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 | 811-03940 | |||||
BNY Mellon Strategic Funds, Inc. | ||||||
(Exact name of Registrant as specified in charter) | ||||||
c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street New York, New York 10286 |
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(Address of principal executive offices) (Zip code) | ||||||
Deirdre Cunnane, Esq. 240 Greenwich Street New York, New York 10286 |
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(Name and address of agent for service) | ||||||
Registrant's telephone number, including area code: | (212) 922-6400 | |||||
Date of fiscal year end:
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11/30 | |||||
Date of reporting period: |
05/31/2021
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The following N-CSR relates only to the Registrant's series listed below and does not relate to any series of the Registrant with a different fiscal year end and, therefore, different N-CSR reporting requirements. A separate N-CSR will be filed for any series with a different fiscal year end, as appropriate.
BNY Mellon Select Managers Small Cap Value Fund
BNY Mellon U.S. Equity Fund
BNY Mellon Global Stock Fund
BNY Mellon International Stock Fund
FORM N-CSR
Item 1. | Reports to Stockholders. |
BNY Mellon Select Managers Small Cap Value Fund
SEMIANNUAL REPORT May 31, 2021 |
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The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
FOR MORE INFORMATION
Back Cover
DISCUSSION OF FUND PERFORMANCE (Unaudited)
For the period from December 1, 2020 through May 31, 2021, as provided by portfolio allocation managers Stephen Kolano and Elena Goncharova
Market and Fund Performance Overview
For the six-month period ended May 31, 2021, BNY Mellon Select Managers Small Cap Value Fund’s Class A shares, Class C shares, Class I shares and Class Y shares at NAV produced total returns of 30.92%, 30.42%, 31.12% and 31.14%, respectively.1 In comparison, the Russell 2000® Value Index (the “Index”), the fund’s benchmark, returned 37.56% for the same period.2
Small-cap stocks produced gains over the reporting period as markets began to anticipate the end of the pandemic and the economic recovery resulting from widespread distribution of COVID-19 vaccines. The fund lagged the Index, mainly due to outperformance of lower-quality shares, which the fund avoided.
The Fund’s Investment Approach
The fund seeks capital appreciation. To pursue its goal, the fund normally invests at least 80% of its net assets in the stocks of small-cap companies. The fund currently considers small-cap companies to be those companies with market capitalizations that fall within the range of companies in the Index, the fund’s benchmark index. The fund’s portfolio is constructed to have a value tilt.
The fund uses a “multi-manager” approach by selecting various subadvisers to manage its assets. We may hire, terminate or replace subadvisers and modify material terms and conditions of subadvisory arrangements without shareholder approval.
The fund’s assets will be allocated among six subadvisers – Channing Capital Management, LLC, Eastern Shore Capital Management, Neuberger Berman Investment Advisers LLC, Walthausen & Co. LLC, Heartland Advisors, Inc. and Rice Hall James & Associates LLC. The target percentage of the fund’s assets to be allocated over time to the subadvisers is approximately 23% to Channing; 20% to Eastern Shore; 18% to Neuberger Berman; 22% to Walthausen; 15% to Heartland and 2% to RHJ. The portion of the fund’s assets previously allocated to Kayne (approximately 15% of the fund’s assets) will be re-allocated to the other subadvisers over time in accordance with the target amounts noted above. The target percentages of the fund’s assets to be allocated to Heartland and RHJ, and any modification to the target percentage of the fund’s assets currently allocated to the other subadvisers, will occur over time. In addition, BNYM Investment Adviser, Inc. is permitted to adjust those allocations by up to 20% of the fund’s assets without board approval. Subject to board approval, the fund may hire, terminate or replace subadvisers and modify material terms and conditions of subadvisory arrangements without shareholder approval.
Market Rebound Continues
Early in the reporting period, stocks benefited from a number of factors. With the approval of multiple COVID-19 vaccines in November 2020, investor sentiment improved, and the global economic outlook brightened. Returns were also boosted by interest rates, which remained low, and by the stimulus package approved by Congress, which provided support to consumers, small businesses and the economy generally.
2
Uncertainty surrounding the November 2020 election also eased, and investors began to factor the likelihood of additional stimulus and infrastructure spending into their calculations. With the end of the pandemic in view and continued economic rebound likely, investors began to shift away from growth-oriented stocks and into value-oriented stocks.
As the end of the pandemic became more likely, government lockdowns were eased, and businesses that had been hard hit by the pandemic began to show signs of recovery. Businesses also became more confident and increased their capital spending. In addition, inventory shortages began to appear, providing another catalyst to economic growth.
Toward the end of the reporting period, the economic rebound continued, but combined with the Federal Reserve’s indications that it would tolerate higher inflation rates until the economy fully recovered, this led to a rise in inflation expectations. As a result, yields at the long end of the Treasury yield curve began to increase. These higher interest rates weighed heavily on the stock market performance, especially that of technology and other growth-oriented stocks.
Fund Performance Hindered by Prudent Avoidance of Speculative Shares
The fund’s underperformance versus the Index stemmed mainly from three factors. First, although value stocks outperformed growth stocks during the period, the fund’s underlying managers tend to be somewhat more growth-oriented than other value-oriented managers. Second, certain “meme stocks,” which tend to be value-oriented, became the object of intense speculative buying, causing their prices to rise dramatically. The fund’s prudent decision not to own such speculative shares, including GameStop, AMC Entertainment Holdings and others, hurt its performance versus the Index. Third, the outperformance of companies with low credit quality persisted longer than expected as the economy continued to improve, and the market rotated to value-oriented companies.
On a more positive note, the fund’s underweight position in the utilities sector added to performance versus the Index as this sector underperformed. Stock selections in this sector also proved to be beneficial as did selections in the financial sector.
A Positive Backdrop
Our outlook for the coming months reflects ongoing optimism about the economic recovery. Although the distribution of COVID-19 vaccines has been uneven globally, the economies of developed countries are increasingly opening up, which is benefiting stocks. Inflation, which remains somewhat of a concern, is being driven by supply chain issues and worker shortages, which are producing a supply/demand imbalance. However, we believe
3
DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)
that though higher inflation is likely to be transitory, it may persist for several quarters, and we will continue to monitor it as the recovery proceeds.
June 15, 2021
DUE TO RECENT MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investors should note that the fund’s short-term performance is highly unusual, in part to unusually favorable market conditions, and is unlikely to be repeated or consistently achieved in the future.
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Return figures provided reflect the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an undertaking in effect through March 31, 2022, at which time it may be extended, terminated or modified. Had these expenses not been absorbed, the fund’s returns would have been lower.
2 Source: Lipper Inc. — The Russell 2000® Value Index measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies that are considered more value-oriented relative to the overall market as defined by Russell’s leading style methodology. The Russell 2000® Value Index is constructed to provide a comprehensive and unbiased barometer for the small-cap value segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set, and that the represented companies continue to reflect value characteristics. Investors cannot invest directly in any index.
Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries.
Multi-manager risk means each sub adviser makes investment decisions independently, and it is possible that the investment styles of the sub advisers may not complement one another. Consequently, the fund’s exposure to a given stock, industry or investment style could be greater or smaller than if the fund had a single adviser.
The prices of small company stocks tend to be more volatile than the prices of large company stocks, mainly because these companies have less established and more volatile earnings histories. They also tend to be less liquid than larger company stocks.
References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations.
Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
4
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon Select Managers Small Cap Value Fund from December 1, 2020 to May 31, 2021. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
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Assume actual returns for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
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Expenses paid per $1,000† | $7.48 | $11.78 | $5.76 | $5.53 |
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Ending value (after expenses) | $1,309.20 | $1,304.20 | $1,311.20 | $1,311.40 |
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COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
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Assuming a hypothetical 5% annualized return for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
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Expenses paid per $1,000† | $6.54 | $10.30 | $5.04 | $4.84 |
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Ending value (after expenses) | $1,018.45 | $1,014.71 | $1,019.95 | $1,020.14 |
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† | Expenses are equal to the fund’s annualized expense ratio of 1.30% for Class A, 2.05% for Class C, 1.00% for Class I and .96% for Class Y, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
5
STATEMENT OF INVESTMENTS
May 31, 2021 (Unaudited)
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% | |||||||
Automobiles & Components - .9% | |||||||
Fox Factory Holding | 7,100 | a | 1,103,908 | ||||
Gentherm | 3,609 | a | 261,761 | ||||
Harley-Davidson | 40,653 | 1,970,451 | |||||
LCI Industries | 7,670 | 1,143,213 | |||||
Thor Industries | 1,738 | 213,774 | |||||
Visteon | 8,470 | a | 1,037,236 | ||||
5,730,343 | |||||||
Banks - 12.7% | |||||||
Associated Banc-Corp | 99,024 | 2,276,562 | |||||
BankUnited | 60,901 | 2,910,459 | |||||
Banner | 70,141 | 4,105,353 | |||||
Brookline Bancorp | 80,387 | 1,355,325 | |||||
Bryn Mawr Bank | 16,520 | 789,656 | |||||
Cadence Bancorp | 175,171 | 3,920,327 | |||||
Camden National | 30,650 | 1,459,553 | |||||
Cathay General Bancorp | 4,402 | 183,475 | |||||
City Holding | 15,060 | 1,208,113 | |||||
Columbia Banking System | 75,480 | 3,257,717 | |||||
Community Bank System | 2,495 | 202,394 | |||||
Dime Community Bancshares | 3,048 | 105,796 | |||||
Eastern Bankshares | 56,540 | 1,266,496 | |||||
Enterprise Financial Services | 3,223 | 159,248 | |||||
Essent Group | 24,395 | 1,167,057 | |||||
F.N.B. | 16,806 | 225,368 | |||||
Federal Agricultural Mortgage, Cl. C | 2,137 | 216,820 | |||||
First Bancorp | 35,100 | 1,557,387 | |||||
First Financial | 28,190 | 1,279,262 | |||||
First Horizon | 4,820 | 91,917 | |||||
Glacier Bancorp | 29,242 | 1,703,346 | |||||
Great Southern Bancorp | 22,360 | 1,263,116 | |||||
Great Western Bancorp | 4,763 | 159,370 | |||||
Hancock Whitney | 27,970 | 1,384,795 | |||||
Heartland Financial USA | 28,958 | 1,440,661 | |||||
Hope Bancorp | 13,130 | 200,889 | |||||
Independent Bank | 66,503 | 5,427,310 | |||||
Independent Bank Group | 5,760 | 453,600 | |||||
Lakeland Financial | 18,860 | 1,163,851 | |||||
NBT Bancorp | 39,560 | 1,542,444 | |||||
NMI Holdings, Cl. A | 38,000 | a | 919,220 | ||||
OceanFirst Financial | 50,440 | 1,115,228 | |||||
Old National Bancorp | 79,677 | 1,517,847 |
6
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Banks - 12.7% (continued) | |||||||
Pacific Premier Bancorp | 86,376 | 3,970,705 | |||||
PacWest Bancorp | 31,660 | 1,430,082 | |||||
Pinnacle Financial Partners | 8,232 | 748,453 | |||||
Renasant | 79,129 | b | 3,499,084 | ||||
Seacoast Banking Corp. of Florida | 95,077 | 3,524,505 | |||||
Sterling Bancorp | 17,060 | 454,478 | |||||
Stock Yards Bancorp | 10,025 | 538,744 | |||||
Synovus Financial | 97,195 | 4,774,218 | |||||
TCF Financial | 41,286 | 1,961,085 | |||||
Texas Capital Bancshares | 34,782 | a | 2,395,784 | ||||
TriCo Bancshares | 26,650 | 1,277,867 | |||||
Triumph Bancorp | 12,174 | a | 1,019,573 | ||||
Walker & Dunlop | 20,815 | 2,113,555 | |||||
Washington Trust Bancorp | 22,970 | 1,263,120 | |||||
Webster Financial | 24,120 | 1,367,122 | |||||
WesBanco | 37,260 | 1,450,159 | |||||
Wintrust Financial | 31,650 | 2,545,293 | |||||
WSFS Financial | 36,415 | 1,937,642 | |||||
82,301,431 | |||||||
Capital Goods - 14.4% | |||||||
AerCap Holdings | 40,388 | a | 2,382,892 | ||||
Alamo Group | 979 | 150,942 | |||||
Albany International, Cl. A | 24,525 | 2,191,309 | |||||
Allied Motion Technologies | 38,417 | 1,359,962 | |||||
Altra Industrial Motion | 25,375 | 1,666,884 | |||||
Ameresco, Cl. A | 27,000 | a | 1,451,520 | ||||
Astec Industries | 30,069 | 2,060,629 | |||||
AZZ | 29,550 | 1,580,629 | |||||
Babcock & Wilcox Enterprises | 230,574 | a | 1,987,548 | ||||
Beacon Roofing Supply | 7,800 | a | 441,792 | ||||
Bloom Energy, Cl. A | 57,798 | a,b | 1,396,978 | ||||
Chart Industries | 10,315 | a | 1,505,371 | ||||
Colfax | 5,694 | a,b | 251,675 | ||||
Comfort Systems USA | 16,410 | 1,360,389 | |||||
Curtiss-Wright | 1,672 | 209,535 | |||||
EMCOR Group | 8,590 | 1,083,285 | |||||
Enerpac Tool Group | 117,668 | a,b | 3,224,103 | ||||
EnerSys | 8,055 | 759,103 | |||||
ESCO Technologies | 9,626 | 911,004 | |||||
Franklin Electric | 12,850 | 1,077,987 | |||||
Granite Construction | 90,977 | 3,671,832 | |||||
Great Lakes Dredge & Dock | 86,324 | a | 1,261,194 | ||||
Griffon | 35,247 | 926,644 |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Capital Goods - 14.4% (continued) | |||||||
H&E Equipment Services | 28,160 | 1,053,184 | |||||
Hexcel | 17,980 | a,b | 1,069,091 | ||||
Hillenbrand | 69,538 | 3,170,933 | |||||
Hyster-Yale Materials Handling | 14,124 | 1,067,633 | |||||
ITT | 12,800 | 1,201,920 | |||||
Kennametal | 198,114 | b | 7,431,257 | ||||
LSI Industries | 68,400 | 636,120 | |||||
Lydall | 37,525 | a | 1,365,159 | ||||
McGrath RentCorp | 10,790 | 925,027 | |||||
Mercury Systems | 10,354 | a | 677,669 | ||||
Mueller Industries | 29,500 | 1,369,685 | |||||
Oshkosh | 1,413 | 185,725 | |||||
Park Aerospace | 114,736 | 1,769,229 | |||||
PGT Innovations | 29,230 | a | 706,197 | ||||
Powell Industries | 46,773 | 1,607,120 | |||||
RBC Bearings | 6,225 | a | 1,218,793 | ||||
Regal Beloit | 1,016 | 144,506 | |||||
Resideo Technologies | 131,355 | a | 3,927,514 | ||||
Rexnord | 122,544 | 6,123,524 | |||||
Simpson Manufacturing | 9,250 | 1,038,960 | |||||
Spirit AeroSystems Holdings, Cl. A | 45,124 | 2,220,552 | |||||
SPX | 64,425 | a | 4,034,938 | ||||
SPX FLOW | 61,384 | 4,212,784 | |||||
Systemax | 17,390 | 596,825 | |||||
Teledyne Technologies | 2,488 | a | 1,043,641 | ||||
Tennant | 17,116 | 1,416,178 | |||||
Textainer Group Holdings | 57,930 | a | 1,952,241 | ||||
The Shyft Group | 36,810 | 1,434,854 | |||||
TPI Composites | 14,435 | a,b | 697,211 | ||||
TriMas | 39,650 | a | 1,285,453 | ||||
Triton International | 23,960 | 1,299,830 | |||||
Twin Disc | 20,940 | a | 288,553 | ||||
Valmont Industries | 5,036 | 1,248,928 | |||||
Welbilt | 59,759 | a | 1,476,645 | ||||
Williams Industrial Services Group | 82,940 | a | 430,459 | ||||
93,241,545 | |||||||
Commercial & Professional Services - 6.2% | |||||||
ABM Industries | 18,770 | 936,435 | |||||
ASGN | 12,541 | a | 1,292,852 | ||||
Brady, Cl. A | 43,335 | 2,480,062 | |||||
CACI International, Cl. A | 648 | a | 165,214 | ||||
CBIZ | 7,861 | a | 261,064 | ||||
Clean Harbors | 11,817 | a | 1,100,163 |
8
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Commercial & Professional Services - 6.2% (continued) | |||||||
Covanta Holding | 138,582 | 2,052,399 | |||||
Deluxe | 38,421 | b | 1,750,460 | ||||
Harsco | 295,035 | a | 6,614,685 | ||||
Heritage-Crystal Clean | 54,220 | a | 1,669,976 | ||||
Herman Miller | 5,375 | b | 256,925 | ||||
KAR Auction Services | 41,583 | a,b | 745,999 | ||||
KBR | 65,996 | 2,688,677 | |||||
Kelly Services, Cl. A | 78,240 | a | 2,008,421 | ||||
ManTech International, Cl. A | 41,162 | 3,581,506 | |||||
MSA Safety | 24,435 | b | 4,106,546 | ||||
Resources Connection | 42,505 | 619,723 | |||||
Stericycle | 31,865 | a | 2,503,314 | ||||
The Brink's Company | 48,880 | 3,686,041 | |||||
VSE | 38,720 | 1,841,910 | |||||
40,362,372 | |||||||
Consumer Durables & Apparel - 3.4% | |||||||
Acushnet Holdings | 30,194 | 1,606,321 | |||||
Carter's | 2,237 | 228,711 | |||||
Cavco Industries | 5,060 | a | 1,119,626 | ||||
G-III Apparel Group | 46,440 | a | 1,534,378 | ||||
Hayward Holdings | 39,110 | a | 996,132 | ||||
Helen of Troy | 805 | a,b | 169,436 | ||||
Installed Building Products | 9,005 | 1,067,993 | |||||
KB Home | 26,280 | 1,230,167 | |||||
M/I Homes | 18,990 | a | 1,339,175 | ||||
Malibu Boats, Cl. A | 13,725 | a | 1,076,315 | ||||
PVH | 38,933 | a | 4,470,287 | ||||
Ralph Lauren | 14,570 | 1,807,846 | |||||
Skyline Champion | 21,990 | a | 1,113,793 | ||||
Tempur Sealy International | 51,914 | 1,998,689 | |||||
Wolverine World Wide | 54,450 | 1,985,247 | |||||
21,744,116 | |||||||
Consumer Services - 3.5% | |||||||
Boyd Gaming | 64,811 | a | 4,173,180 | ||||
Brinker International | 56,939 | a | 3,498,902 | ||||
Frontdoor | 19,090 | a | 1,025,133 | ||||
Hilton Grand Vacations | 22,175 | a | 1,014,063 | ||||
International Game Technology | 118,945 | a,b | 2,885,606 | ||||
Marriott Vacations Worldwide | 21,598 | a | 3,721,119 | ||||
OneSpaWorld Holdings | 318,976 | a,b | 3,575,721 | ||||
Perdoceo Education | 140,030 | a | 1,706,966 | ||||
SeaWorld Entertainment | 18,209 | a | 991,116 | ||||
22,591,806 |
9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Diversified Financials - 3.7% | |||||||
Artisan Partners Asset Management, Cl. A | 102,881 | 5,255,162 | |||||
B. Riley Financial | 14,592 | 1,074,555 | |||||
Cohen & Steers | 30,675 | 2,243,263 | |||||
Evercore, Cl. A | 16,299 | 2,377,373 | |||||
FirstCash | 39,577 | 3,155,078 | |||||
Focus Financial Partners, Cl. A | 57,130 | a | 2,895,920 | ||||
PROG Holdings | 2,491 | 131,326 | |||||
Stifel Financial | 101,268 | 7,015,847 | |||||
24,148,524 | |||||||
Energy - 3.4% | |||||||
Cactus, Cl. A | 103,730 | 3,634,699 | |||||
ChampionX | 149,846 | a | 3,970,919 | ||||
Chesapeake Energy | 8,730 | 460,944 | |||||
CNX Resources | 64,080 | a,b | 872,770 | ||||
Devon Energy | 69,236 | 1,838,908 | |||||
Dril-Quip | 63,066 | a,b | 2,114,603 | ||||
Forum Energy Technologies | 3,900 | a | 99,606 | ||||
Geopark | 7,225 | 107,580 | |||||
Green Plains | 29,040 | a,b | 926,086 | ||||
ION Geophysical | 18,037 | a,b | 36,254 | ||||
Oil States International | 26,636 | a | 171,269 | ||||
Patterson-UTI Energy | 35,836 | 299,947 | |||||
PDC Energy | 101,036 | 4,265,740 | |||||
Renewable Energy Group | 17,350 | a,b | 1,059,565 | ||||
Southwestern Energy | 158,920 | a | 821,616 | ||||
TETRA Technologies | 107,885 | a | 388,386 | ||||
World Fuel Services | 33,078 | 1,016,487 | |||||
22,085,379 | |||||||
Food & Staples Retailing - .6% | |||||||
BJ's Wholesale Club Holdings | 22,640 | a | 1,014,046 | ||||
Casey's General Stores | 5,790 | b | 1,278,664 | ||||
The Andersons | 43,890 | 1,364,101 | |||||
3,656,811 | |||||||
Food, Beverage & Tobacco - 2.6% | |||||||
Calavo Growers | 1,858 | a | 132,290 | ||||
Darling Ingredients | 30,155 | a | 2,064,411 | ||||
Lancaster Colony | 7,290 | 1,360,824 | |||||
Landec | 133,030 | a | 1,592,369 | ||||
Primo Water | 79,391 | 1,374,258 | |||||
Sanderson Farms | 8,270 | 1,345,942 | |||||
The Hain Celestial Group | 42,359 | a | 1,726,552 | ||||
Tootsie Roll Industries | 35,816 | b | 1,120,683 |
10
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Food, Beverage & Tobacco - 2.6% (continued) | |||||||
TreeHouse Foods | 124,971 | a,b | 6,087,338 | ||||
16,804,667 | |||||||
Health Care Equipment & Services - 6.5% | |||||||
Acadia Healthcare | 45,037 | a | 2,898,581 | ||||
Accuray | 516,247 | a | 2,199,212 | ||||
AMN Healthcare Services | 32,014 | a | 2,839,642 | ||||
AngioDynamics | 57,680 | a | 1,333,562 | ||||
Apria | 36,650 | a | 1,115,992 | ||||
AtriCure | 18,793 | a | 1,404,401 | ||||
Avanos Medical | 61,832 | a | 2,479,463 | ||||
Cantel Medical | 1,095 | a | 89,056 | ||||
CONMED | 6,070 | b | 835,778 | ||||
Cross Country Healthcare | 182,679 | a | 2,858,926 | ||||
CryoPort | 25,630 | a,b | 1,433,230 | ||||
Cytosorbents | 30,703 | a,b | 248,387 | ||||
Encompass Health | 15,250 | 1,308,297 | |||||
Haemonetics | 51,884 | a | 2,929,370 | ||||
Hanger | 59,673 | a | 1,541,354 | ||||
HealthEquity | 11,855 | a | 985,388 | ||||
Integer Holdings | 15,809 | a | 1,430,240 | ||||
Intersect ENT | 34,824 | a | 614,644 | ||||
LHC Group | 3,955 | a | 778,542 | ||||
MEDNAX | 23,309 | a,b | 745,422 | ||||
Meridian Bioscience | 22,790 | a | 473,120 | ||||
Merit Medical Systems | 16,440 | a | 991,990 | ||||
Mesa Laboratories | 6,380 | b | 1,569,863 | ||||
Molina Healthcare | 8,232 | a | 2,069,196 | ||||
NuVasive | 67,820 | a | 4,625,324 | ||||
OraSure Technologies | 70,645 | a,b | 678,898 | ||||
Patterson Companies | 26,590 | 865,239 | |||||
The Ensign Group | 2,407 | b | 200,262 | ||||
Varex Imaging | 26,212 | a,b | 657,659 | ||||
42,201,038 | |||||||
Household & Personal Products - .4% | |||||||
Central Garden & Pet, Cl. A | 14,395 | a | 726,228 | ||||
Spectrum Brands Holdings | 21,927 | 1,949,091 | |||||
2,675,319 | |||||||
Insurance - 1.8% | |||||||
Axis Capital Holdings | 22,770 | 1,221,383 | |||||
First American Financial | 11,750 | 755,643 | |||||
HCI Group | 1,078 | 86,844 | |||||
Horace Mann Educators | 65,840 | 2,625,041 | |||||
Kemper | 10,963 | 820,800 |
11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Insurance - 1.8% (continued) | |||||||
Old Republic International | 40,051 | 1,051,739 | |||||
Primerica | 5,600 | 908,376 | |||||
ProAssurance | 18,208 | 443,365 | |||||
Selective Insurance Group | 1,094 | 82,345 | |||||
Stewart Information Services | 23,070 | 1,392,274 | |||||
The Hanover Insurance Group | 17,951 | 2,503,985 | |||||
11,891,795 | |||||||
Materials - 7.2% | |||||||
Allegheny Technologies | 224,140 | a | 5,489,189 | ||||
American Vanguard | 129,578 | 2,382,939 | |||||
Ampco-Pittsburgh | 18,790 | a | 132,094 | ||||
Avery Dennison | 17,330 | 3,821,785 | |||||
Avient | 97,081 | 5,046,270 | |||||
Balchem | 8,355 | 1,094,505 | |||||
Cleveland-Cliffs | 216,106 | a,b | 4,348,053 | ||||
Commercial Metals | 54,280 | 1,708,192 | |||||
Crown Holdings | 26,540 | 2,739,990 | |||||
Eagle Materials | 9,725 | 1,427,241 | |||||
Innospec | 1,493 | 150,957 | |||||
Louisiana-Pacific | 50,839 | 3,416,889 | |||||
Materion | 27,439 | 2,163,565 | |||||
Mercer International | 108,900 | 1,616,076 | |||||
MP Materials | 16,935 | a,b | 475,535 | ||||
Myers Industries | 31,101 | 685,155 | |||||
Neenah | 1,819 | 96,280 | |||||
Schnitzer Steel Industries, Cl. A | 46,870 | 2,553,478 | |||||
Schweitzer-Mauduit International | 27,206 | b | 1,112,997 | ||||
Sensient Technologies | 13,761 | 1,193,767 | |||||
Summit Materials, Cl. A | 46,640 | a | 1,624,005 | ||||
U.S. Concrete | 22,350 | a | 1,273,726 | ||||
UFP Technologies | 22,850 | a | 1,243,954 | ||||
Worthington Industries | 17,947 | 1,191,142 | |||||
46,987,784 | |||||||
Media & Entertainment - 2.1% | |||||||
Criteo, ADR | 122,874 | a | 4,575,828 | ||||
Gray Television | 177,838 | 4,136,512 | |||||
Madison Square Garden Entertainment | 44,789 | a,b | 3,996,522 | ||||
TechTarget | 15,105 | a | 1,062,033 | ||||
13,770,895 | |||||||
Pharmaceuticals Biotechnology & Life Sciences - 2.6% | |||||||
Amneal Pharmaceuticals | 136,564 | a | 772,952 | ||||
Arvinas | 15,525 | a | 1,129,288 | ||||
Axsome Therapeutics | 6,990 | a,b | 424,363 |
12
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Pharmaceuticals Biotechnology & Life Sciences - 2.6% (continued) | |||||||
Bicycle Therapeutics, ADR | 12,150 | a,b | 358,425 | ||||
Charles River Laboratories International | 10,678 | a | 3,609,057 | ||||
Dicerna Pharmaceuticals | 15,955 | a | 520,133 | ||||
Fluidigm | 157,410 | a,b | 912,978 | ||||
IGM Biosciences | 5,620 | a,b | 419,533 | ||||
Intellia Therapeutics | 4,880 | a | 365,707 | ||||
Invitae | 25,680 | a,b | 739,070 | ||||
Karuna Therapeutics | 1,670 | a | 186,739 | ||||
Luminex | 33,705 | 1,243,377 | |||||
Natera | 11,535 | a | 1,085,905 | ||||
NeoGenomics | 15,195 | a,b | 623,451 | ||||
Phibro Animal Health, Cl. A | 128,106 | 3,611,308 | |||||
TCR2 Therapeutics | 20,660 | a | 395,639 | ||||
TG Therapeutics | 12,455 | a,b | 434,306 | ||||
16,832,231 | |||||||
Real Estate - 2.9% | |||||||
Apple Hospitality REIT | 7,546 | c | 119,755 | ||||
CareTrust REIT | 9,814 | c | 228,470 | ||||
Corporate Office Properties Trust | 29,110 | c | 803,436 | ||||
EPR Properties | 32,380 | a,b,c | 1,591,477 | ||||
Global Medical REIT | 82,000 | c | 1,180,800 | ||||
Hudson Pacific Properties | 54,720 | c | 1,586,333 | ||||
Industrial Logistics Properties Trust | 46,370 | c | 1,162,032 | ||||
Jones Lang LaSalle | 1,064 | a | 215,194 | ||||
Lamar Advertising, Cl. A | 22,780 | c | 2,387,800 | ||||
Lexington Realty Trust | 13,587 | b,c | 168,207 | ||||
National Health Investors | 1,910 | c | 125,888 | ||||
Newmark Group, Cl. A | 21,266 | 274,331 | |||||
Omega Healthcare Investors | 4,676 | c | 171,235 | ||||
Physicians Realty Trust | 43,794 | c | 793,985 | ||||
Piedmont Office Realty Trust, Cl. A | 11,367 | c | 210,176 | ||||
Potlatchdeltic | 24,693 | c | 1,486,519 | ||||
QTS Realty Trust, Cl. A | 25,225 | b,c | 1,598,760 | ||||
Sunstone Hotel Investors | 138,445 | a,c | 1,738,869 | ||||
Terreno Realty | 19,300 | c | 1,227,866 | ||||
UMH Properties | 93,400 | c | 1,981,014 | ||||
19,052,147 | |||||||
Retailing - 2.6% | |||||||
American Eagle Outfitters | 29,570 | 1,047,665 | |||||
Caleres | 20,020 | 502,102 | |||||
Chico's FAS | 82,327 | a | 382,821 | ||||
Leslie's | 27,480 | a | 801,317 |
13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Retailing - 2.6% (continued) | |||||||
Lithia Motors, Cl. A | 8,847 | b | 3,114,056 | ||||
Monro | 28,807 | b | 1,795,828 | ||||
Ollie's Bargain Outlet Holdings | 9,220 | a,b | 796,977 | ||||
Overstock.com | 6,000 | a | 512,580 | ||||
PubMatic, Cl. A | 48,515 | a,b | 1,434,589 | ||||
Signet Jewelers | 25,840 | a | 1,565,387 | ||||
Sonic Automotive, Cl. A | 49,314 | 2,378,414 | |||||
The Aaron's Company | 7,162 | 257,617 | |||||
The Children's Place | 9,976 | a,b | 927,668 | ||||
The ODP | 23,350 | a | 1,021,329 | ||||
16,538,350 | |||||||
Semiconductors & Semiconductor Equipment - 4.4% | |||||||
Axcelis Technologies | 19,650 | a | 814,296 | ||||
CEVA | 19,206 | a | 861,773 | ||||
CMC Materials | 19,498 | 3,009,126 | |||||
DSP Group | 100,373 | a | 1,577,864 | ||||
Entegris | 8,049 | 921,208 | |||||
Impinj | 8,687 | a,b | 452,158 | ||||
Kulicke & Soffa Industries | 25,520 | 1,324,488 | |||||
MACOM Technology Solutions Holdings | 59,909 | a | 3,546,613 | ||||
MaxLinear | 146,908 | a | 5,585,442 | ||||
Onto Innovation | 11,330 | a | 813,154 | ||||
Power Integrations | 18,770 | 1,542,706 | |||||
Rambus | 105,357 | a | 2,060,783 | ||||
Semtech | 14,290 | a | 900,270 | ||||
Silicon Laboratories | 8,895 | a | 1,214,701 | ||||
SunPower | 22,335 | a | 522,416 | ||||
Synaptics | 5,513 | a,b | 696,457 | ||||
Veeco Instruments | 109,405 | a | 2,606,027 | ||||
28,449,482 | |||||||
Software & Services - 7.1% | |||||||
Avaya Holdings | 142,674 | a | 4,091,890 | ||||
BlackLine | 7,390 | a,b | 768,338 | ||||
Box, Cl. A | 42,053 | a | 980,255 | ||||
Cerence | 11,855 | a,b | 1,127,766 | ||||
Cloudera | 243,467 | a,b | 3,130,986 | ||||
Cognyte Software | 43,458 | a | 1,118,609 | ||||
Concentrix | 9,750 | a | 1,489,020 | ||||
Conduent | 416,455 | a | 3,156,729 | ||||
ExlService Holdings | 36,968 | a | 3,769,997 | ||||
FireEye | 124,166 | a | 2,777,593 | ||||
LivePerson | 20,205 | a,b | 1,110,265 | ||||
MAXIMUS | 16,109 | 1,492,821 |
14
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Software & Services - 7.1% (continued) | |||||||
New Relic | 10,029 | a | 628,618 | ||||
Nuance Communications | 70,201 | a | 3,713,633 | ||||
OneSpan | 53,360 | a,b | 1,395,364 | ||||
Perficient | 2,979 | a | 213,267 | ||||
Qualys | 5,165 | a,b | 499,352 | ||||
Sprout Social, Cl. A | 10,790 | a | 749,042 | ||||
Switch, Cl. A | 60,165 | b | 1,135,314 | ||||
The Hackett Group | 51,330 | 914,187 | |||||
Unisys | 126,404 | a | 3,249,847 | ||||
Upland Software | 60,022 | a | 2,460,302 | ||||
Varonis Systems | 14,580 | a | 704,214 | ||||
Verint Systems | 43,458 | a,b | 2,003,848 | ||||
Vonage Holdings | 41,163 | a | 567,226 | ||||
Xperi Holding | 127,902 | 2,739,661 | |||||
45,988,144 | |||||||
Technology Hardware & Equipment - 4.8% | |||||||
Ciena | 58,876 | a | 3,112,774 | ||||
Diebold Nixdorf | 91,431 | a,b | 1,237,976 | ||||
EMCORE | 76,698 | a | 743,971 | ||||
II-VI | 12,268 | a,b | 826,495 | ||||
Infinera | 90,117 | a,b | 865,123 | ||||
Itron | 26,857 | a | 2,560,815 | ||||
Kimball Electronics | 56,580 | a | 1,266,260 | ||||
Knowles | 152,652 | a | 3,135,472 | ||||
Methode Electronics | 94,572 | 4,575,393 | |||||
OSI Systems | 26,159 | a | 2,520,681 | ||||
Quantum | 268,666 | a | 2,017,682 | ||||
Radware | 13,753 | a | 401,588 | ||||
Ribbon Communications | 108,379 | a | 806,340 | ||||
Rogers | 3,620 | a | 678,207 | ||||
Stratasys | 65,184 | a,b | 1,505,099 | ||||
Viasat | 33,137 | a,b | 1,762,226 | ||||
Viavi Solutions | 102,858 | a | 1,803,101 | ||||
Vishay Intertechnology | 26,530 | 638,577 | |||||
Vishay Precision Group | 29,700 | a | 968,220 | ||||
31,426,000 | |||||||
Telecommunication Services - .5% | |||||||
ATN International | 51,338 | 2,426,747 | |||||
Bandwidth, Cl. A | 8,815 | a,b | 1,042,726 | ||||
3,469,473 | |||||||
Transportation - 2.1% | |||||||
Allegiant Travel | 18,019 | a | 3,990,488 | ||||
Avis Budget Group | 24,947 | a | 2,190,846 |
15
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.6% (continued) | |||||||
Transportation - 2.1% (continued) | |||||||
Heartland Express | 63,097 | 1,145,211 | |||||
Hub Group, Cl. A | 19,120 | a | 1,334,767 | ||||
JetBlue Airways | 81,485 | a | 1,637,848 | ||||
Kirby | 17,180 | a | 1,122,369 | ||||
Knight-Swift Transportation Holdings | 3,909 | 186,577 | |||||
Ryder System | 13,790 | 1,127,884 | |||||
Werner Enterprises | 18,685 | 896,693 | |||||
13,632,683 | |||||||
Utilities - 1.2% | |||||||
ALLETE | 1,583 | b | 109,053 | ||||
Avista | 3,670 | 166,361 | |||||
IDACORP | 1,757 | 172,098 | |||||
MDU Resources Group | 31,961 | 1,075,807 | |||||
NorthWestern | 18,380 | 1,164,373 | |||||
Ormat Technologies | 21,029 | b | 1,452,052 | ||||
Portland General Electric | 42,485 | 2,036,731 | |||||
South Jersey Industries | 19,140 | b | 510,272 | ||||
Vistra Energy | 79,701 | 1,288,765 | |||||
7,975,512 | |||||||
Total Common Stocks (cost $433,767,031) | 633,557,847 | ||||||
Coupon | Maturity | ||||||
Convertible Bonds - .0% | |||||||
Energy - .0% | |||||||
ION Geophysical | 8.00 | 12/15/2025 | 48,000 | b | 51,146 | ||
Exchange-Traded Funds - .3% | |||||||
Registered Investment Companies - .3% | |||||||
iShares Russell 2000
ETF | 8,500 | b | 1,916,750 | ||||
1-Day | |||||||
Investment Companies - 2.3% | |||||||
Registered Investment Companies - 2.3% | |||||||
Dreyfus
Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 0.04 | 15,110,509 | d | 15,110,509 |
16
Description | 1-Day | Shares | Value ($) | ||||
Investment of Cash Collateral for Securities Loaned - 1.4% | |||||||
Registered Investment Companies - 1.4% | |||||||
Dreyfus
Institutional Preferred Government Plus Money Market Fund, SL Shares | 0.01 | 8,802,204 | d | 8,802,204 | |||
Total Investments (cost $459,492,105) | 101.6% | 659,438,456 | |||||
Liabilities, Less Cash and Receivables | (1.6%) | (10,633,605) | |||||
Net Assets | 100.0% | 648,804,851 |
ADR—American Depository Receipt
ETF—Exchange-Traded Fund
REIT—Real Estate Investment Trust
a Non-income producing security.
b Security, or portion thereof, on loan. At May 31, 2021, the value of the fund’s securities on loan was $67,261,300 and the value of the collateral was $69,894,289, consisting of cash collateral of $8,802,204 and U.S. Government & Agency securities valued at $61,092,085.
c Investment in real estate investment trust within the United States.
d Investment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.
Portfolio Summary (Unaudited) † | Value (%) |
Industrials | 22.7 |
Financials | 18.2 |
Information Technology | 16.3 |
Consumer Discretionary | 10.3 |
Health Care | 9.1 |
Materials | 7.2 |
Investment Companies | 4.0 |
Consumer Staples | 3.6 |
Energy | 3.4 |
Real Estate | 2.9 |
Communication Services | 2.7 |
Utilities | 1.2 |
101.6 |
† Based on net assets.
See notes to financial statements.
17
STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS (Unaudited)
Investment Companies | Value | Purchases ($)† | Sales ($) | Value | Net | Dividends/ | ||
Registered Investment Companies; | ||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 6,924,724 | 179,578,185 | (171,392,400) | 15,110,509 | 2.3 | 6,584 | ||
Investment of Cash Collateral for Securities Loaned; | ||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund, SL Shares | 9,625,934 | 63,010,757 | (63,834,487) | 8,802,204 | 1.4 | 92,507†† | ||
Total | 16,550,658 | 242,588,942 | (235,226,887) | 23,912,713 | 3.7 | 99,091 |
† Included reinvested dividends/distributions.
†† Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.
See notes to financial statements.
18
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
| Cost |
| Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See
Statement of Investments |
|
|
| |||
Unaffiliated issuers | 435,579,392 |
| 635,525,743 |
| ||
Affiliated issuers |
| 23,912,713 |
| 23,912,713 |
| |
Receivable for investment securities sold |
| 1,933,519 |
| |||
Receivable for shares of Common Stock subscribed |
| 344,702 |
| |||
Dividends, interest and securities lending income receivable |
| 288,143 |
| |||
Prepaid expenses |
|
|
|
| 41,080 |
|
|
|
|
|
| 662,045,900 |
|
Liabilities ($): |
|
|
|
| ||
Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c) |
| 517,880 |
| |||
Liability for securities on loan—Note 1(c) |
| 8,802,204 |
| |||
Payable for investment securities purchased |
| 3,852,344 |
| |||
Payable for shares of Common Stock redeemed |
| 12,827 |
| |||
Directors’ fees and expenses payable |
| 7,897 |
| |||
Other accrued expenses |
|
|
|
| 47,897 |
|
|
|
|
|
| 13,241,049 |
|
Net Assets ($) |
|
| 648,804,851 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
| 399,842,517 |
|
Total distributable earnings (loss) |
|
|
|
| 248,962,334 |
|
Net Assets ($) |
|
| 648,804,851 |
|
Net Asset Value Per Share | Class A | Class C | Class I | Class Y |
|
Net Assets ($) | 1,985,363 | 130,669 | 21,428,875 | 625,259,944 |
|
Shares Outstanding | 66,244 | 4,952 | 701,187 | 20,502,341 |
|
Net Asset Value Per Share ($) | 29.97 | 26.39 | 30.56 | 30.50 |
|
|
|
|
|
|
|
See notes to financial statements. |
|
|
|
|
|
19
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Cash dividends (net of $450 foreign taxes withheld at source): |
| |||||
Unaffiliated issuers |
|
| 3,256,327 |
| ||
Affiliated issuers |
|
| 6,584 |
| ||
Income from securities lending—Note 1(c) |
|
| 92,507 |
| ||
Total Income |
|
| 3,355,418 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
| 2,622,174 |
| ||
Professional fees |
|
| 59,807 |
| ||
Registration fees |
|
| 33,346 |
| ||
Custodian fees—Note 3(c) |
|
| 24,626 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
| 23,375 |
| ||
Chief Compliance Officer fees—Note 3(c) |
|
| 15,725 |
| ||
Shareholder servicing costs—Note 3(c) |
|
| 7,466 |
| ||
Loan commitment fees—Note 2 |
|
| 7,429 |
| ||
Prospectus and shareholders’ reports |
|
| 6,379 |
| ||
Distribution fees—Note 3(b) |
|
| 485 |
| ||
Miscellaneous |
|
| 14,283 |
| ||
Total Expenses |
|
| 2,815,095 |
| ||
Less—reduction in expenses due to undertaking—Note 3(a) |
|
| (599) |
| ||
Net Expenses |
|
| 2,814,496 |
| ||
Investment Income—Net |
|
| 540,922 |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments | 58,902,358 |
| ||||
Net change in unrealized appreciation (depreciation) on investments | 89,392,751 |
| ||||
Net Realized and Unrealized Gain (Loss) on Investments |
|
| 148,295,109 |
| ||
Net Increase in Net Assets Resulting from Operations |
| 148,836,031 |
| |||
|
|
|
|
|
|
|
See notes to financial statements. |
20
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year
Ended |
| ||
Operations ($): |
|
|
|
|
|
|
|
| |
Investment income—net |
|
| 540,922 |
|
|
| 2,126,368 |
| |
Net realized gain (loss) on investments |
| 58,902,358 |
|
|
| 22,619,818 |
| ||
Net change in unrealized appreciation
|
| 89,392,751 |
|
|
| (3,360,978) |
| ||
Net Increase (Decrease) in Net Assets | 148,836,031 |
|
|
| 21,385,208 |
| |||
Distributions ($): |
| ||||||||
Distributions to shareholders: |
|
|
|
|
|
|
|
| |
Class A |
|
| (62,778) |
|
|
| (22,327) |
| |
Class C |
|
| (7,152) |
|
|
| (6,338) |
| |
Class I |
|
| (788,385) |
|
|
| (347,742) |
| |
Class Y |
|
| (27,376,311) |
|
|
| (13,642,241) |
| |
Total Distributions |
|
| (28,234,626) |
|
|
| (14,018,648) |
| |
Capital Stock Transactions ($): |
| ||||||||
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
| 709,195 |
|
|
| 175,195 |
| |
Class C |
|
| 100,000 |
|
|
| - |
| |
Class I |
|
| 8,723,759 |
|
|
| 7,421,325 |
| |
Class Y |
|
| 65,911,186 |
|
|
| 67,966,466 |
| |
Distributions reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
| 62,687 |
|
|
| 22,065 |
| |
Class C |
|
| 6,605 |
|
|
| 6,160 |
| |
Class I |
|
| 608,542 |
|
|
| 279,227 |
| |
Class Y |
|
| 12,863,987 |
|
|
| 5,611,816 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
| (89,540) |
|
|
| (334,715) |
| |
Class C |
|
| (120,675) |
|
|
| (284,260) |
| |
Class I |
|
| (5,197,171) |
|
|
| (10,260,196) |
| |
Class Y |
|
| (38,167,205) |
|
|
| (190,954,260) |
| |
Increase (Decrease) in Net Assets
| 45,411,370 |
|
|
| (120,351,177) |
| |||
Total Increase (Decrease) in Net Assets | 166,012,775 |
|
|
| (112,984,617) |
| |||
Net Assets ($): |
| ||||||||
Beginning of Period |
|
| 482,792,076 |
|
|
| 595,776,693 |
| |
End of Period |
|
| 648,804,851 |
|
|
| 482,792,076 |
|
21
STATEMENT OF CHANGES IN NET ASSETS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year Ended |
| ||
Capital Share Transactions (Shares): |
| ||||||||
Class Aa |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 24,686 |
|
|
| 9,139 |
| |
Shares issued for distributions reinvested |
|
| 2,448 |
|
|
| 1,033 |
| |
Shares redeemed |
|
| (3,380) |
|
|
| (18,464) |
| |
Net Increase (Decrease) in Shares Outstanding | 23,754 |
|
|
| (8,292) |
| |||
Class Ca |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 3,811 |
|
|
| - |
| |
Shares issued for distributions reinvested |
|
| 294 |
|
|
| 323 |
| |
Shares redeemed |
|
| (4,626) |
|
|
| (16,516) |
| |
Net Increase (Decrease) in Shares Outstanding | (521) |
|
|
| (16,193) |
| |||
Class Ib |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 298,358 |
|
|
| 370,345 |
| |
Shares issued for distributions reinvested |
|
| 23,392 |
|
|
| 12,980 |
| |
Shares redeemed |
|
| (183,537) |
|
|
| (525,982) |
| |
Net Increase (Decrease) in Shares Outstanding | 138,213 |
|
|
| (142,657) |
| |||
Class Yb |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 2,315,010 |
|
|
| 3,544,829 |
| |
Shares issued for distributions reinvested |
|
| 495,982 |
|
|
| 262,316 |
| |
Shares redeemed |
|
| (1,355,320) |
|
|
| (10,363,216) |
| |
Net Increase (Decrease) in Shares Outstanding | 1,455,672 |
|
|
| (6,556,071) |
| |||
|
|
|
|
|
|
|
|
|
|
a | During the period ended May 31, 2021, 3,811 Class C shares representing $100,000 were automatically converted to 3,357 Class A shares and during the period ended November 30, 2020, 43 Class C shares representing $574 were automatically converted to 38 Class A shares. | ||||||||
b | During the period ended May 31, 2021, 237,106 Class Y shares representing $6,908,666 were exchanged for 236,616 Class I shares and during the period ended November 30, 2020, 317,496 Class Y shares representing $6,477,388 were exchanged for 316,961 Class I shares. | ||||||||
See notes to financial statements. |
22
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class A Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 24.13 | 22.15 | 23.94 | 26.44 | 22.72 | 22.02 |
Investment Operations: | ||||||
Investment income (loss)—neta | (.02) | .03 | .02 | (.01) | .00b | .09 |
Net realized and unrealized | 7.23 | 2.39 | .86 | (.98) | 3.79 | 2.02 |
Total from Investment Operations | 7.21 | 2.42 | .88 | (.99) | 3.79 | 2.11 |
Distributions: | ||||||
Dividends from investment income—net | (.04) | (.01) | - | - | (.07) | (.11) |
Dividends from net realized | (1.33) | (.43) | (2.67) | (1.51) | - | (1.30) |
Total Distributions | (1.37) | (.44) | (2.67) | (1.51) | (.07) | (1.41) |
Net asset value, end of period | 29.97 | 24.13 | 22.15 | 23.94 | 26.44 | 22.72 |
Total Return (%)c | 30.92d | 11.21 | 6.07 | (3.93) | 16.74 | 10.72 |
Ratios/Supplemental Data (%): | ||||||
Ratio
of total expenses | 1.34e | 1.44 | 1.38 | 1.35 | 1.30 | 1.30 |
Ratio
of net expenses | 1.30e | 1.30 | 1.30 | 1.30 | 1.28 | 1.30 |
Ratio
of net investment income (loss) | (.17)e | .14 | .12 | (.05) | .01 | .44 |
Portfolio Turnover Rate | 40.98d | 86.50 | 57.74 | 58.85 | 67.90 | 66.57 |
Net Assets, end of period ($ x 1,000) | 1,985 | 1,025 | 1,125 | 1,048 | 1,076 | 2,862 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
d Not annualized.
e Annualized.
See notes to financial statements.
23
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class C Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 21.44 | 19.86 | 21.92 | 24.51 | 21.15 | 20.68 |
Investment Operations: | ||||||
Investment (loss)—neta | (.11) | (.10) | (.12) | (.19) | (.16) | (.07) |
Net realized and unrealized | 6.39 | 2.11 | .73 | (.89) | 3.52 | 1.90 |
Total from Investment Operations | 6.28 | 2.01 | .61 | (1.08) | 3.36 | 1.83 |
Distributions: | ||||||
Dividends from investment income—net | - | - | - | - | - | (.06) |
Dividends from net realized | (1.33) | (.43) | (2.67) | (1.51) | - | (1.30) |
Total Distributions | (1.33) | (.43) | (2.67) | (1.51) | - | (1.36) |
Net asset value, end of period | 26.39 | 21.44 | 19.86 | 21.92 | 24.51 | 21.15 |
Total Return (%)b | 30.42c | 10.42 | 5.28 | (4.65) | 15.89 | 9.94 |
Ratios/Supplemental Data (%): | ||||||
Ratio
of total expenses | 2.44d | 2.39 | 2.12 | 2.15 | 2.31 | 2.33 |
Ratio
of net expenses | 2.05d | 2.05 | 2.05 | 2.05 | 2.04 | 2.05 |
Ratio
of net investment (loss) | (.88)d | (.55) | (.61) | (.82) | (.74) | (.39) |
Portfolio Turnover Rate | 40.98c | 86.50 | 57.74 | 58.85 | 67.90 | 66.57 |
Net Assets, end of period ($ x 1,000) | 131 | 117 | 430 | 553 | 179 | 146 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
24
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class I Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 24.60 | 22.61 | 24.41 | 26.90 | 23.09 | 22.36 |
Investment Operations: | ||||||
Investment income—neta | .02 | .08 | .10 | .07 | .07 | .15 |
Net realized and unrealized | 7.37 | 2.44 | .86 | (1.00) | 3.87 | 2.06 |
Total from Investment Operations | 7.39 | 2.52 | .96 | (.93) | 3.94 | 2.21 |
Distributions: | ||||||
Dividends
from | (.10) | (.10) | (.09) | (.05) | (.13) | (.18) |
Dividends from net realized | (1.33) | (.43) | (2.67) | (1.51) | - | (1.30) |
Total Distributions | (1.43) | (.53) | (2.76) | (1.56) | (.13) | (1.48) |
Net asset value, end of period | 30.56 | 24.60 | 22.61 | 24.41 | 26.90 | 23.09 |
Total Return (%) | 31.12b | 11.53 | 6.40 | (3.63) | 17.14 | 11.09 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| 1.00c | 1.03 | .99 | .97 | 1.00 | .99 |
Ratio
of net expenses | 1.00c | 1.03 | .99 | .97 | .98 | .99 |
Ratio
of net investment income | .14c | .41 | .45 | .27 | .29 | .75 |
Portfolio Turnover Rate | 40.98b | 86.50 | 57.74 | 58.85 | 67.90 | 66.57 |
Net Assets, end of period ($ x 1,000) | 21,429 | 13,851 | 15,955 | 24,890 | 20,566 | 16,478 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
25
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class Y Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 24.56 | 22.59 | 24.40 | 26.88 | 23.08 | 22.35 |
Investment Operations: | ||||||
Investment income—neta | .03 | .10 | .10 | .08 | .08 | .16 |
Net realized and unrealized | 7.35 | 2.42 | .86 | (.99) | 3.86 | 2.06 |
Total from Investment Operations | 7.38 | 2.52 | .96 | (.91) | 3.94 | 2.22 |
Distributions: | ||||||
Dividends
| (.11) | (.12) | (.10) | (.06) | (.14) | (.19) |
Dividends from net realized | (1.33) | (.43) | (2.67) | (1.51) | - | (1.30) |
Total Distributions | (1.44) | (.55) | (2.77) | (1.57) | (.14) | (1.49) |
Net asset value, end of period | 30.50 | 24.56 | 22.59 | 24.40 | 26.88 | 23.08 |
Total Return (%) | 31.14b | 11.58 | 6.41 | (3.56) | 17.15 | 11.13 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| .96c | .98 | .95 | .94 | .94 | .95 |
Ratio
of net expenses | .96c | .98 | .95 | .94 | .93 | .95 |
Ratio
of net investment income | .19c | .46 | .48 | .31 | .35 | .79 |
Portfolio Turnover Rate | 40.98b | 86.50 | 57.74 | 58.85 | 67.90 | 66.57 |
Net Assets, end of period ($ x 1,000) | 625,260 | 467,798 | 578,267 | 777,237 | 942,613 | 797,087 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
26
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
BNY Mellon Select Managers Small Cap Value Fund (the “fund”) is a separate non-diversified series of BNY Mellon Strategic Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering six series, including the fund. The fund’s investment objective is to seek capital appreciation. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser and the fund’s portfolio allocation manager. Walthausen & Co., LLC (“Walthausen”), Neuberger Berman Investment Advisers LLC (“Neuberger Berman”), Channing Capital Management, LLC (“Channing”), Eastern Shore Capital Management (“Eastern Shore”), Heartland Advisors, Inc. (“Heartland”) and Rice Hall James & Associates, LLC (“RHJ”), serve as the fund’s sub-investment advisers, each managing an allocated portion of the fund’s portfolio.
BNY Mellon Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Adviser, is the distributor of the fund’s shares. The fund is authorized to issue 500 million shares of $.001 par value Common Stock. The fund currently has authorized four classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized), Class I (100 million shares authorized) and Class Y (200 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class A shares bought without an initial sales charge as part of an investment of $1 million or more may be charged a contingent deferred sales charge (“CDSC”) of 1.00% if redeemed within one year. Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. Class C shares automatically convert to Class A shares eight years after the date of purchase, without the imposition of a sales charge. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to
27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund is an investment company and applies the accounting and reporting guidance of the FASB ASC Topic 946 Financial Services-Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
28
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in debt securities excluding short-term investments (other than U.S. Treasury Bills), are valued each business day by one or more independent pricing services (each, a “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of a Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by a Service based upon its evaluation of the market for such securities). Securities are valued as determined by a Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. These securities are generally categorized within Level 2 of the fair value hierarchy.
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Each Service and independent valuation firm is engaged under the general oversight of the Board.
Fair valuing of securities may be determined with the assistance of a Service using calculations based on indices of domestic securities and other
29
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
appropriate indicators, such as prices of relevant ADRs and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For securities where observable inputs are limited, assumptions about market activity and risk are used and such securities are generally categorized within Level 3 of the fair value hierarchy.
The following is a summary of the inputs used as of May 31, 2021 in valuing the fund’s investments:
Level 1-Unadjusted Quoted Prices | Level 2- Other Significant Observable Inputs | Level 3-Significant Unobservable Inputs | Total | |||
Assets ($) | ||||||
Investments In Securities:† | ||||||
Corporate Bonds | - | 51,146 | - | 51,146 | ||
Equity Securities - Common Stocks | 633,557,847 | - | - | 633,557,847 | ||
Exchange-Traded Funds | 1,916,750 | - | - | 1,916,750 | ||
Investment Companies | 23,912,713 | - | - | 23,912,713 |
† See Statement of Investments for additional detailed categorizations, if any.
(b) Foreign taxes: The fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, realized and unrealized capital gains on investments or certain foreign currency transactions. Foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the fund invests. These foreign taxes, if any, are paid by the fund
30
and are reflected in the Statement of Operations, if applicable. Foreign taxes payable or deferred or those subject to reclaims as of May 31, 2021, if any, are disclosed in the fund’s Statement of Assets and Liabilities.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended May 31, 2021, The Bank of New York Mellon earned $12,305 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.
(d) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.
(e) Risk: Certain events particular to the industries in which the fund’s investments conduct their operations, as well as general economic, political and public health conditions, may have a significant negative impact on the investee’s operations and profitability. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different
31
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
country, region or financial market. These risks may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies world-wide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
(f) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended May 31, 2021, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended May 31, 2021, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended November 30, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2020 was as follows: ordinary income $2,947,411 and long-term capital gains $11,071,237. The tax character of
32
current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other long-term open-end funds managed by the Adviser in a $823.5 million unsecured credit facility led by Citibank, N.A. (the “Citibank Credit Facility”) and a $300 million unsecured credit facility provided by The Bank of New York Mellon (the “BNYM Credit Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions (each, a “Facility”). The Citibank Credit Facility is available in two tranches: (i) Tranche A is in an amount equal to $688.5 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $135 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended May 31, 2021, the fund did not borrow under the Facilities.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .90% of the value of the fund’s average daily net assets and is payable monthly. The Adviser has contractually agreed, from December 1, 2020 through March 31, 2022, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.05% of the value of the fund’s average daily net assets. On or after March 31, 2022, the Adviser may terminate this expense limitation at any time. The reduction in expenses, pursuant to the undertakings, amounted to $599 during the period ended May 31, 2021.
Pursuant to separate sub-investment advisory agreements between the Adviser and Walthausen, Neuberger Berman, Channing, Eastern Shore, Heartland and RHJ, each serves as the fund’s sub-investment adviser responsible for the day-to-day management of a portion of the fund’s portfolio. The Adviser pays each sub-investment adviser a monthly fee at an annual percentage of the value of the fund’s average daily net assets.
33
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The Adviser has obtained an exemptive order from the SEC (the “Order”), upon which the fund may rely, to use a manager of managers approach that permits the Adviser, subject to certain conditions and approval by the Board, to enter into and materially amend sub-investment advisory agreements with one or more sub-investment advisers who are either unaffiliated with the Adviser or are wholly-owned subsidiaries (as defined under the Act) of the Adviser’s ultimate parent company, BNY Mellon, without obtaining shareholder approval. The Order also allows the fund to disclose the sub-investment advisory fee paid by the Adviser to any unaffiliated sub-investment adviser in the aggregate with other unaffiliated sub-investment advisers in documents filed with the SEC and provided to shareholders. In addition, pursuant to the Order, it is not necessary to disclose the sub-investment advisory fee payable by the Adviser separately to a sub-investment adviser that is a wholly-owned subsidiary of BNY Mellon in documents filed with the SEC and provided to shareholders; such fees are to be aggregated with fees payable to the Adviser. The Adviser has ultimate responsibility (subject to oversight by the Board) to supervise any sub-investment adviser and recommend the hiring, termination, and replacement of any sub-investment adviser to the Board.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. The Distributor may pay one or more Service Agents in respect of advertising, marketing and other distribution services, and determines the amounts, if any, to be paid to Service Agents and the basis on which such payments are made. During the period ended May 31, 2021, Class C shares were charged $485 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2021, Class A and Class C shares were charged $1,756 and $162, respectively, pursuant to the Shareholder Services Plan.
The fund has an arrangement with the transfer agent whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency fees. For financial reporting
34
purposes, the fund includes net earnings credits, if any, as shareholder servicing costs in the Statement of Operations.
The fund has an arrangement with the custodian whereby the fund will receive interest income or be charged an overdraft fees when cash balances are maintained. For financial reporting purposes, the fund includes this interest income and overdraft fees, if any, as interest income in the Statement of Operations.
The fund compensates BNY Mellon Transfer, Inc., a wholly-owned subsidiary of the Adviser, under a transfer agency agreement for providing transfer agency and cash management services inclusive of earnings credits, if any, for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended May 31, 2021, the fund was charged $2,746 for transfer agency services, inclusive of earnings credit, if any. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended May 31, 2021, the fund was charged $24,626 pursuant to the custody agreement.
During the period ended May 31, 2021, the fund was charged $15,725 for services performed by the Chief Compliance Officer and his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.
The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: management fees of $489,052, Distribution Plan fees of $83, Shareholder Services Plan fees of $425, Custodian fees of $14,424, Chief Compliance Officer fees of $13,104 and transfer agency fees of $934, which are offset against an expense reimbursement currently in effect in the amount of $142.
(d) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended May 31, 2021, amounted to $239,814,634 and $228,337,463, respectively.
35
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
At May 31, 2021, accumulated net unrealized appreciation on investments was $199,946,351, consisting of $205,579,661 gross unrealized appreciation and $5,633,310 gross unrealized depreciation.
At May 31, 2021, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
36
LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited)
Effective June 1, 2019, the fund adopted a liquidity risk management program (the “Liquidity Risk Management Program”) pursuant to the requirements of Rule 22e-4 under the Investment Company Act of 1940, as amended. Rule 22e-4 requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish liquidity risk management programs in order to effectively manage fund liquidity and shareholder redemptions. The rule is designed to mitigate the risk that a fund could not meet redemption requests without significantly diluting the interests of remaining investors.
The rule requires the fund to assess, manage and review their liquidity risk at least annually considering applicable factors such as investment strategy and liquidity during normal and foreseeable stressed conditions, including whether the strategy is appropriate for an open-end fund and whether the fund has a relatively concentrated portfolio or large positions in particular issuers. The fund must also assess its use of borrowings and derivatives, short-term and long-term cash flow projections in normal and stressed conditions, holdings of cash and cash equivalents, and borrowing arrangements and other funding sources.
The rule also requires the fund to classify its investments as highly liquid, moderately liquid, less liquid or illiquid based on the number of days the fund expects it would take to liquidate the investment, and to review these classifications at least monthly or more often under certain conditions. The periods range from three or fewer business days for a highly liquid investment to greater than seven calendar days for settlement of a less liquid investment. Illiquid investments are those a fund does not expect to be able to sell or dispose of within seven calendar days without significantly changing the market value. The fund is prohibited from acquiring an investment if, after the acquisition, its holdings of illiquid assets will exceed 15% of its net assets. In addition, if a fund permits redemptions in-kind, the rule requires the fund to establish redemption in-kind policies and procedures governing how and when it will engage in such redemptions.
Pursuant to the rule’s requirements, the Liquidity Risk Management Program has been reviewed and approved by the Board. Furthermore, the Board has received a written report prepared by the Program’s Administrator that addresses the operation of the Program, assesses its adequacy and effectiveness and describes any material changes made to the Program.
Assessment of Program
In the opinion of the Program Administrator, the Program approved by the Board continues to be adequate for the fund and the Program has been implemented effectively. The Program Administrator has monitored the fund’s liquidity risk and the liquidity classification of the securities held by the fund and has determined that the Program is operating effectively.
During the period from January 1, 2020 to December 31, 2020, there were no material changes to the Program and no material liquidity events that impacted the fund. During the period, the fund held sufficient highly liquid assets to meet fund redemptions.
Under normal expected foreseeable fund redemption forecasts and foreseeable stressed fund redemption forecasts, the Program Administrator believes that the fund maintains sufficient highly liquid assets to meet expected fund redemptions.
37
BNY Mellon Select Managers Small Cap Value Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Sub-Advisers
Walthausen & Co., LLC
9 Executive Park Drive, Suite B
Clifton Park, NY 12065
Neuberger Berman Investment Advisers, LLC
605 Third Avenue
New York, NY 10158
Channing Capital Management, LLC
10 South LaSalle Street
Suite 2401
Chicago, IL 60633
Eastern Shore Capital Management
18 Sewall Street
Marblehead, MA 01945
Heartland Advisors, Inc.
790 North Water Street, Suite 1200
Milwaukee, WI 53202
Rice Hall James & Associates
600 West Broadway, suite 1000
San Diego, CA 92101
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Dividend
Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286
Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286
Ticker Symbols: | Class A: DMVAX Class C: DMECX Class I: DMVIX Class Y: DMVYX |
Telephone Call your financial representative or 1-800-373-9387
Mail The BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to info@bnymellon.com
Internet Information can be viewed online or downloaded at www.im.bnymellon.com
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.im.bnymellon.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.
© 2021 BNY Mellon Securities
Corporation |
BNY Mellon U.S. Equity Fund
SEMIANNUAL REPORT May 31, 2021 |
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.im.bnymellon.com and sign up for eCommunications. It’s simple and only takes a few minutes. |
The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
FOR MORE INFORMATION
Back Cover
DISCUSSION OF FUND PERFORMANCE (Unaudited)
For the period from December 1, 2020 through May 31, 2021, as provided by Charlie Macquaker, Roy Leckie and Jane Henderson, the three members of the Investment Executive at Walter Scott & Partners Limited (WS), Sub-Investment Adviser
Market and Fund Performance Overview
For the six-month period ended May 31, 2021, the BNY Mellon U.S. Equity Fund’s Class A shares achieved a return of 13.51%, Class C shares returned 13.00%, Class I shares returned 13.67% and Class Y shares returned 13.66%.1 In comparison, the fund’s benchmark, the MSCI USA Index (the “Index”), achieved a return of 16.12% over the same period.2
U.S. equities gained ground during the period, bolstered by supportive central bank policies and economic reopening. The fund trailed the Index for the period, due primarily to stock selection within the materials sector and an underweight to the financials sector.
The Fund’s Investment Approach
The fund seeks long-term total return. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies located in the United States. The fund may invest in the securities of companies of any market capitalization. Walter Scott seeks investment opportunities in companies with fundamental strengths that indicate the potential for sustainable growth. Walter Scott focuses on individual stock selection, building the fund’s portfolio from the bottom up through extensive fundamental research. The investment process begins with the screening of reported company financials. Companies that meet certain broad, absolute and trend criteria are candidates for more detailed financial analysis. The fund’s Investment Team collectively reviews and selects those stocks that meet Walter Scott’s criteria, and where the expected growth rate is combined with a reasonable valuation for the underlying equity. Market capitalization and sector allocations are a residual of, not part of, the investment process, because the Investment Team’s sole focus is on the analysis of and investment in individual companies.
COVID-19 and Central Bank Activity Drive Markets
The COVID-19 pandemic and the extraordinary response from policymakers proved the dominant influence on financial markets over the review period. Equities enjoyed a stellar recovery. Globally, monetary policy remained highly accommodative in light of the near-term economic headwinds arising from renewed COVID-19 restrictions and was thus firmly supportive of risk assets. Increased risk appetite that was present during the six months was stoked prior to the start of the period by two developments: first, a relatively benign outcome to the U.S. presidential election; and second, the long-awaited positive news on several of the leading COVID-19 vaccine contenders, which opened the door to the normalization of social and economic activity in 2021. This drove a rotation into value-oriented cyclical sectors. Additional impetus was provided as two long-running political wrangles were settled—the fiscal stimulus bill in the U.S. and the Brexit deal between the European Union and the UK.
With reflation underway and an elevated pace of growth expected in the second half of 2021, investors began to anticipate a dialing back of the exceptional levels of monetary stimulus
2
witnessed since the start of the pandemic, and this contributed to a sharp rise in government-bond yields during the first quarter of 2021. Although concerns around inflation persisted, as did fears around fresh COVID-19 mutations, U.S. equity markets continued to push higher into the end of the review period, supported by the Biden administration’s commitment to fiscal stimulus, corresponding hopes of economic recovery and the advancement of COVID-19 vaccination plans.
Stock Selection Drove Fund Results
The fund’s results compared to the Index stemmed from security selection. A shift in momentum occurred in the markets near the end of 2020. As viable vaccine candidates surfaced, and countries constructed plans to immunize their populations, companies that had benefited from the lockdown began to lag companies that stood to benefit from economic reopening. The six-month reporting period saw strong performance from highly cyclical sectors and those that receive the largest tailwind from increased economic activity. Given this, security selection within the materials sector detracted, as did an underweight to the highly cyclical, financials sector. From an individual stock perspective, health care information technology company Cerner was among the leading detractors. Management fell short on executing its plan for margin improvement during the period. COVID-19 has also led to concerns over the financial strength of hospitals and their ability to invest in their IT infrastructure. We exited the position during the period. Information technology outsourcing company Cognizant Technology Solutions also detracted. The stock price fell in May after the company’s quarterly results announcement. The company has seen significant attrition of its employees, which led to investor concern over its ability to act on future business opportunities.
Conversely, the fund saw positive results stemming from successful security selection within the health care and industrials sectors. From an individual stock perspective, a position in Alphabet yielded some of the most positive results, stemming from continued strength in the company’s core search-engine business. The company also continues to operate a successful cloud-based business. Pharmaceutical company Eli Lilly & Co. was also a leading contributor. The company delivered COVID-19 antibodies during the six months and continues to benefit from FDA trial-successes of its Alzheimer’s drug.
Maintaining a Long-Term Approach
U.S. equities have traveled a long way in the last twelve months, reflecting the strong recovery in the economy and corporate earnings. While markets may continue to celebrate U.S. economic resurgence and the gradual pickup of growth elsewhere in the world, the prospect of an eventually less-benign monetary environment may weigh more heavily on investors’ minds. Balance-sheet rigor and the robustness of business models, key components of our investment criteria, will come under greater scrutiny in a potentially higher interest-rate and higher cost environment. The pandemic has induced some supply-and-demand distortions and mismatches, and it remains to be seen how much of the current pressure on prices will endure, although economic buoyancy makes it easier for companies to pass on prices, or at least for those that have pricing power. But rather than deliberate over macroeconomic guesswork, our time is spent analyzing and talking to companies as they meet the challenges and opportunities that lie ahead. The portfolio is characterized by financially strong, market-leading businesses that have shown the ability to adapt to the ups
3
DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)
and downs of economic cycles, and which remain well-positioned to generate strong earnings growth over our lengthy investment time horizon.
June 15, 2021
1 DUE TO RECENT MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investors should note that the fund’s short-term performance is highly unusual, in part due to unusually favorable market conditions, and is unlikely to be repeated or consistently achieved in the future. Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. The fund’s return reflects the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an agreement in effect through March 31, 2022, at which time it may be extended, modified or terminated. Had these expenses not been absorbed, returns would have been lower. Past performance is no guarantee of future results.
2 Source: Lipper Inc. — The MSCI USA Index is designed to measure the performance of the large- and mid-cap segments of the U.S. market. It reflects reinvestment of net dividends and, where applicable, capital gain distributions. Investors cannot invest directly in any index.
Please note: the position in any security highlighted with italicized typeface was sold during the reporting period.
Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Small and midsized company stocks tend to be more volatile and less liquid than larger company stocks as these companies are less established and have more volatile earnings histories.
Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
4
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon U.S. Equity Fund from December 1, 2020 to May 31, 2021. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
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Assume actual returns for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
|
Expenses paid per $1,000† | $6.12 | $10.09 | $4.37 | $4.21 |
| |
Ending value (after expenses) | $1,135.10 | $1,130.00 | $1,136.70 | $1,136.60 |
|
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
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Assuming a hypothetical 5% annualized return for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
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Expenses paid per $1,000† | $5.79 | $9.55 | $4.13 | $3.98 |
| |
Ending value (after expenses) | $1,019.20 | $1,015.46 | $1,020.84 | $1,020.99 |
| |
† | Expenses are equal to the fund’s annualized expense ratio of 1.15% for Class A, 1.90% for Class C, .82% for Class I and .79% for Class Y, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
5
STATEMENT OF INVESTMENTS
May 31, 2021 (Unaudited)
Description | Shares | Value ($) | |||||
Common Stocks - 98.6% | |||||||
Capital Goods - 6.1% | |||||||
Fastenal | 300,400 | 15,933,216 | |||||
Hexcel | 254,900 | a | 15,156,354 | ||||
The Toro Company | 124,200 | 13,797,378 | |||||
44,886,948 | |||||||
Consumer Durables & Apparel - 2.2% | |||||||
NIKE, Cl. B | 118,200 | 16,129,572 | |||||
Consumer Services - 4.2% | |||||||
Booking Holdings | 6,800 | a | 16,058,540 | ||||
McDonald's | 64,300 | 15,039,127 | |||||
31,097,667 | |||||||
Diversified Financials - 3.1% | |||||||
Intercontinental Exchange | 136,900 | 15,453,272 | |||||
Moody's | 22,300 | 7,478,305 | |||||
22,931,577 | |||||||
Food & Staples Retailing - 1.0% | |||||||
Costco Wholesale | 19,100 | 7,224,957 | |||||
Health Care Equipment & Services - 11.1% | |||||||
Edwards Lifesciences | 204,400 | a | 19,601,960 | ||||
Henry Schein | 182,100 | a | 13,846,884 | ||||
Intuitive Surgical | 22,100 | a | 18,612,178 | ||||
ResMed | 72,400 | 14,903,540 | |||||
Stryker | 59,500 | 15,188,565 | |||||
82,153,127 | |||||||
Household & Personal Products - 4.0% | |||||||
Colgate-Palmolive | 133,100 | 11,151,118 | |||||
The Estee Lauder Companies, Cl. A | 59,400 | 18,207,288 | |||||
29,358,406 | |||||||
Materials - 6.5% | |||||||
Ecolab | 69,600 | 14,969,568 | |||||
FMC | 128,600 | 15,006,334 | |||||
Linde | 59,200 | 17,795,520 | |||||
47,771,422 | |||||||
Media & Entertainment - 5.5% | |||||||
Alphabet, Cl. C | 11,206 | a | 27,023,942 | ||||
The Walt Disney Company | 75,800 | a | 13,541,670 | ||||
40,565,612 | |||||||
Pharmaceuticals Biotechnology & Life Sciences - 9.9% | |||||||
Eli Lilly & Co. | 71,200 | 14,221,488 | |||||
Illumina | 23,600 | a | 9,573,104 | ||||
Johnson & Johnson | 92,500 | 15,655,625 | |||||
Mettler-Toledo International | 11,400 | a | 14,830,830 |
6
Description | Shares | Value ($) | |||||
Common Stocks - 98.6% (continued) | |||||||
Pharmaceuticals Biotechnology & Life Sciences - 9.9% (continued) | |||||||
Waters | 57,400 | a | 18,497,150 | ||||
72,778,197 | |||||||
Retailing - 6.0% | |||||||
Dollar General | 74,300 | 15,079,928 | |||||
O'Reilly Automotive | 26,100 | a | 13,966,632 | ||||
The TJX Companies | 224,300 | 15,149,222 | |||||
44,195,782 | |||||||
Semiconductors & Semiconductor Equipment - 2.4% | |||||||
Texas Instruments | 93,700 | 17,786,134 | |||||
Software & Services - 23.5% | |||||||
Adobe | 43,100 | a | 21,747,398 | ||||
Ansys | 37,700 | a | 12,740,338 | ||||
Automatic Data Processing | 77,100 | 15,113,142 | |||||
Cognizant Technology Solutions, Cl. A | 140,900 | 10,082,804 | |||||
Fortinet | 46,000 | a | 10,052,840 | ||||
Jack Henry & Associates | 84,100 | 12,964,015 | |||||
Manhattan Associates | 111,500 | a | 15,161,770 | ||||
Mastercard, Cl. A | 58,400 | 21,057,872 | |||||
Microsoft | 109,200 | 27,265,056 | |||||
Oracle | 158,200 | 12,456,668 | |||||
Paychex | 149,700 | 15,140,658 | |||||
173,782,561 | |||||||
Technology Hardware & Equipment - 11.1% | |||||||
Amphenol, Cl. A | 305,600 | 20,554,656 | |||||
Cisco Systems | 324,400 | 17,160,760 | |||||
Cognex | 187,100 | 14,853,869 | |||||
IPG Photonics | 63,600 | a | 13,308,936 | ||||
TE Connectivity | 119,600 | 16,227,328 | |||||
82,105,549 | |||||||
Transportation - 2.0% | |||||||
Expeditors International of Washington | 115,400 | 14,504,626 | |||||
Total Common Stocks (cost $296,843,537) | 727,272,137 |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | 1-Day Yield (%) | Shares | Value ($) | ||||
Investment Companies - 1.4% | |||||||
Registered Investment Companies - 1.4% | |||||||
Dreyfus
Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 0.04 | 10,612,218 | b | 10,612,218 | |||
Total Investments (cost $307,455,755) | 100.0% | 737,884,355 | |||||
Cash and Receivables (Net) | .0% | 147,471 | |||||
Net Assets | 100.0% | 738,031,826 |
a Non-income producing security.
b Investment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.
Portfolio Summary (Unaudited) † | Value (%) |
Information Technology | 37.1 |
Health Care | 21.0 |
Consumer Discretionary | 12.4 |
Industrials | 8.0 |
Materials | 6.5 |
Communication Services | 5.5 |
Consumer Staples | 5.0 |
Financials | 3.1 |
Investment Companies | 1.4 |
100.0 |
† Based on net assets.
See notes to financial statements.
8
STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS (Unaudited)
Investment Companies | Value
| Purchases($)† | Sales($) | Value | Net | Dividend/ |
Registered Investment Companies: | ||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 10,968,818 | 99,481,023 | (99,837,623) | 10,612,218 | 1.4 | 2,948 |
† Includes reinvested dividends/distributions.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2021 (Unaudited)
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| Cost |
| Value |
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Assets ($): |
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Investments in securities—See Statement of Investments |
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| |||
Unaffiliated issuers | 296,843,537 |
| 727,272,137 |
| ||
Affiliated issuers |
| 10,612,218 |
| 10,612,218 |
| |
Dividends receivable |
| 643,952 |
| |||
Receivable for shares of Common Stock subscribed |
| 333,350 |
| |||
Prepaid expenses |
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| 51,095 |
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| 738,912,752 |
|
Liabilities ($): |
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|
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Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c) |
| 480,993 |
| |||
Payable for shares of Common Stock redeemed |
| 339,567 |
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Directors’ fees and expenses payable |
| 9,957 |
| |||
Other accrued expenses |
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| 50,409 |
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| 880,926 |
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Net Assets ($) |
|
| 738,031,826 |
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Composition of Net Assets ($): |
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Paid-in capital |
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| 257,863,742 |
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Total distributable earnings (loss) |
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| 480,168,084 |
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Net Assets ($) |
|
| 738,031,826 |
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Net Asset Value Per Share | Class A | Class C | Class I | Class Y |
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Net Assets ($) | 1,947,152 | 32,269 | 28,595,224 | 707,457,181 |
|
Shares Outstanding | 73,075 | 1,328.33 | 1,067,996 | 26,444,204 |
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Net Asset Value Per Share ($) | 26.65 | 24.29 | 26.77 | 26.75 |
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See notes to financial statements. |
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10
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2021 (Unaudited)
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Investment Income ($): |
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Income: |
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Cash dividends: |
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Unaffiliated issuers |
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| 4,184,415 |
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Affiliated issuers |
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| 2,948 |
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Income from securities lending—Note 1(b) |
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| 7,623 |
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Total Income |
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| 4,194,986 |
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Expenses: |
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Management fee—Note 3(a) |
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| 2,792,550 |
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Professional fees |
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| 51,548 |
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Registration fees |
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| 34,349 |
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Directors’ fees and expenses—Note 3(d) |
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| 28,986 |
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Loan commitment fees—Note 2 |
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| 11,162 |
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Chief Compliance Officer fees—Note 3(c) |
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| 7,862 |
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Shareholder servicing costs—Note 3(c) |
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| 7,339 |
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Prospectus and shareholders’ reports |
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| 6,743 |
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Custodian fees—Note 3(c) |
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| 5,946 |
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Distribution fees—Note 3(b) |
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| 176 |
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Miscellaneous |
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| 12,442 |
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Total Expenses |
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| 2,959,103 |
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Less—reduction in expenses due to undertaking—Note 3(a) |
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| (129) |
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Net Expenses |
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| 2,958,974 |
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Investment Income—Net |
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| 1,236,012 |
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Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
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Net realized gain (loss) on investments | 49,511,389 |
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Net change in unrealized appreciation (depreciation) on investments | 44,653,225 |
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Net Realized and Unrealized Gain (Loss) on Investments |
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| 94,164,614 |
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Net Increase in Net Assets Resulting from Operations |
| 95,400,626 |
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See notes to financial statements. |
11
STATEMENT OF CHANGES IN NET ASSETS
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| Six Months Ended |
| Year
Ended |
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Operations ($): |
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Investment income—net |
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| 1,236,012 |
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| 2,509,175 |
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Net realized gain (loss) on investments |
| 49,511,389 |
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| 7,695,251 |
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Net change in unrealized appreciation
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| 44,653,225 |
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| 106,022,662 |
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Net Increase (Decrease) in Net Assets | 95,400,626 |
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| 116,227,088 |
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Distributions ($): |
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Distributions to shareholders: |
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Class A |
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| (23,045) |
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| (20,417) |
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Class C |
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| (1,102) |
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| (989) |
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Class I |
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| (342,545) |
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| (372,091) |
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Class Y |
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| (10,227,644) |
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| (8,875,901) |
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Total Distributions |
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| (10,594,336) |
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| (9,269,398) |
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Capital Stock Transactions ($): |
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Net proceeds from shares sold: |
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Class A |
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| 440,297 |
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| 409,770 |
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Class C |
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| 4,230 |
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| 42 |
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Class I |
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| 5,578,080 |
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| 15,259,360 |
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Class Y |
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| 27,249,197 |
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| 204,938,534 |
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Distributions reinvested: |
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Class A |
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| 17,544 |
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| 19,712 |
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Class C |
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| 973 |
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| 849 |
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Class I |
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| 294,756 |
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| 310,164 |
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Class Y |
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| 4,006,640 |
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| 3,663,746 |
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Cost of shares redeemed: |
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Class A |
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| (446,720) |
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| (415,435) |
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Class C |
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| (85,243) |
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| (27,361) |
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Class I |
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| (4,854,240) |
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| (19,364,786) |
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Class Y |
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| (130,733,138) |
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| (208,050,126) |
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Increase (Decrease) in Net Assets
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| (3,255,531) |
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Total Increase (Decrease) in Net Assets | (13,721,334) |
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| 103,702,159 |
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Net Assets ($): |
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Beginning of Period |
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| 751,753,160 |
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| 648,051,001 |
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End of Period |
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| 738,031,826 |
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| 751,753,160 |
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| Six Months Ended |
| Year Ended |
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Capital Share Transactions (Shares): |
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Class A |
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Shares sold |
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| 17,971 |
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| 19,732 |
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Shares issued for distributions reinvested |
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| 730 |
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| 934 |
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Shares redeemed |
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| (18,043) |
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| (22,098) |
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Net Increase (Decrease) in Shares Outstanding | 658 |
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| (1,432) |
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Class C |
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Shares sold |
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| 191 |
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| 2 |
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Shares issued for distributions reinvested |
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| 44 |
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| 44 |
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Shares redeemed |
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| (3,849) |
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| (1,430) |
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Net Increase (Decrease) in Shares Outstanding | (3,614) |
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| (1,384) |
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Class Ia |
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Shares sold |
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| 222,171 |
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| 736,612 |
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Shares issued for distributions reinvested |
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| 12,254 |
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| 14,665 |
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Shares redeemed |
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| (192,492) |
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| (994,367) |
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Net Increase (Decrease) in Shares Outstanding | 41,933 |
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| (243,090) |
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Class Ya |
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Shares sold |
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| 1,084,191 |
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| 10,960,229 |
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Shares issued for distributions reinvested |
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| 166,720 |
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| 173,309 |
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Shares redeemed |
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| (5,197,343) |
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| (10,353,806) |
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Net Increase (Decrease) in Shares Outstanding | (3,946,432) |
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| 779,732 |
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a | During the period ended May 31, 2021, 208,096 Class Y shares representing $5,213,051 were exchanged for 207,920 Class I shares and during the period ended November 30, 20120, 694,371 Class Y shares representing $14,409,288 were exchanged for 693,927 Class I shares. | ||||||||
See notes to financial statements. |
13
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class A Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 23.75 | 20.85 | 20.44 | 20.85 | 18.29 | 19.77 |
Investment Operations: | ||||||
Investment income (loss)—neta | (.00)b | .00b | .04 | .03 | .06 | .08 |
Net realized and unrealized
| 3.18 | 3.16 | 2.30 | 1.77 | 4.00 | 1.18 |
Total from Investment Operations | 3.18 | 3.16 | 2.34 | 1.80 | 4.06 | 1.26 |
Distributions: | ||||||
Dividends from | (.03) | (.07) | (.03) | (.04) | (.10) | (.11) |
Dividends
from net realized | (.25) | (.19) | (1.90) | (2.17) | (1.40) | (2.63) |
Total Distributions | (.28) | (.26) | (1.93) | (2.21) | (1.50) | (2.74) |
Net asset value, end of period | 26.65 | 23.75 | 20.85 | 20.44 | 20.85 | 18.29 |
Total Return (%)c | 13.51d | 15.28 | 13.77 | 9.49 | 24.07 | 7.85 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| 1.15e | 1.17 | 1.20 | 1.25 | 1.20 | 1.17 |
Ratio
of net expenses | 1.15e | 1.15 | 1.15 | 1.15 | 1.15 | 1.15 |
Ratio
of net investment income (loss) | (.02)e | .02 | .20 | .17 | .31 | .46 |
Portfolio Turnover Rate | 4.99d | 11.94 | 14.11 | 17.14 | 13.28 | 5.31 |
Net Assets, end of period ($ x 1,000) | 1,947 | 1,720 | 1,540 | 787 | 842 | 1,775 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
d Not Annualized.
e Annualized.
See notes to financial statements.
14
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class C Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 21.74 | 19.18 | 19.07 | 19.70 | 17.38 | 18.94 |
Investment Operations: | ||||||
Investment (loss)—neta | (.06) | (.14) | (.10) | (.11) | (.08) | (.05) |
Net
realized and unrealized | 2.86 | 2.89 | 2.11 | 1.65 | 3.80 | 1.12 |
Total from Investment Operations | 2.80 | 2.75 | 2.01 | 1.54 | 3.72 | 1.07 |
Distributions: | ||||||
Dividends from net realized | (.25) | (.19) | (1.90) | (2.17) | (1.40) | (2.63) |
Net asset value, end of period | 24.29 | 21.74 | 19.18 | 19.07 | 19.70 | 17.38 |
Total Return (%)b | 13.00c | 14.44 | 12.92 | 8.69 | 23.11 | 7.03 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| 2.46d | 2.35 | 2.40 | 2.35 | 2.16 | 2.11 |
Ratio
of net expenses | 1.90d | 1.90 | 1.90 | 1.90 | 1.90 | 1.90 |
Ratio
of net investment (loss) | (.57)d | (.72) | (.56) | (.57) | (.43) | (.29) |
Portfolio Turnover Rate | 4.99c | 11.94 | 14.11 | 17.14 | 13.28 | 5.31 |
Net Assets, end of period ($ x 1,000) | 32 | 107 | 121 | 86 | 138 | 266 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not Annualized.
d Annualized.
See notes to financial statements.
15
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class I Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 23.89 | 20.94 | 20.54 | 20.96 | 18.37 | 19.88 |
Investment Operations: | ||||||
Investment income—neta | .04 | .08 | .10 | .10 | .12 | .14 |
Net realized and unrealized
| 3.18 | 3.17 | 2.31 | 1.77 | 4.02 | 1.17 |
Total from Investment Operations | 3.22 | 3.25 | 2.41 | 1.87 | 4.14 | 1.31 |
Distributions: | ||||||
Dividends from | (.09) | (.11) | (.11) | (.12) | (.15) | (.19) |
Dividends
from net realized | (.25) | (.19) | (1.90) | (2.17) | (1.40) | (2.63) |
Total Distributions | (.34) | (.30) | (2.01) | (2.29) | (1.55) | (2.82) |
Net asset value, end of period | 26.77 | 23.89 | 20.94 | 20.54 | 20.96 | 18.37 |
Total Return (%) | 13.67b | 15.71 | 14.17 | 9.85 | 24.46 | 8.15 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | .82c | .82 | .82 | .82 | .83 | .83 |
Ratio
of net expenses | .82c | .82 | .82 | .82 | .83 | .83 |
Ratio
of net investment income | .30c | .36 | .53 | .51 | .61 | .80 |
Portfolio Turnover Rate | 4.99b | 11.94 | 14.11 | 17.14 | 13.28 | 5.31 |
Net Assets, end of period ($ x 1,000) | 28,595 | 24,508 | 26,577 | 22,755 | 20,963 | 16,824 |
a Based on average shares outstanding.
b Not Annualized.
c Annualized.
See notes to financial statements.
16
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class Y Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 23.87 | 20.93 | 20.54 | 20.96 | 18.37 | 19.88 |
Investment Operations: | ||||||
Investment income—neta | .04 | .08 | .11 | .11 | .12 | .14 |
Net realized and unrealized
| 3.18 | 3.17 | 2.29 | 1.77 | 4.02 | 1.17 |
Total from Investment Operations | 3.22 | 3.25 | 2.40 | 1.88 | 4.14 | 1.31 |
Distributions: | ||||||
Dividends from | (.09) | (.12) | (.11) | (.13) | (.15) | (.19) |
Dividends
from net realized | (.25) | (.19) | (1.90) | (2.17) | (1.40) | (2.63) |
Total Distributions | (.34) | (.31) | (2.01) | (2.30) | (1.55) | (2.82) |
Net asset value, end of period | 26.75 | 23.87 | 20.93 | 20.54 | 20.96 | 18.37 |
Total Return (%) | 13.66b | 15.69 | 14.15 | 9.88 | 24.51 | 8.18 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | .79c | .80 | .80 | .80 | .80 | .80 |
Ratio
of net expenses | .79c | .80 | .80 | .80 | .80 | .80 |
Ratio
of net investment income | .33c | .37 | .55 | .53 | .64 | .81 |
Portfolio Turnover Rate | 4.99b | 11.94 | 14.11 | 17.14 | 13.28 | 5.31 |
Net Assets, end of period ($ x 1,000) | 707,457 | 725,418 | 619,812 | 534,230 | 527,263 | 486,044 |
a Based on average shares outstanding.
b Not Annualized.
c Annualized.
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
BNY Mellon U.S. Equity Fund (the “fund”) is a separate diversified series of BNY Mellon Strategic Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering six series, including the fund. The fund’s investment objective is to seek long-term total return. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Walter Scott & Partners Limited (the “Sub-Adviser”), a wholly-owned subsidiary of BNY Mellon and an affiliate of the Adviser, serves as the fund’s sub-investment adviser.
BNY Mellon Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Adviser, is the distributor of the fund’s shares. The fund is authorized to issue 500 million shares of $.001 par value Common Stock. The fund currently has authorized four classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized), Class I (100 million shares authorized) and Class Y (200 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class A shares bought without an initial sales charge as part of an investment of $1 million or more may be charged a contingent deferred sales charge (“CDSC”) of 1.00% if redeemed within one year. Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. Class C shares automatically convert to Class A shares eight years after the date of purchase, without the imposition of a sales charge. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the
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FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund is an investment company and applies the accounting and reporting guidance of the FASB ASC Topic 946 Financial Services-Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Company's Board of Directors (the “Board”). Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For securities where observable inputs are limited, assumptions about market activity and risk are used and such securities are generally categorized within Level 3 of the fair value hierarchy.
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The following is a summary of the inputs used as of May 31, 2021 in valuing the fund’s investments:
Level 1-Unadjusted Quoted Prices | Level 2- Other Significant Observable Inputs | Level 3-Significant Unobservable Inputs | Total | |||
Assets ($) | ||||||
Investments In Securities:† | ||||||
Equity Securities - Common Stocks | 727,272,137 | - | - | 727,272,137 | ||
Investment Companies | 10,612,218 | - | - | 10,612,218 |
† See Statement of Investments for additional detailed categorizations, if any.
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended May 31, 2021, The Bank of New York Mellon earned $990 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.
21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(d) Risk: Certain events particular to the industries in which the fund’s investments conduct their operations, as well as general economic, political and public health conditions, may have a significant negative impact on the investee’s operations and profitability. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies world-wide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
(e) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended May 31, 2021, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax
22
expense in the Statement of Operations. During the period ended May 31, 2021, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended November 30, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2020 was as follows: ordinary income $3,562,200 and long-term capital gains $5,707,198. The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other long-term open-end funds managed by the Adviser in a $823.5 million unsecured credit facility led by Citibank, N.A. (the “Citibank Credit Facility”) and a $300 million unsecured credit facility provided by The Bank of New York Mellon (the “BNYM Credit Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions (each, a “Facility”). The Citibank Credit Facility is available in two tranches: (i) Tranche A is in an amount equal to $688.5 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $135 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended May 31, 2021, the fund did not borrow under the Facilities.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .75% of the value of the fund’s average daily net assets and is payable monthly. The Adviser has contractually agreed, from December 1, 2020 through March 31, 2022, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .90% of the value of the fund’s average daily net assets. On or after March 31, 2022, the Adviser may terminate
23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
this expense limitation at any time. The reduction in expenses, pursuant to the undertaking, amounted to $129 during the period ended May 31, 2021.
Pursuant to a sub-investment advisory agreement between the Adviser and the Sub-Adviser, the Adviser pays the Sub-Adviser a monthly fee at an annual rate of .36% of the value of the fund’s average daily net assets.
During the period ended May 31, 2021, the Distributor retained $17 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. The Distributor may pay one or more Service Agents in respect of advertising, marketing and other distribution services, and determines the amounts, if any, to be paid to Service Agents and the basis on which such payments are made. During the period ended May 31, 2021, Class C shares were charged $176 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2021, Class A and Class C shares were charged $2,504 and $59, respectively, pursuant to the Shareholder Services Plan.
The fund has an arrangement with the transfer agent whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency fees. For financial reporting purposes, the fund includes net earnings credits, if any, as shareholder servicing costs in the Statement of Operations.
The fund has an arrangement with the custodian whereby the fund will receive interest income or be charged an overdraft fees when cash balances are maintained. For financial reporting purposes, the fund includes this interest income and overdraft fees, if any, as interest income in the Statement of Operations.
The fund compensates BNY Mellon Transfer, Inc., a wholly-owned subsidiary of the Adviser, under a transfer agency agreement for providing transfer agency and cash management services inclusive of earnings credits,
24
if any, for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended May 31, 2021, the fund was charged $2,368 for transfer agency services, inclusive of earnings credit, if any. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended May 31, 2021, the fund was charged $5,946 pursuant to the custody agreement.
During the period ended May 31, 2021, the fund was charged $7,862 for services performed by the Chief Compliance Officer and his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.
The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: management fees of $468,839, Distribution Plan fees of $21, Shareholder Services Plan fees of $415, custodian fees of $4,385, Chief Compliance Officer fees of $6,552 and transfer agency fees of $814, which are offset against an expense reimbursement currently in effect in the amount of $33.
(d) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended May 31, 2021, amounted to $36,377,430 and $143,307,392, respectively.
At May 31, 2021, accumulated net unrealized appreciation on investments was $430,428,600, consisting of $430,555,944 gross unrealized appreciation and $127,344 gross unrealized depreciation.
At May 31, 2021, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
25
LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited)
Effective June 1, 2019, the fund adopted a liquidity risk management program (the “Liquidity Risk Management Program”) pursuant to the requirements of Rule 22e-4 under the Investment Company Act of 1940, as amended. Rule 22e-4 requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish liquidity risk management programs in order to effectively manage fund liquidity and shareholder redemptions. The rule is designed to mitigate the risk that a fund could not meet redemption requests without significantly diluting the interests of remaining investors.
The rule requires the fund to assess, manage and review their liquidity risk at least annually considering applicable factors such as investment strategy and liquidity during normal and foreseeable stressed conditions, including whether the strategy is appropriate for an open-end fund and whether the fund has a relatively concentrated portfolio or large positions in particular issuers. The fund must also assess its use of borrowings and derivatives, short-term and long-term cash flow projections in normal and stressed conditions, holdings of cash and cash equivalents, and borrowing arrangements and other funding sources.
The rule also requires the fund to classify its investments as highly liquid, moderately liquid, less liquid or illiquid based on the number of days the fund expects it would take to liquidate the investment, and to review these classifications at least monthly or more often under certain conditions. The periods range from three or fewer business days for a highly liquid investment to greater than seven calendar days for settlement of a less liquid investment. Illiquid investments are those a fund does not expect to be able to sell or dispose of within seven calendar days without significantly changing the market value. The fund is prohibited from acquiring an investment if, after the acquisition, its holdings of illiquid assets will exceed 15% of its net assets. In addition, if a fund permits redemptions in-kind, the rule requires the fund to establish redemption in-kind policies and procedures governing how and when it will engage in such redemptions.
Pursuant to the rule’s requirements, the Liquidity Risk Management Program has been reviewed and approved by the Board. Furthermore, the Board has received a written report prepared by the Program’s Administrator that addresses the operation of the Program, assesses its adequacy and effectiveness and describes any material changes made to the Program.
Assessment of Program
In the opinion of the Program Administrator, the Program approved by the Board continues to be adequate for the fund and the Program has been implemented effectively. The Program Administrator has monitored the fund’s liquidity risk and the liquidity classification of the securities held by the fund and has determined that the Program is operating effectively.
During the period from January 1, 2020 to December 31, 2020, there were no material changes to the Program and no material liquidity events that impacted the fund. During the period, the fund held sufficient highly liquid assets to meet fund redemptions.
Under normal expected foreseeable fund redemption forecasts and foreseeable stressed fund redemption forecasts, the Program Administrator believes that the fund maintains sufficient highly liquid assets to meet expected fund redemptions.
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BNY Mellon U.S. Equity Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Sub-Adviser
Walter Scott & Partners Limited
(Walter Scott)
One Charlotte
Square
Edinburgh, Scotland, UK
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Dividend
Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286
Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286
Ticker Symbols: | Class A: DPUAX Class C: DPUCX Class I: DPUIX Class Y: DPUYX |
Telephone Call your financial representative or 1-800-373-9387
Mail The BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to info@bnymellon.com
Internet Information can be viewed online or downloaded at www.im.bnymellon.com
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.im.bnymellon.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.
© 2021 BNY Mellon Securities
Corporation |
BNY Mellon Global Stock Fund
SEMIANNUAL REPORT May 31, 2021 |
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.im.bnymellon.com and sign up for eCommunications. It’s simple and only takes a few minutes. |
The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
FOR MORE INFORMATION
Back Cover
DISCUSSION OF FUND PERFORMANCE (Unaudited)
For the period from December 1, 2020 through May 31, 2021, as provided by Charlie Macquaker, Roy Leckie and Jane Henderson, the three members of the Investment Executive at Walter Scott & Partners Limited (WS), Sub-Investment Adviser
Market and Fund Performance Overview
For the six-month period ended May 31, 2021, the BNY Mellon Global Stock Fund’s Class A shares achieved a total return of 11.96%, Class C shares returned 11.52%, Class I shares returned 12.14% and Class Y shares returned 12.13%.1 For the same period, the fund’s benchmark, the MSCI World Index (the “Index”), achieved a total return of 16.25%.2
Global equities gained ground during the period, bolstered by supportive central bank policies and economic reopening. An underweight to the financials sector, as well as stock selection within the industrials sector, contributed to the fund underperforming the Index.
The Fund’s Investment Approach
The fund seeks long-term total return. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in stocks. The fund’s investments will be focused on companies located in developed markets. The fund ordinarily invests in at least three countries and is not geographically limited in its investment selection but, at times, may invest a substantial portion of its assets in a single country. The fund may invest in the securities of companies of any market capitalization. Walter Scott seeks investment opportunities in companies with fundamental strengths that indicate the potential for sustainable growth. Walter Scott focuses on individual stock selection, building the fund’s portfolio from the bottom up through extensive fundamental research. The investment process begins with the screening of reported company financials. Companies that meet certain broad, absolute and trend criteria are candidates for more detailed financial analysis. The fund’s Investment Team collectively reviews and selects those stocks that meet Walter Scott’s criteria, and where the expected growth rate is combined with a reasonable valuation for the underlying equity. Geographic and sector allocations are the result of, not part of, the investment process, because the Investment Team’s sole focus is on the analysis of and investment in individual companies.
COVID-19 and Central Bank Activity Drive Markets
The COVID-19 pandemic and the extraordinary response from policymakers proved the dominant influence on financial markets over the review period. Equities enjoyed a stellar recovery. Globally, monetary policy remained highly accommodative in light of the near-term economic headwinds arising from renewed COVID-19 restrictions and was thus firmly supportive of risk assets. Increased risk appetite that was present during the six months was stoked prior to the start of the period by two developments: first, a relatively benign outcome to the U.S. presidential election; and second, the long-awaited positive news on several of the leading COVID-19 vaccine contenders, which opened the door to the normalization of social and economic activity in 2021. This drove a rotation into value-oriented cyclical sectors. Additional impetus was provided as two long-running political wrangles were settled—the fiscal stimulus bill in the U.S. and the Brexit deal between the European Union and the UK.
With reflation underway and an elevated pace of growth expected in the second half of 2021, investors began to anticipate a dialing back of the exceptional levels of monetary stimulus witnessed since the start of the pandemic, and this contributed to a sharp rise in government-bond yields during the first quarter of 2021. Although concerns around inflation persisted, as did fears around fresh COVID-19 mutations, U.S. equity markets continued to push higher into the
2
end of the review period, supported by the Biden administration’s commitment to fiscal stimulus, corresponding hopes of economic recovery and the advancement of COVID-19 vaccination plans.
Stock Selection Drove Fund Results
The fund’s results compared to the Index stemmed from security selection. A shift in momentum occurred in the markets near the end of 2020. As viable vaccine candidates surfaced, and countries constructed plans to immunize their populations, companies that had benefited from the lockdown began to lag companies that stood to benefit from economic reopening. The six-month reporting period saw strong performance from highly cyclical sectors and those that receive the largest tailwind from increased economic activity. Given this, the fund’s stock choices within the industrials sector detracted most. An underweight to the highly cyclical, financials sector also provided a headwind to results. From an individual stock perspective, health care information technology company Cerner was among the leading detractors. Management fell short on executing its plan for margin improvement during the period. COVID-19 has also led to concerns over the financial strength of hospitals and their ability to invest in their IT infrastructure. We exited the position during the period. Industrial automation company Keyence also weighed on results during the six months, as they faced headwinds given the rotation into value stocks. Information technology outsourcing company Cognizant Technology Solutions also detracted. The stock price fell in May after the company’s quarterly results announcement. The company has seen significant attrition of its employees, which led to investor concern over its ability to act on future business opportunities.
Conversely, stock selection within the communication services and consumer discretionary sectors contributed to relative returns. The top individual contributors included Taiwan Semiconductor Manufacturing. Demand for semiconductors continues to soar, pushing up revenues for these companies. LVMH Moet Hennessy Louis Vuitton was also among the leading contributors to returns. Consumer spending was strong during the period, given rising consumer confidence and improving economic data. This supported demand for LVMH’s products, particularly among emerging-market consumers.
Maintaining a Long-Term Approach
Economic and earnings recovery is gathering momentum across most countries, and with a few exceptions, governments and central banks are sticking to their stimulus agendas, with Europe and Japan, in particular, conscious of the continued need to promote growth. While this might represent a recipe for further equity price gains, the magnitude of the rise in markets since the slump of last March suggests that investors have, to varying degrees, discounted the near-term recovery in corporate profits. While producer and consumer price inflation has been picking up, it is likely that some of this has been due to the dislocations and disruptions caused by the pandemic. However, as economies recover and should inflation remain elevated, the novel specter of central bank tightening will loom larger in investors’ minds. This may induce bouts of volatility as markets eventually encounter a less-benign monetary environment. Furthermore, should some of the cost pressures that companies are currently experiencing endure, corporate profitability may be tested, although such increases may be passed through to consumers in an improving economic environment, or at least by companies that have pricing power.
Over the course of the downturn, we have been pleased by the way the companies in the portfolio have shown resilience and adapted to challenging conditions. Some have benefited from growth trends that have been accelerated by the pandemic, while others are well positioned for the broadening economic rebound. They are financially strong, market-leading businesses that
3
DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)
have typically demonstrated good cost control and pricing power, and whose management teams are adept at navigating the challenges and opportunities brought about by cyclical swings. We retain our confidence in their ability to deliver strong returns to investors over the long term, whatever the economic and market ebbs and flows that may lie ahead.
June 15, 2021
1 DUE TO RECENT MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investors should note that the fund’s short-term performance is highly unusual, in part due to unusually favorable market conditions, and is unlikely to be repeated or consistently achieved in the future. Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost.
2 Source: Lipper Inc. — The MSCI World Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets. It reflects reinvestment of net dividends and, where applicable, capital gain distributions. Investors cannot invest directly in any index.
Please note: the position in any security highlighted with italicized typeface was sold during the reporting period.
Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic, and social instability, a lack of comprehensive company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging-market countries than with more economically and politically established foreign countries.
Small and midsized company stocks tend to be more volatile and less liquid than larger company stocks, as these companies are less established and have more volatile earnings.
Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
The fund may, but is not required to, use derivative instruments. A small investment in derivatives could have a potentially large impact on the fund’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets.
4
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon Global Stock Fund from December 1, 2020 to May 31, 2021. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
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Assume actual returns for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
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Expenses paid per $1,000† | $6.39 | $10.39 | $4.92 | $4.71 |
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Ending value (after expenses) | $1,119.60 | $1,115.20 | $1,121.40 | $1,121.30 |
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COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
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Assuming a hypothetical 5% annualized return for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
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Expenses paid per $1,000† | $6.09 | $9.90 | $4.68 | $4.48 |
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Ending value (after expenses) | $1,018.90 | $1,015.11 | $1,020.29 | $1,020.49 |
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† | Expenses are equal to the fund’s annualized expense ratio of 1.21% for Class A, 1.97% for Class C, .93% for Class I and .89% for Class Y, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
5
STATEMENT OF INVESTMENTS
May 31, 2021 (Unaudited)
Description | Shares | Value ($) | |||||
Common Stocks - 98.6% | |||||||
Australia - 1.7% | |||||||
CSL | 115,300 | 25,795,249 | |||||
Canada - 3.2% | |||||||
Alimentation Couche-Tard, Cl. B | 874,700 | 31,547,270 | |||||
Canadian National Railway | 134,200 | 14,941,352 | |||||
46,488,622 | |||||||
Denmark - 2.3% | |||||||
Novo Nordisk, Cl. B | 436,800 | 34,474,409 | |||||
Finland - 1.3% | |||||||
Kone, Cl. B | 235,400 | 18,986,051 | |||||
France - 4.8% | |||||||
L'Oreal | 76,600 | 34,402,855 | |||||
LVMH | 46,000 | 36,573,744 | |||||
70,976,599 | |||||||
Hong Kong - 4.9% | |||||||
AIA Group | 3,262,800 | 41,705,184 | |||||
CLP Holdings | 1,301,000 | 13,218,035 | |||||
Jardine Matheson Holdings | 264,500 | 17,155,470 | |||||
72,078,689 | |||||||
Ireland - 1.9% | |||||||
Experian | 714,500 | 27,407,952 | |||||
Japan - 9.1% | |||||||
FANUC | 119,200 | 28,542,450 | |||||
Keyence | 105,328 | 51,659,483 | |||||
Shin-Etsu Chemical | 177,700 | 30,505,153 | |||||
SMC | 37,000 | 22,071,653 | |||||
132,778,739 | |||||||
Spain - 2.3% | |||||||
Industria de Diseno Textil | 865,000 | 33,427,381 | |||||
Switzerland - 6.9% | |||||||
Nestle | 215,100 | 26,472,007 | |||||
Novartis | 245,700 | 21,557,136 | |||||
Roche Holding | 80,300 | 27,915,297 | |||||
SGS | 7,900 | 24,617,788 | |||||
100,562,228 | |||||||
Taiwan - 3.5% | |||||||
Taiwan Semiconductor Manufacturing, ADR | 434,300 | 50,969,448 | |||||
United Kingdom - 5.5% | |||||||
Compass Group | 1,018,000 | 23,237,914 | |||||
Linde | 110,400 | 33,186,240 |
6
Description | Shares | Value ($) | |||||
Common Stocks - 98.6% (continued) | |||||||
United Kingdom - 5.5% (continued) | |||||||
Reckitt Benckiser Group | 267,400 | 24,165,332 | |||||
80,589,486 | |||||||
United States - 51.2% | |||||||
Adobe | 61,300 | a | 30,930,754 | ||||
Alphabet, Cl. C | 15,897 | a | 38,336,569 | ||||
Amphenol, Cl. A | 497,600 | 33,468,576 | |||||
Automatic Data Processing | 156,300 | 30,637,926 | |||||
Booking Holdings | 11,510 | a | 27,181,441 | ||||
Cisco Systems | 576,000 | 30,470,400 | |||||
Cognizant Technology Solutions, Cl. A | 396,100 | 28,344,916 | |||||
Colgate-Palmolive | 310,400 | 26,005,312 | |||||
Edwards Lifesciences | 323,100 | a | 30,985,290 | ||||
Fastenal | 544,600 | 28,885,584 | |||||
Fortinet | 89,400 | a | 19,537,476 | ||||
Illumina | 50,500 | a | 20,484,820 | ||||
Intuitive Surgical | 41,500 | a | 34,950,470 | ||||
IPG Photonics | 78,700 | a | 16,468,762 | ||||
Johnson & Johnson | 164,700 | 27,875,475 | |||||
Mastercard, Cl. A | 124,000 | 44,711,920 | |||||
Microsoft | 198,600 | 49,586,448 | |||||
NIKE, Cl. B | 231,000 | 31,522,260 | |||||
Oracle | 388,200 | 30,566,868 | |||||
Paychex | 148,100 | 14,978,834 | |||||
Stryker | 113,000 | 28,845,510 | |||||
Texas Instruments | 176,100 | 33,427,302 | |||||
The TJX Companies | 440,000 | 29,717,600 | |||||
The Walt Disney Company | 171,600 | a | 30,656,340 | ||||
Waters | 96,100 | a | 30,968,225 | ||||
749,545,078 | |||||||
Total Common Stocks (cost $546,286,871) | 1,444,079,931 |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | 1-Day Yield (%) | Shares | Value ($) | ||||
Investment Companies - 1.1% | |||||||
Registered Investment Companies - 1.1% | |||||||
Dreyfus
Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 0.04 | 15,570,042 | b | 15,570,042 | |||
Total Investments (cost $561,856,913) | 99.7% | 1,459,649,973 | |||||
Cash and Receivables (Net) | .3% | 5,082,065 | |||||
Net Assets | 100.0% | 1,464,732,038 |
ADR—American Depository Receipt
a Non-income producing security.
b Investment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.
Portfolio Summary (Unaudited) † | Value (%) |
Software & Services | 17.0 |
Pharmaceuticals Biotechnology & Life Sciences | 12.9 |
Technology Hardware & Equipment | 9.0 |
Capital Goods | 7.9 |
Health Care Equipment & Services | 6.5 |
Household & Personal Products | 5.8 |
Semiconductors & Semiconductor Equipment | 5.8 |
Media & Entertainment | 4.7 |
Consumer Durables & Apparel | 4.7 |
Materials | 4.3 |
Retailing | 4.3 |
Commercial & Professional Services | 3.6 |
Consumer Services | 3.4 |
Insurance | 2.8 |
Food & Staples Retailing | 2.2 |
Food, Beverage & Tobacco | 1.8 |
Investment Companies | 1.1 |
Transportation | 1.0 |
Utilities | .9 |
99.7 |
† Based on net assets.
See notes to financial statements.
8
STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS (Unaudited)
Investment Companies | Value | Purchases($)† | Sales($) | Value | Net | Dividends/ |
Registered Investment Companies: | ||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 16,828,237 | 150,732,776 | (151,990,971) | 15,570,042 | 1.1 | 7,306 |
† Includes reinvested dividends/distributions.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2021 (Unaudited)
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Assets ($): |
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Investments in securities—See Statement of Investments |
|
|
| |||
Unaffiliated issuers | 546,286,871 |
| 1,444,079,931 |
| ||
Affiliated issuers |
| 15,570,042 |
| 15,570,042 |
| |
Tax reclaim receivable—Note 1(b) |
| 2,778,175 |
| |||
Receivable for shares of Common Stock subscribed |
| 2,130,860 |
| |||
Dividends and securities lending income receivable |
| 2,005,434 |
| |||
Prepaid expenses |
|
|
|
| 48,369 |
|
|
|
|
|
| 1,466,612,811 |
|
Liabilities ($): |
|
|
|
| ||
Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c) |
| 1,112,222 |
| |||
Payable for shares of Common Stock redeemed |
| 601,688 |
| |||
Directors’ fees and expenses payable |
| 24,583 |
| |||
Other accrued expenses |
|
|
|
| 142,280 |
|
|
|
|
|
| 1,880,773 |
|
Net Assets ($) |
|
| 1,464,732,038 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
| 509,797,767 |
|
Total distributable earnings (loss) |
|
|
|
| 954,934,271 |
|
Net Assets ($) |
|
| 1,464,732,038 |
|
Net Asset Value Per Share | Class A | Class C | Class I | Class Y |
|
Net Assets ($) | 45,742,082 | 4,722,993 | 1,086,506,555 | 327,760,408 |
|
Shares Outstanding | 1,678,625 | 180,957 | 39,188,849 | 11,842,482 |
|
Net Asset Value Per Share ($) | 27.25 | 26.10 | 27.72 | 27.68 |
|
|
|
|
|
|
|
See notes to financial statements. |
|
|
|
|
|
10
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Cash dividends (net of $1,100,399 foreign taxes withheld at source): |
| |||||
Unaffiliated issuers |
|
| 11,475,110 |
| ||
Affiliated issuers |
|
| 7,306 |
| ||
Income from securities lending—Note 1(c) |
|
| 1,436 |
| ||
Total Income |
|
| 11,483,852 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
| 6,132,093 |
| ||
Shareholder servicing costs—Note 3(c) |
|
| 337,947 |
| ||
Professional fees |
|
| 60,736 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
| 55,742 |
| ||
Registration fees |
|
| 43,049 |
| ||
Custodian fees—Note 3(c) |
|
| 32,804 |
| ||
Distribution fees—Note 3(b) |
|
| 22,672 |
| ||
Loan commitment fees—Note 2 |
|
| 20,347 |
| ||
Prospectus and shareholders’ reports |
|
| 17,402 |
| ||
Chief Compliance Officer fees—Note 3(c) |
|
| 7,862 |
| ||
Miscellaneous |
|
| 21,350 |
| ||
Total Expenses |
|
| 6,752,004 |
| ||
Investment Income—Net |
|
| 4,731,848 |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments and foreign currency transactions | 53,058,732 |
| ||||
Net realized gain (loss) on forward foreign currency exchange contracts | (5,615) |
| ||||
Net Realized Gain (Loss) |
|
| 53,053,117 |
| ||
Net change in unrealized appreciation
(depreciation) on investments | 106,840,245 |
| ||||
Net Realized and Unrealized Gain (Loss) on Investments |
|
| 159,893,362 |
| ||
Net Increase in Net Assets Resulting from Operations |
| 164,625,210 |
| |||
|
|
|
|
|
|
|
See notes to financial statements. |
11
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year
Ended |
| ||
Operations ($): |
|
|
|
|
|
|
|
| |
Investment income—net |
|
| 4,731,848 |
|
|
| 7,032,502 |
| |
Net realized gain (loss) on investments |
| 53,053,117 |
|
|
| 72,310,840 |
| ||
Net change in unrealized appreciation
|
| 106,840,245 |
|
|
| 129,553,859 |
| ||
Net Increase (Decrease) in Net Assets | 164,625,210 |
|
|
| 208,897,201 |
| |||
Distributions ($): |
| ||||||||
Distributions to shareholders: |
|
|
|
|
|
|
|
| |
Class A |
|
| (2,168,361) |
|
|
| (1,732,199) |
| |
Class C |
|
| (430,557) |
|
|
| (505,995) |
| |
Class I |
|
| (58,199,516) |
|
|
| (47,741,113) |
| |
Class Y |
|
| (19,314,782) |
|
|
| (20,130,902) |
| |
Total Distributions |
|
| (80,113,216) |
|
|
| (70,110,209) |
| |
Capital Stock Transactions ($): |
| ||||||||
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
| 6,943,834 |
|
|
| 7,914,008 |
| |
Class C |
|
| 236,753 |
|
|
| 728,080 |
| |
Class I |
|
| 80,911,960 |
|
|
| 192,319,417 |
| |
Class Y |
|
| 7,973,355 |
|
|
| 51,753,770 |
| |
Distributions reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
| 1,974,862 |
|
|
| 1,567,224 |
| |
Class C |
|
| 403,712 |
|
|
| 438,484 |
| |
Class I |
|
| 54,658,318 |
|
|
| 45,792,622 |
| |
Class Y |
|
| 9,350,319 |
|
|
| 11,356,963 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
| (4,680,591) |
|
|
| (10,371,478) |
| |
Class C |
|
| (4,294,882) |
|
|
| (4,832,346) |
| |
Class I |
|
| (138,632,631) |
|
|
| (288,857,628) |
| |
Class Y |
|
| (46,572,896) |
|
|
| (146,256,945) |
| |
Increase (Decrease) in Net Assets
| (31,727,887) |
|
|
| (138,447,829) |
| |||
Total Increase (Decrease) in Net Assets | 52,784,107 |
|
|
| 339,163 |
| |||
Net Assets ($): |
| ||||||||
Beginning of Period |
|
| 1,411,947,931 |
|
|
| 1,411,608,768 |
| |
End of Period |
|
| 1,464,732,038 |
|
|
| 1,411,947,931 |
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year Ended |
| ||
Capital Share Transactions (Shares): |
| ||||||||
Class Aa,b |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 269,853 |
|
|
| 348,709 |
| |
Shares issued for distributions reinvested |
|
| 79,793 |
|
|
| 68,980 |
| |
Shares redeemed |
|
| (179,317) |
|
|
| (465,455) |
| |
Net Increase (Decrease) in Shares Outstanding | 170,329 |
|
|
| (47,766) |
| |||
Class Ca,b |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 9,636 |
|
|
| 33,765 |
| |
Shares issued for distributions reinvested |
|
| 16,970 |
|
|
| 19,949 |
| |
Shares redeemed |
|
| (173,743) |
|
|
| (231,461) |
| |
Net Increase (Decrease) in Shares Outstanding | (147,137) |
|
|
| (177,747) |
| |||
Class Ia |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 3,074,148 |
|
|
| 8,725,221 |
| |
Shares issued for distributions reinvested |
|
| 2,173,293 |
|
|
| 1,985,803 |
| |
Shares redeemed |
|
| (5,264,777) |
|
|
| (12,699,259) |
| |
Net Increase (Decrease) in Shares Outstanding | (17,336) |
|
|
| (1,988,235) |
| |||
Class Ya |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 302,953 |
|
|
| 2,423,472 |
| |
Shares issued for distributions reinvested |
|
| 372,523 |
|
|
| 493,352 |
| |
Shares redeemed |
|
| (1,754,175) |
|
|
| (7,037,762) |
| |
Net Increase (Decrease) in Shares Outstanding | (1,078,699) |
|
|
| (4,120,938) |
| |||
|
|
|
|
|
|
|
|
|
|
a | During the period ended May 31, 2021, 130,641 Class Y shares representing $3,441,459 were exchanged for 130,413 Class I shares. During the period ended November 30, 2020, 4,073 Class A shares representing $92,020 were exchanged for 4,008 Class I shares, 436,841 Class Y shares representing $9,954,167 were exchanged for 436,147 Class I shares and 121 Class C shares representing $2,697 were exchanged for 115 Class I shares. | ||||||||
b | During the period ended May 31, 2021, 5,638 Class C shares representing $138,532 were automatically converted to 5,413 Class A shares and during the period ended November 30, 2020, 4,098 Class C shares representing $84,772 were automatically converted to 3,951 Class A shares. | ||||||||
See notes to financial statements. |
13
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class A Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 25.74 | 23.07 | 21.08 | 21.53 | 17.51 | 18.66 |
Investment Operations: | ||||||
Investment income—neta | .05 | .06 | .10 | .11 | .11 | .11 |
Net realized and unrealized
| 2.89 | 3.71 | 3.17 | 1.02 | 4.06 | .42 |
Total from Investment Operations | 2.94 | 3.77 | 3.27 | 1.13 | 4.17 | .53 |
Distributions: | ||||||
Dividends from | (.08) | (.10) | (.12) | (.15) | (.09) | (.19) |
Dividends
from net realized | (1.35) | (1.00) | (1.16) | (1.43) | (.06) | (1.49) |
Total Distributions | (1.43) | (1.10) | (1.28) | (1.58) | (.15) | (1.68) |
Net asset value, end of period | 27.25 | 25.74 | 23.07 | 21.08 | 21.53 | 17.51 |
Total Return (%)b | 11.96c | 17.00 | 17.04 | 5.61 | 24.04 | 3.19 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| 1.21d | 1.23 | 1.21 | 1.20 | 1.22 | 1.22 |
Ratio
of net investment income | .41d | .27 | .46 | .52 | .60 | .63 |
Portfolio Turnover Rate | 3.96c | 4.13 | 6.62 | 8.15 | 6.50 | 11.79 |
Net Assets, end of period ($ x 1,000) | 45,742 | 38,828 | 35,891 | 29,369 | 25,477 | 34,844 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
14
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class C Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 24.73 | 22.26 | 20.41 | 20.89 | 17.03 | 18.18 |
Investment Operations: | ||||||
Investment (loss)—neta | (.06) | (.10) | (.05) | (.05) | (.02) | (.02) |
Net realized and unrealized | 2.78 | 3.57 | 3.06 | 1.00 | 3.94 | .40 |
Total from Investment Operations | 2.72 | 3.47 | 3.01 | .95 | 3.92 | .38 |
Distributions: | ||||||
Dividends
from | - | - | - | - | - | (.04) |
Dividends from net realized | (1.35) | (1.00) | (1.16) | (1.43) | (.06) | (1.49) |
Total Distributions | (1.35) | (1.00) | (1.16) | (1.43) | (.06) | (1.53) |
Net asset value, end of period | 26.10 | 24.73 | 22.26 | 20.41 | 20.89 | 17.03 |
Total Return (%)b | 11.52c | 16.15 | 16.12 | 4.85 | 23.11 | 2.36 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | 1.97d | 1.98 | 1.96 | 1.97 | 1.99 | 1.99 |
Ratio
of net investment | (.51)d | (.45) | (.25) | (.22) | (.10) | (.13) |
Portfolio Turnover Rate | 3.96c | 4.13 | 6.62 | 8.15 | 6.50 | 11.79 |
Net Assets, end of period ($ x 1,000) | 4,723 | 8,114 | 11,260 | 11,008 | 13,132 | 13,258 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
15
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class I Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 26.19 | 23.44 | 21.41 | 21.83 | 17.76 | 18.92 |
Investment Operations: | ||||||
Investment income—neta | .09 | .12 | .15 | .17 | .18 | .16 |
Net realized and unrealized | 2.93 | 3.78 | 3.21 | 1.04 | 4.10 | .43 |
Total from Investment Operations | 3.02 | 3.90 | 3.36 | 1.21 | 4.28 | .59 |
Distributions: | ||||||
Dividends
from | (.14) | (.15) | (.17) | (.20) | (.15) | (.26) |
Dividends from net realized | (1.35) | (1.00) | (1.16) | (1.43) | (.06) | (1.49) |
Total Distributions | (1.49) | (1.15) | (1.33) | (1.63) | (.21) | (1.75) |
Net asset value, end of period | 27.72 | 26.19 | 23.44 | 21.41 | 21.83 | 17.76 |
Total Return (%) | 12.14b | 17.32 | 17.32 | 5.89 | 24.40 | 3.50 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| .93c | .96 | .97 | .94 | .98 | .91 |
Ratio
of net investment income | .66c | .53 | .71 | .78 | .92 | .93 |
Portfolio Turnover Rate | 3.96b | 4.13 | 6.62 | 8.15 | 6.50 | 11.79 |
Net Assets, end of period ($ x 1,000) | 1,086,507 | 1,026,985 | 965,481 | 858,817 | 901,556 | 915,049 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
16
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class Y Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 26.16 | 23.41 | 21.38 | 21.81 | 17.74 | 18.90 |
Investment Operations: | ||||||
Investment income—neta | .09 | .14 | .17 | .18 | .19 | .17 |
Net realized and unrealized | 2.93 | 3.78 | 3.20 | 1.04 | 4.10 | .42 |
Total from Investment Operations | 3.02 | 3.92 | 3.37 | 1.22 | 4.29 | .59 |
Distributions: | ||||||
Dividends
from | (.15) | (.17) | (.18) | (.22) | (.16) | (.26) |
Dividends from net realized | (1.35) | (1.00) | (1.16) | (1.43) | (.06) | (1.49) |
Total Distributions | (1.50) | (1.17) | (1.34) | (1.65) | (.22) | (1.75) |
Net asset value, end of period | 27.68 | 26.16 | 23.41 | 21.38 | 21.81 | 17.74 |
Total Return (%) | 12.13b | 17.43 | 17.36 | 5.98 | 24.47 | 3.51 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| .89c | .89 | .89 | .89 | .90 | .89 |
Ratio
of net investment income | .70c | .62 | .80 | .85 | .99 | .95 |
Portfolio Turnover Rate | 3.96b | 4.13 | 6.62 | 8.15 | 6.50 | 11.79 |
Net Assets, end of period ($ x 1,000) | 327,760 | 338,021 | 398,977 | 358,526 | 355,729 | 304,547 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
BNY Mellon Global Stock Fund (the “fund”) is a separate diversified series of BNY Mellon Strategic Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering six series, including the fund. The fund’s investment objective is to seek long-term total return. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Walter Scott & Partners Limited (the “Sub-Adviser”), a wholly-owned subsidiary of BNY Mellon and an affiliate of the Adviser, serves as the fund’s sub-investment adviser.
BNY Mellon Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Adviser, is the distributor of the fund’s shares. The fund is authorized to issue 600 million shares of $.001 par value Common Stock. The fund currently has authorized four classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized), Class I (250 million shares authorized) and Class Y (150 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class A shares bought without an initial sales charge as part of an investment of $1 million or more may be charged a contingent deferred sales charge (“CDSC”) of 1.00% if redeemed within one year. Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. Class C shares automatically convert to Class A shares eight years after the date of purchase, without the imposition of a sales charge. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the
18
FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund is an investment company and applies the accounting and reporting guidance of the FASB ASC Topic 946 Financial Services-Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Company’s Board of Directors (the “Board”). Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For securities where observable inputs are limited, assumptions about market activity and risk are used and such securities are generally categorized within Level 3 of the fair value hierarchy.
20
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
The following is a summary of the inputs used as of May 31, 2021 in valuing the fund’s investments:
Level 1-Unadjusted Quoted Prices | Level 2- Other Significant Observable Inputs | Level 3-Significant Unobservable Inputs | Total | |||
Assets ($) | ||||||
Investments In Securities:† | ||||||
Equity Securities - Common Stocks | 1,444,079,931 | - | - | 1,444,079,931 | ||
Investment Companies | 15,570,042 | - | - | 15,570,042 |
† See Statement of Investments for additional detailed categorizations, if any.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.
Foreign taxes: The fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, realized and unrealized capital gains on investments or certain foreign currency transactions. Foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the fund invests. These foreign taxes, if any, are paid by the fund and are reflected in the Statement of Operations, if applicable. Foreign taxes payable or deferred or those subject to reclaims as of May 31, 2021, if any, are disclosed in the fund’s Statement of Assets and Liabilities.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses
21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended May 31, 2021, The Bank of New York Mellon earned $175 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.
(d) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political, economic developments and public health conditions. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks may be magnified if certain
22
events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies world-wide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
(f) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended May 31, 2021, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended May 31, 2021, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended November 30, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2020 was as follows: ordinary income $9,789,271 and long-term capital gains $60,320,938. The tax character of current year distributions will be determined at the end of the current fiscal year.
23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 2—Bank Lines of Credit:
The fund participates with other long-term open-end funds managed by the Adviser in a $823.5 million unsecured credit facility led by Citibank, N.A. (the “Citibank Credit Facility”) and a $300 million unsecured credit facility provided by The Bank of New York Mellon (the “BNYM Credit Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions (each, a “Facility”). The Citibank Credit Facility is available in two tranches: (i) Tranche A is in an amount equal to $688.5 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $135 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended May 31, 2021, the fund did not borrow under the Facilities.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .85% of the value of the fund’s average daily net assets and is payable monthly.
Pursuant to a sub-investment advisory agreement between the Adviser and the Sub-Adviser, the Adviser pays the Sub-Adviser a monthly fee at an annual rate of .41% of the value of the fund’s average daily net assets.
During the period ended May 31, 2021, the Distributor retained $1,816 from commissions earned on sales of the fund’s Class A shares and $85 from CDSC fees on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. The Distributor may pay one or more Service Agents in respect of advertising, marketing and other distribution services, and determines the amounts, if any, to be paid to Service Agents and the basis on which such payments are made. During the period ended May 31, 2021, Class C shares were charged $22,672 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may
24
include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2021, Class A and Class C shares were charged $54,613 and $7,558, respectively, pursuant to the Shareholder Services Plan.
The fund has an arrangement with the transfer agent whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency fees. For financial reporting purposes, the fund includes net earnings credits, if any, as shareholder servicing costs in the Statement of Operations.
The fund has an arrangement with the custodian whereby the fund will receive interest income or be charged an overdraft fees when cash balances are maintained. For financial reporting purposes, the fund includes this interest income and overdraft fees, if any, as interest income in the Statement of Operations.
The fund compensates BNY Mellon Transfer, Inc., a wholly-owned subsidiary of the Adviser, under a transfer agency agreement for providing transfer agency and cash management services inclusive of earnings credits, if any, for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended May 31, 2021, the fund was charged $10,819 for transfer agency services, inclusive of earnings credit, if any. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended May 31, 2021, the fund was charged $32,804 pursuant to the custody agreement.
During the period ended May 31, 2021, the fund was charged $7,862 for services performed by the Chief Compliance Officer and his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.
The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: management fees of $1,051,241, Distribution Plan fees of $2,999, Shareholder Services
25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Plan fees of $10,757, custodian fees of $37,093, Chief Compliance Officer fees of $6,552 and transfer agency fees of $3,580.
(d) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities and forward foreign currency exchange contracts (“forward contracts”), during the period ended May 31, 2021, amounted to $55,854,799 and $163,406,322, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its over-the-counter (“OTC”) derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default or termination.
Each type of derivative instrument that was held by the fund during the period ended May 31, 2021 is discussed below.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments. The fund is also
26
exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. At May 31, 2021, there were no forward contracts outstanding.
The following summarizes the average market value of derivatives outstanding during the period ended May 31, 2021:
|
| Average Market Value ($) |
Forward contracts |
| 80,695 |
At May 31, 2021, accumulated net unrealized appreciation on investments was $897,793,060, consisting of gross unrealized appreciation.
At May 31, 2021, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
27
LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited)
Effective June 1, 2019, the fund adopted a liquidity risk management program (the “Liquidity Risk Management Program”) pursuant to the requirements of Rule 22e-4 under the Investment Company Act of 1940, as amended. Rule 22e-4 requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish liquidity risk management programs in order to effectively manage fund liquidity and shareholder redemptions. The rule is designed to mitigate the risk that a fund could not meet redemption requests without significantly diluting the interests of remaining investors.
The rule requires the fund to assess, manage and review their liquidity risk at least annually considering applicable factors such as investment strategy and liquidity during normal and foreseeable stressed conditions, including whether the strategy is appropriate for an open-end fund and whether the fund has a relatively concentrated portfolio or large positions in particular issuers. The fund must also assess its use of borrowings and derivatives, short-term and long-term cash flow projections in normal and stressed conditions, holdings of cash and cash equivalents, and borrowing arrangements and other funding sources.
The rule also requires the fund to classify its investments as highly liquid, moderately liquid, less liquid or illiquid based on the number of days the fund expects it would take to liquidate the investment, and to review these classifications at least monthly or more often under certain conditions. The periods range from three or fewer business days for a highly liquid investment to greater than seven calendar days for settlement of a less liquid investment. Illiquid investments are those a fund does not expect to be able to sell or dispose of within seven calendar days without significantly changing the market value. The fund is prohibited from acquiring an investment if, after the acquisition, its holdings of illiquid assets will exceed 15% of its net assets. In addition, if a fund permits redemptions in-kind, the rule requires the fund to establish redemption in-kind policies and procedures governing how and when it will engage in such redemptions.
Pursuant to the rule’s requirements, the Liquidity Risk Management Program has been reviewed and approved by the Board. Furthermore, the Board has received a written report prepared by the Program’s Administrator that addresses the operation of the Program, assesses its adequacy and effectiveness and describes any material changes made to the Program.
Assessment of Program
In the opinion of the Program Administrator, the Program approved by the Board continues to be adequate for the fund and the Program has been implemented effectively. The Program Administrator has monitored the fund’s liquidity risk and the liquidity classification of the securities held by the fund and has determined that the Program is operating effectively.
During the period from January 1, 2020 to December 31, 2020, there were no material changes to the Program and no material liquidity events that impacted the fund. During the period, the fund held sufficient highly liquid assets to meet fund redemptions.
Under normal expected foreseeable fund redemption forecasts and foreseeable stressed fund redemption forecasts, the Program Administrator believes that the fund maintains sufficient highly liquid assets to meet expected fund redemptions.
28
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29
BNY Mellon Global Stock Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Sub-Adviser
Walter Scott & Partners Limited
One Charlotte Square
Edinburgh, Scotland, UK
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286
Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286
Ticker Symbols: | Class A: DGLAX Class C: DGLCX Class I: DGLRX Class Y: DGLYX |
Telephone Call your financial representative or 1-800-373-9387
Mail The BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to info@bnymellon.com
Internet Information can be viewed online or downloaded at www.im.bnymellon.com
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.im.bnymellon.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.
© 2021 BNY Mellon Securities
Corporation |
BNY Mellon International Stock Fund
SEMIANNUAL REPORT May 31, 2021 |
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.im.bnymellon.com and sign up for eCommunications. It’s simple and only takes a few minutes. |
The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
FOR MORE INFORMATION
Back Cover
DISCUSSION OF FUND PERFORMANCE (Unaudited)
For the period from December 1, 2020 through May 31, 2021, as provided by Charlie Macquaker, Roy Leckie and Jane Henderson, the three members of the Investment Executive at Walter Scott & Partners Limited (WS), Sub-Investment Adviser
Market and Fund Performance Overview
For the six-month period ended May 31, 2021 the BNY Mellon International Stock Fund’s Class A shares achieved a total return of 9.62%, Class C shares returned 9.29%, Class I shares returned 9.84% and Class Y shares returned 9.85%.1 In comparison, the fund’s benchmark index, the MSCI EAFE Index (the “Index”), achieved a return of 15.55% for the same period.2
International equities gained ground during the period, bolstered by supportive central bank policies and economic reopening. The fund underperformed the Index, largely due to stock selection within the industrials and materials sectors. An underweight to financials also detracted.
The Fund’s Investment Approach
The fund seeks long-term total returns. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in stocks. The fund normally invests primarily in foreign companies located in developed markets. The fund ordinarily invests in at least three countries and is not geographically limited in its investment selection but, at times, may invest a substantial portion of its assets in a single country. The fund may invest in the securities of companies of any market capitalization. Walter Scott seeks investment opportunities in companies with fundamental strengths that indicate the potential for sustainable growth. Walter Scott focuses on individual stock selection, building the fund’s portfolio from the bottom up through extensive fundamental research. The investment process begins with the screening of reported company financials. Companies that meet certain broad, absolute and trend criteria are candidates for more detailed financial analysis. The fund’s Investment Team collectively reviews and selects those stocks that meet Walter Scott’s criteria, and where the expected growth rate is combined with a reasonable valuation for the underlying equity. Geographic and sector allocations are results of, not part of, the investment process, because the Investment Team’s sole focus is on the analysis of and investment in individual companies.
COVID-19 and Central Bank Activity Drive Markets
The COVID-19 pandemic and the extraordinary response from policymakers proved the dominant influence on financial markets over the review period. Equities enjoyed a stellar recovery. Globally, monetary policy remained highly accommodative in light of the near-term economic headwinds arising from renewed COVID-19 restrictions and was thus firmly supportive of risk assets. Increased risk appetite that was present during the six months was stoked prior to the start of the period by two developments: first, a relatively benign outcome to the U.S. presidential election; and second, the long-awaited positive news on several of the leading COVID-19 vaccine contenders, which opened the door to the normalization of social and economic activity in 2021. This drove a rotation into value-oriented cyclical sectors. Additional impetus was provided as two long-running political
2
wrangles were settled—the fiscal stimulus bill in the U.S. and the Brexit deal between the European Union and the UK.
With reflation underway and an elevated pace of growth expected in the second half of 2021, investors began to anticipate a dialing back of the exceptional levels of monetary stimulus witnessed since the start of the pandemic, and this contributed to a sharp rise in government-bond yields during the first quarter of 2021. Although concerns around inflation persisted, as did fears around fresh COVID-19 mutations, U.S. equity markets continued to push higher into the end of the review period, supported by the Biden administration’s commitment to fiscal stimulus, corresponding hopes of economic recovery and the advancement of COVID-19 vaccination plans.
Stock Selection Drove Fund Results
The fund’s results compared to the Index stemmed from security selection. A shift in momentum occurred in the markets near the end of 2020. As viable vaccine candidates surfaced, and countries constructed plans to immunize their populations, companies that had benefited from the lockdown began to lag companies that stood to benefit from economic reopening. The six-month reporting period saw strong performance from highly cyclical sectors and those that receive the largest tailwind from increased economic activity. Given this, the fund’s stock choices within the industrials and materials sector detracted most. An underweight to the highly cyclical, financials sector also provided a headwind to results. From an individual stock perspective, Japan-based consumer products company Kao was among the leading detractors. The company faced challenges with competition in its diapers business and the impact of COVID-19. We exited the position during the period. Industrial automation company Keyence and Murata Manufacturing also weighed on results during the six months, as they faced headwinds given the rotation into value stocks.
Conversely, positioning within the utilities and communication services sectors benefited relative returns. The top individual contributors included semiconductor companies ASML Holding and Taiwan Semiconductor Manufacturing. Demand for semiconductors continues to soar, pushing up revenues for these companies. LVMH Moet Hennessy Louis Vuitton was also among the leading contributors to returns. Consumer spending was strong during the period, given rising consumer confidence and improving economic data. This supported demand for LVMH’s products, particularly among emerging-market consumers.
Maintaining a Long-Term Approach
The positive economic and earnings outlook in tandem with still-expansionary, monetary and fiscal stimuli, have helped propel many stock markets to new highs. To some extent, given the magnitude of the gains, a lot of the near-term good news may have been discounted, and indeed, there are some challenges ahead. It remains to be seen if the current rise in inflation is due to reopening pains, which will be alleviated once production and the transportation of goods get back to full normality as economies increasingly reopen. At the moment, most governments and central banks are more concerned about fostering recovery than mitigating the effects of possibly transient price rises and talk of tapering seems premature. But the prospect of eventual tightening will be of greater investor focus as the world economic momentum gathers pace and should some of the inflationary trends endure. A tilt toward the normalization of interest rates may not be too disruptive if it speaks of growth, but investors will be wary of companies whose business models are founded on
3
DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)
excess leverage, and where hyped valuations are not justified by earnings reality. May was marked by some landmark sustainability developments. We believe that the court ruling against Royal Dutch Shell and shareholder activism at Exxon are a clear clarion call for all companies not to slacken the pace in their pursuit of a greener future.
The durability of the economic recovery, inflationary pressures and the outlook for monetary policy will likely occupy investors’ attention in the near term. Rather than second-guess future macroeconomic developments, our focus remains on company fundamentals. The attributes of market leadership, financial strength and the ability to innovate and adapt are hallmarks of the companies in the portfolio, and we are confident in their ability to deliver strong earnings growth in the long term, whatever new challenges may emerge in their operating environment.
June 15, 2021
1 DUE TO RECENT MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investors should note that the fund’s short-term performance is highly unusual, in part due to unusually favorable market conditions, and is unlikely to be repeated or consistently achieved in the future. Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost.
2 Source: Lipper Inc. — The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. It reflects reinvestment of net dividends and, where applicable, capital gain distributions. Investors cannot invest directly in any index.
Please note: the position in any security highlighted with italicized typeface was sold during the reporting period
Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic, and social instability, a lack of comprehensive company information, differing auditing and legal standards, and less market liquidity.
Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
The fund may, but is not required to, use derivative instruments. A small investment in derivatives could have a
potentially large impact on the fund’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets.
4
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon International Stock Fund from December 1, 2020 to May 31, 2021. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
| |||||
Assume actual returns for the six months ended May 31, 2021 |
| |||||
|
|
|
|
|
|
|
|
| Class A | Class C | Class I | Class Y |
|
Expenses paid per $1,000† | $6.64 | $10.28 | $4.76 | $4.60 |
| |
Ending value (after expenses) | $1,096.20 | $1,092.90 | $1,098.40 | $1,098.50 |
|
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
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Assuming a hypothetical 5% annualized return for the six months ended May 31, 2021 |
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| Class A | Class C | Class I | Class Y |
|
Expenses paid per $1,000† | $6.39 | $9.90 | $4.58 | $4.43 |
| |
Ending value (after expenses) | $1,018.60 | $1,015.11 | $1,020.39 | $1,020.54 |
| |
† | Expenses are equal to the fund’s annualized expense ratio of 1.27% for Class A, 1.97% for Class C, .91% for Class I and .88% for Class Y, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
5
STATEMENT OF INVESTMENTS
May 31, 2021 (Unaudited)
Description | Shares | Value ($) | |||||
Common Stocks - 96.9% | |||||||
Australia - 3.3% | |||||||
Cochlear | 431,100 | 75,453,336 | |||||
CSL | 686,800 | 153,652,880 | |||||
229,106,216 | |||||||
Canada - 4.1% | |||||||
Alimentation Couche-Tard, Cl. B | 4,259,900 | 153,639,206 | |||||
Canadian National Railway | 1,218,400 | 135,652,332 | |||||
289,291,538 | |||||||
Denmark - 7.9% | |||||||
Chr. Hansen Holding | 1,592,000 | 142,643,534 | |||||
Coloplast, Cl. B | 684,800 | 107,870,991 | |||||
Novo Nordisk, Cl. B | 2,033,000 | 160,454,380 | |||||
Novozymes, Cl. B | 2,005,512 | 145,952,285 | |||||
556,921,190 | |||||||
Finland - 1.8% | |||||||
Kone, Cl. B | 1,564,500 | 126,183,845 | |||||
France - 10.4% | |||||||
Air Liquide | 782,600 | 132,729,826 | |||||
Dassault Systemes | 605,200 | 138,930,597 | |||||
L'Oreal | 358,000 | 160,786,190 | |||||
LVMH | 256,400 | 203,858,871 | |||||
TotalEnergies | 2,042,104 | 94,392,688 | |||||
730,698,172 | |||||||
Germany - 5.4% | |||||||
adidas | 448,300 | 163,101,809 | |||||
Merck | 393,800 | 70,856,374 | |||||
SAP | 1,047,700 | 145,035,169 | |||||
378,993,352 | |||||||
Hong Kong - 7.5% | |||||||
AIA Group | 15,578,600 | 199,126,019 | |||||
CLP Holdings | 9,862,500 | 100,202,055 | |||||
Hang Lung Properties | 40,583,000 | 102,386,983 | |||||
Hong Kong & China Gas | 33,747,160 | 58,702,813 | |||||
Jardine Matheson Holdings | 983,100 | 63,763,866 | |||||
524,181,736 | |||||||
Ireland - 2.1% | |||||||
Experian | 3,750,400 | 143,863,936 | |||||
Japan - 20.9% | |||||||
Daikin Industries | 795,100 | 156,399,467 | |||||
FANUC | 661,200 | 158,324,396 | |||||
Hoya | 1,120,900 | 146,446,169 | |||||
Keyence | 427,280 | 209,565,017 |
6
Description | Shares | Value ($) | |||||
Common Stocks - 96.9% (continued) | |||||||
Japan - 20.9% (continued) | |||||||
Makita | 2,050,900 | 98,591,087 | |||||
MISUMI Group | 1,837,800 | 58,897,947 | |||||
Murata Manufacturing | 1,900,000 | 143,215,733 | |||||
Shin-Etsu Chemical | 1,011,600 | 173,657,923 | |||||
SMC | 314,100 | 187,370,438 | |||||
Sysmex | 1,382,900 | 140,512,259 | |||||
1,472,980,436 | |||||||
Netherlands - 3.2% | |||||||
ASML Holding | 331,990 | 221,531,296 | |||||
Portugal - 1.1% | |||||||
Galp Energia | 6,398,300 | 79,428,503 | |||||
Spain - 2.4% | |||||||
Industria de Diseno Textil | 4,400,000 | 170,035,230 | |||||
Switzerland - 13.7% | |||||||
Givaudan | 33,400 | 149,009,672 | |||||
Kuehne + Nagel International | 667,600 | 225,328,916 | |||||
Nestle | 1,219,000 | 150,020,345 | |||||
Novartis | 1,630,100 | 143,021,114 | |||||
Roche Holding | 482,300 | 167,665,603 | |||||
SGS | 42,000 | 130,879,377 | |||||
965,925,027 | |||||||
Taiwan - 3.6% | |||||||
Taiwan Semiconductor Manufacturing, ADR | 2,177,200 | 255,516,192 | |||||
United Kingdom - 9.5% | |||||||
Compass Group | 6,013,500 | 137,270,331 | |||||
Diageo | 3,553,000 | 171,637,848 | |||||
Intertek Group | 978,600 | 75,382,989 | |||||
Reckitt Benckiser Group | 1,520,000 | 137,364,637 | |||||
Smith & Nephew | 6,856,300 | 149,892,470 | |||||
671,548,275 | |||||||
Total Common Stocks (cost $3,971,778,638) | 6,816,204,944 |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | 1-Day | Shares | Value ($) | ||||
Investment Companies - 2.7% | |||||||
Registered Investment Companies - 2.7% | |||||||
Dreyfus
Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 0.04 | 190,533,971 | a | 190,533,971 | |||
Total Investments (cost $4,162,312,609) | 99.6% | 7,006,738,915 | |||||
Cash and Receivables (Net) | .4% | 29,680,774 | |||||
Net Assets | 100.0% | 7,036,419,689 |
ADR—American Depository Receipt
a Investment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.
Portfolio Summary (Unaudited) † | Value (%) |
Capital Goods | 12.1 |
Materials | 10.6 |
Pharmaceuticals Biotechnology & Life Sciences | 9.9 |
Health Care Equipment & Services | 8.8 |
Semiconductors & Semiconductor Equipment | 6.8 |
Consumer Durables & Apparel | 5.2 |
Transportation | 5.1 |
Technology Hardware & Equipment | 5.0 |
Commercial & Professional Services | 5.0 |
Food, Beverage & Tobacco | 4.6 |
Household & Personal Products | 4.2 |
Software & Services | 4.0 |
Insurance | 2.8 |
Investment Companies | 2.7 |
Energy | 2.5 |
Retailing | 2.4 |
Utilities | 2.3 |
Food & Staples Retailing | 2.2 |
Consumer Services | 1.9 |
Real Estate | 1.5 |
99.6 |
† Based on net assets.
See notes to financial statements.
8
STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS (Unaudited)
Investment Companies | Value | Purchases ($)† | Sales ($) | Value | Net | Dividends/ | ||
Registered Investment Companies; | ||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares | 128,302,457 | 622,955,298 | (560,723,784) | 190,533,971 | 2.7 | 61,345 | ||
Investment of Cash Collateral for Securities Loaned; | ||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund, SL Shares | 605,800 | 1,348,054 | (1,953,854) | - | - | 8,780†† | ||
Total | 128,908,257 | 624,303,352 | (562,677,638) | 190,533,971 | 2.7 | 70,125 |
† Included reinvested dividends/distributions.
†† Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
| Cost |
| Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See Statement of Investments |
|
|
| |||
Unaffiliated issuers | 3,971,778,638 |
| 6,816,204,944 |
| ||
Affiliated issuers |
| 190,533,971 |
| 190,533,971 |
| |
Tax reclaim receivable—Note 1(b) |
| 18,483,113 |
| |||
Dividends receivable |
| 12,839,514 |
| |||
Receivable for shares of Common Stock subscribed |
| 6,207,617 |
| |||
Prepaid expenses |
|
|
|
| 97,003 |
|
|
|
|
|
| 7,044,366,162 |
|
Liabilities ($): |
|
|
|
| ||
Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c) |
| 5,314,171 |
| |||
Payable for shares of Common Stock redeemed |
| 2,178,390 |
| |||
Directors’ fees and expenses payable |
| 84,276 |
| |||
Other accrued expenses |
|
|
|
| 369,636 |
|
|
|
|
|
| 7,946,473 |
|
Net Assets ($) |
|
| 7,036,419,689 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
| 4,144,798,445 |
|
Total distributable earnings (loss) |
|
|
|
| 2,891,621,244 |
|
Net Assets ($) |
|
| 7,036,419,689 |
|
Net Asset Value Per Share | Class A | Class C | Class I | Class Y |
|
Net Assets ($) | 73,778,305 | 14,446,453 | 3,816,352,772 | 3,131,842,159 |
|
Shares Outstanding | 2,873,945 | 574,050 | 147,678,507 | 122,669,646 |
|
Net Asset Value Per Share ($) | 25.67 | 25.17 | 25.84 | 25.53 |
|
|
|
|
|
|
|
See notes to financial statements. |
|
|
|
|
|
10
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Cash dividends (net of $10,421,482 foreign taxes withheld at source): |
| |||||
Unaffiliated issuers |
|
| 69,832,688 |
| ||
Affiliated issuers |
|
| 61,345 |
| ||
Income from securities lending—Note 1(c) |
|
| 8,780 |
| ||
Total Income |
|
| 69,902,813 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
| 27,397,322 |
| ||
Shareholder servicing costs—Note 3(c) |
|
| 633,515 |
| ||
Custodian fees—Note 3(c) |
|
| 378,231 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
| 257,863 |
| ||
Registration fees |
|
| 160,926 |
| ||
Loan commitment fees—Note 2 |
|
| 89,055 |
| ||
Prospectus and shareholders’ reports |
|
| 76,998 |
| ||
Professional fees |
|
| 65,024 |
| ||
Distribution fees—Note 3(b) |
|
| 53,695 |
| ||
Chief Compliance Officer fees—Note 3(c) |
|
| 7,862 |
| ||
Miscellaneous |
|
| 90,907 |
| ||
Total Expenses |
|
| 29,211,398 |
| ||
Investment Income—Net |
|
| 40,691,415 |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments and foreign currency transactions | 4,953,558 |
| ||||
Net realized gain (loss) on forward foreign currency exchange contracts | 749,246 |
| ||||
Net Realized Gain (Loss) |
|
| 5,702,804 |
| ||
Net change in unrealized appreciation
(depreciation) on investments | 563,852,948 |
| ||||
Net Realized and Unrealized Gain (Loss) on Investments |
|
| 569,555,752 |
| ||
Net Increase in Net Assets Resulting from Operations |
| 610,247,167 |
| |||
|
|
|
|
|
|
|
See notes to financial statements. |
11
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year
Ended |
| ||
Operations ($): |
|
|
|
|
|
|
|
| |
Investment income—net |
|
| 40,691,415 |
|
|
| 36,839,831 |
| |
Net realized gain (loss) on investments |
| 5,702,804 |
|
|
| 153,315,099 |
| ||
Net change in unrealized appreciation
|
| 563,852,948 |
|
|
| 762,996,898 |
| ||
Net Increase (Decrease) in Net Assets | 610,247,167 |
|
|
| 953,151,828 |
| |||
Distributions ($): |
| ||||||||
Distributions to shareholders: |
|
|
|
|
|
|
|
| |
Class A |
|
| (1,696,616) |
|
|
| (843,502) |
| |
Class C |
|
| (375,053) |
|
|
| (225,034) |
| |
Class I |
|
| (97,424,371) |
|
|
| (54,554,429) |
| |
Class Y |
|
| (89,046,864) |
|
|
| (59,572,962) |
| |
Total Distributions |
|
| (188,542,904) |
|
|
| (115,195,927) |
| |
Capital Stock Transactions ($): |
| ||||||||
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
| 19,151,533 |
|
|
| 37,389,189 |
| |
Class C |
|
| 1,763,619 |
|
|
| 5,343,190 |
| |
Class I |
|
| 667,889,279 |
|
|
| 1,089,210,403 |
| |
Class Y |
|
| 259,870,101 |
|
|
| 715,078,427 |
| |
Distributions reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
| 1,518,997 |
|
|
| 744,156 |
| |
Class C |
|
| 374,478 |
|
|
| 194,398 |
| |
Class I |
|
| 89,308,231 |
|
|
| 49,284,094 |
| |
Class Y |
|
| 50,927,634 |
|
|
| 31,570,827 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
| (11,067,849) |
|
|
| (24,165,631) |
| |
Class C |
|
| (3,128,169) |
|
|
| (5,156,154) |
| |
Class I |
|
| (309,458,116) |
|
|
| (635,572,103) |
| |
Class Y |
|
| (187,633,595) |
|
|
| (592,454,958) |
| |
Increase (Decrease) in Net Assets
| 579,516,143 |
|
|
| 671,465,838 |
| |||
Total Increase (Decrease) in Net Assets | 1,001,220,406 |
|
|
| 1,509,421,739 |
| |||
Net Assets ($): |
| ||||||||
Beginning of Period |
|
| 6,035,199,283 |
|
|
| 4,525,777,544 |
| |
End of Period |
|
| 7,036,419,689 |
|
|
| 6,035,199,283 |
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year Ended |
| ||
Capital Share Transactions (Shares): |
| ||||||||
Class Aa,b |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 780,812 |
|
|
| 1,806,376 |
| |
Shares issued for distributions reinvested |
|
| 63,985 |
|
|
| 35,318 |
| |
Shares redeemed |
|
| (451,109) |
|
|
| (1,145,487) |
| |
Net Increase (Decrease) in Shares Outstanding | 393,688 |
|
|
| 696,207 |
| |||
Class Ca |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 73,956 |
|
|
| 259,895 |
| |
Shares issued for distributions reinvested |
|
| 16,044 |
|
|
| 9,347 |
| |
Shares redeemed |
|
| (129,990) |
|
|
| (243,994) |
| |
Net Increase (Decrease) in Shares Outstanding | (39,990) |
|
|
| 25,248 |
| |||
Class Ib |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 27,082,842 |
|
|
| 52,662,448 |
| |
Shares issued for distributions reinvested |
|
| 3,744,580 |
|
|
| 2,329,343 |
| |
Shares redeemed |
|
| (12,613,417) |
|
|
| (30,419,643) |
| |
Net Increase (Decrease) in Shares Outstanding | 18,214,005 |
|
|
| 24,572,148 |
| |||
Class Yb |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 10,714,219 |
|
|
| 34,748,854 |
| |
Shares issued for distributions reinvested |
|
| 2,161,614 |
|
|
| 1,510,738 |
| |
Shares redeemed |
|
| (7,710,990) |
|
|
| (29,359,590) |
| |
Net Increase (Decrease) in Shares Outstanding | 5,164,843 |
|
|
| 6,900,002 |
| |||
|
|
|
|
|
|
|
|
|
|
a | During the period ended Mar 31, 2021, 3,040 Class C shares representing $72,467 were automatically converted to 2,986 Class A shares and during the period ended November 30, 2020, 425 Class C shares representing $8,538 were automatically converted to 418 Class A shares. | ||||||||
b | During the period ended May 31, 2021, 1,253,073 Class Y shares representing $30,494,397 were exchanged for 1,238,518 Class I shares. During the period ended November 30, 2020, 1,339,701 Class Y shares representing $27,558,864 were exchanged for 1,323,989 Class I shares and 6,813 Class Y shares representing $163,273 were exchanged for 6,784 Class A shares. | ||||||||
See notes to financial statements. |
13
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class A Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, | 24.09 | 20.76 | 17.86 | 18.51 | 14.77 | 14.66 |
Investment Operations: | ||||||
Investment income—neta | .11 | .08 | .15 | .15 | .10 | .13 |
Net realized and unrealized | 2.16 | 3.72 | 2.98 | (.67) | 3.77 | .10 |
Total from | 2.27 | 3.80 | 3.13 | (.52) | 3.87 | .23 |
Distributions: | ||||||
Dividends
from | (.08) | (.15) | (.15) | (.13) | (.13) | (.12) |
Dividends from net realized | (.61) | (.32) | (.08) | - | - | - |
Total Distributions | (.69) | (.47) | (.23) | (.13) | (.13) | (.12) |
Net asset value, end of period | 25.67 | 24.09 | 20.76 | 17.86 | 18.51 | 14.77 |
Total Return (%)b | 9.62c | 18.67 | 17.81 | (2.84) | 26.39 | 1.62 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| 1.27d | 1.30 | 1.24 | 1.22 | 1.26 | 1.27 |
Ratio
of net investment income | .91d | .35 | .77 | .81 | .64 | .89 |
Portfolio Turnover Rate | 4.20c | 7.20 | 7.38 | 7.47 | 12.49 | 10.65 |
Net Assets, | 73,778 | 59,740 | 37,036 | 25,981 | 29,414 | 59,019 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
14
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class C Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, | 23.63 | 20.38 | 17.53 | 18.17 | 14.49 | 14.37 |
Investment Operations: | ||||||
Investment income (loss)—neta | .02 | (.06) | .02 | .01 | .02 | .02 |
Net realized and unrealized | 2.13 | 3.65 | 2.92 | (.65) | 3.66 | .10 |
Total
from | 2.15 | 3.59 | 2.94 | (.64) | 3.68 | .12 |
Distributions: | ||||||
Dividends
from | - | (.02) | (.01) | - | - | - |
Dividends from net realized | (.61) | (.32) | (.08) | - | - | - |
Total Distributions | (.61) | (.34) | (.09) | - | - | - |
Net asset value, end of period | 25.17 | 23.63 | 20.38 | 17.53 | 18.17 | 14.49 |
Total Return (%)b | 9.29c | 17.84 | 16.96 | (3.58) | 25.40 | .83 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | 1.97d | 1.98 | 1.98 | 1.96 | 2.02 | 2.04 |
Ratio
of net investment income | .13d | (.30) | .12 | .07 | .10 | .12 |
Portfolio Turnover Rate | 4.20c | 7.20 | 7.38 | 7.47 | 12.49 | 10.65 |
Net
Assets, | 14,446 | 14,510 | 12,001 | 12,050 | 14,852 | 13,465 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
15
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class I Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, | 24.27 | 20.90 | 17.98 | 18.64 | 14.88 | 14.79 |
Investment Operations: | ||||||
Investment income—neta | .16 | .15 | .22 | .21 | .20 | .18 |
Net
realized and unrealized | 2.17 | 3.75 | 2.99 | (.67) | 3.74 | .10 |
Total from | 2.33 | 3.90 | 3.21 | (.46) | 3.94 | .28 |
Distributions: | ||||||
Dividends from | (.15) | (.21) | (.21) | (.20) | (.18) | (.19) |
Dividends
from net realized | (.61) | (.32) | (.08) | - | - | - |
Total Distributions | (.76) | (.53) | (.29) | (.20) | (.18) | (.19) |
Net asset value, end of period | 25.84 | 24.27 | 20.90 | 17.98 | 18.64 | 14.88 |
Total Return (%) | 9.84b | 19.07 | 18.23 | (2.53) | 26.81 | 1.92 |
Ratios/Supplemental Data (%): | ||||||
Ratio
of total expenses | .91c | .91 | .91 | .91 | .93 | .94 |
Ratio of net investment income | ||||||
to average net assets | 1.27c | .72 | 1.13 | 1.11 | 1.20 | 1.21 |
Portfolio Turnover Rate | 4.20b | 7.20 | 7.38 | 7.47 | 12.49 | 10.65 |
Net
Assets, | 3,816,353 | 3,142,203 | 2,191,801 | 1,953,256 | 1,968,366 | 1,520,360 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
16
Six Months Ended | ||||||
May 31, 2021 | Year Ended November 30, | |||||
Class Y Shares | (Unaudited) | 2020 | 2019 | 2018 | 2017 | 2016 |
Per Share Data ($): | ||||||
Net asset value, | 23.99 | 20.66 | 17.78 | 18.43 | 14.72 | 14.63 |
Investment Operations: | ||||||
Investment income—neta | .15 | .16 | .21 | .21 | .20 | .19 |
Net realized and unrealized
| 2.15 | 3.71 | 2.97 | (.66) | 3.70 | .09 |
Total from Investment Operations | 2.30 | 3.87 | 3.18 | (.45) | 3.90 | .28 |
Distributions: | ||||||
Dividends from | (.15) | (.22) | (.22) | (.20) | (.19) | (.19) |
Dividends
from net realized | (.61) | (.32) | (.08) | - | - | - |
Total Distributions | (.76) | (.54) | (.30) | (.20) | (.19) | (.19) |
Net asset value, end of period | 25.53 | 23.99 | 20.66 | 17.78 | 18.43 | 14.72 |
Total Return (%) | 9.85b | 19.12 | 18.24 | (2.48) | 26.80 | 1.97 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses
| .88c | .89 | .89 | .89 | .91 | .91 |
Ratio of net investment income | 1.27c | .77 | 1.12 | 1.16 | 1.22 | 1.27 |
Portfolio Turnover Rate | 4.20b | 7.20 | 7.38 | 7.47 | 12.49 | 10.65 |
Net Assets, | 3,131,842 | 2,818,746 | 2,284,939 | 1,801,389 | 2,083,569 | 1,627,586 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
BNY Mellon International Stock Fund (the “fund”) is a separate diversified series of BNY Mellon Strategic Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering six series, including the fund. The fund’s investment objective is to seek long-term total return. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Walter Scott & Partners Limited (the “Sub-Adviser”), a wholly-owned subsidiary of BNY Mellon and an affiliate of the Adviser, serves as the fund’s sub-investment adviser.
BNY Mellon Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Adviser, is the distributor of the fund’s shares. The fund is authorized to issue 700 million shares of $.001 par value Common Stock. The fund currently has authorized four classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized), Class I (250 million shares authorized) and Class Y (250 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class A shares bought without an initial sales charge as part of an investment of $1 million or more may be charged a contingent deferred sales charge (“CDSC”) of 1.00% if redeemed within one year. Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. Class C shares automatically convert to Class A shares eight years after the date of purchase, without the imposition of a sales charge. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the
18
FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund is an investment company and applies the accounting and reporting guidance of the FASB ASC Topic 946 Financial Services-Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Company's Board of Directors (the “Board”). Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For securities where observable inputs are limited, assumptions about market activity and risk are used and such securities are generally categorized within Level 3 of the fair value hierarchy.
20
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
The following is a summary of the inputs used as of May 31, 2021 in valuing the fund’s investments:
Level 1-Unadjusted Quoted Prices | Level 2- Other Significant Observable Inputs | Level 3-Significant Unobservable Inputs | Total | |||
Assets ($) | ||||||
Investments In Securities:† | ||||||
Equity Securities - Common Stocks | 6,816,204,944 | - | - | 6,816,204,944 | ||
Investment Companies | 190,533,971 | - | - | 190,533,971 |
† See Statement of Investments for additional detailed categorizations, if any.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.
Foreign taxes: The fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, realized and unrealized capital gains on investments or certain foreign currency transactions. Foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the fund invests. These foreign taxes, if any, are paid by the fund and are reflected in the Statement of Operations, if applicable. Foreign taxes payable or deferred or those subject to reclaims as of May 31, 2021, if any, are disclosed in the fund’s Statement of Assets and Liabilities.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses
21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended May 31, 2021, The Bank of New York Mellon earned $1,108 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.
(d) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political, economic developments and public health conditions. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks may be magnified if certain
22
events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies world-wide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.
(f) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended May 31, 2021, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended May 31, 2021, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended November 30, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2020 was as follows: ordinary income $45,914,161 and long-term capital gains $69,281,766. The tax character of current year distributions will be determined at the end of the current fiscal year.
23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 2—Bank Lines of Credit:
The fund participates with other long-term open-end funds managed by the Adviser in a $823.5 million unsecured credit facility led by Citibank, N.A. (the “Citibank Credit Facility”) and a $300 million unsecured credit facility provided by The Bank of New York Mellon (the “BNYM Credit Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions (each, a “Facility”). The Citibank Credit Facility is available in two tranches: (i) Tranche A is in an amount equal to $688.5 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $135 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended May 31, 2021, the fund did not borrow under the Facilities.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .85% of the value of the fund’s average daily net assets and is payable monthly.
Pursuant to a sub-investment advisory agreement between the Adviser and the Sub-Adviser, the Adviser pays the Sub-Adviser a monthly fee at an annual rate of .41% of the value of the fund’s average daily net assets.
During the period ended May 31, 2021, the Distributor retained $3,172 from commissions earned on sales of the fund’s Class A shares and $106 from CDSC fees on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. The Distributor may pay one or more Service Agents in respect of advertising, marketing and other distribution services, and determines the amounts, if any, to be paid to Service Agents and the basis on which such payments are made. During the period ended May 31, 2021, Class C shares were charged $53,695 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may
24
include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2021, Class A and Class C shares were charged $82,693 and $17,899, respectively, pursuant to the Shareholder Services Plan.
The fund has an arrangement with the transfer agent whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency fees. For financial reporting purposes, the fund includes net earnings credits, if any, as shareholder servicing costs in the Statement of Operations.
The fund has an arrangement with the custodian whereby the fund will receive interest income or be charged an overdraft fees when cash balances are maintained. For financial reporting purposes, the fund includes this interest income and overdraft fees, if any, as interest income in the Statement of Operations.
The fund compensates BNY Mellon Transfer, Inc., a wholly-owned subsidiary of the Adviser, under a transfer agency agreement for providing transfer agency and cash management services inclusive of earnings credits, if any, for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended May 31, 2021, the fund was charged $23,018 for transfer agency services, inclusive of earnings credit, if any. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended May 31, 2021, the fund was charged $378,231 pursuant to the custody agreement.
During the period ended May 31, 2021, the fund was charged $7,862 for services performed by the Chief Compliance Officer and his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.
The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: management fees of $4,994,041, Distribution Plan fees of $9,133, Shareholder Services
25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Plan fees of $18,336, custodian fees of $278,642, Chief Compliance Officer fees of $6,552 and transfer agency fees of $7,467.
(d) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities and forward foreign currency exchange (“forward contract”) during the period ended May 31, 2021, amounted to $611,872,232 and $261,406,762, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its over-the-counter (“OTC”) derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default or termination.
Each type of derivative instrument that was held by the fund during the period ended May 31, 2021 is discussed below.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of
26
changes in value of underlying financial instruments. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. At May 31, 2021, there were no forward contracts outstanding.
The following summarizes the average market value of derivatives outstanding during the period ended May 31, 2021:
|
| Average Market Value ($) |
Forward contracts |
| 8,632,390 |
At May 31, 2021, accumulated net unrealized appreciation on investments was $2,844,426,306, consisting of $2,879,924,689 gross unrealized appreciation and $35,498,383 gross unrealized depreciation.
At May 31, 2021, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
27
LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited)
Effective June 1, 2019, the fund adopted a liquidity risk management program (the “Liquidity Risk Management Program”) pursuant to the requirements of Rule 22e-4 under the Investment Company Act of 1940, as amended. Rule 22e-4 requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish liquidity risk management programs in order to effectively manage fund liquidity and shareholder redemptions. The rule is designed to mitigate the risk that a fund could not meet redemption requests without significantly diluting the interests of remaining investors.
The rule requires the fund to assess, manage and review their liquidity risk at least annually considering applicable factors such as investment strategy and liquidity during normal and foreseeable stressed conditions, including whether the strategy is appropriate for an open-end fund and whether the fund has a relatively concentrated portfolio or large positions in particular issuers. The fund must also assess its use of borrowings and derivatives, short-term and long-term cash flow projections in normal and stressed conditions, holdings of cash and cash equivalents, and borrowing arrangements and other funding sources.
The rule also requires the fund to classify its investments as highly liquid, moderately liquid, less liquid or illiquid based on the number of days the fund expects it would take to liquidate the investment, and to review these classifications at least monthly or more often under certain conditions. The periods range from three or fewer business days for a highly liquid investment to greater than seven calendar days for settlement of a less liquid investment. Illiquid investments are those a fund does not expect to be able to sell or dispose of within seven calendar days without significantly changing the market value. The fund is prohibited from acquiring an investment if, after the acquisition, its holdings of illiquid assets will exceed 15% of its net assets. In addition, if a fund permits redemptions in-kind, the rule requires the fund to establish redemption in-kind policies and procedures governing how and when it will engage in such redemptions.
Pursuant to the rule’s requirements, the Liquidity Risk Management Program has been reviewed and approved by the Board. Furthermore, the Board has received a written report prepared by the Program’s Administrator that addresses the operation of the Program, assesses its adequacy and effectiveness and describes any material changes made to the Program.
Assessment of Program
In the opinion of the Program Administrator, the Program approved by the Board continues to be adequate for the fund and the Program has been implemented effectively. The Program Administrator has monitored the fund’s liquidity risk and the liquidity classification of the securities held by the fund and has determined that the Program is operating effectively.
During the period from January 1, 2020 to December 31, 2020, there were no material changes to the Program and no material liquidity events that impacted the fund. During the period, the fund held sufficient highly liquid assets to meet fund redemptions.
Under normal expected foreseeable fund redemption forecasts and foreseeable stressed fund redemption forecasts, the Program Administrator believes that the fund maintains sufficient highly liquid assets to meet expected fund redemptions.
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29
BNY Mellon International Stock Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Sub-Adviser
Walter Scott & Partners Limited
One Charlotte Square
Edinburgh, Scotland, UK
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286
Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286
Ticker Symbols: | Class A: DISAX Class C: DISCX Class I: DISRX Class Y: DISYX |
Telephone Call your financial representative or 1-800-373-9387
Mail The BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to info@bnymellon.com
Internet Information can be viewed online or downloaded at www.im.bnymellon.com
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.im.bnymellon.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.
© 2021 BNY Mellon Securities
Corporation |
Item 2. | Code of Ethics. |
Not applicable.
Item 3. | Audit Committee Financial Expert. |
Not applicable.
Item 4. | Principal Accountant Fees and Services. |
Not applicable.
Item 5. | Audit Committee of Listed Registrants. |
Not applicable.
Item 6. | Investments. |
(a) Not applicable.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. |
Not applicable.
Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures applicable to Item 10.
Item 11. | Controls and Procedures. |
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable.
Item 13. | Exhibits. |
(a)(1) Not applicable.
(a)(3) Not applicable.
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.
BNY Mellon Strategic Funds, Inc.
By: /s/ David DiPetrillo
David
DiPetrillo
President (Principal Executive Officer)
Date: July 21, 2021
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/ David DiPetrillo
David DiPetrillo
President (Principal Executive Officer)
Date: July 21, 2021
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: July 21, 2021
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)
[EX-99.CERT]—Exhibit (a)(2)
SECTION 302 CERTIFICATION
I, David DiPetrillo,, certify that:
1. I have reviewed this report on Form N-CSR of BNY Mellon Strategic Funds, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
By: /s/ David DiPetrillo
David DiPetrillo
President (Principal Executive Officer)
Date: July 21, 2021
SECTION 302 CERTIFICATION
I, James Windels, certify that:
1. I have reviewed this report on Form N-CSR of BNY Mellon Strategic Funds, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: July 21, 2021
[EX-99.906CERT]
Exhibit (b)
SECTION 906 CERTIFICATIONS
In connection with this report on Form N-CSR for the Registrant as furnished to the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
By: /s/ David DiPetrillo
David DiPetrillo
President (Principal Executive Officer)
Date: July 21, 2021
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: July 21, 2021
This certificate is furnished pursuant to the requirements of Form N-CSR and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.