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 5 Municipal Market Insight

2013 – The Year of Income: Mid-Year Review
Bob DiMella and John Loffredo, Portfolio Managers of MainStay's tax-free bond funds, update their insights into the municipal bond market.

Before You Invest
A portion of the Funds' income may be subject to state and local taxes or the alternative minimum tax.

The Funds may invest in derivatives, which may increase the volatility of the Funds' net asset value and may result in a loss to the Fund. Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner. The Funds may experience a portfolio turnover rate of over 100% and may generate short-term capital gains which are taxable.

High-yield securities (commonly referred to as “junk bonds”) are generally considered speculative because they present a greater risk of loss than higher-quality debt securities and may be subject to greater price volatility. High-yield municipal bonds may be subject to increased liquidity risk as compared to other high-yield debt securities.

Treasury securities, when held to maturity, are backed by the full faith and credit of the United States government as to timely payment of principal and interest. Interest income on these securities is exempt from state and local taxes. Bond ratings are evaluations of a bond issuer's financial strength, or its ability to pay a bond's principal and interest as agreed upon. Ratings are expressed as letters ranging from 'AAA', which is the highest grade, to 'C' ("junk"), which is the lowest grade.

The information contained on the video reflects, as of the date hereof, the views of MacKay Municipal Managers. No representation of warranty is made concerning the accuracy of any data compiled herein. In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. The views expressed herein may change at any time subsequent to the date of issue hereof. These materials are provided for informational purposes only.

Past performance is not a guarantee of future results.

Investment objectives may not be met as the investment options are subject to market risk and will fluctuate in value. The use of leverage will magnify the Fund’s investment, market, and certain other risks.

This material contains the opinions of the MacKay Municipal Managers'™ team of MacKay Shields LLC but not necessarily those of MacKay Shields LLC. The opinions expressed herein are subject to change without notice. This material is distributed for informational purposes only, and is not intended to constitute the giving of advice or the making of a recommendation. The investments or strategies presented are not appropriate for every investor and do not take into account the investment objectives or financial needs of particular investors. An investor should review with its financial advisors the terms and conditions and risks involved with specific products or services and consider this information in the context of its personal risk tolerance and investment goals. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Any forward looking statements speak only as of the date they are made, and MacKay Shields LLC assumes no duty and does not undertake to update forward looking statements. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Historical evidence does not guarantee future results. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of MacKay Shields LLC.

Definitions
A yield curve is graphic representation that displays the relationship between yields and maturity dates for a set of similar bonds, at a given point in time. For example, the U.S. dollar interest rates paid on U.S. Treasury securities for various maturities, such as short-term and long-term, are commonly plotted on a graph called a "yield curve."

Credit rating is a published ranking, based on detailed financial analysis by a credit bureau, of one's financial history, specifically as it relates to one's ability to meet debt obligations. The highest rating is usually AAA, and the lowest is D.

Credit spreads is the spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating.

Duration is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. The bigger the duration number, the greater the interest-rate risk or reward for bond prices.

All mutual funds are subject to market risk and will fluctuate in value.

Please call 800-MAINSTAY (624-6782) for a prospectus or summary prospectus. Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus or summary prospectus contains this and other information about the investment company. Please read the prospectus or summary prospectus carefully before investing.

New York Life Investments engages the services of MacKay Shields, LLC an affiliated, registered adviser, to subadvise the Funds. MacKay Shields LLC is an affiliate of New York Life Investment Management LLC. MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. Securities distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, New Jersey 07054.

To qualify for the Lipper/Barron's Fund Survey, a fund family must have at least three funds in Lipper's general U.S.-stock category, one in world equity (which combines global and international funds), one mixed-equity fund (which holds stocks and bonds), two taxable-bond funds, and one tax-exempt fund. Fund loads and 12b-1 fees aren't included in the calculation of returns because the aim is to measure the manager's skill. Each fund's return is measured against all funds in its Lipper category, resulting in a percentile ranking which is then weighted by asset size relative to the fund family's other assets in its general classifications. Finally, the score is multiplied by the general classification weightings as determined by the entire Lipper universe of funds.

Source: Barron's, 2/9/13. Overall, MainStay Funds ranked number 56 for the one-year period, 20 for the five-year period, and 1 for the 10-year period ended December 31, 2012, out of 62, 53, and 46 fund families, respectively. MainStay ranked number three for the 10-year period in 2009, 2010, and 2011 from among 48, 46, and 45 fund families, respectively. MainStay ranked number six from among 48 fund families for the 10-year period in 2008. MainStay ranked number five in the tax-exempt bond category out of 62 fund families for 2012. Past performance is no guarantee of future results, which will vary. For the most recent MainStay Funds performance, please visit our web site at mainstayinvestments.com. All mutual funds are subject to market risk and will fluctuate in value.

Securities distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, NJ 07054.

NYLIM-30658