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: November 30, 2022
FORM N-CSR
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
Average Annual Total Returns for the Period-Ended November 30, 2022* | ||||
Six Months1 | One Year | Five Years | Ten Years | |
Net Asset Value (“NAV”)2 | (4.42)% | (14.68)% | 1.85% | 3.85% |
Market Price2 | (7.41) | (15.85) | 2.24 | 3.98 |
Bloomberg Municipal Bond Index3 | (1.43) | (8.64) | 1.40 | 1.98 |
Morningstar Muni National Long Category Average4 | (5.18) | (17.08) | 0.59 | 2.33 |
* | Returns for indices reflect no deductions for fees, expenses or taxes, except for foreign withholding taxes where applicable. Results assume reinvestment of all dividends and capital gains. An investment cannot be made directly in an index. |
1. | Not annualized. |
2. | Total returns assume dividends and capital gains distributions are reinvested. |
3. | The Bloomberg 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. |
4. | 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. |
NYSE Symbol | MMD | Premium/Discount 1 | (0.30)% |
CUSIP | 56064K100 | Total Net Assets (millions) | $472.2 |
Inception Date | 6/26/2012 | Total Managed Assets (millions)2 | $779.6 |
Market Price | $16.89 | Leverage 3 | 39.44% |
NAV | $16.94 | Percent of AMT Bonds4 | 12.15% |
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 | 17.8% |
California | 15.7 |
New York | 11.4 |
Florida | 10.2 |
Puerto Rico1 | 8.3 |
Michigan | 6.3 |
Pennsylvania | 4.4 |
Texas | 3.8 |
Nevada | 3.1 |
Massachusetts | 2.4 |
New Jersey | 2.2 |
U.S. Virgin Islands | 2.1 |
Utah | 1.9 |
South Carolina | 1.8 |
Guam | 1.4% |
Colorado | 1.2 |
Washington | 0.9 |
Wisconsin | 0.7 |
Virginia | 0.6 |
New Hampshire | 0.6 |
District of Columbia | 0.3 |
Nebraska | 0.3 |
Georgia | 0.3 |
Arizona | 0.2 |
Other Assets, Less Liabilities | 2.1 |
100.0% |
† | As a percentage of Managed Assets. |
1. | As of November 30, 2022, 73.3% of the Puerto Rico municipal securities held by the Fund were insured and all bonds continue to pay full principal and interest. |
6 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
1. | Chicago O'Hare International Airport, 5.25%-5.75%, due 1/1/38–1/1/45 (a) |
2. | Regents of the University of California Medical Center Pooled, 5.00%, due 5/15/43–5/15/47 |
3. | State of Illinois, 5.25%-5.50%, due 5/1/30–5/1/39 |
4. | Los Angeles Department of Water & Power, 5.00%, due 7/1/42 |
5. | Great Lakes Water Authority Sewage Disposal System, 5.00%, due 7/1/34 (a) |
6. | Orange County Convention Center, 4.00%, due 10/1/33 |
7. | City of Chicago IL, 5.00%-6.00%, due 1/1/27–1/1/49 |
8. | Puerto Rico Sales Tax Financing Corp., 4.55%-5.00%, due 7/1/40–7/1/58 |
9. | County of Broward FL, 4.00%-5.50%, due 9/1/51–1/1/55 (a) |
10. | Michigan Finance Authority, 5.25%, due 12/1/41 |
# | 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. |
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 ‘AA’ by Standard & Poor’s (“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. Ratings from `AA' to `CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. 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. |
8 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
7. | An obligation rated ‘AAA’ has the highest rating assigned by S&P, and in the opinion of S&P, the obligor’s capacity to meet its financial commitment on the obligation is extremely 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. |
8. | An obligation rated ��BBB’ by S&P is deemed by S&P to exhibit adequate protection parameters. In the opinion of S&P, however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. 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. |
Principal Amount | Value | |
Municipal Bonds 161.8% | ||
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 | $ 1,730,000 | $ 1,627,420 |
California 25.9% (15.7% of Managed Assets) | ||
Calexico Unified School District, Election of 2020, Unlimited General Obligation | ||
Insured: BAM | ||
3.00%, due 8/1/52 | 3,600,000 | 2,690,847 |
California Municipal Finance Authority, LAX Integrated Express Solutions LLC, Revenue Bonds, Senior Lien | ||
Series A | ||
5.00%, due 12/31/43 (a) | 5,500,000 | 5,563,015 |
California Municipal Finance Authority, United Airlines, Inc. Project, Revenue Bonds | ||
4.00%, due 7/15/29 (a) | 2,305,000 | 2,237,227 |
City of Sacramento CA, Water, Revenue Bonds | ||
5.00%, due 9/1/42 (b) | 19,500,000 | 19,848,563 |
Los Angeles Department of Water & Power, Power System, Revenue Bonds | ||
Series A | ||
5.00%, due 7/1/42 (b) | 28,900,000 | 30,503,442 |
Regents of the University of California Medical Center Pooled, Revenue Bonds (b) | ||
5.00%, due 5/15/47 | 10,000,000 | 10,806,444 |
Series J | ||
5.00%, due 5/15/43 | 23,260,000 | 23,356,298 |
Sacramento City Unified School District, Election of 2020, Unlimited General Obligation | ||
Series A, Insured: BAM | ||
5.50%, due 8/1/52 | 6,000,000 | 6,708,082 |
San Diego County Regional Airport Authority, Revenue Bonds (a) | ||
Series B | ||
5.00%, due 7/1/46 | 3,250,000 | 3,337,026 |
Principal Amount | Value | |
California | ||
San Diego County Regional Airport Authority, Revenue Bonds (a) (continued) | ||
Series B | ||
5.00%, due 7/1/51 | $ 2,705,000 | $ 2,761,752 |
San Francisco City & County Airport Commission, International Airport, Revenue Bonds | ||
Series B | ||
5.00%, due 5/1/46 (a)(b) | 9,500,000 | 9,621,927 |
Sweetwater Union High School District, Unlimited General Obligation | ||
Insured: BAM | ||
4.00%, due 8/1/47 | 5,000,000 | 4,845,128 |
122,279,751 | ||
Colorado 1.9% (1.2% of Managed Assets) | ||
City & County of Denver CO, Airport System, Revenue Bonds | ||
Series A | ||
5.50%, due 11/15/35 (a) | 3,000,000 | 3,357,577 |
Copper Ridge Metropolitan District, Revenue Bonds | ||
5.00%, due 12/1/39 | 3,950,000 | 3,620,998 |
Sterling Ranch Community Authority Board, Metropolitan District No. 2, Revenue Bonds | ||
Series A | ||
4.25%, due 12/1/50 | 1,000,000 | 775,244 |
Sterling Ranch Community Authority Board, Metropolitan District No. 3, Revenue Bonds | ||
Series A, Insured: MUN GOVT GTD | ||
5.00%, due 12/1/30 | 1,315,000 | 1,341,300 |
9,095,119 | ||
District of Columbia 0.6% (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 | 2,722,275 |
Florida 16.9% (10.2% of Managed Assets) | ||
City of Miami Beach FL, Unlimited General Obligation | ||
4.00%, due 5/1/44 | 15,000,000 | 14,620,536 |
10 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Principal Amount | Value | |
Florida (continued) | ||
County of Broward FL, Convention Center Expansion Project, Revenue Bonds | ||
4.00%, due 9/1/51 | $ 3,500,000 | $ 3,128,086 |
Insured: BAM | ||
4.00%, due 9/1/51 | 2,750,000 | 2,471,029 |
County of Broward FL, Convention Center Hotel, Revenue Bonds, First Tier | ||
5.50%, due 1/1/55 (b) | 15,600,000 | 17,347,085 |
County of Miami-Dade FL, Transit System, Revenue Bonds | ||
5.00%, due 7/1/45 | 1,750,000 | 1,882,367 |
5.00%, due 7/1/48 | 1,750,000 | 1,871,402 |
JEA Electric System, Revenue Bonds | ||
Series C | ||
5.00%, due 10/1/37 (b) | 12,980,000 | 12,996,098 |
Orange County Convention Center, Revenue Bonds | ||
Series B | ||
4.00%, due 10/1/33 (b) | 25,000,000 | 25,478,108 |
79,794,711 | ||
Georgia 0.5% (0.3% of Managed Assets) | ||
Municipal Electric Authority of Georgia, Plant Vogtle Units 3&4 Project, Revenue Bonds | ||
Insured: AGM | ||
4.00%, due 1/1/44 | 2,470,000 | 2,354,725 |
Guam 2.3% (1.4% of Managed Assets) | ||
Antonio B Won Pat International Airport Authority, Revenue Bonds | ||
Series C, Insured: AGM | ||
6.00%, due 10/1/34 (a) | 2,440,000 | 3,505,905 |
Guam Government Waterworks Authority, Water and Wastewater System, Revenue Bonds | ||
5.50%, due 7/1/43 | 7,000,000 | 7,119,596 |
10,625,501 | ||
Illinois 29.4% (17.8% of Managed Assets) | ||
Chicago Board of Education, Unlimited General Obligation | ||
Series A | ||
7.00%, due 12/1/44 | 2,880,000 | 3,060,189 |
Principal Amount | Value | |
Illinois | ||
Chicago Board of Education, Dedicated Capital Improvement, Revenue Bonds | ||
5.75%, due 4/1/34 | $ 8,000,000 | $ 8,422,282 |
Chicago Board of Education, Dedicated Capital Improvement, Unlimited General Obligation (d) | ||
Series A | ||
7.00%, due 12/1/46 | 4,000,000 | 4,351,484 |
Series B | ||
7.00%, due 12/1/42 | 3,500,000 | 3,827,474 |
Chicago O'Hare International Airport, Revenue Bonds, Senior lien | ||
Series A, Insured: AGM | ||
5.25%, due 1/1/45 (a)(b) | 30,000,000 | 31,320,612 |
Chicago O'Hare International Airport, Customer Facility Charge, Revenue Bonds, Senior Lien | ||
Insured: AGM-CR | ||
5.75%, due 1/1/38 | 5,000,000 | 5,007,667 |
City of Chicago IL, Unlimited General Obligation | ||
Series A | ||
5.25%, due 1/1/27 | 3,000,000 | 3,045,531 |
Series A | ||
5.50%, due 1/1/49 | 5,000,000 | 5,071,904 |
Series A | ||
6.00%, due 1/1/38 | 7,180,000 | 7,465,826 |
Series E | ||
5.50%, due 1/1/42 | 2,000,000 | 2,014,346 |
City of Chicago IL, Wastewater Transmission, Revenue Bonds, Second Lien | ||
Series C | ||
5.00%, due 1/1/32 | 7,120,000 | 7,219,469 |
Metropolitan Pier & Exposition Authority, McCormick Place Expansion Project, Revenue Bonds | ||
Series A | ||
5.00%, due 6/15/57 | 4,665,000 | 4,649,578 |
Series B-1, Insured: AGM | ||
(zero coupon), due 6/15/43 | 10,000,000 | 3,735,535 |
Sales Tax Securitization Corp., Revenue Bonds | ||
Series C, Insured: BAM | ||
5.25%, due 1/1/48 (b) | 11,000,000 | 11,496,066 |
State of Illinois, Unlimited General Obligation | ||
5.25%, due 7/1/31 (b) | 20,000,000 | 20,123,734 |
Principal Amount | Value | |
Illinois (continued) | ||
State of Illinois, Unlimited General Obligation (continued) | ||
5.50%, due 5/1/30 | $ 2,500,000 | $ 2,729,799 |
5.50%, due 5/1/39 (b) | 8,380,000 | 8,821,122 |
Will County School District No. 114 Manhattan, Unlimited General Obligation | ||
Insured: BAM | ||
5.50%, due 9/1/52 | 6,000,000 | 6,586,045 |
138,948,663 | ||
Massachusetts 4.0% (2.4% of Managed Assets) | ||
Commonwealth of Massachusetts, Unlimited General Obligation | ||
Series C | ||
5.00%, due 10/1/52 | 3,500,000 | 3,810,056 |
Massachusetts Development Finance Agency, North Eastern University Issue, Revenue Bonds | ||
Series A | ||
5.00%, due 3/1/44 (b) | 7,000,000 | 7,072,393 |
Massachusetts School Building Authority, Revenue Bonds | ||
Series A | ||
5.00%, due 8/15/45 (b) | 7,500,000 | 8,142,545 |
19,024,994 | ||
Michigan 10.4% (6.3% of Managed Assets) | ||
Great Lakes Water Authority Sewage Disposal System, Revenue Bonds, Senior Lien | ||
Series B, Insured: AGM-CR | ||
5.00%, due 7/1/34 (b) | 24,940,000 | 26,629,334 |
Michigan Finance Authority, Trinity Health Group, Revenue Bonds | ||
Series 2016MI | ||
5.25%, due 12/1/41 (b) | 21,630,000 | 22,388,164 |
49,017,498 | ||
Nebraska 0.5% (0.3% of Managed Assets) | ||
Omaha Public Power District, Electric System, Revenue Bonds | ||
Series A | ||
5.00%, due 2/1/47 | 2,300,000 | 2,536,445 |
Principal Amount | Value | |
Nevada 5.1% (3.1% of Managed Assets) | ||
County of Clark NV, Regional Transportation Commission of Southern Nevada Motor Fuel Tax, Revenue Bonds | ||
3.00%, due 7/1/42 | $ 4,090,000 | $ 3,323,186 |
Las Vegas Convention & Visitors Authority, Convention Center Expansion, Revenue Bonds | ||
Series B | ||
5.00%, due 7/1/43 (b) | 20,000,000 | 20,754,808 |
24,077,994 | ||
New Hampshire 1.0% (0.6% of Managed Assets) | ||
Manchester Housing and Redevelopment Authority, Inc., Meals & Rooms Tax, Revenue Bonds | ||
Series B, Insured: ACA | ||
(zero coupon), due 1/1/24 | 4,740,000 | 4,503,700 |
New Jersey 3.7% (2.2% of Managed Assets) | ||
New Jersey Economic Development Authority, Continental Airlines, Inc. Project, Revenue Bonds | ||
5.25%, due 9/15/29 | 5,000,000 | 5,016,661 |
New Jersey Economic Development Authority, New Jersey Transit Transportation Project, Revenue Bonds | ||
Series A | ||
4.00%, due 11/1/39 | 3,400,000 | 3,233,167 |
New Jersey Transportation Trust Fund Authority, Transportation Program, Revenue Bonds | ||
Series AA | ||
5.25%, due 6/15/43 | 4,595,000 | 4,774,603 |
Series BB | ||
4.00%, due 6/15/44 | 1,000,000 | 917,915 |
State of New Jersey, COVID-19 General Obligation Emergency Bonds, Unlimited General Obligation | ||
Series A | ||
4.00%, due 6/1/31 | 2,900,000 | 3,073,696 |
Tobacco Settlement Financing Corp., Revenue Bonds | ||
Series A | ||
5.00%, due 6/1/46 | 300,000 | 294,308 |
17,310,350 |
12 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Principal Amount | Value | |
New York 18.7% (11.4% of Managed Assets) | ||
Metropolitan Transportation Authority, Revenue Bonds | ||
Series A-1 | ||
5.00%, due 11/15/45 (b) | $ 22,695,000 | $ 22,316,665 |
New York Liberty Development Corp., 3 World Trade Center Project, Revenue Bonds | ||
Class 3 | ||
7.25%, due 11/15/44 (b)(d) | 10,890,000 | 11,005,324 |
New York State Dormitory Authority, State Personal Income Tax, Revenue Bonds | ||
Series A | ||
5.00%, due 3/15/41 (b) | 9,450,000 | 10,300,710 |
Series E | ||
4.00%, due 3/15/38 | 2,000,000 | 2,018,420 |
New York State Housing Finance Agency, Revenue Bonds | ||
Series P | ||
3.15%, due 11/1/54 | 2,375,000 | 1,715,079 |
New York Transportation Development Corp., LaGuardia Airport Terminal B Redevelopment Project, Revenue Bonds | ||
Series A, Insured: AGM | ||
4.00%, due 7/1/36 (a)(b) | 20,000,000 | 19,172,438 |
Onondaga County Trust for Cultural Resources, Syracuse University Project, Revenue Bonds | ||
4.00%, due 12/1/47 | 5,000,000 | 4,742,665 |
Port Authority of New York & New Jersey, Revenue Bonds | ||
5.50%, due 8/1/52 (a)(b) | 10,000,000 | 10,795,993 |
Riverhead Industrial Development Agency, Riverhead Charter School, Revenue Bonds | ||
Series A | ||
7.00%, due 8/1/43 | 3,395,000 | 3,456,489 |
Triborough Bridge & Tunnel Authority, Payroll Mobility Tax, Revenue Bonds, Senior Lien | ||
Series D-2 | ||
5.25%, due 5/15/47 | 2,700,000 | 2,993,933 |
88,517,716 |
Principal Amount | Value | |
Pennsylvania 7.3% (4.4% of Managed Assets) | ||
Allentown Neighborhood Improvement Zone Development Authority, City Center Project, Revenue Bonds | ||
5.00%, due 5/1/42 (d) | $ 1,000,000 | $ 908,002 |
Commonwealth Financing Authority, Tobacco Master Settlement Payment, Revenue Bonds | ||
Insured: AGM | ||
4.00%, due 6/1/39 | 2,370,000 | 2,376,677 |
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 | 14,596,420 |
Pennsylvania Turnpike Commission, Revenue Bonds | ||
Series A, Insured: AGM | ||
4.00%, due 12/1/49 (b) | 7,470,000 | 7,171,252 |
Philadelphia Authority for Industrial Development, Nueva Esperanza, Inc., Revenue Bonds | ||
8.20%, due 12/1/43 | 2,000,000 | 2,008,639 |
Southeastern Pennsylvania Transportation Authority, Asset Improvement Program, Revenue Bonds | ||
5.25%, due 6/1/43 (b) | 6,500,000 | 7,218,508 |
34,279,498 | ||
Puerto Rico 13.8% (8.3% of Managed Assets) | ||
Children's Trust Fund, Asset-Backed, Revenue Bonds | ||
5.50%, due 5/15/39 | 12,965,000 | 12,932,626 |
Commonwealth of Puerto Rico, Restructured, Unlimited General Obligation | ||
Series A-1 | ||
4.00%, due 7/1/33 | 8,500,000 | 7,406,390 |
Puerto Rico Electric Power Authority, Revenue Bonds (e) | ||
Series DDD, Insured: AGM | ||
3.625%, due 7/1/23 | 755,000 | 749,875 |
Series DDD, Insured: AGM | ||
3.65%, due 7/1/24 | 2,830,000 | 2,778,062 |
Series PP, Insured: NATL-RE | ||
5.00%, due 7/1/24 | 1,130,000 | 1,134,539 |
Series PP, Insured: NATL-RE | ||
5.00%, due 7/1/25 | 165,000 | 165,663 |
Principal Amount | Value | |
Puerto Rico (continued) | ||
Puerto Rico Electric Power Authority, Revenue Bonds (e) (continued) | ||
Series TT, Insured: AGM-CR | ||
5.00%, due 7/1/27 | $ 310,000 | $ 312,075 |
Puerto Rico Highway & Transportation Authority, Revenue Bonds (e) | ||
Series AA-1, Insured: AGM | ||
4.95%, due 7/1/26 | 5,575,000 | 5,574,774 |
Series D, Insured: AGM | ||
5.00%, due 7/1/32 | 960,000 | 955,218 |
Series N, Insured: AMBAC | ||
5.25%, due 7/1/31 | 3,485,000 | 3,447,100 |
Series N, Insured: AMBAC | ||
5.50%, due 7/1/29 | 1,025,000 | 1,034,765 |
Puerto Rico Municipal Finance Agency, Revenue Bonds | ||
Series A, Insured: AGM | ||
5.00%, due 8/1/27 | 2,770,000 | 2,788,537 |
Series A, Insured: AGM | ||
5.00%, due 8/1/30 | 1,685,000 | 1,696,276 |
Puerto Rico Sales Tax Financing Corp., Revenue Bonds | ||
Series A-1 | ||
4.55%, due 7/1/40 | 2,500,000 | 2,328,326 |
Series A-1 | ||
5.00%, due 7/1/58 | 22,940,000 | 21,765,718 |
65,069,944 | ||
South Carolina 2.9% (1.8% of Managed Assets) | ||
South Carolina Public Service Authority, Santee Cooper, Revenue Bonds | ||
Series A, Insured: BAM | ||
4.00%, due 12/1/52 | 5,000,000 | 4,569,664 |
Series E, Insured: AGM | ||
5.75%, due 12/1/52 (b) | 8,500,000 | 9,335,303 |
13,904,967 | ||
Texas 6.3% (3.8% of Managed Assets) | ||
City of Georgetown TX, Utility System, Revenue Bonds | ||
Insured: AGM | ||
5.25%, due 8/15/52 (b) | 7,500,000 | 8,161,280 |
City of Lubbock TX, Electric Light & Power System, Revenue Bonds | ||
Insured: AGM-CR | ||
4.00%, due 4/15/51 | 10,000,000 | 9,322,256 |
Principal Amount | Value | |
Texas | ||
Harris County-Houston Sports Authority, Revenue Bonds, Senior Lien | ||
Series A, Insured: AGM, NATL-RE | ||
(zero coupon), due 11/15/38 | $ 175,000 | $ 74,437 |
Harris County-Houston Sports Authority, Revenue Bonds, Junior Lien | ||
Series H, Insured: NATL-RE | ||
(zero coupon), due 11/15/28 | 50,000 | 38,774 |
Series H, Insured: NATL-RE | ||
(zero coupon), due 11/15/38 | 260,000 | 109,984 |
San Antonio Water System, Water System, Revenue Bonds, Junior Lien | ||
Series B | ||
5.25%, due 5/15/52 | 6,000,000 | 6,657,450 |
Texas Water Development Board, State Water Implementation, Revenue Bonds | ||
Series A | ||
5.00%, due 10/15/45 | 5,000,000 | 5,212,552 |
29,576,733 | ||
U.S. Virgin Islands 3.5% (2.1% of Managed Assets) | ||
Matching Fund Special Purpose Securitization Corp., United States Virgin Islands Federal Excise Tax, Revenue Bonds | ||
Series A | ||
5.00%, due 10/1/30 | 1,570,000 | 1,619,944 |
Series A | ||
5.00%, due 10/1/32 | 1,570,000 | 1,618,753 |
Series A | ||
5.00%, due 10/1/39 | 4,710,000 | 4,749,665 |
Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan, Revenue Bonds | ||
Series A | ||
5.00%, due 10/1/29 (d) | 2,980,000 | 2,876,858 |
Series A | ||
5.00%, due 10/1/32 | 3,020,000 | 2,853,125 |
Series A, Insured: AGM-CR | ||
5.00%, due 10/1/32 | 2,690,000 | 2,691,409 |
16,409,754 | ||
Utah 3.1% (1.9% of Managed Assets) | ||
City of Salt Lake UT, International Airport, Revenue Bonds | ||
Series A | ||
5.00%, due 7/1/47 (a) | 3,000,000 | 3,036,799 |
14 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Principal Amount | Value | ||
Utah (continued) | |||
Intermountain Power Agency, Revenue Bonds | |||
5.00%, due 7/1/43 (b) | $ 10,580,000 | $ 11,637,754 | |
14,674,553 | |||
Virginia 1.0% (0.6% 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 | 4,665,770 | |
Washington 1.5% (0.9% of Managed Assets) | |||
State of Washington, Various Purpose, Unlimited General Obligation | |||
Series C | |||
5.00%, due 2/1/46 | 6,500,000 | 7,110,138 | |
Washington State Housing Finance Commission, Single Family Program, Revenue Bonds | |||
Series 1N | |||
4.00%, due 6/1/49 | 105,000 | 105,095 | |
7,215,233 | |||
Wisconsin 1.2% (0.7% of Managed Assets) | |||
Public Finance Authority, Bancroft NeuroHealth Project, Revenue Bonds | |||
Series A | |||
5.00%, due 6/1/36 (d) | 500,000 | 476,857 | |
Public Finance Authority, Ultimate Medical Academy Project, Revenue Bonds | |||
Series A | |||
5.00%, due 10/1/39 (d) | 5,750,000 | 5,311,758 | |
5,788,615 | |||
Total Investments (Cost $760,071,065) | 161.8% | 764,021,929 | |
Floating Rate Note Obligations (f) | (64.6) | (304,950,000) | |
Other Assets, Less Liabilities | 2.8 | 13,088,072 | |
Net Assets Applicable to Common Shares | 100.0% | $ 472,160,001 |
† | 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 November 30, 2022. |
(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) | 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. |
CR—Custodial Receipts |
MUN GOVT GTD—Municipal Government Guaranteed |
NATL-RE—National Public Finance Guarantee Corp. |
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 | $ — | $ 764,021,929 | $ — | $ 764,021,929 |
(a) | For a complete listing of investments and their industries, see the Portfolio of Investments. |
16 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Assets | |
Investment in securities, at value (identified cost $760,071,065) | $764,021,929 |
Cash | 3,835,320 |
Receivables: | |
Interest | 11,572,929 |
Investment securities sold | 678,592 |
Other assets | 5,500 |
Total assets | 780,114,270 |
Liabilities | |
Payable for Floating Rate Note Obligations | 304,950,000 |
Payables: | |
Manager (See Note 3) | 376,862 |
Professional fees | 35,449 |
Transfer agent | 5,513 |
Custodian | 5,395 |
Shareholder communication | 5,351 |
Accrued expenses | 46,952 |
Interest expense and fees payable | 2,528,747 |
Total liabilities | 307,954,269 |
Net assets applicable to Common shares | $472,160,001 |
Common shares outstanding | 27,875,160 |
Net asset value per Common share (Net assets applicable to Common shares divided by Common shares outstanding) | $ 16.94 |
Net Assets Applicable to Common Shares Consist of | |
Common shares, $0.001 par value per share, unlimited number of shares authorized | $ 27,875 |
Additional paid-in-capital | 530,908,223 |
530,936,098 | |
Total distributable earnings (loss) | (58,776,097) |
Net assets applicable to Common shares | $472,160,001 |
Investment Income (Loss) | |
Income | |
Interest | $ 14,768,654 |
Expenses | |
Interest expense and fees | 3,405,420 |
Manager (See Note 3) | 2,393,561 |
Professional fees | 78,928 |
Shareholder communication | 27,939 |
Transfer agent | 19,576 |
Custodian | 18,418 |
Trustees | 5,798 |
Miscellaneous | 34,903 |
Total expenses | 5,984,543 |
Net investment income (loss) | 8,784,111 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on investments | (23,493,786) |
Net change in unrealized appreciation (depreciation) on investments | (8,117,372) |
Net realized and unrealized gain (loss) | (31,611,158) |
Net increase (decrease) in net assets to Common shares resulting from operations | $(22,827,047) |
18 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
for the six months ended November 30, 2022 (Unaudited) and the year ended May 31, 2022
Six months ended November 30, 2022 | Year ended May 31, 2022 | |
Increase (Decrease) in Net Assets Applicable to Common Shares | ||
Operations: | ||
Net investment income (loss) | $ 8,784,111 | $ 25,880,112 |
Net realized gain (loss) | (23,493,786) | (18,321,721) |
Net change in unrealized appreciation (depreciation) | (8,117,372) | (62,585,644) |
Net increase (decrease) in net assets applicable to Common shares resulting from operations | (22,827,047) | (55,027,253) |
Distributions to Common shareholders | (14,212,598) | (28,372,977) |
Capital share transactions (Common shares): | ||
Net proceeds issued to shareholders resulting from reinvestment of dividends | 388,959 | 1,559,157 |
Net increase (decrease) in net assets applicable to Common shares | (36,650,686) | (81,841,073) |
Net Assets Applicable to Common Shares | ||
Beginning of period | 508,810,687 | 590,651,760 |
End of period | $472,160,001 | $508,810,687 |
for the six months ended November 30, 2022 (Unaudited)
Cash Flows From (Used in) Operating Activities: | |
Net decrease in net assets resulting from operations | $ (22,827,047) |
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: | |
Investments purchased | (239,169,782) |
Investments sold | 263,552,348 |
Amortization (accretion) of discount and premium, net | 3,687,921 |
Increase in investment securities sold receivable | (678,592) |
Decrease in interest receivable | 59,460 |
Decrease in other assets | 25,128 |
Decrease in due to custodian | (621,048) |
Decrease in professional fees payable | (72,963) |
Decrease in custodian payable | (9,507) |
Decrease in shareholder communication payable | (11,764) |
Decrease in due to Trustees | (18) |
Decrease in due to manager | (38,277) |
Increase in due to transfer agent | 4,544 |
Increase in accrued expenses | 7,598 |
Increase in interest expense and fees payable | 1,215,097 |
Net realized loss from investments | 23,493,786 |
Net change in unrealized (appreciation) depreciation on unaffiliated investments | 8,117,372 |
Net cash from operating activities | 36,734,256 |
Cash Flows From (Used in) Financing Activities: | |
Net proceeds resulting from reinvestment of dividends | 523,919 |
Proceeds from floating rate note obligations | 76,675,000 |
Payments on floating rate note obligations | (98,470,000) |
Cash distributions paid, net of change in Common share dividend payable | (14,212,598) |
Net cash used in financing activities | (35,483,679) |
Net increase in cash | 1,250,577 |
Cash at beginning of period | 2,584,743 |
Cash at end of period | $ 3,835,320 |
20 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Six months ended November 30, 2022* | Year Ended May 31, | ||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | |||||||
Net asset value at beginning of period applicable to Common shares | $ 18.27 | $ 21.26 | $ 19.79 | $ 20.41 | $ 20.11 | $ 20.14 | |||||
Net investment income (loss) | 0.32 | 0.93 | 1.01 | 0.99 | 1.01 | 1.05 | |||||
Net realized and unrealized gain (loss) | (1.14) | (2.90) | 1.48 | (0.59) | 0.32 | 0.00‡ | |||||
Total from investment operations | (0.82) | (1.97) | 2.49 | 0.40 | 1.33 | 1.05 | |||||
Dividends and distributions to Common shareholders | (0.51) | (1.02) | (1.02) | (1.02) | (1.03) | (1.08) | |||||
Net asset value at end of period applicable to Common shares | $ 16.94 | $ 18.27 | $ 21.26 | $ 19.79 | $ 20.41 | $ 20.11 | |||||
Market price at end of period applicable to Common shares | $ 16.89 | $ 18.80 | $ 22.89 | $ 20.94 | $ 20.65 | $ 19.41 | |||||
Total investment return on market price (a) | (7.41)% | (13.62)% | 14.79% | 6.62% | 12.05% | 2.88% | |||||
Total investment return on net asset value (a) | (4.42)% | (9.68)% | 12.82% | 1.94% | 6.80% | 5.31% | |||||
Ratios (to average net assets of Common shareholders)/ Supplemental Data: | |||||||||||
Net investment income (loss) | 3.65%†† | 4.56% | 4.88% | 4.44% | 5.03% | 5.21% | |||||
Net expenses (including interest expense and fees) | 2.49%†† | 1.79% | 1.64% | 2.33% | 2.47% | 2.11% | |||||
Interest expense and fees (b) | 1.42%†† | 0.76% | 0.61% | 1.31% | 1.45% | 1.10% | |||||
Portfolio Turnover Rate | 30% | 46% | 20% | 38%(c) | 27% | 20% | |||||
Net assets applicable to Common shareholders at end of period (in 000’s) | $ 472,160 | $ 508,811 | $ 590,652 | $ 547,744 | $ 563,098 | $ 554,332 | |||||
Preferred shares outstanding at $100,000 liquidation preference, end of period (in 000’s) (d)(e) | $ — | $ — | $ — | $ 70,000 | $ 70,000 | $ 70,000 | |||||
Assets coverage per Preferred share, end of period (d)(e) | $ — | $ — | $ — | $ 882,491(f) | $ 904,426(f) | $ 891,903(f) | |||||
Average market value per Preferred share: | |||||||||||
Series A (d) | $ — | $ — | $ — | $ 100,000 | $ 100,000 | $ 100,006 | |||||
Series B (e) | $ — | $ — | $ — | $ 99,999 | $ 100,000 | $ 100,000 |
* | Unaudited. |
‡ | Less than one cent per share. |
†† | Annualized. |
(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, where applicable, for the six months ended November 30, 2022 and for years ended May 31, 2022, 2021, 2020, 2019 and 2018, respectively. |
(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. |
22 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
• | Level 1—quoted prices (unadjusted) 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 |
24 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Underlying Securities Transferred to TOB Issuers | Liability for Floating Rate Note Obligations |
$438,418,389 | $304,950,000 |
Average Floating Rate Note Obligations Outstanding | Daily Weighted Average Interest Rate |
$308,998,415 | 1.10% |
26 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Federal Tax Cost | Gross Unrealized Appreciation | Gross Unrealized (Depreciation) | Net Unrealized Appreciation/ (Depreciation) | |
Investments in Securities | $445,128,087 | $332,832,949 | $(13,939,107) | $318,893,842 |
Capital Loss Available Through | Short-Term Capital Loss Amounts (000’s) | Long-Term Capital Loss Amounts (000’s) |
Unlimited | $24,885 | $5,273 |
2022 | |||
Distributions paid from: | Ordinary Income | Exempt Interest Dividends | Long-Term Capital Gain |
Common shares | $1,090,377 | $27,282,600 | $— |
Common Shares | Shares | Amount |
Six-month period ended November 30, 2022: | ||
Common shares issued to shareholders in reinvestment of distributions (a) | 21,889 | $ 388,959 |
Year ended May 31, 2022: | ||
Common shares issued to shareholders in reinvestment of distributions (a) | 76,072 | $1,559,157 |
(a) | See page 29 for information on the Fund’s dividend reinvestment plan. |
Month | Ex-Date | Record Date | Payable Date | Amount |
January | 1/13/23 | 1/17/23 | 1/31/23 | $0.08 |
February | 2/14/23 | 2/15/23 | 2/28/23 | $0.08 |
March | 3/14/23 | 3/15/23 | 3/31/23 | $0.08 |
28 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Trustees | Votes FOR | Votes WITHHELD | Abstentions | Total Votes |
Susan B. Kerley | 24,511,545 | 324,248 | 0 | 24,835,793 |
Jacques P. Perold | 24,374,023 | 461,770 | 0 | 24,835,793 |
30 | MainStay MacKay DefinedTerm Municipal Opportunities Fund |
Providence, RI 02940-3078
(855) 456-9683
5013532.2MS005-23 | MSMHI10-01/23 |
Item 2. | Code of Ethics. |
Not applicable.
Item 3. | Audit Committee Financial Expert. |
Not applicable.
Item 4. | Principal Accountant Fees and Services. |
Not applicable.
Item 5. | Audit Committee of Listed Registrants. |
Not applicable.
Item 6. | Investments. |
The Schedule of Investments is included as part of Item 1 of this report.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable.
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 Registrant’s Board of Trustees.
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) (the “Disclosure Controls”), as of a date within 90 days prior to the filing date (the “Filing Date”) of this Form
N-CSR (the “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) |
(b) |
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: February 3, 2023
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: February 3, 2023
By: | /s/ Jack R. Benintende | |
Jack R. Benintende | ||
Treasurer and Principal Financial | ||
and Accounting Officer |
Date: February 3, 2023
EXHIBIT INDEX