N-CSRS 1 lp1-6914.htm SEMI-ANNUAL REPORTS

 

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 811-04813
   
  BNY Mellon Investment Funds I  
  (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:

 

09/30  
Date of reporting period:

03/31/2021

 

 
             

 

 

 

 

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 Diversified Emerging Markets Fund

BNY Mellon International Equity Fund

BNY Mellon Small Cap Growth Fund

BNY Mellon Small Cap Value Fund

BNY Mellon Small/Mid Cap Growth Fund

BNY Mellon Tax Sensitive Total Return Bond Fund

 
 

 

FORM N-CSR

Item 1.Reports to Stockholders.
 
 

 

BNY Mellon Diversified Emerging Markets Fund

 

SEMIANNUAL REPORT

March 31, 2021

 

 

 

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The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds.

 

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

 

Contents

THE FUND

  

Discussion of Fund Performance

2

Understanding Your Fund’s Expenses

6

Comparing Your Fund’s Expenses
With Those of Other Funds

6

Statement of Investments

7

Statement of Investments
in Affiliated Issuers

16

Statement of Forward Foreign
Currency Exchange Contracts

17

Statement of Assets and Liabilities

18

Statement of Operations

19

Statement of Changes in Net Assets

20

Financial Highlights

22

Notes to Financial Statements

26

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

40

FOR MORE INFORMATION

 

Back Cover

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from October 1, 2020 through March 31, 2021, as provided by portfolio managers Julianne McHugh, Peter D. Goslin, CFA, Syed A. Zamil, CFA, and Chris Yao, CFA of Mellon Investments Corporation, Sub-Investment Adviser

Market and Fund Performance Overview

For the six-month period ended March 31, 2021, BNY Mellon Diversified Emerging Markets Fund’s Class A shares produced a total return of 22.42%, Class C shares returned 22.02%, Class I shares returned 22.68% and Class Y shares returned 22.67%.1 In comparison, the fund’s benchmark, the MSCI Emerging Markets Index (the “Index”), produced a return of 22.43% for the same period.2

Emerging-markets stocks posted positive returns during the reporting period, amid supportive central bank policies and improving investor sentiment due to anticipated economic reopening, vaccine approval and rollouts. The fund performed in-line with the Index.

The Fund’s Investment Approach

The fund seeks long-term capital growth. To pursue its goal, the fund invests at least 80% of its assets, plus any borrowings for investment purposes, in equity securities (or other instruments with similar economic characteristics) of companies located, organized or with a majority of assets or business in countries considered to be emerging markets, including other investment companies that invest in such securities.

The fund uses a “manager-of-managers” approach by selecting one or more experienced investment managers to serve as sub-advisers to the fund. The fund also uses a “fund-of-funds” approach by investing in one or more underlying funds. The fund currently allocates its assets among the emerging-market equity strategies that are separately employed by: (i) Mellon Investments Corporation (Mellon), the fund’s sub-adviser, through its Active Equity portfolio management team (the Active Equity Strategy); (ii) Mellon through its Multi-Factor Equity portfolio management team (the Multi-Factor Equity Strategy); and (iii) BNY Mellon Global Emerging Markets Fund, an affiliated underlying fund, which is sub-advised by Newton Investment Limited (the Newton Fund). BNY Mellon Investment Adviser, Inc. determines the investment strategies and sets the target allocations.

2

 

A Tale of Two Markets

After a strong summer rally, volatility crept back into equity markets in the fall of 2020 as increasing COVID-19 infection rates began to concern investors. By October, several countries had begun to reinstitute some degree of behavioral restriction among residents in order to stem the spread of the virus. In addition, mounting political rhetoric in the U.S. due to the election, renewed trade difficulties between the U.S. and China, and other geopolitical events stoked investor anxiety. However, resolution in the U.S. presidential election and promising progress towards a COVID-19 vaccine during the month of November 2020 helped stocks resurrect their upward momentum.

December 2020 brought vaccine approvals and passage of another U.S. fiscal stimulus package, both of which helped to support the rally. Ten-year U.S. Treasury rates began to rise as market participants anticipated the beginning of a strong global economic recovery. A strong rotation began out of companies that were able to benefit in the COVID-19-economy, such as technology and growth stocks. Investors began to support COVID-19-sensitive sectors of the market, which had previously lagged, as well as cyclical areas of the market on the theory that these sectors were offering more attractive valuations and would benefit most from economic reopening. As the stock rally continued, and sentiment strengthened, the yield curve continued to steepen on increasing concerns over inflation rates, which could lead to tightening by the U.S. Federal Reserve (the “Fed”). Despite small pockets of volatility, stocks generally rose through the end of the period, and stocks produced strong results for the six months.

Manager Performance Drives Positive Relative Results

The Multi-Factor Equity Strategy posted positive absolute performance in a period when investors rewarded value and dividend-yielding stocks and generally penalized growth and momentum stocks. Stock selection within the consumer discretionary, energy and information technology sectors contributed, as did positions in companies based in China and India. India-based Tata Motors was among the leading individual contributors to fund performance, as was Mexico-based mining company Grupo Mexico China-based health care company China Medical System Holdings was also a primary contributor to fund results. Conversely, stock selection within the industrials, consumer staples and health care sectors detracted from performance, as did selection among companies located in Malaysia and Thailand. From an individual company perspective, a position in China-based online commerce platform Alibaba Group Holding was a headwind to results, as was a position in Hong Kong-based materials company Conch Cement. Dr. Reddy’s Laboratories, an India-based health care company, also weighed on returns.

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

The Newton Fund also produced positive absolute performance. At the sector level, the Fund benefited most from stock selection within the communication services, information technology and materials sectors. At a country level, the largest positive contribution came from Chinese holdings. Performance was driven in large part by the Fund’s holdings in the electric-vehicle (EV) supply chain, as strong EV sales numbers, coupled with U.S. president-elect Joe Biden’s promise of $2 trillion for renewable energy and other climate measures over his tenure, helped Korean battery maker Samsung SDI, copper-foils producer Iljin Materials and lithium producers Livent and Orocobre to outperform. Other top stock performers included Chinese online entertainment brand Bilibili, which made gains based on its strong earnings announcements and growth outlook, and chipmaker ASML Holding, whose results for the fourth quarter were solid, while guidance came in ahead of expectations. At a sector level, positioning within the consumer discretionary and financial sectors detracted. At a country level, positioning in Taiwan detracted as did the underweight in South Africa, as the hard-hit country started to recover from the pandemic. New Oriental Education & Technology Group (“New Oriental”) was the biggest detractor with the impact of COVID-19 resulting in the announcement of mixed results and a negative market reaction. The stock weakened further toward the end of the six months on fears about increased regulation despite nothing being communicated through official channels to date. We note that New Oriental strictly adheres to the regulations published in 2018. While stricter enforcement and additional regulatory curbs can negatively affect growth and profitability, New Oriental should be better positioned for this than smaller and more informal competitors. Maruti Suzuki India detracted, despite the latest results revealing that the company is running at near capacity and has a large backlog of orders. A recent report also highlighted that the company now accounts for 50% of all passenger-vehicle sales in India. The absence of large Index constituent Samsung Electronics also had a material negative impact after the shares rallied strongly in the first three months of the period on expectations of strong memory price recovery.

The Active Equity Strategy also posted positive absolute performance, in part due to security selection and allocation decisions within the materials, financials and information technology sectors. From a country perspective, selections among companies based in Taiwan, South Korea and South Africa provided the biggest tailwind. Taiwan Semiconductor Manufacturing was among the leading individual contributors to performance. Demand for semiconductors has surged since the beginning of the pandemic, helping to raise the stock prices of semiconductor manufacturers. Samsung Electronics, which produces semiconductors and electronic equipment, has also benefited from this trend and was among the leading contributors to total portfolio results. Tencent Holdings was also beneficial to performance. The stock rose for much of the period on the back of strong demand for its online games. Conversely, stock selection decisions in the consumer staples, consumer discretionary and real estate sectors weighed on results, as did companies based in Brazil, China and Mexico. China-based Alibaba Group Holding, an online commerce platform, was one of the largest detractors from total performance during the period. Chinese property company Shimao Property Holdings also provided a headwind, as did Malaysian-based health care equipment company Top Glove.

4

 

A Constructive Investment Posture

Each of the fund’s underlying strategies and the underlying fund employ its own distinctive approach to investing in emerging-market equities, and all have continued to find opportunities that meet their investment criteria across a wide variety of markets and industry groups.

April 15, 2021

1 DUE TO RECENT MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investors should note that the fund’s short-term performance is highly unusual, in part to unusually favorable market conditions, and is unlikely to be repeated or consistently achieved in the future. Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. The fund’s return reflects the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an agreement in effect through February 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 MSCI Emerging Markets Index is a free float-adjusted, market capitalization-weighted index that is designed to measure equity market performance of emerging markets. It reflects reinvestment of net dividends and, where applicable, capital gain distributions. Investors cannot invest directly in any index.

The fund’s performance will be influenced by political, social and economic factors affecting investments in foreign companies. These special risks 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. 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.

Emerging markets tend to be more volatile than the markets of more mature economies and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. The securities of companies located in emerging markets are often subject to rapid and large changes in price. An investment in this fund should be considered only as a supplement to a complete investment program for those investors willing to accept the greater risks associated with investing in emerging-market countries.

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 ability of the fund to achieve its investment goal depends, in part, on the ability of BNY Mellon Investment Adviser, Inc. to allocate effectively the fund’s assets among investment strategies, sub-advisers and underlying funds. There can be no assurance that the actual allocations will be effective in achieving the fund’s investment goal or that an investment strategy, sub-adviser or underlying fund will achieve its particular investment objective.

Each strategy of the sub-adviser makes investment decisions independently, and it is possible that the investment styles of the individual strategies of the sub-adviser may not complement one another. As a result, the fund’s exposure to a given stock, industry, sector, market capitalization, geographic area or investment style could unintentionally be greater or smaller than it would have been if the fund had a single investment strategy.

The risks of investing in other investment companies, including ETFs, typically reflect the risks associated with the types of instruments in which the investment companies and ETFs invest. When the fund or an underlying fund invests in another investment company or ETF, shareholders of the fund will bear indirectly their proportionate share of the expenses of the other investment company or ETF (including management fees) in addition to the expenses of the fund. ETFs are exchange-traded investment companies that are, in many cases, designed to provide investment results corresponding to an index. The value of the underlying securities can fluctuate in response to activities of individual companies or in response to general market and/or economic conditions.

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.

5

 

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 Diversified Emerging Markets Fund from October 1, 2020 to March 31, 2021. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

       

Expenses and Value of a $1,000 Investment

 

Assume actual returns for the six months ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$8.60

$12.73

$6.77

$6.38

 

Ending value (after expenses)

$1,224.20

$1,220.20

$1,226.80

$1,226.70

 

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 March 31, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$7.80

$11.55

$6.14

$5.79

 

Ending value (after expenses)

$1,017.20

$1,013.46

$1,018.85

$1,019.20

 

Expenses are equal to the fund’s annualized expense ratio of 1.55% for Class A, 2.30% for Class C, 1.22% for Class I and 1.15% for Class Y, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

6

 

STATEMENT OF INVESTMENTS

March 31, 2021 (Unaudited)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6%

     

Brazil - 2.3%

     

B3 - Brasil Bolsa Balcao

   

41,900

 

406,967

 

Banco do Brasil

   

129,700

 

703,498

 

BB Seguridade Participacoes

   

36,100

 

155,530

 

BRF

   

12,700

a 

56,837

 

Cia Siderurgica Nacional

   

49,500

a 

331,809

 

Cyrela Brazil Realty Empreendimentos e Participacoes

   

100,500

 

440,128

 

EDP - Energias do Brasil

   

133,100

 

470,573

 

IRB Brasil Resseguros

   

10,600

 

11,544

 

JBS

   

57,400

 

306,955

 

Minerva

   

227,900

 

414,610

 

Petroleo Brasileiro, ADR

   

35,631

 

302,151

 

TIM

   

57,300

 

129,287

 

Vale

   

49,200

 

852,509

 

WEG

   

17,900

 

238,162

 
    

4,820,560

 

Chile - .1%

     

Enel Americas

   

1,715,057

 

285,908

 

Enel Generacion Chile

   

64,627

a 

22,697

 
    

308,605

 

China - 22.7%

     

Agile Group Holdings

   

328,000

 

537,518

 

Agricultural Bank of China, Cl. H

   

1,284,000

 

513,659

 

Alibaba Group Holding, ADR

   

34,386

a 

7,796,338

 

Anhui Conch Cement, Cl. H

   

187,200

a 

1,217,242

 

ANTA Sports Products

   

15,200

 

247,921

 

BAIC Motor, Cl. H

   

111,000

a,b 

35,553

 

Baidu, ADR

   

2,797

a 

608,487

 

CGN Power, Cl. H

   

1,770,000

b 

428,037

 

China Construction Bank, Cl. H

   

2,637,700

a 

2,218,978

 

China Everbright Bank, Cl. A

   

711,600

a 

442,918

 

China Evergrande Group

   

38,000

a 

72,343

 

China Galaxy Securities, Cl. H

   

780,500

a 

481,908

 

China Hongqiao Group

   

351,000

 

468,656

 

China Life Insurance, Cl. H

   

271,400

 

560,667

 

China Medical System Holdings

   

227,100

 

449,286

 

China Merchants Bank, Cl. H

   

85,500

a 

652,735

 

China Minsheng Banking, Cl. H

   

797,000

a 

462,365

 

China National Building Material, Cl. H

   

242,300

 

349,700

 

China Pacific Insurance Group, Cl. H

   

65,500

a 

258,239

 

China Shenhua Energy, Cl. H

   

888,800

 

1,831,540

 

7

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6% (continued)

     

China - 22.7% (continued)

     

China Vanke, Cl. H

   

13,600

a 

53,269

 

Chongqing Rural Commercial Bank, Cl. H

   

731,700

a 

315,303

 

Cosco Shipping Holdings, Cl. H

   

592,000

a 

761,503

 

Country Garden Services Holdings

   

27,000

 

273,678

 

ENN Energy Holdings

   

58,700

 

941,574

 

Fosun International

   

158,600

 

221,964

 

GSX Techedu, ADR

   

671

a 

22,733

 

Industrial & Commercial Bank of China, Cl. H

   

91,200

 

65,460

 

Industrial Bank, Cl. A

   

94,200

a 

346,190

 

JD.com, ADR

   

11,095

a 

935,641

 

Jointown Pharmaceutical Group, CI. A

   

194,300

a 

535,029

 

Kingdee International Software Group

   

6,000

a 

18,600

 

Lenovo Group

   

360,000

 

512,162

 

Li Ning

   

34,500

 

224,110

 

Longfor Group Holdings

   

9,000

b 

59,621

 

Meituan, Cl. B

   

42,800

a,b 

1,641,728

 

Momo, ADR

   

10,435

a 

153,812

 

NetEase, ADR

   

3,677

 

379,687

 

New China Life Insurance, Cl. H

   

260,200

a 

1,007,450

 

NIO, ADR

   

10,666

a 

415,761

 

PICC Property & Casualty, Cl. H

   

594,000

a 

514,987

 

Pinduoduo, ADR

   

3,221

a 

431,227

 

Ping An Insurance Group Company of China, Cl. H

   

119,000

 

1,416,685

 

Shandong Weigao Group Medical Polymer, Cl. H

   

6,800

 

13,418

 

Shanghai Pharmaceuticals Holding, Cl. H

   

269,800

a 

529,598

 

Sinopharm Group, Cl. H

   

106,000

 

256,611

 

Sinotruk Hong Kong

   

384,700

a 

1,152,997

 

Tencent Holdings

   

141,300

 

11,087,199

 

Times China Holdings

   

256,000

 

352,349

 

Tingyi Cayman Islands Holding

   

431,800

 

793,160

 

Uni-President China Holdings

   

395,200

 

480,904

 

Vipshop Holdings, ADR

   

7,073

a 

211,200

 

Weichai Power, Cl. H

   

298,000

a 

735,982

 

Yanzhou Coal Mining, Cl. H

   

571,500

a 

676,323

 

Yihai International Holding

   

6,000

 

62,129

 

Yum China Holdings

   

1,648

 

97,578

 

Zhongsheng Group Holdings

   

54,200

 

382,058

 

Zoomlion Heavy Industry Science & Technology, Cl. A

   

228,500

a 

443,056

 

8

 

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6% (continued)

     

China - 22.7% (continued)

     

Zoomlion Heavy Industry Science & Technology, Cl. H

   

322,700

a 

460,757

 
    

48,617,583

 

Colombia - .1%

     

Interconexion Electrica

   

31,645

 

194,449

 

Greece - .1%

     

Hellenic Telecommunications Organization

   

19,164

a 

307,439

 

Hong Kong - 1.7%

     

Bosideng International Holdings

   

1,422,500

 

640,428

 

China Overseas Land & Investment

   

19,700

 

51,188

 

China Resources Cement Holdings

   

366,000

 

411,003

 

China Resources Land

   

36,000

 

174,348

 

China Taiping Insurance Holdings

   

152,600

a 

310,928

 

Kingboard Laminates Holdings

   

108,000

 

233,668

 

Kunlun Energy

   

84,000

 

88,278

 

Nine Dragons Paper Holdings

   

153,500

 

224,699

 

Shanghai Industrial Holdings

   

900

 

1,343

 

Shanghai Industrial Urban Development Group

   

108,200

 

10,578

 

Shenzhen International Holdings

   

97,500

 

163,292

 

Shimao Group Holdings

   

190,500

 

599,134

 

SITC International Holdings

   

220,000

 

745,681

 
    

3,654,568

 

Hungary - .3%

     

MOL Hungarian Oil & Gas

   

1,692

a 

12,251

 

Richter Gedeon

   

20,978

 

618,504

 
    

630,755

 

India - 5.6%

     

Amara Raja Batteries

   

33,584

 

392,184

 

Aurobindo Pharma

   

13,240

 

159,593

 

Bajaj Finance

   

3,525

a 

248,287

 

Cipla

   

19,163

a 

213,636

 

Dr. Reddy's Laboratories

   

4,492

a 

277,456

 

HCL Technologies

   

39,930

 

536,660

 

Hero MotoCorp

   

17,500

 

697,379

 

Hindalco Industries

   

32,484

a 

145,217

 

Hindustan Unilever

   

12,196

 

405,595

 

Housing Development Finance

   

25,841

a 

882,917

 

Indus Towers

   

46,842

 

156,965

 

Infosys

   

82,523

 

1,544,109

 

ITC

   

95,008

 

283,931

 

LIC Housing Finance

   

76,749

a 

449,490

 

Mindtree

   

22,370

 

637,593

 

9

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6% (continued)

     

India - 5.6% (continued)

     

Motherson Sumi Systems

   

244,760

a 

674,386

 

Nestle India

   

752

 

176,550

 

Petronet LNG

   

121,377

 

372,944

 

REC

   

211,438

 

379,273

 

Reliance Industries

   

11,956

a 

327,559

 

Shriram Transport Finance

   

39,085

 

760,330

 

Tata Consultancy Services

   

14,202

 

617,282

 

Tata Motors

   

117,759

a 

486,087

 

Tech Mahindra

   

15,090

 

204,626

 

The Tata Power Company

   

322

a 

455

 

UPL

   

60,304

a 

529,396

 

Wipro

   

58,165

 

329,473

 
    

11,889,373

 

Indonesia - .4%

     

Gudang Garam

   

53,700

a 

133,742

 

Indah Kiat Pulp & Paper

   

210,000

a 

151,084

 

Indofood CBP Sukses Makmur

   

295,100

a 

186,914

 

Indofood Sukses Makmur

   

1,024,900

a 

465,703

 

XL Axiata

   

172,000

a 

24,749

 
    

962,192

 

Malaysia - .9%

     

Hartalega Holdings

   

84,700

 

182,412

 

RHB Bank

   

441,500

 

571,773

 

Sime Darby

   

880,000

 

509,345

 

Supermax

   

108,900

 

100,062

 

Top Glove

   

431,100

 

469,932

 
    

1,833,524

 

Mexico - 1.2%

     

America Movil, Ser. L

   

1,174,700

 

800,585

 

Coca-Cola Femsa

   

6,585

 

30,284

 

Fibra Uno Administracion

   

14,300

 

16,742

 

Gruma, Cl. B

   

39,405

 

466,548

 

Grupo Financiero Banorte, Cl. O

   

89,400

a 

504,090

 

Grupo Mexico, Ser. B

   

152,300

 

802,799

 
    

2,621,048

 

Philippines - .4%

     

Aboitiz Equity Ventures

   

280,240

 

199,192

 

Ayala Land

   

50,700

 

35,880

 

Globe Telecom

   

2,720

 

105,354

 

International Container Terminal Services

   

192,540

 

479,986

 

Metro Pacific Investments

   

70,000

 

5,394

 

10

 

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6% (continued)

     

Philippines - .4% (continued)

     

SM Prime Holdings

   

54,300

a 

39,155

 
    

864,961

 

Poland - .3%

     

CD Projekt

   

560

a 

26,995

 

KGHM Polska Miedz

   

6,904

a 

332,281

 

Polskie Gornictwo Naftowe i Gazownictwo

   

120,430

a 

183,270

 
    

542,546

 

Qatar - .2%

     

Ooredoo

   

153,686

 

298,362

 

The Commercial Bank

   

148,340

 

197,515

 
    

495,877

 

Russia - 2.4%

     

Lukoil, ADR

   

25,127

 

2,031,770

 

MMC Norilsk Nickel, ADR

   

12,128

 

378,151

 

Polyus

   

358

 

66,214

 

Sberbank of Russia, ADR

   

131,144

 

2,020,273

 

Sistema, GDR

   

3,869

a 

34,976

 

Tatneft, ADR

   

3,588

 

170,215

 

X5 Retail Group, GDR

   

10,810

 

348,514

 
    

5,050,113

 

Saudi Arabia - .9%

     

Abdullah Al Othaim Markets

   

8,861

 

298,651

 

Al Rajhi Bank

   

23,984

 

631,848

 

Almarai

   

16,382

 

227,146

 

Bupa Arabia for Cooperative Insurance

   

10,881

a 

347,004

 

Jarir Marketing

   

7,864

 

381,636

 

The Savola Group

   

2,639

a 

27,655

 
    

1,913,940

 

South Africa - 2.7%

     

Anglo American Platinum

   

949

 

138,373

 

AngloGold Ashanti

   

4,138

 

90,229

 

Clicks Group

   

31,430

 

511,909

 

Growthpoint Properties

   

19,705

 

17,622

 

Impala Platinum Holdings

   

78,119

 

1,448,748

 

Investec

   

104,690

 

306,906

 

Kumba Iron Ore

   

6,606

 

272,341

 

Mediclinic International

   

110,419

a 

435,360

 

MTN Group

   

59,041

a 

347,406

 

Naspers, Cl. N

   

2,366

 

566,126

 

Ninety One

   

203

 

660

 

Redefine Properties

   

23,528

a 

5,978

 

Resilient REIT

   

2,677

 

8,250

 

11

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6% (continued)

     

South Africa - 2.7% (continued)

     

Sibanye Stillwater

   

393,295

 

1,731,990

 
    

5,881,898

 

South Korea - 8.9%

     

Celltrion

   

1,536

a 

440,431

 

CJ CheilJedang

   

946

 

343,544

 

DB Insurance

   

12,005

 

501,733

 

DL E&C

   

1,309

a 

139,372

 

Dl Holdings

   

305

 

23,581

 

Doosan Bobcat

   

3,338

 

124,170

 

Doosan Heavy Industries & Construction

   

12,840

a 

147,488

 

Hana Financial Group

   

13,217

 

499,834

 

Hyundai Glovis

   

1,682

 

278,661

 

Hyundai Mobis

   

7,728

 

1,993,882

 

Kakao

   

978

 

430,346

 

KB Financial Group

   

13,085

 

649,770

 

Kia Motors

   

5,509

 

403,531

 

Korea Investment Holdings

   

7,588

 

573,919

 

Kumho Petrochemical

   

6,484

 

1,518,233

 

LG Electronics

   

8,021

 

1,063,088

 

Mirae Asset Daewoo

   

90,918

 

792,093

 

NAVER

   

96

 

31,979

 

NCSoft

   

221

 

170,473

 

POSCO

   

3,120

 

882,174

 

Posco International

   

1,191

 

21,205

 

Samsung Biologics

   

120

a,b 

79,311

 

Samsung Electronics

   

84,541

 

6,080,528

 

Samsung SDI

   

140

 

81,643

 

Samsung Securities

   

24,523

 

854,811

 

Seegene

   

600

 

68,973

 

Shinhan Financial Group

   

26,202

 

867,033

 
    

19,061,806

 

Taiwan - 9.7%

     

Accton Technology

   

6,000

a 

58,038

 

Asia Cement

   

221,000

a 

370,231

 

Chailease Holding

   

321,895

a 

2,222,456

 

Evergreen Marine

   

334,000

a 

532,611

 

Feng Tay Enterprise

   

19,440

a 

132,857

 

Hotai Motor

   

5,000

a 

103,039

 

Lite-On Technology

   

84,000

a 

184,881

 

MediaTek

   

81,000

a 

2,750,815

 

Micro-Star International

   

122,000

a 

743,981

 

Nanya Technology

   

7,000

a 

22,546

 

Powertech Technology

   

77,000

a 

284,705

 

12

 

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 62.6% (continued)

     

Taiwan - 9.7% (continued)

     

Realtek Semiconductor

   

43,000

a 

744,471

 

Standard Foods

   

111,000

a 

227,968

 

Taiwan Semiconductor Manufacturing

   

554,600

 

11,409,603

 

Uni-President Enterprises

   

101,000

a 

258,403

 

United Microelectronics

   

225,000

a 

395,857

 

Zhen Ding Technology Holding

   

81,000

a 

342,078

 
    

20,784,540

 

Thailand - .5%

     

Advanced Info Service, NVDR

   

44,000

 

244,288

 

Krungthai Card

   

9,600

 

24,269

 

PTT Exploration & Production, NVDR

   

29,000

 

105,792

 

Thai Union Group, NVDR

   

721,400

 

339,347

 

Thanachart Capital

   

297,700

 

362,003

 
    

1,075,699

 

Turkey - .7%

     

BIM Birlesik Magazalar

   

61,739

 

527,873

 

Emlak Konut Gayrimenkul Yatirim Ortakligi

   

16,792

 

3,884

 

Eregli Demir ve Celik Fabrikalari

   

379,416

 

701,189

 

KOC Holding

   

12,702

 

29,858

 

Turkcell Iletisim Hizmetleri

   

99,082

 

179,631

 

Turkiye Vakiflar Bankasi, Cl. D

   

25,869

 

10,840

 
    

1,453,275

 

United Arab Emirates - .3%

     

Dubai Islamic Bank

   

534,005

 

661,482

 

Emaar Properties

   

35,277

a 

33,998

 
    

695,480

 

Uruguay - .2%

     

Globant

   

2,106

a 

437,227

 

Total Common Stocks (cost $90,683,595)

   

134,097,458

 
        

Exchange-Traded Funds - 1.4%

     

United States - 1.4%

     

iShares MSCI Emerging Markets ETF
(cost $2,852,283)

   

54,038

 

2,882,387

 
  

Preferred Dividend
Yield (%)

     

Preferred Stocks - .7%

     

Brazil - .6%

     

Banco do Estado do Rio Grande do Sul, Cl. B

 

5.33

 

184,700

 

396,068

 

Cia Energetica de Minas Gerais

 

4.71

 

143,100

 

331,014

 

13

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        
 

Description

 

Preferred Dividend
Yield (%)

 

Shares

 

Value ($)

 

Preferred Stocks - .7% (continued)

     

Brazil - .6% (continued)

     

Cia Paranaense de Energia

 

4.35

 

373,900

 

474,296

 
    

1,201,378

 

South Korea - .1%

     

Samsung Electronics

 

3.52

 

4,773

 

307,867

 

Total Preferred Stocks (cost $1,422,623)

   

1,509,245

 
        

Investment Companies - 34.2%

     

Registered Investment Companies - 34.2%

     

BNY Mellon Global Emerging Markets Fund, Cl. Y
(cost $36,858,738)

   

2,714,179

c 

73,309,975

 

Total Investments (cost $131,817,239)

 

98.9%

 

211,799,065

 

Cash and Receivables (Net)

 

1.1%

 

2,396,563

 

Net Assets

 

100.0%

 

214,195,628

 

ADR—American Depository Receipt

ETF—Exchange-Traded Fund

GDR—Global Depository Receipt

NVDR—Non-Voting Depository Receipt

REIT—Real Estate Investment Trust

a Non-income producing security.

b Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2021, these securities were valued at $2,244,250 or 1.05% of net assets.

c Investment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.

14

 

  

Portfolio Summary (Unaudited)

Value (%)

Investment Companies

35.6

Semiconductors & Semiconductor Equipment

7.3

Banks

6.7

Materials

6.3

Media & Entertainment

6.0

Retailing

5.8

Technology Hardware & Equipment

4.0

Diversified Financials

3.3

Energy

2.8

Food, Beverage & Tobacco

2.5

Insurance

2.4

Capital Goods

2.2

Automobiles & Components

2.2

Software & Services

2.0

Utilities

1.5

Transportation

1.4

Consumer Durables & Apparel

1.3

Telecommunication Services

1.2

Health Care Equipment & Services

1.2

Pharmaceuticals Biotechnology & Life Sciences

1.1

Real Estate

1.0

Food & Staples Retailing

.8

Household & Personal Products

.2

Commercial & Professional Services

.1

Consumer Services

.0

 

98.9

 Based on net assets.

See notes to financial statements.

15

 

STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS (Unaudited)

       

Investment Companies

 

Value
9/30/2020 ($)

Purchases ($)

 

Sales ($)

Net Realized
Gain (Loss) ($)

Registered Investment Companies:

BNY Mellon Global Emerging Markets Fund, Cl. Y

 

57,827,175

6,329,907

 

(4,604,420)

1,343,920

Investment of Cash Collateral for
Securities Loaned:††

Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares

 

21,750

424,709

 

(446,459)

-

Dreyfus Institutional Preferred Government Plus Money Market Fund, SL Shares

 

-

4,612,269

 

(4,612,269)

-

Total

 

57,848,925

11,366,885

 

(9,663,148)

1,343,920

       

Investment Companies

 

Net Change in
Unrealized
Appreciation
(Depreciation) ($)

Value
3/31/2021 ($)

 

Net
Assets (%)

Dividends/
Distributions ($)

Registered Investment Companies:

BNY Mellon Global Emerging Markets Fund, Cl. Y

 

12,413,393

73,309,975

 

34.2

231,405

Investment of Cash Collateral for
Securities Loaned:††

Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares

 

-

-

 

-

32†††

Dreyfus Institutional Preferred Government Plus Money Market Fund, SL Shares

 

-

-

 

-

1,657†††

Total

 

12,413,393

73,309,975

 

34.2

233,094

 Includes reinvested dividends/distributions.

†† Effective November 9, 2020, cash collateral for securities lending was transferred from Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares to Dreyfus Institutional Preferred Government Plus Money Market Fund, SL Shares.

††† 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.

16

 

STATEMENT OF FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS March 31, 2021 (Unaudited)

      

Counterparty/ Purchased
Currency

Purchased Currency
Amounts

Currency
Sold

Sold
Currency
Amounts

Settlement Date

Unrealized Appreciation ($)

Morgan Stanley

United States Dollar

112,162

South African Rand

1,653,180

4/1/2021

175

Gross Unrealized Appreciation

  

175

See notes to financial statements.

17

 

STATEMENT OF ASSETS AND LIABILITIES

March 31, 2021 (Unaudited)

       

 

 

 

 

 

 

 

 

 

 

Cost

 

Value

 

Assets ($):

 

 

 

 

Investments in securities—See Statement of Investments

 

 

 

Unaffiliated issuers

94,958,501

 

138,489,090

 

Affiliated issuers

 

36,858,738

 

73,309,975

 

Cash

 

 

 

 

1,700,904

 

Cash denominated in foreign currency

 

 

950,853

 

936,748

 

Dividends and securities lending income receivable

 

512,890

 

Receivable for shares of Beneficial Interest subscribed

 

326,753

 

Tax reclaim receivable

 

15,242

 

Unrealized appreciation on forward foreign
currency exchange contracts—Note 4

 

175

 

Prepaid expenses

 

 

 

 

47,272

 

 

 

 

 

 

215,339,049

 

Liabilities ($):

 

 

 

 

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

 

211,932

 

Payable for investment securities purchased

 

386,643

 

Foreign capital gains tax payable

 

272,817

 

Payable for shares of Beneficial Interest redeemed

 

204,356

 

Trustees’ fees and expenses payable

 

1,486

 

Other accrued expenses

 

 

 

 

66,187

 

 

 

 

 

 

1,143,421

 

Net Assets ($)

 

 

214,195,628

 

Composition of Net Assets ($):

 

 

 

 

Paid-in capital

 

 

 

 

155,355,690

 

Total distributable earnings (loss)

 

 

 

 

58,839,938

 

Net Assets ($)

 

 

214,195,628

 

      

Net Asset Value Per Share

Class A

Class C

Class I

Class Y

 

Net Assets ($)

541,452

13,463

5,729,251

207,911,462

 

Shares Outstanding

17,248

460.19

184,117

6,674,278

 

Net Asset Value Per Share ($)

31.39

29.26

31.12

31.15

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

18

 

STATEMENT OF OPERATIONS

Six Months Ended March 31, 2021 (Unaudited)

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income ($):

 

 

 

 

Income:

 

 

 

 

Cash dividends (net of $197,026 foreign taxes withheld at source):

 

Unaffiliated issuers

 

 

1,545,014

 

Affiliated issuers

 

 

231,405

 

Income from securities lending—Note 1(c)

 

 

1,689

 

Total Income

 

 

1,778,108

 

Expenses:

 

 

 

 

Investment advisory fee—Note 3(a)

 

 

695,242

 

Custodian fees—Note 3(c)

 

 

233,859

 

Professional fees

 

 

72,952

 

Administration fee—Note 3(a)

 

 

63,325

 

Registration fees

 

 

34,471

 

Trustees’ fees and expenses—Note 3(d)

 

 

7,809

 

Chief Compliance Officer fees—Note 3(c)

 

 

7,642

 

Prospectus and shareholders’ reports

 

 

5,751

 

Shareholder servicing costs—Note 3(c)

 

 

3,710

 

Loan commitment fees—Note 2

 

 

3,039

 

Distribution fees—Note 3(b)

 

 

99

 

Miscellaneous

 

 

13,893

 

Total Expenses

 

 

1,141,792

 

Less—reduction in expenses due to undertaking—Note 3(a)

 

 

(330)

 

Net Expenses

 

 

1,141,462

 

Investment Income—Net

 

 

636,646

 

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

 

 

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

 

 

Unaffiliated issuers

 

 

 

3,143,205

 

Affiliated issuers

 

 

 

1,343,920

 

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

(22,346)

 

Net Realized Gain (Loss)

 

 

4,464,779

 

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

 

 

Unaffiliated issuers

 

 

 

19,872,061

 

Affiliated issuers

 

 

 

12,413,393

 

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

(2,023)

 

Net Change in Unrealized Appreciation (Depreciation)

 

 

32,283,431

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

36,748,210

 

Net Increase in Net Assets Resulting from Operations

 

37,384,856

 

 

 

 

 

 

 

 

See notes to financial statements.

     

19

 

STATEMENT OF CHANGES IN NET ASSETS

          

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
March 31, 2021 (Unaudited)

 

Year Ended
September 30, 2020

 

Operations ($):

 

 

 

 

 

 

 

 

Investment income—net

 

 

636,646

 

 

 

3,304,205

 

Net realized gain (loss) on investments

 

4,464,779

 

 

 

4,277,700

 

Net change in unrealized appreciation
(depreciation) on investments

 

32,283,431

 

 

 

19,719,219

 

Net Increase (Decrease) in Net Assets
Resulting from Operations

37,384,856

 

 

 

27,301,124

 

Distributions ($):

 

Distributions to shareholders:

 

 

 

 

 

 

 

 

Class A

 

 

(1,490)

 

 

 

(4,209)

 

Class C

 

 

-

 

 

 

(230)

 

Class I

 

 

(27,119)

 

 

 

(85,164)

 

Class Y

 

 

(1,141,669)

 

 

 

(4,635,350)

 

Total Distributions

 

 

(1,170,278)

 

 

 

(4,724,953)

 

Beneficial Interest Transactions ($):

 

Net proceeds from shares sold:

 

 

 

 

 

 

 

 

Class A

 

 

146,754

 

 

 

37,178

 

Class I

 

 

2,759,954

 

 

 

4,071,189

 

Class Y

 

 

24,387,996

 

 

 

32,168,702

 

Distributions reinvested:

 

 

 

 

 

 

 

 

Class A

 

 

1,177

 

 

 

4,103

 

Class C

 

 

-

 

 

 

140

 

Class I

 

 

24,958

 

 

 

74,367

 

Class Y

 

 

172,643

 

 

 

708,904

 

Cost of shares redeemed:

 

 

 

 

 

 

 

 

Class A

 

 

(15,725)

 

 

 

(64,475)

 

Class C

 

 

(22,338)

 

 

 

-

 

Class I

 

 

(1,320,685)

 

 

 

(4,837,945)

 

Class Y

 

 

(18,973,210)

 

 

 

(93,223,924)

 

Increase (Decrease) in Net Assets
from Beneficial Interest Transactions

7,161,524

 

 

 

(61,061,761)

 

Total Increase (Decrease) in Net Assets

43,376,102

 

 

 

(38,485,590)

 

Net Assets ($):

 

Beginning of Period

 

 

170,819,526

 

 

 

209,305,116

 

End of Period

 

 

214,195,628

 

 

 

170,819,526

 

20

 

          

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
March 31, 2021 (Unaudited)

 

Year Ended
September 30, 2020

 

Capital Share Transactions (Shares):

 

Class A

 

 

 

 

 

 

 

 

Shares sold

 

 

4,839

 

 

 

1,516

 

Shares issued for distributions reinvested

 

 

40

 

 

 

167

 

Shares redeemed

 

 

(502)

 

 

 

(2,835)

 

Net Increase (Decrease) in Shares Outstanding

4,377

 

 

 

(1,152)

 

Class C

 

 

 

 

 

 

 

 

Shares issued for distributions reinvested

 

 

-

 

 

 

6

 

Shares redeemed

 

 

(724)

 

 

 

-

 

Net Increase (Decrease) in Shares Outstanding

(724)

 

 

 

6

 

Class Ia

 

 

 

 

 

 

 

 

Shares sold

 

 

95,389

 

 

 

175,581

 

Shares issued for distributions reinvested

 

 

848

 

 

 

3,055

 

Shares redeemed

 

 

(45,476)

 

 

 

(222,389)

 

Net Increase (Decrease) in Shares Outstanding

50,761

 

 

 

(43,753)

 

Class Ya

 

 

 

 

 

 

 

 

Shares sold

 

 

772,866

 

 

 

1,549,992

 

Shares issued for distributions reinvested

 

 

5,860

 

 

 

29,113

 

Shares redeemed

 

 

(642,498)

 

 

 

(4,304,456)

 

Net Increase (Decrease) in Shares Outstanding

136,228

 

 

 

(2,725,351)

 

 

 

 

 

 

 

 

 

 

 

a

During the period ended March 31, 2021, 91,372 Class Y shares representing $2,639,827 were exchanged for 91,482 Class I shares and during the period ended September 30, 2020, 166,105 Class Y shares representing $3,853,381 were exchanged for 166,268 Class I shares.

 

See notes to financial statements.

        

21

 

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

 

March 31, 2021

Year Ended September 30,

Class A Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

25.72

22.25

22.69

24.18

19.92

17.23

Investment Operations:

      

Investment income—neta

.05

.21

.13

.19

.02

.02

Net realized and unrealized
gain (loss) on investments

5.71

3.59

(.55)

(1.50)

4.26

2.72

Total from Investment Operations

5.76

3.80

(.42)

(1.31)

4.28

2.74

Distributions:

      

Dividends from investment
income—net

(.09)

(.33)

(.02)

(.18)

(.02)

(.08)

Proceeds from redemption
fees—Note 3(e)

-

.00b

.00b

.00b

.00b

.03

Net asset value, end of period

31.39

25.72

22.25

22.69

24.18

19.92

Total Return (%)c

22.42d

17.12

(1.87)

(5.50)

21.48

16.20

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assetse

1.67f

1.62

1.51

1.26

1.28

1.39

Ratio of net expenses
to average net assetse

1.55f

1.55

1.51

1.26

1.27

1.39

Ratio of net investment income
to average net assetse

.33f

.89

.60

.77

.08

.10

Portfolio Turnover Rate

24.57d

47.02

44.24

41.37

50.35

62.91

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

541

331

312

479

901

949

a Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Exclusive of sales charge.

d Not annualized.

e Amount does not include the expenses of the underlying funds.

f Annualized.

See notes to financial statements.

22

 

        
    

Six Months Ended

 

March 31, 2021

Year Ended September 30,

Class C Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

23.99

20.81

21.37

22.85

18.98

16.50

Investment Operations:

      

Investment income (loss)—neta

(.06)

.03

.04

(.11)

(.16)

(.13)

Net realized and unrealized
gain (loss) on investments

5.33

3.35

(.60)

(1.37)

4.03

2.58

Total from Investment Operations

5.27

3.38

(.56)

(1.48)

3.87

2.45

Distributions:

      

Dividends from investment
income—net

-

(.20)

-

-

-

-

Proceeds from redemption
fees—Note 3(e)

-

.00b

.00b

.00b

.00b

.03

Net asset value, end of period

29.26

23.99

20.81

21.37

22.85

18.98

Total Return (%)c

22.02d

16.21

(2.62)

(6.48)

20.39

15.03

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assetse

2.71f

2.51

2.27

2.59

2.32

2.23

Ratio of net expenses
to average net assetse

2.30f

2.30

2.27

2.26

2.25

2.23

Ratio of net investment income (loss)
to average net assetse

(.42)f

.15

.21

(.47)

(.83)

(.74)

Portfolio Turnover Rate

24.57d

47.02

44.24

41.37

50.35

62.91

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

13

28

25

29

28

64

a Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Exclusive of sales charge.

d Not annualized.

e Amount does not include the expenses of the underlying funds.

f Annualized.

See notes to financial statements.

23

 

FINANCIAL HIGHLIGHTS (continued)

        
   

Six Months Ended

 

March 31, 2021

Year Ended September 30,

Class I Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value, beginning of period

25.52

22.11

22.66

24.13

19.86

17.16

Investment Operations:

      

Investment income—neta

.09

.36

.33

.32

.13

.02

Net realized and unrealized
gain (loss) on investments

5.68

3.54

(.64)

(1.52)

4.22

2.75

Total from Investment Operations

5.77

3.90

(.31)

(1.20)

4.35

2.77

Distributions:

      

Dividends from investment
income—net

(.17)

(.49)

(.24)

(.27)

(.08)

(.10)

Proceeds from redemption
fees—Note 3(e)

-

.00b

.00b

.00b

.00b

.03

Net asset value, end of period

31.12

25.52

22.11

22.66

24.13

19.86

Total Return (%)

22.68c

17.71

(1.26)

(5.10)

22.05

16.45

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assetsd

1.22e

1.01

.90

.89

.95

1.11

Ratio of net expenses
to average net assetsd

1.22e

1.01

.90

.89

.94

1.11

Ratio of net investment income
to average net assetsd

.60e

1.53

1.49

1.26

.57

.12

Portfolio Turnover Rate

24.57c

47.02

44.24

41.37

50.35

62.91

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

5,729

3,403

3,916

4,700

3,550

1,207

a Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Not annualized.

d Amount does not include the expenses of the underlying funds.

e Annualized.

See notes to financial statements.

24

 

           
   

Six Months Ended

   
 

March 31, 2021

Year Ended September 30,

 

Class Y Shares

(Unaudited)

2020

2019

2018

2017

2016

Per Share Data ($):

      

Net asset value,
beginning of period

25.55

22.14

22.69

24.16

19.90

17.18

Investment Operations:

      

Investment income—neta

.10

.39

.35

.31

.13

.07

Net realized and unrealized
gain (loss) on investments

5.68

3.53

(.63)

(1.50)

4.23

2.74

Total from Investment Operations

5.78

3.92

.28

1.19

4.36

2.81

Distributions:

      

Dividends from investment
income—net

(.18)

(.51)

(.27)

(.28)

(.10)

(.12)

Proceeds from redemption
fees—Note 3(e)

-

.00b

.00b

.00b

.00b

.03

Net asset value, end of period

31.15

25.55

22.14

22.69

24.16

19.90

Total Return (%)

22.67c

17.84

(1.15)

(5.06)

22.06

16.64

Ratios/Supplemental Data (%):

      

Ratio of total expenses
to average net assetsd

1.15e

.91

.82

.80

.86

1.01

Ratio of net expenses
to average net assetsd

1.15e

.91

.82

.80

.85

1.01

Ratio of net investment income
to average net assetsd

.64e

1.71

1.59

1.24

.61

.42

Portfolio Turnover Rate

24.57c

47.02

44.24

41.37

50.35

62.91

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

207,911

167,057

205,052

225,899

213,397

147,926

a Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Not annualized.

d Amount does not include the expenses of the underlying funds.

e Annualized.

See notes to financial statements.

25

 

NOTES TO FINANCIAL STATEMENTS (Unaudited)

NOTE 1—Significant Accounting Policies:

BNY Mellon Diversified Emerging Markets Fund (the “fund”) is a separate diversified series of BNY Mellon Investment Funds I (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 seven series, including the fund. The fund’s investment objective is to seek long-term growth of capital. 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. Mellon Investments Corporation (the “Sub-Adviser”), a wholly-owned subsidiary of BNY Mellon and an affiliate of the Adviser, serves as the fund’s sub-investment adviser.

On February 10, 2021, BNY Mellon Investment Management announced its intention to realign several of its investment firms. As a result of this realignment, which is scheduled to occur, subject to regulatory requirements, in the third quarter of 2021 (the “Effective Date”), portfolio managers responsible for the day-to-day management of the portions of the fund’s portfolio allocated to the Active Equity Strategy and Multi-Factor Equity Strategy as employees of the Sub-Adviser, will become employees of Newton Investment Management North America, LLC (“Newton”), which, like the Sub-Adviser, will be an affiliate of the Adviser, the fund’s investment adviser, and will no longer be employees of Mellon. Consequently, effective as of the Effective Date and subject to the approval of the Trust’s Board of Trustees (the “Board”), the Adviser will engage Newton to serve as the fund’s sub-adviser, pursuant to a sub-investment advisory agreement between the Adviser and Newton, replacing the Sub-Adviser. As the fund’s sub-adviser, Newton will provide the day-to-day management of the portions of the fund’s portfolio allocated to the Active Equity Strategy and Multi-Factor Equity Strategy, subject to the Adviser’s supervision and approval. It is currently anticipated that the fund’s portfolio managers who are responsible for the day-to-day management of the fund’s investments will continue to manage the fund’s investments as of the Effective Date. It is also currently anticipated that there will be no material changes to the fund’s investment objective, strategies or policies, no reduction in the nature or level of services provided to the fund, and no increase in the management fee payable by the fund as a result of the engagement of Newton as the fund’s sub-adviser. As is the case under the sub-investment advisory agreement between the Adviser and Sub-Adviser, the Adviser (and not the fund) will

26

 

pay Newton for its sub-advisory services. The rate of sub-investment advisory fee payable by the Adviser to Newton will be the same as that currently payable by the Adviser to the Sub-Adviser pursuant to the respective sub-investment advisory agreements. In addition, all other material terms and conditions of the proposed sub-investment advisory agreement between the Adviser and Newton will be substantially similar to those of the sub-investment advisory agreement between the Adviser and Sub-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 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.

27

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 Securities and Exchange Commission (“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.

As of March 31, 2021, MBC Investments Corp., an indirect subsidiary of BNY Mellon, held all of the outstanding Class C shares of the fund.

(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.

Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:

Level 1—unadjusted quoted prices in active markets for identical investments.

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).

28

 

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 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.

29

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 March 31, 2021 in valuing the fund’s investments:

       
 

Level 1-Unadjusted Quoted Prices

Level 2- Other Significant Observable Inputs

 

Level 3-Significant Unobservable Inputs

Total

 

Assets ($)

  

Investments In Securities:

  

Equity Securities - Common Stocks

134,097,458

-

 

-

134,097,458

 

Equity Securities - Preferred Stocks

1,509,245

-

 

-

1,509,245

 

Exchange-Traded Funds

2,882,387

-

 

-

2,882,387

 

Investment Companies

73,309,975

-

 

-

73,309,975

 

Other Financial Instruments:

  

Forward Foreign Currency Exchange contracts††

-

175

 

-

175

 

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

†† 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

30

 

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 March 31, 2021, if any, are disclosed in the fund’s Statement of Assets and Liabilities.

(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with The Bank of New York Mellon, 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 March 31, 2021, The Bank of New York Mellon earned $227 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.

31

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

(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 these and other circumstances, such risks might affect companies worldwide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.

(f) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.

(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and

32

 

net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.

As of and during the period ended March 31, 2021, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended March 31, 2021, the fund did not incur any interest or penalties.

Each tax year in the three-year period ended September 30, 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 $22,277,630 available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to September 30, 2020. The fund has $20,864,082 of short-term capital losses and $1,413,548 of long-term capital losses which can be carried forward for an unlimited period.

The tax character of distributions paid to shareholders during the fiscal year ended September 30, 2020 was as follows: ordinary income $4,724,953. The tax character of current year distributions will be determined at the end of the current fiscal year.

NOTE 2—Bank Lines of Credit:

The fund participates with other long-term open-end funds managed by the Adviser in a $823.5 million unsecured credit facility led by Citibank, N.A. (the “Citibank Credit Facility”) and a $300 million unsecured credit facility provided by The Bank of New York Mellon (the “BNYM Credit Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions (each, a “Facility”). The Citibank Credit Facility is available in two tranches: (i) Tranche A is in an amount equal to $688.5 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $135 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended March 31, 2021, the fund did not borrow under the Facilities.

33

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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

(a) Pursuant to an investment advisory agreement with the Adviser, the fund has agreed to pay an investment advisory fee at the annual rate of 1.10% of the value of the fund’s average daily net assets other than assets allocated to investments in other investment companies (other underlying funds, which may consist of affiliated funds, mutual funds and exchange traded funds) and is payable monthly. Therefore the fund’s investment advisory fee will fluctuate based on the fund’s allocation between underlying and direct investments. The Adviser has also contractually agreed, from October 1, 2020 through February 1, 2022, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings, and extraordinary expenses) exceed 1.30% of the value of the fund’s average daily net assets. On or after February 1, 2022, the Adviser, Inc. may terminate this expense limitation at any time. Because “acquired fund fees and expenses” are incurred indirectly by the fund as a result of its investment in underlying funds, such fees and expenses are not included in the expense limitation. The reduction in expenses, pursuant to the undertaking, amounted to $330 during the period ended March 31, 2021.

Pursuant to separate sub-investment advisory agreements between the Adviser and the Sub-Adviser, the Sub-Adviser serves as the fund’s sub-investment adviser responsible for the day-to-day management of a portion of the fund’s portfolio. The Adviser pays the sub-investment adviser a monthly fee at an annual percentage of the value of the fund’s average daily net assets. The Adviser has obtained an exemptive order from the SEC (the “Order”), upon which the fund may rely, to use a manager of managers approach that permits the Adviser, subject to certain conditions and approval by the Board, to enter into and materially amend sub-investment advisory agreements with one or more sub-investment advisers who are either unaffiliated with the Adviser or are wholly-owned subsidiaries (as defined under the Act) of the Adviser’s ultimate parent company, BNY Mellon, without obtaining shareholder approval. The Order also allows the fund to disclose the sub-investment advisory fee paid by the Adviser to any unaffiliated sub-investment adviser in the aggregate with other unaffiliated sub-investment advisers in documents filed with the SEC and provided to shareholders. In addition, pursuant to the Order, it is not necessary to disclose the sub-investment advisory fee payable by the Adviser separately to a sub-investment adviser that is a wholly-owned subsidiary of BNY Mellon in documents filed with the SEC and provided

34

 

to shareholders; such fees are to be aggregated with fees payable to the Adviser. The Adviser has ultimate responsibility (subject to oversight by the Board) to supervise any sub-investment adviser and recommend the hiring, termination, and replacement of any sub-investment adviser to the Board.

The fund has a Fund Accounting and Administrative Services Agreement (the “Administration Agreement”) with the Adviser, whereby the Adviser performs administrative, accounting and recordkeeping services for the fund. The fund has agreed to compensate the Adviser for providing accounting and recordkeeping services, administration, compliance monitoring, regulatory and shareholder reporting, as well as related facilities, equipment and clerical help. The fee is based on the fund’s average daily net assets and computed at the following annual rates: .10% of the first $500 million, .065% of the next $500 million and .02% in excess of $1 billion.

In addition, after applying any expense limitations or fee waivers that reduce the fees paid to the Adviser for this service, the Adviser has contractually agreed in writing to waive any remaining fees for this service to the extent that they exceed both the Adviser’ costs in providing these services and a reasonable allocation of the costs incurred by the Adviser and its affiliates related to the support and oversight of these services. The fund also reimburses the Adviser for the out-of-pocket expenses incurred in performing this service for the fund. Pursuant to the Administration Agreement, the fund was charged $63,325 during the period ended March 31, 2021.

During the period ended March 31, 2021, the Distributor retained $5 from commissions earned on sales of the fund’s Class A shares.

(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended March 31, 2021, Class C shares were charged $99 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

35

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended March 31, 2021, Class A and Class C shares were charged $576 and $33, 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 March 31, 2021, the fund was charged $1,851 for transfer agency services, inclusive of earnings credit, if any. These fees are included in Shareholder servicing costs in the Statement of Operations.

The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended March 31, 2021, the fund was charged $233,859 pursuant to the custody agreement.

During the period ended March 31, 2021, the fund was charged $7,642 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.

36

 

The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: investment advisory fees of $127,959, administration fees of $11,660, Distribution Plan fees of $9, Shareholder Services Plan fees of $119, custodian fees of $67,571, Chief Compliance Officer fees of $3,931 and transfer agency fees of $683.

(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 March 31, 2021, amounted to $53,614,011 and $47,061,882, 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 March 31, 2021 is discussed below.

Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the

37

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 March 31, 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.

At March 31, 2021, derivative assets and liabilities (by type) on a gross basis are as follows:

      

Derivative Financial Instruments:

 

Assets ($)

 

Liabilities ($)

 

Forward contracts

 

175

 

-

 

Total gross amount of derivative

 

 

 

 

 

assets and liabilities in the

 

 

 

 

 

Statement of Assets and Liabilities

 

175

 

-

 

Derivatives not subject to

 

 

 

 

 

Master Agreements

 

-

 

-

 

Total gross amount of assets

 

 

 

 

 

and liabilities subject to

 

 

 

 

 

Master Agreements

 

175

 

-

 

38

 

The following table presents derivative assets net of amounts available for offsetting under Master Agreements and net of related collateral received or pledged, if any, as of March 31, 2021:

       

 

 

 

Financial

 

 

 

 

 

 

Instruments

 

 

 

 

 

 

and Derivatives

 

 

 

 

Gross Amount of

 

Available

Collateral

 

Net Amount of

Counterparty

Assets ($)

1 

for Offset ($)

Received ($)

  

Assets ($)

Morgan Stanley

175

 

-

-

 

175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 March 31, 2021:

   

 

 

Average Market Value ($)

Forward contracts

 

259,280

At March 31, 2021, accumulated net unrealized appreciation on investments inclusive of derivative contracts was $79,982,001, consisting of $83,367,401 gross unrealized appreciation and $3,385,400 gross unrealized depreciation.

At March 31, 2021, the cost of investments inclusive of derivative contracts for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).

39

 

INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY, ADMINISTRATION 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 Investment Advisory Agreement and Administration Agreement, pursuant to which the Adviser provides the fund with investment advisory services and administrative services (the “Agreement”) and the Sub-Investment Advisory Agreement (together, the “Agreements”), pursuant to which Mellon Investments Corporation (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 policies and practices regarding soft dollars) 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 group of institutional emerging markets funds selected by Broadridge as comparable to the fund (the “Performance Group”) and with a broader group of funds consisting of all

40

 

retail and institutional emerging markets funds (the “Performance Universe”), all for various periods ended December 31, 2020, 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 emerging markets 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.

The Board noted that, prior to January 31, 2014, the fund did not use a “manager of managers” or “fund of funds” approach and the fund’s investments strategies were different than the strategies currently in place. The Board noted that different investments strategies may lead to different performance results and that the fund’s performance for periods prior to January 31, 2014 reflects the investment strategies in effect during those periods.

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 median for all periods except the four-year and five- year period when it was below median and above the Performance Universe median for all periods. The Board considered the relative proximity of the fund’s performance to the Performance Group medians in the periods when performance was below median. The Adviser also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark index, and it was noted that the fund’s returns were above the returns of the index in six of the ten calendar years shown.

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 lower than the Expense Group median and the Expense Universe median actual management fee and the fund’s total expenses were lower than the Expense Group median and the Expense Universe median total expenses.

Representatives of the Adviser stated that the Adviser has contractually agreed, until February 1, 2022, to waive receipt of its fees and/or assume the direct expenses of the

41

 

INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY, ADMINISTRATION AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)

fund so that the direct expenses of none of its classes (excluding Rule 12b-1 fees, shareholder services fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.30% of the fund’s average daily net assets.

Representatives of the Adviser reviewed with the Board the management or investment advisory fees paid by funds advised or administered by the Adviser that are in the same Lipper category as the fund (the “Similar Funds”), and explained the nature of the Similar Funds. 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 Funds to evaluate the appropriateness of the fund’s management fee. Representatives of the Adviser noted that there were no separate accounts and/or other types of client portfolios advised by the Adviser that are considered to have similar investment strategies and policies as the fund.

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

42

 

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 the 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.

· 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

43

 

INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY, ADMINISTRATION AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)

similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined to renew the Agreements.

44

 

This page intentionally left blank.

45

 

For More Information

BNY Mellon Diversified Emerging Markets Fund

240 Greenwich Street

New York, NY 10286

Adviser

BNY Mellon Investment Adviser, Inc.

240 Greenwich Street

New York, NY 10286

Sub-Adviser

Mellon Investments Corporation
BNY Mellon Center
One Boston Place
Boston, MA 02108-4408

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: DBEAX      Class C: DBECX      Class I: SBCEX      Class Y: SBYEX

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
6919SA0321

 

BNY Mellon International Equity Fund

 

SEMIANNUAL REPORT

March 31, 2021

 

 

 

Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.im.bnymellon.com and sign up for eCommunications. It’s simple and only takes a few minutes.

 

The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds.

 

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

 

Contents

THE FUND

  

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

10

Statement of Forward Foreign
Currency Exchange Contracts

11

Statement of Assets and Liabilities

12

Statement of Operations

13

Statement of Changes in Net Assets

14

Financial Highlights

16

Notes to Financial Statements

20

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

32

FOR MORE INFORMATION

 

Back Cover

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from October 1, 2020 through March 31, 2021, as provided by portfolio managers Paul Markham and Jeff Munroe, of Newton Investment Management Limited, Sub-Investment Adviser

Market and Fund Performance Overview

For the six-month period ended March 31, 2021, BNY Mellon International Equity Fund’s Class A shares produced a total return of 20.23%, Class C shares returned 19.84%, Class I shares returned 20.43% and Class Y shares returned 20.39%.1,2 In comparison, the fund’s benchmark, the MSCI EAFE Index (the “Index”), produced a net return of 20.08% for the same period.3

International equity markets generally provided positive returns over the reporting period, amid supportive central bank policies and improving investor sentiment due to anticipated economic reopening, vaccine approval and rollouts. The fund's relative performance as compared to the Index was primarily due to stock selection within the consumer discretionary sector and an underweight to the energy sector.

The Fund’s Investment Approach

The fund seeks long-term growth of capital. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in common stocks or securities convertible into common stocks of foreign companies and depositary receipts evidencing ownership in such securities. At least 75% of the fund’s net assets will be invested in countries represented in the Index.

The core of the investment philosophy of Newton Investment Management Limited (“Newton”), the fund’s sub-investment adviser, is the belief that no company, market or economy can be considered in isolation; each must be understood within a global context. Newton believes that a global comparison of companies is the most effective method of stock analysis, and Newton’s global analysts research investment opportunities by global sector rather than by region.

The process begins by identifying a core list of investment themes that Newton believes will positively or negatively affect certain sectors or industries and cause stocks within these sectors or industries to outperform or underperform others. Newton then identifies specific companies, using these investment themes, to help focus on areas where thematic and strategic research indicates superior returns are likely to be achieved. Sell decisions for individual stocks will typically be a result of one or more of the following: a change in investment theme or strategy, profit-taking, a significant change in the prospects of a company, price movement and market activity creating an extreme valuation, and the valuation of a company becoming expensive against its peers.

A Tale of Two Markets

After a strong summer rally, volatility crept back into equity markets in the fall of 2020 as increasing COVID-19 infection rates began to concern investors. By October, several countries had begun to reinstitute some degree of behavioral restriction among residents in order to stem the spread of the virus. In addition, mounting political rhetoric in the U.S. due to the election, renewed trade difficulties between the U.S. and China, and other geopolitical events stoked investor anxiety. However, resolution in the U.S. presidential election and

2

 

promising progress towards a COVID-19 vaccine during the month of November 2020 helped stocks resurrect their upward momentum.

December 2020 brought vaccine approvals and passage of another U.S. fiscal stimulus package, both of which helped to support the rally. Ten-year U.S. Treasury rates began to rise as market participants anticipated the beginning of a strong global economic recovery. A strong rotation began out of companies that were able to benefit in the COVID-19-economy, such as technology and growth stocks. Investors began to support COVID-19-sensitive sectors of the market, which had previously lagged, as well as cyclical areas of the market on the theory that these sectors were offering more attractive valuations and would benefit most from economic reopening. As the stock rally continued, and sentiment strengthened, the yield curve continued to steepen on increasing concerns over inflation rates, which could lead to tightening by the U.S. Federal Reserve (the “Fed”). Despite small pockets of volatility, stocks generally rose through the end of the period, and stocks produced strong results for the six months.

Stock Selection Drives Fund Performance

Stock picking in the consumer discretionary sector weighed on performance over the review period as China-based online commerce company Alibaba Group Holding emerged as the portfolio’s primary detractor. Alibaba Group Holding fell as the listing of Ant Group was suspended amid growing regulatory scrutiny of the company’s ecosystem. The overhang of an ongoing antitrust investigation into the company’s practices continued to hamper investor sentiment for the remainder of the review period. Despite these headwinds, we find it difficult to envisage a scenario in which Alibaba Group Holding will not continue to be the leading e-commerce and cloud platform in China. With management outlining plans for an accelerated shift to the cloud, SAP disappointed with its results for the third quarter as both full year and mid-term guidance were cut meaningfully. A cautious message on the pandemic’s ongoing impact on demand was also unhelpful for shares. An underweight to the energy sector also weighed as optimism around a rapid global economic recovery boosted the commodity price backdrop.

Conversely, stock selection was particularly strong in information technology, consumer staples and financials. Financial company Barclays reported results for the third quarter that were significantly ahead of consensus expectations, driven by better revenues across all businesses and lower loan losses. While a strong print in investment banking came as no surprise, a better-than-expected recovery in retail and commercial was a welcome development. The bank went on to issue another positive set of results for the fourth quarter and continued to find favor with investors encouraged by the prospects for its diversified business model. A backdrop of rising yields, perceived to be supportive of banking profitability, also aided shares as the market considered the prospect of a sharper-than-expected rebound for the global economy. Such a prospect also fueled a rally in mining stocks. Indeed, Anglo American contributed positively to relative returns as part of a buoyant mining sector boosted by the commodity-price backdrop. A void in sizeable Index constituent Nestle also proved beneficial.

Maintaining a Clear Focus in the Face of Uncertainty

Although the European Union’s recent vaccine-related travails will undoubtedly dent investor confidence in the bloc’s ability to recover economically from the pandemic over the

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

second quarter, we remain positive on the prospects of a broader recovery led by the U.S. and fueled by a major stimulus package and an increasing pace of vaccinations. A key question remains the extent to which such a recovery has been built into valuations already and, as we move toward the end of the year, we anticipate that the market will need to see the beginnings of earnings progression in those more cyclically exposed names that have performed well of late. Although short-term market gyrations remain a consideration, our primary focus continues to be on those companies in which we have a strong long-term conviction. In this context, our thematic framework is able to serve as a valuable guide to our stock picking.

As highlighted over recent quarters, we continue with a balanced portfolio, with longer-term, secular growth situations being represented at higher weightings in most cases and more cyclical, higher-beta names being weighted intentionally modestly in order to reduce stock-specific risk within the more value-oriented areas.

April 15, 2021

1 DUE TO RECENT MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investors should note that the fund’s short-term performance is highly unusual, in part to unusually favorable market conditions, and is unlikely to be repeated or consistently achieved in the future. BNY Mellon Investment Adviser, Inc. serves as the investment adviser for the fund. Newton Investment Management Limited (Newton) is the fund’s sub-investment adviser. Newton’s comments are provided as a general market overview and should not be considered investment advice or predictive of any future market performance. Newton’s views are current as of the date of this communication and are subject to change rapidly as economic and market conditions dictate.

2 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. The fund’s return reflects the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an agreement in effect through February 1, 2022, at which time it may be extended, modified or terminated. Had these expenses not been absorbed, returns would have been lower.

3 Source: Lipper Inc. — The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. It reflects reinvestment of net dividends and, where applicable, capital gain distributions. Investors cannot invest directly in any index.

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.

Investing internationally involves special risks, including changes in currency exchange rates, political, economic, and social instability, a lack of comprehensive company information, differing auditing and legal standards and less market liquidity.

The fund may, but is not required to, use derivative instruments. A small investment in derivatives could have a potentially large impact on the fund’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets.

4

 

UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.

Review your fund’s expenses

The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon International Equity Fund from October 1, 2020 to March 31, 2021. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

       

Expenses and Value of a $1,000 Investment

 

Assume actual returns for the six months ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$5.88

$9.98

$4.51

$4.51

 

Ending value (after expenses)

$1,202.30

$1,198.40

$1,204.30

$1,203.90

 

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 March 31, 2021

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expenses paid per $1,000

$5.39

$9.15

$4.13

$4.13

 

Ending value (after expenses)

$1,019.60

$1,015.86

$1,020.84

$1,020.84

 

Expenses are equal to the fund’s annualized expense ratio of 1.07% for Class A, 1.82% for Class C, .82% for Class I and .82% for Class Y, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

5

 

STATEMENT OF INVESTMENTS

March 31, 2021 (Unaudited)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 98.5%

     

China - 7.2%

     

Alibaba Group Holding

   

555,296

a 

15,714,375

 

Meituan, Cl. B

   

176,528

a,b 

6,771,285

 

Ping An Insurance Group Company of China, Cl. H

   

905,000

 

10,773,948

 

Tencent Holdings

   

261,335

 

20,505,827

 
    

53,765,435

 

Denmark - .7%

     

Chr. Hansen Holding

   

57,212

a 

5,198,754

 

France - 11.1%

     

AXA

   

420,988

 

11,298,156

 

Bureau Veritas

   

465,069

 

13,236,528

 

L'Oreal

   

23,565

 

9,031,012

 

Thales

   

94,753

 

9,413,819

 

Total

   

266,402

 

12,426,093

 

Valeo

   

331,411

 

11,259,065

 

Vivendi

   

473,191

 

15,537,510

 
    

82,202,183

 

Germany - 9.4%

     

Bayer

   

137,414

 

8,695,406

 

Continental

   

81,878

 

10,821,266

 

Deutsche Post

   

250,473

 

13,723,051

 

HELLA GmbH & Co.

   

78,874

a 

4,423,137

 

Infineon Technologies

   

319,480

 

13,545,622

 

SAP

   

155,152

 

18,998,880

 
    

70,207,362

 

Hong Kong - 2.7%

     

AIA Group

   

1,641,712

 

19,914,002

 

India - 1.3%

     

Housing Development Finance

   

180,568

a 

6,169,522

 

Vakrangee

   

4,872,018

a 

3,734,955

 
    

9,904,477

 

Ireland - 1.5%

     

CRH

   

245,663

 

11,514,917

 

Japan - 22.0%

     

Ebara

   

279,800

 

11,409,320

 

FANUC

   

34,700

 

8,206,092

 

M3

   

87,300

 

5,969,278

 

Pan Pacific International Holdings

   

451,300

 

10,642,080

 

Recruit Holdings

   

429,813

 

20,965,636

 

Sony Group

   

267,500

 

28,012,305

 

Sugi Holdings

   

110,100

 

8,720,497

 

6

 

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 98.5% (continued)

     

Japan - 22.0% (continued)

     

Suntory Beverage & Food

   

166,700

 

6,195,263

 

Suzuki Motor

   

411,500

 

18,674,983

 

TechnoPro Holdings

   

263,400

 

21,933,150

 

Topcon

   

505,100

 

6,121,871

 

Toyota Industries

   

189,200

 

16,848,155

 
    

163,698,630

 

Netherlands - 3.1%

     

ASML Holding

   

37,778

 

22,904,269

 

Norway - 1.7%

     

Mowi

   

248,893

 

6,174,929

 

TOMRA Systems

   

149,297

 

6,463,663

 
    

12,638,592

 

South Korea - 2.3%

     

Samsung SDI

   

28,988

 

16,904,864

 

Sweden - 1.6%

     

Swedbank, Cl. A

   

661,065

 

11,649,223

 

Switzerland - 8.7%

     

Alcon

   

93,048

 

6,515,280

 

Lonza Group

   

22,520

 

12,590,137

 

Novartis

   

157,536

 

13,462,607

 

Roche Holding

   

51,044

 

16,496,207

 

Zurich Insurance Group

   

35,749

 

15,258,051

 
    

64,322,282

 

Taiwan - 2.2%

     

Taiwan Semiconductor Manufacturing, ADR

   

139,967

 

16,555,297

 

Thailand - 1.0%

     

Kasikornbank

   

1,639,200

 

7,605,888

 

United Kingdom - 22.0%

     

Anglo American

   

428,994

 

16,810,861

 

Associated British Foods

   

223,942

a 

7,455,743

 

Barclays

   

7,645,519

 

19,596,177

 

Diageo

   

460,559

 

18,981,132

 

GlaxoSmithKline

   

695,394

 

12,347,672

 

Informa

   

1,041,565

a 

8,038,177

 

Linde

   

40,479

 

11,340,517

 

Natwest Group

   

3,096,502

 

8,377,594

 

Persimmon

   

167,074

 

6,771,649

 

Prudential

   

769,718

 

16,346,757

 

RELX

   

472,614

 

11,871,702

 

St. James's Place

   

594,338

 

10,438,575

 

7

 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        
 

Description

   

Shares

 

Value ($)

 

Common Stocks - 98.5% (continued)

     

United Kingdom - 22.0% (continued)

     

Unilever

   

270,725

 

15,105,661

 
    

163,482,217

 

Total Common Stocks (cost $485,675,698)

   

732,468,392

 
  

1-Day
Yield (%)

     

Investment Companies - 2.5%

     

Registered Investment Companies - 2.5%

     

Dreyfus Institutional Preferred Government Plus Money Market Fund, Institutional Shares
(cost $18,816,298)

 

0.06

 

18,816,298

c 

18,816,298

 

Total Investments (cost $504,491,996)

 

101.0%

 

751,284,690

 

Liabilities, Less Cash and Receivables

 

(1.0%)