MainStay High Yield Corporate Bond Fund FOR REGISTERED REPRESENTATIVE USE ONLY. NOT TO BE USED WITH THE GENERAL PUBLIC.

Transcription

1 MainStay High Yield Corporate Bond Fund NYLIM MSHY31b-07/12

2 High Yield Investment Team Name Responsibilities Investment Experience J. Matthew Philo, CFA Utilities Thorsell, Parker Partners Inc. Senior Managing Director Generalist Moran Asset Management Lead Portfolio Manager Education New York University, MBA SUNY Albany, BA Chartered Financial Analyst Nate Hudson, CFA Managing Director Portfolio Manager/Analyst Automotive/Transportation Building Materials Homebuilding Banc of America Securities Nomura Corporate Research & Asset Management (NCRAM) Yale University, BA Chartered Financial Analyst Michael A. Snyder Managing Director Portfolio Manager/Analyst Aerospace/Defense Consumer Products Manufacturing Media-Diversified AllianceBernstein DLJ Asset Management Bear Stearns Asset Management Group Prudential Insurance Company of America Duke University s Fuqua School of Business, MBA Dickinson College, BA Andrew Susser Managing Director Portfolio Manager/Analyst Food Gaming & Leisure Lodging Retail Services GoldenTree Asset Management Banc of America Salomon Brothers Moody s Investors Service Shearman & Sterling University of Pennsylvania Law School, JD Wharton Graduate School of Business, MBA Vassar College, BA James S. Wolf Managing Director Portfolio Manager/Analyst Finance Health Care First Albany Capital RBC Capital Markets Bear, Stearns Co. University Of Rochester s Simon School of Business, MBA Northwestern University, BA Dohyun Cha, CFA Director Analyst/Portfolio Manager Energy Utilities Credit Suisse First Boston CIBC World Markets Boston College, BS Chartered Financial Analyst Won Choi, CFA Director Analyst/Portfolio Manager Chemicals Metals Paper & Packaging Fenway Partners, Inc. Salomon Smith Barney Yale University, BA Chartered Financial Analyst Eric Gold Director Analyst/Portfolio Manager Media-Cable TV/Broadcasting Technology Telecommunications Sterne, Agee & Leach Inc. BlackRock Grantchester Securities New York University, MBA Vassar College, BA Traders Scott Mallek Director High Yield Trader Trading Salomon Smith Barney Fairfield University, BA J. Alex Leites Associate Director High Yield Trader Trading Credit Suisse First Boston Kinexus Inc. New York University, BS 2

3 Investment Process O B J E C T I V E S Meet minimum yield requirement Exclude illiquid issues HIGH YIELD, VALUE-ORIENTED SECURITY SELECTION PROCESS H I G H Y I E L D U N I V E R S E C O M P A N I E S C R I T E R I A YTM >200 bps over comparable Treasury Minimum issue size of $100 million (95%) Identify undervalued and cash generating companies M A R G I N O F S A F E T Y F I N A N C I A L A N A L Y S I S Discount to asset value and/or Free cash flow Evaluate future B U S I N E S S J U D G E M E N T Management intent Quality of business Direction of business Identify improving financials C A T A L Y S T Free cash flow will retire 1/2 of debt in 5 years Company has access to equity markets Corporate restructuring in place HIGH YIELD FOCUS LIST 300 Companies Relative value Reduce risk through diversification H I G H Y I E L D P O R T F O L I O A P P R O X I S S U E R S Sector weighting limits Individual issue limit 3

4 Investment Process Thorough Understanding Of Risk And Asset Value Every Holding is in 1 of 4 Groups Group I Highest Quality Credits Among Non-Investment Grade Lowest Volatility Group 1 is comprised of: Rated A 0.4%, Rated BBB 3%, Rated BB 23%, Rated B 7%, NR 1% Normal Group II Seasoned Issuers Significant equity value Strong credit statistics Strong asset value Group 2 is comprised of: Rated BB 5%, Rated B 34%, Rated CCC 4%, NR 2% Group III Risk Credits Trading at discount More research intensive Higher yielding relative to universe Group 3 is comprised of: Rated BB 0.2%, Rated B 10%, Rated CCC 10%, Ratings NR 0.7% Group III 20% Current Group IV <1% Group I 35% Group IV Restructurings Look for significant discount to asset value Operations stabilizer Group II 45% * 3% of the portfolio was not rated (NR) by S&P and/or Moody s. 4

5 Investment Process Three Factors Drive MacKay Shields Sell Discipline VALUATION Market price rises above target price W A T C H L I S T DIVERSIFICATION 4% maximum position in any one security SELL The greater of 2x index industry weighting or 15% CHANGE IN FUNDAMENTALS Company fails valuation or financial test Credit does not improve Fundamentals begin to deteriorate 5

6 How MacKay Shields Manages Risk Disciplined investment process designed to minimize default rates - Focus on asset coverage and free cash flow has kept defaults low - Our default rate has historically averaged 53% of the market s default rate* Diversification of holdings with average position size of 1% - No single position is more than 4% of the portfolio Diversification of portfolio sector weights - Industry weights limited to greater of 15% or two times the index weight Source: Moody s and Credit Suisse. *For the period 1/92 12/11, MacKay Shields default rate is 1.93%, Moody s Dollar Volume-Weighted Speculative Grade default rate is 5.36% and Credit Suisse default rate is 3.64%. (Default rates are calculations which represent the total dollar volume of defaulted speculative grade or high yield corporate bonds over a twelvemonth period divided by the total face amount of such bonds outstanding that could have defaulted during the period of their respective bond universes). 6

7 Portfolio Characteristics MainStay High Yield Corporate Bond Fund Credit Suisse High Yield Index Current Yield 7.72% 8.16% Modified Duration 3.37 Years 3.77 Years Yield to Worst* 6.33% 7.39% Top Ten Industries MainStay High Yield Corporate Bond Fund Credit Suisse High Yield Index Energy 12.5% 13.8% Healthcare Transportation Financial Gaming/Leisure Cable/Wireless Video Metals/Minerals Forest Products/Containers Communications Utility Source: MacKay Shields and Credit Suisse. Portfolio characteristics are as of 6/30/12 and are subject to change. Upon request, MacKay Shields can provide the last 12 months purchases in the Fund. *Yield to Worst is the lower of the yield to maturity or yield to call. 7

8 MainStay High Yield Corporate Bond Fund Annualized as of June 30, 2012 Class A Shares at NAV Performance Period MainStay High Yield Corporate Bond Fund Lipper Average High Yield Fund Lipper Percentile in Peer Group Lipper Ranking in Peer Group Credit Suisse High Yield Index 1 Year 7.45% 5.15% 14 th 67 / % 3 Years 13.25% 14.38% 79 th 340 / % 5 Years 6.19% 5.88% 56 th 206 / % 7 Years 6.85% 6.40% 42 nd 133 / % 10 Years 9.59% 8.14% 11 th 26 / % Performance data quoted represents past performance. Past performance is no guarantee of future results. Due to market volatility, current performance may be less or higher than the figures shown. Investment return and principal will fluctuate so that upon redemption, shares may be worth more or less than their original cost. Returns shown at NAV do not reflect deduction of sales charges which would lower performance. For performance information current to the most recent month-end, please visit our web site at mainstayinvestments.com. Source: Lipper Inc., is an independent fund performance monitor. Results are based on total returns with capital gain and dividend distributions reinvested and do not reflect any deduction of sales charges. Lipper numbers are based on the Fund s total-return rank for the specified time period relative to all funds that have the same Lipper category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. Percentile ranks within categories are most useful in those categories that have a large number of funds. 8

9 SEC Average Annual Total Returns Annualized as of June 30, 2012 Class A Shares Net of 4.5% Maximum Sales Charge Performance Period MainStay High Yield Corporate Bond Fund 1 Year 2.61% 3 Years 11.53% 5 Years 5.21% 10 Years 9.08% Since Inception (1/03/95) 8.76% 30-Day SEC Yield as of 6/30/ % Performance data quoted represents past performance. Past performance is no guarantee of future results. Due to market volatility, current performance may be less or higher than the figures shown. Investment return and principal will fluctuate so that upon redemption, shares may be worth more or less than their original cost. For performance information current to the most recent month-end, please visit our web site at mainstayinvestments.com. Total annual operating expenses are: Class A: 0.99%, Investor Class: 1.05%, Class B: 1.80%, Class C: 1.80%, Class I: 0.74%. These results include the maximum initial sales charge for Class A shares of 4.5% and show the percentage change for each of the required periods with capital gain and dividend distributions reinvested. Performance for Class A shares includes the historical performance of Class B shares from inception 5/1/86 through 12/31/94, adjusted to reflect the applicable sales charge (or CDSC) and fees and expenses for such share. The 30-day SEC yield calculation is based on a 30-day period ending on the last day of the month. It is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period. 9

10 Why MacKay Shields? MacKay Shields believes the best way to maximize returns is to minimize default risk/loss. From 1992 through 2011 our default rate has been 1.93%. MacKay Shields has a time-tested, disciplined process which has resulted in strong historical performance. Past performance is no guarantee of future results. 10

11 Disclosures To learn more about MainStay Funds, call 800-MAINSTAY ( ) for a prospectus or summary prospectus. Please ask your clients to consider the investment objectives, risks, and charges and expenses of these investments carefully before investing. The prospectus or summary prospectus contains this and other information about the Funds and can be obtained by contacting you, the financial professional. Instruct your clients to read the prospectus or summary prospectus carefully before investing. About Risk: Foreign securities can be subject to greater risks than U.S. investments, including currency fluctuations, less liquid trading markets, greater price volatility, political and economic instability, less publicly available information, and changes in tax or currency laws or currency laws or monetary policy. These risks are likely to be greater for emerging markets than in developed markets. High yield securities ( junk bonds ) have speculative characteristics and present a greater risk of loss than higher quality debt securities. These securities can also be subject to greater price volatility. 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 Floating rate loans are generally considered to have speculative characteristics that involve default risk of principal and interest, collateral impairment, borrower industry concentration, and limited liquidity. Issuers of convertible securities may not be as financially strong as those issuing securities with higher credit ratings and are more vulnerable to changes in the economy. Index Definitions: Credit Suisse High Yield Index is a is a market-weighted index that includes publicly traded bonds rated below BBB by S&P and Baa by Moody s. Lipper defines the High Current Yield Funds Category as Funds that aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower-grade debt issues. MacKay Shields is a federally registered advisor and an affiliate of New York 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. 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. 11