UNITED STATES | ||||
FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
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Investment Company Act file number 811-03940 | ||||
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| BNY Mellon Strategic Funds, Inc. |
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| (Exact name of Registrant as specified in charter) |
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| c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street New York, New York 10286 |
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| (Address of principal executive offices) (Zip code) |
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| Bennett A. MacDougall, Esq. 240 Greenwich Street New York, New York 10286 |
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| (Name and address of agent for service) |
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Registrant's telephone number, including area code: (212) 922-6400 | ||||
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Date of fiscal year end: 05/31 | ||||
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Date of reporting period: 11/30/19
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The following N-CSR relates only to the Registrant's series listed below and does not relate to any series of the Registrant with a different fiscal year end and, therefore, different N-CSR reporting requirements. A separate N-CSR will be filed for any series with a different fiscal year end, as appropriate.
BNY Mellon Select Managers Small Cap Growth Fund
FORM N-CSR
Item 1. Reports to Stockholders.
BNY Mellon Select Managers Small Cap Growth Fund
SEMIANNUAL REPORT November 30, 2019 |
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The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
BNY Mellon Investment Adviser, Inc. | |
With Those of Other Funds | |
in Affiliated Issuers | |
the Fund’s Management and | |
Sub-Investment Advisory Agreements |
FOR MORE INFORMATION
Back Cover
| The Fund |
A LETTER FROM THE PRESIDENT OF BNY MELLON INVESTMENT ADVISER, INC.
Dear Shareholder:
We are pleased to present this semiannual report for BNY Mellon Select Managers Small Cap Growth Fund (formerly, Dreyfus Select Managers Small Cap Growth Fund), covering the six-month period from June 1, 2019 through November 30, 2019. 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.
U.S. equity markets experienced bouts of brief volatility during the reporting period, caused in part by concerns over slowing global growth and trade tensions. Prior to the start of the period, mounting trade disputes ended a strong equity market rally. However, stocks recovered in June 2019 and generally experienced an upward trajectory through the month of July. Prices were buoyed by hopes of a U.S.-China trade deal and the steady, although moderate, pace of U.S. economic growth. Nevertheless, concerns over slowing global growth persisted, resulting in bouts of market volatility in August 2019. Stocks rebounded in September and continued an upward path through most of October 2019, supported in part by central bank policy and consistent consumer spending. Near the end of the period, an announcement by President Trump that the first phase of a trade deal with China had been achieved sent U.S. markets to record highs.
In fixed-income markets, indices generally rose during the reporting period, as mixed economic data and the Federal Reserve’s (the “Fed”) new data-dependent stance regarding future policy moves suggested the economy could be slowing. Markets had been expecting a loosening of monetary policy, and at the end of July 2019, the Fed cut the federal funds rate by 25 basis points. The Fed cut rates again in September and October, for a total 75-basis-point reduction in the federal funds rate during the reporting period. Rates across much of the Treasury curve saw a slight increase during the month of November. However, demand for fixed-income instruments during much of the reporting period was strong, which helped to support positive bond market returns.
We remain optimistic on the near-term economic outlook for the U.S. but will monitor relevant data for any signs of a change. As always, 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.
December 16, 2019
2
DISCUSSION OF FUND PERFORMANCE(Unaudited)
For the period from June 1, 2019 through November 30, 2019, as provided by portfolio allocation managers Stephen Kolano and Elena Goncharova
Market and Fund Performance Overview
For the six-month period ended November 30, 2019, BNY Mellon Select Managers Small Cap Growth Fund’s (formerly, Dreyfus Select Managers Small Cap Growth Fund) Class A, Class C, Class I and Class Y shares at NAV produced total returns of 9.62%, 9.19%, 9.77% and 9.81%, respectively.1 In comparison, the Russell 2000® Growth Index (the “Index”), the fund’s benchmark, returned 12.39% for the same period.2
Small-cap growth stocks gained ground over the reporting period, amid steady economic growth and corporate earnings. The fund lagged the Index, mainly due to unfavorable asset allocation and security selections, primarily in the health care and industrials sectors.
The Fund’s Investment Approach
The fund seeks capital appreciation. To pursue its goal, the fund normally invests at least 80% of its assets in the stocks of small-cap companies. The fund’s portfolio is constructed to have a growth tilt.
The fund uses a “multi-manager” approach by selecting various subadvisors to manage its assets. We may hire, terminate or replace subadvisors and modify material terms and conditions of subadvisory arrangements without shareholder approval.
The fund’s assets are currently allocated to six subadvisors, each acting independently and using its own methodology to select portfolio investments. At the end of the reporting period, 13% of the fund’s assets were under the management of Redwood Investments, LLC, which employs a blend of quantitative and qualitative research to build growth and core equity portfolios; approximately 18% of the fund’s assets were under the management of Geneva Capital Management, which employs bottom-up fundamental analysis supplemented by top-down considerations to identify companies with a consistent, sustainable record of growth; approximately 13% of the fund’s assets were under the management of Nicholas Investment Partners, L.P., which uses a bottom-up approach to security selection, combining rigorous fundamental analysis with the discipline and objectivity of quantitative analytics; EAM Investors, LLC, which managed 21% of the fund’s assets, which chooses investments through bottom-up fundamental analysis using a blend of a quantitative discovery process and a qualitative analysis process; approximately 10% of the fund’s assets were managed by Granite Investment Partners, LLC, which seeks attractively valued, small-cap companies with catalysts for growth; and 25% of the fund’s assets were managed by Rice Hall James & Associates LLC, which seeks growing companies with high earnings growth, high or improving returns on invested capital and sustainable competitive advantages. The percentages of the fund’s assets allocated to the various subadvisors can change over time, within ranges described in the prospectus.
Stocks Gain on Interest Rate Cuts
During the reporting period, the Federal Reserve (the “Fed”) reduced the fed funds rate three times, shifting from a hawkish stance late in 2018. The three rate cuts brought the fed funds target rate to 1.50-1.75%.
3
DISCUSSION OF FUND PERFORMANCE(Unaudited) (continued)
The reporting period began with wide expectations of interest rate cuts, as the Fed had earlier moved from a tightening policy to one that was “data dependent.” With this shift, stocks rallied late in 2018 and continued to rise early in 2019.
At its July 2019 meeting, the Fed announced an initial reduction, bringing the fed funds rate to 2.00-2.25%. The Fed followed up with two additional rate cuts in September and October 2019, as trade tensions and other geopolitical concerns appeared to be weighing on economic growth. Other major central banks were also supportive. U.S. markets were steady through most of the reporting period, though investors were somewhat concerned about trade tensions and the global economy. But at the end of the period, stocks finished on an uptrend, as investors became optimistic about a U.S.-China trade agreement.
Growth stocks and lower quality stocks outperformed early in the reporting period, as markets responded to the Fed’s data-dependent approach. But in September 2019, growth stocks began to lag, and value stocks and those of highly leveraged companies continued to gain through the end of the reporting period, in anticipation of lower interest rates and continued economic growth.
Asset Allocation and Security Selections Hindered Fund Performance
The fund’s relative underperformance versus the Index was mainly the result of unfavorable asset allocation and stock selections by the fund’s underlying portfolio managers. The fund had greater exposure to higher quality companies, but lower quality companies generally outperformed, particularly late in the period, as interest rates came down. The biggest detractors from performance were underweighted positions in the health care and industrials sectors, which outperformed the Index. As for stock selection, in the industrial sector, the fund’s decision on Builders FirstSource was detrimental, as the building supply company gained more than 80% on a strong housing sector. The fund purchased a smaller weight in the stock relative to the benchmark after most of the return was already generated. In the health care sector, the fund’s underweight ofArray BioPharma, hurt performance, as the company benefited from its acquisition by Pfizer. The fund was also hindered by positions in the for-profit education industry, which lagged the Index due to concerns about possible regulatory impacts. Specifically, positions in Strategic Education and Grand Canyon Education were detrimental.
On the other hand, the fund benefited slightly from a slight underweight to the communications services sector, which was one of the worst performing sectors. Stock selection contributed most positively in the information technology sector. Positions in the media and advertising industry, including holdings of Cardlytics, a marketing firm, and Digital Turbine, a specialist in mobile advertising, were the largest positive contributors. Another positive contributor was a position in Cypress Semiconductor, which gained 33% on its acquisition by Infineon Technologies, a German semiconductor company.
A Cautious Outlook
The economy is in the latter stages of the business cycle, and growth is beginning to slow. Geopolitical tensions, including continued uncertainty about Brexit, even in the wake of the UK election, as well as the U.S. election in November 2020, may weigh on stocks in the coming months. The fund will, therefore, continue to maintain a greater exposure to higher quality stocks. In line with more defensive positioning, the fund made a change in allocations
4
to underlying managers during the period, moving 3% from Nicholas Investment Partners, L.P. to Redwood Investments LLC.
December 16, 2019
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Return figures provided reflect the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an undertaking in effect through September 30, 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 2000® Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher growth earning potential as defined by Russell’s leading style methodology. The Russell 2000® Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth segment. The index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth 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 prices of small company stocks tend to be more volatile than the prices of large company stocks, mainly because these companies have less established and more volatile earnings histories. They also tend to be less liquid than larger company stocks.
5
UNDERSTANDING YOUR FUND’S EXPENSES(Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon Select Managers Small Cap Growth Fund from June 1, 2019 to November 30, 2019. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
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Assume actual returns for the six months ended November 30, 2019 |
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| Class A | Class C | Class I | Class Y |
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Expense paid per $1,000† | $6.81 | $10.72 | $5.30 | $5.04 |
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Ending value (after expenses) | $1,096.20 | $1,091.90 | $1,097.70 | $1,098.10 |
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COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
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Assuming a hypothetical 5% annualized return for the six months ended November 30, 2019 |
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| Class A | Class C | Class I | Class Y |
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Expense paid per $1,000† | $6.56 | $10.33 | $5.10 | $4.85 |
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Ending value (after expenses) | $1,018.50 | $1,014.75 | $1,019.95 | $1,020.20 |
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† Expenses are equal to the fund’s annualized expense ratio of 1.30% for Class A, 2.05% for Class C, 1.01% for Class I and .96% for Class Y, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS
November 30, 2019 (Unaudited)
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% | |||||||
Automobiles & Components - 2.1% | |||||||
Dorman Products | 20,716 | a,b | 1,539,613 | ||||
Fox Factory Holding | 41,188 | a,b | 2,715,525 | ||||
Gentex | 28,347 | 805,055 | |||||
LCI Industries | 38,447 | a | 4,093,068 | ||||
Stoneridge | 30,290 | b | 912,941 | ||||
Visteon | 21,225 | a,b | 1,985,174 | ||||
12,051,376 | |||||||
Banks - 3.2% | |||||||
Axos Financial | 130,210 | b | 3,834,684 | ||||
Bank OZK | 53,160 | 1,577,789 | |||||
Carolina Financial | 10,703 | 452,630 | |||||
Central Pacific Financial | 25,490 | 740,739 | |||||
Columbia Banking System | 17,634 | 689,137 | |||||
Essent Group | 35,478 | 1,938,873 | |||||
Federal Agricultural Mortgage, Cl. C | 13,454 | 1,117,355 | |||||
First Financial Bankshares | 45,244 | a | 1,564,085 | ||||
First Foundation | 22,979 | 376,626 | |||||
National Bank Holdings, Cl. A | 17,191 | 616,125 | |||||
Pacific Premier Bancorp | 46,734 | 1,497,357 | |||||
Pennymac Financial Services | 29,259 | a | 1,003,876 | ||||
Seacoast Banking Corp. of Florida | 25,690 | b | 764,278 | ||||
Texas Capital Bancshares | 30,051 | b | 1,736,948 | ||||
17,910,502 | |||||||
Capital Goods - 10.3% | |||||||
AAON | 39,232 | a | 1,936,884 | ||||
Advanced Drainage Systems | 23,059 | a | 879,931 | ||||
AECOM | 20,231 | b | 876,609 | ||||
Aerojet Rocketdyne Holdings | 15,644 | b | 691,465 | ||||
Albany International, Cl. A | 10,219 | 855,126 | |||||
American Woodmark | 8,903 | b | 916,119 | ||||
Armstrong World Industries | 38,066 | 3,655,097 | |||||
Atkore International Group | 26,267 | b | 1,095,859 | ||||
Axon Enterprise | 14,960 | b | 1,104,048 | ||||
Barnes Group | 26,399 | 1,562,557 | |||||
BMC Stock Holdings | 29,888 | b | 884,984 | ||||
Builders FirstSource | 62,722 | b | 1,593,766 | ||||
Chart Industries | 32,827 | b | 1,812,051 | ||||
Continental Building Products | 31,177 | b | 1,147,002 | ||||
Cubic | 14,656 | a | 872,765 | ||||
Donaldson | 41,127 | 2,306,402 | |||||
Douglas Dynamics | 15,869 | 858,672 |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Capital Goods - 10.3% (continued) | |||||||
Encore Wire | 15,325 | 894,060 | |||||
Federal Signal | 30,284 | 997,555 | |||||
Generac Holdings | 26,573 | b | 2,617,440 | ||||
Gibraltar Industries | 15,725 | b | 821,160 | ||||
H&E Equipment Services | 34,242 | 1,129,986 | |||||
Kornit Digital | 46,173 | a,b | 1,574,499 | ||||
Kratos Defense & Security Solutions | 73,767 | a,b | 1,332,232 | ||||
Masonite International | 51,433 | b | 3,692,889 | ||||
MasTec | 15,664 | a,b | 1,039,150 | ||||
Mercury Systems | 22,190 | b | 1,625,418 | ||||
Moog, Cl. A | 8,935 | 767,248 | |||||
MSC Industrial Direct, Cl. A | 16,117 | a | 1,183,149 | ||||
PGT Innovations | 95,470 | b | 1,372,859 | ||||
Plug Power | 230,863 | a,b | 900,366 | ||||
Proto Labs | 14,544 | b | 1,409,168 | ||||
Quanta Services | 19,248 | 801,487 | |||||
RBC Bearings | 18,256 | b | 3,028,305 | ||||
SiteOne Landscape Supply | 41,572 | a,b | 3,689,930 | ||||
The Middleby | 5,362 | a,b | 620,705 | ||||
Trex | 52,162 | a,b | 4,489,061 | ||||
Universal Forest Products | 19,179 | 951,278 | |||||
57,987,282 | |||||||
Commercial & Professional Services - 3.7% | |||||||
Brady, Cl. A | 16,605 | 946,485 | |||||
Casella Waste Systems, Cl. A | 20,375 | b | 951,716 | ||||
CBIZ | 50,497 | b | 1,356,349 | ||||
Cimpress | 21,827 | b | 2,796,912 | ||||
Clean Harbors | 9,594 | b | 792,944 | ||||
Deluxe | 15,670 | 800,424 | |||||
Exponent | 50,599 | 3,215,566 | |||||
Franklin Covey | 23,132 | b | 853,802 | ||||
FTI Consulting | 8,247 | b | 898,841 | ||||
Herman Miller | 15,103 | 721,621 | |||||
Huron Consulting Group | 13,505 | b | 905,510 | ||||
IAA | 18,431 | b | 835,477 | ||||
McGrath RentCorp | 21,937 | 1,608,860 | |||||
Tetra Tech | 14,303 | 1,262,812 | |||||
The Brink's Company | 13,353 | 1,241,829 | |||||
Willdan Group | 48,757 | a,b | 1,390,062 | ||||
20,579,210 | |||||||
Consumer Durables & Apparel - 2.7% | |||||||
Acushnet Holdings | 40,992 | a | 1,232,629 | ||||
Callaway Golf | 99,733 | a | 2,072,452 |
8
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Consumer Durables & Apparel - 2.7% (continued) | |||||||
Clarus | 44,755 | 563,465 | |||||
Crocs | 27,458 | b | 958,284 | ||||
Deckers Outdoor | 5,378 | b | 904,472 | ||||
Installed Building Products | 11,811 | b | 846,849 | ||||
KB Home | 35,654 | 1,232,915 | |||||
Kontoor Brands | 17,987 | a | 644,834 | ||||
M/I Homes | 19,011 | b | 841,617 | ||||
Peloton Interactive, Cl. A | 27,249 | a,b | 959,982 | ||||
Skyline Champion | 44,590 | b | 1,479,496 | ||||
Steven Madden | 24,136 | 1,025,056 | |||||
Tempur Sealy International | 9,046 | b | 767,824 | ||||
TopBuild | 10,341 | b | 1,140,405 | ||||
YETI Holdings | 18,009 | a,b | 573,046 | ||||
15,243,326 | |||||||
Consumer Services - 5.9% | |||||||
BJ‘s Restaurants | 5,933 | a | 244,143 | ||||
Bright Horizons Family Solutions | 25,681 | b | 3,865,504 | ||||
Century Casinos | 147,396 | b | 1,193,908 | ||||
Chegg | 22,917 | a,b | 888,492 | ||||
Churchill Downs | 10,256 | 1,333,383 | |||||
Dave & Buster's Entertainment | 89,432 | a | 3,593,378 | ||||
Denny's | 28,436 | b | 555,639 | ||||
Eldorado Resorts | 7,023 | b | 375,801 | ||||
Frontdoor | 27,476 | b | 1,243,564 | ||||
Grand Canyon Education | 8,255 | b | 703,243 | ||||
Kura Sushi USA, Cl. A | 7,349 | b | 190,633 | ||||
Papa John's International | 63,176 | a | 3,997,778 | ||||
Planet Fitness, Cl. A | 21,517 | b | 1,590,537 | ||||
Scientific Games | 29,014 | a,b | 793,823 | ||||
Strategic Education | 27,770 | 3,936,120 | |||||
Texas Roadhouse | 32,480 | a | 1,880,592 | ||||
The Cheesecake Factory | 39,234 | a | 1,710,995 | ||||
The Wendy's Company | 32,093 | a | 688,074 | ||||
Vail Resorts | 10,991 | a | 2,667,186 | ||||
Wingstop | 9,758 | 780,640 | |||||
WW International | 18,985 | b | 821,861 | ||||
33,055,294 | |||||||
Diversified Financials - 1.7% | |||||||
Apollo Global Management | 21,340 | 934,692 | |||||
Ares Management, Cl. A | 26,876 | a | 889,327 | ||||
Cannae Holdings | 23,492 | b | 880,715 | ||||
Capstead Mortgage | 56,934 | a,c | 442,947 | ||||
Cohen & Steers | 12,217 | a | 820,127 |
9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Diversified Financials - 1.7% (continued) | |||||||
Hamilton Lane, Cl. A | 13,084 | 758,872 | |||||
Hercules Capital | 72,880 | a | 1,044,370 | ||||
MarketAxess Holdings | 5,775 | 2,332,060 | |||||
OneMain Holdings | 21,043 | 906,743 | |||||
PRA Group | 14,885 | b | 545,386 | ||||
9,555,239 | |||||||
Energy - 1.0% | |||||||
Core Laboratories | 22,156 | 970,433 | |||||
DHT Holdings | 113,192 | 830,829 | |||||
Diamond S Shipping | 50,027 | a,b | 721,890 | ||||
International Seaways | 28,936 | b | 766,225 | ||||
Nordic American Tankers | 217,394 | 786,966 | |||||
Oceaneering International | 55,043 | b | 738,127 | ||||
Scorpio Tankers | 23,917 | 822,506 | |||||
5,636,976 | |||||||
Food & Staples Retailing - .5% | |||||||
Casey's General Stores | 5,299 | a | 920,807 | ||||
Grocery Outlet Holding | 19,430 | b | 643,716 | ||||
Sprouts Farmers Market | 17,236 | b | 341,273 | ||||
The Chefs' Warehouse | 23,246 | b | 826,628 | ||||
2,732,424 | |||||||
Food, Beverage & Tobacco - 1.8% | |||||||
Freshpet | 38,641 | b | 2,076,567 | ||||
J&J Snack Foods | 13,902 | a | 2,571,870 | ||||
Nomad Foods | 35,511 | b | 745,731 | ||||
The Simply Good Foods Company | 174,278 | b | 4,815,301 | ||||
10,209,469 | |||||||
Health Care Equipment & Services - 10.7% | |||||||
Addus HomeCare | 9,687 | b | 902,925 | ||||
Alphatec Holdings | 102,013 | b | 719,192 | ||||
Amedisys | 7,759 | b | 1,264,407 | ||||
AMN Healthcare Services | 21,153 | b | 1,257,969 | ||||
Antares Pharma | 166,202 | b | 786,135 | ||||
Cantel Medical | 27,560 | a | 2,119,364 | ||||
CONMED | 10,816 | 1,225,128 | |||||
Cutera | 26,667 | b | 1,021,346 | ||||
Glaukos | 9,876 | a,b | 633,348 | ||||
Globus Medical, Cl. A | 36,650 | b | 2,050,567 | ||||
Guardant Health | 6,848 | a,b | 531,884 | ||||
Haemonetics | 5,684 | b | 685,490 | ||||
HealthEquity | 29,042 | b | 1,826,451 | ||||
HealthStream | 32,055 | b | 933,762 | ||||
Heska | 9,356 | a,b | 893,498 |
10
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Health Care Equipment & Services - 10.7% (continued) | |||||||
HMS Holdings | 28,353 | b | 856,261 | ||||
Inspire Medical Systems | 24,088 | b | 1,709,285 | ||||
Insulet | 4,744 | b | 880,961 | ||||
LeMaitre Vascular | 32,648 | a | 1,161,289 | ||||
LHC Group | 22,595 | b | 3,014,173 | ||||
Livongo Health, Cl. A | 18,927 | b | 540,555 | ||||
Masimo | 25,494 | b | 3,953,354 | ||||
Neogen | 32,755 | b | 2,180,500 | ||||
Nevro | 9,028 | b | 1,009,150 | ||||
Novocure | 38,980 | a,b | 3,593,177 | ||||
Omnicell | 47,410 | b | 3,792,326 | ||||
Penumbra | 7,509 | a,b | 1,328,492 | ||||
PetIQ | 54,822 | a,b | 1,260,906 | ||||
Phreesia | 22,958 | a,b | 645,579 | ||||
Premier, Cl. A | 118,970 | a,b | 4,228,194 | ||||
Select Medical Holdings | 44,774 | b | 989,953 | ||||
Sientra | 78,108 | b | 668,604 | ||||
Silk Road Medical | 20,123 | b | 724,830 | ||||
STAAR Surgical | 44,503 | a,b | 1,640,381 | ||||
Tabula Rasa HealthCare | 30,112 | a,b | 1,343,296 | ||||
Tactile Systems Technology | 50,522 | a,b | 3,244,018 | ||||
Tandem Diabetes Care | 10,425 | b | 719,638 | ||||
Teladoc Health | 11,988 | a,b | 1,003,875 | ||||
Teleflex | 2,773 | 979,812 | |||||
Vocera Communications | 62,637 | a,b | 1,359,223 | ||||
Zynex | 63,932 | a,b | 671,286 | ||||
60,350,584 | |||||||
Household & Personal Products - 1.1% | |||||||
e.l.f. Beauty | 20,451 | b | 338,873 | ||||
Inter Parfums | 26,590 | 1,874,329 | |||||
Medifast | 33,213 | a | 2,919,755 | ||||
WD-40 | 4,983 | 962,267 | |||||
6,095,224 | |||||||
Insurance - 1.8% | |||||||
eHealth | 18,600 | a,b | 1,716,036 | ||||
Horace Mann Educators | 16,929 | 734,888 | |||||
Kemper | 9,902 | 731,956 | |||||
Kinsale Captial Group | 38,044 | 3,852,336 | |||||
Palomar Holdings | 35,065 | b | 1,913,497 | ||||
ProAssurance | 24,100 | 906,160 | |||||
9,854,873 | |||||||
Materials - 2.1% | |||||||
Balchem | 19,693 | b | 1,962,014 |
11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Materials - 2.1% (continued) | |||||||
Carpenter Technology | 24,295 | 1,277,188 | |||||
Graphic Packaging Holding | 55,965 | 910,551 | |||||
Ingevity | 40,628 | b | 3,669,115 | ||||
Materion | 8,957 | 527,209 | |||||
Neenah | 13,181 | 959,313 | |||||
Norbord | 15,758 | 445,006 | |||||
Sensient Technologies | 21,465 | a | 1,358,520 | ||||
US Concrete | 11,614 | b | 475,361 | ||||
11,584,277 | |||||||
Media & Entertainment - 1.6% | |||||||
Cardlytics | 28,487 | b | 1,596,696 | ||||
Criteo, ADR | 102,535 | b | 1,830,250 | ||||
EverQuote, Cl. A | 34,365 | b | 1,209,992 | ||||
Scholastic | 27,986 | 1,039,120 | |||||
The New York Times Company, Cl. A | 32,077 | a | 1,034,483 | ||||
World Wrestling Entertainment, Cl. A | 33,744 | a | 2,092,803 | ||||
8,803,344 | |||||||
Pharmaceuticals Biotechnology & Life Sciences - 12.6% | |||||||
ACADIA Pharmaceuticals | 26,318 | b | 1,191,942 | ||||
Aerie Pharmaceuticals | 71,600 | a,b | 1,359,685 | ||||
Aimmune Therapeutics | 42,137 | a,b | 1,176,465 | ||||
Akebia Therapeutics | 81,573 | a,b | 513,094 | ||||
Allakos | 11,001 | a,b | 1,045,095 | ||||
Amarin, ADR | 39,861 | a,b | 847,843 | ||||
argenx, ADR | 5,722 | a,b | 847,142 | ||||
Arrowhead Pharmaceuticals | 19,875 | a,b | 1,451,074 | ||||
Axsome Therapeutics | 22,026 | a,b | 867,164 | ||||
BioDelivery Sciences International | 129,031 | b | 879,991 | ||||
Biohaven Pharmaceutical Holding | 18,639 | a,b | 1,068,387 | ||||
BioSpecifics Technologies | 21,425 | b | 1,178,375 | ||||
Bio-Techne | 14,987 | 3,270,913 | |||||
CareDx | 21,762 | b | 446,556 | ||||
Codexis | 31,764 | a,b | 493,613 | ||||
Collegium Pharmaceutical | 65,073 | b | 1,414,036 | ||||
CRISPR Therapeutics | 6,269 | b | 449,174 | ||||
Dicerna Pharmaceuticals | 40,500 | b | 974,430 | ||||
Emergent BioSolutions | 59,216 | b | 3,248,590 | ||||
Epizyme | 43,035 | b | 710,938 | ||||
Exact Sciences | 8,768 | a,b | 710,296 | ||||
Global Blood Therapeutics | 45,374 | a,b | 3,017,371 | ||||
GW Pharmaceuticals, ADR | 6,000 | b | 612,660 | ||||
Halozyme Therapeutics | 71,554 | a,b | 1,387,432 | ||||
Horizon Therapeutics | 73,825 | b | 2,419,983 |
12
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Pharmaceuticals Biotechnology & Life Sciences - 12.6% (continued) | |||||||
Immunomedics | 123,219 | a,b | 2,314,053 | ||||
Insmed | 28,023 | a,b | 645,930 | ||||
Iovance Biotherapeutics | 29,447 | b | 672,275 | ||||
Karuna Therapeutics | 10,648 | a,b | 765,378 | ||||
Karyopharm Therapeutics | 49,209 | a,b | 862,142 | ||||
Krystal Biotech | 30,274 | a,b | 1,710,784 | ||||
Ligand Pharmaceuticals | 34,005 | a,b | 3,842,565 | ||||
Medpace Holdings | 8,656 | b | 663,656 | ||||
MyoKardia | 12,133 | a,b | 790,465 | ||||
Myriad Genetics | 27,261 | a,b | 701,698 | ||||
Natera | 51,716 | b | 1,887,117 | ||||
Nektar Therapeutics | 46,311 | a,b | 939,650 | ||||
NeoGenomics | 166,204 | a,b | 4,289,725 | ||||
Optinose | 76,639 | a,b | 715,808 | ||||
Pacira Biosciences | 32,099 | b | 1,483,616 | ||||
Personalis | 7,908 | b | 70,381 | ||||
Prestige Consumer Healthcare | 46,735 | a,b | 1,765,181 | ||||
Puma Biotechnology | 31,478 | a,b | 298,726 | ||||
Reata Pharmaceuticals, Cl. A | 19,794 | a,b | 3,862,403 | ||||
Repligen | 32,394 | b | 2,874,967 | ||||
Revance Therapeutics | 60,105 | b | 1,075,879 | ||||
Sage Therapeutics | 2,401 | a,b | 371,603 | ||||
Sarepta Therapeutics | 5,430 | a,b | 610,821 | ||||
Supernus Pharmaceuticals | 95,554 | b | 2,234,052 | ||||
The Medicines Company | 15,912 | a,b | 1,339,790 | ||||
Turning Point Therapeutics | 13,463 | b | 756,890 | ||||
uniQure | 15,416 | a,b | 858,055 | ||||
Vericel | 41,357 | b | 771,722 | ||||
70,757,581 | |||||||
Real Estate - 2.6% | |||||||
Americold Realty Trust | 72,356 | a,c | 2,722,033 | ||||
Independence Realty Trust | 58,647 | c | 876,186 | ||||
Marcus & Millichap | 21,106 | a,b | 775,857 | ||||
Monmouth Real Estate Investment | 59,141 | c | 906,632 | ||||
Newmark Group, Cl. A | 66,072 | 862,240 | |||||
NexPoint Residential Trust | 32,602 | c | 1,560,006 | ||||
QTS Realty Trust, Cl. A | 20,923 | c | 1,110,384 | ||||
RE/MAX Holdings, Cl. A | 36,449 | 1,397,819 | |||||
Retail Opportunity Investments | 48,531 | c | 885,205 | ||||
Terreno Realty | 63,711 | c | 3,677,400 | ||||
14,773,762 |
13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Retailing - 3.7% | |||||||
Aaron's | 4,579 | 267,414 | |||||
Boot Barn Holdings | 32,575 | a,b | 1,297,136 | ||||
Etsy | 37,315 | b | 1,619,098 | ||||
Five Below | 6,688 | b | 827,372 | ||||
Floor & Decor Holdings, Cl. A | 13,589 | b | 652,408 | ||||
Funko, Cl. A | 40,197 | b | 573,611 | ||||
Lithia Motors, Cl. A | 15,164 | a | 2,435,035 | ||||
Ollie's Bargain Outlet Holdings | 31,120 | a,b | 2,035,248 | ||||
Points International | 38,789 | b | 517,057 | ||||
Pool | 25,604 | 5,285,946 | |||||
RH | 5,284 | a,b | 1,086,338 | ||||
Shutterstock | 59,529 | a,b | 2,475,216 | ||||
Sonic Automotive, Cl. A | 26,763 | 876,488 | |||||
The Buckle | 30,639 | a | 852,377 | ||||
20,800,744 | |||||||
Semiconductors & Semiconductor Equipment - 5.4% | |||||||
Amkor Technology | 63,816 | b | 771,535 | ||||
Brooks Automation | 24,177 | 1,082,404 | |||||
CEVA | 105,215 | b | 2,727,173 | ||||
Cirrus Logic | 12,196 | b | 874,453 | ||||
Cypress Semiconductor | 72,328 | 1,696,092 | |||||
Entegris | 17,704 | 837,753 | |||||
FormFactor | 40,378 | b | 934,347 | ||||
Inphi | 60,374 | b | 4,203,841 | ||||
Lattice Semiconductor | 135,354 | b | 2,556,837 | ||||
MKS Instruments | 7,421 | 788,704 | |||||
Monolithic Power Systems | 32,938 | 5,292,478 | |||||
ON Semiconductor | 69,085 | b | 1,483,255 | ||||
Power Integrations | 18,098 | 1,655,786 | |||||
Semtech | 79,744 | b | 3,864,394 | ||||
SolarEdge Technologies | 5,869 | b | 478,969 | ||||
Ultra Clean Holdings | 45,938 | b | 1,021,661 | ||||
30,269,682 | |||||||
Software & Services - 15.7% | |||||||
ACI Worldwide | 115,993 | b | 4,349,737 | ||||
Agilysys | 24,998 | b | 633,199 | ||||
Alarm.com Holdings | 38,789 | a,b | 1,691,976 | ||||
Alteryx, Cl. A | 8,090 | a,b | 918,458 | ||||
AppFolio, Cl. A | 13,785 | a,b | 1,556,602 | ||||
Appian | 22,481 | a,b | 968,481 | ||||
Aspen Technology | 6,111 | b | 766,319 | ||||
Avalara | 23,526 | 1,835,734 | |||||
Blackbaud | 22,412 | a | 1,857,507 |
14
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Software & Services - 15.7% (continued) | |||||||
BlackLine | 29,073 | a,b | 1,564,709 | ||||
Bottomline Technologies | 41,188 | b | 2,038,394 | ||||
CACI International, Cl. A | 14,833 | b | 3,549,833 | ||||
Carbonite | 11,020 | b | 253,460 | ||||
Cornerstone OnDemand | 17,448 | b | 1,076,018 | ||||
Coupa Software | 7,346 | a,b | 1,127,538 | ||||
Digital Turbine | 120,037 | b | 1,065,929 | ||||
Elastic | 9,543 | b | 757,810 | ||||
Envestnet | 37,980 | b | 2,704,556 | ||||
Euronet Worldwide | 8,500 | b | 1,336,115 | ||||
Everbridge | 23,838 | b | 2,096,314 | ||||
Evo Payments, Cl. A | 51,376 | b | 1,442,124 | ||||
ExlService Holdings | 27,270 | b | 1,903,719 | ||||
Fair Isaac | 10,541 | b | 3,876,453 | ||||
Five9 | 57,716 | b | 3,934,500 | ||||
j2 Global | 38,484 | a | 3,733,718 | ||||
KBR | 33,214 | 988,781 | |||||
LivePerson | 83,861 | a,b | 3,328,443 | ||||
Manhattan Associates | 7,308 | b | 610,291 | ||||
ManTech International, Cl. A | 12,073 | 936,623 | |||||
MAXIMUS | 36,377 | 2,715,543 | |||||
MiX Telematics, ADR | 44,233 | 537,431 | |||||
Model N | 31,311 | b | 952,481 | ||||
Nuance Communications | 51,168 | b | 917,442 | ||||
Paycom Software | 10,633 | a,b | 2,943,321 | ||||
Paylocity Holding | 7,229 | b | 884,251 | ||||
Perficient | 25,953 | b | 1,097,293 | ||||
Q2 Holdings | 23,802 | a,b | 2,009,603 | ||||
Rapid7 | 11,243 | b | 630,395 | ||||
Smartsheet, Cl. A | 18,585 | a,b | 881,487 | ||||
Switch, Cl. A | 65,880 | 1,038,269 | |||||
The Descartes Systems Group | 75,630 | b | 3,239,233 | ||||
The Trade Desk, Cl. A | 17,814 | a,b | 4,691,139 | ||||
Tyler Technologies | 7,914 | b | 2,296,405 | ||||
Upland Software | 14,642 | b | 566,792 | ||||
Wix.com | 33,862 | a,b | 4,093,577 | ||||
WNS Holdings, ADR | 66,650 | b | 4,206,948 | ||||
Workiva | 38,794 | b | 1,682,496 | ||||
88,287,447 | |||||||
Technology Hardware & Equipment - 3.3% | |||||||
CalAmp | 62,391 | b | 654,482 | ||||
ePlus | 20,655 | b | 1,726,138 | ||||
Harmonic | 115,512 | b | 954,129 |
15
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Description | Shares | Value ($) | |||||
Common Stocks - 97.3% (continued) | |||||||
Technology Hardware & Equipment - 3.3% (continued) | |||||||
Infinera | 117,332 | b | 748,578 | ||||
Insight Enterprises | 8,790 | b | 576,536 | ||||
Itron | 12,614 | b | 1,010,129 | ||||
Ituran Location and Control | 14,930 | a | 358,320 | ||||
Jabil | 23,947 | 930,101 | |||||
KEMET | 43,479 | 1,161,759 | |||||
Knowles | 115,646 | a,b | 2,532,648 | ||||
Lumentum Holdings | 11,871 | b | 874,418 | ||||
Novanta | 16,897 | b | 1,574,462 | ||||
Plexus | 11,234 | b | 852,661 | ||||
Rogers | 8,555 | b | 1,112,321 | ||||
SYNNEX | 7,277 | 893,688 | |||||
Viavi Solutions | 168,345 | b | 2,528,542 | ||||
18,488,912 | |||||||
Telecommunication Services - .4% | |||||||
Boingo Wireless | 183,588 | b | 2,113,098 | ||||
Transportation - 3.0% | |||||||
Allegiant Travel | 13,307 | 2,258,597 | |||||
Copa Holdings, Cl. A | 8,706 | 907,688 | |||||
Echo Global Logistics | 79,472 | b | 1,591,824 | ||||
Genesee & Wyoming, Cl. A | 16,927 | b | 1,886,514 | ||||
Hub Group, Cl. A | 18,395 | b | 939,433 | ||||
Marten Transport | 120,019 | 2,536,001 | |||||
Saia | 22,220 | b | 2,108,678 | ||||
SkyWest | 22,864 | 1,432,201 | |||||
Werner Enterprises | 20,981 | 771,262 | |||||
XPO Logistics | 28,168 | a,b | 2,329,212 | ||||
16,761,410 | |||||||
Utilities - .4% | |||||||
American States Water | 16,349 | a | 1,394,406 | ||||
SJW Group | 15,167 | 1,074,127 | |||||
2,468,533 | |||||||
Total Common Stocks(cost $398,726,980) | 546,370,569 | ||||||
1-Day | |||||||
Investment Companies - 2.4% | |||||||
Registered Investment Companies - 2.4% | |||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund | 1.63 | 13,708,514 | d | 13,708,514 |
16
Description | 1-Day | Shares | Value ($) | ||||
Investment of Cash Collateral for Securities Loaned - 3.1% | |||||||
Registered Investment Companies - 3.1% | |||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund | 1.63 | 17,124,478 | d | 17,124,478 | |||
Total Investments(cost $429,559,972) | 102.8% | 577,203,561 | |||||
Liabilities, Less Cash and Receivables | (2.8%) | (15,536,923) | |||||
Net Assets | 100.0% | 561,666,638 |
ADR—American Depository Receipt
aSecurity, or portion thereof, on loan. At November 30, 2019, the value of the fund’s securities on loan was $147,847,824 and the value of the collateral was $152,248,256, consisting of cash collateral of $17,124,478 and U.S. Government & Agency securities valued at $135,123,778.
bNon-income producing security.
cInvestment in real estate investment trust within the United States.
dInvestment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.
Portfolio Summary (Unaudited)† | Value (%) |
Information Technology | 24.4 |
Health Care | 23.3 |
Industrials | 17.0 |
Consumer Discretionary | 14.5 |
Financials | 6.7 |
Investment Companies | 5.5 |
Consumer Staples | 3.4 |
Real Estate | 2.6 |
Materials | 2.1 |
Communication Services | 1.9 |
Energy | 1.0 |
Utilities | .4 |
102.8 |
† Based on net assets.
See notes to financial statements.
17
STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS(Unaudited)
Investment Companies | Value | Purchases($) | Sales($) | Value | Net | Dividends/ |
Registered Investment Companies; | ||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund | 22,159,636 | 127,582,021 | 136,033,143 | 13,708,514 | 2.4 | 202,378 |
Investment of Cash Collateral for Securities Loaned; | ||||||
Dreyfus Institutional Preferred Government Money Market Fund | 8,554,144 | 71,689,892 | 63,119,558 | 17,124,478 | 3.1 | - |
Total | 30,713,780 | 199,271,913 | 199,152,701 | 30,832,992 | 5.5 | 202,378 |
See notes to financial statements.
18
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2019 (Unaudited)
|
|
|
|
|
|
|
|
|
| Cost |
| Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See Statement of Investments |
|
|
| |||
Unaffiliated issuers | 398,726,980 |
| 546,370,569 |
| ||
Affiliated issuers |
| 30,832,992 |
| 30,832,992 |
| |
Cash |
|
|
|
| 204,763 |
|
Receivable for investment securities sold |
| 4,078,196 |
| |||
Dividends, interest and securities lending income receivable |
| 262,864 |
| |||
Receivable for shares of Common Stock subscribed |
| 48,136 |
| |||
Tax reclaim receivable |
| 306 |
| |||
Prepaid expenses |
|
|
|
| 30,508 |
|
|
|
|
|
| 581,828,334 |
|
Liabilities ($): |
|
|
|
| ||
Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c) |
| 432,832 |
| |||
Liability for securities on loan—Note 1(b) |
| 17,124,478 |
| |||
Payable for investment securities purchased |
| 2,283,997 |
| |||
Payable for shares of Common Stock redeemed |
| 222,239 |
| |||
Directors’ fees and expenses payable |
| 14,050 |
| |||
Other accrued expenses |
|
|
|
| 84,100 |
|
|
|
|
|
| 20,161,696 |
|
Net Assets ($) |
|
| 561,666,638 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
| 386,905,215 |
|
Total distributable earnings (loss) |
|
|
|
| 174,761,423 |
|
Net Assets ($) |
|
| 561,666,638 |
|
Net Asset Value Per Share | Class A | Class C | Class I | Class Y |
|
Net Assets ($) | 1,627,041 | 456,758 | 15,150,456 | 544,432,383 |
|
Shares Outstanding | 64,043 | 19,824 | 574,142 | 20,608,023 |
|
Net Asset Value Per Share ($) | 25.41 | 23.04 | 26.39 | 26.42 |
|
|
|
|
|
|
|
See notes to financial statements. |
|
|
|
|
|
19
STATEMENT OF OPERATIONS
Six Months Ended November 30, 2019 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Cash dividends (net of $5,955 foreign taxes withheld at source): |
| |||||
Unaffiliated issuers |
|
| 1,469,455 |
| ||
Affiliated issuers |
|
| 202,378 |
| ||
Income from securities lending—Note 1(b) |
|
| 145,257 |
| ||
Interest |
|
| 7,270 |
| ||
Total Income |
|
| 1,824,360 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
| 2,490,273 |
| ||
Professional fees |
|
| 45,838 |
| ||
Registration fees |
|
| 35,358 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
| 30,737 |
| ||
Custodian fees—Note 3(c) |
|
| 27,208 |
| ||
Shareholder servicing costs—Note 3(c) |
|
| 8,007 |
| ||
Loan commitment fees—Note 2 |
|
| 5,540 |
| ||
Prospectus and shareholders’ reports |
|
| 3,390 |
| ||
Distribution fees—Note 3(b) |
|
| 1,930 |
| ||
Miscellaneous |
|
| 28,897 |
| ||
Total Expenses |
|
| 2,677,178 |
| ||
Less—reduction in expenses due to undertaking—Note 3(a) |
|
| (891) |
| ||
Net Expenses |
|
| 2,676,287 |
| ||
Investment (Loss)—Net |
|
| (851,927) |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments | 25,880,988 |
| ||||
Net change in unrealized appreciation (depreciation) on investments | 26,269,489 |
| ||||
Net Realized and Unrealized Gain (Loss) on Investments |
|
| 52,150,477 |
| ||
Net Increase in Net Assets Resulting from Operations |
| 51,298,550 |
| |||
|
|
|
|
|
|
|
See notes to financial statements. |
20
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year Ended |
| ||
Operations ($): |
|
|
|
|
|
|
|
| |
Investment (loss)—net |
|
| (851,927) |
|
|
| (2,346,162) |
| |
Net realized gain (loss) on investments |
| 25,880,988 |
|
|
| 54,704,235 |
| ||
Net change in unrealized appreciation |
| 26,269,489 |
|
|
| (90,428,067) |
| ||
Net Increase (Decrease) in Net Assets | 51,298,550 |
|
|
| (38,069,994) |
| |||
Distributions ($): |
| ||||||||
Distributions to shareholders: |
|
|
|
|
|
|
|
| |
Class A |
|
| - |
|
|
| (300,893) |
| |
Class C |
|
| - |
|
|
| (97,308) |
| |
Class I |
|
| - |
|
|
| (3,269,623) |
| |
Class Y |
|
| - |
|
|
| (98,523,649) |
| |
Total Distributions |
|
| - |
|
|
| (102,191,473) |
| |
Capital Stock Transactions ($): |
| ||||||||
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
| 30,305 |
|
|
| 388,146 |
| |
Class C |
|
| 40,000 |
|
|
| 117,526 |
| |
Class I |
|
| 4,308,695 |
|
|
| 15,250,615 |
| |
Class Y |
|
| 19,037,920 |
|
|
| 77,179,954 |
| |
Distributions reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
| - |
|
|
| 285,487 |
| |
Class C |
|
| - |
|
|
| 95,838 |
| |
Class I |
|
| - |
|
|
| 2,544,517 |
| |
Class Y |
|
| - |
|
|
| 41,630,272 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
| (181,923) |
|
|
| (771,412) |
| |
Class C |
|
| (101,945) |
|
|
| (192,102) |
| |
Class I |
|
| (3,384,793) |
|
|
| (17,108,853) |
| |
Class Y |
|
| (43,749,918) |
|
|
| (261,997,698) |
| |
Increase (Decrease) in Net Assets | (24,001,659) |
|
|
| (142,577,710) |
| |||
Total Increase (Decrease) in Net Assets | 27,296,891 |
|
|
| (282,839,177) |
| |||
Net Assets ($): |
| ||||||||
Beginning of Period |
|
| 534,369,747 |
|
|
| 817,208,924 |
| |
End of Period |
|
| 561,666,638 |
|
|
| 534,369,747 |
|
21
STATEMENT OF CHANGES IN NET ASSETS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Year Ended |
| ||
Capital Share Transactions (Shares): |
| ||||||||
Class Aa,b |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 1,223 |
|
|
| 13,108 |
| |
Shares issued for distributions reinvested |
|
| - |
|
|
| 13,913 |
| |
Shares redeemed |
|
| (7,512) |
|
|
| (28,918) |
| |
Net Increase (Decrease) in Shares Outstanding | (6,289) |
|
|
| (1,897) |
| |||
Class Cb |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 1,832 |
|
|
| 4,129 |
| |
Shares issued for distributions reinvested |
|
| - |
|
|
| 5,120 |
| |
Shares redeemed |
|
| (4,684) |
|
|
| (8,353) |
| |
Net Increase (Decrease) in Shares Outstanding | (2,852) |
|
|
| 896 |
| |||
Class Ia |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 169,331 |
|
|
| 540,784 |
| |
Shares issued for distributions reinvested |
|
| - |
|
|
| 119,629 |
| |
Shares redeemed |
|
| (133,691) |
|
|
| (677,394) |
| |
Net Increase (Decrease) in Shares Outstanding | 35,640 |
|
|
| (16,981) |
| |||
Class Ya |
|
|
|
|
|
|
|
| |
Shares sold |
|
| 747,725 |
|
|
| 2,932,914 |
| |
Shares issued for distributions reinvested |
|
| - |
|
|
| 1,956,310 |
| |
Shares redeemed |
|
| (1,718,260) |
|
|
| (10,113,225) |
| |
Net Increase (Decrease) in Shares Outstanding | (970,535) |
|
|
| (5,224,001) |
| |||
|
|
|
|
|
|
|
|
|
|
a During the period ended November 30, 2019, 167,591 Class Y shares representing $4,268,762 were exchanged 167,741 Class I shares and 350 Class Y shares representing $9,247 were exchanged for 364 Class A shares. During the period ended May 31, 2019, 510,689 Class Y shares representing $14,339,294 were exchanged for 510,978 Class I shares. | |||||||||
b During the period ended November 30, 2019, 88 Class C shares representing $1,953 were automatically converted to 80 Class A shares. | |||||||||
|
22
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||
November 30, 2019 | Year Ended May 31, | |||||
Class A Shares | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 23.18 | 28.94 | 24.54 | 20.41 | 24.84 | 23.55 |
Investment Operations: | ||||||
Investment (loss)—neta | (.08) | (.18) | (.15) | (.13) | (.15) | (.17) |
Net realized and unrealized | 2.31 | (1.28) | 6.36 | 4.26 | (2.76) | 3.42 |
Total from Investment Operations | 2.23 | (1.46) | 6.21 | 4.13 | (2.91) | 3.25 |
Distributions: | ||||||
Dividends from net realized | - | (4.30) | (1.81) | - | (1.52) | (1.96) |
Net asset value, end of period | 25.41 | 23.18 | 28.94 | 24.54 | 20.41 | 24.84 |
Total Return (%)b | 9.62c | (3.11) | 26.05 | 20.24 | (11.99) | 14.30 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | 1.38d | 1.40 | 1.29 | 1.28 | 1.29 | 1.32 |
Ratio of net expenses | 1.30d | 1.30 | 1.28 | 1.28 | 1.29 | 1.30 |
Ratio of net investment (loss) | (.64)d | (.68) | (.56) | (.60) | (.66) | (.71) |
Portfolio Turnover Rate | 47.72c | 101.14 | 95.50 | 138.00 | 125.11 | 148.55 |
Net Assets, end of period ($ x 1,000) | 1,627 | 1,630 | 2,090 | 2,819 | 3,716 | 4,834 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
23
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
November 30, 2019 | Year Ended May 31, | |||||
Class C Shares | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 21.10 | 26.95 | 23.13 | 19.39 | 23.85 | 22.85 |
Investment Operations: | ||||||
Investment (loss)—neta | (.16) | (.35) | (.33) | (.31) | (.30) | (.35) |
Net realized and unrealized | 2.10 | (1.20) | 5.96 | 4.05 | (2.64) | 3.31 |
Total from Investment Operations | 1.94 | (1.55) | 5.63 | 3.74 | (2.94) | 2.96 |
Distributions: | ||||||
Dividends from net realized | - | (4.30) | (1.81) | - | (1.52) | (1.96) |
Net asset value, end of period | 23.04 | 21.10 | 26.95 | 23.13 | 19.39 | 23.85 |
Total Return (%)b | 9.19c | (3.71) | 25.11 | 19.29 | (12.67) | 13.49 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | 2.16d | 2.33 | 2.23 | 2.27 | 2.39 | 2.34 |
Ratio of net expenses | 2.05d | 2.05 | 2.05 | 2.05 | 2.05 | 2.05 |
Ratio of net investment (loss) | (1.40)d | (1.43) | (1.37) | (1.39) | (1.42) | (1.48) |
Portfolio Turnover Rate | 47.72c | 101.14 | 95.50 | 138.00 | 125.11 | 148.55 |
Net Assets, end of period ($ x 1,000) | 457 | 479 | 587 | 323 | 253 | 268 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
24
Six Months Ended | ||||||
November 30, 2019 | Year Ended May 31, | |||||
Class I Shares | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 24.05 | 29.76 | 25.12 | 20.84 | 25.25 | 23.83 |
Investment Operations: | ||||||
Investment (loss)—neta | (.04) | (.10) | (.07) | (.08) | (.08) | (.10) |
Net realized and unrealized | 2.38 | (1.31) | 6.52 | 4.36 | (2.81) | 3.48 |
Total from Investment Operations | 2.34 | (1.41) | 6.45 | 4.28 | (2.89) | 3.38 |
Distributions: | ||||||
Dividends from net realized | - | (4.30) | (1.81) | - | (1.52) | (1.96) |
Net asset value, end of period | 26.39 | 24.05 | 29.76 | 25.12 | 20.84 | 25.25 |
Total Return (%) | 9.77b | (2.88) | 26.42 | 20.54 | (11.71) | 14.69 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | 1.01c | .98 | .99 | 1.03 | .98 | .97 |
Ratio of net expenses | 1.01c | .98 | .98 | 1.01 | .98 | .97 |
Ratio of net investment (loss) | (.35)c | (.35) | (.26) | (.33) | (.35) | (.53) |
Portfolio Turnover Rate | 47.72b | 101.14 | 95.50 | 138.00 | 125.11 | 148.55 |
Net Assets, end of period ($ x 1,000) | 15,150 | 12,949 | 16,532 | 11,777 | 19,373 | 23,882 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
25
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||
November 30, 2019 | Year Ended May 31, | |||||
Class Y Shares | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 |
Per Share Data ($): | ||||||
Net asset value, beginning of period | 24.07 | 29.77 | 25.12 | 20.83 | 25.23 | 23.81 |
Investment Operations: | ||||||
Investment (loss)—neta | (.04) | (.09) | (.06) | (.07) | (.07) | (.09) |
Net realized and unrealized | 2.39 | (1.31) | 6.52 | 4.36 | (2.81) | 3.47 |
Total from Investment Operations | 2.35 | (1.40) | 6.46 | 4.29 | (2.88) | 3.38 |
Distributions: | ||||||
Dividends from net realized | - | (4.30) | (1.81) | - | (1.52) | (1.96) |
Net asset value, end of period | 26.42 | 24.07 | 29.77 | 25.12 | 20.83 | 25.23 |
Total Return (%) | 9.81b | (2.84) | 26.46 | 20.60 | (11.68) | 14.66 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | .96c | .95 | .95 | .96 | .96 | .97 |
Ratio of net expenses | .96c | .95 | .94 | .96 | .96 | .97 |
Ratio of net investment (loss) | (.30)c | (.34) | (.21) | (.28) | (.33) | (.36) |
Portfolio Turnover Rate | 47.72b | 101.14 | 95.50 | 138.00 | 125.11 | 148.55 |
Net Assets, end of period ($ x 1,000) | 544,432 | 519,312 | 798,000 | 624,947 | 531,507 | 592,655 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
26
NOTES TO FINANCIAL STATEMENTS(Unaudited)
NOTE 1—Significant Accounting Policies:
BNY Mellon Select Managers Small Cap Growth Fund (the “fund”) is a separate non-diversified series of BNY Mellon Strategic Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering six series, including the fund. The fund’s investment objective is to seek capital appreciation. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser and the fund’s portfolio allocation manager. Henderson Geneva Capital Management Ltd. (“Henderson”), Nicholas Investment Partners, L.P. (“Nicholas”), EAM Investors, LLC (“EAM”), Granite Investment Partners, LLC (“Granite”), Rice Hall James & Associates (“Rice Hall”) and Redwood Investments, LLC (“Redwood”), serve as the fund’s sub-investment advisers, each managing an allocated portion of the fund’s portfolio.
Effective June 3, 2019, the fund changed its name from Dreyfus Select Managers Small Cap Growth Fund to BNY Mellon Select Managers Small Cap Growth Fund and the Company changed its name from Strategic Funds, Inc. to BNY Mellon Strategic Funds, Inc. In addition, The Dreyfus Corporation, the fund’s investment adviser, changed its name to “BNY Mellon Investment Adviser, Inc.”, MBSC Securities Corporation, the fund’s distributor, changed its name to “BNY Mellon Securities Corporation” and Dreyfus Transfer, Inc., the fund’s transfer agent, changed its name to “BNY Mellon Transfer, Inc.”
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 425 million shares of $.001 par value Common Stock. The fund currently has authorized four classes of shares: Class A (75 million shares authorized), Class C (75 million shares authorized), Class I (75 million shares authorized), Class T (100 million shares authorized) and Class Y (100 million shares authorized). Class A and Class T 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. As of the date of this report, the fund did not offer Class T
27
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
shares for purchase. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the 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 Companyenters 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.
28
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for
29
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Company’s Board of Directors (the “Board”). Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted 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 November 30, 2019in 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† | 546,370,569 | - | - | 546,370,569 |
Investment Company | 30,832,992 | - | - | 30,832,992 |
† See Statement of Investments for additional detailed categorizations, if any.
(b)Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on
30
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 November 30, 2019, The Bank of New York Mellon earned $25,244 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.
(d) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(e) 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 November 30, 2019, 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 November 30, 2019, the fund did not incur any interest or penalties.
Each tax year for the three-year period ended May 31, 2019 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended May 31, 2019 was as follows: ordinary income $17,296,566 and long-term capital gains $84,894,907. The tax character of current year distributions will be determined at the end of the current fiscal year.
31
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
(e) New Accounting Pronouncements: Effective June 1, 2019, the fund adopted Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The update provides guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. The adoption of ASU 2018-13 had no impact on the operations of the fund for the period ended November 30, 2019.
NOTE 2—Bank Lines of Credit:
The fund participates with other long-term open-end funds managed by the Adviser in a $1.030 billion 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 $830 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is in amount equal to $200 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended November 30, 2019, the fund did not borrow under the Facilities.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a)Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .90% of the value of the fund’s average daily net assets and is payable monthly. The Adviser has contractually agreed, from June 1, 2019 through September 30, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the direct expenses of Class A, Class C, Class I and Class Y shares (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) do not exceed 1.05%, 1.05%, 1.05% and .98% of the value of the respective class’ average daily net assets. On or after September 30, 2020, the Adviser may terminate these expense limitations at any time. The reduction in expenses, pursuant to the undertaking, amounted to $891 during the period ended November 30, 2019.
32
Pursuant to separate sub-investment advisory agreements between the Adviser and Henderson, Nicholas, EAM, Granite, Rice Hall and Redwood, each serves as the fund’s sub-investment adviser responsible for the day-to-day management of a portion of the fund’s portfolio. The Adviser pays each sub-investment adviser a monthly fee at an annual percentage of the value of the fund’s average daily net assets. The Adviser has obtained an exemptive order from the SEC (the “Order”), upon which the fund may rely, to use a manager of managers approach that permits the Adviser, subject to certain conditions and approval by the Board, to enter into and materially amend sub-investment advisory agreements with one or more sub-investment advisers who are either unaffiliated with the Adviser or are wholly-owned subsidiaries (as defined under the Act) of the Adviser’s ultimate parent company, BNY Mellon, without obtaining shareholder approval. The Order also allows the fund to disclose the sub-investment advisory fee paid by the Adviser to any unaffiliated sub-investment adviser in the aggregate with other unaffiliated sub-investment advisers in documents filed with the SEC and provided to shareholders. In addition, pursuant to the Order, it is not necessary to disclose the sub-investment advisory fee payable by the Adviser separately to a sub-investment adviser that is a wholly-owned subsidiary of BNY Mellon in documents filed with the SEC and provided to shareholders; such fees are to be aggregated with fees payable to the Adviser. The Adviser has ultimate responsibility (subject to oversight by the Board) to supervise any sub-investment adviser and recommend the hiring, termination, and replacement of any sub-investment adviser to the Board.
During the period ended November 30, 2019, the Distributor retained $33 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended November 30, 2019, Class C shares were charged $1,930 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
33
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
the amounts to be paid to Service Agents. During the period ended November 30, 2019, Class A and Class C shares were charged $2,042and $643, 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 and the fund has an arrangement with the custodian to receive interest income or be charged overdraft fees when cash balances are maintained. For financial reporting purposes, the fund includes net earnings credits, if any, as an expense offset 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 November 30, 2019, the fund was charged $2,846 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 November 30, 2019, the fund was charged $27,208 pursuant to the custody agreement.
During the period ended November 30, 2019, the fund was charged $13,142 for services performed by the Chief Compliance Officer and his staff. These fees are included in Miscellaneous 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 $407,013, Distribution Plan fees of $274, Shareholder Services Plan fees of $416, custodian fees of $20,000, Chief Compliance Officer fees of $4,348 and transfer agency fees of $916, which are offset against an expense reimbursement currently in effect in the amount of $135.
(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.
34
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended November 30, 2019, amounted to $254,456,645 and $273,844,167, respectively.
At November 30, 2019, accumulated net unrealized appreciation on investments was $147,643,589, consisting of $159,495,702 gross unrealized appreciation and $11,852,113 gross unrealized depreciation.
At November 30, 2019, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
35
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited)
At a meeting of the fund’s Board of Directors held on November 5, 2019, the Board considered the renewal of (a) the fund’s Management Agreement, pursuant to which the Adviser provides the fund with investment management and administrative services and is responsible for evaluating and recommending subadvisers to provide the fund with day-to-day portfolio management services, recommending the percentage of fund assets to be allocated to each subadviser, monitoring and evaluating the performance of the subadvisers, and recommending whether a subadviser should be terminated (the “Agreement”) and (b) the Adviser’s separate Sub-Investment Advisory Agreements with each of EAM Investors, LLC, Geneva Capital Management LLC, Nicholas Investment Partners, L.P., Granite Investment Partners, LLC, Rice Hall James & Associates, LLC and Redwood Investments, LLC (each, a “Subadviser” and collectively, the “Subadvisers”), pursuant to which each Subadviser serves as a sub-investment adviser and provides day-to-day management of the fund’s investments with respect to the portion of the fund’s assets allocated to the Subadviser. The Board members, a majority of whom are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Adviser and the Subadvisers. In considering the renewal of the Agreements, the Board considered several factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
Analysis of Nature, Extent, and Quality of Services Provided to the Fund. The Board considered information provided to it at the meeting and in previous presentations from representatives of the Adviser regarding the nature, extent, and quality of the services provided to funds in the BNY Mellon fund complex, including the fund. The Adviser provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. The Adviser also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the BNY Mellon fund complex (such as retail direct or intermediary, in which intermediaries typically are paid by the fund and/or the Adviser) and the Adviser’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each intermediary or distribution channel, as applicable to the fund.
The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that the Adviser also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board also considered the Adviser’s extensive administrative, accounting and compliance infrastructures, as well as the Adviser’s supervisory, evaluation and other responsibilities in respect of the Subadvisers. As part of its review, the Board considered information regarding the process by which the Adviser selected and recommended the Subadvisers for Board approval. The Board considered each Subadviser’s specific responsibilities in
36
the day-to-day management of the portion of the fund’s assets allocated to it, as well as the qualifications, experience and responsibilities of the persons serving as the portfolio managers for the segment of the fund’s assets managed by the respective Subadviser, and other key personnel at the Subadviser. The Board specifically took into account each Subadviser’s investment process and capabilities, evaluating how the Subadviser complemented each of the other Subadvisers to the fund, noting the Adviser’s favorable assessment of the nature and quality of the sub-advisory services provided to the fund by the Subadvisers. The Board also considered portfolio management’s brokerage policies and practices (including policies and practices regarding soft dollars) and the standards applied in seeking best execution.
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed reports prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, which included information comparing (1) the fund’s performance with the performance of a group of small-cap growth funds (the “Performance Group”) and with a broader group of funds consisting of all retail and institutional small-cap growth funds (the “Performance Universe”), all for various periods ended September 30, 2019, and (2) the fund’s actual and contractual management fees and total expenses with those of the same group of funds in the Performance Group (the “Expense Group”) and with a broader group of funds consisting of all institutional small-cap growth funds, excluding outliers (the “Expense Universe”), the information for which was derived in part from fund financial statements available to Broadridge as of the date of its analysis. The Adviser previously had furnished the Board with a description of the methodology Broadridge used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe. The Board also reviewed performance information provided by the Adviser with respect to each Subadviser for various periods ended September 30, 2019.
Representatives of the Adviser stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations and policies that may be applicable to the fund and comparison funds, noting that the funds included in the Performance Group and Performance Universe were not limited to funds that engage multiple subadvisers like the fund. The Board discussed with representatives of the Adviser the results of the comparisons and considered that the fund’s total return performance was below the Performance Group and Performance Universe medians for all periods. The Board considered the relative proximity of the fund’s performance to the Performance Group and/or Performance Universe median when performance was below median. The Adviser also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark index. With respect to the performance of each Subadviser, the Board noted that, depending on the period under review, some Subadvisers outperformed, while others underperformed, the fund’s benchmark index and/or the median performance of the funds in the Performance Group and Performance Universe.
The Board reviewed and considered the contractual management fee rate paid by the fund to the Adviser over the fund’s last fiscal year in light of the nature, extent and
37
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)
quality of the management and sub-advisory services provided by the Adviser and the Subadvisers, respectively. The Board noted that the compensation paid to the Subadvisers is paid by the Adviser (out of its fee from the fund), not the fund, and, accordingly, that the retention of the Subadvisers does not increase the fees or expenses otherwise incurred by the fund and its shareholders.
The Board also reviewed the range of actual and contractual management fees and total expenses of the Expense Group and Expense Universe funds and discussed the results of the comparisons. It was noted that, as in the case of the funds included in the Performance Group and Performance Universe, the funds included in the Expense Group and Expense Universe were not limited to funds that engage multiple subadvisers like the fund. The Board considered that the fund’s contractual management fee was above the Expense Group median, the fund’s actual management fee was above the Expense Group and Expense Universe medians and the fund’s total expenses were above the Expense Group median and below the Expense Universe median.
Representatives of the Adviser stated that the Adviser has contractually agreed, until September 30, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the direct expenses of Class A, Class C, Class I and Class Y shares of the fund (excluding Rule 12b-1 fees, shareholder services fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) do not exceed 1.05%, 1.05%, 1.05% and 0.98% of the fund’s average daily net assets, respectively.
Representatives of the Adviser reviewed with the Board the management or investment advisory fees (1) paid by funds advised or administered by the Adviser that are in the same Lipper category as the fund and (2) paid to the Adviser or the Subadvisers or their affiliates for advising any separate accounts and/or other types of client portfolios that are considered to have similar investment strategies and policies as the fund (the “Similar Clients”), and explained the nature of the Similar Clients. They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors. The Board considered the relevance of the fee information provided for the Similar Clients to evaluate the appropriateness of the fund’s management fee.
Analysis of Profitability and Economies of Scale. Representatives of the Adviser reviewed the expenses allocated and profit received by the Adviser and its affiliates and the resulting profitability percentage for managing the fund and the aggregate profitability percentage to the Adviser and its affiliates for managing the funds in the BNY Mellon fund complex, and the method used to determine the expenses and profit. The Board concluded that the profitability results were not excessive, given the services rendered and service levels provided by the Adviser and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
38
The Board considered on the advice of its counsel the profitability analysis (1) as part of its evaluation of whether the fees under the Agreements, considered in relation to the mix of services provided by the Adviser and the Subadvisers, including the nature, extent and quality of such services, supported the renewal of the Agreements and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Since the Adviser, and not the fund, pays the Subadvisers pursuant to the respective Sub-Investment Advisory Agreements, the Board did not consider any Subadviser’s profitability to be relevant to its deliberations. Representatives of the Adviser also stated that, as a result of shared and allocated costs among funds in the BNY Mellon fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to the Adviser and each Subadviser from acting as investment adviser and sub-investment adviser, respectively, and took into consideration the soft dollar arrangements in effect for trading the fund’s investments.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreements. Based on the discussions and considerations as described above, the Board concluded and determined as follows.
· The Board concluded that the nature, extent and quality of the services provided by the Adviser and the Subadvisers are adequate and appropriate.
· The Board was generally satisfied with the manner in which the Adviser monitors and evaluates the performance of each Subadviser and directed the Adviser to closely monitor those Subadvisers that underperformed the fund’s benchmark index for extended periods and report the results of its evaluation to the Board at a future meeting.
· The Board concluded that the fees paid to the Adviser and the Subadvisers continued to be appropriate under the circumstances and in light of the factors and the totality of the services provided as discussed above.
· The Board determined that the economies of scale which may accrue to the Adviser and its affiliates in connection with the management of the fund had been adequately considered by the Adviser in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
In evaluating the Agreements, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and
39
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)
other interactions with the Adviser and its affiliates, and the Subadvisers, of the Adviser and the Subadvisers and the services provided to the fund by the Adviser and the Subadvisers. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreements, including information on the investment performance of the fund in comparison to similar mutual funds and benchmark performance indices; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for this fund had the benefit of a number of years of reviews of the Agreements for the fund, or substantially similar agreements for other BNY Mellon funds that the Board oversees, during which lengthy discussions took place between the Board and representatives of the Adviser. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the fund’s arrangements, or substantially similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board also noted that the Adviser continued to believe that the Subadvisers complemented each other’s specific style of investing and that the Adviser recommended that the Board approve each Sub-Investment Advisory Agreement. The Board determined to renew the Agreements.
40
NOTES
41
BNY Mellon Select Managers Small Cap Growth Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Sub-Advisers
Henderson Geneva Capital
Management Ltd.
100 East Wisconsin Avenue,
Suite 2550
Milwaukee, WI 53202
Nicholas Investment Partners, L.P.
6451 El Sicomoro
Rancho Santa Fe, CA 92067
EAM Investors, LLC
2533 South Coast Highway 101,
Suite 240
Cardiff-by-the-Sea, CA 92007
Granite Investment Partners, LLC
2121 Rosecrans Avenue, Suite 2360
El Segundo, CA 90245
Rice Hall James & Associates
600 West Broadway, Suite 1000
San Diego, CA 92101
Redwood Investments, LLC
One Gateway Center, Suite 802
Newton, MA 02458
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: DSGAX Class C: DSGCX Class I: DSGIX Class Y: DSGYX |
TelephoneCall your financial representative or 1-800-373-9387
MailThe BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mailSend your request toinfo@bnymellon.com
InternetInformation can be viewed online or downloaded atwww.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 atwww.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 atwww.bnymellonim.com/usand on the SEC’s website atwww.sec.gov and without charge, upon request, by calling 1-800-373-9387.
© 2020 BNY Mellon Securities Corporation |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
BNY Mellon Strategic Funds, Inc.
By: /s/ Renee LaRoche-Morris
Renee LaRoche-Morris
President (Principal Executive Officer)
Date: January 27, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ Renee LaRoche-Morris
Renee LaRoche-Morris
President (Principal Executive Officer)
Date: January 27, 2020
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: January 24, 2020
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)