N-CSR 1 d380500dncsr.htm MAINSTAY FUNDS MAINSTAY FUNDS

 

 

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 811-04550

THE MAINSTAY FUNDS

(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: October 31

Date of reporting period: October 31, 2022

 

 

 


FORM N-CSR

 

Item 1.

    Reports to Stockholders.





MainStay Candriam Emerging Markets Debt Fund

Message from the President and Annual Report
October 31, 2022
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Not FDIC/NCUA Insured Not a Deposit May Lose Value No Bank Guarantee Not Insured by Any Government Agency


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Message from the President
A series of economic and geopolitical challenges undermined equity and fixed-income markets during the 12-month reporting period ended October 31, 2022. Stocks and bonds alike trended lower in the face of sharply rising interest rates, increasing inflationary pressures, slowing economic growth and Russia’s invasion of Ukraine.
The reporting period began on a mixed note, with concerns about the spreading Omicron variant of the COVID-19 virus and increasingly hawkish statements from the U.S. Federal Reserve (the “Fed”) regarding mounting inflation, countered by bullish sentiment stemming from U.S. economic growth and strong corporate earnings. In January 2022, markets turned decisively negative as comments from the Fed raised the likelihood of rate hikes as early as March, and Russia issued increasingly aggressive threats toward Ukraine. The onset of Russia’s invasion in February exacerbated global inflationary pressures while increasing investor uncertainty. Domestic supply shortages, international trade imbalances and rising inflation caused GDP (gross domestic product) to contract in the first and second quarters of the year, although employment and consumer spending proved resilient. Prices for petroleum surged to multi-year highs, while many key agricultural chemicals and industrial metals climbed as well. Accelerating inflationary forces prompted the Fed to implement its most aggressive interest rate increases since the 1980s with a series of five sharp rate hikes, raising the federal funds rate from a range of 0.00% to 0.25% in March to 3.00% to 3.25% in September, with additional rate hikes expected before the end of the year. International central banks generally followed suit, raising rates by varying degrees in efforts to curb local inflation, although most increases remained significantly more modest than those in the United States. Relatively high U.S. interest rates and risk-averse international sentiment pushed U.S. dollar values higher compared to most other currencies, with the ensuing negative impact on global prices for food, fuel and other key, U.S.-dollar-denominated products.
The effects of these interrelated challenges were felt throughout U.S. and international financial markets. The S&P 500® Index, a widely regarded benchmark of U.S. market performance, declined by more than 14% during the reporting period. Although the energy sector generated strong gains, bolstered by elevated oil and gas prices, most other industry areas recorded losses. The more cyclical and growth-oriented sectors of consumer discretionary, real estate and information technology delivered the
weakest returns, while the traditionally defensive and value-oriented consumer staples, utilities and health care sectors outperformed. International stocks lagged compared to their U.S. counterparts, with some emerging markets, such as China, suffering particularly steep losses. A few markets, however, including Brazil, Mexico and the United Arab Emirates, ended the reporting period with little change. Fixed-income markets saw bond prices broadly decline as yields rose along with interest rates. Short-term yields rose faster than long-term yields, producing a yield curve inversion from July through the end of the reporting period, with long-term rates remaining below short-term rates. While floating-rate instruments, which feature variable interest rates that allow investors to benefit from a rising rate environment, provided a degree of insulation from inflation-driven trends, they were not immune to the market’s widespread declines.
While the Fed acknowledges the costs of rising rates in terms of weaker GDP growth and unsettled financial markets over the short term, its primary focus continues to be the longer-term economic impact of inflation. With the latest figures as of the date of this report showing that inflation remains above 8%, versus a target rate of just 2%, the Fed clearly has a distance yet to go, making further rate increases and market volatility more likely in the coming months. The question remains as to whether the Fed and other central banks will manage a so-called “soft landing,” curbing inflation while avoiding a persistent economic slowdown. If they prove successful, we expect that favorable inflation trends and increasingly attractive valuations in both equity and bond markets should eventually translate into sustainable improvements in the investment environment.
Whatever actions the Fed takes and however financial markets react, as a MainStay investor, you can depend on us to continue providing the insight, expertise and service that have long defined New York Life Investments. Thank you for trusting us to help you meet your investment needs.
Sincerely,
Kirk C. Lehneis
President
 
The opinions expressed are as of the date of this report and are subject to change. There is no guarantee that any forecast made will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment. Past performance is no guarantee of future results.
Not part of the Annual Report


Table of Contents

Investors should refer to the Fund’s Summary Prospectus and/or Prospectus and consider the Fund’s investment objectives, strategies, risks, charges and expenses carefully before investing. The Summary Prospectus and/or Prospectus contain this and other information about the Fund. You may obtain copies of the Fund’s Summary Prospectus, Prospectus and Statement of Additional Information, which includes information about The MainStay Funds' Trustees, free of charge, upon request, by calling toll-free 800-624-6782, by writing to NYLIFE Distributors LLC, Attn: MainStay Marketing Department, 30 Hudson Street, Jersey City, NJ 07302 or by sending an e-mail to MainStayShareholderServices@nylim.com. These documents are also available via the MainStay Funds’ website at newyorklifeinvestments.com. Please read the Fund’s Summary Prospectus and/or Prospectus carefully before investing.


Investment and Performance Comparison (Unaudited)
Performance data quoted represents past performance. Past performance is no guarantee of future results. Because of market volatility and other factors, current performance may be lower or higher than the figures shown. Investment return and principal value will fluctuate, and as a result, when shares are redeemed, they may be worth more or less than their original cost. The graph below depicts the historical performance of Class I shares of the Fund. Performance will vary from class to class based on differences in class-specific expenses and sales charges. For performance information current to the most recent month-end, please call 800-624-6782 or visit newyorklifeinvestments.com.
The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on distributions or Fund share redemptions. Total returns reflect maximum applicable sales charges as indicated in the table below, if any, changes in share price, and reinvestment of dividend and capital gain distributions. The graph assumes the initial investment amount shown below and reflects the deduction of all sales charges that would have applied for the period of investment. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower. For more information on share classes and current fee waivers and/or expense limitations (if any), please refer to the Notes to Financial Statements.
Average Annual Total Returns for the Year-Ended October 31, 2022
Class Sales Charge   Inception
Date1
One
Year
Five
Years
Ten
Years
Gross
Expense
Ratio2
Class A Shares Maximum 4.5% Initial Sales Charge With sales charges 6/1/1998 -28.31% -5.09% -0.88% 1.32%
    Excluding sales charges   -24.93 -4.21 -0.42 1.32
Investor Class Shares3 Maximum 4% Initial Sales Charge With sales charges 2/28/2008 -28.26 -5.39 -1.13 1.70
    Excluding sales charges   -25.27 -4.51 -0.67 1.70
Class B Shares4 Maximum 5% CDSC With sales charges 6/1/1998 -29.38 -5.57 -1.42 2.45
  if Redeemed Within the First Six Years of Purchase Excluding sales charges   -25.85 -5.25 -1.42 2.45
Class C Shares Maximum 1% CDSC With sales charges 9/1/1998 -26.61 -5.25 -1.41 2.45
  if Redeemed Within One Year of Purchase Excluding sales charges   -25.90 -5.25 -1.41 2.45
Class I Shares No Sales Charge   8/31/2007 -24.75 -3.95 -0.15 1.06
    
1. Prior to February 28, 2017, the Fund's primary investment strategies were changed. Effective June 21, 2019, the Fund replaced its prior subadvisor and modified its investment objective and principal investment strategies. The performance in the graph and table prior to those dates reflects its prior subadvisor's, investment objective and principal investment strategies.
2. The gross expense ratios presented reflect the Fund’s “Total Annual Fund Operating Expenses” from the most recent Prospectus, as supplemented, and may differ from other expense ratios disclosed in this report.
3. Prior to June 30, 2020, the maximum initial sales charge was 4.5%, which is reflected in the applicable average annual total return figures shown.
4. Class B shares are closed to all new purchases as well as additional investments by existing Class B shareholders.
The footnotes on the next page are an integral part of the table and graph and should be carefully read in conjunction with them.
5


Benchmark Performance* One
Year
Five
Years
Ten
Years
JPMorgan EMBI Global Diversified Index1 -24.19% -2.66% 1.01%
Morningstar Emerging Markets Bond Category Average2 -21.77 -2.75 -0.59
    
* 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. The JPMorgan EMBI Global Diversified Index is the Fund’s primary broad-based securities market index for comparison purposes. The JPMorgan EMBI Global Diversified Index is a market-capitalization weighted, total return index tracking the traded market for U.S. dollar-denominated Brady Bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities.
2. The Morningstar Emerging Markets Bond Category Average is representative of funds that invest more than 65% of their assets in foreign bonds from developing countries. The largest portion of the emerging-markets bond market comes from Latin America, followed by Eastern Europe. Africa, the Middle East, and Asia make up the rest. Results are based on average total returns of similar funds with all dividends and capital gain distributions reinvested.
The footnotes on the preceding page are an integral part of the table and graph and should be carefully read in conjunction with them.
6 MainStay Candriam Emerging Markets Debt Fund


Cost in Dollars of a $1,000 Investment in MainStay Candriam Emerging Markets Debt Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from May 1, 2022 to October 31, 2022, and the impact of those costs on your investment.
Example
As a shareholder of the Fund you incur two types of costs: (1) transaction costs, including exchange fees and sales charges (loads) on purchases (as applicable), and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from May 1, 2022 to October 31, 2022.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended October 31, 2022. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other mutual funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as exchange fees or sales charges (loads). Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Share Class Beginning
Account
Value
5/1/22
Ending Account
Value (Based
on Actual
Returns and
Expenses)
10/31/22
Expenses
Paid
During
Period1
Ending Account
Value (Based
on Hypothetical
5% Annualized
Return and
Actual Expenses)
10/31/22
Expenses
Paid
During
Period1
Net Expense
Ratio
During
Period2
Class A Shares $1,000.00 $878.80 $ 5.45 $1,019.41 $ 5.85 1.15%
Investor Class Shares $1,000.00 $877.00 $ 7.43 $1,017.29 $ 7.98 1.57%
Class B Shares $1,000.00 $873.20 $11.00 $1,013.46 $11.82 2.33%
Class C Shares $1,000.00 $873.40 $11.00 $1,013.46 $11.82 2.33%
Class I Shares $1,000.00 $880.30 $ 4.03 $1,020.92 $ 4.33 0.85%
    
1. Expenses are equal to the Fund’s annualized expense ratio of each class multiplied by the average account value over the period, divided by 365 and multiplied by 184 (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. In addition to the fees and expenses which the Fund bears directly, it also indirectly bears a pro rata share of the fees and expenses of the underlying funds in which it invests. Such indirect expenses are not included in the above-reported expense figures.
2. Expenses are equal to the Fund's annualized expense ratio to reflect the six-month period.
7



Country Composition as of October 31, 2022 (Unaudited)
Mexico 8.6%
United States 7.1
United Arab Emirates 6.3
Saudi Arabia 5.4
Chile 4.8
Indonesia 4.7
Romania 4.5
Colombia 4.4
Brazil 3.3
Oman 3.2
South Africa 3.0
Qatar 2.9
Dominican Republic 2.9
Hungary 2.5
Croatia 2.4
Egypt 2.2
Azerbaijan 2.0
Angola 1.8
Bahrain 1.7
Philippines 1.7
Nigeria 1.6
Uruguay 1.5
Ecuador 1.4
Argentina 1.4
Ukraine 1.3
Paraguay 1.3%
Panama 1.3
El Salvador 1.0
Republic of the Congo 1.0
Gabon 0.9
Peru 0.9
Tunisia 0.8
Iraq 0.8
Ghana 0.7
Georgia 0.7
Venezuela 0.7
Poland 0.6
Mozambique 0.6
India 0.6
Cote D'Ivoire 0.6
Zambia 0.4
Bahamas 0.4
Sri Lanka 0.3
Senegal 0.3
Republic Of Serbia 0.2
Lebanon 0.2
Pakistan 0.1
Other Assets, Less Liabilities 3.0
  100.0%
See Portfolio of Investments beginning on page 12 for specific holdings within these categories. The Fund's holdings are subject to change.


Top Ten Holdings and/or Issuers Held as of October 31, 2022 (excluding short-term investments) (Unaudited)
1. Mexico Government Bond, 2.659%-4.75%, due 1/21/26–4/19/71
2. Chile Government Bond, 2.55%-4.34%, due 1/27/32–1/22/61
3. Abu Dhabi Government Bond, 1.875%-3.875%, due 4/16/25–4/16/50
4. Romanian Government Bond, 3.00%-6.00%, due 2/27/27–5/25/34
5. Oman Government Bond, 4.875%-7.00%, due 2/1/25–1/25/51
6. Colombia Government Bond, 3.125%-6.125%, due 2/26/24–5/15/49
 7. South Africa Government Bond, 4.30%-7.30%, due 9/16/25–4/20/52
 8. Qatar Government Bond, 3.40%-4.40%, due 4/16/25–4/16/50
 9. Dominican Republic Government Bond, 4.875%-5.95%, due 1/27/25–1/30/60
10. Hungary Government Bond, 2.125%-3.125%, due 9/22/31–9/21/51
 

8 MainStay Candriam Emerging Markets Debt Fund


Portfolio Management Discussion and Analysis (Unaudited)
Questions answered by portfolio managers Diliana Deltcheva, CFA, and Christopher Mey, CFA, of Candriam, the Fund’s Subadvisor.
How did MainStay Candriam Emerging Markets Debt Fund perform relative to its benchmark and peer group during the 12 months ended October 31, 2022?
For the 12 months ended October 31, 2022, Class I shares of MainStay Candriam Emerging Markets Debt Fund returned −24.75%, underperforming the −24.19% return of the Fund’s benchmark, the JPMorgan EMBI Global Diversified Index (the "Index"). Over the same period, Class I shares also underperformed the −21.77% return of the Morningstar Emerging Markets Bond Category Average.1
Were there any changes to the Fund during the reporting period?
Effective January 11, 2022, Magda Branet no longer served as a portfolio manager for the Fund. For more information see the prospectus supplement dated January 11, 2022.
What factors affected the Fund’s relative performance during the reporting period?
In the fourth quarter of 2021, emerging-market hard-currency debt optically declined only marginally, as flat Treasury returns, muted spread2 returns and asset class risks progressively rose during the quarter. In November, the discovery of a more contagious Omicron variant of the COVID-19 virus in South Africa accelerated a slight correction in the asset class. The U.S. Federal Reserve (the “Fed”) shifted to an explicitly hawkish stance during the quarter, and market expectations of a rate hike increased significantly. The main detractor from the Fund’s performance relative to the Index during the final two months of 2021 was overweight exposure to idiosyncratic high-yield credits, including Ghana, El Salvador, Ukraine and Venezuela. Underweight positions in rich U.S. Treasury-sensitive emerging-markets investment-grade credits, including Malaysia, Philippines and Qatar—which were supported by the Omicron-driven U.S. Treasury rally towards year end—also detracted from relative performance. The top contributions to the Fund’s relative performance came from underweight positions in distressed and/or nearing default debt of Belarus, Ethiopia and Sri Lanka, as well as overweight positions in Bahamas and Ecuador, which benefited from stabilization of debt sustainability risks. (Contributions take weightings and total returns into account.)
In the first quarter of 2022, emerging-market hard-currency debt posted one of its worst quarters on record as geopolitical risks rose sharply with the Russian invasion of Ukraine on February 24, 2022, adding to already-weak emerging-markets sentiment regarding developed-market monetary policy tightening and
Chinese regulatory activism. Both spread and U.S. Treasury returns rose on higher emerging-markets spreads: spread returns were up 31 basis points (“bps”) and 10-year U.S. Treasury yields were up 83 bps, amid more volatile core rates and emerging-markets risk premiums. (A basis point is one one-hundredth of a percentage point.) The Fund strongly outperformed the Index thanks to underweight positions in Belarus, Kazakhstan and Russia. An outright short 10-year U.S. Treasury futures position also bolstered relative performance, as 10-year U.S. Treasuries sold-off by 83 bps during the quarter. Overweight exposure to energy exporters, including Azerbaijan, Iraq, Nigeria and Venezuela also made positive contributions to relative performance, as oil rallied further following the implementation of Russian sanctions.
Emerging-market hard-currency debt delivered poor returns again in the second quarter of 2022.Tightening global liquidity related to the start of the developed-market central bank hiking cycle, together with surging inflation related to higher commodities prices, China’s “Zero-COVID” policies (which restricted goods supply) and the ongoing war in Ukraine (which pressured energy and agricultural prices) led to a material risky asset market correction. The Fund’s slight underperformance over the quarter (78 bps) was due to underweight exposure to defensive Chinese sovereign and quasi-sovereign debt, which outperformed the Index. Overweight positions in higher beta3 credits, including Egypt, Ghana and Bahrain—which suffered in an environment of tighter global liquidity conditions, high and rising volatility of core rates, and general uncertainties over the global growth outlook—also detracted from returns. However, these negative positions were partially balanced by the positive impact of underweight exposures in Sri Lanka and Kenya. Sri Lanka declared default in May and approached the International Monetary Fund (the “IMF”) for a funding program while Kenya held elections in August and faced rising funding concerns. Overweight exposure in Iraq (an oil exporter with no repayment issues), also contributed to relative performance.
In the third quarter of 2022, elevated U.S. nominal and real rates volatility drove corrections across credit and equity in developed and emerging markets. These corrections were in line with typical asset performance trends at the mature stage of monetary policy normalization and economic contraction. The Fund underperformed the Index by 85 bps over the quarter, due to underweight positions in China and Turkey, as well as overweight positions in Venezuela and Petroleos de Venezuela (PDVSA), the Venezuelan state-owned oil and natural gas company. Security selection in Argentina (with Province of Buenos Aires
 
1. See page 5 for other share class returns, which may be higher or lower than Class I share returns. See page 6 for more information on benchmark and peer group returns.
2. 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.
3. Beta is a measure of volatility in relation to the market as a whole. A beta higher than 1 indicates that a security or portfolio will tend to exhibit higher volatility than the market. A beta lower than 1 indicates that a security or portfolio will tend to exhibit lower volatility than the market.
9


outperforming the sovereign) and underweight exposure in Pakistan contributed positively to relative performance, as did the Fund’s higher average cash position and its underweight exposure to U.S. Treasury duration.4
During the reporting period, how was the Fund’s performance materially affected by investments in derivatives?
The Fund held a short 10-year U.S. Treasury futures position from the beginning of 2022 that posted positive performance over the reporting period. The Fund also initiated a short position in the 5-year, versus a long position in the 30-year segment on rising stagflation risks, which was also rewarded.
What was the Fund’s duration strategy during the reporting period?
In the first quarter of 2022, the Fund's absolute duration (−4 bps to 6.57 years) and relative duration (−37 bps to − 0.91 years) declined marginally; we took some profits on the Fund’s 10-year U.S. Treasury position and installed a short 5-year versus 30-year U.S. Treasury yield curve5 position on the basis of rising stagflation risks. Through the second quarter, the Fund’s absolute duration (-42 bps to 6.15 years) and relative duration (-25 bps to -0.66 years) continued to decline as we persisted in our partial profit-taking on the Fund’s short U.S. Treasury position, when 10-year U.S. Treasuries approached 3.5% in mid-June. The Fund’s duration did not change materially through the end of the reporting period, with absolute duration standing at 5.84 years and relative duration standing at -0.73 years.
How was the Fund affected by shifting currency values during the reporting period?
The Fund was not affected by shifting currency values during the reporting period.
During the reporting period, which countries and/or sectors were the strongest positive contributors to the Fund’s relative performance and which countries and/or sectors were particularly weak?
During the last two months of 2021, the main detractors from the Fund’s performance relative to the Index were overweight positions in idiosyncratic high-yield credits, including Ghana, El Salvador, Ukraine and Venezuela. The Fund’s underweight positions in rich U.S. Treasury-sensitive emerging-market investment-grade credits, including Malaysia, Philippines and Qatar, which were supported by the Omicron-driven Treasury rally towards year end, also detracted from relative returns. The
strongest contributors to relative performance were underweight positions in distressed and/or nearing default Belarus, Ethiopia and Sri Lanka, as well as overweight positions in Bahamas and Ecuador, which benefited from stabilization of debt sustainability risks.
During the first ten months of 2022, the main positive contributors included the Fund’s underweight positions in Russia, Belarus and Kazakhstan. The Fund’s underweight exposure to U.S. Treasuries (short positions, both outright and relative) also enhanced relative returns. The main detractors from relative performance were the Fund’s overweight position in Ukraine and underweight positions in certain investment-grade countries when, despite tight spreads, China and Indonesia continued outperforming asset class peers.
What were some of the Fund’s largest purchases and sales during the reporting period?
In the first quarter of 2022, the Fund reduced risk overall across a number of high-yield credits (Argentina, El Salvador, Nigeria, Pakistan and Zambia) that may have been impacted by a rise in asset class uncertainty. When emerging-market spreads widened to 526 bps in the first week of March, we added high-yield risk back into the Fund through energy exporters and Egypt. We added exposure to energy exporters, including Angola, Bahrain, Ecuador and Oman, on the view that oil prices in the $90-$110 range would strengthen their balance sheets and lead to risk premium compression. In Egypt, we covered the Fund’s underweight position and moved to an overweight stance when the country rounded up sizeable Gulf Cooperation Council financing ($12 billion to date) and moved closer to an IMF funding program, after allowing a currency devaluation in excess of 15%. We moved to complete underweight positions in Pakistan and Turkey on the rise of political uncertainty in the former, and given the adverse impact of higher agricultural and energy prices in both countries.
During the second quarter, we continued to reduce the Fund’s risk on the margin and selectively participated in primary market deals. The early-quarter recovery lasted until April 5, 2022, with emerging-market spreads widening by an impressive 155 bps between the low on April 5, 2022, (387 bps) and June 30, 2022. The reductions included vulnerable and higher-beta high-yield credits, including Angola, Bahrain, Colombia, Ecuador, Ghana, Nigeria, Pakistan and Tunisia. In May, we also reduced the Fund’s exposure to longer-dated investment-grade credits in Indonesia, Peru, Romania and UAE that had outperformed their respective 10-year counterparts. Additionally, we exited the Fund’s 30-year, long U.S. Treasury futures position, retaining only the 5-year short U.S. Treasury futures position, as the long end of the U.S. Treasury curve flattened to prior cycle lows.
4. 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.
5. 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.
10 MainStay Candriam Emerging Markets Debt Fund


In the third quarter of 2022, we continued reducing risk on the margin and selectively participated in primary market deals. Volatility during the third quarter rose materially, with emerging-market spreads rising to 592 bps by mid-July, before recovering 120 bps by mid-August and widening to 559 bps by the end of September 2022, in line with nominal and real U.S. Treasury yields. The reductions spanned BB-rated6 (Azerbaijan, Brazil, Dominican Republic and Serbia) to higher-beta high-yield credits (Bahamas, Ghana, Egypt, Iraq, Nigeria, Oman and Pakistan). We added to the Fund’s Ukraine exposure as Eurobonds traded down to 20 bps after the two-year debt service extension agreed in August. We also increased exposure to Colombia in anticipation of some political risk premium repricing after the presidential election cycle was resolved in mid-June.
How did the Fund’s country and/or sector weightings change during the reporting period?
Early in the reporting period, the buildup of Russian troops around the Russian-Ukraine border intensified. Following failed negotiations between Russia and Ukraine in January 2022 we decided to reduce the Fund’s exposure to Russian short-dated corporates in anticipation of an acceleration of the conflict. We reduced the Fund’s Russian corporate exposure from neutral (approximately 3.1%) to an underweight position of 2.5%, retaining a 0.5% position in Russian fertilizer producer PhosAgro. Once the full Russian invasion of Ukraine started on February 24, 2022, we divested the residual PhosAgro position.
In January 2022, mass protests erupted in Kazakhstan in response to a sudden and sharp increase in gas prices when the government removed a price cap. Eventually the protests turned violent as President Tokayev declared a state of emergency and ordered the use of force, resulting in 160+ civilian deaths. Given the sharp rise of political uncertainty, we fully divested the Fund of any Kazakh sovereign holdings (1% of the Fund), resulting in a full underweight position in Kazakhstan, compared to the Index weighting of 2.5%.
After taking profits in the tactical additions to high-yield-rated energy exporters that the Fund traded between March and April 2022, in May 2022 we covered the Fund’s underweight positions in cheap investment-grade-rated credits, bringing the Fund’s overall investment-grade exposure closer to Index. The additions included Abu Dhabi (1.5%), Chile (1.5%), Hungary (0.5%) and Mexico (1.5%).
In August 2022, we added to the Fund’s Colombia position (+2%), as we expected a decline in political risk premiums following the presidential elections of May 29, 2022, and a run-off on June 19, 2022, were cleared. Colombia screened as the most attractive BB-rated credit globally. We funded the addition to the Fund’s Colombia exposure with reductions in Brazil and the Dominican Republic, and with similarly rated Latin American credits trading well inside Colombia.
How was the Fund positioned at the end of the reporting period?
As of October 31, 2022, the Fund maintains a negative stance on U.S. Treasury-sensitive investment-grade-rated proxies concentrated in Asia (Malaysia, Philippines), the Gulf Cooperation Council (Qatar), and Latin America (Panama, Peru, Uruguay) on the view that investment-grade-rated issuers offer only limited spread cushion versus extended core rate rises. At the same time, we acknowledge that during the current contractionary stage of the business cycle, investment grade is likely to outperform high yield. In response, the Fund retains exposure to select investment-grade-rated credits with attractive valuations, including Chile, Hungary, Mexico, Poland and Romania.
Outside of the oil exporter and investment-grade space, the Fund continues to hold overweight exposure to attractively valued and fundamentally supported emerging market credits across BB-rated and high-yield credits in Africa (Ivory Coast) and Europe (Ukraine). The Fund also continues to hold specific idiosyncratic credits with near-term performance catalysts and distressed valuations, including Argentina, Bahamas, Egypt and Tunisia. We prefer to retain the Fund’s underweight positions in distressed Sri Lanka (where restructuring may deliver recovery values in the low-to-mid-30s) and Pakistan (where floods increased risks for debt renegotiation). The Fund does not hold any Turkish exposure; this reflects our assessment that the government’s policies of foreign exchange (FX) deposit guarantees, targeted at preventing a bank run and deeper currency devaluation are unsustainable, given the country’s deeply negative net FX reserves position, and its excessive sensitivity to higher energy and wheat prices. The Fund does not have any exposure to Belarus, Kazakhstan, Russia, Uzbekistan or Tajikistan on the basis of elevated governance, default and sanctions risks that are not sufficiently compensated by valuations. 
6. An obligation rated ‘BB’ by Standard & Poor’s (“S&P”) is deemed by S&P to be less vulnerable to nonpayment than other speculative issues. In the opinion of S&P, however, the obligor faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor’s inadequate capacity 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.
The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.
11


Portfolio of Investments October 31, 2022
  Principal
Amount
Value
Long-Term Bonds 89.9%
Corporate Bonds 9.1%
Brazil 2.4% 
Arcos Dorados BV    
Series Reg S                     
6.125%, due 5/27/29 $     500,000 $    460,000
Braskem Netherlands Finance BV    
Series Reg S                     
4.50%, due 1/31/30    800,000     649,136
Rumo Luxembourg SARL    
Series Reg S    
4.20%, due 1/18/32 500,000 378,750
    1,487,886
Georgia 0.7% 
Georgian Railway JSC    
Series Reg S    
4.00%, due 6/17/28 600,000 451,548
Mexico 2.2% 
Alpek SAB de CV    
Series Reg S    
3.25%, due 2/25/31 (a) 750,000 573,560
Cemex SAB de CV    
Series Reg S    
3.875%, due 7/11/31 (a) 500,000 380,582
Orbia Advance Corp. SAB de CV    
Series Reg S    
5.875%, due 9/17/44 500,000 384,895
    1,339,037
Saudi Arabia 2.6% 
Gaci First Investment Co.    
Series Reg S    
5.25%, due 10/13/32 1,300,000 1,269,125
SA Global Sukuk Ltd.    
Series Reg S    
1.602%, due 6/17/26 400,000 349,916
    1,619,041
United Arab Emirates 1.1% 
Galaxy Pipeline Assets Bidco Ltd.    
Series Reg S    
2.625%, due 3/31/36 650,000 493,660
MDGH GMTN RSC Ltd.    
Series Reg S    
5.50%, due 4/28/33 200,000 198,656
    692,316
  Principal
Amount
Value
 
Venezuela 0.1% 
Petroleos de Venezuela SA    
5.375%, due 4/12/27 (b)(c)(d) $   3,000,000 $     60,000
Total Corporate Bonds
(Cost $7,386,501)
  5,649,828
Foreign Government Bonds 80.8%
Angola 1.8% 
Angola Government Bond    
Series Reg S                     
8.00%, due 11/26/29    400,000     324,680
Series Reg S    
8.75%, due 4/14/32 500,000 402,750
Series Reg S    
9.375%, due 5/8/48 500,000 379,400
    1,106,830
Argentina 1.4% 
Buenos Aires Government Bond    
Series Reg S    
5.25%, due 9/1/37 (e) 2,887,805 869,652
Azerbaijan 2.0% 
Southern Gas Corridor CJSC    
Series Reg S    
6.875%, due 3/24/26 700,000 687,764
State Oil Co. of the Azerbaijan Republic    
Series Reg S    
6.95%, due 3/18/30 550,000 534,094
    1,221,858
Bahamas 0.4% 
Bahamas Government Bond    
Series Reg S    
6.00%, due 11/21/28 400,000 252,545
Bahrain 1.7% 
Bahrain Government Bond    
Series Reg S    
5.625%, due 5/18/34 500,000 391,290
Series Reg S    
6.25%, due 1/25/51 300,000 210,991
Series Reg S    
6.75%, due 9/20/29 500,000 469,170
    1,071,451
 
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
12 MainStay Candriam Emerging Markets Debt Fund


  Principal
Amount
Value
Foreign Government Bonds (continued)
Brazil 0.9% 
Brazil Government Bond    
8.75%, due 2/4/25 $     500,000 $    533,153
Chile 4.8% 
Chile Government Bond    
2.55%, due 1/27/32 (a) 1,200,000     940,047
2.55%, due 7/27/33 1,000,000     743,578
3.10%, due 1/22/61 (a)    300,000     167,723
3.50%, due 1/31/34    400,000     322,622
3.50%, due 4/15/53 (a) 550,000 355,939
4.34%, due 3/7/42 561,000 431,414
    2,961,323
Colombia 4.4% 
Colombia Government Bond    
3.125%, due 4/15/31 300,000 204,864
3.25%, due 4/22/32 300,000 199,096
4.00%, due 2/26/24 800,000 766,260
5.00%, due 6/15/45 300,000 181,680
5.20%, due 5/15/49 300,000 181,888
6.125%, due 1/18/41 500,000 355,494
Ecopetrol SA    
4.625%, due 11/2/31 1,200,000 826,995
    2,716,277
Cote D'Ivoire 0.6% 
Ivory Coast Government Bond    
Series Reg S    
5.75%, due 12/31/32 (e) 125,389 110,601
Series Reg S    
6.125%, due 6/15/33 (a) 300,000 234,000
    344,601
Croatia 2.4% 
Croatia Government Bond    
Series Reg S    
5.50%, due 4/4/23 1,000,000 1,000,084
Series Reg S    
6.00%, due 1/26/24 500,000 503,301
    1,503,385
Dominican Republic 2.9% 
Dominican Republic Government Bond    
Series Reg S    
4.875%, due 9/23/32 300,000 231,152
Series Reg S    
5.50%, due 1/27/25 500,000 488,695
  Principal
Amount
Value
 
Dominican Republic (continued) 
Dominican Republic Government Bond
(continued)
   
Series Reg S                     
5.50%, due 2/22/29 $     300,000 $    261,940
Series Reg S                     
5.875%, due 1/30/60    500,000     328,379
Series Reg S                     
5.95%, due 1/25/27    500,000    466,998
    1,777,164
Ecuador 1.4% 
Ecuador Government Bond    
Series Reg S    
(zero coupon), due 7/31/30 208,496 64,807
Series Reg S    
1.50%, due 7/31/40 (e) 1,200,000 396,207
Series Reg S    
2.50%, due 7/31/35 (e) 1,200,000 438,595
    899,609
Egypt 2.2% 
Egypt Government Bond    
Series Reg S    
5.875%, due 2/16/31 500,000 307,500
Series Reg S    
6.875%, due 4/30/40 300,000 172,320
Series Reg S    
7.30%, due 9/30/33 500,000 311,876
Series Reg S    
7.50%, due 2/16/61 600,000 333,900
Series Reg S    
8.70%, due 3/1/49 400,000 238,000
    1,363,596
El Salvador 1.0% 
El Salvador Government Bond    
Series Reg S    
7.625%, due 2/1/41 900,000 308,638
Series Reg S    
8.25%, due 4/10/32 500,000 198,709
Series Reg S    
9.50%, due 7/15/52 263,000 98,636
    605,983
Gabon 0.9% 
Gabon Government Bond    
Series Reg S    
6.95%, due 6/16/25 350,000 315,301
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
13


Portfolio of Investments October 31, 2022 (continued)
  Principal
Amount
Value
Foreign Government Bonds (continued)
Gabon (continued) 
Gabon Government Bond (continued)    
Series Reg S                     
7.00%, due 11/24/31 $     350,000 $    243,442
    558,743
Ghana 0.7% 
Ghana Government Bond    
Series Reg S                     
7.75%, due 4/7/29 (a)    800,000     230,360
Series Reg S    
7.875%, due 2/11/35 500,000 140,040
Series Reg S    
8.627%, due 6/16/49 300,000 82,080
    452,480
Hungary 2.5% 
Hungary Government Bond    
Series Reg S    
2.125%, due 9/22/31 1,600,000 1,143,974
Series Reg S    
3.125%, due 9/21/51 800,000 437,565
    1,581,539
India 0.6% 
Export-Import Bank of India    
Series Reg S    
2.25%, due 1/13/31 500,000 366,375
Indonesia 4.7% 
Indonesia Government Bond    
3.55%, due 3/31/32 (a) 700,000 597,272
5.45%, due 9/20/52 500,000 450,000
Pertamina Persero PT    
Series Reg S    
4.15%, due 2/25/60 500,000 308,749
5.625%, due 5/20/43 (a)(f) 500,000 412,500
Series Reg S    
6.00%, due 5/3/42 400,000 340,818
Perusahaan Penerbit SBSN Indonesia III    
Series Reg S    
3.55%, due 6/9/51 700,000 472,573
Series Reg S    
4.70%, due 6/6/32 (a) 350,000 327,016
    2,908,928
  Principal
Amount
Value
 
Iraq 0.8% 
Iraq Government Bond    
Series Reg S                     
5.80%, due 1/15/28 $     206,250 $    175,216
Series Reg S                     
6.752%, due 3/9/23    300,000    294,750
    469,966
Lebanon 0.2% 
Lebanon Government Bond (b)(c)(d)    
Series Reg S    
6.65%, due 4/22/24 1,200,000 70,874
Series Reg S    
6.85%, due 3/23/27 1,000,000 59,000
    129,874
Mexico 6.4% 
Comision Federal de Electricidad    
Series Reg S    
3.875%, due 7/26/33 500,000 356,250
Series Reg S    
4.677%, due 2/9/51 700,000 426,773
Mexico Government Bond    
2.659%, due 5/24/31 500,000 387,071
3.50%, due 2/12/34 500,000 381,477
3.75%, due 4/19/71 1,000,000 578,304
3.771%, due 5/24/61 800,000 464,309
4.125%, due 1/21/26 1,000,000 962,534
4.75%, due 4/27/32 (a) 500,000 452,306
    4,009,024
Mozambique 0.6% 
Mozambique Government Bond    
Series Reg S    
5.00%, due 9/15/31 (e) 550,000 370,563
Nigeria 1.6% 
Nigeria Government Bond    
Series Reg S    
7.625%, due 11/21/25 500,000 429,502
Series Reg S    
7.625%, due 11/28/47 300,000 169,800
Series Reg S    
7.875%, due 2/16/32 600,000 385,500
Series Reg S    
8.375%, due 3/24/29 27,000 19,507
    1,004,309
 
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
14 MainStay Candriam Emerging Markets Debt Fund


  Principal
Amount
Value
Foreign Government Bonds (continued)
Oman 3.2% 
Oman Government Bond    
Series Reg S                     
4.875%, due 2/1/25 $   1,000,000 $    971,490
Series Reg S                     
5.625%, due 1/17/28    500,000     476,305
Series Reg S                     
7.00%, due 1/25/51    600,000    511,169
    1,958,964
Pakistan 0.1% 
Pakistan Government Bond    
Series Reg S    
7.375%, due 4/8/31 300,000 93,000
Panama 1.3% 
Aeropuerto Internacional de Tocumen SA    
Series Reg S    
5.125%, due 8/11/61 727,000 491,731
Panama Government Bond    
3.87%, due 7/23/60 500,000 289,283
    781,014
Paraguay 1.3% 
Paraguay Government Bond    
Series Reg S    
2.739%, due 1/29/33 495,000 368,424
Series Reg S    
5.40%, due 3/30/50 600,000 460,031
    828,455
Peru 0.9% 
Peruvian Government Bond    
2.783%, due 1/23/31 (a) 700,000 552,048
Philippines 1.7% 
Philippine Government Bond    
3.229%, due 3/29/27 300,000 276,346
4.20%, due 3/29/47 500,000 388,364
5.609%, due 4/13/33 (a) 381,000 381,061
    1,045,771
Poland 0.6% 
Poland Government Bond    
3.25%, due 4/6/26 200,000 187,488
4.00%, due 1/22/24 200,000 196,866
    384,354
  Principal
Amount
Value
 
Qatar 2.9% 
Qatar Government Bond    
Series Reg S                     
3.40%, due 4/16/25 $   1,000,000 $    964,178
Series Reg S                     
4.40%, due 4/16/50 1,000,000    840,000
    1,804,178
Republic Of Serbia 0.2% 
Serbia Government Bond    
Series Reg S    
2.125%, due 12/1/30 200,000 138,238
Republic of the Congo 1.0% 
Congo Government Bond    
Series Reg S    
6.00%, due 6/30/29 (e) 712,500 600,637
Romania 4.5% 
Romanian Government Bond    
Series Reg S    
3.00%, due 2/27/27 900,000 771,206
Series Reg S    
3.00%, due 2/14/31 300,000 221,592
Series Reg S    
5.25%, due 11/25/27 1,200,000 1,100,679
Series Reg S    
6.00%, due 5/25/34 800,000 674,112
    2,767,589
Saudi Arabia 2.8% 
Saudi Arabian Oil Co.    
Series Reg S    
2.25%, due 11/24/30 800,000 630,907
Series Reg S    
3.25%, due 11/24/50 300,000 188,095
Saudi Government Bond    
Series Reg S    
5.50%, due 10/25/32 900,000 911,250
    1,730,252
Senegal 0.3% 
Senegal Government Bond    
Series Reg S    
6.75%, due 3/13/48 250,000 158,625
South Africa 3.0% 
South Africa Government Bond    
4.30%, due 10/12/28 500,000 426,430
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
15


Portfolio of Investments October 31, 2022 (continued)
  Principal
Amount
Value
Foreign Government Bonds (continued)
South Africa (continued) 
South Africa Government Bond (continued)    
5.75%, due 9/30/49 $     200,000 $    132,660
5.875%, due 9/16/25    400,000     395,562
5.875%, due 4/20/32    400,000     341,728
6.25%, due 3/8/41    300,000     228,000
7.30%, due 4/20/52    450,000    352,125
    1,876,505
Sri Lanka 0.3% 
Sri Lanka Government Bond    
Series Reg S    
6.825%, due 7/18/26 (b)(d) 850,000 191,300
Tunisia 0.8% 
Tunisian Republic    
Series Reg S    
5.625%, due 2/17/24 EUR  200,000 145,253
Series Reg S    
5.75%, due 1/30/25 $  600,000 375,754
    521,007
Ukraine 1.3% 
NPC Ukrenergo    
Series Reg S    
6.875%, due 11/9/28 (b)(c)(d) 1,150,000 165,647
State Agency of Roads of Ukraine    
Series Reg S    
6.25%, due 6/24/30 (b)(c)(d) 2,227,000 311,833
Ukraine Government Bond (b)(c)(d)    
Series Reg S    
7.253%, due 3/15/35 1,300,000 198,838
Series Reg S    
7.375%, due 9/25/34 1,000,000 155,000
    831,318
United Arab Emirates 5.2% 
Abu Dhabi Government Bond    
Series Reg S    
1.875%, due 9/15/31 600,000 472,904
Series Reg S    
2.50%, due 4/16/25 1,000,000 951,250
Series Reg S    
3.125%, due 4/16/30 600,000 537,684
Series Reg S    
3.125%, due 9/30/49 600,000 403,524
Series Reg S    
3.875%, due 4/16/50 600,000 464,184
  Principal
Amount
Value
 
United Arab Emirates (continued) 
Finance Department Government of Sharjah    
Series Reg S                     
4.00%, due 7/28/50 $     400,000 $    230,680
United Arab Emirates Government Bond    
Series Reg S                     
3.90%, due 9/9/50    250,000    162,743
    3,222,969
Uruguay 1.5% 
Uruguay Government Bond    
4.975%, due 4/20/55 400,000 346,586
5.75%, due 10/28/34 600,000 610,830
    957,416
Venezuela 0.6% 
Petroleos de Venezuela SA (b)(c)(d)    
Series Reg S    
6.00%, due 5/16/24 2,500,000 56,250
Series Reg S    
6.00%, due 11/15/26 (g) 2,500,000 47,500
Venezuela Government Bond    
Series Reg S    
9.25%, due 5/7/28 (b)(c)(d) 4,095,000 276,412
    380,162
Zambia 0.4% 
Zambia Government Bond    
Series Reg S    
8.97%, due 7/30/27 (b)(d) 700,000 275,590
Total Foreign Government Bonds
(Cost $71,228,249)
  50,178,620
Total Long-Term Bonds
(Cost $78,614,750)
  55,828,448
 
 
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
16 MainStay Candriam Emerging Markets Debt Fund


  Shares   Value
Short-Term Investment 7.1%
Unaffiliated Investment Company 7.1% 
United States 7.1% 
Invesco Government & Agency Portfolio, 3.163% (h)(i) 4,430,155   $  4,430,155
Total Short-Term Investment
(Cost $4,430,155)
    4,430,155
Total Investments
(Cost $83,044,905)
97.0%   60,258,603
Other Assets, Less Liabilities 3.0   1,885,773
Net Assets 100.0%   $ 62,144,376
    
Percentages indicated are based on Fund net assets.
(a) All or a portion of this security was held on loan. As of October 31, 2022, the aggregate market value of securities on loan was $4,598,470; the total market value of collateral held by the Fund was $4,824,475. The market value of the collateral held included non-cash collateral in the form of U.S. Treasury securities with a value of $394,320. The Fund received cash collateral with a value of $4,430,155. (See Note 2(J))
(b) Issue in default.
(c) Illiquid security—As of October 31, 2022, the total market value deemed illiquid under procedures approved by the Board of Trustees was $1,401,354, which represented 2.3% of the Fund’s net assets.(Unaudited)
(d) Issue in non-accrual status.
(e) Step coupon—Rate shown was the rate in effect as of October 31, 2022.
(f) 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.
(g) Coupon rate may change based on changes of the underlying collateral or prepayments of principal. Rate shown was the rate in effect as of October 31, 2022.
(h) Current yield as of October 31, 2022.
(i) Represents a security purchased with cash collateral received for securities on loan.
Futures Contracts
As of October 31, 2022, the Fund held the following futures contracts1:
Type Number of
Contracts
Expiration
Date
Value at
Trade Date
Current
Notional
Amount
Unrealized
Appreciation
(Depreciation)2
Long Contracts          
U.S. Treasury Ultra Bonds 10 December 2022  $ 1,275,339  $ 1,276,563  $ 1,224
    
1. As of October 31, 2022, cash in the amount of $1,932,182 was on deposit with a broker or futures commission merchant for futures transactions.
2. Represents the difference between the value of the contracts at the time they were opened and the value as of October 31, 2022.
    
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
17


Portfolio of Investments October 31, 2022 (continued)
Abbreviation(s):
EUR—Euro
The following is a summary of the fair valuations according to the inputs used as of October 31, 2022, for valuing the Fund’s assets:
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)              
Long-Term Bonds              
Corporate Bonds         $  —     $  5,649,828   $ —     $  5,649,828
Foreign Government Bonds         —    50,178,620      50,178,620
Total Long-Term Bonds   55,828,448     55,828,448
Short-Term Investment              
Unaffiliated Investment Company  4,430,155            —       4,430,155
Total Investments in Securities 4,430,155   55,828,448     60,258,603
Other Financial Instruments              
Futures Contracts (b)      1,224            —           1,224
Total Investments in Securities and Other Financial Instruments $  4,431,379   $  55,828,448   $ —   $ 60,259,827
    
(a) For a complete listing of investments and their industries, see the Portfolio of Investments.
(b) The value listed for these securities reflects unrealized appreciation (depreciation) as shown on the Portfolio of Investments.
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
18 MainStay Candriam Emerging Markets Debt Fund


Statement of Assets and Liabilities as of October 31, 2022
Assets
Investment in securities, at value
(identified cost $83,044,905) including securities on loan of $4,598,470
$ 60,258,603
Cash 3,453,785
Cash denominated in foreign currencies
(identified cost $40,683)
40,779
Cash collateral on deposit at broker for futures contracts 1,932,182
Due from custodian 807,076
Receivables:  
Interest 763,851
Investment securities sold 266,445
Variation margin on futures contracts 71,500
Fund shares sold 6,513
Securities lending 3,532
Other assets 62,129
Total assets 67,666,395
Liabilities
Cash collateral received for securities on loan 4,430,155
Payables:  
Investment securities purchased 807,076
Fund shares redeemed 151,333
Transfer agent (See Note 3) 30,472
Shareholder communication 22,105
Manager (See Note 3) 20,753
NYLIFE Distributors (See Note 3) 13,803
Custodian 11,624
Professional fees 11,183
Trustees 47
Accrued expenses 9,849
Distributions payable 13,619
Total liabilities 5,522,019
Net assets $ 62,144,376
Composition of Net Assets
Shares of beneficial interest outstanding (par value of $.01 per share) unlimited number of shares authorized $ 90,231
Additional paid-in-capital 113,441,531
  113,531,762
Total distributable earnings (loss) (51,387,386)
Net assets $ 62,144,376
Class A  
Net assets applicable to outstanding shares $48,053,369
Shares of beneficial interest outstanding 6,984,655
Net asset value per share outstanding $ 6.88
Maximum sales charge (4.50% of offering price) 0.32
Maximum offering price per share outstanding $ 7.20
Investor Class  
Net assets applicable to outstanding shares $ 8,669,750
Shares of beneficial interest outstanding 1,245,686
Net asset value per share outstanding $ 6.96
Maximum sales charge (4.00% of offering price) 0.29
Maximum offering price per share outstanding $ 7.25
Class B  
Net assets applicable to outstanding shares $ 426,208
Shares of beneficial interest outstanding 63,383
Net asset value and offering price per share outstanding $ 6.72
Class C  
Net assets applicable to outstanding shares $ 1,358,322
Shares of beneficial interest outstanding 201,655
Net asset value and offering price per share outstanding $ 6.74
Class I  
Net assets applicable to outstanding shares $ 3,636,727
Shares of beneficial interest outstanding 527,734
Net asset value and offering price per share outstanding $ 6.89
 
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
19


Statement of Operations for the year ended October 31, 2022
Investment Income (Loss)
Income  
Interest $ 4,635,467
Securities lending, net 21,100
Total income 4,656,567
Expenses  
Manager (See Note 3) 573,341
Distribution/Service—Class A (See Note 3) 160,576
Distribution/Service—Investor Class (See Note 3) 26,582
Distribution/Service—Class B (See Note 3) 7,990
Distribution/Service—Class C (See Note 3) 22,716
Transfer agent (See Note 3) 172,527
Professional fees 83,134
Registration 75,730
Custodian 47,445
Shareholder communication 7,305
Trustees 1,508
Miscellaneous 8,755
Total expenses before waiver/reimbursement 1,187,609
Expense waiver/reimbursement from Manager (See Note 3) (178,325)
Net expenses 1,009,284
Net investment income (loss) 3,647,283
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:  
Unaffiliated investment transactions (14,035,936)
Futures transactions 831,068
Foreign currency transactions (368,963)
Foreign currency forward transactions 418,843
Net realized gain (loss) (13,154,988)
Net change in unrealized appreciation (depreciation) on:  
Unaffiliated investments (13,431,533)
Futures contracts (324,760)
Foreign currency forward contracts (134,512)
Translation of other assets and liabilities in foreign currencies (4,565)
Net change in unrealized appreciation (depreciation) (13,895,370)
Net realized and unrealized gain (loss) (27,050,358)
Net increase (decrease) in net assets resulting from operations $(23,403,075)
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
20 MainStay Candriam Emerging Markets Debt Fund


Statements of Changes in Net Assets
for the years ended October 31, 2022 and October 31, 2021
  2022 2021
Increase (Decrease) in Net Assets
Operations:    
Net investment income (loss) $ 3,647,283 $ 3,880,608
Net realized gain (loss) (13,154,988) 262,191
Net change in unrealized appreciation (depreciation) (13,895,370) 336,603
Net increase (decrease) in net assets resulting from operations (23,403,075) 4,479,402
Distributions to shareholders:    
Class A (3,612,534) (4,028,577)
Investor Class (549,300) (598,582)
Class B (37,561) (56,287)
Class C (107,128) (199,315)
Class I (237,169) (337,673)
  (4,543,692) (5,220,434)
Distributions to shareholders from return of capital:    
Class A (277,063)
Investor Class (42,129)
Class B (2,881)
Class C (8,216)
Class I (18,190)
  (348,479)
Total distributions to shareholders (4,892,171) (5,220,434)
Capital share transactions:    
Net proceeds from sales of shares 12,957,410 10,338,246
Net asset value of shares issued to shareholders in reinvestment of distributions 4,663,688 4,945,465
Cost of shares redeemed (31,448,175) (21,792,166)
Increase (decrease) in net assets derived from capital share transactions (13,827,077) (6,508,455)
Net increase (decrease) in net assets (42,122,323) (7,249,487)
Net Assets
Beginning of year 104,266,699 111,516,186
End of year $ 62,144,376 $104,266,699
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
21


Financial Highlights selected per share data and ratios
  Year Ended October 31,
Class A 2022   2021   2020   2019   2018
Net asset value at beginning of year $ 9.73   $ 9.81   $ 10.46   $ 9.71   $ 10.88
Net investment income (loss) (a) 0.38   0.36   0.47   0.49   0.45
Net realized and unrealized gain (loss) (2.73)   0.04   (0.67)   0.76   (1.19)
Total from investment operations (2.35)   0.40   (0.20)   1.25   (0.74)
Less distributions:                  
From net investment income (0.46)   (0.48)   (0.45)   (0.50)   (0.43)
Return of capital (0.04)        
Total distributions (0.50)   (0.48)   (0.45)   (0.50)   (0.43)
Net asset value at end of year $ 6.88   $ 9.73   $ 9.81   $ 10.46   $ 9.71
Total investment return (b) (24.93)%   4.00%   (1.80)%   13.05%   (6.95)%
Ratios (to average net assets)/Supplemental Data:                  
Net investment income (loss) 4.53%   3.58%   4.70%   4.78%   4.36%
Net expenses (c) 1.15%   1.16%   1.17%   1.23%   1.26%
Expenses (before waiver/reimbursement) (c) 1.36%   1.31%   1.33%   1.26%   1.26%
Portfolio turnover rate 116%   112%   102%   102%   44%
Net assets at end of year (in 000’s) $ 48,053   $ 81,092   $ 82,874   $ 93,472   $ 86,452
    
(a) Per share data based on average shares outstanding during the year.
(b) Total investment return is calculated exclusive of sales charges and assumes the reinvestment of dividends and distributions. For periods of less than one year, total return is not annualized.
(c) In addition to the fees and expenses which the Fund bears directly, it also indirectly bears a pro-rata share of the fees and expenses of the underlying funds in which it invests. Such indirect expenses are not included in the above expense ratios.
    
  Year Ended October 31,
Investor Class 2022   2021   2020   2019   2018
Net asset value at beginning of year $ 9.84   $ 9.91   $ 10.57   $ 9.80   $ 10.98
Net investment income (loss) (a) 0.35   0.33   0.44   0.47   0.43
Net realized and unrealized gain (loss) (2.77)   0.04   (0.68)   0.77   (1.20)
Total from investment operations (2.42)   0.37   (0.24)   1.24   (0.77)
Less distributions:                  
From net investment income (0.43)   (0.44)   (0.42)   (0.47)   (0.41)
Return of capital (0.03)        
Total distributions (0.46)   (0.44)   (0.42)   (0.47)   (0.41)
Net asset value at end of year $ 6.96   $ 9.84   $ 9.91   $ 10.57   $ 9.80
Total investment return (b) (25.27)%   3.70%   (2.20)%   12.82%   (7.18)%
Ratios (to average net assets)/Supplemental Data:                  
Net investment income (loss) 4.14%   3.21%   4.38%   4.50%   4.15%
Net expenses (c) 1.56%   1.53%   1.49%   1.52%   1.47%
Expenses (before waiver/reimbursement) (c) 1.78%   1.70%   1.66%   1.56%   1.49%
Portfolio turnover rate 116%   112%   102%   102%   44%
Net assets at end of year (in 000's) $ 8,670   $ 12,806   $ 13,801   $ 16,024   $ 15,911
    
(a) Per share data based on average shares outstanding during the year.
(b) Total investment return is calculated exclusive of sales charges and assumes the reinvestment of dividends and distributions. For periods of less than one year, total return is not annualized.
(c) In addition to the fees and expenses which the Fund bears directly, it also indirectly bears a pro-rata share of the fees and expenses of the underlying funds in which it invests. Such indirect expenses are not included in the above expense ratios.
    
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
22 MainStay Candriam Emerging Markets Debt Fund


Financial Highlights selected per share data and ratios
  Year Ended October 31,
Class B 2022   2021   2020   2019   2018
Net asset value at beginning of year $ 9.52   $ 9.61   $ 10.26   $ 9.52   $ 10.69
Net investment income (loss) (a) 0.27   0.24   0.36   0.38   0.34
Net realized and unrealized gain (loss) (2.67)   0.04   (0.66)   0.75   (1.18)
Total from investment operations (2.40)   0.28   (0.30)   1.13   (0.84)
Less distributions:                  
From net investment income (0.37)   (0.37)   (0.35)   (0.39)   (0.33)
Return of capital (0.03)        
Total distributions (0.40)   (0.37)   (0.35)   (0.39)   (0.33)
Net asset value at end of year $ 6.72   $ 9.52   $ 9.61   $ 10.26   $ 9.52
Total investment return (b) (25.85)%   2.87%   (2.91)%   12.04%   (7.98)%
Ratios (to average net assets)/Supplemental Data:                  
Net investment income (loss) 3.31%   2.49%   3.66%   3.76%   3.37%
Net expenses (c) 2.31%   2.28%   2.24%   2.27%   2.22%
Expenses (before waiver/reimbursement) (c) 2.52%   2.45%   2.40%   2.31%   2.24%
Portfolio turnover rate 116%   112%   102%   102%   44%
Net assets at end of year (in 000’s) $ 426   $ 1,129   $ 1,789   $ 2,663   $ 3,660
    
(a) Per share data based on average shares outstanding during the year.
(b) Total investment return is calculated exclusive of sales charges and assumes the reinvestment of dividends and distributions. For periods of less than one year, total return is not annualized.
(c) In addition to the fees and expenses which the Fund bears directly, it also indirectly bears a pro-rata share of the fees and expenses of the underlying funds in which it invests. Such indirect expenses are not included in the above expense ratios.
    
  Year Ended October 31,
Class C 2022   2021   2020   2019   2018
Net asset value at beginning of year $ 9.54   $ 9.63   $ 10.27   $ 9.54   $ 10.70
Net investment income (loss) (a) 0.27   0.25   0.36   0.38   0.35
Net realized and unrealized gain (loss) (2.67)   0.03   (0.66)   0.74   (1.18)
Total from investment operations (2.40)   0.28   (0.30)   1.12   (0.83)
Less distributions:                  
From net investment income (0.37)   (0.37)   (0.34)   (0.39)   (0.33)
Return of capital (0.03)        
Total distributions (0.40)   (0.37)   (0.34)   (0.39)   (0.33)
Net asset value at end of year $ 6.74   $ 9.54   $ 9.63   $ 10.27   $ 9.54
Total investment return (b) (25.90)%   2.87%   (2.81)%   11.91%   (7.88)%
Ratios (to average net assets)/Supplemental Data:                  
Net investment income (loss) 3.31%   2.52%   3.68%   3.78%   3.39%
Net expenses (c) 2.31%   2.28%   2.24%   2.27%   2.22%
Expenses (before waiver/reimbursement) (c) 2.52%   2.45%   2.40%   2.31%   2.24%
Portfolio turnover rate 116%   112%   102%   102%   44%
Net assets at end of year (in 000’s) $ 1,358   $ 3,511   $ 6,365   $ 11,150   $ 19,246
    
(a) Per share data based on average shares outstanding during the year.
(b) Total investment return is calculated exclusive of sales charges and assumes the reinvestment of dividends and distributions. For periods of less than one year, total return is not annualized.
(c) In addition to the fees and expenses which the Fund bears directly, it also indirectly bears a pro-rata share of the fees and expenses of the underlying funds in which it invests. Such indirect expenses are not included in the above expense ratios.
    
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
23


Financial Highlights selected per share data and ratios
  Year Ended October 31,
Class I 2022   2021   2020   2019   2018
Net asset value at beginning of year $ 9.75   $ 9.82   $ 10.48   $ 9.72   $ 10.90
Net investment income (loss) (a) 0.40   0.39   0.51   0.52   0.48
Net realized and unrealized gain (loss) (2.74)   0.05   (0.69)   0.76   (1.20)
Total from investment operations (2.34)   0.44   (0.18)   1.28   (0.72)
Less distributions:                  
From net investment income (0.48)   (0.51)   (0.48)   (0.52)   (0.46)
Return of capital (0.04)        
Total distributions (0.52)   (0.51)   (0.48)   (0.52)   (0.46)
Net asset value at end of year $ 6.89   $ 9.75   $ 9.82   $ 10.48   $ 9.72
Total investment return (b) (24.75)%   4.42%   (1.59)%   13.46%   (6.80)%
Ratios (to average net assets)/Supplemental Data:                  
Net investment income (loss) 4.89%   3.86%   5.09%   4.99%   4.60%
Net expenses (c) 0.85%   0.85%   0.85%   0.94%   1.01%
Expenses (before waiver/reimbursement) (c) 1.12%   1.06%   1.07%   1.01%   1.01%
Portfolio turnover rate 116%   112%   102%   102%   44%
Net assets at end of year (in 000’s) $ 3,637   $ 5,729   $ 6,687   $ 17,100   $ 10,428
    
(a) Per share data based on average shares outstanding during the year.
(b) Total investment return is calculated exclusive of sales charges and assumes the reinvestment of dividends and distributions. Class I shares are not subject to sales charges. For periods of less than one year, total return is not annualized.
(c) In addition to the fees and expenses which the Fund bears directly, it also indirectly bears a pro-rata share of the fees and expenses of the underlying funds in which it invests. Such indirect expenses are not included in the above expense ratios.
The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.
24 MainStay Candriam Emerging Markets Debt Fund


Notes to Financial Statements
Note 1-Organization and Business
The MainStay Funds (the “Trust”) was organized on January 9, 1986, as a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and is comprised of twelve funds (collectively referred to as the "Funds"). These financial statements and notes relate to the MainStay Candriam Emerging Markets Debt Fund (the "Fund"), a “diversified” fund, as that term is defined in the 1940 Act, as interpreted or modified by regulatory authorities having jurisdiction, from time to time.
The following table lists the Fund's share classes that have been registered and commenced operations:
Class Commenced Operations
Class A June 1, 1998
Investor Class February 28, 2008
Class B June 1, 1998
Class C September 1, 1998
Class I August 31, 2007
Class R6 N/A*
SIMPLE Class N/A*
    
* Class R6 shares were registered for sale effective as of February 28, 2017 and SIMPLE Class shares were registered for sale effective as of August 31, 2020 but have not yet commenced operations.
Class B shares of the MainStay Group of Funds are closed to all new purchases as well as additional investments by existing Class B shareholders. Existing Class B shareholders may continue to reinvest dividends and capital gains distributions, as well as exchange their Class B shares for Class B shares of other funds in the MainStay Group of Funds as permitted by the current exchange privileges. Class B shareholders continue to be subject to any applicable contingent deferred sales charge ("CDSC") at the time of redemption. All other features of the Class B shares, including but not limited to the fees and expenses applicable to Class B shares, remain unchanged. Unless redeemed, Class B shareholders will remain in Class B shares of their respective fund until the Class B shares are converted to Class A or Investor Class shares pursuant to the applicable conversion schedule.
Class A and Investor Class shares are offered at net asset value (“NAV”) per share plus an initial sales charge. No initial sales charge applies to investments of $1 million or more (and certain other qualified purchases) in Class A and Investor Class shares. However, a CDSC of 1.00% may be imposed on certain redemptions made within 18 months of the date of purchase on shares that were purchased without an initial sales charge. Class C shares are offered at NAV without an initial sales charge, although a 1.00% CDSC may be imposed on certain redemptions of such shares made within one year of the date of purchase of Class C shares. When Class B shares were offered, they were offered at NAV without an initial sales charge, although a CDSC that declines depending on the number of years a shareholder held its Class B shares may be imposed on certain redemptions of such shares made within six years of the date
of purchase of such shares. Class I shares are offered at NAV without a sales charge. Class R6 and SIMPLE Class shares are expected to be offered at NAV without a sales charge if such shares are offered in the future. Depending upon eligibility, Class B shares convert to either Class A or Investor Class shares at the end of the calendar quarter eight years after the date they were purchased. In addition, depending upon eligibility, Class C shares convert to either Class A or Investor Class shares at the end of the calendar quarter eight years after the date they were purchased. Additionally, Investor Class shares may convert automatically to Class A shares. Under certain circumstances and as may be permitted by the Trust’s multiple class plan pursuant to Rule 18f-3 under the 1940 Act, specified share classes of the Fund may be converted to one or more other share classes of the Fund as disclosed in the capital share transactions within these Notes. The classes of shares have the same voting (except for issues that relate solely to one class), dividend, liquidation and other rights, and the same terms and conditions, except that under distribution plans pursuant to Rule 12b-1 under the 1940 Act, Class B and Class C shares are subject to higher distribution and/or service fees than Class A, Investor Class and SIMPLE Class shares. Class I and Class R6 shares are not subject to a distribution and/or service fee.
The Fund's investment objective is to seek total return.
Note 2–Significant Accounting Policies
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services—Investment Companies. The Fund prepares its financial statements in accordance with generally accepted accounting principles (“GAAP”) in the United States of America and follows the significant accounting policies described below.
(A) Securities Valuation.  Investments are usually valued as of the close of regular trading on the New York Stock Exchange (the "Exchange") (usually 4:00 p.m. Eastern time) on each day the Fund is open for business ("valuation date").
Effective September 8, 2022, and pursuant to Rule 2a-5 under the 1940 Act, the Board of Trustees of the Trust (the "Board") designated New York Life Investment Management LLC (“New York Life Investments” or the "Manager") as its Valuation Designee (the "Valuation Designee"). The Valuation Designee is responsible for performing fair valuations relating to all investments in the Fund’s portfolio for which market quotations are not readily available; periodically assessing and managing material valuation risks; establishing and applying fair value methodologies; testing fair valuation methodologies; evaluating and overseeing pricing services; segregation of valuation and portfolio management functions; providing quarterly, annual and prompt reporting to the Board, as appropriate; identifying potential conflicts of interest; and maintaining appropriate records. The Valuation Designee has established a valuation committee ("Valuation Committee") to assist in carrying out the Valuation Designee’s responsibilities and establish prices of securities for which market
 
25


Notes to Financial Statements (continued)
quotations are not readily available. The Fund’s and the Valuation Designee's policies and procedures ("Valuation Procedures") govern the Valuation Designee’s selection and application of methodologies for determining and calculating the fair value of Fund investments. The Valuation Designee may value Fund portfolio securities for which market quotations are not readily available and other Fund assets utilizing inputs from pricing services and other third-party sources (together, “Pricing Sources”). The Valuation Committee meets (in person, via electronic mail or via teleconference) on an ad-hoc basis to determine fair valuations and on a quarterly basis to review fair value events (excluding fair valuations from pricing services), including valuation risks and back-testing results, and preview reports to the Board.
The Valuation Committee establishes prices of securities for which market quotations are not readily available based on such methodologies and measurements on a regular basis after considering information that is reasonably available and deemed relevant by the Valuation Committee. The Board shall oversee the Valuation Designee and review fair valuation materials on a prompt, quarterly and annual basis and approve proposed revisions to the Valuation Procedures.
Investments for which market quotations are not readily available are valued at fair value as determined in good faith pursuant to the Valuation Procedures. A market quotation is readily available only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Fund can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. Fair value measurements are determined within a framework that establishes a three-tier hierarchy that maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. "Inputs" refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities. The three-tier hierarchy of inputs is summarized below.
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)
The level of an asset or liability within the fair value hierarchy is based on the lowest level of an input, both individually and in the aggregate, that is significant to the fair value measurement. The aggregate value by input level of the Fund’s assets and liabilities as of October 31, 2022, is included at the end of the Portfolio of Investments.
The Fund may use third-party vendor evaluations, whose prices may be derived from one or more of the following standard inputs, among others:
• 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  
An asset or liability for which a market quotation is not readily available is valued by methods deemed reasonable in good faith by the Valuation Committee, following the Valuation Procedures to represent fair value. Under these procedures, the Valuation Designee generally uses a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information. The Valuation Designee may also use an income-based valuation approach in which the anticipated future cash flows of the asset or liability are discounted to calculate fair value. Discounts may also be applied due to the nature and/or duration of any restrictions on the disposition of the asset or liability. Fair value represents a good faith approximation of the value of a security. Fair value determinations involve the consideration of a number of subjective factors, an analysis of applicable facts and circumstances and the exercise of judgment. As a result, it is possible that the fair value for a security determined in good faith in accordance with the Valuation Procedures may differ from valuations for the same security determined for other funds using their own valuation procedures. Although the Valuation Procedures are designed to value a security at the price the Fund may reasonably expect to receive upon the security's sale in an orderly transaction, there can be no assurance that any fair value determination thereunder would, in fact, approximate the amount that the Fund would actually realize upon the sale of the security or the price at which the security would trade if a reliable market price were readily available. During the year ended October 31, 2022, there were no material changes to the fair value methodologies.
Securities which may be valued in this manner include, but are not limited to: (i) a security for which trading has been halted or suspended or otherwise does not have a readily available market quotation on a given day; (ii) a debt security that has recently gone into default and for which there is not a current market quotation; (iii) a security of an issuer that has entered into a restructuring; (iv) a security that has been delisted from a national exchange; (v) a security subject to trading collars for which no or limited trading takes place; and (vi) a security whose principal market has been temporarily closed at a time when, under normal
 
26 MainStay Candriam Emerging Markets Debt Fund


conditions, it would be open. Securities valued in this manner are generally categorized as Level 2 or 3 in the hierarchy.
Investments in mutual funds, including money market funds, are valued at their respective NAVs at the close of business each day on the valuation date. These securities are generally categorized as Level 1 in the hierarchy.
Futures contracts are valued at the last posted settlement price on the market where such futures are primarily traded. These securities are generally categorized as Level 1 in the hierarchy.
Debt securities (other than convertible and municipal bonds) are valued at the evaluated bid prices (evaluated mean prices in the case of convertible and municipal bonds) supplied by a pricing agent or broker selected by the Valuation Designee, in consultation with the Subadvisor. The evaluations are market-based measurements processed through a pricing application and represents the pricing agent’s good faith determination as to what a holder may receive in an orderly transaction under market conditions. The rules-based logic utilizes valuation techniques that reflect participants’ assumptions and vary by asset class and per methodology, maximizing the use of relevant observable data including quoted prices for similar assets, benchmark yield curves and market corroborated inputs. The evaluated bid or mean prices are deemed by the Valuation Designee, in consultation with the Subadvisor, to be representative of market values at the regular close of trading of the Exchange on each valuation date. Debt securities purchased on a delayed delivery basis are marked to market daily until settlement at the forward settlement date. Debt securities, including corporate bonds, U.S. government and federal agency bonds, municipal bonds, foreign bonds, convertible bonds, asset-backed securities and mortgage-backed securities are generally categorized as Level 2 in the hierarchy.
Temporary cash investments acquired in excess of 60 days to maturity at the time of purchase are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities and ratings), both as furnished by independent pricing services. Temporary cash investments that mature in 60 days or less at the time of purchase ("Short-Term Investments") are valued using the amortized cost method of valuation, unless the use of such method would be inappropriate. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between such cost and the value on maturity date. Amortized cost approximates the current fair value of a security. Securities valued using the amortized cost method are not valued using quoted prices in an active market and are generally categorized as Level 2 in the hierarchy.
The information above is not intended to reflect an exhaustive list of the methodologies that may be used to value portfolio investments. The Valuation Procedures permit the use of a variety of valuation methodologies in connection with valuing portfolio investments. The methodology used for a specific type of investment may vary based on the market data available or other considerations. The methodologies
summarized above may not represent the specific means by which portfolio investments are valued on any particular business day.
A portfolio investment may be classified as an illiquid investment under the Fund's written liquidity risk management program and related procedures (“Liquidity Program”). Illiquidity of an investment might prevent the sale of such investment at a time when the Manager or the Subadvisor might wish to sell, and these investments could have the effect of decreasing the overall level of the Fund's liquidity. Further, the lack of an established secondary market may make it more difficult to value illiquid investments, requiring the Fund to rely on judgments that may be somewhat subjective in measuring value, which could vary materially from the amount that the Fund could realize upon disposition. Difficulty in selling illiquid investments may result in a loss or may be costly to the Fund. An illiquid investment is any investment that the Manager or Subadvisor reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The liquidity classification of each investment will be made using information obtained after reasonable inquiry and taking into account, among other things, relevant market, trading and investment-specific considerations in accordance with the Liquidity Program. Illiquid investments are often fair valued in accordance with the Fund's procedures described above. The liquidity of the Fund's investments was determined as of October 31, 2022, and can change at any time. Illiquid investments as of October 31, 2022, are shown in the Portfolio of Investments.
(B) Income Taxes.  The Fund's policy is to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute all of its taxable income to the shareholders of the Fund within the allowable time limits.
The Manager evaluates the Fund’s tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax liabilities in the financial statements. Recognition of tax benefits of an uncertain tax position is permitted only to the extent the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Manager analyzed the Fund's tax positions taken on federal, state and local income tax returns for all open tax years (for up to three tax years) and has concluded that no provisions for federal, state and local income tax are required in the Fund's financial statements. The Fund's federal, state and local income tax and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state and local departments of revenue.
(C) Dividends and Distributions to Shareholders. Dividends and distributions are recorded on the ex-dividend date. The Fund intends to declare and pay dividends from net investment income, if any, at least monthly and distributions from net realized capital and currency gains, if
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Notes to Financial Statements (continued)
any, at least annually. Unless a shareholder elects otherwise, all dividends and distributions are reinvested at NAV in the same class of shares of the Fund. Dividends and distributions to shareholders are determined in accordance with federal income tax regulations and may differ from determinations using GAAP.
(D) Security Transactions and Investment Income.  The Fund records security transactions on the trade date. Realized gains and losses on security transactions are determined using the identified cost method. Interest income is accrued as earned using the effective interest rate method. Distributions received from real estate investment trusts may be classified as dividends, capital gains and/or return of capital. Discounts and premiums on securities purchased for the Fund are accreted and amortized, respectively, on the effective interest rate method. Income from payment-in-kind securities, to the extent the Fund held any such securities during the year ended October 31, 2022, is accreted daily based on the effective interest method.
Investment income and realized and unrealized gains and losses on investments of the Fund are allocated pro rata to the separate classes of shares based upon their relative net assets on the date the income is earned or realized and unrealized gains and losses are incurred.
The Fund may place a debt security on non-accrual status and reduce related interest income by ceasing current accruals and writing off all or a portion of any interest receivables when the collection of all or a portion of such interest has become doubtful. A debt security is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
(E) Expenses.  Expenses of the Trust are allocated to the individual Funds in proportion to the net assets of the respective Funds when the expenses are incurred, except where direct allocations of expenses can be made. Expenses (other than transfer agent expenses and fees incurred under the shareholder services plans and/or the distribution plans further discussed in Note 3(B)) are allocated to separate classes of shares pro rata based upon their relative net assets on the date the expenses are incurred. The expenses borne by the Fund, including those of related parties to the Fund, are shown in the Statement of Operations.
Additionally, the Fund may invest in mutual funds, which are subject to management fees and other fees that may cause the costs of investing in mutual funds to be greater than the costs of owning the underlying securities directly. These indirect expenses of mutual funds are not included in the amounts shown as expenses in the Statement of Operations or in the expense ratios included in the Financial Highlights.
(F) Use of Estimates.  In preparing financial statements in conformity with GAAP, the Manager makes estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates and assumptions.
(G) Futures Contracts.  A futures contract is an agreement to purchase or sell a specified quantity of an underlying instrument at a specified future date and price, or to make or receive a cash payment
based on the value of a financial instrument (e.g., foreign currency, interest rate, security or securities index). The Fund is subject to risks such as market price risk, leverage risk, liquidity risk, counterparty risk, operational risk, legal risk and/or interest rate risk in the normal course of investing in these contracts. Upon entering into a futures contract, the Fund is required to pledge to the broker or futures commission merchant an amount of cash and/or U.S. government securities equal to a certain percentage of the collateral amount, known as the “initial margin.” During the period the futures contract is open, changes in the value of the contract are recognized as unrealized appreciation or depreciation by marking to market such contract on a daily basis to reflect the market value of the contract at the end of each day’s trading. The Fund agrees to receive from or pay to the broker or futures commission merchant an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin.” When the futures contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund's basis in the contract.
The use of futures contracts involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. The contract or notional amounts and variation margin reflect the extent of the Fund's involvement in open futures positions. There are several risks associated with the use of futures contracts as hedging techniques. There can be no assurance that a liquid market will exist at the time when the Fund seeks to close out a futures contract. If no liquid market exists, the Fund would remain obligated to meet margin requirements until the position is closed. Futures contracts may involve a small initial investment relative to the risk assumed, which could result in losses greater than if the Fund did not invest in futures contracts. Futures contracts may be more volatile than direct investments in the instrument underlying the futures and may not correlate to the underlying instrument, causing a given hedge not to achieve its objectives. The Fund's activities in futures contracts have minimal counterparty risk as they are conducted through regulated exchanges that guarantee the futures against default by the counterparty. In the event of a bankruptcy or insolvency of a futures commission merchant that holds margin on behalf of the Fund, the Fund may not be entitled to the return of the entire margin owed to the Fund, potentially resulting in a loss. The Fund may invest in futures contracts to seek enhanced returns or to reduce the risk of loss by hedging certain of its holdings. The Fund's investment in futures contracts and other derivatives may increase the volatility of the Fund's NAVs and may result in a loss to the Fund. Open futures contracts as of October 31, 2022, are shown in the Portfolio of Investments.
(H) Foreign Currency Forward Contracts. The Fund may enter into foreign currency forward contracts, which are agreements to buy or sell foreign currencies on a specified future date at a specified rate. The Fund is subject to foreign currency exchange rate risk in the normal course of investing in these transactions. During the period the forward contract is open, changes in the value of the contract are recognized as unrealized appreciation or depreciation by marking to market such contract on a
 
28 MainStay Candriam Emerging Markets Debt Fund


daily basis to reflect the market value of the contract at the end of each day’s trading. Cash movement occurs on the settlement date. When the forward contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund's basis in the contract. The Fund may purchase and sell foreign currency forward contracts for purposes of seeking to enhance portfolio returns and manage portfolio risk more efficiently. Foreign currency forward contracts may also be used to gain exposure to a particular currency or to hedge against the risk of loss due to changing currency exchange rates. Foreign currency forward contracts to purchase or sell a foreign currency may also be used in anticipation of future purchases or sales of securities denominated in foreign currency, even if the specific investments have not yet been selected.
The use of foreign currency forward contracts involves, to varying degrees, elements of risk in excess of the amount recognized in the Statement of Assets and Liabilities, including counterparty risk, market risk, leverage risk, operational risk, legal risk and liquidity risk. Counterparty risk is heightened for these instruments because foreign currency forward contracts are not exchange-traded and therefore no clearinghouse or exchange stands ready to meet the obligations under such contracts. Thus, the Fund faces the risk that its counterparties under such contracts may not perform their obligations. Market risk is the risk that the value of a foreign currency forward contract will depreciate due to unfavorable changes in exchange rates. Liquidity risk arises because the secondary market for foreign currency forward contracts may have less liquidity relative to markets for other securities and financial instruments. Liquidity risk also can arise when forward currency contracts create margin or settlement payment obligations for the Fund. Leverage risk is the risk that a foreign currency forward contract can magnify the Fund's gains and losses. Operational risk refers to risk related to potential operational issues (including documentation issues, settlement issues, systems failures, inadequate controls and human error), and legal risk refers to insufficient documentation, insufficient capacity or authority of the counterparty, or legality or enforceability of a foreign currency forward contract. Risks also arise from the possible movements in the foreign exchange rates underlying these instruments. While the Fund may enter into forward contracts to reduce currency exchange risks, changes in currency exchange rates may result in poorer overall performance for the Fund than if it had not engaged in such transactions. Exchange rate movements can be large, depending on the currency, and can last for extended periods of time, affecting the value of the Fund's assets. Moreover, there may be an imperfect correlation between the Fund's holdings of securities denominated in a particular currency and forward contracts entered into by the Fund. Such imperfect correlation may prevent the Fund from achieving the intended hedge or expose the Fund to the risk of currency exchange loss. The unrealized appreciation (depreciation) on forward contracts also reflects the Fund's exposure at the valuation date to credit loss in the event of a counterparty’s failure to perform its obligations. As of October 31, 2022, the Fund did not hold any foreign currency forward contracts.
(I) Foreign Currency Transactions. The Fund's books and records are maintained in U.S. dollars. Prices of securities denominated in foreign currency amounts are translated into U.S. dollars at the mean between the buying and selling rates last quoted by any major U.S. bank at the following dates:
(i) market value of investment securities, other assets and liabilities— at the valuation date; and
(ii) purchases and sales of investment securities, income and expenses—at the date of such transactions.
The assets and liabilities that are denominated in foreign currency amounts are presented at the exchange rates and market values at the close of the period. The realized and unrealized changes in net assets arising from fluctuations in exchange rates and market prices of securities are not separately presented.
Net realized gain (loss) on foreign currency transactions represent