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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number 811-22321

 

MainStay Funds Trust

(Exact name of registrant as specified in charter)

 

 

51 Madison Avenue, New York, New York 10010

(Address of principal executive offices) (Zip Code)

 

 

J. Kevin Gao, Esq., 169 Lackawanna Avenue, Parsippany, NJ 07054

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 800-624-6782

 

Date of fiscal year end: June 30  (MainStay Cornerstone Growth Fund)

 

Date of reporting period: March 31, 2013

 

 

 

 

Item 1. Schedule of Investments.

 

MainStay Cornerstone Growth Fund

 

Portfolio of Investments March 28, 2013 (Unaudited)

 

				Shares				Value
		Common Stocks 97.0% †
		Aerospace & Defense 1.0%
		Textron, Inc.			301,821			$	8,997,284
		Auto Components 2.9%
¤		Johnson Controls, Inc.			793,045				27,812,088
		Beverages 4.1%
		Coca-Cola Co. (The)			259,128				10,479,136
¤		Diageo PLC, Sponsored ADR			225,035				28,318,405
									38,797,541
		Biotechnology 0.8%
		Celgene Corp. (a)			63,708				7,384,394
		Chemicals 4.3%
		Mosaic Co. (The)			391,426				23,332,904
		Sherwin-Williams Co. (The)			101,822				17,196,718
									40,529,622
		Communications Equipment 5.8%
¤		QUALCOMM, Inc.			813,099				54,436,978
		Computers & Peripherals 3.7%
		NetApp, Inc. (a)			677,305				23,136,739
		Stratasys, Ltd. (a)			163,312				12,121,016
									35,257,755
		Construction & Engineering 2.7%
		Fluor Corp.			381,369				25,296,206
		Consumer Finance 2.3%
		Capital One Financial Corp.			403,554				22,175,292
		Diversified Consumer Services 2.2%
		Apollo Group, Inc. Class A (a)			1,176,039				20,451,318
		Electrical Equipment 0.9%
		Rockwell Automation, Inc.			102,840				8,880,234
		Energy Equipment & Services 3.7%
		Schlumberger, Ltd.			299,129				22,401,771
		Weatherford International, Ltd. (a)			1,065,614				12,936,554
									35,338,325
		Food & Staples Retailing 0.7%
		Costco Wholesale Corp.			62,964				6,681,110
		Food Products 1.3%
		Mondelez International, Inc. Class A			393,678				12,050,484
		Health Care Equipment & Supplies 4.4%
		Edwards Lifesciences Corp. (a)			253,736				20,846,950
		Hologic, Inc. (a)			933,617				21,099,744
									41,946,694
		Health Care Providers & Services 5.2%
		Express Scripts Holding Co. (a)			336,668				19,408,910
¤		WellPoint, Inc.			451,494				29,902,448
									49,311,358
		Internet & Catalog Retail 1.3%
		Amazon.com, Inc. (a)			46,488				12,388,587
		Internet Software & Services 6.4%
		eBay, Inc. (a)			147,913				8,019,843
¤		Google, Inc. Class A (a)			66,315				52,656,099
									60,675,942
		IT Services 6.3%
¤		Visa, Inc. Class A			165,967				28,187,835
¤		Western Union Co.			2,100,467				31,591,024
									59,778,859
		Machinery 2.0%
		Joy Global, Inc.			317,308				18,886,172
		Media 3.0%
		Comcast Corp. Class A			221,733				9,315,003
		Comcast Corp. Special Class A			90,852				3,599,556
		Walt Disney Co. (The)			268,397				15,244,950
									28,159,509
		Metals & Mining 2.3%
		Freeport-McMoRan Copper & Gold, Inc.			644,218				21,323,616
		Multiline Retail 1.0%
		Dollar General Corp. (a)			186,659				9,441,212
		Oil, Gas & Consumable Fuels 5.3%
		Anadarko Petroleum Corp.			195,689				17,113,003
¤		Cobalt International Energy, Inc. (a)			1,181,593				33,320,923
									50,433,926
		Pharmaceuticals 2.3%
		Teva Pharmaceutical Industries, Ltd., Sponsored ADR			551,554				21,885,663
		Real Estate Investment Trusts 1.9%
		Camden Property Trust			262,086				18,000,067
		Road & Rail 2.8%
¤		CSX Corp.			1,080,772				26,619,414
		Semiconductors & Semiconductor Equipment 2.0%
		Altera Corp.			525,609				18,643,351
		Software 3.1%
		Citrix Systems, Inc. (a)			162,126				11,699,012
		Salesforce.com, Inc. (a)			99,570				17,806,103
									29,505,115
		Specialty Retail 3.1%
		Dick's Sporting Goods, Inc.			379,440				17,947,512
		TJX Companies, Inc.			252,999				11,827,703
									29,775,215
		Textiles, Apparel & Luxury Goods 5.2%
		Burberry Group PLC, Sponsored ADR			290,425				11,712,840
		Hugo Boss A.G., Sponsored ADR (a)			100,643				2,244,339
		NIKE, Inc. Class B			350,472				20,681,353
		Ralph Lauren Corp.			86,510				14,647,008
									49,285,540
		Tobacco 3.0%
¤		Philip Morris International, Inc.			301,819				27,981,639
		Total Common Stocks (Cost $851,861,926)							918,130,510
					Principal Amount				Value
		Short-Term Investment 2.9%
		Repurchase Agreement 2.9%
		State Street Bank and Trust Co. 0.01%, dated 3/28/13 due 4/1/13 Proceeds at Maturity $26,989,097 (Collateralized by a Federal National Mortgage Association security with a rate of 2.20% and a maturity date of 10/17/22, with a Principal Amount of $27,390,000 and a Market Value of $27,531,853)		$	26,989,067				26,989,067
		Total Short-Term Investment (Cost $26,989,067)							26,989,067
		Total Investments (Cost $878,850,993) (b)			99.9	%			945,119,577
		Other Assets, Less Liabilities			0.1				1,240,542
		Net Assets			100.0	%		$	946,360,119

 

¤

Among the Fund's 10 largest holdings, as of March 28, 2013, excluding short-term investment. May be subject to change daily.

†

Percentages indicated are based on Fund net assets.

(a)

Non-income producing security.

(b)

As of March 28, 2013, cost is $878,850,993 for federal income tax purposes and net unrealized appreciation is as follows:

 

	Gross unrealized appreciation		$	83,506,464
	Gross unrealized depreciation			(17,237,880	)
	Net unrealized appreciation		$	66,268,584

 

 

 

The following abbreviation is used in the above portfolio:

ADR

-American Depositary Receipt

 

 

 

The following is a summary of the fair valuations according to the inputs used as of March 28, 2013, for valuing the Fund's assets.

 

 

Asset Valuation Inputs

 

 

Description		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Investments in Securities (a)
Common Stocks		$	918,130,510			$	—			$	—			$	918,130,510
Short-Term Investment
Repurchase Agreement			—				26,989,067				—				26,989,067
Total Investments in Securities		$	918,130,510			$	26,989,067			$	—			$	945,119,577

 

 

 

 

 

(a) For a complete listing of investments and their industries, see the Portfolio of Investments.

 

The Fund recognizes transfers between the levels as of the beginning of the period.

 

For the period ended March 28, 2013, the Fund did not have any transfers between Level 1 and Level 2 fair value measurements.

 

As of March 28, 2013, the Fund did not hold any investments with significant unobservable inputs (Level 3).

 

 

 

 

 

 

MainStay Funds Trust

 

NOTES TO PORTFOLIOS OF INVESTMENTS March 28, 2013 unaudited

 

SECURITIES VALUATION.

 

MainStay Funds Trust is comprised of thirty-three separate funds (each a “Fund”). This report is exclusively for the MainStay Cornerstone Growth Fund. The Fund prepares its financial statements in accordance with generally accepted accounting principles (“GAAP”) in the United States of America and follows significant accounting policies described below.

 

Investments are valued as of the close of regular trading on the New York Stock Exchange (“Exchange”) (generally 4:00 p.m. Eastern time) on each day the Fund is open for business (“valuation date”).

 

The Board of Trustees (the “Board”) of MainStay Funds Trust has adopted procedures for the valuation of the Fund’s securities and has delegated the responsibility for valuation determination under those procedures to the Fund’s Valuation Committee (the “Valuation Committee”). The Board has authorized the Valuation Committee to appoint a Valuation Sub-Committee (the “Sub-Committee”) to deal in the first instance with questions that arise or cannot be resolved under these procedures. The Sub-Committee will meet (in person, via electronic mail or via teleconference) on an as-needed basis. The Valuation Committee shall meet at a later time, as necessary, to ensure that actions taken by the Sub-Committee were appropriate. The procedures recognize that, subject to the oversight of the Board and unless otherwise noted, the responsibility for day-to-day valuation of portfolio assets (including securities for which market prices are not readily available) rests with New York Life Investment Management LLC ( the “Manager”), aided to whatever extent necessary by the Fund’s Subadvisor.

 

To assess the appropriateness of security valuations, the Manager or the Fund’s third party service provider who is subject to oversight by the Manager, regularly compares prior day prices, prices on comparable securities and the sale prices to the current day prices and challenges prices exceeding certain tolerance levels with third party pricing services or broker sources. For those securities valued by recommendation, whether through a standardized fair valuation methodology or a fair valuation determination, the Valuation Committee reviews and affirms the reasonableness of the valuation based on such methodologies and determinations on a regular basis after considering all relevant information that is reasonably available.

 

“Fair value” is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. Fair value measurements are determined within a framework that has established a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish 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 developed based on the information available in the circumstances. The inputs or methodology used for valuing securities may not be an indication of the risks associated with investing in those securities. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.

 

·

Level 1 – quoted prices in active markets for identical investments

·

Level 2 – other significant observable inputs (including quoted prices for similar investments in active markets, interest rates and yield curves, prepayment speeds, credit risks, etc.)

·

Level 3 – significant unobservable inputs (including each Fund’s own assumptions about the assumptions that market participants would use in determining the fair value of investments)

 

The aggregate value by input level, as of March 28, 2013, for the Fund’s investments are included at the end of the Fund’s Portfolio of Investments.

 

The valuation techniques used by the Fund to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Fund may utilize third party vendor evaluations, whose prices may be derived from one or more of the following standard inputs:

 

 

• 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
• Equity and credit default swap curves	• Monthly payment information

 

  

 

Securities for which market value cannot be determined using the methodologies described above are valued by methods deemed in good faith by the Fund’s Valuation Committee, following the procedures established by the Board, to represent fair value. Under these procedures, the Fund primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. For the period ended March 28, 2013 there have been no changes to the fair value methodologies.

 

Equity and non-equity securities which may be valued in this manner include, but are not limited to: (i) a security for which the trading has been halted or suspended; (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 de-listed from a national exchange; (v) a security for which the market price is not available from third party pricing source or, if so provided, does not, in the opinion of a Fund’s Manager or Subadvisor reflect the security’s market value; and (vi) a security whose principal market has been temporarily closed at a time when, under normal conditions, it would be open. Securities for which market quotations or observable inputs are not readily available are generally categorized as Level 3 in the hierarchy. As of March 28, 2013, the Cornerstone Growth Fund did not hold securities that were valued in such a manner.

 

Certain events may occur between the time that foreign markets close, on which securities held by the Fund principally trade and the time at which the Fund’s net asset values (“NAV(s)”) are calculated. These events may include, but are not limited to, situations relating to a single issue in a market sector, significant fluctuations in U.S. or foreign markets, natural disasters, armed conflicts, governmental actions or other developments not tied directly to the securities markets. Should the Manager or Subadvisor conclude that such events may have affected the accuracy of the last price of such securities reported on the local foreign market, the Manager or Subadvisor may pursuant to procedures adopted by the Board, adjust the value of the local price to reflect the impact on the price of such securities as a result of such events. In this instance, securities are generally categorized as Level 3 in the hierarchy. Additionally, foreign equity securities are also fair valued whenever the movement of a particular index exceeds certain thresholds. In such cases, the securities are fair valued by applying factors provided by a third party vendor in accordance with the Fund’s policies and procedures and are generally categorized as Level 2 in the hierarchy. As of March 28, 2013, certain foreign equity securities held by the Fund were not fair valued in such a manner.

 

Equity securities and ExchangeTraded Funds are valued at the latest quoted sales prices as of the close of regular trading on the Exchange on each valuation date. Securities that are not traded on the valuation date are valued at the mean of the latest quoted bid and ask prices. Prices normally are taken from the principal market in which each security trades. Futures contracts are valued at the last posted settlement price on the market where such futures are primarily traded. Option contracts are valued at the last posted settlement price on the market where such options are principally traded. Investments in other mutual funds are valued at their respective NAV as of the close of the Exchange on the valuation date. These securities are generally categorized as Level 1 in the hierarchy.

 

Debt securities (other than convertible bonds and municipal debt securities) are valued at the evaluated bid prices (evaluated mean prices in the case of convertible bonds and municipal securities) supplied by a pricing agent or brokers selected by the Manager in consultation with the Subadvisor, whose prices reflect broker/dealer supplied valuations and electronic data processing techniques, if such prices are deemed by the Manager, in consultation with the Subadvisor, if any, to be representative of market values, at the regular close of trading of the Exchange on each valuation date. Debt securities, including corporate bonds, U.S. government and federal agency bonds, municipal bonds, foreign bonds, Yankee bonds, convertible bonds, asset-backed securities, and mortgage-backed securities are generally categorized as Level 2 in the hierarchy.

 

Temporary cash investments acquired over 60 days to maturity 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. Other temporary cash investments which mature in 60 days or less (“Short-Term Investments”) are valued at amortized cost. 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 the maturity date. Amortized cost approximates the current fair value of a security. Securities valued at amortized cost are not valued using a quoted price in an active market. These securities are generally categorized as Level 2 in the hierarchy.

 

Foreign currency forward contracts are valued at their fair market values determined on the basis of the mean between the last current bid and ask prices based on dealer or exchange quotations and are generally categorized as Level 2 in the hierarchy.

 

Loan assignments, participations and commitments are valued at the average of bid quotations obtained from the engaged independent pricing service and are generally categorized as Level 2 in the hierarchy. Certain loan assignments, participations and commitments may be valued by single broker quotes obtained from the engaged independent pricing service with significant unobservable inputs and are generally categorized as Level 3 in the hierarchy. For these loan assignments, participations and commitments, the Manager may consider additional factors such as liquidity of the Funds’ investments.

 

  

Generally, a security is considered illiquid if it cannot be sold or disposed of in the ordinary course of business at approximately the price at which it is valued. Its illiquidity might prevent the sale of such security at a time when the Manager or Subadvisor might wish to sell, and these securities 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 securities, requiring a Fund to rely on judgments that may be somewhat subjective to determining value, which could vary from the amount that the Fund could realize upon disposition. Difficulty in selling illiquid securities may result in a loss or may be costly to a Fund. Under the supervision of the Board, the Manager or Subadvisor determines the liquidity of the Fund’s investments; in doing so, the Manager or Subadvisor may consider various factors, including (i) the frequency of trades and quotations, (ii) the number of dealers and prospective purchasers, (iii) the dealer undertakings to make a market, and (iv) the nature of the security and the market in which it trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). Illiquid securities generally will be valued in such manner as the Board deems appropriate to reflect their fair value.

  

Item 2. Controls And Procedures.

 

(a)

Based on an evaluation of the Disclosure Controls and Procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, the “Disclosure Controls”) as of a date within 90 days prior to the filing date (the “Filing Date”) of this Form N-Q (the “Report”), the Registrant’s principal executive and principal financial officers have concluded that the Disclosure Controls are reasonably designed to ensure that information required to be disclosed by the Registrant in the Report is recorded, processed, summarized and reported by the Filing Date, including ensuring that information required to be disclosed in the Report is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

(b)

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

 

(a)

Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).

 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

MAINSTAY FUNDS TRUST

By:	/s/ Stephen P. Fisher
	Stephen P. Fisher
	President and Principal Executive Officer
Date:	May 29, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By:	/s/ Stephen P. Fisher
	Stephen P. Fisher
	President and Principal Executive Officer
Date:	May 29, 2013
By:	/s/ Jack R. Benintende
	Jack R. Benintende
	Treasurer and Principal Financial and
	Accounting Officer
Date:	May 29, 2013