MainStay Investments Introduces Its First NYSE-listed Closed-end Fund
MainStay DefinedTerm Municipal Opportunities Fund Raises $564 Million
New York, June 27, 2012 – MainStay Investments, a New York Life company, today announced that the MainStay DefinedTerm Municipal Opportunities Fund (the "Fund") raised $564 million in its initial public offering, (assuming full exercise of the underwriters' overallotment, which may not occur), representing the largest raise-up of any tax-exempt closed-end municipal bond fund since 2003.1 The Fund, which begins trading today on the New York Stock Exchange under symbol "MMD," seeks to provide investors current income as a primary objective and total return as a secondary objective. While the Fund seeks to provide income exempt from regular U.S. Federal income tax, such income may be includable for purposes of the Federal alternative minimum tax.
The Fund, managed by the MacKay Municipal ManagersTM team of MacKay Shields LLC led by Robert DiMella and John Loffredo, is MainStay's first-ever NYSE-listed closed-end fund and the first tax-exempt municipal bond closed-end fund to be launched since September 2009.
"We believe that now is an ideal time for us to bring a new municipal closed-end fund to market," said Stephen Fisher, president of the MainStay Funds. "Investors recognized the value of an opportunistic municipal bond strategy providing attractive tax-exempt income in the current economic climate. Bob and John have managed municipal credit and portfolio strategies together for 19 years and are supported by dedicated research and risk management personnel with an average of 20 years of experience."
"A closed-end fund is ideally suited for the asset class given the importance of active management and illiquidity of many municipal bonds," said Robert DiMella. "As the name implies, the Fund will be opportunistically managed, blending together our investment team's experience managing investment grade and high yield municipal bond portfolios. We will employ a range of leverage strategies seeking to enhance income to investors."
The underwriting syndicate was led by BofA Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Raymond James & Associates, Inc.
1. Morningstar Traded Fund CenterTM – IPO Gross Proceeds for the period ending May 31, 2012.
About MainStay Investments
With over $60 billion in mutual fund assets under management, as of March 31, 2012, MainStay Investments is the mutual fund distribution arm of New York Life. MainStay provides financial advisors access to a powerful mix of autonomous, institutional investment managers, delivered by people who understand the needs of today's financial advisor. MainStay Funds has been designated a top three fund family* by Barron's for the 10-year time period for three consecutive years (as of 12/31/11, out of 45 mutual fund families). As an indirect subsidiary of New York Life Insurance Company, a Fortune 100 company founded in 1845, MainStay Investments is owned by the largest mutual life insurance company in the United States** and one of the largest life insurers in the world.
About MacKay Shields LLC
MacKay Shields LLC ("MacKay") is a multi product investment management firm with approximately $64.8 billion in assets under management as of March 31, 2012. MacKay serves as the Fund's investment sub-advisor and is an indirect wholly-owned subsidiary of New York Life Insurance Company. MacKay manages a number of fixed income strategies for institutional clients and retail mutual funds, including: high yield, high yield active core, core plus, global fixed income, municipal and investment grade, as well as convertible strategies.
New York Life
The Fund is a recently organized, diversified, closed-end management company with no operating history. Shares of closed-end investment companies, such as the Fund, typically trade on a national stock exchange, and these shares frequently trade at a discount to their net asset value, which may increase investors' risk of loss.
Investing in the Fund's shares involves certain risks. You could lose some or all of your investment. Please carefully review the section entitled "Risks" in the Fund's prospectus.
It is expected that the Fund's distributions will generally be treated as tax-exempt income for purposes of regular U.S. Federal income tax. A portion of the Fund's distributions may be (i) subject to U.S. Federal income tax and such distributions will generally be subject to state and local taxes, and (ii) includable in taxable income for purposes of the Federal alternative minimum tax.
For information on the Fund please visit www.mainstayinvestments.com/mmd or call the Fund's shareholder servicing agent at 855-456-9683.
MainStay Investments is a registered 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. The MainStay Funds are managed by New York Life Investment Management LLC and distributed through NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, NJ 07054, a wholly owned subsidiary of New York Life Insurance Company. NYLIFE Distributors LLC is a Member of FINRA/SIPC.
How Barron's Ranks the Fund Families: 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), at least two taxable-bond funds, and one tax-exempt offering. Each fund's returns are adjusted for 12b-1 fees. Fund loads, or sales charges, aren't included in the calculation of returns, either. Each fund's return is measured against those of all funds in its Lipper category, such as, say, small-cap value. That leads to a percentile ranking, with 100 the highest and 1 the lowest, which is then weighted by asset size, relative to the fund family's other assets in its general classification, world equity, for instance. If a family's biggest funds do well, that boosts its overall ranking. Poor performance in a big fund would have the opposite effect. Finally, the score is multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. The category weightings for the one-year results: general equity, 38.04%; world equity, 12.77%; mixed equity, 17.36%; taxable bonds, 27.43%; and tax-exempt bonds, 4.40%. The category weightings for the five-year results: general equity, 40.12%; world equity, 12.32%; mixed equity, 17.30%; taxable bonds, 25.56%; and tax-exempt bonds, 4.70%. The category weightings for the 10-year results: general equity, 41.89%; world equity, 12.30%; mixed equity, 14.44%; taxable bonds, 25.99%; and tax-exempt bonds, 5.38%. The scoring: Say a company has a fund in the general U.S. equity category with $50 million in assets that accounts for half of the company's assets in that category. Its ranking is the 75th percentile. The first calculation would be 75 x 0.50, which comes to 37.5. That score is then multiplied by 38.04%, general equity's overall weighting in Lipper's universe. So it would be 37.5 x 0.3804, which totals 14.265. Similar calculations are done for each fund in the study. Then, all the numbers are added up for a total score. The fund family with the highest score wins, both for every category and overall. The same process is repeated for the five- and 10-year rankings based on their weightings. Ranking data is from Lipper. Source: Barron's, 2/6/12. Overall, MainStay Funds ranked seven for the one-year period, eight for the five-year period, and three for the 10-year period ended December 31, 2011, out of 58, 53, and 45 fund families, respectively. NYLIM