We are pleased to present this semiannual report for BNY Mellon Large Cap Growth Fund (formerly, Dreyfus Large Cap Growth Fund), covering the six-month period from January 1, 2019 through June 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 a rally during the first several months of 2019, which was a welcome reprieve after the volatility observed in the fourth quarter of 2018. The recovery was stoked by comments made by the U.S. Federal Reserve (the “Fed”), indicating its willingness to slow the pace of interest-rate increases. Supportive central bank policy, a robust labor market, strong corporate fundamentals, and optimism regarding a possible resolution of the U.S.-China trade dispute buoyed the markets for much of the reporting period. However, in May, escalating trade tensions once again disrupted equity market progress, causing stock prices to pull back. The dip was short-lived, as markets rose once again in June. To end the period, the S&P 500 Index posted its best return for the first half of the year since 1997.
Fixed-income markets also benefited during the six months. Supportive policies from the Fed, as well as other global central banks, coupled with falling rates throughout the first half of the year, led to strong bond market returns. During its May meeting, the Fed reiterated its patient stance regarding future rate hikes and its willingness to take action to support economic growth rates.
We remain positive 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.
DISCUSSION OF FUND PERFORMANCE(Unaudited)
For the period from January 1, 2019 through June 30, 2019, as provided by Don Sauber and Thomas Lee, Primary Portfolio Managers
Market and Fund Performance Overview
For the six-month period ended June 30, 2019, BNY Mellon Large Cap Growth Fund’s (formerly, Dreyfus Large Cap Growth Fund) Class A shares achieved a total return of 21.04%, Class C shares returned 20.66%, Class I shares returned 21.29%, and Class Y shares returned 21.28%.1In comparison, the Russell 1000® Growth Index (the “Index”), the fund’s benchmark, produced a total return of 21.49% for the same period.2
Large-cap stocks posted strong gains over the reporting period, in an environment of moderate growth and supportive central bank policies. The fund mildly underperformed the Index, primarily due to security selection shortfalls in the consumer discretionary and information technology sectors.
The Fund’s Investment Approach
The fund seeks to provide long-term capital appreciation. To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of large-capitalization companies (those with market capitalizations of $5 billion or more at the time of purchase). The fund may invest up to 20% of its assets in equity securities of companies with market capitalizations of less than $5 billion at the time of purchase (however, such companies generally will have market capitalizations of at least $100 million at the time of purchase). The fund invests primarily in equity securities of U.S. issuers, but may invest without limitation in equity securities of foreign issuers, including those in emerging-market countries.
The fund’s investment philosophy is based on the premise that earnings growth is the primary determinant of long-term stock appreciation. With this in mind, the fund’s portfolio managers use an approach that combines top-down and bottom-up analysis, so stock selection and sector allocation are both factors in determining the fund’s holdings. Fundamental financial analysis is used to identify companies that the portfolio managers believe offer one or more of the following characteristics: expected earnings growth rate exceeds market and industry trends; potential for positive earnings surprise relative to market expectations; positive operational or financial catalysts; attractive valuation based on growth prospects; and strong financial condition.
Markets Pivot on Central Bank Statements and Trade Policy
Equities rallied throughout much of the reporting period, recovering from the lows reached at the end of 2018. Talk of a potential trade deal between the U.S. and China helped fuel investor optimism, as did the European Central Bank’s (ECB) announcement that it would provide additional stimulus to support the eurozone economy. China also revealed plans to stoke its slowing economic growth rate. At its first meeting of the year, the U.S. Federal Reserve (the “Fed”) emphasized its focus on data as a primary driver for interest-rate-hike decisions, and its ability to suspend additional rate increases when the data is not supportive. A strong first-quarter corporate reporting season also worked to stoke investor risk appetites.
However, a challenging period soon ensued during the month of May. Renewed trade disputes between the U.S. and China caused equity markets to pull back. Investors became concerned about the negative effects decreased trade may have on economic growth. During its meeting in early May, the Fed reiterated its patient stance regarding future rate hikes and its willingness to take action to support economic growth rates. The ECB also indicated its intention to continue with further monetary easing. In the United Kingdom, continued political turmoil surrounding Brexit, and the resignation of Prime Minister Theresa May, was broadly shrugged off by investors, as markets reversed course in June and rallied through the end of the period.
According to the Russell family of indices, mid-cap stocks generally outperformed their large- and small-cap counterparts during the period.
3
DISCUSSION OF FUND PERFORMANCE(Unaudited) (continued)
Security Selections Constrain Fund Performance
The fund’s underperformance versus the Index was mainly the result of lagging returns in the consumer discretionary and information technology sectors. In the consumer discretionary sector, the fund’s performance was hurt by a position inSix Flags Entertainment, which experienced softer-than-expected first-quarter revenue due to lower-than-expected traffic through its parks. MGM Resorts International was also among the top detracting stocks, as the price fell during the reporting period over concerns regarding a slowing Chinese economy and an earnings report in April that fell below estimates. A position in Advance Auto Parts also weighed on results, as the company has been experiencing soft demand for its after-market auto parts. In information technology, a position inNutanix detracted, as the stock struggled during the period due to issues with the company’s sales pipeline. In addition, a lack of exposure to strong performer PayPal Holdings provided a headwind to returns.
On the positive side, in the consumer staples sector, the fund’s position in Mondelez International was rewarded, as the company benefited from lower commodity costs and product price increases that improved its profitability. A position in Philip Morris International was also advantageous, as the stock rose on improved demand for its smokeless tobacco products and an improved pricing environment for its combustible cigarettes. In the industrials sector, industrial conglomerate Honeywell International added to performance, as increases to its aerospace and defense product order book helped boost the stock price. A lack of exposure to 3M also was rewarded, as were positions in Roper Technologies and Ingersoll-Rand. In the real estate sector, positions in Equinix and American Tower were also beneficial.
Constructively Positioned for Slow Growth
We are currently positioned for moderating growth within the U.S. economy, although we believe a recession is still more than 18 months away. We continue to favor growth names and have identified an ample number of investments meeting our criteria in high-growth areas of the market, such as information technology. We are also seeking stable growth companies in sectors such as consumer staples. It is our belief that commodity prices will remain range-bound for the foreseeable future, and we do not expect a definitive resolution to the U.S.-China trade dispute in the near term. We do expect that the Fed will maintain its accommodative policies, and that this will continue to support equity markets.
July 15, 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 the redemption 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 May 1, 2020, at which time it may be extended, terminated, or modified. Had these expenses not been absorbed, the fund’s returns would have been lower.
2 Source: Lipper Inc. — The Russell 1000®Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher growth earning potential as defined by Russell’s leading style methodology. The Russell 1000®Growth Index is constructed to provide a comprehensive and unbiased barometer for the large-cap growth segment. The Index is completely reconstituted annually to ensure new and growing equities are included 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 fund’s performance will be influenced by political, social, and economic factors affecting investments in foreign companies. Special risks associated with investments in foreign companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability, and differing auditing and legal standards. These risks are enhanced in emerging-market countries.
4
UNDERSTANDING YOUR FUND’S EXPENSES(Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon Large Cap Growth Fund from January 1, 2019 to June 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 |
assuming actual returns for the six months ended June 30, 2019 |
| | | Class A | Class C | Class I | Class Y |
Expenses paid per $1,000† | | $6.30 | | $10.40 | | $4.94 | | $4.94 |
Ending value (after expenses) | | $1,210.40 | | $1,206.60 | | $1,212.90 | | $1,212.80 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| | | | | | | | | | | |
Expenses and Value of a $1,000 Investment |
assuming a hypothetical 5% annualized return for the six months ended June 30, 2019 |
| | | Class A | Class C | Class I | Class Y |
Expenses paid per $1,000† | | $5.76 | | $9.49 | | $4.51 | | $4.51 |
Ending value (after expenses) | | $1,019.09 | | $1,015.37 | | $1,020.33 | | $1,020.33 |
† Expenses are equal to the fund’s annualized expense ratio of 1.15% for Class A, 1.90% for Class C, .90% for Class I and .90% for Class Y, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
5
STATEMENT OF INVESTMENTS
June 30, 2019 (Unaudited)
| | | | | | | | |
| |
Description | | | | Shares | | Value ($) | |
Common Stocks - 99.8% | | | | | |
Banks - .8% | | | | | |
JPMorgan Chase & Co. | | | | 4,962 | | 554,752 | |
Capital Goods - 10.9% | | | | | |
Honeywell International | | | | 7,122 | | 1,243,430 | |
Illinois Tool Works | | | | 6,834 | | 1,030,636 | |
Ingersoll-Rand | | | | 13,635 | | 1,727,145 | |
Lockheed Martin | | | | 2,924 | | 1,062,991 | |
Roper Technologies | | | | 2,983 | | 1,092,554 | |
The Boeing | | | | 4,241 | | 1,543,766 | |
| | | | | 7,700,522 | |
Consumer Durables & Apparel - 1.8% | | | | | |
NIKE, Cl. B | | | | 14,716 | | 1,235,408 | |
Consumer Services - 2.1% | | | | | |
MGM Resorts International | | | | 29,450 | | 841,386 | |
Yum! Brands | | | | 6,008 | | 664,905 | |
| | | | | 1,506,291 | |
Diversified Financials - 2.9% | | | | | |
CME Group | | | | 3,790 | | 735,677 | |
MSCI | | | | 3,281 | | 783,470 | |
The Charles Schwab | | | | 12,447 | | 500,245 | |
| | | | | 2,019,392 | |
Energy - .4% | | | | | |
Diamondback Energy | | | | 2,843 | | 309,802 | |
Food & Staples Retailing - 1.0% | | | | | |
Costco Wholesale | | | | 2,600 | | 687,076 | |
Food, Beverage & Tobacco - 4.4% | | | | | |
Constellation Brands, Cl. A | | | | 3,259 | | 641,827 | |
Mondelez International, Cl. A | | | | 14,178 | | 764,194 | |
Monster Beverage | | | | 8,019 | a | 511,853 | |
Philip Morris International | | | | 6,918 | | 543,271 | |
The Coca-Cola | | | | 12,290 | | 625,807 | |
| | | | | 3,086,952 | |
Health Care Equipment & Services - 4.1% | | | | | |
Abbott Laboratories | | | | 4,830 | | 406,203 | |
Align Technology | | | | 1,578 | a | 431,899 | |
Boston Scientific | | | | 16,510 | a | 709,600 | |
CVS Health | | | | 9,157 | | 498,965 | |
UnitedHealth Group | | | | 3,496 | | 853,059 | |
| | | | | 2,899,726 | |
Household & Personal Products - .3% | | | | | |
The Procter & Gamble | | | | 2,003 | | 219,629 | |
6
| | | | | | | | |
| |
Description | | | | Shares | | Value ($) | |
Common Stocks - 99.8% (continued) | | | | | |
Materials - 2.3% | | | | | |
Celanese | | | | 8,665 | | 934,087 | |
FMC | | | | 8,012 | | 664,595 | |
| | | | | 1,598,682 | |
Media & Entertainment - 12.3% | | | | | |
Alphabet, Cl. A | | | | 3,119 | a | 3,377,253 | |
Charter Communications, Cl. A | | | | 885 | a | 349,734 | |
Facebook, Cl. A | | | | 14,381 | a | 2,775,533 | |
IAC/InterActiveCorp | | | | 1,595 | a | 346,960 | |
Netflix | | | | 2,403 | a | 882,670 | |
The Walt Disney | | | | 5,572 | | 778,074 | |
Twitter | | | | 3,787 | a | 132,166 | |
| | | | | 8,642,390 | |
Pharmaceuticals Biotechnology & Life Sciences - 8.3% | | | | | |
AbbVie | | | | 9,190 | | 668,297 | |
Allergan | | | | 1,992 | | 333,521 | |
Amgen | | | | 1,965 | | 362,110 | |
Bristol-Myers Squibb | | | | 6,004 | | 272,281 | |
Exact Sciences | | | | 5,045 | a,b | 595,512 | |
Gilead Sciences | | | | 7,614 | | 514,402 | |
Illumina | | | | 1,355 | a | 498,843 | |
Johnson & Johnson | | | | 2,626 | | 365,749 | |
Merck & Co. | | | | 5,549 | | 465,284 | |
The Medicines | | | | 12,106 | a,b | 441,506 | |
Thermo Fisher Scientific | | | | 2,512 | | 737,724 | |
Vertex Pharmaceuticals | | | | 3,304 | a | 605,888 | |
| | | | | 5,861,117 | |
Real Estate - 2.3% | | | | | |
American Tower | | | | 4,996 | c | 1,021,432 | |
Equinix | | | | 1,171 | c | 590,524 | |
| | | | | 1,611,956 | |
Retailing - 10.3% | | | | | |
Advance Auto Parts | | | | 4,576 | | 705,345 | |
Amazon.com | | | | 2,297 | a | 4,349,668 | |
Dollar Tree | | | | 7,702 | a | 827,118 | |
Lowe's | | | | 4,810 | | 485,377 | |
The TJX Cos | | | | 16,218 | | 857,608 | |
| | | | | 7,225,116 | |
Semiconductors & Semiconductor Equipment - 4.9% | | | | | |
Advanced Micro Devices | | | | 26,887 | a,b | 816,558 | |
Analog Devices | | | | 3,558 | | 401,591 | |
Applied Materials | | | | 11,629 | | 522,258 | |
Micron Technology | | | | 19,772 | a | 763,001 | |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | | | |
| |
Description | | | | Shares | | Value ($) | |
Common Stocks - 99.8% (continued) | | | | | |
Semiconductors & Semiconductor Equipment - 4.9% (continued) | | | | | |
Taiwan Semiconductor Manufacturing, ADR | | | | 13,845 | | 542,309 | |
Texas Instruments | | | | 3,691 | | 423,579 | |
| | | | | 3,469,296 | |
Software & Services - 22.1% | | | | | |
Accenture, Cl. A | | | | 5,971 | | 1,103,262 | |
Adobe | | | | 3,405 | a | 1,003,283 | |
Atlassian, Cl. A | | | | 6,528 | a | 854,124 | |
Automatic Data Processing | | | | 2,504 | | 413,986 | |
Cadence Design Systems | | | | 5,161 | a | 365,450 | |
Intuit | | | | 3,729 | | 974,500 | |
Mastercard, Cl. A | | | | 4,461 | | 1,180,068 | |
Microsoft | | | | 26,803 | | 3,590,530 | |
Proofpoint | | | | 3,244 | a | 390,091 | |
salesforce.com | | | | 7,621 | a | 1,156,334 | |
ServiceNow | | | | 3,529 | a | 968,958 | |
Splunk | | | | 5,554 | a | 698,415 | |
Square, Cl. A | | | | 4,394 | a,b | 318,697 | |
Synopsys | | | | 2,880 | a | 370,627 | |
Visa, Cl. A | | | | 12,574 | b | 2,182,218 | |
| | | | | 15,570,543 | |
Technology Hardware & Equipment - 7.5% | | | | | |
Amphenol, Cl. A | | | | 6,389 | | 612,961 | |
Apple | | | | 15,305 | | 3,029,166 | |
CDW | | | | 3,280 | | 364,080 | |
Ciena | | | | 9,448 | a | 388,596 | |
Keysight Technologies | | | | 4,622 | a | 415,102 | |
Lumentum Holdings | | | | 8,708 | a,b | 465,094 | |
| | | | | 5,274,999 | |
Transportation - 1.1% | | | | | |
Norfolk Southern | | | | 3,827 | | 762,836 | |
Total Common Stocks(cost $44,689,810) | | | | 70,236,485 | |
| | | 1-Day
Yield (%) | | | | | |
Investment Companies - .6% | | | | | |
Registered Investment Companies - .6% | | | | | |
Dreyfus Institutional Preferred Government Plus Money Market Fund
(cost $427,665) | | 2.29 | | 427,665 | d | 427,665 | |
8
| | | | | | | | |
| |
Description | | 1-Day
Yield (%) | | Shares | | Value ($) | |
Investment of Cash Collateral for Securities Loaned - .6% | | | | | |
Registered Investment Companies - .6% | | | | | |
Dreyfus Institutional Preferred Government Plus Money Market Fund
(cost $443,408) | | 2.29 | | 443,408 | d | 443,408 | |
Total Investments(cost $45,560,883) | | 101.0% | | 71,107,558 | |
Liabilities, Less Cash and Receivables | | (1.0%) | | (725,016) | |
Net Assets | | 100.0% | | 70,382,542 | |
ADR—American Depository Receipt
a Non-income producing security.
b Security, or portion thereof, on loan. At June 30, 2019, the value of the fund’s securities on loan was $4,235,088 and the value of the collateral held by the fund was $4,280,298, consisting of cash collateral of $443,408 and U.S. Government & Agency securities valued at $3,836,890.
c Investment in real estate investment trust within the United States.
d Investment in affiliated issuer. The investment objective of this investment company is publicly available and can be found within the investment company’s prospectus.
| | |
Portfolio Summary (Unaudited)† | Value (%) |
Information Technology | 34.5 |
Consumer Discretionary | 14.2 |
Health Care | 12.4 |
Communication Services | 12.3 |
Industrials | 12.0 |
Consumer Staples | 5.7 |
Financials | 3.7 |
Real Estate | 2.3 |
Materials | 2.3 |
Investment Companies | 1.2 |
Energy | .4 |
| | 101.0 |
† Based on net assets.
See notes to financial statements.
9
STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS(Unaudited)
| | | | | | | |
Investment Companies | Value
12/31/18 ($) | Purchases ($) | Sales ($) | Value
6/30/19 ($) | Net
Assets (%) | Dividends/
Distributions ($) |
Registered Investment Companies: | | | |
Dreyfus Institutional Preferred Government Plus Money Market Fund | 708,469 | 5,386,414 | 5,667,218 | 427,665 | .6 | 5,420 |
Investment of Cash Collateral for Securities Loaned:† | | | |
Dreyfus Institutional Preferred Government Money Market Fund | 242,563 | 969,724 | 768,879 | 443,408 | .6 | - |
Total | 951,032 | 6,356,138 | 6,436,097 | 871,073 | 1.2 | 5,420 |
† Effective January 2, 2019, cash collateral for securities lending was transferred from Dreyfus Institutional Preferred Government Money Market Fund, Institutional Shares to Dreyfus Institutional Preferred Government Plus Money Market Fund.
10
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2019 (Unaudited)
| | | | | | | |
| | | | | | |
| | | Cost | | Value | |
Assets ($): | | | | |
Investments in securities—See Statement of Investments
(including securities on loan, valued at $4,235,088)—Note 1(b): | | | |
Unaffiliated issuers | 44,689,810 | | 70,236,485 | |
Affiliated issuers | | 871,073 | | 871,073 | |
Receivable for investment securities sold | | 628,133 | |
Dividends, interest and securities lending income receivable | | 57,189 | |
Receivable for shares of Common Stock subscribed | | 623 | |
Prepaid expenses | | | | | 28,170 | |
| | | | | 71,821,673 | |
Liabilities ($): | | | | |
Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c) | | 45,624 | |
Payable for investment securities purchased | | 639,206 | |
Liability for securities on loan—Note 1(b) | | 443,408 | |
Payable for shares of Common Stock redeemed | | 276,025 | |
Directors fees and expenses payable | | 640 | |
Accrued expenses | | | | | 34,228 | |
| | | | | 1,439,131 | |
Net Assets ($) | | | 70,382,542 | |
Composition of Net Assets ($): | | | | |
Paid-in capital | | | | | 44,159,294 | |
Total distributable earnings (loss) | | | | | 26,223,248 | |
Net Assets ($) | | | 70,382,542 | |
| | | | | | |
Net Asset Value Per Share | Class A | Class C | Class I | Class Y | |
Net Assets ($) | 17,013,358 | 1,790,849 | 31,860,695 | 19,717,640 | |
Shares Outstanding | 1,326,808 | 147,523 | 2,402,402 | 1,486,196 | |
Net Asset Value Per Share ($) | 12.82 | 12.14 | 13.26 | 13.27 | |
| | | | | |
See notes to financial statements. | | | | | |
11
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2019 (Unaudited)
| | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Investment Income ($): | | | | |
Income: | | | | |
Cash dividends (net of $3,709 foreign taxes withheld at source): | |
Unaffiliated issuers | | | 399,686 | |
Affiliated issuers | | | 5,420 | |
Income from securities lending—Note 1(b) | | | 3,212 | |
Total Income | | | 408,318 | |
Expenses: | | | | |
Management fee—Note 3(a) | | | 236,386 | |
Shareholder servicing costs—Note 3(c) | | | 41,206 | |
Professional fees | | | 40,340 | |
Registration fees | | | 30,811 | |
Prospectus and shareholders’ reports | | | 9,290 | |
Distribution fees—Note 3(b) | | | 6,577 | |
Custodian fees—Note 3(c) | | | 5,512 | |
Directors’ fees and expenses—Note 3(d) | | | 3,840 | |
Loan commitment fees—Note 2 | | | 863 | |
Miscellaneous | | | 11,251 | |
Total Expenses | | | 386,076 | |
Less—reduction in expenses due to undertaking—Note 3(a) | | | (51,292) | |
Net Expenses | | | 334,784 | |
Investment Income—Net | | | 73,534 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | | |
Net realized gain (loss) on investments | 1,649,825 | |
Net unrealized appreciation (depreciation) on investments | | | 11,059,555 | |
Net Realized and Unrealized Gain (Loss) on Investments | | | 12,709,380 | |
Net Increase in Net Assets Resulting from Operations | | 12,782,914 | |
| | | | | | |
See notes to financial statements. | | | | | |
12
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | | | |
| | | | | | | | | |
| | | | Six Months Ended
June 30, 2019 (Unaudited) | | Year Ended
December 31, 2018 | |
Operations ($): | | | | | | | | |
Investment income—net | | | 73,534 | | | | 116,163 | |
Net realized gain (loss) on investments | | 1,649,825 | | | | 3,645,652 | |
Net unrealized appreciation (depreciation)
on investments | | 11,059,555 | | | | (6,473,583) | |
Net Increase (Decrease) in Net Assets
Resulting from Operations | 12,782,914 | | | | (2,711,768) | |
Distributions ($): | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (384,193) | | | | (781,202) | |
Class C | | | (40,961) | | | | (101,002) | |
Class I | | | (677,194) | | | | (1,569,216) | |
Class Y | | | (419,908) | | | | (1,026,136) | |
Total Distributions | | | (1,522,256) | | | | (3,477,556) | |
Capital Stock Transactions ($): | |
Net proceeds from shares sold: | | | | | | | | |
Class A | | | 2,537,210 | | | | 8,031,434 | |
Class C | | | 21,556 | | | | 243,397 | |
Class I | | | 2,867,388 | | | | 8,848,328 | |
Class Y | | | 1,206,084 | | | | 3,807,630 | |
Distributions reinvested: | | | | | | | | |
Class A | | | 358,248 | | | | 736,457 | |
Class C | | | 21,885 | | | | 57,457 | |
Class I | | | 672,125 | | | | 1,548,334 | |
Class Y | | | 261,847 | | | | 622,266 | |
Cost of shares redeemed: | | | | | | | | |
Class A | | | (3,307,130) | | | | (3,173,236) | |
Class C | | | (208,168) | | | | (564,010) | |
Class I | | | (3,890,972) | | | | (7,632,605) | |
Class Y | | | (1,906,436) | | | | (3,848,869) | |
Increase (Decrease) in Net Assets
from Capital Stock Transactions | (1,366,363) | | | | 8,676,583 | |
Total Increase (Decrease) in Net Assets | 9,894,295 | | | | 2,487,259 | |
Net Assets ($): | |
Beginning of Period | | | 60,488,247 | | | | 58,000,988 | |
End of Period | | | 70,382,542 | | | | 60,488,247 | |
13
STATEMENT OF CHANGES IN NET ASSETS (continued)
| | | | | | | | | | |
| | | | | | | | | |
| | | | Six Months Ended
June 30, 2019 (Unaudited) | | Year Ended
December 31, 2018 | |
Capital Share Transactions (Shares): | |
Class A | | | | | | | | |
Shares sold | | | 210,932 | | | | 643,443 | |
Shares issued for distributions reinvested | | | 29,655 | | | | 66,575 | |
Shares redeemed | | | (266,586) | | | | (262,484) | |
Net Increase (Decrease) in Shares Outstanding | (25,999) | | | | 447,534 | |
Class C | | | | | | | | |
Shares sold | | | 1,955 | | | | 20,196 | |
Shares issued for distributions reinvested | | | 1,910 | | | | 5,422 | |
Shares redeemed | | | (18,125) | | | | (45,944) | |
Net Increase (Decrease) in Shares Outstanding | (14,260) | | | | (20,326) | |
Class Ia | | | | | | | | |
Shares sold | | | 234,170 | | | | 676,374 | |
Shares issued for distributions reinvested | | | 53,813 | | | | 135,002 | |
Shares redeemed | | | (312,268) | | | | (592,616) | |
Net Increase (Decrease) in Shares Outstanding | (24,285) | | | | 218,760 | |
Class Ya | | | | | | | | |
Shares sold | | | 94,122 | | | | 292,682 | |
Shares issued for distributions reinvested | | | 20,965 | | | | 54,239 | |
Shares redeemed | | | (150,304) | | | | (309,055) | |
Net Increase (Decrease) in Shares Outstanding | (35,217) | | | | 37,866 | |
| | | | | | | | | |
aDuring the period ended June 30, 2019, 10,380 Class Y shares representing $133,352 were exchanged for 10,388 Class I shares and during the period ended December 31, 2018, 22,132 Class Y shares representing $297,075 were exchanged for 22,136 Class I shares.
| |
See notes to financial statements. | | | | | | | | |
14
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
| | | | | | | |
Six Months Ended | |
| | June 30, 2019 | Year Ended December 31, |
Class A Shares | (Unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 10.83 | 11.87 | 9.55 | 9.00 | 8.84 | 8.96 |
Investment Operations: | | | | | | |
Investment income—neta | .00b | .00b | .01 | .04 | .03 | .01 |
Net realized and unrealized
gain (loss) on investments | 2.26 | (.39) | 2.71 | .57 | .28 | 1.28 |
Total from Investment Operations | 2.26 | (.39) | 2.72 | .61 | .31 | 1.29 |
Distributions: | | | | | | |
Dividends from
investment income—net | - | (.00)b | (.02) | (.06) | (.04) | (.00)b |
Dividends from net realized
gain on investments | (.27) | (.65) | (.38) | - | (.11) | (1.41) |
Total Distributions | (.27) | (.65) | (.40) | (.06) | (.15) | (1.41) |
Net asset value, end of period | 12.82 | 10.83 | 11.87 | 9.55 | 9.00 | 8.84 |
Total Return (%)c | 21.04d | (3.40) | 28.44 | 6.72 | 3.40 | 14.49 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | 1.33e | 1.35 | 1.41 | 1.42 | 1.40 | 1.51 |
Ratio of net expenses to
average net assets | 1.15e | 1.15 | 1.15 | 1.15 | 1.15 | 1.15 |
Ratio of net investment income
to average net assets | .05e | .02 | .12 | .41 | .37 | .12 |
Portfolio Turnover Rate | 29.90d | 68.61 | 48.04 | 40.65 | 63.87 | 91.53 |
Net Assets, end of period ($ x 1,000) | 17,013 | 14,648 | 10,749 | 9,410 | 16,467 | 6,878 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
d Not annualized.
e Annualized.
See notes to financial statements.
15
FINANCIAL HIGHLIGHTS (continued)
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2019 | Year Ended December 31, |
Class C Shares | (Unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 10.30 | 11.41 | 9.24 | 8.73 | 8.60 | 8.82 |
Investment Operations: | | | | | | |
Investment (loss)—neta | (.04) | (.09) | (.07) | (.03) | (.03) | (.05) |
Net realized and unrealized
gain (loss) on investments | 2.15 | (.37) | 2.62 | .54 | .27 | 1.24 |
Total from Investment Operations | 2.11 | (.46) | 2.55 | .51 | .24 | 1.19 |
Distributions: | | | | | | |
Dividends from net realized
gain on investments | (.27) | (.65) | (.38) | - | (.11) | (1.41) |
Net asset value, end of period | 12.14 | 10.30 | 11.41 | 9.24 | 8.73 | 8.60 |
Total Return (%)b | 20.66c | (4.19) | 27.56 | 5.84 | 2.71 | 13.66 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | 2.10d | 2.13 | 2.16 | 2.21 | 2.20 | 2.29 |
Ratio of net expenses to
average net assets | 1.90d | 1.90 | 1.90 | 1.90 | 1.90 | 1.90 |
Ratio of net investment (loss)
to average net assets | (.70)d | (.76) | (.61) | (.34) | (.38) | (.60) |
Portfolio Turnover Rate | 29.90c | 68.61 | 48.04 | 40.65 | 63.87 | 91.53 |
Net Assets, end of period ($ x 1,000) | 1,791 | 1,667 | 2,078 | 1,486 | 2,130 | 1,635 |
a Based on average shares outstanding.
b Exclusive of sales charge.
c Not annualized.
d Annualized.
See notes to financial statements.
16
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2019 | Year Ended December 31, |
Class I Shares | (Unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 11.19 | 12.24 | 9.82 | 9.23 | 9.07 | 9.16 |
Investment Operations: | | | | | | |
Investment income—neta | .02 | .03 | .04 | .06 | .06 | .03 |
Net realized and unrealized
gain (loss) on investments | 2.33 | (.40) | 2.79 | .59 | .27 | 1.32 |
Total from Investment Operations | 2.35 | (.37) | 2.83 | .65 | .33 | 1.35 |
Distributions: | | | | | | |
Dividends from
investment income—net | (.01) | (.03) | (.03) | (.06) | (.06) | (.03) |
Dividends from net realized
gain on investments | (.27) | (.65) | (.38) | - | (.11) | (1.41) |
Total Distributions | (.28) | (.68) | (.41) | (.06) | (.17) | (1.44) |
Net asset value, end of period | 13.26 | 11.19 | 12.24 | 9.82 | 9.23 | 9.07 |
Total Return (%) | 21.29b | (3.29) | 28.77 | 7.09 | 3.60 | 14.79 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | 1.07c | 1.08 | 1.14 | 1.16 | 1.10 | 1.15 |
Ratio of net expenses to
average net assets | .90c | .90 | .90 | .90 | .90 | .90 |
Ratio of net investment income
to average net assets | .31c | .25 | .39 | .65 | .61 | .32 |
Portfolio Turnover Rate | 29.90b | 68.61 | 48.04 | 40.65 | 63.87 | 91.53 |
Net Assets, end of period ($ x 1,000) | 31,861 | 27,147 | 27,019 | 13,112 | 28,054 | 25,055 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
17
FINANCIAL HIGHLIGHTS (continued)
| | | | | | | |
| | | Six Months Ended | |
| | | June 30, 2019 | Year Ended December 31, |
Class Y Shares | | (Unaudited) | 2018 | 2017 | 2016 | 2015a |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | | 11.19 | 12.24 | 9.82 | 9.23 | 8.74 |
Investment Operations: | | | | | | |
Investment income—netb | | .02 | .03 | .04 | .06 | .02 |
Net realized and unrealized
gain (loss) on investments | | 2.34 | (.40) | 2.79 | .59 | .55 |
Total from Investment Operations | | 2.36 | (.37) | 2.83 | .65 | .57 |
Distributions: | | | | | | |
Dividends from
investment income—net | | (.01) | (.03) | (.03) | (.06) | (.05) |
Dividends from net realized
gain on investments | | (.27) | (.65) | (.38) | - | (.03) |
Total Distributions | | (.28) | (.68) | (.41) | (.06) | (.08) |
Net asset value, end of period | | 13.27 | 11.19 | 12.24 | 9.82 | 9.23 |
Total Return (%) | | 21.28c | (3.20) | 28.77 | 7.09 | 6.49c |
Ratios/Supplemental Data (%): | | | | | |
Ratio of total expenses
to average net assets | | 1.01d | 1.02 | 1.07 | 1.10 | 2.36d |
Ratio of net expenses
to average net assets | | .90d | .90 | .90 | .90 | .90d |
Ratio of net investment income
to average net assets | | .31d | .25 | .39 | .68 | .69d |
Portfolio Turnover Rate | | 29.90c | 68.61 | 48.04 | 40.65 | 63.87 |
Net Assets, end of period ($ x 1,000) | | 19,718 | 17,026 | 18,155 | 13,750 | 1 |
a From October 1, 2015 (commencement of initial offering) to December 31, 2015.
b Based on average shares outstanding.
c Not annualized.
d Annualized.
See notes to financial statements.
18
NOTES TO FINANCIAL STATEMENTS(Unaudited)
NOTE 1—Significant Accounting Policies:
BNY Mellon Large Cap Growth Fund (the “fund”) is a separate diversified series of BNY Mellon Investment Funds V, 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 four series, including the fund. The fund’s investment objective is to seek to provide long-term 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.
Effective June 3, 2019, the fund changed its name from Dreyfus Large Cap Growth Fund to BNY Mellon Large Cap Growth Fund and the Company changed its name from Dreyfus Premier Investment Funds, Inc. to BNY Mellon Investment Funds V, Inc. In addition, The Dreyfus Corporation, the fund’s investment adviser and administrator, 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 450 million shares of $.001 par value Common Stock. The fund currently has authorized five classes of shares: Class A (100 million shares authorized), Class C (50 million shares authorized), Class I (100 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 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.
19
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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 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’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.
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).
20
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 securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Company’s Board of Directors (the “Board”). Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
21
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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 June 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† | 70,236,485 | - | - | 70,236,485 |
Investment Companies | 871,073 | - | - | 871,073 |
† See Statement of Investments for additional detailed categorizations.
(b)Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended June 30, 2019, The Bank of New York Mellon earned $751 from lending portfolio securities, pursuant to the securities lending agreement.
22
(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 June 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 June 30, 2019, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended December 31, 2018 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 December 31, 2018 was as follows: ordinary income $693,241 and long-term capital gains $2,784,315. The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other long-term open-end funds managed by the Adviser in a $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
23
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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 June 30, 2019 the fund did not borrow under the Facilities.
NOTE 3—Management Fee and Other Transactions with Affiliates:
(a)Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .70% of the value of the fund’s average daily net assets and is payable monthly. The Adviser has contractually agreed, from January 1, 2019 through May 1, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .90% of the value of the fund’s average daily net assets. On or after May 1, 2020, the Adviser may terminate this expense limitation at any time. The reduction in expenses, pursuant to the undertaking, amounted to $51,292 during the period ended June 30, 2019.
During the period ended June 30, 2019, the Distributor retained $810 from commissions earned on sales of the fund’s Class A shares and $100 from CDSC fees on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended June 30, 2019, Class C shares were charged $6,577 pursuant to the Distribution Plan.
(c)Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended June
24
30, 2019, Class A and Class C shares were charged $21,030and $2,192, 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. The fund had an arrangement with the custodian to receive earnings credits when positive cash balances were maintained, which were used to offset custody fees. Effective February 1, 2019, the arrangement with the custodian changed whereby the fund will no longer receive earnings credits to offset its custody fees and will receive interest income or overdraft fees going forward. 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 June 30, 2019, the fund was charged $5,782 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 June 30, 2019, the fund was charged $5,512 pursuant to the custody agreement.
During the period ended June 30, 2019, the fund was charged $4,090 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 $40,116, Distribution Plan fees $1,095, Shareholder Services Plan fees $3,938, custodian fees $3,567, Chief Compliance Officer fees $2,347 and transfer agency fees $3,090, which are offset against an expense reimbursement currently in effect in the amount of $8,529.
(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.
25
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities during the period ended June 30, 2019, amounted to $20,054,855 and $22,622,979, respectively.
At June 30, 2019, accumulated net unrealized appreciation on investments was $25,546,675, consisting of $25,863,276 gross unrealized appreciation and $316,601 gross unrealized depreciation.
At June 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).
26
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited)
At a meeting of the fund’s Board of Directors held on March 12-13, 2019, the Board considered the renewal of the fund’s Management Agreement pursuant to which the Adviser provides the fund with investment advisory and administrative services (the “Agreement”). The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Adviser. In considering the renewal of the Agreement, the Board considered all 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. 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. 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 comparable funds (the “Performance Group”) and with a broader group of funds (the “Performance Universe”), all for various periods ended January 31, 2019, and (2) the fund’s actual and contractual management fees and total expenses with those of a group of comparable funds (the “Expense Group”) and with a broader group of funds (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
27
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)
select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
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. The Board discussed with representatives of the Adviser and/or its affiliates the results of the comparisons and considered that the fund’s total return performance was above the Performance Group median for all periods, except the one- and two-year periods when performance was below the median, and below the Performance Universe median for all periods, except the five-year period when performance was above the median. The Board considered the relative proximity of the fund’s performance to the Performance Group and/or Performance Universe median in certain periods when performance was below median. The Adviser also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark index.
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. The Board considered that the fund’s contractual management fee was below the Expense Group median, the fund’s actual management fee was below the Expense Group and Expense Universe medians and the fund’s total expenses were below the Expense Group median (lowest in the Expense Group) and slightly above the Expense Universe median.
Representatives of the Adviser stated that the Adviser has contractually agreed, until May 1, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund so that the direct expenses of none of its classes (excluding Rule 12b-1 fees, shareholder services fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .90% of the fund’s average daily net assets.
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 primary employer of the fund’s primary portfolio manager(s) that is affiliated with the Adviser, 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.
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The Board concluded that the profitability results were not unreasonable, given the services rendered and service levels provided by the Adviser. The Board also considered the expense limitation arrangement and its effect on the profitability of the Adviser and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
The Board considered, on the advice of its counsel, the profitability analysis (1) as part of its evaluation of whether the fees under the Agreement, considered in relation to the mix of services provided by the Adviser, including the nature, extent and quality of such services, supported the renewal of the Agreement 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. Representatives of the Adviser stated that a discussion of economies of scale is predicated on a fund having achieved a substantial size with increasing assets and that, if a fund’s assets had been stable or decreasing, the possibility that the Adviser may have realized any economies of scale would be less. Representatives of the Adviser also stated that, as a result of shared and allocated costs among funds in the BNY Mellon fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to the Adviser from acting as investment adviser 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 Agreement. 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 are adequate and appropriate.
· The Board expressed some concern about relative performance, especially that in recent periods and determined to closely monitor performance.
· The Board concluded that the fee paid to the Adviser 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
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INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)
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 Agreement, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with the Adviser and its affiliates, of the Adviser and the services provided to the fund by the Adviser. 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 Agreement, 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 Agreement for the fund, or substantially similar agreements for other BNY Mellon funds that the Board oversees, during which lengthy discussions took place between the Board and representatives of the Adviser. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the fund’s arrangements, or substantially similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined to renew the Agreement.
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NOTES
31
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BNY Mellon Large Cap Growth Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286
Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286
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Ticker Symbols: | Class A: DAPAX Class C: DGTCX Class I: DAPIX Class Y: DLCGX |
Telephone Call your financial representative or 1-800-373-9387
Mail The BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-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/us and on the SEC’s website atwww.sec.gov and without charge, upon request, by calling 1-800-373-9387.
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© 2019 BNY Mellon Securities Corporation
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