Form N-CSRS BNY Mellon Investment For: Apr 30

June 23, 2021 4:00 PM EDT

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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 811-00524
   
  BNY Mellon Investment Funds III  
  (Exact name of Registrant as specified in charter)  
     
 

 

c/o BNY Mellon Investment Adviser, Inc.

240 Greenwich Street

New York, New York 10286

 
  (Address of principal executive offices)        (Zip code)  
     
 

Bennett A. MacDougall, Esq.

240 Greenwich Street

New York, New York 10286

 
  (Name and address of agent for service)  
 
Registrant's telephone number, including area code:   (212) 922-6400
   

Date of fiscal year end:

 

10/31  
Date of reporting period:

04/30/2021

 

 
             

 

 

 

 

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 Global Equity Income Fund

BNY Mellon International Bond Fund

 
 

 

FORM N-CSR

Item 1.Reports to Stockholders.

 

BNY Mellon Global Equity Income Fund

 

SEMIANNUAL REPORT

April 30, 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

T H E F U N D

  

Discussion of Fund Performance

2

Understanding Your Fund’s Expenses

5

Comparing Your Fund’s Expenses
With Those of Other Funds

5

Statement of Investments

6

Statement of Investments
in Affiliated Issuers

9

Statement of Forward Foreign
Currency Exchange Contracts

10

Statement of Assets and Liabilities

11

Statement of Operations

12

Statement of Changes in Net Assets

13

Financial Highlights

15

Notes to Financial Statements

19

Information About the Renewal of
the Fund’s Management and Sub-
Investment Advisory Agreements

32

Liquidity Risk Management Program

36

F O R M O R E I N F O R M AT I O N

 

Back Cover

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from November 1, 2020 through April 30, 2021, as provided by portfolio managers Jon Bell, Paul Flood, Ilga Haubelt, and Robert Hay of Newton Investment Management (North America) Limited, Sub-Investment Adviser

Market and Fund Performance Overview

For the six-month period ended April 30, 2021, the BNY Mellon Global Equity Income Fund Class A shares produced a total return of 27.29%, Class C shares returned 26.83%, Class I shares returned 27.51% and Class Y shares returned 27.53%.1 In comparison, the fund’s benchmark, the FTSE World Index (the “Index”), produced a total return of 30.08% for the same period.2

Global markets gained ground during the reporting period amid central bank policies that supported investor confidence, the implementation of a COVID vaccine rollout and impending economic reopening. The fund underperformed the Index, partly due to positioning within the consumer goods, health care and utilities sectors.

The Fund’s Investment Approach

The fund seeks total return (consisting of capital appreciation and income). To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities. The fund seeks to focus on dividend-paying stocks of companies located in the developed-capital markets, such as the United States, Canada, Japan, Australia, Hong Kong and Western Europe. The fund may invest in the securities of companies of any market capitalization, and it may invest up to 30% of its assets in emerging markets. The fund’s portfolio managers typically will purchase stocks that, at the time of purchase, have a yield-premium to the yield of the Index.

The portfolio managers will combine a top-down approach, emphasizing current economic trends and current investment themes on a global basis, with a bottom-up stock selection, based on fundamental research. Within markets and sectors determined to be relatively attractive, the portfolio managers seek what are believed to be attractively priced companies that possess a sustainable competitive advantage in their market or sector.

Stimulus and Optimism Support Equity Rally

Global equities continued to advance over the six-month review period. Risk appetite was bolstered by a series of well-received geopolitical developments, not least the relatively benign outcome of the U.S. presidential election in early November, which saw Joe Biden voted in as president. Meanwhile, following much last-minute wrangling, a Brexit deal was finally agreed between the UK and the European Union on Christmas Eve, neutralizing another major risk for financial markets. 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. With COVID-19 vaccines being rolled out and reflation underway, investors began to anticipate a dialing back of the exceptional levels of monetary stimulus witnessed over the last 12 months, and this contributed to a sharp rise in government-bond yields during the first four months of 2021.

Consumer Goods, Health Care and Utilities Companies Constrain Results

At a sector level, positioning within the consumer goods, health care and utilities were the biggest detractors. At a country level, positioning within the UK and Switzerland were the largest detractors. Unilever’s share price fell on the completion of its unified legal structure, even though

2

 

it is expected to make the company more efficient and nimbler. The stock also came under more pressure later in the period, suffering a negative market reaction to its results, particularly the decline in margins and disappointing forward guidance. However, the results highlighted that it is gaining market share across more than 60% of the business, which is encouraging. The fund’s overweight position in health care had a negative impact on performance, with the sector being out of favor as the market rotated toward more cyclical stocks. The fund’s holdings in U.S. pharmaceutical Merck & Co and Switzerland’s Novartis and Roche Holding all detracted from relative returns. The defensive, stable-return profile of the utilities sector meant that it was a headwind as well, with Eversource Energy the biggest detractor.

Conversely, the fund benefited most from positioning within consumer services, owing largely to the holdings in luxury retailers Cie Financière Richemont and Tapestry. A further positive came from the technology sector. At a country level, South Korea was the largest contributor, owing to the holding in Samsung Electronics. The fund also benefited from being underweight in Japan. Despite suffering from some profit taking later in the period, Samsung Electronics was the top stock contributor, with strong performance from its computer chips and smartphone businesses leading to bumper, third-quarter operating profits. The share price of Swiss watch and jewelry group Cie Financière Richemont climbed, after the company reported a marked improvement in sales. Richemont was additionally boosted by news of its joint investment with Alibaba in online fashion retailer Farfetch, a collaboration that is expected to enhance sales in the growing Chinese luxury goods market. Luxury-fashion company Tapestry also contributed, as strong online business and growth in China meant that sales numbers were at the higher end of market estimates.

Focused on Economic Recovery

After a year that was dominated by the uncertainty of the COVID-19 pandemic, which benefited growth stocks— given the structural tailwinds, and the perceived earnings certainty the companies enjoy as a result—the announcement of a growing number of effective vaccines marks a significant change in the outlook. We believe this should enable market participants to look through the COVID-related disruption and focus on the economic recovery, which is underway as a result of enormous fiscal and monetary stimulus.

Income stocks, hit by the double whammy of a market focused on growth and significant dividend cuts, have underperformed dramatically. Does the economic rebound mark a change of fortunes? We believe that it does, not least because of the outstanding value-opportunity that income stocks represent relative to the market, particularly when compared with growth stocks. Economic recovery should allow market participation to broaden, and while it is likely that the scale of the stimulus will lead to a medium-term pickup in inflation, and a rise in bond yields (as we have already seen), we believe that such a rise will be contained by central banks and is more of a risk to high-growth than to income stocks. In addition, economic recovery has already allowed the reinstatement of dividends, and we do not believe that investors seeking income should lose faith in equities. 2020 was very much a hiatus in income generation rather than a broad structural change, and dividends should grow from here.

However, not all companies will be able to restore dividends to previous levels, as the pandemic has accelerated some of the key themes that were already in place, as highlighted by our ‘smart revolution’ and ‘earth matters’ themes. Income investors will need to be mindful of the specific structural challenges posed to income generation as a result of rapid thematic change.

To navigate what is likely to be a volatile backdrop, we believe following an active, disciplined approach that emphasizes quality and income, and which has stood the test of time, is as relevant

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

today as it has ever been. The fund remains overweight in those areas of the market that offer sustainable premium levels of income, the ability to compound over time, and that have the necessary pricing power to cope with a more inflationary backdrop, namely consumer staples, pharmaceuticals and U.S. regulated utilities. To take account of the more inflationary backdrop, a change in the backdrop for bond markets and attractive valuations, the strategy has increased exposure to the financial sector from significantly underweight to a small overweight, at the same time as reducing exposure to the very strongly-performing technology sector. We are also confident that the prospects for our active-income approach are superior to those of the market.

May 17, 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. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Past performance is no guarantee of future results.

2 Source: Lipper Inc. — Reflects reinvestment of net dividends and, where applicable, capital gain distributions. The FTSE World Index is a market capitalization-weighted index representing the performance of the large- and mid-cap stocks from the Developed and Advanced Emerging segments of the FTSE Global Equity Index Series. 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.

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.

The fund’s performance will be influenced by political, social and economic factors affecting investments in foreign companies. Special risks associated with investments in foreign companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards. These risks generally are greater with emerging-market countries than with more economically and politically established foreign countries.

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 Equity Income Fund from November 1, 2020 to April 30, 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 April 30, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$6.76

$11.02

$5.30

$5.25

 

Ending value (after expenses)

$1,272.90

$1,268.30

$1,275.10

$1,275.30

 

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

 

Assuming a hypothetical 5% annualized return for the six months ended April 30, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$6.01

$9.79

$4.71

$4.66

 

Ending value (after expenses)

$1,018.84

$1,015.08

$1,020.13

$1,020.18

 

Expenses are equal to the fund’s annualized expense ratio of 1.20% for Class A, 1.96% for Class C, .94% for Class I and .93% for Class Y, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

5

 

STATEMENT OF INVESTMENTS

April 30, 2021 (Unaudited)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 94.2%

     

Australia - 1.2%

     

Insurance Australia Group

   

929,404

 

3,504,204

 

China - 1.6%

     

Ping An Insurance Group Company of China, Cl. H

   

433,500

 

4,736,405

 

France - 4.0%

     

Sanofi

   

81,542

 

8,550,539

 

Total

   

79,556

 

3,522,175

 
    

12,072,714

 

Germany - 5.6%

     

Bayer

   

107,805

 

6,973,775

 

Continental

   

38,715

 

5,243,932

 

Muenchener Rueckversicherungs-Gesellschaft

   

16,469

 

4,763,420

 
    

16,981,127

 

Hong Kong - 1.3%

     

Link REIT

   

416,500

 

3,935,580

 

India - 3.2%

     

Infosys, ADR

   

526,465

 

9,518,487

 

Japan - 1.8%

     

KDDI

   

175,400

 

5,307,936

 

Netherlands - 1.0%

     

Royal Dutch Shell, Cl. A

   

157,906

 

3,002,552

 

South Korea - 1.0%

     

Macquarie Korea Infrastructure Fund

   

270,261

 

2,927,177

 

Spain - 2.5%

     

Industria de Diseno Textil

   

212,993

 

7,582,945

 

Sweden - 2.1%

     

Svenska Handelsbanken, Cl. A

   

549,884

 

6,378,581

 

Switzerland - 12.2%

     

Cie Financiere Richemont, CI. A

   

86,230

a 

8,848,163

 

Nestle

   

46,951

 

5,597,383

 

Novartis

   

92,612

 

7,910,775

 

Roche Holding

   

21,397

 

6,971,346

 

Zurich Insurance Group

   

18,170

 

7,456,714

 
    

36,784,381

 

United Kingdom - 17.3%

     

BAE Systems

   

916,759

 

6,415,472

 

British American Tobacco

   

169,571

 

6,291,697

 

British American Tobacco, ADR

   

59,404

 

2,228,244

 

Bunzl

   

111,349

 

3,577,847

 

Ferguson

   

26,625

 

3,357,217

 

6

 

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 94.2% (continued)

     

United Kingdom - 17.3% (continued)

     

Informa

   

901,503

a 

6,996,791

 

RELX

   

296,071

 

7,683,345

 

Taylor Wimpey

   

1,332,836

 

3,304,516

 

The Sage Group

   

316,063

 

2,784,147

 

Unilever

   

159,198

 

9,334,494

 
    

51,973,770

 

United States - 39.4%

     

Cisco Systems

   

267,895

 

13,638,534

 

Citigroup

   

85,526

 

6,092,872

 

CME Group

   

29,782

 

6,015,666

 

CMS Energy

   

98,138

 

6,319,106

 

Emerson Electric

   

80,248

 

7,261,641

 

Eversource Energy

   

79,499

 

6,854,404

 

Merck & Co.

   

98,921

 

7,369,614

 

Paychex

   

57,863

 

5,641,064

 

PepsiCo

   

67,578

 

9,742,044

 

Philip Morris International

   

50,903

 

4,835,785

 

Principal Financial Group

   

76,197

 

4,866,702

 

Qualcomm

   

69,372

 

9,628,834

 

Tapestry

   

73,327

a 

3,508,697

 

Texas Instruments

   

35,919

 

6,483,739

 

The Goldman Sachs Group

   

11,924

 

4,154,918

 

The Home Depot

   

12,765

 

4,131,647

 

The Procter & Gamble Company

   

48,590

 

6,482,878

 

The Western Union Company

   

109,351

 

2,816,882

 

Verizon Communications

   

50,064

 

2,893,199

 
    

118,738,226

 

Total Common Stocks (cost $200,277,220)

   

283,444,085

 
  

Preferred Dividend
Yield (%)

     

Preferred Stocks - 3.3%

     

South Korea - 3.3%

     

Samsung Electronics
(cost $4,779,020)

 

4.08

 

152,659

 

10,018,262

 
  

Maturity
Date

 

Number of Warrants

   

Warrants - .0%

     

Switzerland - .0%

     

Cie Financiere Richemont
(cost $0)

 

11/22/2023

 

188,850

 

80,648

 

7

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        
 

Description

 

1-Day
Yield (%)

 

Shares

 

Value ($)

 

Investment Companies - 1.9%

     

Registered Investment Companies - 1.9%

     

Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares
(cost $5,684,939)

 

0.05

 

5,684,939

b 

5,684,939

 

Total Investments (cost $210,741,179)

 

99.4%

 

299,227,934

 

Cash and Receivables (Net)

 

.6%

 

1,856,620

 

Net Assets

 

100.0%

 

301,084,554

 

ADR—American Depository Receipt

REIT—Real Estate Investment Trust

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 (%)

Pharmaceuticals Biotechnology & Life Sciences

12.5

Food, Beverage & Tobacco

9.5

Insurance

8.4

Technology Hardware & Equipment

7.9

Software & Services

6.9

Capital Goods

6.8

Semiconductors & Semiconductor Equipment

5.4

Household & Personal Products

5.3

Consumer Durables & Apparel

5.2

Utilities

4.4

Diversified Financials

4.4

Banks

4.1

Retailing

3.9

Telecommunication Services

2.7

Commercial & Professional Services

2.6

Media & Entertainment

2.3

Energy

2.2

Investment Companies

1.9

Automobiles & Components

1.7

Real Estate

1.3

 

99.4

 Based on net assets.

See notes to financial statements.

8

 

STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS (Unaudited)

       

Investment Companies

Value
10/31/20($)

Purchases($)

Sales($)

Value
4/30/21($)

Net
Assets(%)

Dividends/

Distributions($)

Registered Investment Companies:

    

Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares

3,706,898

42,349,412

(40,371,371)

5,684,939

1.9

2,180

Investment of Cash Collateral for Securities Loaned:

   

Dreyfus Institutional Preferred Government Plus Money Market Fund, SL Shares

1,166,358

24,430

(1,190,788)

-

-

597††

Total

4,873,256

42,373,842

(41,562,159)

5,684,939

1.9

2,777

 Includes 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 to financial statements.

See notes to financial statements.

9

 

STATEMENT OF FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS April 30, 2021 (Unaudited)

      

Counterparty/ Purchased
Currency

Purchased Currency
Amounts

Currency
Sold

Sold
Currency
Amounts

Settlement Date

Unrealized Appreciation (Depreciation) ($)

Barclays Capital

United States Dollar

276,084

Swiss Franc

251,141

5/3/2021

1,068

UBS Securities

Euro

1,536,929

United States Dollar

1,859,129

5/3/2021

(11,251)

Gross Unrealized Appreciation

  

1,068

Gross Unrealized Depreciation

  

(11,251)

See notes to financial statements.

10

 

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2021 (Unaudited)

       

 

 

 

 

 

 

 

 

 

 

Cost

 

Value

 

Assets ($):

 

 

 

 

Investments in securities—See Statement of Investments

 

 

 

Unaffiliated issuers

205,056,240

 

293,542,995

 

Affiliated issuers

 

5,684,939

 

5,684,939

 

Cash denominated in foreign currency

 

 

193,212

 

191,863

 

Tax reclaim receivable—Note 1(b)

 

1,309,178

 

Dividends receivable

 

1,226,764

 

Receivable for shares of Beneficial Interest subscribed

 

841,301

 

Receivable for investment securities sold

 

801,902

 

Unrealized appreciation on forward foreign
currency exchange contracts—Note 4

 

1,068

 

Prepaid expenses

 

 

 

 

41,082

 

 

 

 

 

 

303,641,092

 

Liabilities ($):

 

 

 

 

Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c)

 

236,035

 

Payable for investment securities purchased

 

2,053,797

 

Payable for shares of Beneficial Interest redeemed

 

171,604

 

Unrealized depreciation on forward foreign
currency exchange contracts—Note 4

 

11,251

 

Trustees’ fees and expenses payable

 

5,131

 

Other accrued expenses

 

 

 

 

78,720

 

 

 

 

 

 

2,556,538

 

Net Assets ($)

 

 

301,084,554

 

Composition of Net Assets ($):

 

 

 

 

Paid-in capital

 

 

 

 

204,450,128

 

Total distributable earnings (loss)

 

 

 

 

96,634,426

 

Net Assets ($)

 

 

301,084,554

 

      

Net Asset Value Per Share

Class A

Class C

Class I

Class Y

 

Net Assets ($)

53,544,562

20,783,659

226,720,003

36,330

 

Shares Outstanding

3,422,630

1,281,335

15,289,304

2,451

 

Net Asset Value Per Share ($)

15.64

16.22

14.83

14.82

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

11

 

STATEMENT OF OPERATIONS

Six Months Ended April 30, 2021 (Unaudited)

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income ($):

 

 

 

 

Income:

 

 

 

 

Cash dividends (net of $480,057 foreign taxes withheld at source):

 

Unaffiliated issuers

 

 

5,166,460

 

Affiliated issuers

 

 

2,180

 

Income from securities lending—Note 1(c)

 

 

597

 

Total Income

 

 

5,169,237

 

Expenses:

 

 

 

 

Management fee—Note 3(a)

 

 

1,111,557

 

Shareholder servicing costs—Note 3(c)

 

 

199,250

 

Distribution fees—Note 3(b)

 

 

90,596

 

Professional fees

 

 

69,088

 

Registration fees

 

 

34,694

 

Prospectus and shareholders’ reports

 

 

24,220

 

Custodian fees—Note 3(c)

 

 

18,820

 

Trustees’ fees and expenses—Note 3(d)

 

 

11,130

 

Chief Compliance Officer fees—Note 3(c)

 

 

7,766

 

Loan commitment fees—Note 2

 

 

4,324

 

Interest expense—Note 2

 

 

209

 

Miscellaneous

 

 

11,129

 

Total Expenses

 

 

1,582,783

 

Investment Income—Net

 

 

3,586,454

 

Realized and Unrealized Gain (Loss) on Investments—Note 4 ($):

 

 

Net realized gain (loss) on investments and foreign currency transactions

14,222,683

 

Net realized gain (loss) on forward foreign currency exchange contracts

16,391

 

Net Realized Gain (Loss)

 

 

14,239,074

 

Net change in unrealized appreciation (depreciation) on investments
and foreign currency transactions

51,898,719

 

Net change in unrealized appreciation (depreciation) on
forward foreign currency exchange contracts

(10,183)

 

Net Change in Unrealized Appreciation (Depreciation)

 

 

51,888,536

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

66,127,610

 

Net Increase in Net Assets Resulting from Operations

 

69,714,064

 

 

 

 

 

 

 

 

See notes to financial statements.

     

12

 

STATEMENT OF CHANGES IN NET ASSETS

          

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
April 30, 2021 (Unaudited)

 

Year Ended
October 31, 2020

 

Operations ($):

 

 

 

 

 

 

 

 

Investment income—net

 

 

3,586,454

 

 

 

7,677,908

 

Net realized gain (loss) on investments

 

14,239,074

 

 

 

(2,170,193)

 

Net change in unrealized appreciation
(depreciation) on investments

 

51,888,536

 

 

 

(50,021,717)

 

Net Increase (Decrease) in Net Assets
Resulting from Operations

69,714,064

 

 

 

(44,514,002)

 

Distributions ($):

 

Distributions to shareholders:

 

 

 

 

 

 

 

 

Class A

 

 

(472,345)

 

 

 

(1,478,263)

 

Class C

 

 

(116,035)

 

 

 

(898,027)

 

Class I

 

 

(2,461,978)

 

 

 

(9,087,320)

 

Class Y

 

 

(368)

 

 

 

(1,014,590)

 

Total Distributions

 

 

(3,050,726)

 

 

 

(12,478,200)

 

Beneficial Interest Transactions ($):

 

Net proceeds from shares sold:

 

 

 

 

 

 

 

 

Class A

 

 

7,569,971

 

 

 

14,341,558

 

Class C

 

 

263,722

 

 

 

2,459,474

 

Class I

 

 

26,926,465

 

 

 

65,550,396

 

Class Y

 

 

3,967

 

 

 

44,160

 

Distributions reinvested:

 

 

 

 

 

 

 

 

Class A

 

 

356,519

 

 

 

1,155,036

 

Class C

 

 

100,291

 

 

 

655,358

 

Class I

 

 

2,006,740

 

 

 

7,118,845

 

Class Y

 

 

368

 

 

 

1,014,590

 

Cost of shares redeemed:

 

 

 

 

 

 

 

 

Class A

 

 

(10,120,784)

 

 

 

(20,723,278)

 

Class C

 

 

(9,717,190)

 

 

 

(23,436,144)

 

Class I

 

 

(42,400,485)

 

 

 

(149,982,669)

 

Class Y

 

 

(2,555)

 

 

 

(36,564,936)

 

Increase (Decrease) in Net Assets
from Beneficial Interest Transactions

(25,012,971)

 

 

 

(138,367,610)

 

Total Increase (Decrease) in Net Assets

41,650,367

 

 

 

(195,359,812)

 

Net Assets ($):

 

Beginning of Period

 

 

259,434,187

 

 

 

454,793,999

 

End of Period

 

 

301,084,554

 

 

 

259,434,187

 

13

 

STATEMENT OF CHANGES IN NET ASSETS (continued)

          

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
April 30, 2021 (Unaudited)

 

Year Ended
October 31, 2020

 

Capital Share Transactions (Shares):

 

Class Aa,b

 

 

 

 

 

 

 

 

Shares sold

 

 

506,334

 

 

 

1,089,867

 

Shares issued for distributions reinvested

 

 

23,749

 

 

 

87,007

 

Shares redeemed

 

 

(678,377)

 

 

 

(1,619,798)

 

Net Increase (Decrease) in Shares Outstanding

(148,294)

 

 

 

(442,924)

 

Class Ca

 

 

 

 

 

 

 

 

Shares sold

 

 

17,061

 

 

 

174,016

 

Shares issued for distributions reinvested

 

 

6,470

 

 

 

46,799

 

Shares redeemed

 

 

(630,348)

 

 

 

(1,776,282)

 

Net Increase (Decrease) in Shares Outstanding

(606,817)

 

 

 

(1,555,467)

 

Class Ib

 

 

 

 

 

 

 

 

Shares sold

 

 

1,903,984

 

 

 

5,267,063

 

Shares issued for distributions reinvested

 

 

141,141

 

 

 

567,218

 

Shares redeemed

 

 

(2,991,115)

 

 

 

(12,851,302)

 

Net Increase (Decrease) in Shares Outstanding

(945,990)

 

 

 

(7,017,021)

 

Class Y

 

 

 

 

 

 

 

 

Shares sold

 

 

283

 

 

 

3,369

 

Shares issued for distributions reinvested

 

 

26

 

 

 

80,506

 

Shares redeemed

 

 

(183)

 

 

 

(3,061,011)

 

Net Increase (Decrease) in Shares Outstanding

126

 

 

 

(2,977,136)

 

 

 

 

 

 

 

 

 

 

 

a

During the period ended April 30, 2021, 1,482 Class C shares representing $22,775 were automatically converted to 1,536 Class A shares and during the period ended October 31, 2020, 106 Class C shares representing $1,489 were automatically converted to 109 Class A shares.

 

b

During the period ended October 31, 2020, 953 Class A shares representing $11,016 were exchanged for 1,004 Class I shares.

 

See notes to financial statements.

        

14

 

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

 
 

April 30, 2021

Year Ended October 31,

Class A Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

12.40

13.99

13.45

13.65

12.57

12.62

Investment Operations:

      

Investment income—neta

.17

.26

.33

.31

.24

.27

Net realized and unrealized
gain (loss) on investments

3.21

(1.45)

1.36

.13

1.49

.48

Total from Investment Operations

3.38

(1.19)

1.69

.44

1.73

.75

Distributions:

      

Dividends from
investment income—net

(.14)

(.27)

(.33)

(.32)

(.27)

(.27)

Dividends from net realized
gain on investments

-

(.13)

(.82)

(.32)

(.38)

(.53)

Total Distributions

(.14)

(.40)

(1.15)

(.64)

(.65)

(.80)

Net asset value, end of period

15.64

12.40

13.99

13.45

13.65

12.57

Total Return (%)b

27.29c

(8.72)

13.85

3.14

14.30

6.31

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assets

1.20d

1.19

1.17

1.18

1.28

1.27

Ratio of net investment income
to average net assets

2.32d

1.95

2.54

2.26

1.93

2.16

Portfolio Turnover Rate

12.50c

18.42

27.51

21.82

26.35

27.90

Net Assets, end of period ($ x 1,000)

53,545

44,269

56,173

50,382

54,546

108,189

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

 
 

April 30, 2021

Year Ended October 31,

Class C Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

12.85

14.47

13.86

13.98

12.79

12.84

Investment Operations:

      

Investment income—neta

.10

.17

.24

.22

.18

.18

Net realized and unrealized
gain (loss) on investments

3.34

(1.51)

1.41

.12

1.50

.48

Total from Investment Operations

3.44

(1.34)

1.65

.34

1.68

.66

Distributions:

      

Dividends from
investment income—net

(.07)

(.15)

(.22)

(.14)

(.11)

(.18)

Dividends from net realized
gain on investments

-

(.13)

(.82)

(.32)

(.38)

(.53)

Total Distributions

(.07)

(.28)

(1.04)

(.46)

(.49)

(.71)

Net asset value, end of period

16.22

12.85

14.47

13.86

13.98

12.79

Total Return (%)b

26.83c

(9.42)

13.00

2.41

13.56

5.49

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assets

1.96d

1.94

1.91

1.91

2.01

2.02

Ratio of net investment income
to average net assets

1.36d

1.21

1.79

1.53

1.36

1.42

Portfolio Turnover Rate

12.50c

18.42

27.51

21.82

26.35

27.90

Net Assets, end of period ($ x 1,000)

20,784

24,255

49,830

49,068

56,969

57,459

a Based on average shares outstanding.

b Exclusive of sales charge.

c Not annualized.

d Annualized.

See notes to financial statements.

16

 

       

Six Months Ended

 

April 30, 2021

Year Ended October 31,

Class I Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

11.76

13.30

12.83

13.10

12.11

12.19

Investment Operations:

      

Investment income—neta

.18

.28

.35

.33

.31

.28

Net realized and unrealized
gain (loss) on investments

3.05

(1.39)

1.30

.12

1.39

.47

Total from Investment Operations

3.23

(1.11)

1.65

.45

1.70

.75

Distributions:

      

Dividends from
investment income—net

(.16)

(.30)

(.36)

(.40)

(.33)

(.30)

Dividends from net realized
gain on investments

-

(.13)

(.82)

(.32)

(.38)

(.53)

Total Distributions

(.16)

(.43)

(1.18)

(.72)

(.71)

(.83)

Net asset value, end of period

14.83

11.76

13.30

12.83

13.10

12.11

Total Return (%)

27.51b

(8.53)

14.20

3.43

14.65

6.65

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assets

.94c

.94

.91

.90

.99

1.01

Ratio of net investment income
to average net assets

2.56c

2.22

2.78

2.55

2.42

2.32

Portfolio Turnover Rate

12.50b

18.42

27.51

21.82

26.35

27.90

Net Assets, end of period ($ x 1,000)

226,720

190,883

309,206

262,268

296,215

222,595

a Based on average shares outstanding.

b Not annualized.

c Annualized.

See notes to financial statements.

17

 

FINANCIAL HIGHLIGHTS (continued)

       

Six Months Ended

 
 

April 30, 2021

Year Ended October 31,

Class Y Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

11.75

13.29

12.82

13.09

12.11

12.19

Investment Operations:

      

Investment income—neta

.18

.32

.37

.34

.31

.30

Net realized and unrealized
gain (loss) on investments

3.05

(1.42)

1.29

.12

1.39

.46

Total from Investment Operations

3.23

(1.10)

1.66

.46

1.70

.76

Distributions:

      

Dividends from
investment income—net

(.16)

(.31)

(.37)

(.41)

(.34)

(.31)

Dividends from net realized
gain on investments

-

(.13)

(.82)

(.32)

(.38)

(.53)

Total Distributions

(.16)

(.44)

(1.19)

(.73)

(.72)

(.84)

Net asset value, end of period

14.82

11.75

13.29

12.82

13.09

12.11

Total Return (%)

27.53b

(8.47)

14.29

3.53

14.68

6.72

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assets

.93c

.85

.84

.83

.92

.94

Ratio of net investment income
to average net assets

2.64c

2.48

2.93

2.61

2.45

2.52

Portfolio Turnover Rate

12.50b

18.42

27.51

21.82

26.35

27.90

Net Assets, end of period ($ x 1,000)

36

27

39,585

43,267

40,786

33,342

a Based on average shares outstanding.

b Not annualized.

c Annualized.

See notes to financial statements.

18

 

NOTES TO FINANCIAL STATEMENTS (Unaudited)

NOTE 1—Significant Accounting Policies:

BNY Mellon Global Equity Income Fund (the “fund”) is a separate diversified series of BNY Mellon Investment Funds III (the “Trust”), 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 four series, including the fund. The fund’s investment objective is to seek total return (consisting of capital appreciation and income). 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. Newton Investment Management 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 an unlimited number of $.001 par value shares of Beneficial Interest in each of the following classes of shares: Class A, Class C, Class I and Class Y. Class A and Class C shares are sold primarily to retail investors through financial intermediaries and bear Distribution and/or Shareholder Services Plan fees. 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 shares are sold primarily to bank trust departments and other financial service providers (including The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, and its affiliates), acting on behalf of customers having a qualified trust or an investment account or relationship at such institution, and bear no Distribution or Shareholder Services Plan fees. Class Y shares are sold at net asset value per share generally to institutional investors, and bear no Distribution or Shareholder Services Plan fees. Class I and Class Y shares are offered without a front-end sales charge or CDSC. 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

19

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The Trust 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 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 Trust 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.

20

 

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.

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 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

21

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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.

Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.

Forward foreign currency exchange contracts (“forward contracts”) are valued at the forward rate and are generally categorized within Level 2 of the fair value hierarchy.

The following is a summary of the inputs used as of April 30, 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

130,484,957

152,959,128

†† 

-

283,444,085

 

Equity Securities - Preferred Stocks

-

10,018,262

†† 

-

10,018,262

 

Investment Companies

5,684,939

-

 

-

5,684,939

 

Warrants

80,648

-

 

-

80,648

 

Other Financial Instruments:

  

Forward Foreign Currency Exchange Contracts†††

-

1,068

 

-

1,068

 

22

 

       
 

Level 1-Unadjusted Quoted Prices

Level 2- Other Significant Observable Inputs

 

Level 3-Significant Unobservable Inputs

Total

 

Liabilities ($)

  

Other Financial Instruments:

  

Forward Foreign Currency Exchange Contracts†††

-

(11,251)

 

-

(11,251)

 

 See Statement of Investments for additional detailed categorizations, if any.

†† Securities classified within Level 2 at period end as the values were determined pursuant to the fund’s fair valuation procedures.

††† Amount shown represents unrealized appreciation (depreciation) at period end, but only variation margin on exchanged traded and centrally cleared derivatives, if any, are reported in the Statement of Assets and Liabilities.

(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 April 30, 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.

23

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 April 30, 2021, The Bank of New York Mellon earned $77 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 events or developments adversely interrupt the global supply chain; in

24

 

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 are normally declared and paid quarterly. 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 April 30, 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 April 30, 2021, the fund did not incur any interest or penalties.

Each tax year in the three-year period ended October 31, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.

The fund is permitted to carry forward capital losses for an unlimited period. Furthermore, capital loss carryovers retain their character as either short-term or long-term capital losses.

The fund has an unused capital loss carryover of $2,029,439 available for federal income tax purposes to be applied against future net realized capital

25

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

gains, if any, realized subsequent to October 31, 2020. These short-term capital losses can be carried forward for an unlimited period.

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2020 was as follows: ordinary income $8,251,503 and long-term capital gains $4,226,697. 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.

The average amount of borrowings outstanding under the Facilities during the period ended April 30, 2021 was approximately $34,254 with a related weighted average annualized interest rate of 1.23%.

NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:

(a) Pursuant to a management agreement with the Adviser and the Trust, the Trust had agreed to pay the Adviser a management fee computed at the annual rate of .75% 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 .36% of the value of the fund’s average daily net assets.

During the period ended April 30, 2021, the Distributor retained $818 from commissions earned on sales of the fund’s Class A shares and $511 from CDSC fees on redemptions of the fund’s Class C shares.

26

 

(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. During the period ended April 30, 2021, Class C shares were charged $90,596 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 providing reports and other information, 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 April 30, 2021, Class A and Class C shares were charged $64,178 and $30,199, respectively, pursuant to the Shareholder Services Plan.

Under its terms, the Distribution Plan and Shareholder Services Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of a majority of those Trustees who are not “interested persons” of the Trust and who have no direct or indirect financial interest in the operation of or in any agreement related to the Distribution Plan or 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 April 30, 2021, the fund was charged $5,281 for transfer agency services,

27

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 April 30, 2021, the fund was charged $18,820 pursuant to the custody agreement.

During the period ended April 30, 2021, the fund was charged $7,766 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 $186,125, Distribution Plan fees of $13,068, Shareholder Services Plan fees of $15,439, custodian fees of $14,400, Chief Compliance Officer fees of $5,242 and transfer agency fees of $1,761.

(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 contracts, during the period ended April 30, 2021, amounted to $35,415,985 and $62,053,994, 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 April 30, 2021 is discussed below.

28

 

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 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. Forward contracts open at April 30, 2021 are set forth in the Statement of Forward Foreign Currency Exchange Contracts.

The provisions of ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities” require disclosure on the offsetting of financial assets and liabilities. These disclosures are required for certain investments, including derivative financial instruments subject to Master Agreements which are eligible for offsetting in the Statement of Assets and Liabilities and require the fund to disclose both gross and net information with respect to such investments. For financial reporting purposes, the fund does not offset derivative assets and derivative liabilities that are subject to Master Agreements in the Statement of Assets and Liabilities.

29

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

At April 30, 2021, derivative assets and liabilities (by type) on a gross basis are as follows:

      

Derivative Financial Instruments:

 

Assets ($)

 

Liabilities ($)

 

Forward contracts

 

1,068

 

(11,251)

 

Total gross amount of derivative

 

 

 

 

 

assets and liabilities in the

 

 

 

 

 

Statement of Assets and Liabilities

 

1,068

 

(11,251)

 

Derivatives not subject to

 

 

 

 

 

Master Agreements

 

-

 

-

 

Total gross amount of assets

 

 

 

 

 

and liabilities subject to

 

 

 

 

 

Master Agreements

 

1,068

 

(11,251)

 

The following tables present derivative assets and liabilities net of amounts available for offsetting under Master Agreements and net of related collateral received or pledged, if any, as of April 30, 2021:

       

 

 

 

Financial

 

 

 

 

 

 

Instruments

 

 

 

 

 

 

and Derivatives

 

 

 

 

Gross Amount of

 

Available

Collateral

 

Net Amount of

Counterparty

Assets ($)

1 

for Offset ($)

Received ($)

  

Assets ($)

Barclays Capital

1,068

 

-

-

 

1,068

 

 

 

 

 

 

 

 

 

 

Financial

 

 

 

 

 

 

Instruments

 

 

 

 

 

 

and Derivatives

 

 

 

 

Gross Amount of

 

Available

Collateral

 

Net Amount of

Counterparty

Liabilities ($)

1 

for Offset ($)

Pledged ($)

  

Liabilities ($)

UBS Securities

(11,251)

 

-

-

 

(11,251)

 

 

 

 

 

 

 

1 Absent a default event or early termination, OTC derivative assets and liabilities are presented at gross amounts
and are not offset in the Statement of Assets and Liabilities.

The following summarizes the average market value of derivatives outstanding during the period ended April 30, 2021:

   

 

 

Average Market Value ($)

Forward contracts

 

865,305

At April 30, 2021, accumulated net unrealized appreciation on investments inclusive of derivative contracts was $88,476,572, consisting of $92,912,615 gross unrealized appreciation and $4,436,043 gross unrealized depreciation.

30

 

At April 30, 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).

31

 

INFORMATION ABOUT THE RENEWAL OF THE FUND'S MANAGEMENT AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited)

At a meeting of the fund’s Board of Trustees held on February 24-25, 2021, the Board considered the renewal of the fund’s Management Agreement pursuant to which the Adviser provides the fund with investment advisory and administrative services (the “Agreement”), and the Sub-Investment Advisory Agreement (together, the “Agreements”), pursuant to which Newton Investment Management Limited (the “Subadviser”) provides day-to-day management of the fund’s investments. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Adviser and the Subadviser. In considering the renewal of the Agreements, the Board considered several factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.

Analysis of Nature, Extent, and Quality of Services Provided to the Fund. The Board considered information provided to it at the meeting and in previous presentations from representatives of the Adviser regarding the nature, extent, and quality of the services provided to funds in the BNY Mellon fund complex, including the fund. The Adviser provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. The Adviser also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the BNY Mellon fund complex (such as retail direct or intermediary, in which intermediaries typically are paid by the fund and/or the Adviser) and the Adviser’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each intermediary or distribution channel, as applicable to the fund.

The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that the Adviser also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board also considered the Adviser’s extensive administrative, accounting and compliance infrastructures, as well as the Adviser’s supervisory activities over the Subadviser. The Board also considered portfolio management’s brokerage policies and practices (including that there are no soft dollar arrangements in place for the fund) and the standards applied in seeking best execution.

Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed reports prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data based on classifications provided by Thomson Reuters Lipper, which included information comparing (1) the performance of the fund’s Class I shares with the performance of a

32

 

group of institutional global equity income funds selected by Broadridge as comparable to the fund (the “Performance Group”) and with a broader group of funds consisting of all retail and institutional global equity income funds (the “Performance Universe”), all for various periods ended December 31, 2021 and (2) the fund’s actual and contractual management fees and total expenses with those of the same group of funds in the Performance Group (the “Expense Group”) and with a broader group of all institutional global equity income funds, excluding outliers (the “Expense Universe”), the information for which was derived in part from fund financial statements available to Broadridge as of the date of its analysis. The Adviser previously had furnished the Board with a description of the methodology Broadridge used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.

Performance Comparisons. Representatives of the Adviser stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations and policies that may be applicable to the fund and comparison funds and the end date selected. The Board discussed with representatives of the Adviser and the Subadviser the results of the comparisons and considered that the fund’s total return performance was above the Performance Group and Performance Universe medians for all periods. The Adviser also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark indices.

Management Fee and Expense Ratio Comparisons. The Board reviewed and considered the contractual management fee rate payable by the fund to the Adviser in light of the nature, extent and quality of the management and sub-advisory services provided by the Adviser and the Subadviser, respectively. In addition, the Board reviewed and considered the actual management fee rate paid by the fund over the fund’s last fiscal year.

The Board also reviewed the range of actual and contractual management fees and total expenses as a percentage of average net assets of the Expense Group and Expense Universe funds and discussed the results of the comparisons. The Board considered that the fund’s contractual management fee was higher than the Expense Group median contractual management fee, the fund’s actual management fee was higher than the Expense Group median and the Expense Universe median actual management fee and the fund’s total expenses were higher than the Expense Group median and slightly higher than the Expense Universe median total expenses.

Representatives of the Adviser reviewed with the Board the management or investment advisory fees paid to the Adviser or the Subadviser or its affiliates for advising the one separate account or other type of client portfolio that is considered to have similar investment strategies and policies as the fund (the “Similar Client”), and explained the nature of the Similar Client. They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors. The Board considered the relevance of the fee information provided for the Similar Client to evaluate the appropriateness of the fund’s management fee. Representatives of the Adviser noted that there were no other funds advised or administered by the Adviser that are in the same Lipper category as the fund.

33

 

INFORMATION ABOUT THE RENEWAL OF THE FUND'S MANAGEMENT AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)

The Board considered the fee to the Subadviser in relation to the fee paid to the Adviser by the fund and the respective services provided by the Subadviser and the Adviser. The Board also took into consideration that the Subadviser’s fee is paid by the Adviser (out of its fee from the fund) and not the fund.

Analysis of Profitability and Economies of Scale. Representatives of the Adviser reviewed the expenses allocated and profit received by the Adviser and its affiliates and the resulting profitability percentage for managing the fund and the aggregate profitability percentage to the Adviser and its affiliates for managing the funds in the BNY Mellon fund complex, and the method used to determine the expenses and profit. The Board concluded that the profitability results were not excessive, given the services rendered and service levels provided by the Adviser and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.

The Board considered, on the advice of its counsel, the profitability analysis (1) as part of its evaluation of whether the fees under the Agreements, considered in relation to the mix of services provided by the Adviser and the Subadviser, including the nature, extent and quality of such services, supported the renewal of the Agreements and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Since the Adviser, and not the fund, pays the Subadviser pursuant to the Sub-Investment Advisory Agreement, the Board did not consider the Subadviser’s profitability to be relevant to its deliberations. Representatives of the Adviser stated that a discussion of economies of scale is predicated on a fund having achieved a substantial size with increasing assets and that, if a fund’s assets had been stable or decreasing, the possibility that the Adviser may have realized any economies of scale would be less. Representatives of the Adviser also stated that, as a result of shared and allocated costs among funds in the BNY Mellon fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to the Adviser and the Subadviser from acting as investment adviser and sub-investment adviser, respectively, and took into consideration that there were no soft dollar arrangements in effect for trading the fund’s investments.

At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreements. Based on the discussions and considerations as described above, the Board concluded and determined as follows.

34

 

· The Board concluded that the nature, extent and quality of the services provided by the Adviser and the Subadviser are adequate and appropriate.

· The Board was satisfied with the fund’s performance.

· The Board concluded that the fees paid to the Adviser and the Subadviser continued to be appropriate under the circumstances and in light of the factors and the totality of the services provided as discussed above.

· The Board determined that the economies of scale which may accrue to the Adviser and its affiliates in connection with the management of the fund had been adequately considered by the Adviser in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.

In evaluating the Agreements, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with the Adviser and its affiliates and the Subadviser, of the Adviser and the Subadviser and the services provided to the fund by the Adviser and the Subadviser. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreements, including information on the investment performance of the fund in comparison to similar mutual funds and benchmark performance indices; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for the fund had the benefit of a number of years of reviews of the Agreements for the fund, or substantially similar agreements for other BNY Mellon funds that the Board oversees, during which lengthy discussions took place between the Board and representatives of the Adviser. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the fund’s arrangements, or substantially similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined to renew the Agreements.

35

 

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.

36

 

This page intentionally left blank.

37

 

For More Information

BNY Mellon Global Equity Income Fund

240 Greenwich Street

New York, NY 10286

Adviser

BNY Mellon Investment Adviser, Inc.

240 Greenwich Street

New York, NY 10286

Sub-Adviser

Newton Investment Management Limited

160 Queen Victoria Street

London, EC4V, 4LA, 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: DEQAX Class C: DEQCX Class I: DQEIX Class Y: DEQYX

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
6175SA0421

 

 

BNY Mellon International Bond Fund

 

SEMIANNUAL REPORT

April 30, 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

T H E F U N D

  

Discussion of Fund Performance

2

Understanding Your Fund’s Expenses

5

Comparing Your Fund’s Expenses
With Those of Other Funds

5

Statement of Investments

6

Statement of Investments
in Affiliated Issuers

17

Statement of Futures

18

Statement of Options Written

19

Statement of Forward Foreign
Currency Exchange Contracts

20

Statement of Swap Agreements

23

Statement of Assets and Liabilities

25

Statement of Operations

26

Statement of Changes in Net Assets

27

Financial Highlights

29

Notes to Financial Statements

33

Information About the Renewal and
Approval of the Fund’s Management
Agreement and Approval of
Sub-Investment Advisory Agreement

53

Liquidity Risk Management Program

60

F O R M O R E I N F O R M AT I O N

 

Back Cover

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from November 1, 2020 through April 30, 2021, as provided by David Leduc, CFA, Brendan Murphy, CFA and Scott Zaleski, CFA, Portfolio Managers

Market and Fund Performance Overview

For the six-month period ended April 30, 2021, the BNY Mellon International Bond Fund’s Class A shares produced a total return of 2.32%, Class C shares returned 1.88%, Class I shares returned 2.50% and Class Y shares returned 2.57%.1 In comparison, the fund’s benchmark, the Bloomberg Barclays Global Aggregate ex USD Index (Unhedged) (the “Index”), produced a total return of 0.68% for the same period.2

International bond markets posted moderately positive returns during the period. Sovereign debt returns were challenged by a rising rate environment. Spread products outperformed their like-duration sovereign counterparts due to spread tightening. The fund outperformed the Index, due in part to positioning within high yield and investment grade credit.

The Fund’s Investment Approach

The fund seeks to maximize total return through capital appreciation and income. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in fixed-income securities. The fund also normally invests at least 65% of its assets in non-U.S. dollar-denominated, fixed-income securities of foreign governments and companies located in various countries, including emerging markets.

Generally, the fund seeks to maintain a portfolio with an average credit quality of investment grade. The fund’s portfolio managers focus on identifying undervalued government bond markets, currencies, sectors and securities and look for fixed-income securities with the most potential for added value, such as those involving the potential for credit upgrades, unique structural characteristics or innovative features. The portfolio managers select securities for the fund’s portfolio by using fundamental economic research and quantitative analysis to allocate assets among countries and currencies, focusing on sectors and individual securities that appear to be relatively undervalued, and actively trading among sectors.

Economic Improvement and Rising Rates Drive Bond Markets

The economic outlook brightened considerably over the period, making it a more challenging market for bonds, safe-havens in particular. The roll-out of multiple successful COVID-19 vaccinations, coupled with ongoing fiscal and monetary stimulus, was responsible for better growth prospects, particularly in developed markets. G7 government bonds had one of their worst periods in over 30 years in the early months of 2021. U.S. 10-year Treasury yields almost doubled over the six months, moving from 0.82% to 1.62% as the market pivoted to anticipating eventual tapering of central bank bond buying. Other developed-market government bond yields also rose, but less dramatically. Credit spreads generally narrowed in response to the brighter outlook, meaning that while government bonds typically delivered losses, investment grade returns were generally flat, while high yield and emerging-market bonds showed positive returns. The U.S. dollar weakened over the period, particularly against commodity currencies such as the Norwegian krone, the Australian and Canadian dollar, and most emerging-markets currencies.

2

 

High Yield and Investment Grade Credit Drive Fund Performance

The fund’s performance compared to the Index was bolstered during the period by positions in high yield and investment grade bonds. A big theme during the six months was the recovery trade. Sectors of the market which were hit hard by COVID-19 came back into favor during the period. This was brought on by the impending prospect of economic reopening. Business like gaming, lodging, restaurants and home construction companies, as well as energy companies, all saw their valuations rebound. Financial companies also posted strong results. The fund benefited from purchasing securities positioned low within the capital structure of high quality banks such as Barclays and Goldman Sachs. In investment grade credit, REITs were also a standout performer, particularly data center and warehouse REITs. Securities issued by aircraft lessors also benefited returns. Other strategies benefited as well. Bonds issued by corporate and sovereign entities located in emerging markets, particularly those that were levered to the global recovery, bolstered results, as did securitized auto and CMBS instruments.

In a period of such strong performance, there were a few strategies that did not contribute as strongly to returns. The fund’s FX strategy generated flat results for the period. In addition, the team’s strategy for investing in Australian securities was unproductive. The anticipated activity of the AUS yield curve relative to the U.S. yield curve did not come to fruition, creating a drag on performance.

The Road to Recovery

Countries all over the world are at varying points in their COVID-19 journey and eventual economic recovery. While some countries reentered lockdown, others have high vaccination rates and are focused on the recovery ahead. Central banks are along for the ride, posed at different places along the support spectrum. While some speak of tapering, others are still in full-blown easing mode. It is our opinion that the central banks will remain supportive until the virus is neutralized, and COVID-related supply chain issues are solved. Although spread product valuations are rich by many measures, market technicals remain supportive.

When the time comes for banks to roll back their easing programs, there could be a spike in market volatility. In the meantime, economic data in some developed regions are improving. Yield curves are steepening, and inflationary pressures are building. These are all normal signs of recovery. In less developed areas, recovery may take a bit longer. As emerging-market economies continue to struggle with rising infection rates and lockdowns, supply chain issues may continue, as many items are manufactured in these parts of the world. We expect the recovery to be a bit choppier in less developed markets, although these areas will begin to benefit as the developed-world recovery leads to increases in demand for commodities and global trade. We expect the longer-term secular trend of U.S. dollar

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

weakening to continue, particularly against emerging-market currencies, but think the rate of weakening will be influenced by the severity of the pandemic in these countries.

May 17, 2021

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. Class I shares and Class Y shares are not subject to any initial or deferred sales charge. 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. 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 1, 2022, at which time it may be extended, modified or terminated. Had these expenses not been absorbed, returns would have been lower.

2 Source: Lipper Inc. — The Bloomberg Barclays Global Aggregate ex USD Index (Unhedged) is a flagship measure of global investment grade debt from 24 local currency markets, excluding U.S. dollar-denominated bonds. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed- and emerging-market issuers. Investors cannot invest directly in any index.

Bonds are subject generally to interest-rate, credit, liquidity and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.

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.

High yield bonds are subject to increased credit risk and are considered speculative in terms of the issuer’s perceived ability to continue making interest payments on a timely basis and to repay principal upon maturity.

Foreign bonds are subject to special risks, including exposure to currency fluctuations, changing political and economic conditions and potentially less liquidity. These risks are generally greater with emerging-market countries than with more economically and politically established foreign countries.

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.

Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by the fund and denominated in those currencies. The use of leverage may magnify the fund’s gains or losses. For derivatives with a leveraging component, adverse changes in the value or level of the underlying asset can result in a loss that is much greater than the original investment in the derivative.

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 Bond Fund from November 1, 2020 to April 30, 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 April 30, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$5.12

$8.61

$3.51

$3.01

 

Ending value (after expenses)

$1,023.20

$1,018.80

$1,025.00

$1,025.70

 

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

 

Assuming a hypothetical 5% annualized return for the six months ended April 30, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$5.11

$8.60

$3.51

$3.01

 

Ending value (after expenses)

$1,019.74

$1,016.27

$1,021.32

$1,021.82

 

Expenses are equal to the fund’s annualized expense ratio of 1.02% for Class A, 1.72% for Class C, .70% for Class I and .60% for Class Y, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

5

 

STATEMENT OF INVESTMENTS

April 30, 2021 (Unaudited)

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1%

     

Australia - 2.1%

     

Australia, Sr. Unscd. Bonds, Ser. 150

AUD

3.00

 

3/21/2047

 

5,750,000

 

4,764,031

 

Queensland Treasury, Govt. Gtd. Bonds

AUD

1.75

 

7/20/2034

 

3,900,000

b 

2,811,068

 
 

7,575,099

 

Austria - .1%

     

Suzano Austria GmbH, Gtd. Notes

 

3.75

 

1/15/2031

 

475,000

 

486,927

 

Bermuda - .3%

     

Textainer Marine Containers VII, Ser. 2021-1A, Cl. A

 

1.68

 

2/20/2046

 

1,060,667

b 

1,043,981

 

Canada - 3.8%

     

BMW Canada Auto Trust, Ser. 2019-1, Cl. A3

CAD

2.35

 

2/20/2024

 

1,600,000

 

1,324,125

 

BMW Canada Auto Trust, Ser. 2021-1A, Cl. A3

CAD

0.76

 

12/20/2025

 

1,175,000

b 

949,579

 

Canada, Bonds

CAD

1.25

 

6/1/2030

 

7,575,000

 

6,034,443

 

CNH Capital Canada Receivables Trust, Ser. 2021-1A, Cl. A2

CAD

1.00

 

11/16/2026

 

1,125,000

b 

915,761

 

Ford Auto Securitization Trust, Ser. 2019-AA, Cl. A2

CAD

2.35

 

6/15/2023

 

601,225

b 

492,853

 

Ford Auto Securitization Trust, Ser. 2020-AA, Cl. A3

CAD

1.15

 

11/15/2025

 

1,075,000

b 

876,182

 

GMF Canada Leasing Trust, Ser. 2020-1A, Cl. A3

CAD

1.05

 

11/20/2025

 

850,000

b 

694,785

 

GMF Canada Leasing Trust, Ser. 2021-1A, Cl. A3

CAD

0.87

 

5/20/2026

 

1,125,000

b 

915,541

 

Silver Arrow Canada, Ser. 2018-1A, Cl. A3

CAD

3.17

 

8/15/2025

 

1,019,006

b 

838,554

 

Teck Resources, Sr. Unscd. Notes

 

6.25

 

7/15/2041

 

315,000

 

400,369

 
 

13,442,192

 

Cayman Islands - 3.2%

     

Avery Point VII CLO, Ser. 2015-7A, Cl. AR2, 3 Month LIBOR +.96%

 

1.14

 

1/15/2028

 

956,968

b,c 

957,121

 

Bain Capital Credit CLO, Ser. 2020-3A, Cl. A, 3 Month LIBOR +1.38%

 

1.55

 

10/23/2032

 

1,155,000

b,c 

1,157,110

 

Carlyle US CLO, Ser. 2017-2A, Cl. A1R, 3 Month LIBOR +1.05%

 

1.05

 

7/20/2031

 

1,125,000

b,c 

1,125,687

 

CK Hutchison Europe Finance 18, Gtd. Bonds

EUR

1.25

 

4/13/2025

 

660,000

 

830,212

 

DP World Salaam, Jr. Sub. Notes

 

6.00

 

10/1/2025

 

480,000

d 

527,280

 

Invesco CLO, Ser. 2021-1A, Cl. A1, 3 Month LIBOR +1.00%

 

1.17

 

4/15/2034

 

1,025,000

b,c 

1,025,916

 

Magnetite XIX CLO, Ser. 2017-19A, Cl. AR, 3 Month LIBOR +1.05%

 

1.24

 

4/17/2034

 

900,000

b,c 

900,802

 

6

 

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1% (continued)

     

Cayman Islands - 3.2% (continued)

     

Magnetite XXVIII CLO, Ser. 2020-28A, Cl. A, 3 Month LIBOR +1.27%

 

1.45

 

10/25/2031

 

800,000

b,c 

801,344

 

Race Point IX CLO, Ser. 2015-9A, CI. A1A2, 3 Month LIBOR +.94%

 

1.12

 

10/15/2030

 

975,000

b,c 

975,568

 

RIN IV CLO, Ser. 2021-1A, CI. A, 3 Month LIBOR +1.30%

 

1.30

 

4/20/2033

 

700,000

b,c 

701,037

 

Sands China, Sr. Unscd. Notes

 

4.38

 

6/18/2030

 

375,000

 

400,969

 

TCI-Flatiron CLO, Ser. 2017-1A, CI. AR, 3 Month LIBOR +.96%

 

1.08

 

11/18/2030

 

925,000

b,c 

925,466

 

Thompson Park CLO, Ser. 2021-1A, CI. A1, 3 Month LIBOR +1.00%

 

1.20

 

4/15/2034

 

975,000

b,c 

975,584

 

Vale Overseas, Gtd. Notes

 

6.25

 

8/10/2026

 

172,000

 

205,817

 
 

11,509,913

 

Chile - .3%

     

Inversiones, Gtd. Notes

 

3.00

 

4/6/2031

 

700,000

b 

695,030

 

VTR Comunicaciones, Sr. Scd. Notes

 

5.13

 

1/15/2028

 

375,000

b 

393,750

 
 

1,088,780

 

China - 5.0%

     

China, Unscd. Bonds

CNY

3.81

 

9/14/2050

 

112,500,000

 

17,794,783

 

Dominican Republic - .3%

     

Dominican Republic, Sr. Unscd. Notes

 

4.88

 

9/23/2032

 

900,000

b 

944,100

 

Ecuador - .1%

     

Ecuador, Sr. Unscd. Notes

 

0.50

 

7/31/2030

 

555,000

 

466,200

 

Egypt - .3%

     

Egypt, Sr. Unscd. Notes

 

5.25

 

10/6/2025

 

975,000

b 

1,016,964

 

France - 1.3%

     

BNP Paribas, Sub. Notes

 

4.38

 

3/1/2033

 

825,000

b 

902,006

 

Credit Agricole, Sub. Notes

 

3.25

 

1/14/2030

 

630,000

 

653,693

 

Credit Agricole Home Loan SFH, Covered Notes

EUR

1.25

 

3/24/2031

 

1,600,000

 

2,139,097

 

Orange, Sr. Unscd. Notes

EUR

0.02

 

9/4/2026

 

700,000

 

839,892

 
 

4,534,688

 

Germany - 10.1%

     

Bundesrepublik Deutschland Bundesanleihe, Bonds, Ser. 98

EUR

4.75

 

7/4/2028

 

8,325,000

 

13,820,567

 

Bundesrepublik Deutschland Bundesanleihe, Bonds, Ser. G

EUR

0.42

 

8/15/2030

 

17,940,000

 

22,168,160

 
 

35,988,727

 

Ghana - .3%

     

Ghana, Sr. Unscd. Notes

 

8.63

 

4/7/2034

 

1,075,000

b 

1,112,173

 

Indonesia - .3%

     

Perusahaan Listrik Negara, Sr. Unscd. Notes

EUR

1.88

 

11/5/2031

 

940,000

 

1,117,684

 

7

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1% (continued)

     

Ireland - 1.1%

     

AerCap Global Aviation Trust, Gtd. Notes

 

4.45

 

10/1/2025

 

500,000

 

549,734

 

AerCap Global Aviation Trust, Gtd. Notes

 

6.50

 

7/15/2025

 

650,000

 

765,295

 

Ireland, Bonds

EUR

2.00

 

2/18/2045

 

1,610,000

 

2,472,007

 
 

3,787,036

 

Italy - 2.9%

     

Italy Buoni Poliennali Del Tesoro, Sr. Unscd. Bonds

EUR

2.70

 

3/1/2047

 

2,950,000

b 

4,200,059

 

Italy Buoni Poliennali Del Tesoro, Sr. Unscd. Bonds, Ser. CAC

EUR

2.45

 

9/1/2050

 

4,600,000

b 

6,229,165

 
 

10,429,224

 

Ivory Coast - .2%

     

Ivory Coast, Sr. Unscd. Notes

EUR

4.88

 

1/30/2032

 

600,000

b,e 

725,812

 

Ivory Coast, Sr. Unscd. Notes

EUR

6.63

 

3/22/2048

 

100,000

b 

125,829

 
 

851,641

 

Japan - 14.9%

     

Japan (10 Year Issue), Bonds, Ser. 348

JPY

0.10

 

9/20/2027

 

2,129,300,000

 

19,675,344

 

Japan (20 Year Issue), Bonds, Ser. 156

JPY

0.40

 

3/20/2036

 

2,311,900,000

 

21,520,074

 

Japan (30 Year Issue), Bonds, Ser. 66

JPY

0.40

 

3/20/2050

 

1,308,800,000

 

11,233,265

 

Takeda Pharmaceutical, Sr. Unscd. Notes

EUR

2.00

 

7/9/2040

 

300,000

 

381,227

 
 

52,809,910

 

Luxembourg - .9%

     

CK Hutchison Group Telecom Finance, Gtd. Notes

EUR

1.13

 

10/17/2028

 

485,000

 

603,417

 

DH Europe Finance II, Gtd. Bonds

EUR

0.20

 

3/18/2026

 

1,125,000

 

1,359,628

 

Medtronic Global Holdings, Gtd. Notes

EUR

0.75

 

10/15/2032

 

420,000

 

505,615

 

Medtronic Global Holdings, Gtd. Notes

EUR

1.63

 

3/7/2031

 

475,000

 

628,365

 

Millicom International Cellular, Sr. Unscd. Notes

 

4.50

 

4/27/2031

 

250,000

b 

265,977

 
 

3,363,002

 

Malaysia - .5%

     

Malaysia, Bonds, Ser. 219

MYR

3.89

 

8/15/2029

 

7,530,000

 

1,927,764

 

Mexico - 3.0%

     

Infraestructura Energetica Nova, Sr. Unscd. Notes

 

4.88

 

1/14/2048

 

755,000

 

767,790

 

Metalsa, Gtd. Notes

 

3.75

 

5/4/2031

 

525,000

b 

515,812

 

Mexican Bonos, Bonds, Ser. M

MXN

7.75

 

5/29/2031

 

100,000,000

 

5,243,618

 

Mexico, Bonds, Ser. M

MXN

5.75

 

3/5/2026

 

35,000,000

 

1,713,889

 

Mexico, Sr. Unscd. Notes

 

6.05

 

1/11/2040

 

720,000

 

882,198

 

8

 

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1% (continued)

     

Mexico - 3.0% (continued)

     

Nemak, Sr. Unscd. Notes

 

4.75

 

1/23/2025

 

317,000

 

328,152

 

Petroleos Mexicanos, Gtd. Notes

 

6.84

 

1/23/2030

 

1,050,000

 

1,080,187

 
 

10,531,646

 

Netherlands - 4.0%

     

Cooperatieve Rabobank, Sub. Bonds

EUR

2.50

 

5/26/2026

 

2,141,000

 

2,578,324

 

EDP Finance, Sr. Unscd. Notes

EUR

0.38

 

9/16/2026

 

2,300,000

 

2,792,976

 

Enel Finance International, Gtd. Notes

EUR

0.38

 

6/17/2027

 

2,315,000

 

2,830,855

 

Equate Petrochemical, Gtd. Notes

 

2.63

 

4/28/2028

 

475,000

b,e 

477,078

 

ING Groep, Sub. Bonds

EUR

2.00

 

3/22/2030

 

900,000

 

1,139,364

 

ING Groep, Sub. Notes

EUR

3.00

 

4/11/2028

 

600,000

 

759,877

 

Mamoura Diversified Global Holding, Gtd. Notes

 

2.50

 

11/7/2024

 

755,000

 

793,578

 

Prosus, Sr. Unscd. Notes

 

3.83

 

2/8/2051

 

400,000

b 

366,308

 

WPC Eurobond, Gtd. Bonds

EUR

2.25

 

7/19/2024

 

950,000

 

1,219,696

 

WPC Eurobond, Gtd. Notes

EUR

1.35

 

4/15/2028

 

760,000

 

948,122

 

WPC Eurobond, Gtd. Notes

EUR

2.13

 

4/15/2027

 

195,000

 

254,698

 
 

14,160,876

 

Oman - .2%

     

Oman, Sr. Unscd. Notes

 

4.88

 

2/1/2025

 

425,000

b 

446,781

 

Oman, Sr. Unscd. Notes

 

6.25

 

1/25/2031

 

200,000

b 

215,680

 
 

662,461

 

Romania - .4%

     

Romania, Bonds

EUR

3.62

 

5/26/2030

 

300,000

b 

416,699

 

Romania, Sr. Unscd. Notes

EUR

2.50

 

2/8/2030

 

405,000

b 

520,012

 

Romania, Unscd. Notes

EUR

2.75

 

4/14/2041

 

425,000

b 

503,190

 
 

1,439,901

 

Senegal - .3%

     

Senegal, Sr. Unscd. Notes

 

6.25

 

5/23/2033

 

925,000

 

974,719

 

Serbia - .3%

     

Serbia, Sr. Unscd. Notes

EUR

3.13

 

5/15/2027

 

725,000

b 

960,616

 

Singapore - 1.5%

     

Singapore, Bonds

SGD

2.63

 

5/1/2028

 

6,560,000

 

5,358,422

 

Spain - 3.3%

     

Banco Santander, Covered Notes

EUR

0.88

 

5/9/2031

 

1,500,000

 

1,938,462

 

Banco Santander, Sub. Notes

EUR

2.50

 

3/18/2025

 

1,500,000

 

1,948,065

 

Spain, Sr. Unscd. Bonds

EUR

2.90

 

10/31/2046

 

3,224,000

b 

5,211,665

 

Telefonica Emisiones, Gtd. Notes

EUR

1.53

 

1/17/2025

 

2,100,000

 

2,677,054

 
 

11,775,246

 

Supranational - 1.6%

     

Africa Finance, Sr. Unscd. Notes

 

2.88

 

4/28/2028

 

625,000

b 

621,094

 

Banque Ouest Africaine de Developpement, Sr. Unscd. Notes

 

5.00

 

7/27/2027

 

1,635,000

 

1,810,861

 

9

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1% (continued)

     

Supranational - 1.6% (continued)

     

Corp. Andina de Fomento, Sr. Unscd. Notes

 

3.25

 

2/11/2022

 

1,300,000

 

1,330,095

 

The African Export-Import Bank, Sr. Unscd. Notes

 

5.25

 

10/11/2023

 

1,850,000

 

2,004,595

 
 

5,766,645

 

Sweden - 1.3%

     

Sweden, Bonds, Ser. 1061

SEK

0.75

 

11/12/2029

 

38,125,000

b 

4,673,150

 

Switzerland - .3%

     

UBS Group, Jr. Sub. Notes

 

7.00

 

1/31/2024

 

800,000

b,d 

883,052

 

Thailand - 2.6%

     

PTT Treasury Center, Gtd. Notes

 

3.70

 

7/16/2070

 

525,000

b,e 

499,108

 

Thailand, Bonds

THB

2.88

 

12/17/2028

 

243,270,000

 

8,565,594

 
 

9,064,702

 

Ukraine - .2%

     

Ukraine, Sr. Unscd. Notes

 

1.17

 

5/31/2040

 

725,000

 

767,344

 

United Kingdom - 8.1%

     

Anglo American Capital, Gtd. Notes

EUR

1.63

 

3/11/2026

 

1,205,000

 

1,538,846

 

Anglo American Capital, Gtd. Notes

EUR

1.63

 

9/18/2025

 

325,000

 

414,613

 

Barclays, Jr. Sub. Bonds

 

7.88

 

3/15/2022

 

850,000

d 

894,094

 

Barclays, Jr. Sub. Notes

 

8.00

 

6/15/2024

 

521,000

d 

591,661

 

BAT International Finance, Gtd. Notes

EUR

2.25

 

1/16/2030

 

300,000

 

382,602

 

Brass No. 10, Ser. 10-A, Cl. A1

 

0.67

 

4/16/2069

 

473,733

b 

473,951

 

Gemgarto, Ser. 2021-1A, Cl. A, 3 Month SONIA +.59%

GBP

0.64

 

12/16/2067

 

825,000

b,c 

1,142,938

 

Lanark Master Issuer, Ser. 2020-1A, Cl. 2A, 3 Month SONIA +.57%

GBP

0.62

 

12/22/2069

 

922,500

b,c 

1,282,451

 

MARB BondCo, Gtd. Bonds

 

3.95

 

1/29/2031

 

825,000

b 

785,058

 

Penarth Master Issuer, Ser. 2019-1A, Cl. A2, 1 Month SONIA +.70%

GBP

0.75

 

7/18/2024

 

1,180,000

b,c 

1,636,314

 

United Kingdom, Bonds

GBP

0.13

 

1/30/2026

 

5,525,000

 

7,537,575

 

United Kingdom, Bonds

GBP

1.50

 

7/22/2047

 

7,690,000

 

11,005,801

 

Vodafone Group, Jr. Sub. Bonds

EUR

3.10

 

1/3/2079

 

771,000

 

966,478

 
 

28,652,382

 

United States - 19.0%

     

AbbVie, Sr. Unscd. Bonds

EUR

1.38

 

5/17/2024

 

2,180,000

 

2,725,841

 

Air Lease, Sr. Unscd. Notes

 

2.88

 

1/15/2026

 

600,000

 

625,276

 

Air Products & Chemicals, Sr. Unscd. Notes

EUR

0.50

 

5/5/2028

 

1,025,000

 

1,254,479

 

Air Products & Chemicals, Sr. Unscd. Notes

EUR

0.80

 

5/5/2032

 

275,000

 

336,491

 

Ally Financial, Jr. Sub. Notes, Ser. B

 

4.70

 

5/15/2026

 

1,125,000

d 

1,143,225

 

Ally Financial, Sub. Notes

 

5.75

 

11/20/2025

 

185,000

 

212,160

 

AT&T, Sr. Unscd. Notes

EUR

0.25

 

3/4/2026

 

1,000,000

 

1,207,919

 

10

 

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1% (continued)

     

United States - 19.0% (continued)

     

AT&T, Sr. Unscd. Notes

EUR

1.80

 

9/14/2039

 

325,000

 

390,265

 

AT&T, Sr. Unscd. Notes

EUR

2.05

 

5/19/2032

 

300,000

 

399,002

 

AT&T, Sr. Unscd. Notes

EUR

2.35

 

9/5/2029

 

129,000

 

175,929

 

Bank of America, Jr. Sub. Notes, Ser. JJ

 

5.13

 

6/20/2024

 

570,000

d 

614,890

 

Bank of America, Jr. Sub. Notes, Ser. X

 

6.25

 

9/5/2024

 

571,000

d 

637,022

 

Berkshire Hathaway, Sr. Unscd. Notes

EUR

0.04

 

3/12/2025

 

2,250,000

 

2,710,370

 

Cameron LNG, Sr. Scd. Notes

 

2.90

 

7/15/2031

 

600,000

b 

615,308

 

Carrier Global, Sr. Unscd. Notes

 

2.72

 

2/15/2030

 

350,000

 

356,675

 

CCO Holdings, Sr. Unscd. Notes

 

4.50

 

8/15/2030

 

865,000

b 

881,124

 

Centene, Sr. Unscd. Notes

 

3.00

 

10/15/2030

 

575,000

 

571,406

 

Centene, Sr. Unscd. Notes

 

3.38

 

2/15/2030

 

650,000

 

653,253

 

CHC Commercial Mortgage Trust, Ser. 2019-CHC, Cl. B, 1 Month LIBOR +1.50%

 

1.62

 

6/15/2034

 

869,839

b,c 

863,084

 

Cheniere Corpus Christi Holdings, Sr. Scd. Notes

 

3.70

 

11/15/2029

 

380,000

 

404,938

 

Cheniere Energy, Sr. Scd. Notes

 

4.63

 

10/15/2028

 

575,000

b 

600,242

 

Cheniere Energy Partners, Gtd. Notes

 

4.00

 

3/1/2031

 

725,000

b 

738,594

 

Citigroup, Jr. Sub. Bonds

 

5.90

 

2/15/2023

 

479,000

d,e 

506,542

 

Citigroup, Jr. Sub. Bonds, Ser. D

 

5.35

 

5/15/2023

 

850,000

d 

879,750

 

Citigroup, Jr. Sub. Bonds, Ser. M

 

6.30

 

5/15/2024

 

596,000

d 

642,725

 

CNX Resources, Gtd. Notes

 

6.00

 

1/15/2029

 

140,000

b 

149,773

 

Comcast, Gtd. Notes

EUR

0.75

 

2/20/2032

 

1,575,000

 

1,907,825

 

Crown Americas, Gtd. Notes

 

4.75

 

2/1/2026

 

575,000

 

597,569

 

CyrusOne, Gtd. Notes

EUR

1.45

 

1/22/2027

 

800,000

 

975,401

 

CyrusOne, Gtd. Notes

 

2.90

 

11/15/2024

 

225,000

 

238,524

 

CyrusOne, Gtd. Notes

 

3.45

 

11/15/2029

 

650,000

 

680,040

 

Danaher, Sr. Unscd. Notes

EUR

2.50

 

3/30/2030

 

375,000

 

523,617

 

DataBank Issuer, Ser. 2021-1A, Cl. A2

 

2.06

 

2/27/2051

 

875,000

b 

876,762

 

DaVita, Gtd. Notes

 

3.75

 

2/15/2031

 

900,000

b 

856,129

 

Diamondback Energy, Gtd. Notes

 

3.13

 

3/24/2031

 

1,000,000

 

1,010,885

 

Digital Euro Finco, Gtd. Bonds

EUR

2.63

 

4/15/2024

 

1,275,000

 

1,648,809

 

Edison International, Sr. Unscd. Notes

 

4.13

 

3/15/2028

 

540,000

 

583,556

 

Elanco Animal Health, Sr. Unscd. Notes

 

5.90

 

8/28/2028

 

775,000

 

882,260

 

Energy Transfer, Jr. Sub. Bonds, Ser. A

 

6.25

 

2/15/2023

 

680,000

d,e 

578,000

 

Energy Transfer, Jr. Sub. Bonds, Ser. F

 

6.75

 

5/15/2025

 

260,000

d 

259,935

 

11

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

          
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

a 

Value ($)

 

Bonds and Notes - 94.1% (continued)

     

United States - 19.0% (continued)

     

Energy Transfer, Sr. Unscd. Notes

 

4.00

 

10/1/2027

 

380,000

 

409,345

 

EQT, Sr. Unscd. Notes

 

3.00

 

10/1/2022

 

1,555,000

e 

1,586,100

 

Federal Home Loan Mortgage Corp. Multifamily Structured Credit Risk, Ser. 2021-MN1, Cl. M1, 1 Month SOFR +2.00%

 

2.01

 

1/25/2051

 

307,406

b,c,f 

310,574

 

Fidelity National Information Services, Sr. Unscd. Notes

EUR

1.50

 

5/21/2027

 

2,195,000

 

2,803,682

 

General Electric, Jr. Sub. Debs., Ser. D, 3 Month LIBOR +3.33%

 

3.51

 

9/15/2021

 

1,325,000

c,d 

1,261,228

 

GLP Capital, Gtd. Notes

 

5.38

 

4/15/2026

 

900,000

 

1,019,882

 

HCA, Gtd. Notes

 

3.50

 

9/1/2030

 

348,000

 

357,909

 

HCA, Gtd. Notes

 

5.88

 

2/1/2029

 

435,000

 

513,844

 

Icahn Enterprises, Gtd. Notes

 

5.25

 

5/15/2027

 

555,000

 

566,794

 

JPMorgan Chase & Co., Jr. Sub. Bonds, Ser. FF

 

5.00

 

8/1/2024

 

1,788,000

d 

1,885,741

 

JPMorgan Chase & Co., Jr. Sub. Bonds, Ser. Q

 

5.15

 

5/1/2023

 

541,000

d 

558,582

 

KeyCorp Student Loan Trust, Ser. 1999-B, Cl. CTFS, 3 Month LIBOR +.90%

 

1.09

 

11/25/2036

 

82,435

c 

82,425

 

Kraft Heinz Foods, Gtd. Notes

 

4.63

 

1/30/2029

 

525,000

 

592,138

 

Kraft Heinz Foods, Gtd. Notes

 

4.88

 

10/1/2049

 

255,000

 

293,175

 

Lamar Media, Gtd. Notes

 

3.75

 

2/15/2028

 

1,150,000

 

1,161,701

 

Lennar, Gtd. Notes

 

5.25

 

6/1/2026

 

255,000

 

294,831

 

Level 3 Financing, Gtd. Notes

 

3.75

 

7/15/2029

 

150,000

b 

146,437

 

Level 3 Financing, Gtd. Notes

 

4.25

 

7/1/2028

 

990,000

b 

998,771

 

Lumen Technologies, Sr. Scd. Notes

 

4.00

 

2/15/2027

 

160,000