Before you invest
All mutual funds are subject to market risk, including possible loss of principal. Before considering an investment in the Funds, you should understand that you could lose money. Securities purchased by the Funds that are liquid at the time of purchase may subsequently become illiquid due to, among other things, events relating to the issuer of the securities, market events, economic conditions, investor perceptions, or lack of market participants. The lack of an active trading market may make it difficult to obtain an accurate price for a security. As a result, an investor could pay more than the market value when buying Fund shares or receive less than the market value when selling Fund shares.
The Funds are non-diversified, open-end management investment companies under the Investment Company Act of 1940, as amended (the “1940 Act”). Accordingly, the Funds may invest a greater portion of its assets in a more limited number of issuers than a diversified fund. There are currently approximately 120 publicly traded MLPs. The Funds will select its investments in MLPs from this small pool of issuers together with securities issued by any newly public MLPs, and may invest in securities of private MLPs, affiliates of MLPs, and non-MLP issuers, consistent with its investment objective and policies. An investment in the Funds may present greater risk to an investor than an investment in a diversified portfolio because changes in the financial condition or market assessment of a single issuer may cause greater fluctuations in the value of the Funds’ shares. The investment strategies, practices and risk analysis used by the Subadvisor may not produce the desired results.
MainStay Cushing MLP Premier Fund: MLPs and Other Natural Resources Sector Companies’ Risks: Under normal circumstances, the Fund concentrates its investments in the natural resources sector, with an emphasis on securities issued by MLPs. MLPs and other natural resources sector companies are subject to certain risks, including, but not limited to, the following:
MainStay Cushing Renaissance Advantage Fund and MainStay Cushing Energy Income Fund – Concentration Risk: The Funds’ investments will be concentrated in issuers in the energy sector. Because the Funds will be concentrated in the energy sector, they may be subject to more risks than if they were more broadly diversified over numerous industries and sectors of the economy.
MainStay Cushing Energy Income Fund and MainStay Cushing MLP Premier Fund: Holders of MLP units are subject to certain risks inherent in the structure of MLPs, including (i) tax risks, (ii) the limited ability to elect or remove management or the general partner or managing member, (iii) limited voting rights, except with respect to extraordinary transactions, and (iv) conflicts of interest between the general partner or managing member and its affiliates, on the one hand, and the limited partners or members, on the other hand, including those arising from incentive distribution payments or corporate opportunities.
The investment strategy of investing primarily in MLPs and being treated as a regular corporation, or “C” corporation, rather than electing to be treated as a regulated investment company for U.S. federal income tax purposes, is a relatively new investment strategy for open-end registered investment companies, such as the Funds. This strategy involves complicated and, in some cases, unsettled accounting, tax, net asset, and share valuation aspects that cause MainStay Cushing Energy Income Fund and MainStay Cushing MLP Premier Fund to differ significantly from most other open-end registered investment companies. This may result in unexpected and potentially significant accounting, tax, and valuation consequences for the Funds and for their shareholders. In addition, accounting, tax, and valuation practices in this area are still developing, and there may not always be a clear consensus among industry participants as to the most appropriate approach, which may result in changes over time in the practices applied by the Funds, which, in turn, could have material adverse consequences on the Funds and their shareholders.
MainStay Cushing Renaissance Advantage Fund: Small- and mid-cap stocks are often more volatile and less liquid than large-cap stocks. Smaller companies generally face higher risks due to their limited product lines, markets, and financial resources.
MainStay Cushing Energy Income Fund: Unlike U.S. royalty trusts, Canadian royalty trusts and exploration and production companies may engage in the acquisition, development, and production of natural gas and crude oil to replace depleting reserves. They may have employees, issue new shares, borrow money, acquire additional properties, and may manage the resources themselves. As a result, Canadian royalty trusts and Canadian exploration and production companies are exposed to commodity risk and production and reserve risks, as well as operating risk.
Alpha measures a fund's risk-adjusted performance and is expressed as an annualized percentage. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%.
E&P: Exploration & Production
ETF: Exchange-Traded Fund is a security that tracks an index, a commodity, or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.
ETN: Exchange-Traded Note is a type of unsecured, unsubordinated debt security that differs from other types of bonds and notes because ETN returns are based upon the performance of a market index minus applicable fees. No period coupon payments are distributed and no principal protections exists.
Fracking is a slang term for hydraulic fracturing, the procedure of creating fractures in rocks and rock formations by injecting fluid into cracks to force them to further open. The larger fissures allow more oil and gas to flow out of the formation and into the wellbore, from where it can be extracted.
LNG: Liquid natural gas
Marsellus is a rock formation long known to be a source rock for many conventional oil and gas reservoirs in the Appalachian basin.
MCF: An abbreviation denoting a thousand cubic feet of natural gas. A natural gas well that produces 400 Mcf of gas per day operates with a daily production rate of 400,000. A single Mcf is equal to approximately 1,000,000 Btu (British thermal units) of energy. The "M" in MCF comes from the ancient Roman letter M, which stood for one thousand. One million cubic feet is instead denoted as MMcf.
MLPs: Master Limited Partnerships. With MLPs, investors buy units of a partnership rather than shares of stock and they are referred to as unitholders rather than shareholders. MLP units are traded like shares of a traditional corporation and pay cash distributions similar to dividends of a corporation. However, MLPs pay out the majority of distributable cash flow to unitholders, whereas a corporation typically pays out a relatively small portion of its cash flow to shareholders. Congress created today’s MLP structure in the 1980s to encourage investment in U.S. natural resources and energy infrastructure. There are strict requirements governing which types of companies may qualify to be a MLP.
REIT: Real Estate Investment Trust is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
UBTI: Unrelated Business Taxable Income is income regularly generated by a tax-exempt entity by means of taxable activities. This income is not related to the main function of the entity, but is needed to generate a small portion of income.
As of March 31, 2014, the top 10 holdings of MainStay Cushing Renaissance Advantage Fund were: United Rentals Inc., (4.23% of net assets); Trinity Industries, Inc.(3.65%); Kirby Corp. (2.69%); Swift Transportation Co. (2.58%); Quanta Services, Inc. (2.56%); Westlake Chemical Corp. (2.51%); Phillips 66 (2.48%); LyondellBasell Industries (2.43%); Navigator Holdings, Ltd. (2.27%); Tesoro Corporation (2.21%).
As of March 31, 2014, the top 10 holdings of MainStay Cushing MLP Premier Fund were: Energy Transfer Equity LP (5.43% of net assets); Access Midstream Partners LP (5.07%); NGL Energy Partners LP (4.40%); Oneok Inc. (4.35%); Targa Resources Corp. (4.08%); Energy Transfer Partners LP (4.05%); Enterprise Products Partners LP (4.04%); Williams Companies, Inc. (3.93%); Genesis Energy LP (3.81%); Kinder Morgan Management, LLC (3.54%).
As of March 31, 2014, the top 10 holdings of MainStay Cushing Energy Income Fund were: Breitburn Energy Partners LP (7.78% of net assets); Memorial Production Partners (7.54%); Vanguard Natural Resources (7.29%); QR Energy LP (7.24%); Legacy Reserves LP (6.97%); Linn Energy LLC (6.84%); Mid-Con Energy Partners LP (6.80%); EV Energy Partners, LP (6.55%); Atlas Resource Partners, LP (5.92%); Dorchester Minerals, LP (3.53%).
Past performance is no guarantee of future results.
Active investment managers charge higher fees than passive managers.