenses | 9,402,456 |
Net investment income (loss) | 28,088,294 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on investments | 11,953,725 |
Net change in unrealized appreciation (depreciation) on investments | 29,096,609 |
Net realized and unrealized gain (loss) | 41,050,334 |
Net increase (decrease) in net assets to Common shares resulting from operations | $69,138,628 |
for the years ended May 31, 2021 and May 31, 2020
2021 | 2020 | |
Increase (Decrease) in Net Assets Applicable to Common Shares | ||
Operations: | ||
Net investment income (loss) | $ 28,088,294 | $ 24,932,264 |
Net realized gain (loss) | 11,953,725 | 6,624,757 |
Net change in unrealized appreciation (depreciation) | 29,096,609 | (20,458,229) |
Net increase (decrease) in net assets applicable to Common shares resulting from operations | 69,138,628 | 11,098,792 |
Distributions to Common shareholders | (28,279,253) | (28,189,046) |
Capital share transactions (Common shares): | ||
Net proceeds issued to shareholders resulting from reinvestment of dividends | 2,048,836 | 1,735,312 |
Increase (decrease) in net assets applicable to Common shares from capital share transactions | 2,048,836 | 1,735,312 |
Net increase (decrease) in net assets applicable to Common shares | 42,908,211 | (15,354,942) |
Net Assets Applicable to Common Shares | ||
Beginning of year | 547,743,549 | 563,098,491 |
End of year | $590,651,760 | $547,743,549 |
18 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
for the year ended May 31, 2021
Cash flows from (used in) operating activities: | |
Net increase in net assets resulting from operations | $ 69,138,628 |
Adjustments to reconcile net increase in net assets resulting from operations to net cash from operating activities: | |
Investments purchased | (180,662,025) |
Investments sold | 195,360,457 |
Amortization (accretion) of discount and premium, net | 4,308,306 |
Decrease in due from broker | 7,000,270 |
Decrease in investment securities sold receivable | 7,388,788 |
Decrease in interest receivable | 1,015,764 |
Increase in other assets | (2,117) |
Increase in professional fees payable | 19,633 |
Decrease in custodian payable | (1,977,733) |
Increase in shareholder communication payable | 6,101 |
Increase in due to trustees | 225 |
Increase in due to manager | 26,413 |
Increase in due to transfer agent | 4,129 |
Decrease in accrued expenses | (5,767) |
Decrease in interest expense and fees payable | (1,331,665) |
Net realized gain from investments | (11,953,725) |
Net change in unrealized (appreciation) depreciation on unaffiliated investments | (29,096,609) |
Net cash from operating activities | 59,239,073 |
Cash flows from financing activities: | |
Net proceeds resulting from reinvestment of dividends | 2,054,443 |
Proceeds from fixed Rate Municipal Term Preferred Shares, at liquidation value, Series A | (35,000,000) |
Proceeds from fixed Rate Municipal Term Preferred Shares, at liquidation value, Series B | (35,000,000) |
Proceeds from floating rate note obligations | 83,710,000 |
Payments on floating rate note obligations | (40,135,000) |
Cash distributions paid, net of change in Common share dividend payable | (28,455,601) |
Net cash from financing activities | (52,826,158) |
Net increase in cash | 6,412,915 |
Cash at beginning of year | — |
Cash at end of year | $ 6,412,915 |
Supplemental disclosure of cash flow information: |
Cash payments recognized as interest expense on the Fund’s Fixed Rate Municipal Term Preferred Shares for the year ended May 31, 2021, were $594,359. |
Year Ended May 31, | |||||||||
2021 | 2020 | 2019 | 2018 | 2017 | |||||
Net asset value at beginning of year applicable to Common shares | $ 19.79 | $ 20.41 | $ 20.11 | $ 20.14 | $ 20.61 | ||||
Net investment income (loss) | 1.01 | 0.99 | 1.01 | 1.05 | 1.08 | ||||
Net realized and unrealized gain (loss) on investments | 1.48 | (0.59) | 0.32 | 0.00‡ | (0.46) | ||||
Total from investment operations | 2.49 | 0.40 | 1.33 | 1.05 | 0.62 | ||||
Dividends and distributions to Common shareholders | (1.02) | (1.02) | (1.03) | (1.08) | (1.09) | ||||
Net asset value at end of year applicable to Common shares | $ 21.26 | $ 19.79 | $ 20.41 | $ 20.11 | $ 20.14 | ||||
Market price at end of year applicable to Common shares | $ 22.89 | $ 20.94 | $ 20.65 | $ 19.41 | $ 19.94 | ||||
Total investment return on market price (a) | 14.79% | 6.62% | 12.05% | 2.88% | 7.22% | ||||
Total investment return on net asset value (a) | 12.82% | 1.94% | 6.80% | 5.31% | 3.21% | ||||
Ratios (to average net assets of Common shareholders)/ Supplemental Data: | |||||||||
Net investment income (loss) | 4.88% | 4.44% | 5.03% | 5.21% | 5.35% | ||||
Net expenses (including interest expense and fees) | 1.64% | 2.33% | 2.47% | 2.11% | 1.83% | ||||
Interest expense and fees (b) | 0.61% | 1.31% | 1.45% | 1.10% | 0.85% | ||||
Portfolio Turnover Rate | 20% | 38% (c) | 27% | 20% | 26% | ||||
Net assets applicable to Common shareholders at end of year (in 000’s) | $ 590,652 | $ 547,744 | $ 563,098 | $ 554,332 | $ 555,071 | ||||
Preferred shares outstanding at $100,000 liquidation preference, end of year (in 000’s) (d)(e) | $ — | $ 70,000 | $ 70,000 | $ 70,000 | $ 70,000 | ||||
Assets coverage per Preferred share, end of year (d)(e) | $ — | $ 882,491 (f) | $ 904,426 (f) | $ 891,903 (f) | $ 892,958 (f) | ||||
Average market value per Preferred share: | |||||||||
Series A (d) | $ — | $ 100,000 | $ 100,000 | $ 100,006 | $ 100,012 | ||||
Series B (e) | $ — | $ 99,999 | $ 100,000 | $ 100,000 | $ 100,000 |
‡ | Less than one cent per share. |
(a) | Total investment return on market price is calculated assuming a purchase of a common share at the market price on the first day and a sale on the last day business day of each month. Dividends and distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return on net asset value reflects the changes in net asset value during each period and assumes the reinvestment of dividends and distributions at net asset value on the last business day of each month. This percentage may be different from the total investment return on market price, due to differences between the market price and the net asset value. For periods less than one year, total investment return is not annualized. |
(b) | Interest expense and fees relate to the costs of tender option bond transactions (See Note 2(G)) and the issuance of fixed rate municipal term preferred shares (See Note 2(H)). |
(c) | The portfolio turnover rate includes variable rate demand notes. |
(d) | Redeemed on June 15, 2020. |
(e) | Redeemed on December 15, 2020. |
(f) | Calculated by subtracting the Fund’s total liabilities (not including the Preferred shares) from the Fund’s total assets, and dividing the result by the number of Preferred shares outstanding. |
20 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
• | Level 1—quoted prices in active markets for an identical asset or liability |
• | Level 2—other significant observable inputs (including quoted prices for a similar asset or liability in active markets, interest rates and yield curves, prepayment speeds, credit risk, etc.) |
• | Level 3—significant unobservable inputs (including the Fund's own assumptions about the assumptions that market participants would use in measuring fair value of an asset or liability) |
• Benchmark yields | • Reported trades |
• Broker/dealer quotes | • Issuer spreads |
• Two-sided markets | • Benchmark securities |
• Bids/offers | • Reference data (corporate actions or material event notices) |
• Industry and economic events | • Comparable bonds |
• Monthly payment information |
22 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
24 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Underlying Securities Transferred to TOB Issuers | Liability for Floating Rate Note Obligations |
$534,120,010 | $335,925,000 |
Average Floating Rate Note Obligations Outstanding | Daily Weighted Average Interest Rate |
$315,843,918 | 0.91% |
Federal Tax Cost | Gross Unrealized Appreciation | Gross Unrealized (Depreciation) | Net Unrealized Appreciation/ (Depreciation) | |
Investments in Securities | $509,108,805 | $63,449,255 | $(33,039) | $63,416,216 |
Ordinary income | Undistributed Tax Exempt Income | Accumulated Capital and Other Gain (Loss) | Other Temporary Differences | Unrealized Appreciation (Depreciation) | Total Accumulated Gain (Loss) |
$5,036,472 | $9,031,254 | $(7,901,101) | $— | $55,497,153 | $61,663,778 |
26 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Total Distributable Earnings (Loss) | Additional Paid-In Capital | |
$(85) | $85 |
Capital Loss Available Through | Short-Term Capital Loss Amounts (000’s) | Long-Term Capital Loss Amounts (000’s) |
Unlimited | $7,901 | $— |
2021 | 2020 | ||||||
Distributions paid from: | Ordinary Income | Exempt Interest Dividends | Long-Term Capital Gain | Ordinary Income | Exempt Interest Dividends | Long-Term Capital Gain | |
Common shares | $23,434 | $28,255,819 | $— | $214,915 | $27,974,131 | $— | |
Prefered shares | 1,278 | 1,538,991 | — | 31,930 | 2,001,297 | — | |
Total | $24,712 | $29,794,810 | $— | $246,845 | $29,975,428 | $— |
Common Shares | Shares | Amount |
Year ended May 31, 2021: | ||
Common shares issued to shareholders in reinvestment of distributions (a) | 98,420 | $2,048,836 |
Year ended May 31, 2020: | ||
Common shares issued to shareholders in reinvestment of distributions (a) | 85,241 | $1,735,312 |
(a) | See page 34 for information on the Fund’s dividend reinvestment plan. |
Month | Ex-Date | Record Date | Payable Date | Amount |
July | 7/14/21 | 7/15/21 | 7/30/21 | $0.085 |
August | 8/13/21 | 8/16/21 | 8/31/21 | $0.085 |
September | 9/14/21 | 9/15/21 | 9/30/21 | $0.085 |
28 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
New York, New York
July 23, 2021
30 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
32 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
34 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
36 |
38 |
40 |
42 |
• | General Obligation Bonds Risk —timely payments depend on the issuer's credit quality, ability to raise tax revenues and ability to maintain an adequate tax base; |
• | Revenue Bonds (including Industrial Development Bonds) Risk —timely payments depend on the money earned by the particular facility or class of facilities, or the amount of revenues derived from another source, and may be negatively impacted by the general credit of the user of the facility; |
• | Private Activity Bonds Risk —municipalities and other public authorities issue private activity bonds to finance development of industrial facilities for use by a private enterprise, which is solely responsible for paying the principal and interest on the bond, and payment under these bonds depends on the private enterprise’s ability to do so; |
• | Moral Obligation Bonds Risk —moral obligation bonds are generally issued by special purpose public authorities of a state or municipality. If the issuer is unable to meet its obligations, repayment of these bonds becomes a moral commitment, but not a legal obligation, of the state or municipality; |
• | Municipal Notes Risk —municipal notes are shorter-term municipal debt obligations that pay interest that is, in the opinion of bond counsel, generally excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) and that have a maturity that is generally one year or less. If there is a shortfall in the anticipated proceeds, the notes may not be fully repaid and the Fund may lose money; and |
• | Municipal Lease Obligations Risk —in a municipal lease obligation, the issuer agrees to make payments when due on the lease obligation. Although the issuer does not pledge its unlimited taxing power for payment of the lease obligation, the lease obligation is secured by the leased property. Municipal leases may pose additional risks because many leases and contracts contain “non-appropriation” clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body. |
• | Participation Interest Risk —certificates of participation, which represent interests in unmanaged pools of municipal leases or installment contracts, involve the same risks as the underlying municipal leases. In addition, the Fund may be dependent upon the municipal authority issuing the certificate of participation to exercise remedies with respect to the underlying securities. Certificates of participation also entail a risk of default or bankruptcy, both of the issuer of the municipal lease and also the municipal agency issuing the certificate of participation. |
• | Tax Risk —to be tax-exempt, municipal bonds must meet certain regulatory requirements. If a municipal bond fails to meet such requirements, the interest received by the Fund from its investment in such bonds and distributed to shareholders may be taxable. It is possible that interest on a municipal bond may be declared taxable after the issuance of the bond, and this determination may apply retroactively to the date of the issuance of the bond, which could cause a portion of prior distributions made by the Fund to be taxable to shareholders in the year of receipt. |
44 |
• | the likelihood of greater volatility of NAV, market price and dividend rate of the common shares than a comparable portfolio without leverage; |
• | the risk that fluctuations in the interest or dividend rates that the Fund must pay on any leverage will reduce the return to the holders of the common shares; |
• | the effect of leverage in a declining market, which is likely to cause a greater decline in the NAV of the common shares than if the Fund were not leveraged, which may result in a greater decline in the market price of the common shares; |
• | when the Fund uses financial leverage, the management fees payable to the Manager and the Subadvisor will be higher than if the Fund did not use leverage; and |
• | leverage may increase operating costs, which may reduce total return. |
• | If the Fund has a need for cash and the securities deposited in the TOB Issuer are not actively trading due to adverse market conditions; |
• | If the sponsors of TOB Issuers (as a collective group or individually) experience financial hardship and consequently seek to terminate their sponsorship of TOB Issuers; and |
• | If the value of an underlying security deposited in the TOB Issuer declines significantly (to a level below the notional value of the TOB Floaters issued by the TOB Issuer) and if additional collateral has not been posted by the Fund. |
46 |
48 |
MMD | |
Common Share Total Return for (10.00)% Assumed Portfolio Total Return | -15.43% |
Common Share Total Return for (5.00)% Assumed Portfolio Total Return | -7.93% |
Common Share Total Return for 0.00% Assumed Portfolio Total Return | -0.43% |
Common Share Total Return for 5.00% Assumed Portfolio Total Return | 7.08% |
Common Share Total Return for 10.00% Assumed Portfolio Total Return | 14.58% |
50 |
• | Borrowing . In the event that a Fund's “asset coverage” (as defined in the 1940 Act) at any time falls below 300%, the Fund, within three days thereafter (not including Sundays and holidays) or such longer period as the SEC may prescribe by rules and regulations, will reduce the amount of its borrowings to the extent required so that the asset coverage of such borrowings will be at least 300%. |
• | Concentration . Although the 1940 Act does not define what constitutes “concentration” in an industry or group of industries, the SEC and its staff take the position that any fund that invests more than 25% of the value of its assets in a particular industry or group of industries (other than securities issued or guaranteed by the U.S. |
52 |
Name and Year of Birth | Term of Office, Position(s) Held and Length of Service | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |
Yie-Hsin Hung* 1962 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Trustee since 2017 | Senior Vice President of New York Life since joining in 2010, Member of the Executive Management Committee since 2017, Chief Executive Officer, New York Life Investment Management Holdings LLC & New York Life Investment Management LLC since 2015. Senior Managing Director and Co-President of New York Life Investment Management LLC from 2014 to May 2015. Previously held positions of increasing responsibility, including head of NYLIM International, Alternative Growth Businesses, and Institutional investments since joining New York Life in 2010 | 73 | MainStay VP Funds Trust: Trustee since 2017 (31 portfolios). MainStay Funds: Trustee since 2017 (12 funds); and MainStay Funds Trust: Trustee since 2017 (32 funds) |
* | This Trustee is considered to be an “interested person” of the MainStay Group of Funds, MainStay VP Funds Trust and MainStay MacKay DefinedTerm Municipal Opportunities Fund, within the meaning of the 1940 Act because of her affiliation with New York Life Insurance Company, New York Life Investment Management LLC, Candriam Belgium S.A., Candriam Luxembourg S.C.A., IndexIQ Advisors LLC, MacKay Shields LLC, NYL Investors LLC, NYLIFE Securities LLC and/or NYLIFE Distributors LLC, as described in detail above in the column entitled “Principal Occupation(s) During Past Five Years.” |
Name and Year of Birth | Term of Office, Position(s) Held and Length of Service | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |
David H. Chow 1957 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Trustee since 2016 and Audit Committee Financial Expert, Advisory Board Member (June 2015 to December 2015) | Founder and CEO, DanCourt Management, LLC since 1999 | 73 | MainStay VP Funds Trust: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) (31 portfolios); MainStay Funds: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) (12 funds); MainStay Funds Trust: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) (32 funds). Market Vectors Group of Exchange- Traded Funds: Independent Chairman of the Board of Trustees since 2008 and Trustee since 2006 (56 portfolios); and Berea College of Kentucky: Trustee since 2009, Chair of the Investment Committee since 2018 | |
Susan B. Kerley 1951 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Chairman since 2017, Trustee since 2011 and Audit Committee Financial Expert | President, Strategic Management Advisors LLC since 1990 | 73 | MainStay VP Funds Trust: Chairman since 2017 and Trustee since 2007 (31 portfolios)***; MainStay Funds: Chairman since 2017 and Trustee since 2007 (12 funds); MainStay Funds Trust: Chairman since 2017 and Trustee since 1990 (32 funds)**; and Legg Mason Partners Funds: Trustee since 1991 (45 portfolios) | |
Alan R. Latshaw 1951 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Trustee since 2011 and Audit Committee Financial Expert | Retired; Partner, Ernst & Young LLP (2002 to 2003); Partner, Arthur Andersen LLP (1989 to 2002); Consultant to the MainStay Funds Audit and Compliance Committee (2004 to 2006) | 73 | MainStay VP Funds Trust: Trustee and Audit Committee Financial Expert since 2007 (31 portfolios)***; MainStay Funds: Trustee and Audit Committee Financial Expert since 2006 (12 funds); MainStay Funds Trust: Trustee and Audit Committee Financial Expert since 2007 (32 funds)**; and State Farm Associates Funds Trusts: Trustee since 2005 (4 portfolios) | |
Richard H. Nolan, Jr. 1946 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Trustee since 2011 | Managing Director, ICC Capital Management since 2004; President—Shields/Alliance, Alliance Capital Management (1994 to 2004) | 73 | MainStay VP Funds Trust: Trustee since 2006 (31 portfolios)***; and MainStay Funds: Trustee since 2007 (12 funds); MainStay Funds Trust: Trustee since 2007 (32 funds)** |
54 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Name and Year of Birth | Term of Office, Position(s) Held and Length of Service | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |
Jacques P. Perold 1958 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) | Retired; President, Fidelity Management & Research Company (2009 to 2014); Founder, President and Chief Executive Officer, Geode Capital Management, LLC (2001 to 2009) | 73 | MainStay VP Funds Trust: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) (31 portfolios); MainStay Funds: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) (12 funds); MainStay Funds Trust: Trustee since 2016, Advisory Board Member (June 2015 to December 2015) (32 funds); Allstate Corporation: Director since 2015; MSCI Inc.: Director since 2017 and Boston University: Trustee since 2014 | |
Richard S. Trutanic 1952 | MainStay MacKay DefinedTerm Municipal Opportunities Fund: Trustee since 2011 | Chairman and Chief Executive Officer, Somerset & Company (financial advisory firm) since 2004; Managing Director, The Carlyle Group (private investment firm) (2002 to 2004); Senior Managing Director, Partner and Board Member, Groupe Arnault S.A. (private investment firm) (1999 to 2002) | 73 | MainStay VP Funds Trust: Trustee since 2007 (31 portfolios)***; MainStay Funds: Trustee since 1994 (12 funds); and MainStay Funds Trust: Trustee since 2007 (32 funds)** |
** | Includes prior service as a Director/Trustee of certain predecessor entities to MainStay Funds Trust. |
*** | Includes prior service as a Director of MainStay VP Series Fund, Inc., the predecessor to MainStay VP Funds Trust. |
Name and Year of Birth | Position(s) Held and Length of Service | Principal Occupation(s) During Past Five Years | ||
Kirk C. Lehneis 1974 | President, MainStay MacKay DefinedTerm Municipal Opportunities Fund since 2017 | Chief Operating Officer and Senior Managing Director since 2016, New York Life Investment Management LLC and New York Life Investment Management Holdings LLC; Member of the Board of Managers since 2017 and Senior Managing Director since 2018, NYLIFE Distributors LLC; Chairman of the Board and Senior Managing Director, NYLIM Service Company LLC since 2017; Trustee, President and Principal Executive Officer of IndexIQ Trust, IndexIQ ETF Trust and IndexIQ Active ETF Trust since 2018; President, MainStay Funds, MainStay Funds Trust and MainStay VP Funds Trust (since 2017)**; Senior Managing Director, Global Product Development (2015 to 2016); Managing Director, Product Development (2010 to 2015), New York Life Investment Management LLC | ||
Jack R. Benintende 1964 | Treasurer and Principal Financial and Accounting Officer, MainStay MacKay DefinedTerm Municipal Opportunities Fund since 2011 | Managing Director, New York Life Investment Management LLC since 2007; Treasurer and Principal Financial and Accounting Officer, MainStay Funds since 2007, MainStay Funds Trust since 2009 and MainStay VP Funds Trust since 2007**; and Assistant Treasurer, New York Life Investment Management Holdings LLC (2008 to 2012) | ||
Yi-Chia Kuo 1981 | Vice President and Chief Compliance Officer, MainStay MacKay DefinedTerm Municipal Opportunities Fund since January 2020 | Chief Compliance Officer, Index IQ Trust, Index IQ ETF Trust and Index IQ Active ETF Trust since January 2020; Vice President and Chief Compliance Officer, MainStay Funds, MainStay Funds Trust and MainStay VP Funds Trust since January 2020; Director and Associate General Counsel, New York Life Insurance Company (2015 to 2019) | ||
J. Kevin Gao 1967 | Secretary and Chief Legal Officer, MainStay MacKay DefinedTerm Municipal Opportunities Fund since 2011 | Managing Director and Associate General Counsel, New York Life Investment Management LLC since 2010; Secretary and Chief Legal Officer, MainStay Funds, MainStay Funds Trust and MainStay VP Funds Trust since 2010** | ||
Scott T. Harrington 1959 | Vice President— Administration, MainStay MacKay DefinedTerm Municipal Opportunities Fund since 2011 | Managing Director, New York Life Investment Management LLC (including predecessor advisory organizations) since 2000; Member of the Board of Directors, New York Life Trust Company since 2009; Vice President—Administration, MainStay Funds since 2005, MainStay Funds Trust since 2009 and MainStay VP Funds Trust since 2005** |
* | The officers listed above are considered to be “interested persons” of the MainStay Group of Funds, MainStay VP Funds Trust and MainStay MacKay DefinedTerm Municipal Opportunities Fund within the meaning of the 1940 Act because of their affiliation with the MainStay Group of Funds, New York Life Insurance Company and/or its affiliates, including New York Life Investment Management LLC, NYLIM Service Company LLC, NYLIFE Securities LLC and/or NYLIFE Distributors LLC, as described in detail in the column captioned “Principal Occupation(s) During Past Five Years.” Officers are elected annually by the Board. |
** | Includes prior service as an Officer of MainStay VP Series Fund, Inc., the predecessor to MainStay VP Funds Trust. |
56 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Louisville, Kentucky 40233
(855) 456-9683
1741808MS127-21 | MSMHI11-07/21 |
Item 2. | Code of Ethics. |
As of the end of the period covered by this report, the Registrant has adopted a code of ethics (the “Code”) that applies to the Registrant’s principal executive officer (“PEO”) and principal financial officer (“PFO”). A copy of the Code is filed herewith. Schedule II of the Code has been amended to name Kevin M. Bopp as the Compliance Officer. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.
Item 3. | Audit Committee Financial Expert. |
The Board of Trustees (“Board”) has determined that the Registrant has three audit committee financial experts serving on its Audit Committee. The Audit Committee financial experts are Alan R. Latshaw, David H. Chow and Susan B. Kerley. Mr. Latshaw, Mr. Chow and Ms. Kerley are “independent” as defined by Item 3 of Form N-CSR.
Item 4. | Principal Accountant Fees and Services. |
(a) Audit Fees
The aggregate fees billed for the fiscal year ended May 31, 2021 for professional services rendered by PricewaterhouseCoopers LLP (“PwC”) for the audit of the Registrant’s annual financial statements or services that are normally provided by PwC in connection with statutory and regulatory filings or engagements for that fiscal year were $84,400.
The aggregate fees billed for the fiscal year ended May 31, 2020 for professional services rendered by PwC for the audit of the Registrant’s annual financial statements or services that are normally provided by PwC in connection with statutory and regulatory filings or engagements for that fiscal year were $79,600.
(b) Audit-Related Fees
The aggregate fees billed for assurance and related services by PwC that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were: (i) $0 for the fiscal year ended May 31, 2021, and (ii) $0 for the fiscal year ended May 31, 2020.
(c) Tax Fees
The aggregate fees billed for professional services rendered by PwC for tax compliance, tax advice, and tax planning were: (i) $0 during the fiscal year ended May 31, 2021, and (ii) $0 during the fiscal year ended May 31, 2020. These services primarily included preparation of federal, state and local income tax returns and excise tax returns, as well as services relating to excise tax distribution requirements.
(d) All Other Fees
The aggregate fees billed for products and services provided by PwC, other than the services reported in paragraphs (a) through (c) of this Item were: (i) $0 during the fiscal year ended May 31, 2021, and (ii) $0 during the fiscal year ended May 31, 2020.
(e) Pre-Approval Policies and Procedures
(1) | The Registrant’s Audit Committee has adopted pre-approval policies and procedures (the “Procedures”) to govern the Committee’s pre-approval of (i) all audit services and permissible non-audit services to be provided to the Registrant by its independent accountant, and (ii) all permissible non-audit services to be provided by such independent accountant to the Registrant’s investment adviser and to any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant (collectively, “Service Affiliates”) if the services directly relate to the Registrant’s operations and financial reporting. In accordance with the Procedures, the Audit Committee is responsible for the engagement of the independent accountant to certify the Registrant’s financial statements for each fiscal year. With respect to the pre-approval of non-audit services provided to the Registrant and its Service Affiliates, the Procedures provide that the Audit Committee may annually pre-approve a list of the types of services that may be provided to the Registrant or its Service Affiliates, or the Audit Committee may pre-approve such services on a project-by-project basis as they arise. Unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent accountant. The Procedures also permit the Audit Committee to delegate authority to one or more of its members to pre-approve any proposed non-audit services that have not been previously pre-approved by the Audit Committee, subject to the ratification by the full Audit Committee no later than its next scheduled meeting. To date, the Audit Committee has not delegated such authority. |
(2) | With respect to the services described in paragraphs (b) through (d) of this Item 4, no amount was approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) There were no hours expended on PwC’s engagement to audit the Registrant’s financial statements for the most recent fiscal year was attributable to work performed by persons other than PwC’s full-time, permanent employees.
(g) All non-audit fees billed by PwC for services rendered to the Registrant for the fiscal year ended May 31, 2021 are disclosed in 4(b)-(d) above.
The aggregate non-audit fees billed by PwC for services rendered to the Registrant’s investment adviser (not including any subadvisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant were approximately: (i) $10.4 million for the fiscal year ended May 31, 2021, and (ii) $10.4 million for the fiscal year ended May 31, 2020.
(h) The Registrant’s Audit Committee has determined that the non-audit services rendered by PwC for the fiscal year ended May 31, 2021 to the Registrant’s investment adviser and any entity controlling, controlled by, or under common control with the Registrant’s investment adviser that provides ongoing services to the Registrant that were not required to be pre-approved by the Audit Committee because they did not relate directly to the operations and financial reporting of the Registrant were compatible with maintaining the respective independence of PwC during the relevant time period.
Item 5. | Audit Committee of Listed Registrants. |
(a) The Board has a separately-designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act (“Exchange Act”) (15 U.S.C. 78c(a)(58)(A)). The members of the Audit Committee are Alan R. Latshaw, David H. Chow and Susan B. Kerley.
(b) Not applicable.
Item 6. | Investments. |
(a) | The Schedule of Investments is included as part of Item 1 of this report. |
(b) | Not applicable. |
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
It is the policy of the Registrant that proxies received by the Registrant are voted in the best interests of the Registrant’s shareholders. The Board has adopted Proxy Voting Policies and Procedures for the Registrant that delegate all responsibility for voting proxies received relating to the Registrant’s portfolio securities to New York Life Investment Management LLC (“New York Life Investments” or “Manager”), subject to the oversight of the Board. The Manager has adopted its own Proxy Voting Policies and Procedures in order to assure that proxies voted on behalf of the Registrant are voted in the best interests of the Registrant and its shareholders. The Manager has delegated proxy voting authority to MacKay Shields LLC (“MacKay Shields” or “Sub-Advisor”); provided that, as specified in the Manager’s Proxy Voting Policies and Procedures, the Sub-Advisor either (1) follows the Manager’s Proxy Voting Policy and the Registrant’s Procedures; or (2) has demonstrated that its proxy voting policies and procedures are consistent with the Manager’s Proxy Voting Policies and Procedures or are otherwise implemented in the best interests of the Manager’s clients and appear to comply with governing regulations. The Registrant may revoke all or part of this delegation (to the Manager and/or Sub-Advisor as applicable) at any time by a vote of the Board.
Conflicts of Interest. When a proxy presents a conflict of interest, such as when the Manager has actual knowledge of a material business arrangement between a particular proxy issuer or closely affiliated entity and the Manager or an affiliated entity of the Manager, both the Registrant’s and the Manager’s proxy voting policies and procedures mandate that the Manager follow an alternative voting procedure rather than voting proxies in its sole discretion. In these cases, the Manager may: (1) cause the proxies to be voted in accordance with the recommendations of an independent service provider; (2) notify the Board or a designated committee of the Manager, or a representative of either, and seek a waiver of the conflict to permit the Manager to vote the proxies as it deems appropriate and in the best interest of Registrant shareholders, under its usual policy; or (3) forward the proxies to the Board, or a designated committee of the Manager, so that the Board or the committee may vote the proxies itself. In the case of proxies received in connection with a fund of funds structure, whereby the Manager, on behalf of the Registrant, receives proxies in its capacity as a shareholder in an underlying fund, the Manager may vote in accordance with the recommendations of an independent service provider who has been retained to assist in voting proxies or echo the vote of the other shareholders in those underlying funds. As part of its delegation of proxy voting responsibility to the Manager, the Registrant also delegated to the Manager responsibility for resolving conflicts of interest based on the use of acceptable alternative voting procedures, as described above. If the Manager chooses to override a voting recommendation made by Institutional Shareholder Services Inc. (‘‘ISS’’), the Manager’s compliance department will review the override prior to voting to determine the existence of any potential conflicts of interest. If the compliance department determines a material conflict
may exist, the issue is referred to the Manager’s Proxy Voting Committee who will consider the facts and circumstances and determine whether to allow the override or take other action, such as the alternative voting procedures just mentioned.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
(a)(1) The Registrant’s portfolio is managed on a team basis. The following persons are primarily responsible for the day-to-day management of the registrant’s portfolio.
Michael Denlinger, CFA. Mr. Denlinger joined MacKay Shields in 2019 and is currently a Director. He has managed the Registrant’s portfolio since June 1, 2021. He has also been a portfolio manager of the MainStay MacKay California Tax Free Opportunities Fund, MainStay MacKay Tax Free Bond Fund and MainStay MacKay U.S. Infrastructure Bond Fund since February 2021. Prior to joining MacKay Shields, Mr. Denlinger was an institutional municipal credit trader at Bank of America Merrill Lynch with a primary focus on taxable and healthcare securities. Prior to trading credit, he was a high grade municipal trader. Mr. Denlinger earned a Bachelor’s degree in Economics from Johns Hopkins University in 2014. Mr. Denlinger is a Chartered Financial Analyst® (“CFA®”) charterholder and has been in the financial services industry since 2014.
Robert DiMella, CFA. Mr. DiMella is an Executive Managing Director of MacKay Shields. He has managed the Registrant’s portfolio since inception. Mr. DiMella has also managed the MainStay MacKay Tax Free Bond Fund since 2009, the MainStay High Yield Municipal Fund since 2010, the MainStay MacKay New York Tax Free Opportunities Fund since 2012, the MainStay MacKay California Tax Free Opportunities Fund since 2013 and the MainStay MacKay Short Term Municipal Fund since June 2015. Previously, he co-founded Mariner Municipal Managers LLC (2007 to 2009). Prior to BlackRock’s merger with Merrill Lynch Investment Managers (“MLIM”), he served as a Senior Portfolio Manager and Managing Director of the Municipal Products Group. Mr. DiMella earned his Master’s degree at Rutgers University Business School and a Bachelors Degree at the University of Connecticut. He is a CFA® charterholder.
John Lawlor. Mr. Lawlor joined MacKay Shields in 2016 as a Director. He has managed the Registrant’s portfolio and the MainStay MacKay Infrastructure Bond Fund since 2019. Before joining the firm, he was Vice President Equity Sales at Deutsche Bank and was previously at Bank of America Merrill Lynch. From 1997-2011, he was a senior trader on the floor of the New York Stock Exchange. Mr. Lawlor has a broad and diverse set of skills in sales, trading, and electronic trading platforms. He earned a Bachelor’s degree in Finance from Lehigh University and has been in the financial services industry since 1997.
John Loffredo, CFA. Mr. Loffredo is an Executive Managing Director of MacKay Shields. He has managed the Registrant’s portfolio since inception. Mr. Loffredo has also managed the MainStay MacKay Tax Free Bond Fund since 2009, the MainStay MacKay High Yield Municipal Bond Fund since 2010, the MainStay MacKay New York Tax Free Opportunities Fund since 2012, the MainStay MacKay California Tax Free Opportunities Fund since 2013 and the MainStay MacKay Short Term Municipal Fund since June 2015. He has been a municipal portfolio manager and/or municipal analyst on Wall Street since 1990, with a broad range of portfolio management and analytic experience in the municipal markets. He previously co-founded Mariner Municipal Managers LLC (2007 to 2009). Prior to BlackRock’s merger with MLIM, he served as Chief Investment Officer of the Municipal Products Group of MLIM. Mr. Loffredo graduated cum laude with an MBA from Utah State University where he was a Harry S. Truman Scholar. He also has a Certificate of Public Management from Boston University. He is a CFA® charterholder.
Michael Petty. Mr. Petty is a Senior Managing Director and portfolio manager for MacKay Shields. He has managed the Registrant’s portfolio since inception. Mr. Petty has also managed the MainStay MacKay High Yield Municipal Bond Fund since 2010, the MainStay MacKay Tax Free Bond Fund since 2011, the MainStay MacKay New York Tax Free Opportunities Fund since 2012, the MainStay MacKay California Tax Free Opportunities Fund since 2013 and the MainStay MacKay Short Term Municipal Fund since June 2015. Mr. Petty joined MacKay Shields in July 2009. Before joining the Firm he was a Portfolio Manager for Mariner Municipal Managers. He has been a portfolio manager on Wall Street since 1992, and has worked in the municipal products market since 1985. Mr. Petty has a broad array of trading, portfolio management, and sales experience. Prior to joining Mariner Municipal Managers, he was a Senior Portfolio Manager at Dreyfus Corporation from 1997 to 2009. From 1992 to 1997, he served as a Portfolio Manager for Merrill Lynch Investment Managers. Mr. Petty graduated from Hobart College with a B.S. in Mathematics and Economics.
Scott Sprauer. Mr. Sprauer is a Managing Director. He joined MacKay Shields in 2009 as a Portfolio Manager in the Municipal Bond Division. He has managed the Registrant’s portfolio since inception. He has also managed the MainStay MacKay New York Tax Free Opportunities Fund since 2012, the MainStay MacKay California Tax Free Opportunities Fund since 2013, the MainStay MacKay High Yield Municipal Bond Fund and MainStay MacKay Tax Free Bond Fund since February 2014 and the MainStay MacKay Short Term Municipal Fund since June 2015. Prior to joining MacKay Shields, he was the Head Trader, Fixed Income at Financial Guaranty Insurance Company from 2006 to 2009. He has a BSBA from Villanova University, and has been in the investment management industry since 1991.
David Dowden. Mr. Dowden is a Managing Director. He joined MacKay Shields in 2009 as a Portfolio Manager in the Municipal Bond Division. He has managed the Registrant’s portfolio since inception. He has managed the MainStay MacKay New York Tax Free Opportunities Fund since 2012, the MainStay MacKay California Tax Free Opportunities Fund since 2013, the MainStay MacKay High Yield Municipal Bond Fund and MainStay MacKay Tax Free Bond Fund since February 2014 and the MainStay MacKay Short Term Municipal Fund since June 2015. Prior to joining MacKay Shields, he was the Chief Investment Officer at Financial Guaranty Insurance Company from 2006 to 2009. He has a BA from Brown University and an MBA from Columbia University. He has been in the investment management industry since 1989.
(a)(2) Other Accounts Managed by Portfolio Managers or Management Team Member and Potential Conflicts of Interest as of May 31, 2021.
NUMBER OF OTHER ACCOUNTS MANAGED AND ASSETS BY ACCOUNT TYPE | NUMBER OF ACCOUNTS AND ASSETS MANAGED FOR WHICH THE ADVISORY FEE IS BASED ON PERFORMANCE | |||||||||||
PORTFOLIO MANAGER | REGISTERED INVESTMENT COMPANY | OTHER POOLED INVESTMENT VEHICLES | OTHER ACCOUNTS | REGISTERED INVESTMENT COMPANY | OTHER POOLED | OTHER ACCOUNTS | ||||||
Michael Denlinger | 9 RICs $16,697,860,780 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 | ||||||
Robert DiMella | 16 RICs $32,167,395,491 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 | ||||||
David Dowden | 16 RICs $32,167,395,491 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 | ||||||
John Lawlor | 9 RICs $6,658,551,985 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 | ||||||
John Loffredo | 15 RICs $29,774,657,859 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 |
NUMBER OF OTHER ACCOUNTS MANAGED AND ASSETS BY ACCOUNT TYPE | NUMBER OF ACCOUNTS AND ASSETS MANAGED FOR WHICH THE ADVISORY FEE IS BASED ON PERFORMANCE | |||||||||||
PORTFOLIO MANAGER | REGISTERED INVESTMENT COMPANY | OTHER POOLED INVESTMENT VEHICLES | OTHER ACCOUNTS | REGISTERED INVESTMENT COMPANY | OTHER POOLED | OTHER ACCOUNTS | ||||||
Michael Petty | 15 RICs $29,774,657,859 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 | ||||||
Scott Sprauer | 15 RICs $29,774,657,859 | 8 Accounts $11,435,839,076 | 75 Accounts $27,950,874,635 | 0 | 2 Accounts $773,687,981 | 2 Accounts $564,221,521 |
Potential Conflicts of Interest
MacKay Shields’ does not favor the interest of one client over another and it has adopted a Trade Allocation Policy designed so that all client accounts will be treated fairly and no one client account will receive, over time, preferential treatment over another. MacKay Shields maintains independently managed investment strategy teams, each of which conducts its own research and operates autonomously, with its own portfolio managers and traders, and typically manages multiple client accounts, including separately managed accounts, registered and non-registered investment companies, and other types of investment vehicles. Orders within an investment team will generally be aggregated or bunched to reduce the costs of the transactions. However, orders are typically not aggregated across investment teams, even though there may be orders by separate investment teams to execute the same instrument on the same trading day.
MacKay Shields’ investment teams may compete with each other for the same investment opportunities and/or take positions that are counter to one another. As such, MacKay Shields may engage in transactions and investment strategies for certain clients that differ from the transactions and strategies executed on behalf of other clients. MacKay Shields’ clients have held, and it is expected that in the future they will at times hold, different segments of the capital structure of the same issuer that have different priorities. These investments create conflicts of interest, particularly because MacKay Shields can take certain actions for clients that can have an adverse effect on other clients. For example, certain MacKay Shields clients may hold instruments that are senior or subordinated rights relative to instruments of the same issuer held by other clients, and any action that the portfolio managers were to take on behalf of the issuer’s senior instrument, for instance, could have an adverse effect on the issuer’s junior instrument held by other clients, and vice versa, particularly in distressed or default situations. To the extent MacKay Shields or any of its employees were to serve on a formal or informal creditor or similar committee on behalf of a client, such conflicts of interest may be exacerbated. Additionally, MacKay Shields may make investments for certain clients that they conclude are inappropriate for other clients. For instance, clients within one investment strategy may take short positions in the debt or equity instruments of certain issuers, while at the same time those instruments or other instruments of that issuer are acquired or held long by clients in another investment strategy, or within the same strategy, and vice versa.
MacKay Shields offers many of its investment strategies through a variety of investment products, including, without limitation, separately managed accounts, private funds, CLOs, mutual funds, and ETFs. Given the different structures of these products, certain clients are subject to terms and conditions that are materially different or more advantageous than available under different products. For example, mutual funds offer investors the ability to redeem from the fund daily, while private funds offer less frequent liquidity. As a result of these differing liquidity and other terms, MacKay Shields may acquire and/or dispose of investments for a client either prior to or subsequent to the acquisition and/or disposition of the same or similar securities held by another client. In certain circumstances, purchases or sales of securities by one client could adversely affect the value of the
same securities held in another client’s portfolio. In addition, MacKay Shields has caused, and expects in the future to cause, certain clients to invest in opportunities with different levels of concentration or on different terms than that to which other clients invest in the same securities.
These differences in terms and concentration could lead to different investment outcomes among clients investing in the same securities. MacKay Shields seeks to tailor its investment advisory services to meet each client’s investment objective, constraints and investment guidelines, and MacKay Shields’ judgments with respect to a particular client will at times differ from its judgments for other clients, even when such clients pursue similar investment strategies.
MacKay Shields permits its personnel, including portfolio managers and other investment personnel, to engage in personal securities transactions, including buying or selling securities that it has recommended to, or purchased or sold on behalf of, clients. These transactions raise potential conflicts of interests, including when they involve securities owned or considered for purchase or sale by or on behalf of a client account. MacKay Shields has adopted NYLIM’s Code of Ethics to assist and guide the portfolio managers and other investment personnel when faced with a conflict.
MacKay Shields’ services to each client are not exclusive. The nature of managing accounts for multiple clients creates a conflict of interest with regard to time available to serve clients. MacKay Shields and its portfolio managers will devote as much of their time to the activities of each client as they deem necessary and appropriate. Although MacKay Shields strives to identify and mitigate all conflicts of interest, and seeks to treat its clients in a fair and reasonable manner consistent with its fiduciary duties, there may be times when conflicts of interest are not resolved in a manner favorable to a specific client.
Additional material conflicts of interests are presented within Part 2A of MacKay Shields’ Form ADV.
(a)(3) | Portfolio Managers or Management Team Members’ Compensation Structure |
Salaries are set by reference to a range of factors, taking account of seniority and responsibilities and the market rate of pay for the relevant position. Annual salaries are set at competitive levels to attract and maintain the best professional talent. Variable or incentive compensation, both cash bonus and deferred awards, are a significant component of total compensation for portfolio managers at MacKay Shields. Incentive compensation received by portfolio managers is generally based on both quantitative and qualitative factors. The quantitative factors may include: (i) investment performance; (ii) assets under management; (iii) revenues and profitability; and (iv) industry benchmarks. The qualitative factors may include, among others, leadership, adherence to the firm’s policies and procedures, ESG contributions, and contribution to the firm’s goals and objectives. Deferred awards are provided to attract, retain, motivate and reward key personnel. As such, MacKay Shields maintains a phantom equity plan and awards vest and pay out after several years. Thus, portfolio managers share in the results and success of the firm with the receipt of an award from the phantom equity plan. This approach instills a strong sense of commitment towards the overall success of the firm.
MacKay Shields maintains an employee benefit program, including health and non-health insurance, and a 401(k) defined contribution plan for all of its employees regardless of their job title, responsibilities or seniority.
(a)(4) | Disclosure of Securities Ownership |
The following table states, as of May 31, 2021, the dollar range of fund securities beneficially owned by each Portfolio Manager in the Registrant ($1-$10,000, $10,001-$50,000, $50,001-$100,000, $100,001- $500,000, $500,001-$1,000,000, or over $1,000,000).
PORTFOLIO MANAGER | RANGE OF OWNERSHIP | |
Michael Denlinger | None | |
Robert DiMella | None | |
David Dowden | None | |
John Lawlor | None | |
John Loffredo | None | |
Michael Petty | $10,001-$50,000 | |
Scott Sprauer | None |
(b) | Changes in Portfolio Management |
There have been two additions to the portfolio management team since inception on June 26, 2012. John Lawlor was added to the portfolio management team as of February 28, 2019. Michael Denlinger was added to the portfolio management team as of June 1, 2021
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable
Item 10. | Submission of Matters to a Vote of Security Holders. |
Since the Registrant’s last response to this Item, there have been no material changes to the procedures by which shareholders may recommend nominees to the Board.
Item 11. | Controls and Procedures. |
(a) Based on an evaluation of the Registrant’s Disclosure Controls and Procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (“1940 Act”) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act) (“Disclosure Controls”), as of a date within 90 days prior to the filing date (“Filing Date”) of this Form N-CSR (“Report”), the Registrant’s principal executive officer and principal financial officer have concluded that the Disclosure Controls are reasonably designed to ensure that information required to be disclosed by the Registrant in the Report is recorded, processed, summarized and reported by the Filing Date, including ensuring that information required to be disclosed in the Report is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d)) under the Investment Company Act of 1940 that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed End Management Investment Companies. |
Not applicable
Item 13. | Exhibits. |
(a)(1) Code of Ethics
(a)(3) Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAINSTAY MACKAY DEFINEDTERM MUNICIPAL OPPORTUNITIES FUND
By: | /s/Kirk C. Lehneis | |
Kirk C. Lehneis | ||
President and Principal Executive Officer | ||
Date: | August 6, 2021 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Kirk C. Lehneis | |
Kirk C. Lehneis | ||
President and Principal Executive Officer | ||
Date: | August 6, 2021 | |
By: | /s/ Jack R. Benintende | |
Jack R. Benintende | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: August 6, 2021 |
EXHIBIT INDEX