N-CSR 1 lp1-250.htm ANNUAL REPORTS lp1-250.htm - Generated by SEC Publisher for SEC Filing

 

 

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

811-07123

 

 

 

BNY Mellon Advantage Funds, Inc.

 

 

(Exact name of Registrant as specified in charter)

 

 

 

 

 

 

c/o BNY Mellon Investment Adviser, Inc.

240 Greenwich Street

New York, New York  10286

 

 

(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:

 

08/31

 

Date of reporting period:

08/31/2020

 

 

 

 

             

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 Dynamic Value Fund

BNY Mellon Opportunistic Midcap Value Fund

BNY Mellon Opportunistic Small Cap Fund

BNY Mellon Structured Midcap Fund

BNY Mellon Technology Growth Fund

 

 


 

FORM N-CSR

Item 1.             Reports to Stockholders.

 

 


 

BNY Mellon Dynamic Value Fund

 

ANNUAL REPORT

August 31, 2020

 

 

 

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

 

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

 

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

 

Contents

THE FUND

FOR MORE INFORMATION

 

Back Cover

 

       
 


BNY Mellon Dynamic Value Fund

 

The Fund

A LETTER FROM THE PRESIDENT OF BNY MELLON INVESTMENT ADVISER, INC.

Dear Shareholder:

We are pleased to present this annual report for BNY Mellon Dynamic Value Fund, covering the 12-month period from September 1, 2019 through August 31, 2020. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.

Early in the reporting period, positive investor sentiment fueled an equity rally. Accommodative rate policies from the U.S. Federal Reserve (the “Fed”) and progress towards a U.S./China trade deal stoked optimism about future economic growth prospects. As the calendar year turned over, this optimism turned to concern, as COVID-19 began to spread across China, adjacent areas of the Pacific Rim and parts of Europe. When the virus spread throughout the U.S. in March 2020, stocks began to show signs of volatility and posted historic losses during the month. Investor angst over the possible economic impact of a widespread quarantine worked to depress equity valuations. Global central banks and governments worked to enact emergency stimulus measures to support their respective economies and equity valuations began to rebound, trending upward for the remainder of the period.

In fixed-income markets, interest rates were heavily influenced by changes in Fed policy and investor concern over COVID-19. In 2019, as stocks rallied in response to Fed rate cuts, risk-asset valuations also rose while Treasuries lagged. When COVID-19 began to emerge, a flight to quality ensued and Treasury rates fell significantly. March 2020 brought extreme volatility and risk-asset spread widening. The Fed cut rates twice in March, resulting in an overnight lending target rate of nearly zero, and the government launched a large stimulus package; many governments and central banks around the globe followed suit. At their meeting in August 2020, the Fed confirmed their commitment to a “lower-for-longer” rate policy.

We believe the near-term outlook for the U.S. will be challenging, as the country curbs the spread of COVID-19. However, we are confident that ongoing central bank and government policy responses can continue to support economic progress. As always, we will monitor relevant data for any signs of a change. We encourage you to discuss the risks and opportunities in today’s investment environment with your financial advisor.

Thank you for your continued confidence and support.

Sincerely,

Renee LaRoche-Morris

President

BNY Mellon Investment Adviser, Inc.

September 15, 2020

2

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from September 1, 2019 through August 31, 2020, as provided by Brian C. Ferguson, John C. Bailer, and David S. Intoppa, Portfolio Managers

Market and Fund Performance Overview

For the 12-month period ended August 31, 2020, BNY Mellon Dynamic Value Fund’s Class A shares produced a total return of -0.55%, Class C shares returned -1.29%, Class I shares returned -0.30% and Class Y shares returned -0.27%.1 The fund’s benchmark, the Russell 1000® Value Index (the “Index”), produced a total return of 0.84% for the same period.2

Despite concerns about COVID-19, U.S. equities markets increased somewhat over the reporting period amid better-than-expected corporate earnings and signs of economic recovery. The fund underperformed the Index, primarily due to unfavorable security selections in the health care and industrial sectors.

The Fund’s Investment Approach

The fund seeks capital appreciation. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in stocks. The fund may invest up to 30% of its assets in foreign securities. We identify potential investments through extensive quantitative and fundamental research. We focus on individual stock selection (a “bottom-up” approach), emphasizing three key factors: value, sound business fundamentals and positive business momentum.

Stocks Begin to Rebound from Pandemic

The reporting period began with the market continuing to benefit from a shift in Federal Reserve (the “Fed”) policy, which had been prompted by concerns about economic growth and corporate earnings. Late in 2019, the Fed implemented three rate cuts, as trade tensions and other geopolitical concerns appeared to be weighing on economic growth. Other major central banks also enacted supportive policies. Stocks also benefited from the announcement of a “Phase One” trade deal between the U.S. and China, and from the approval of the new U.S.-Mexico-Canada Trade Agreement.

Early in 2020, developed markets experienced a correction amid growing concerns about the COVID-19 virus, erasing the gain that occurred late in 2019. As a result, the Fed reduced the federal funds rate twice in March, bringing the target rate down to 0-0.25%. In addition, the Fed and other central banks initiated various programs to ease liquidity concerns in certain markets, and government authorities introduced programs to keep small businesses afloat. Steps were also taken to provide relief to employees who had lost their jobs as a result of government-mandated business shutdowns.

In the second half of the reporting period, the economy began to show signs of recovery. Retail sales rebounded, and the outlook for manufacturing also improved. The employment trends also recovered from depressed levels as the economy began to reopen, beating economists’ expectations. As the unemployment rate dropped sharply, and markets began to rebound as relief programs took effect, government shutdowns began to ease, and hope for a COVID-19 vaccine or effective therapy took hold.

Performance Hindered by Stock Selections

The fund’s performance versus the Index was hindered by stock selections in the health care and industrial sectors. In the health care sector, the fund’s performance versus the Index was hurt by its decision not to own Johnson & Johnson, which jumped 23%. A position in Becton Dickinson & Co. also hindered returns, as the company issued more shares, diluting per share performance. The company has produced a COVID-19 test, but a less expensive test announcement from Abbott Labs had investors concerned about competitive pressures. It’s likely that testing demand will outstrip capacity from any one provider, resulting in a complementary dynamic as testing becomes more widely

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

entrenched. In the industrial sector, positions in Delta Airlines and Raytheon Corporation were hurt by the decline in the travel industry resulting from COVID-19.

On the positive side, stock selections in the financial and real estate sectors proved beneficial. In the financial services sector, the fund’s positions in Morgan Stanley and Goldman Sachs Group were advantageous, as these well-diversified banks fared better than other banks during the economic downturn. In addition, LPL Financial Holdings, a wealth advisory firm, contributed positively to performance, rising 11%. In the real estate sector, shares of Weyerhaeuser, a lumber and OSB real estate investment trust, outperformed the sector.

Valuations on Value Stocks Still Attractive

The fund engaged in repositioning during the reporting period, moving to an overweight position in the health care sector and an equal weight in the utilities sector. This move was enabled by a shift to a larger underweight position in the communication services and a smaller overweight position in the energy sector.

We remain optimistic about the prospects about value-oriented stocks. We believe economic recovery in the U.S. will benefit these stocks, which have been hurt more than other segments of the equity universe by the market downturn. In addition, valuations on value-oriented stocks remain attractive versus growth-oriented stocks, and we believe the market downturn earlier in 2020 marked a new start for this segment of the market.

September 15, 2020

1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charges 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 returns reflect the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an agreement in effect through December 31, 2020, at which time it may be extended, terminated or modified. Had these expenses not been absorbed, the fund’s returns would have been lower.

2 Source: Lipper Inc. — The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies that are considered more value-oriented relative to the overall market as defined by Russell’s leading style methodology. The Russell 1000® Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. Investors cannot invest directly in any index.

Please note: the position in any security highlighted with italicized typeface was sold during the reporting period.

Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.

The fund’s performance will be influenced by political, social and economic factors affecting investments in foreign companies. Special risks associated with investments in foreign companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards. These risks are enhanced in emerging market countries. Please read the prospectus for further discussion of these risks.

Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.

4

 

FUND PERFORMANCE (Unaudited)

 
Comparison of change in value of a $10,000 investment in Class A shares, Class C shares, and Class I shares of BNY Mellon Dynamic Value Fund with a hypothetical investment of $10,000 in the Russell 1000® Value Index (the “Index”)

 Source: Lipper Inc.

Past performance is not predictive of future performance.

The above graph compares a hypothetical $10,000 investment made in each of the Class A shares, Class C shares and Class I shares of BNY Mellon Dynamic Value Fund on 8/31/10 to a hypothetical investment of $10,000 made in the Index on that date. All dividends and capital gain distributions are reinvested.

The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on Class A shares, Class C shares, and Class I shares. The Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies that are considered more value-oriented relative to the overall market as defined by Russell’s leading style methodology. The Russell 1000® Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.

5

 

FUND PERFORMANCE (Unaudited) (continued)

 
Comparison of change in value of a $1,000,000 investment in Class Y shares of BNY Mellon Dynamic Value Fund with a hypothetical investment of $1,000,000 in the Russell 1000® Value Index (the “Index”)

 Source: Lipper Inc.

†† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.

Past performance is not predictive of future performance.

The above graph compares a hypothetical $1,000,000 investment made in Class Y shares of BNY Mellon Dynamic Value Fund on 8/31/10 to a hypothetical investment of $1,000,000 made in the Index on that date. All dividends and capital gain distributions are reinvested.

The fund’s performance shown in the line graph above takes into account all applicable fees and expenses on Class Y shares. The Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies that are considered more value-oriented relative to the overall market as defined by Russell’s leading style methodology. The Russell 1000® Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.

6

 

               

Average Annual Total Returns as of 8/31/2020

       
   

Inception

         

 

 

Date

1 Year

5 Years

 

10 Years

 
               

Class A shares

           

with maximum sales charge (5.75%)

without sales charge

9/29/95

-6.27%

5.28%

 

9.99%

 

9/29/95

-0.55%

6.54%

 

10.64%

 

Class C shares

           

with applicable redemption charge

5/31/01

-2.25%

5.75%

 

9.82%

 

without redemption

5/31/01

-1.29%

5.75%

 

9.82%

 

Class I shares

5/31/01

-0.30%

6.81%

 

10.92%

 

Class Y shares

7/1/13

-0.27%

6.83%

 

10.88%††

 

Russell 1000® Value Index

 

0.84%

7.53%

 

11.05%

 

 The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.

†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.

The performance data quoted represents past performance, which is no guarantee of future results. Share price and investment return fluctuate and an investor’s shares may be worth more or less than original cost upon redemption. Current performance may be lower or higher than the performance quoted. Go to www.bnymellonim.com/us for the fund’s most recent month-end returns.

The fund’s performance shown in the graphs and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.

7

 

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 Dynamic Value Fund from March 1, 2020 to August 31, 2020. 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 August 31, 2020

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expense paid per $1,000

$4.72

$8.52

$3.46

$3.30

 

Ending value (after expenses)

$1,020.90

$1,017.00

$1,022.00

$1,022.00

 

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 August 31, 2020

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expense paid per $1,000

$4.72

$8.52

$3.46

$3.30

 

Ending value (after expenses)

$1,020.46

$1,016.69

$1,021.72

$1,021.87

 

Expenses are equal to the fund’s annualized expense ratio of .93% for Class A, 1.68% for Class C, .68% for Class I and .65% for Class Y, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

8

 

STATEMENT OF INVESTMENTS

August 31, 2020

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 99.4%

         

Automobiles & Components - 1.7%

         

General Motors

     

691,677

 

20,494,390

 

Banks - 5.9%

         

Citigroup

     

276,449

 

14,132,073

 

JPMorgan Chase & Co.

     

481,474

 

48,238,880

 

The PNC Financial Services Group

     

82,867

 

9,214,810

 
       

71,585,763

 

Capital Goods - 9.9%

         

Carrier Global

     

629,483

 

18,790,068

 

Eaton

     

270,224

 

27,589,870

 

Ingersoll Rand

     

366,561

a

12,851,629

 

L3Harris Technologies

     

66,442

 

12,008,727

 

Northrop Grumman

     

30,366

 

10,403,695

 

Otis Worldwide

     

146,824

 

9,235,230

 

Quanta Services

     

313,208

 

16,051,910

 

Trane Technologies

     

109,460

 

12,958,969

 
       

119,890,098

 

Consumer Durables & Apparel - 2.0%

         

Lennar, Cl. A

     

239,480

 

17,917,894

 

PVH

     

105,093

 

5,859,986

 
       

23,777,880

 

Consumer Services - 1.4%

         

Las Vegas Sands

     

330,709

 

16,770,253

 

Diversified Financials - 16.0%

         

Berkshire Hathaway, Cl. B

     

225,280

a

49,120,051

 

Capital One Financial

     

217,391

 

15,006,501

 

LPL Financial Holdings

     

196,751

 

16,165,062

 

Morgan Stanley

     

659,794

 

34,480,834

 

State Street

     

107,893

 

7,346,434

 

The Charles Schwab

     

275,699

 

9,795,586

 

The Goldman Sachs Group

     

185,699

 

38,044,154

 

Voya Financial

     

447,479

b

23,228,635

 
       

193,187,257

 

Energy - 5.2%

         

ConocoPhillips

     

189,069

 

7,163,824

 

Hess

     

339,633

 

15,636,703

 

Marathon Petroleum

     

526,865

 

18,682,633

 

Phillips 66

     

200,984

 

11,751,535

 

Pioneer Natural Resources

     

89,697

 

9,322,209

 
       

62,556,904

 

Food, Beverage & Tobacco - 4.7%

         

Archer-Daniels-Midland

     

397,587

 

17,795,994

 

9

 

STATEMENT OF INVESTMENTS (continued)

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 99.4% (continued)

         

Food, Beverage & Tobacco - 4.7% (continued)

         

Mondelez International, Cl. A

     

208,529

 

12,182,264

 

PepsiCo

     

83,248

 

11,659,715

 

Philip Morris International

     

187,894

 

14,992,062

 
       

56,630,035

 

Health Care Equipment & Services - 9.7%

         

Alcon

     

177,169

a,b

10,158,871

 

Anthem

     

46,007

 

12,951,891

 

Becton Dickinson & Co.

     

106,658

 

25,893,363

 

Centene

     

141,471

a

8,675,002

 

Humana

     

32,246

 

13,387,572

 

Laboratory Corp. of America Holdings

     

51,438

a

9,040,229

 

Medtronic

     

344,075

 

36,977,740

 
       

117,084,668

 

Insurance - 4.4%

         

Assurant

     

182,056

 

22,130,727

 

Chubb

     

156,890

 

19,611,250

 

Willis Towers Watson

     

53,723

 

11,041,688

 
       

52,783,665

 

Materials - 7.9%

         

CF Industries Holdings

     

741,881

 

24,207,577

 

Freeport-McMoRan

     

2,105,970

 

32,874,192

 

Louisiana-Pacific

     

361,044

 

11,892,789

 

Vulcan Materials

     

216,832

 

26,019,840

 
       

94,994,398

 

Media & Entertainment - 2.3%

         

Alphabet, Cl. A

     

16,878

a

27,503,207

 

Pharmaceuticals Biotechnology & Life Sciences - 4.9%

         

AbbVie

     

128,741

 

12,329,526

 

Biogen

     

32,594

a

9,375,338

 

Bristol-Myers Squibb

     

257,190

 

15,997,218

 

Eli Lilly & Co.

     

65,434

 

9,709,751

 

Horizon Therapeutics

     

77,840

a

5,847,341

 

Thermo Fisher Scientific

     

14,477

 

6,210,344

 
       

59,469,518

 

Real Estate - .8%

         

Weyerhaeuser

     

304,765

c

9,237,427

 

Retailing - 1.8%

         

Booking Holdings

     

4,849

a

9,263,772

 

Lowe's Companies

     

74,947

 

12,343,021

 
       

21,606,793

 

Semiconductors & Semiconductor Equipment - 6.4%

         

Applied Materials

     

263,170

 

16,211,272

 

Intel

     

248,065

 

12,638,912

 

10

 

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 99.4% (continued)

         

Semiconductors & Semiconductor Equipment - 6.4% (continued)

         

Microchip Technology

     

82,670

b

9,068,899

 

Micron Technology

     

139,875

a

6,365,711

 

NXP Semiconductors

     

120,189

 

15,114,969

 

Qualcomm

     

152,453

 

18,157,152

 
       

77,556,915

 

Software & Services - 1.8%

         

International Business Machines

     

74,103

 

9,137,641

 

Proofpoint

     

112,429

a

12,330,088

 
       

21,467,729

 

Technology Hardware & Equipment - 4.4%

         

Apple

     

46,908

 

6,053,008

 

Cisco Systems

     

287,304

 

12,129,975

 

Corning

     

547,306

b

17,765,553

 

Dolby Laboratories, Cl. A

     

122,806

 

8,577,999

 

Zebra Technologies, Cl. A

     

31,508

a

9,027,987

 
       

53,554,522

 

Transportation - 2.5%

         

FedEx

     

27,748

 

6,100,120

 

Union Pacific

     

123,277

 

23,723,426

 
       

29,823,546

 

Utilities - 5.7%

         

Exelon

     

372,472

 

13,747,942

 

FirstEnergy

     

234,405

 

6,701,639

 

NextEra Energy Partners

     

209,044

b

12,609,534

 

PPL

     

1,268,564

 

35,050,423

 
       

68,109,538

 

Total Common Stocks (cost $1,060,676,405)

     

1,198,084,506

 
               

Exchange-Traded Funds - .5%

         

Registered Investment Companies - .5%

         

iShares Russell 1000 Value ETF
(cost $6,024,967)

     

49,557

b

6,041,494

 

11

 

STATEMENT OF INVESTMENTS (continued)

               
 

Description

 

1-day

Yield (%)

 

Shares

 

Value ($)

 

Investment of Cash Collateral for Securities Loaned - 1.7%

         

Registered Investment Companies - 1.7%

         

Dreyfus Institutional Preferred Government Plus Money Market Fund
(cost $20,489,252)

 

0.20

 

20,489,252

d

20,489,252

 

Total Investments (cost $1,087,190,624)

 

101.6%

 

1,224,615,252

 

Liabilities, Less Cash and Receivables

 

(1.6%)

 

(19,289,323)

 

Net Assets

 

100.0%

 

1,205,325,929

 

ETF—Exchange-Traded Fund

aNon-income producing security.

bSecurity, or portion thereof, on loan. At August 31, 2020, the value of the fund’s securities on loan was $55,978,954 and the value of the collateral was $57,568,963, consisting of cash collateral of $20,489,252 and U.S. Government & Agency securities valued at $37,079,711.

cInvestment in real estate investment trust within the United States.

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

   

Portfolio Summary (Unaudited)

Value (%)

Financials

26.3

Health Care

14.6

Information Technology

12.7

Industrials

12.4

Materials

7.9

Consumer Discretionary

6.9

Utilities

5.6

Energy

5.2

Consumer Staples

4.7

Communication Services

2.3

Investment Companies

2.2

Real Estate

.8

 

101.6

 Based on net assets.

See notes to financial statements.

12

 

STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS

             

Investment Companies

Value
8/31/19 ($)

Purchases ($)

Sales ($)

Value
8/31/20 ($)

Net
Assets (%)

Dividends/
Distributions ($)

Registered Investment Companies;

       

Dreyfus Institutional Preferred Government Plus Money Market Fund

1,749,947

196,471,680

(198,221,627)

-

-

19,806

Investment of Cash Collateral for Securities Loaned;

     

Dreyfus Institutional Preferred Government Plus Money Market Fund

1,131,190

121,093,035

(101,734,973)

20,489,252

1.7

-

Total

2,881,137

317,564,715

(299,956,600)

20,489,252

1.7

19,806

 Includes reinvested dividends/distributions.

See notes to financial statements.

13

 

STATEMENT OF ASSETS AND LIABILITIES

August 31, 2020

             

 

 

 

 

 

 

 

 

 

 

Cost

 

Value

 

Assets ($):

 

 

 

 

Investments in securities—See Statement of Investments
(including securities on loan, valued at $55,978,954)—Note 1(c):

 

 

 

Unaffiliated issuers

1,066,701,372

 

1,204,126,000

 

Affiliated issuers

 

20,489,252

 

20,489,252

 

Receivable for investment securities sold

 

9,978,286

 

Dividends and securities lending income receivable

 

2,258,322

 

Receivable for shares of Common Stock subscribed

 

1,173,695

 

Prepaid expenses

 

 

 

 

51,166

 

 

 

 

 

 

1,238,076,721

 

Liabilities ($):

 

 

 

 

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

 

782,451

 

Cash overdraft due to Custodian

 

 

 

 

257,977

 

Liability for securities on loan—Note 1(c)

 

20,489,252

 

Payable for investment securities purchased

 

9,626,350

 

Payable for shares of Common Stock redeemed

 

1,327,383

 

Directors’ fees and expenses payable

 

31,176

 

Interest payable—Note 2

 

59

 

Other accrued expenses

 

 

 

 

236,144

 

 

 

 

 

 

32,750,792

 

Net Assets ($)

 

 

1,205,325,929

 

Composition of Net Assets ($):

 

 

 

 

Paid-in capital

 

 

 

 

1,065,814,121

 

Total distributable earnings (loss)

 

 

 

 

139,511,808

 

Net Assets ($)

 

 

1,205,325,929

 

           

Net Asset Value Per Share

Class A

Class C

Class I

Class Y

 

Net Assets ($)

648,545,493

9,371,595

342,508,053

204,900,788

 

Shares Outstanding

19,488,968

306,510

10,233,605

6,132,938

 

Net Asset Value Per Share ($)

33.28

30.58

33.47

33.41

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

14

 

STATEMENT OF OPERATIONS

Year Ended August 31, 2020

             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income ($):

 

 

 

 

Income:

 

 

 

 

Cash dividends (net of $3,079 foreign taxes withheld at source):

 

Unaffiliated issuers

 

 

30,605,906

 

Affiliated issuers

 

 

19,759

 

Interest

 

 

76,100

 

Income from securities lending—Note 1(c)

 

 

57,217

 

Total Income

 

 

30,758,982

 

Expenses:

 

 

 

 

Management fee—Note 3(a)

 

 

7,855,972

 

Shareholder servicing costs—Note 3(c)

 

 

2,594,725

 

Directors’ fees and expenses—Note 3(d)

 

 

125,205

 

Distribution fees—Note 3(b)

 

 

99,616

 

Professional fees

 

 

97,965

 

Prospectus and shareholders’ reports

 

 

83,299

 

Registration fees

 

 

82,646

 

Loan commitment fees—Note 2

 

 

35,073

 

Custodian fees—Note 3(c)

 

 

31,487

 

Chief Compliance Officer fees—Note 3(c)

 

 

13,975

 

Interest expense—Note 2

 

 

6,384

 

Miscellaneous

 

 

71,828

 

Total Expenses

 

 

11,098,175

 

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

 

 

(399,591)

 

Net Expenses

 

 

10,698,584

 

Investment Income—Net

 

 

20,060,398

 

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

 

 

Net realized gain (loss) on investments

34,853,020

 

Capital gain distributions from affiliated issuers

47

 

Net Realized Gain (Loss)

 

 

34,853,067

 

Net change in unrealized appreciation (depreciation) on investments

(69,024,430)

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

(34,171,363)

 

Net (Decrease) in Net Assets Resulting from Operations

 

(14,110,965)

 

 

 

 

 

 

 

 

See notes to financial statements.

         

15

 

STATEMENT OF CHANGES IN NET ASSETS

                   

 

 

 

 

Year Ended August 31,

 

 

 

 

2020

 

2019

 

Operations ($):

 

 

 

 

 

 

 

 

Investment income—net

 

 

20,060,398

 

 

 

26,752,518

 

Net realized gain (loss) on investments

 

34,853,067

 

 

 

34,123,743

 

Net change in unrealized appreciation
(depreciation) on investments

 

(69,024,430)

 

 

 

(151,536,950)

 

Net Increase (Decrease) in Net Assets
Resulting from Operations

(14,110,965)

 

 

 

(90,660,689)

 

Distributions ($):

 

Distributions to shareholders:

 

 

 

 

 

 

 

 

Class A

 

 

(25,395,218)

 

 

 

(108,639,666)

 

Class C

 

 

(440,390)

 

 

 

(3,576,184)

 

Class I

 

 

(16,654,035)

 

 

 

(65,779,162)

 

Class Y

 

 

(8,883,603)

 

 

 

(45,439,104)

 

Total Distributions

 

 

(51,373,246)

 

 

 

(223,434,116)

 

Capital Stock Transactions ($):

 

Net proceeds from shares sold:

 

 

 

 

 

 

 

 

Class A

 

 

23,294,794

 

 

 

40,244,563

 

Class C

 

 

692,588

 

 

 

2,701,564

 

Class I

 

 

98,524,788

 

 

 

178,906,342

 

Class Y

 

 

41,059,106

 

 

 

57,818,315

 

Distributions reinvested:

 

 

 

 

 

 

 

 

Class A

 

 

23,607,957

 

 

 

100,531,970

 

Class C

 

 

334,420

 

 

 

2,692,043

 

Class I

 

 

15,707,496

 

 

 

61,306,599

 

Class Y

 

 

5,418,388

 

 

 

31,824,011

 

Cost of shares redeemed:

 

 

 

 

 

 

 

 

Class A

 

 

(96,480,564)

 

 

 

(120,669,500)

 

Class C

 

 

(7,613,430)

 

 

 

(13,021,841)

 

Class I

 

 

(196,500,842)

 

 

 

(208,767,777)

 

Class Y

 

 

(74,590,633)

 

 

 

(307,036,796)

 

Increase (Decrease) in Net Assets
from Capital Stock Transactions

(166,545,932)

 

 

 

(173,470,507)

 

Total Increase (Decrease) in Net Assets

(232,030,143)

 

 

 

(487,565,312)

 

Net Assets ($):

 

Beginning of Period

 

 

1,437,356,072

 

 

 

1,924,921,384

 

End of Period

 

 

1,205,325,929

 

 

 

1,437,356,072

 

16

 

                   

 

 

 

 

Year Ended August 31,

 

 

 

 

2020

 

2019

 

Capital Share Transactions (Shares):

 

Class Aa,b

 

 

 

 

 

 

 

 

Shares sold

 

 

713,315

 

 

 

1,177,556

 

Shares issued for distributions reinvested

 

 

651,629

 

 

 

3,032,531

 

Shares redeemed

 

 

(2,915,370)

 

 

 

(3,467,994)

 

Net Increase (Decrease) in Shares Outstanding

(1,550,426)

 

 

 

742,093

 

Class Cb

 

 

 

 

 

 

 

 

Shares sold

 

 

21,874

 

 

 

87,814

 

Shares issued for distributions reinvested

 

 

9,995

 

 

 

87,814

 

Shares redeemed

 

 

(247,262)

 

 

 

(405,903)

 

Net Increase (Decrease) in Shares Outstanding

(215,393)

 

 

 

(230,275)

 

Class Ia

 

 

 

 

 

 

 

 

Shares sold

 

 

3,063,057

 

 

 

5,145,410

 

Shares issued for distributions reinvested

 

 

431,877

 

 

 

1,842,704

 

Shares redeemed

 

 

(6,262,171)

 

 

 

(6,035,248)

 

Net Increase (Decrease) in Shares Outstanding

(2,767,237)

 

 

 

952,866

 

Class Ya

 

 

 

 

 

 

 

 

Shares sold

 

 

1,400,714

 

 

 

1,763,701

 

Shares issued for distributions reinvested

 

 

149,267

 

 

 

958,559

 

Shares redeemed

 

 

(2,329,883)

 

 

 

(8,304,875)

 

Net Increase (Decrease) in Shares Outstanding

(779,902)

 

 

 

(5,582,615)

 

 

 

 

 

 

 

 

 

 

 

aDuring the period ended August 31, 2020, 32,083 Class Y shares representing $1,118,637 were exchanged for 32,028 Class I shares, 8,359 Class A shares representing $258,938 were exchanged for 8,318 Class I shares, and 1,512 Class A shares representing $54,664 were exchanged for 1,506 Class Y shares. During the period August 31, 2019, 13,830 Class Y shares representing $510,754 were exchanged for 13,814 Class I shares.

 

bDuring the period ended August 31, 2020, 3,386 Class C shares representing $103,287 were automatically converted to 3,116 Class A shares and during the period ended August 31, 2019, 1,897 Class C shares representing $64,313 were automatically converted to 1,755 Class A shares.

 

See notes to financial statements.

               

17

 

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. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.

               
 

Year Ended August 31,

 

Class A Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

34.61

42.18

40.12

36.08

38.49

Investment Operations:

           

Investment income—neta

 

.47

.57

.49

.37

.50

Net realized and unrealized gain
(loss) on investments

 

(.56)

(2.67)

5.86

4.72

2.41

Total from Investment Operations

 

(.09)

(2.10)

6.35

5.09

2.91

Distributions:

           

Dividends from investment
income—net

 

(.57)

(.63)

(.39)

(.49)

(.39)

Dividends from net realized gain
on investments

 

(.67)

(4.84)

(3.90)

(.56)

(4.93)

Total Distributions

 

(1.24)

(5.47)

(4.29)

(1.05)

(5.32)

Net asset value, end of period

 

33.28

34.61

42.18

40.12

36.08

Total Return (%)b

 

(.55)

(4.40)

16.68

14.26

8.26

Ratios/Supplemental Data (%):

           

Ratio of total expenses to
average net assets

 

.97

.96

.95

1.07

1.12

Ratio of net expenses to
average net assets

 

.93

.93

.93

.97

.98

Ratio of net investment income to
average net assets

 

1.42

1.58

1.19

.95

1.42

Portfolio Turnover Rate

 

103.12

97.03

105.82

96.39

80.82

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

 

648,545

728,146

856,213

818,085

842,532

a Based on average shares outstanding.

b Exclusive of sales charge.

See notes to financial statements.

18

 

                     
           
 

Year Ended August 31,

Class C Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

31.84

39.20

37.52

33.81

36.35

Investment Operations:

 

 

 

 

 

 

Investment income—neta

 

.20

.27

.17

.07

.22

Net realized and unrealized gain
(loss) on investments

 

(.53)

(2.48)

5.48

4.42

2.26

Total from Investment Operations

 

(.33)

(2.21)

5.65

4.49

2.48

Distributions:

     

 

 

 

Dividends from investment
income—net

 

(.26)

(.31)

(.07)

(.22)

(.09)

Dividends from net realized gain
on investments

 

(.67)

(4.84)

(3.90)

(.56)

(4.93)

Total Distributions

 

(.93)

(5.15)

(3.97)

(.78)

(5.02)

Net asset value, end of period

 

30.58

31.84

39.20

37.52

33.81

Total Return (%)b

 

(1.29)

(5.12)

15.86

13.39

7.46

Ratios/Supplemental Data (%):

     

 

 

 

Ratio of total expenses to
average net assets

 

1.73

1.71

1.71

1.84

1.89

Ratio of net expenses to
average net assets

 

1.68

1.68

1.68

1.72

1.73

Ratio of net investment income to
average net assets

 

.66

.83

.45

.20

.67

Portfolio Turnover Rate

 

103.12

97.03

105.82

96.39

80.82

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

 

9,372

16,615

29,482

42,611

47,696

a Based on average shares outstanding.

b Exclusive of sales charge.

See notes to financial statements.

19

 

FINANCIAL HIGHLIGHTS (continued)

                 
       
 

Year Ended August 31,

Class I Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

34.80

42.33

40.25

36.16

38.58

Investment Operations:

   

 

 

 

 

Investment income—neta

 

.56

.66

.59

.48

.58

Net realized and unrealized gain
(loss) on investments

 

(.56)

(2.68)

5.88

4.73

2.42

Total from Investment Operations

 

(.00)b

(2.02)

6.47

5.21

3.00

Distributions:

     

 

 

 

Dividends from investment
income—net

 

(.66)

(.67)

(.49)

(.56)

(.49)

Dividends from net realized gain
on investments

 

(.67)

(4.84)

(3.90)

(.56)

(4.93)

Total Distributions

 

(1.33)

(5.51)

(4.39)

(1.12)

(5.42)

Net asset value, end of period

 

33.47

34.80

42.33

40.25

36.16

Total Return (%)

 

(.30)

(4.16)

16.99

14.58

8.52

Ratios/Supplemental Data (%):

     

 

 

 

Ratio of total expenses to
average net assets

 

.71

.71

.72

.84

.89

Ratio of net expenses to
average net assets

 

.68

.68

.68

.72

.73

Ratio of net investment income to
average net assets

 

1.67

1.83

1.44

1.21

1.67

Portfolio Turnover Rate

 

103.12

97.03

105.82

96.39

80.82

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

 

342,508

452,432

510,020

751,934

509,485

a Based on average shares outstanding.

b Amount represents less than $.01 per share.

See notes to financial statements.

20

 

                   
       
 

Year Ended August 31,

Class Y Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

34.74

42.35

40.25

36.16

38.58

Investment Operations:

           

Investment income—neta

 

.57

.67

.62

.48

.59

Net realized and unrealized gain
(loss) on investments

 

(.56)

(2.68)

5.87

4.73

2.41

Total from Investment Operations

 

.01

(2.01)

6.49

5.21

3.00

Distributions:

     

 

 

 

Dividends from investment
income—net

 

(.67)

(.76)

(.49)

(.56)

(.49)

Dividends from net realized gain
on investments

 

(.67)

(4.84)

(3.90)

(.56)

(4.93)

Total Distributions

 

(1.34)

(5.60)

(4.39)

(1.12)

(5.42)

Net asset value, end of period

 

33.41

34.74

42.35

40.25

36.16

Total Return (%)

 

(.27)

(4.13)

17.05

14.58

8.52

Ratios/Supplemental Data (%):

     

 

 

 

Ratio of total expenses to
average net assets

 

.65

.65

.64

.75

.79

Ratio of net expenses to
average net assets

 

.65

.65

.64

.71

.73

Ratio of net investment income to
average net assets

 

1.70

1.84

1.50

1.22

1.67

Portfolio Turnover Rate

 

103.12

97.03

105.82

96.39

80.82

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

 

204,901

240,163

529,206

177,876

179,629

a Based on average shares outstanding.

See notes to financial statements.

21

 

NOTES TO FINANCIAL STATEMENTS

NOTE 1—Significant Accounting Policies:

BNY Mellon Dynamic Value Fund (the “fund”) is a separate diversified series of BNY Mellon Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering nine series, including the fund. The fund’s investment objective is to seek capital appreciation. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.

The Company’s Board of Directors (the “Board”) approved, effective December 31, 2019 (the “Effective Date”), the termination of the fund’s authorized Class T shares. Prior to the Effective Date, the fund did not offer such Class T shares for purchase. The authorized Class T shares were reallocated to authorized Class I shares and Class Y shares, increasing authorized Class I shares from 200 million to 250 million and increasing authorized Class Y shares from 100 million to 150 million.

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 800 million shares of $.001 par value Common Stock. The fund currently has authorized four classes of shares: Class A (300 million shares authorized), Class C (100 million shares authorized), Class I (250 million shares authorized), and Class Y (150 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class C shares automatically convert to Class A shares ten years after the date of purchase, without the imposition of a sales charge. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.

22

 

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 Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.

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

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

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

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

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

Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).

23

 

NOTES TO FINANCIAL STATEMENTS (continued)

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 American Depository Receipts and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.

When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the 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.

24

 

For securities where observable inputs are limited, assumptions about market activity and risk are used and such securities are generally categorized within Level 3 of the fair value hierarchy.

The following is a summary of the inputs used as of August 31, 2020 in valuing the fund’s investments:

         
 

Level 1 - Unadjusted Quoted Prices

Level 2 - Other Significant Observable Inputs

Level 3 -Significant Unobservable Inputs

Total

Assets ($)

 

 

 

 

Investments in Securities:

     

Equity Securities - Common Stocks

1,198,084,506

-

-

1,198,084,506

Exchange-Traded Funds

6,041,494

-

-

6,041,494

Investment Companies

20,489,252

-

-

20,489,252

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

(b) Foreign Taxes: The fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, realized and unrealized capital gains on investments or certain foreign currency transactions. Foreign taxes are recorded in accordance with the fund’s understanding of 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. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the fund’s Statement of Assets and Liabilities.

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

Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on

25

 

NOTES TO FINANCIAL STATEMENTS (continued)

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 August 31, 2020, The Bank of New York Mellon earned $11,099 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.

(d) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.

(e) Risk: Certain events particular to the industries in which the fund’s investments conduct their operations, as well as general economic, political and public health conditions, may have a significant negative impact on the investee’s operations and profitability. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different 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

26

 

gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.

(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.

As of and during the period ended August 31, 2020, 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 August 31, 2020, the fund did not incur any interest or penalties.

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

At August 31, 2020, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $9,306,807, undistributed capital gains $27,753,589 and unrealized appreciation $102,451,412.

The tax character of distributions paid to shareholders during the fiscal periods ended August 31, 2020 and August 31, 2019 were as follows: ordinary income $28,709,302 and $61,100,906, and long-term capital gains $22,663,944 and $162,333,210, respectively.

NOTE 2—Bank Lines of Credit:

The fund participates with other long-term open-end funds managed by the Adviser in a $927 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 $747 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $180 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. Prior to March 11, 2020, the Citibank Credit Facility was $1.030 billion with Tranche A available in an amount equal to $830 million and Tranche B available in an amount equal to $200 million. In connection therewith, the fund has agreed to pay its pro

27

 

NOTES TO FINANCIAL STATEMENTS (continued)

rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing.

The average amount of borrowings outstanding under the Facilities during the period ended August 31, 2020 was approximately $316,120 with a related weighted average annualized interest rate of 2.02%.

NOTE 3—Management Fee and Other Transactions with Affiliates:

(a) Pursuant to a management agreement with the Adviser the management fee is computed at the annual rate of .60% of the value of the fund’s average daily net assets and is payable monthly. The Adviser has contractually agreed, from September 1, 2019 through December 31, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .68% of the value of the fund’s average daily net assets. On or after December 31, 2020, the Adviser may terminate this expense limitation agreement at any time. The reduction in expenses, pursuant to the undertaking amounted to $399,591 during the period ended August 31, 2020.

During the period ended August 31, 2020, the Distributor retained $6,262 from commissions earned on sales of the fund’s Class A shares and $28 from CDSC fees on redemptions of the fund’s Class C shares.

(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended August 31, 2020, Class C shares were charged $99,616 pursuant to the Distribution Plan.

(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended August

28

 

31, 2020, Class A and Class C shares were charged $1,703,349 and $33,205, respectively, pursuant to the Shareholder Services Plan.

The fund has an arrangement with the transfer agent whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency fees. For financial reporting purposes, the fund includes net earnings credits, if any, as an expense offset 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 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 August 31, 2020, the fund was charged $158,213 for transfer agency services. 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 August 31, 2020, the fund was charged $31,487 pursuant to the custody agreement.

During the period ended August 31, 2020, the fund was charged $13,975 for services performed by the Chief Compliance Officer and his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.

The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: management fees of $609,713, Distribution Plan fees of $5,981, Shareholder Services Plan fees of $138,712, custodian fees of $10,228, Chief Compliance Officer fees of $2,273 and transfer agency fees of $32,127, which are offset against an expense reimbursement currently in effect in the amount of $16,583.

(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.

29

 

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended August 31, 2020, amounted to $1,341,969,593 and $1,535,768,740, respectively.

At August 31, 2020, the cost of investments for federal income tax purposes was $1,122,163,840 accordingly, accumulated net unrealized appreciation on investments was $102,451,412, consisting of $186,996,287 gross unrealized appreciation and $84,544,875 gross unrealized depreciation.

30

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of BNY Mellon Dynamic Value Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of BNY Mellon Dynamic Value Fund (the “Fund”) (one of the funds constituting BNY Mellon Advantage Funds, Inc.), including the statements of investments and investments in affiliated issuers, as of August 31, 2020, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting BNY Mellon Advantage Funds, Inc.) at August 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more investment companies in the BNY Mellon Family of Funds since at least 1957, but we are unable to determine the specific year.

New York, New York
October 27, 2020

31

 

IMPORTANT TAX INFORMATION (Unaudited)

For federal tax purposes, the fund hereby reports 100% of the ordinary dividends paid during the fiscal year ended August 31, 2020 as qualifying for the corporate dividends received deduction. Also certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $28,709,302 represents the maximum amount that may be considered qualified dividend income. The fund also hereby reports $.1051 per share as a short-term capital gain distribution and $.5660 per share as a long-term capital gain distribution paid on December 10, 2019. Shareholders will receive notification in early 2021 of the percentage applicable to the preparation of their 2020 income tax returns.

32

 

LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited)

Effective June 1, 2019, the fund adopted a liquidity risk management program (the “Liquidity Risk Management Program”) pursuant to the requirements of Rule 22e-4 under the Investment Company Act of 1940, as amended. Rule 22e-4 requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish liquidity risk management programs in order to effectively manage fund liquidity and shareholder redemptions. The rule is designed to mitigate the risk that a fund could not meet redemption requests without significantly diluting the interests of remaining investors.

The rule requires the funds to assess, manage and review their liquidity risk at least annually considering applicable factors such as investment strategy and liquidity during normal and foreseeable stressed conditions, including whether the strategy is appropriate for an open-end fund and whether the fund has a relatively concentrated portfolio or large positions in particular issuers. The fund must also assess its use of borrowings and derivatives, short-term and long-term cash flow projections in normal and stressed conditions, holdings of cash and cash equivalents, and borrowing arrangements and other funding sources.

The rule also requires the fund to classify its investments as highly liquid, moderately liquid, less liquid or illiquid based on the number of days the fund expects it would take to liquidate the investment, and to review these classifications at least monthly or more often under certain conditions. The periods range from three or fewer business days for a highly liquid investment to greater than seven calendar days for settlement of a less liquid investment. Illiquid investments are those a fund does not expect to be able to sell or dispose of within seven calendar days without significantly changing the market value. The fund is prohibited from acquiring an investment if, after the acquisition, its holdings of illiquid assets will exceed 15% of its net assets. In addition, if a fund permits redemptions in-kind, the rule requires the fund to establish redemption in-kind policies and procedures governing how and when it will engage in such redemptions.

Pursuant to the rule’s requirements, the Liquidity Risk Management Program has been reviewed and approved by the fund’s board. Furthermore, the board has received a written report prepared by the Program’s Administrator that addresses the operation of the Program, assesses its adequacy and effectiveness and describes any material changes made to the Program.

Assessment of Program

In the opinion of the Program Administrator, the Program approved by the fund board continues to be adequate for the fund and the Program has been implemented effectively. The Program Administrator has monitored the fund’s liquidity risk and the liquidity classification of the securities held by the fund and has determined that the Program is operating effectively.

During the period from June 1, 2019 to March 31, 2020, there were no material changes to the Program and no material liquidity events that impacted the fund. During the period, the fund held sufficient highly liquid assets to meet fund redemptions.

33

 

LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited) (continued)

Under normal expected foreseeable fund redemption forecasts and foreseeable stressed fund redemption forecasts, the Program Administrator believes that the fund maintains sufficient highly liquid assets to meet expected fund redemptions.

34

 

BOARD MEMBERS INFORMATION (Unaudited)

INDEPENDENT BOARD MEMBERS

Joseph S. DiMartino (76)

Chairman of the Board (1995)

Principal Occupation During Past 5 Years:

· Director or Trustee of funds in the BNY Mellon Family of Funds and certain other entities (as described in the fund’s Statement of Additional Information) (1995-Present)

Other Public Company Board Memberships During Past 5 Years:

· CBIZ, Inc., a public company providing professional business services, products and solutions, Director (1997-Present)

No. of Portfolios for which Board Member Serves: 111

———————

Peggy C. Davis (77)

Board Member (2006)

Principal Occupation During Past 5 Years:

· Shad Professor of Law, New York University School of Law (1983-present)

No. of Portfolios for which Board Member Serves: 39

———————

Gina D. France (62)

Board Member (2019)

Principal Occupation During Past 5 Years:

· Founder, President and Chief Executive Officer, France Strategic Partners, a strategy and advisory firm serving corporate clients across the United States (2003 –Present)

· Corporate Director and Trustee (2004 – Present)

Other Public Company Board Memberships During Past 5 Years:

· Huntington Bancshares, a bank holding company headquartered in Columbus, Ohio, Director (2016 – Present)

· Cedar Fair, L.P., a publicly-traded partnership that owns and operates amusement parks and hotels in the U.S. and Canada, Director (2011 – Present)

· CBIZ, Inc., a public company providing professional business services, products and solutions, Director (2015 – Present)

· Baldwin Wallace University, Trustee (2013- 2019)

· FirstMerit Corporation, a diversified financial services company, Director (2004 – 2016)

No. of Portfolios for which Board Member Serves: 25

———————

35

 

BOARD MEMBERS INFORMATION (Unaudited) (continued)
INDEPENDENT BOARD MEMBERS (continued)

Joan Gulley (72)

Board Member (2017)

Principal Occupation During Past 5 Years:

· PNC Financial Services Group, Inc.(1993-2014), Executive Vice President and Chief Human Resources Officer and Executive Committee Member (2008-2014)

· Director, Nantucket Library (2015-Present)

No. of Portfolios for which Board Member Serves: 44

———————

Robin A. Melvin (56)

Board Member (2012)

Principal Occupation During Past 5 Years:

· Co-chairman, Mentor Illinois, a non-profit organization dedicated to increasing the quantity and quality of mentoring services in Illinois; (2014-Present); Board member (2013-Present)

No. of Portfolios for which Board Member Serves: 89

———————

Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80. The address of the Board Members and Officers is c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street, New York, New York 10286. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from the Adviser free of charge by calling this toll free number: 1-800-373-9387.

David P. Feldman, Emeritus Board Member
James F. Henry, Emeritus Board Member
Ehud Houminer, Emeritus Board Member
Lynn Martin, Emeritus Board Member
Dr. Martin Peretz, Emeritus Board Member
Philip L. Toia, Emeritus Board Member

36

 

OFFICERS OF THE FUND (Unaudited)

RENEE LAROCHE-MORRIS, President since May 2019.

President and a director of BNY Mellon Investment Adviser, Inc. since January 2018. She is an officer of 62 investment companies (comprised of 111 portfolios) managed by the Adviser. She is 49 years old and has been an employee of BNY Mellon since 2003.

JAMES WINDELS, Treasurer since November 2001.

Director-BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 61 years old and has been an employee of the Adviser since April 1985.

BENNETT A. MACDOUGALL, Chief Legal Officer since October 2015.

Chief Legal Officer of the Adviser and Associate General Counsel and Managing Director of BNY Mellon since June 2015; Director and Associate General Counsel of Deutsche Bank–Asset & Wealth Management Division from June 2005 to June 2015, and as Chief Legal Officer of Deutsche Investment Management Americas Inc. from June 2012 to May 2015. He is an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 48 years old and has been an employee of the Adviser since June 2015.

DAVID DIPETRILLO, Vice President since May 2019.

Head of North America Product, BNY Mellon Investment Management since January 2018, Director of Product Strategy, BNY Mellon Investment Management from January 2016 to December 2017; Head of US Retail Product and Channel Marketing, BNY Mellon Investment Management from January 2014 to December 2015. He is an officer of 63 investment companies (comprised of 119 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 42 years old and has been an employee of BNY Mellon since 2005.

JAMES BITETTO, Vice President since August 2005 and Secretary since February 2018.

Senior Managing Counsel of BNY Mellon since December 2019; Managing Counsel of BNY Mellon from April 2014 to December 2019; Secretary of the Adviser, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 54 years old and has been an employee of the Adviser since December 1996.

SONALEE CROSS, Vice President and Assistant Secretary since March 2018.

Counsel of BNY Mellon since October 2016; Associate at Proskauer Rose LLP from April 2016 to September 2016; Attorney at EnTrust Capital from August 2015 to February 2016; Associate at Sidley Austin LLP from September 2013 to August 2015. She is an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 32 years old and has been an employee of the Adviser since October 2016.

DEIRDRE CUNNANE, Vice President and Assistant Secretary since March 2019.

Counsel of BNY Mellon since August 2018; Senior Regulatory Specialist at BNY Mellon Investment Management Services from February 2016 to August 2018; Trustee Associate at BNY Mellon Trust Company (Ireland) Limited from August 2013 to February 2016. She is an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 30 years old and has been an employee of the Adviser since August 2018.

SARAH S. KELLEHER, Vice President and Assistant Secretary since April 2014.

Managing Counsel of BNY Mellon since December 2017, Senior Counsel of BNY Mellon from March 2013 to December 2017. She is an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 44 years old and has been an employee of the Adviser since March 2013.

JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.

Senior Managing Counsel of BNY Mellon, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 55 years old and has been an employee of the Adviser since October 1990.

AMANDA QUINN, Vice President and Assistant Secretary since March 2020.

Counsel of BNY Mellon since June 2019; Regulatory Administration Manager at BNY Mellon Investment Management Services from September 2018 to May 2019; Senior Regulatory Specialist at BNY Mellon Investment Management Services from April 2015 to August 2018. She is an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 35 years old and has been an employee of the Adviser since June 2019.

37

 

OFFICERS OF THE FUND (Unaudited) (continued)

PETER M. SULLIVAN, Vice President and Assistant Secretary since March 2019.

Managing Counsel of BNY Mellon since March 2009, Senior Counsel of BNY Mellon from April 2004 to March 2009, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 52 years old and has been an employee of the Adviser since January 2019.

NATALYA ZELENSKY, Vice President and Assistant Secretary since March 2017.

Managing Counsel of BNY Mellon since December 2019; Counsel of BNY Mellon from May 2016 to December 2019; Attorney at Wildermuth Endowment Strategy Fund/Wildermuth Advisory, LLC from November 2015 to May 2016 and Assistant General Counsel at RCS Advisory Services from July 2014 to November 2015. She is an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 35 years old and has been an employee of the Adviser since May 2016.

GAVIN C. REILLY, Assistant Treasurer since December 2005.

Tax Manager-BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 52 years old and has been an employee of the Adviser since April 1991.

ROBERT S. ROBOL, Assistant Treasurer since August 2005.

Senior Accounting Manager-BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 56 years old and has been an employee of the Adviser since October 1988.

ROBERT SALVIOLO, Assistant Treasurer since July 2007.

Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 53 years old and has been an employee of the Adviser since June 1989.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 142 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 53 years old and has been an employee of the Adviser since November 1990.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Adviser, the BNY Mellon Family of Funds and BNY Mellon Funds Trust (63 investment companies, comprised of 134 portfolios). He is 63 years old and has served in various capacities with the Adviser since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.

CARIDAD M. CAROSELLA, Anti-Money Laundering Compliance Officer since January 2016.

Anti-Money Laundering Compliance Officer of the BNY Mellon Family of Funds and BNY Mellon Funds Trust since January 2016; from May 2015 to December 2015, Interim Anti-Money Laundering Compliance Officer of the BNY Mellon Family of Funds and BNY Mellon Funds Trust and the Distributor; from January 2012 to May 2015, AML Surveillance Officer of the Distributor. She is an officer of 57 investment companies (comprised of 135 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 52 years old and has been an employee of the Distributor since 1997.

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For More Information

BNY Mellon Dynamic Value Fund

240 Greenwich Street
New York, NY 10286

Adviser

BNY Mellon Investment Adviser, Inc.

240 Greenwich Street

New York, NY 10286

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:DAGVX           Class C:DCGVX           Class I:DRGVX           Class Y:DRGYX

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.bnymellonim.com/us

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.bnymellonim.com/us and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.

   

© 2020 BNY Mellon Securities Corporation
0257AR0820

 


 

BNY Mellon Opportunistic Midcap Value Fund

 

ANNUAL REPORT

August 31, 2020

 

 

 

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

 

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

 

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

 

Contents

THE FUND

FOR MORE INFORMATION

 

Back Cover

 

       
 


BNY Mellon Opportunistic Midcap Value Fund

 

The Fund

A LETTER FROM THE PRESIDENT OF BNY MELLON INVESTMENT ADVISER, INC.

Dear Shareholder:

We are pleased to present this annual report for BNY Mellon Opportunistic Midcap Value Fund, covering the 12-month period from September 1, 2019 through August 31, 2020. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.

Early in the reporting period, positive investor sentiment fueled an equity rally. Accommodative rate policies from the U.S. Federal Reserve (the “Fed”) and progress towards a U.S./China trade deal stoked optimism about future economic growth prospects. As the calendar year turned over, this optimism turned to concern, as COVID-19 began to spread across China, adjacent areas of the Pacific Rim and parts of Europe. When the virus spread throughout the U.S. in March 2020, stocks began to show signs of volatility and posted historic losses during the month. Investor angst over the possible economic impact of a widespread quarantine worked to depress equity valuations. Global central banks and governments worked to enact emergency stimulus measures to support their respective economies and equity valuations began to rebound, trending upward for the remainder of the period.

In fixed-income markets, interest rates were heavily influenced by changes in Fed policy and investor concern over COVID-19. In 2019, as stocks rallied in response to Fed rate cuts, risk-asset valuations also rose while Treasuries lagged. When COVID-19 began to emerge, a flight to quality ensued and Treasury rates fell significantly. March 2020 brought extreme volatility and risk-asset spread widening. The Fed cut rates twice in March, resulting in an overnight lending target rate of nearly zero, and the government launched a large stimulus package; many governments and central banks around the globe followed suit. At their meeting in August 2020, the Fed confirmed their commitment to a “lower-for-longer” rate policy.

We believe the near-term outlook for the U.S. will be challenging, as the country curbs the spread of COVID-19. However, we are confident that that ongoing central bank and government policy responses can continue to support economic progress. As always, we will monitor relevant data for any signs of a change. We encourage you to discuss the risks and opportunities in today’s investment environment with your financial advisor.

Thank you for your continued confidence and support.

Sincerely,

Renee LaRoche-Morris
President
BNY Mellon Investment Adviser, Inc.
September 15, 2020

2

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from September 1, 2019 through August 31, 2020, as provided by R. Patrick Kent, lead portfolio manager and James Boyd portfolio manager.

Market and Fund Performance Overview

For the 12-month period ended August 31, 2020, BNY Mellon Opportunistic Midcap Value Fund’s Class A shares produced a total return of 11.34%, Class C shares returned 10.46%, Class I shares returned 11.55% and Class Y shares returned 11.71%.1 In comparison, the fund’s benchmark, the Russell Midcap®Value Index (the “Index”), produced a -1.30% total return for the same period.2

Mid-cap stocks lost ground over the reporting period amid uncertainties about the COVID-19 virus. But the fund produced higher returns than the Index due to favorable asset allocation and security selection.

The Fund’s Investment Approach

The fund seeks to surpass the performance of the Index. Effective January 12, 2018, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of mid-cap companies with market capitalizations between $1 billion and $25 billion at the time of purchase. Because the fund may continue to hold a security whose market capitalization grows, a substantial portion of the fund’s holdings can have market capitalizations in excess of $25 billion at any given time.

The fund’s portfolio managers identify potential investments through extensive fundamental and quantitative research. The fund focuses on individual stock selection (a “bottom-up” approach), emphasizing three key factors: relative value, business health and business momentum.

The fund’s portfolio managers use an opportunistic value approach to identify stocks whose current market prices trade at a large discount to their intrinsic value, as calculated by the portfolio managers. The opportunistic value style attempts to benefit from valuation inefficiencies and underappreciated, fundamental prospects present in the marketplace. The portfolio managers use mid-cycle estimates, growth prospects, the identification of a revaluation catalyst and competitive advantages as some of the factors in the valuation assessment.

Stocks Rebound from Pandemic

The reporting period began with the market continuing to benefit from a shift in Federal Reserve (the “Fed”) policy, which had been prompted by concerns about economic growth and corporate earnings. Late in 2019, the Fed implemented three rate cuts, as trade tensions and other geopolitical concerns appeared to be weighing on economic growth. Other major central banks also enacted supportive policies. Stocks also benefited from the announcement of a “Phase One” trade deal between the U.S. and China, and from the approval of the new U.S.-Mexico-Canada Trade Agreement.

Early in 2020, developed markets experienced a correction amid growing concerns about the COVID-19 virus, erasing the gain that occurred late in 2019. As a result, the Fed reduced the federal funds rate twice in March, bringing the target rate down to 0-0.25%. In addition, the

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

Fed and other central banks initiated various programs to ease liquidity concerns in certain markets, and government authorities introduced programs to keep small businesses afloat. Steps were also taken to provide relief to employees who had lost their jobs as a result of government-mandated business shutdowns.

In the second half of the reporting period, the economy began to show signs of recovery. Retail sales rebounded, and the outlook for manufacturing also improved dramatically. Job creation also surged, beating economists’ expectations. Unemployment dropped sharply, and markets began to rebound as relief programs took effect, government shutdowns began to ease, and hope for a COVID-19 vaccine or effective therapy took hold.

Asset Allocation and Security Selection Drove Performance

The fund outperformed the Index over the reporting period as a result of favorable asset allocation and security selection. In the materials sector, an overweight position was beneficial, as were positions in Newmont Mining and Freeport-McMoran, mining companies that were supported by higher prices. In the information technology sector, holdings in the software industry, including DocuSign, an electronic signature company, and Nuance Communications, a health care, voice recognition company, proved beneficial. In the semiconductor industry, shares of Teradyne and Skyworks Solutions, gained on strong demand. In the communication services sector, a position in Activision Blizzard, a videogame company, gained as a result of strong demand during government lockdowns, and shares of Zillow Group, a real estate information company, rose as a result of a surge in home buying. In the industrials sector, Clarivate Analytics, a provider of data related to intellectual property, performed well, and Equifax, a credit reporting company, gained on strong demand related to homebuying. In the construction and engineering industry, Quanta Services, a provider of services to protect public power grids, benefited from strong demand related to the effect of forest fires.

On the negative side, selections in the health care and utilities sectors detracted from the fund’s performance. The primary detractors were in the health care sector, where shares of Sage Therapeutics and Jazz Pharmaceuticals declined. A position in the utilities sector, Edison International, also was slightly detrimental to fund performance.

Despite Continued Uncertainty, Optimism about 2021

Although stocks have experienced a strong recovery since bottoming in the first quarter of 2020, the pace of economic recovery is uncertain, and another consolidation in the market is possible. Nevertheless, we are optimistic about 2021. Supportive monetary policy is also likely to benefit this segment of the equity universe. Although small- and midcap stocks have lagged, we believe once the recovery is on more solid footing and a vaccine or therapeutic treatment is widely available, they may benefit more than other segments of the market.

4

 

Companies with higher operating leverage may also benefit, especially as the economy continues to recover. The team believes the current market volatility may be laying the foundation for one of the most favorable investment environments for this segment in the last several years.

September 15, 2020

1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost.

2 Source: Lipper Inc. — The Russell Midcap® Value Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap® Index companies that are considered more value-oriented relative to the overall market, as defined by Russell’s leading style methodology. The Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap value market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap value market. Investors cannot invest directly in any index.

Please note: the position in any security highlighted with italicized typeface was sold during the reporting period.

Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.

Stocks of small- and/or mid-cap companies often experience sharper price fluctuations than stocks of large-cap companies.

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.

5

 

FUND PERFORMANCE (Unaudited)

Comparison of change in value of a $10,000 investment in Class A shares, Class C shares, and Class I shares of BNY Mellon Opportunistic Midcap Value Fund with a hypothetical investment of $10,000 in the Russell Midcap® Value Index (the “Index”)

 Source: Lipper Inc.

Past performance is not predictive of future performance.

The above graph compares a hypothetical $10,000 investment made in each of the Class A shares, Class C shares, and Class I shares of BNY Mellon Opportunistic Midcap Value Fund on 8/31/10 to a hypothetical investment of $10,000 made in the Index on that date. All dividends and capital gain distributions are reinvested.

The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on Class A shares, Class C shares, and Class I shares. The Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap® Index companies that are considered more value-oriented relative to the overall market as defined by Russell’s leading style methodology. The Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap value market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap value market. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.

6

 

Comparison of change in value of a $1,000,000 investment in Class Y shares of BNY Mellon Opportunistic Midcap Value Fund with a hypothetical investment of $1,000,000 in the Russell Midcap® Value Index (the “Index”)

 Source: Lipper Inc.

†† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.

Past performance is not predictive of future performance.

The above graph compares a hypothetical $1,000,000 investment made in Class Y shares of BNY Mellon Opportunistic Midcap Value Fund on 8/31/10 to a hypothetical investment of $1,000,000 made in the Index on that date. All dividends and capital gain distributions are reinvested.

The fund’s performance shown in the line graph above takes into account all applicable fees and expenses on Class Y shares. The Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap® Index companies that are considered more value-oriented relative to the overall market as defined by Russell’s leading style methodology. The Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap value market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap value market. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.

7

 

FUND PERFORMANCE (Unaudited) (continued)

             

Average Annual Total Returns as of 8/31/2020

 

 

 

Inception
Date

1 Year

5 Years

10 Years

 

Class A shares

         

with maximum sales charge (5.75%)

9/29/95

4.93%

5.15%

10.24%

 

without sales charge

9/29/95

11.34%

6.40%

10.90%

 

Class C shares

         

with applicable redemption charge

5/30/08

9.46%

5.60%

10.04%

 

without redemption

5/30/08

10.46%

5.60%

10.04%

 

Class I shares

5/30/08

11.55%

6.68%

11.16%

 

Class Y shares

7/1/13

11.71%

6.79%

11.17%††

 

Russell Midcap® Value Index

 

-1.30%

6.14%

10.94%

 

 The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.

†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.

The performance data quoted represents past performance, which is no guarantee of future results. Share price and investment return fluctuate and an investor’s shares may be worth more or less than original cost upon redemption. Current performance may be lower or higher than the performance quoted. Go to www.bnymellonim.com/us for the fund’s most recent month-end returns.

The fund’s performance shown in the graphs and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.

8

 

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 Opportunistic Midcap Value Fund from March 1, 2020 to August 31, 2020. 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 August 31, 2020

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expense paid per $1,000

$6.30

$10.52

$5.25

$4.51

 

Ending value (after expenses)

$1,107.70

$1,102.90

$1,108.60

$1,109.30

 

COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)

Using the SEC’s method to compare expenses

The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

             

Expenses and Value of a $1,000 Investment

 

Assuming a hypothetical 5% annualized return for the six months ended August 31, 2020

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expense paid per $1,000

$6.04

$10.08

$5.03

$4.32

 

Ending value (after expenses)

$1,019.15

$1,015.13

$1,020.16

$1,020.86

 

Expenses are equal to the fund’s annualized expense ratio of 1.19% for Class A, 1.99% for Class C, .99% for Class I and .85% for Class Y, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

9

 

STATEMENT OF INVESTMENTS

August 31, 2020

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 97.2%

         

Banks - 2.0%

         

Popular

     

144,494

 

5,352,058

 

TCF Financial

     

123,592

 

3,322,153

 
       

8,674,211

 

Capital Goods - 3.7%

         

Owens Corning

     

90,149

 

6,097,678

 

Quanta Services

     

190,921

 

9,784,701

 
       

15,882,379

 

Commercial & Professional Services - 6.1%

         

Clarivate

     

443,744

a

13,063,823

 

Equifax

     

79,995

 

13,460,759

 
       

26,524,582

 

Consumer Durables & Apparel - 4.6%

         

D.R. Horton

     

122,412

 

8,736,544

 

Hasbro

     

65,230

 

5,149,256

 

Skechers U.S.A, CI. A

     

207,411

a

6,191,218

 
       

20,077,018

 

Consumer Services - 1.2%

         

Norwegian Cruise Line Holdings

     

310,376

a,b

5,310,533

 

Diversified Financials - 3.6%

         

Ares Management, Cl. A

     

126,348

 

5,110,777

 

Capital One Financial

     

46,746

 

3,226,876

 

Voya Financial

     

139,213

b

7,226,547

 
       

15,564,200

 

Energy - 2.4%

         

Parsley Energy, Cl. A

     

243,246

 

2,614,895

 

Pioneer Natural Resources

     

30,031

 

3,121,122

 

Valero Energy

     

89,287

 

4,695,603

 
       

10,431,620

 

Food, Beverage & Tobacco - 3.9%

         

Conagra Brands

     

261,355

 

10,025,578

 

Ingredion

     

84,707

 

6,813,831

 
       

16,839,409

 

Health Care Equipment & Services - 7.4%

         

Alcon

     

123,854

a,b

7,101,788

 

Centene

     

93,299

a

5,721,095

 

Encompass Health

     

65,086

 

4,246,211

 

Laboratory Corp. of America Holdings

     

43,245

a

7,600,309

 

Zimmer Biomet Holdings

     

51,914

 

7,313,644

 
       

31,983,047

 

Insurance - 1.7%

         

Arch Capital Group

     

102,802

a

3,242,375

 

10

 

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 97.2% (continued)

         

Insurance - 1.7% (continued)

         

Willis Towers Watson

     

19,378

 

3,982,760

 
       

7,225,135

 

Materials - 14.2%

         

Crown Holdings

     

101,803

a

7,823,561

 

Eagle Materials

     

60,712

 

4,964,420

 

FMC

     

94,205

 

10,066,746

 

Freeport-McMoRan

     

417,791

 

6,521,718

 

Huntsman

     

231,687

 

5,009,073

 

Louisiana-Pacific

     

216,632

 

7,135,858

 

Newmont

     

171,219

 

11,519,614

 

The Mosaic Company

     

480,216

 

8,754,338

 
       

61,795,328

 

Media & Entertainment - 5.3%

         

Activision Blizzard

     

175,030

 

14,618,506

 

Zillow Group, Cl. C

     

99,034

a,b

8,493,156

 
       

23,111,662

 

Pharmaceuticals Biotechnology & Life Sciences - 5.0%

         

Mylan

     

282,477

a

4,626,973

 

Neurocrine Biosciences

     

50,458

a

5,874,320

 

Sarepta Therapeutics

     

32,932

a

4,821,903

 

Syneos Health

     

98,310

a

6,203,361

 
       

21,526,557

 

Real Estate - 5.5%

         

Alexandria Real Estate Equities

     

44,497

b,c

7,492,405

 

CBRE Group, Cl. A

     

114,225

a

5,372,002

 

Digital Realty Trust

     

71,172

c

11,077,922

 
       

23,942,329

 

Retailing - 2.3%

         

Dollar General

     

49,851

 

10,063,920

 

Semiconductors & Semiconductor Equipment - 7.3%

         

First Solar

     

162,702

a,b

12,461,346

 

ON Semiconductor

     

346,351

a

7,401,521

 

Skyworks Solutions

     

59,706

 

8,648,414

 

Teradyne

     

39,649

 

3,368,976

 
       

31,880,257

 

Software & Services - 11.6%

         

DocuSign

     

15,448

a

3,444,904

 

Euronet Worldwide

     

73,253

a

7,572,895

 

Global Payments

     

49,539

 

8,749,578

 

Nuance Communications

     

480,221

a

14,387,421

 

Proofpoint

     

59,387

a

6,512,972

 

Slack Technologies, Cl. A

     

297,862

a,b

9,781,788

 
       

50,449,558

 

11

 

STATEMENT OF INVESTMENTS (continued)

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 97.2% (continued)

         

Technology Hardware & Equipment - 2.6%

         

FLIR Systems

     

130,640

 

4,820,616

 

Western Digital

     

169,251

 

6,502,623

 
       

11,323,239

 

Transportation - 2.0%

         

Knight-Swift Transportation Holdings

     

190,952

b

8,680,678

 

Utilities - 4.8%

         

Edison International

     

139,901

 

7,342,005

 

Exelon

     

137,206

 

5,064,274

 

PPL

     

303,022

 

8,372,498

 
       

20,778,777

 

Total Common Stocks (cost $361,285,182)

     

422,064,439

 
               

Exchange-Traded Funds - 1.1%

         

Registered Investment Companies - 1.1%

         

SPDR S&P MidCap 400 ETF Trust
(cost $4,835,110)

     

13,549

 

4,761,119

 
   

1-Day
Yield (%)

         

Investment Companies - 1.8%

         

Registered Investment Companies - 1.8%

         

Dreyfus Institutional Preferred Government Plus Money Market Fund
(cost $7,687,707)

 

0.20

 

7,687,707

d

7,687,707

 
               

Investment of Cash Collateral for Securities Loaned - 2.6%

         

Registered Investment Companies - 2.6%

         

Dreyfus Institutional Preferred Government Plus Money Market Fund
(cost $11,305,965)

 

0.20

 

11,305,965

d

11,305,965

 

Total Investments (cost $385,113,964)

 

102.7%

 

445,819,230

 

Liabilities, Less Cash and Receivables

 

(2.7%)

 

(11,744,226)

 

Net Assets

 

100.0%

 

434,075,004

 

ETF—Exchange-Traded Fund

aNon-income producing security.

bSecurity, or portion thereof, on loan. At August 31, 2020, the value of the fund’s securities on loan was $54,574,185 and the value of the collateral was $56,459,169, consisting of cash collateral of $11,305,965 and U.S. Government & Agency securities valued at $45,153,204.

cInvestment in real estate investment trust within the United States.

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

12

 

   

Portfolio Summary (Unaudited)

Value (%)

Information Technology

21.6

Materials

14.2

Health Care

12.3

Industrials

11.8

Consumer Discretionary

8.2

Financials

7.2

Real Estate

5.5

Investment Companies

5.5

Communication Services

5.3

Utilities

4.8

Consumer Staples

3.9

Energy

2.4

 

102.7

 Based on net assets.

See notes to financial statements.

13

 

STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS

             

Investment Companies

Value
8/31/19 ($)

Purchases ($)

Sales ($)

Value
8/31/20 ($)

Net
Assets (%)

Dividends/
Distributions ($)

Registered Investment Companies:

Dreyfus Institutional Preferred Government Plus Money Market Fund

3,248,008

150,454,904

(146,015,205)

7,687,707

1.8

39,180

Investment of Cash Collateral for Securities Loaned:

Dreyfus Institutional Preferred Government Plus Money Market Fund

3,567,020

217,730,005

(209,991,060)

11,305,965

2.6

-

Total

6,815,028

368,184,909

(356,006,265)

18,993,672

4.4

39,180

 Includes reinvested dividends/distributions.

See notes to financial statements.

14

 

STATEMENT OF ASSETS AND LIABILITIES

August 31, 2020

             

 

 

 

 

 

 

 

 

 

 

Cost

 

Value

 

Assets ($):

 

 

 

 

Investments in securities—See Statement of Investments
(including securities on loan, valued at $54,574,185)—Note 1(c):

 

 

 

Unaffiliated issuers

366,120,292

 

426,825,558

 

Affiliated issuers

 

18,993,672

 

18,993,672

 

Receivable for investment securities sold

 

3,762,285

 

Dividends and securities lending income receivable

 

375,775

 

Receivable for shares of Common Stock subscribed

 

104,982

 

Prepaid expenses

 

 

 

 

49,920

 

 

 

 

 

 

450,112,192

 

Liabilities ($):

 

 

 

 

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

 

370,790

 

Liability for securities on loan—Note 1(c)

 

11,305,965

 

Payable for investment securities purchased

 

3,809,633

 

Payable for shares of Common Stock redeemed

 

366,290

 

Directors’ fees and expenses payable

 

9,325

 

Other accrued expenses

 

 

 

 

175,185

 

 

 

 

 

 

16,037,188

 

Net Assets ($)

 

 

434,075,004

 

Composition of Net Assets ($):

 

 

 

 

Paid-in capital

 

 

 

 

408,969,414

 

Total distributable earnings (loss)

 

 

 

 

25,105,590

 

Net Assets ($)

 

 

434,075,004

 

           

Net Asset Value Per Share

Class A

Class C

Class I

Class Y

 

Net Assets ($)

288,718,961

18,431,058

121,710,427

5,214,558

 

Shares Outstanding

10,790,702

838,943

4,567,360

195,385

 

Net Asset Value Per Share ($)

26.76

21.97

26.65

26.69

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

15

 

STATEMENT OF OPERATIONS

Year Ended August 31, 2020

             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income ($):

 

 

 

 

Income:

 

 

 

 

Cash dividends (net of $23,390 foreign taxes withheld at source):

 

Unaffiliated issuers

 

 

6,072,306

 

Affiliated issuers

 

 

38,473

 

Income from securities lending—Note 1(c)

 

 

89,862

 

Interest

 

 

32,800

 

Total Income

 

 

6,233,441

 

Expenses:

 

 

 

 

Management fee—Note 3(a)

 

 

3,564,477

 

Shareholder servicing costs—Note 3(c)

 

 

1,351,479

 

Distribution fees—Note 3(b)

 

 

186,193

 

Professional fees

 

 

95,663

 

Registration fees

 

 

73,795

 

Prospectus and shareholders’ reports

 

 

69,692

 

Directors’ fees and expenses—Note 3(d)

 

 

36,961

 

Custodian fees—Note 3(c)

 

 

14,373

 

Chief Compliance Officer fees—Note 3(c)

 

 

13,975

 

Loan commitment fees—Note 2

 

 

9,052

 

Interest expense—Note 2

 

 

4,214

 

Miscellaneous

 

 

44,318

 

Total Expenses

 

 

5,464,192

 

Investment Income—Net

 

 

769,249

 

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

 

 

Net realized gain (loss) on investments

13,719,423

 

Capital gain distributions from affiliated issuers

707

 

Net Realized Gain (Loss)

 

 

13,720,130

 

Net change in unrealized appreciation (depreciation) on investments

35,147,037

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

48,867,167

 

Net Increase in Net Assets Resulting from Operations

 

49,636,416

 

 

 

 

 

 

 

 

See notes to financial statements.

         

16

 

STATEMENT OF CHANGES IN NET ASSETS

                   

 

 

 

 

Year Ended August 31,

 

 

 

 

2020

 

2019

 

Operations ($):

 

 

 

 

 

 

 

 

Investment income—net

 

 

769,249

 

 

 

1,676,849

 

Net realized gain (loss) on investments

 

13,720,130

 

 

 

(3,479,590)

 

Net change in unrealized appreciation
(depreciation) on investments

 

35,147,037

 

 

 

(109,890,127)

 

Net Increase (Decrease) in Net Assets
Resulting from Operations

49,636,416

 

 

 

(111,692,868)

 

Distributions ($):

 

Distributions to shareholders:

 

 

 

 

 

 

 

 

Class A

 

 

(901,623)

 

 

 

(89,325,514)

 

Class C

 

 

(238)

 

 

 

(10,375,746)

 

Class I

 

 

(732,913)

 

 

 

(80,239,051)

 

Class Y

 

 

(48,476)

 

 

 

(2,340,142)

 

Total Distributions

 

 

(1,683,250)

 

 

 

(182,280,453)

 

Capital Stock Transactions ($):

 

Net proceeds from shares sold:

 

 

 

 

 

 

 

 

Class A

 

 

17,711,916

 

 

 

30,692,805

 

Class C

 

 

715,583

 

 

 

3,001,837

 

Class I

 

 

20,935,087

 

 

 

75,738,264

 

Class Y

 

 

941,882

 

 

 

1,932,209

 

Distributions reinvested:

 

 

 

 

 

 

 

 

Class A

 

 

847,239

 

 

 

83,230,860

 

Class C

 

 

210

 

 

 

9,141,082

 

Class I

 

 

700,605

 

 

 

77,500,604

 

Class Y

 

 

36,142

 

 

 

1,604,933

 

Cost of shares redeemed:

 

 

 

 

 

 

 

 

Class A

 

 

(104,233,826)

 

 

 

(113,695,003)

 

Class C

 

 

(14,341,047)

 

 

 

(16,238,435)

 

Class I

 

 

(111,672,519)

 

 

 

(330,412,765)

 

Class Y

 

 

(5,550,332)

 

 

 

(5,706,302)

 

Increase (Decrease) in Net Assets
from Capital Stock Transactions

(193,909,060)

 

 

 

(183,209,911)

 

Total Increase (Decrease) in Net Assets

(145,955,894)

 

 

 

(477,183,232)

 

Net Assets ($):

 

Beginning of Period

 

 

580,030,898

 

 

 

1,057,214,130

 

End of Period

 

 

434,075,004

 

 

 

580,030,898

 

17