UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number |
811-05652 |
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BNY Mellon Municipal Income, 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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Deirdre Cunnane, 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:
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09/30 |
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Date of reporting period: |
09/30/2023
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FORM N-CSR
Item 1. Reports to Stockholders.
BNY Mellon Municipal Income, Inc.
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ANNUAL REPORT September 30, 2023 |
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BNY Mellon Municipal Income, Inc. Protecting Your Privacy Our
Pledge to You THE FUND IS COMMITTED TO YOUR PRIVACY. On this page, you will
find the fund’s policies and practices for collecting, disclosing, and safeguarding “nonpublic personal
information,” which may include financial or other customer information. These policies apply to individuals
who purchase fund shares for personal, family, or household purposes, or have done so in the past. This
notification replaces all previous statements of the fund’s consumer privacy policy, and may be amended
at any time. We’ll keep you informed of changes as required by law. YOUR
ACCOUNT IS PROVIDED IN A SECURE ENVIRONMENT. The fund maintains physical, electronic and procedural safeguards
that comply with federal regulations to guard nonpublic personal information. The fund’s agents and
service providers have limited access to customer information based on their role in servicing your account. THE FUND COLLECTS INFORMATION IN ORDER TO SERVICE AND ADMINISTER YOUR ACCOUNT.
The
fund collects a variety of nonpublic personal information, which may include: • Information we receive from you, such as your name, address,
and social security number. • Information
about your transactions with us, such as the purchase or sale of fund shares. • Information we receive from agents and service providers,
such as proxy voting information. THE FUND DOES NOT SHARE NONPUBLIC PERSONAL
INFORMATION WITH ANYONE, EXCEPT AS PERMITTED BY LAW. Thank you for this opportunity
to serve you. |
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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. |
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Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
FOR MORE INFORMATION
Back Cover
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Save time. Save paper. View your next shareholder report online as soon as it’s
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a few minutes. |
DISCUSSION
OF FUND PERFORMANCE (Unaudited)
For the period from October 1, 2022, through September 30,
2023, as provided by the fund’s Primary Portoflio Managers, Daniel Rabasco and Jeffrey Burger, Insight
North America LLC, the fund’s sub-adviser.
Market and Fund Performance Overview
For
the 12-month period ended September 30, 2023, BNY Mellon Municipal Income, Inc. (the “fund”) produced
a total return of 1.76% on a net asset value basis and −2.41% on a market price basis.1
Over the same period, the fund provided aggregate income dividends of $.2130 per share, which reflects
a distribution rate of 3.76%.2 In comparison, the Bloomberg U.S. Municipal
Bond Index (the “Index”), the fund’s benchmark, posted a total return of 2.66% for the same period.3
Municipal bonds rose during the reporting period, as the market benefited from
easing inflation and a slowing of interest-rate hikes by the Federal Reserve (the “Fed”).
The
Fund’s Investment Approach
The fund seeks to maximize current income exempt from federal
income tax to the extent consistent with the preservation of capital. Under normal market conditions,
the fund invests at least 80% of the value of its net assets in municipal obligations and invests in
municipal obligations which, at the time of purchase, are rated investment grade or the unrated equivalent
as determined by fund’s sub-adviser, in the case of bonds, and rated in the two highest-rating categories
or the unrated equivalent as determined by the sub-adviser, in the case of short-term obligations having,
or deemed to have, maturities of less than one year.
To this end, we have
constructed a portfolio based on identifying income opportunities through analysis of each bond’s structure,
including paying close attention to each bond’s yield, maturity and early redemption features. Over
time, many of the fund’s relatively higher-yielding bonds mature or are redeemed by their issuers,
and we generally attempt to replace those bonds with investments consistent with the fund’s investment
policies, albeit with yields that reflect the then-current, interest-rate environment. When making new
investments, we focus on identifying undervalued sectors and securities, and we minimize the use of interest-rate
forecasting. We use fundamental analysis to estimate the relative value and attractiveness of various
sectors and securities and to exploit pricing inefficiencies in the municipal bond market.
Sentiment Shifts Late in
the Period
The municipal market was volatile during most of the reporting period and the
Fed’s rate hike in July 2023, a rise in inflation in August and the Fed’s reiteration of its “higher
for longer” stance caused yields to rise significantly late in the period.
Early
in the period, the municipal bond market experienced volatility driven by economic uncertainty, high
inflation and geopolitical risk. While employment remained strong, the outcome of the Fed’s tightening
policy was uncertain, with investors fearing that an economic slowdown was becoming more likely. The
Fed raised the federal funds rates six times between November 1, 2022 and September 30, 2023, bringing
the federal funds target rate from 3.00%–3.25% to 5.25%–5.50%.
2
Though inflation eased during the period, it remained above the Fed’s 2% target
rate. Nevertheless, the U.S. economy surprised investors by continuing to avoid a long anticipated recession.
The economic growth of 2022 continued into 2023, expanding by 2.2% in the first quarter, followed by
2.1% in the second quarter.
As a result of higher than expected inflation early in the
period and the Fed’s efforts to combat it, municipal bond mutual funds experienced significant outflows
through much of the reporting period. The need for fund managers to meet redemptions only added to the
downward momentum.
Mutual fund investors were still reluctant to return to the
market in any substantial way. Typically, after a sell-off, they return quickly, providing the market
with support. However, fund investors continued to be wary about inflation prospects and the need for
additional monetary tightening by the Fed.
The market impact of this tepid demand
was offset in part by relatively little new issuance. The need to issue new debt has been minimized somewhat
by federal assistance offered in response to the pandemic. In addition, since municipal issuers use debt
to fund capital projects, not operations, they have greater discretion about when they issue new debt,
and high interest rates have made issuance less attractive. Finally, refundings have dropped off because
the Tax Cuts and Jobs Act of 2017 eliminated advance refunding, and today’s high interest rates make
refunding less attractive.
The market environment deteriorated further with the Fed rate
hike in July 2023 and an uptick in inflation prospects in August 2023. Also, the municipal bond market
entered a typically less supportive technical environment in September, when fewer bonds mature or are
redeemed, resulting in less investor reinvestment into municipal bonds.
Sector Allocation Helped
Performance
The fund’s performance was aided primarily by its sector
allocation decisions. An emphasis on revenue bonds, especially overweights in the special tax and tobacco
sectors, was beneficial. An underweight to housing bonds was also advantageous. Security selections in
some sectors were helpful, especially in transportation, and airports. Holdings of Chicago, Orlando and
San Francisco airport bonds were all beneficial. A position in the New York Metropolitan Transportation
Authority also contributed positively.
On the other hand, despite some favorable
choices, overall security selection detracted from performance. Selection was especially weak in the
education, hospital and water & sewer sectors, as well as in local and state general obligation bonds.
The fund’s longer duration also hampered returns somewhat as rising rates weighed heavily on longer
bonds. Funding costs for leverage remained high during the period as well, challenging the Fund’s ability
to pay a dividend. The fund did not employ derivatives during the reporting period.
A Steady Market Heightens
the Importance of Yield
We anticipate that with the Fed’s continued commitment to a “higher for longer”
stance, rates will stay high, and yield will play a greater role in returns in the coming months. However,
we do not anticipate a recession in the medium term. With the market gaining some clarity on the Fed’s
likely steps in the coming months, we believe price action is likely to be more subdued. In this environment,
we expect to maintain a focus on what has
3
DISCUSSION
OF FUND PERFORMANCE (Unaudited) (continued)
worked
in the past six months — an emphasis on higher yielding securities and adding incremental yield to
the Fund’s portfolio.
October 16, 2023
1 Total return includes reinvestment of dividends and any capital
gains paid, based upon net asset value per share or market price per share, as applicable. Past performance
is no guarantee of future results. Market price per share, net asset value per share and investment return
fluctuates. Income may be subject to state and local taxes, and some income may be subject to the federal
alternative minimum tax (AMT) for certain investors. Capital gains, if any, are fully taxable.
2 Distribution
rate per share is based upon dividends per share paid from net investment income during the period, annualized
and divided by the market price per share at the end of the period, adjusted for any capital gain distributions.
3 Source:
Lipper, Inc. --- The Bloomberg U.S. Municipal Bond Index covers the U.S. dollar-denominated long-term
tax-exempt bond market. Unlike a fund, the Index is not subject to fees and other expenses. Investors
cannot invest directly in any Index.
Bonds are subject generally to interest-rate,
credit, liquidity and market risks, to varying degrees. Generally, all other factors being equal, bond
prices are inversely related to interest-rate changes, and rate increases can cause price declines. High
yield bonds are subject to increased credit risk and are considered speculative in terms of the issuer’s
perceived ability to continue making interest payments on a timely basis and to repay principal upon
maturity. The use of leverage may magnify the fund’s gains or losses. For derivatives with a leveraging
component, adverse changes in the value or level of the underlying asset can result in a loss that is
much greater than the original investment in the derivative.
4
FUND
PERFORMANCE (Unaudited)
Comparison
of change in value of a $10,000 investment in BNY Mellon Municipal Income, Inc. with a hypothetical investment
of $10,000 in the Bloomberg U.S. Municipal Bond Index (the “Index”).
†
Source: Lipper Inc.
Past performance is not
predictive of future performance.
The above graph compares a hypothetical
investment of $10,000 made in BNY Mellon Municipal Income, Inc. on 09/30/2013 to a hypothetical investment
of $10,000 made in the Index on that date. All figures for the fund are based on market price. All dividends
and capital gain distributions are reinvested.
The fund invests primarily in municipal
securities and its performance shown in the line graph takes into account fees and expenses. The Index
covers the U.S. dollar-denominated long-term tax-exempt bond market. Unlike a fund, the Index is not
subject to fees and other expenses. Investors cannot invest directly in any index. Further information
relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial
Highlights within this report and elsewhere in this report.
| | | |
Average Annual Total
Returns as of 9/30/2023 |
| 1
Year | 5 Years | 10 Years |
BNY Mellon Municipal
Income, Inc. Fund-Market Price | -2.41% | -1.95% | 1.01% |
BNY Mellon Municipal Income, Inc. Fund-Net Asset Value | 1.76% | -.84% | 2.50% |
Bloomberg
U.S. Municipal Bond Index | 2.66% | 1.05% | 2.29% |
The performance data quoted represents past
performance, which is no guarantee of future results. Share price and investment return fluctuate and
an investor’s shares may be worth more or less than original cost upon sale of the shares. Current
performance may be lower or higher than the performance quoted. Go to www.im.bnymellon.com
for the fund’s most recent month-end returns.
The fund's performance
shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the sale of fund shares.
5
FUND
PERFORMANCE (Unaudited) (continued)
DISTRIBUTION INFORMATION
The following information regarding the
fund’s distributions is current as of September 30, 2023, the fund’s fiscal year end. The fund’s
returns during the period were sufficient to meet fund distributions.
The
fund’s distribution policy is intended to provide shareholders with stable, but not guaranteed, cash
flow, independent of the amount or timing of income earned or capital gains realized by the fund. The
fund intends to distribute all or substantially all of its net investment income through its regular
monthly distribution and to distribute realized capital gains at least annually. In addition, in any
monthly period, in order to try to maintain a level distribution amount, the fund may pay out more or
less than its net investment income during the period. As a result, distributions sources may include
net investment income, realized gains and return of capital. You should not draw any conclusions about
the fund’s investment performance from the amount of the distribution or from the terms of the level
distribution program. A return of capital is a non-taxable distribution of a portion of a fund’s capital.
A return of capital distribution does not necessarily reflect a fund’s investment performance and should
not be confused with “yield” or “income.”
The amounts and sources
of distributions reported below are for financial reporting purposes and are not being provided for tax
reporting purposes. The actual amounts and character of the distributions for tax reporting purposes
will be reported to shareholders on Form 1099-DIV, which will be sent to shareholders shortly after
calendar year-end. Because distribution source estimates are updated throughout the current fiscal
year based on the fund’s performance, those estimates may differ from both the tax information reported
to you in your fund’s 1099 statement, as well as the ultimate economic sources of distributions over
the life of your investment. The figures in the table below provide the sources of distributions and
may include amounts attributed to realized gains and/or returns of capital.
| | | | | | | |
Distributions |
| Current Month Percentage of Distributions | Fiscal Year Ended Per Share Amounts |
| Net Investment Income | Realized Gains | Return of Capital | Total Distributions | Net Investment Income | Realized Gains | Return of Capital |
BNY Mellon Municipal Income, Inc. | 100.00% | .00% | .00% | $.21 | $.21 | $.00 | $.00 |
6
SELECTED INFORMATION
September
30, 2023 (Unaudited)
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Market Price per share September 30, 2023 | | $5.67 | | |
Shares
Outstanding September 30, 2023 | | 20,757,267 | | |
NYSE
MKT Ticker Symbol | | DMF | | |
MARKET PRICE (NYSE MKT) |
| | | Fiscal Year Ended September
30, 2023 | | |
| Quarter | | Quarter | | Quarter | | Quarter |
| Ended | | Ended | | Ended | | Ended |
| December 31, 2022 | | March
31, 2023 | | June 30, 2023 | | September 30, 2023 |
High | $6.65 | | $6.69 | | $6.45 | | $6.40 |
Low | 5.75 | | 6.16 | | 6.13 | | 5.67 |
Close | 6.26 | | 6.49 | | 6.29 | | 5.67 |
PERCENTAGE
GAIN (LOSS) based on change in Market Price† |
October
24, 1988 (commencement of operations) through
September 30, 2023 | 403.37% |
October
1, 2013 through September 30, 2023 | 10.55 |
October
1, 2018 through September 30, 2023 | (9.35) |
October
1, 2022 through September 30, 2023 | (2.41) |
January
1, 2023 through September 30, 2023 | (7.29) |
April
1, 2023 through September 30, 2023 | (11.36) |
July
1, 2023 through September 30, 2023 | (9.19) |
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NET
ASSET VALUE PER SHARE | |
October 24, 1988 (commencement of operations) | $9.26 |
September 30, 2022 | 6.93 |
December
31, 2022 | | | 7.26 |
March
31, 2023 | 7.45 |
June
30, 2023 | 7.46 |
September
30, 2023 | 6.82 |
PERCENTAGE
GAIN (LOSS) based on change in Net Asset Value† | |
October
24, 1988 (commencement of operations) through
September 30, 2023 | 553.57% |
October
1, 2013 through September 30, 2023 | 28.04 |
October
1, 2018 through September 30, 2023 | (4.11) |
October
1, 2022 through September 30, 2023 | 1.76 |
January
1, 2023 through September 30, 2023 | (3.89) |
April
1, 2023 through September 30, 2023 | (7.16) |
July
1, 2023 through September 30, 2023 | (7.94) |
† Total return includes reinvestment of dividends and any capital
gains paid. | |
7
STATEMENT OF INVESTMENTS
September
30, 2023
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Description
| Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% | | | | | |
Alabama
- 4.7% | | | | | |
Jefferson County, Revenue Bonds, Refunding, Ser. F | | 7.75 | | 10/1/2046 | | 4,000,000 | | 4,206,114 | |
The Lower Alabama Gas District, Revenue Bonds, Ser. A | | 5.00 | | 9/1/2046 | | 2,500,000 | | 2,382,359 | |
| 6,588,473 | |
Alaska - .7% | | | | | |
Northern
Tobacco Securitization Corp., Revenue Bonds, Refunding, Ser. A | | 4.00 | | 6/1/2050 | | 1,250,000 | | 1,038,012 | |
Arizona - 5.6% | | | | | |
Arizona Industrial Development Authority, Revenue Bonds (Equitable
School Revolving Fund Obligated Group) Ser. A | | 4.00 | | 11/1/2050 | | 1,200,000 | | 962,095 | |
Arizona Industrial Development Authority, Revenue Bonds (Equitable
School Revolving Fund Obligated Group) Ser. A | | 4.00 | | 11/1/2045 | | 1,355,000 | | 1,132,524 | |
Glendale Industrial Development Authority, Revenue Bonds, Refunding
(Sun Health Services Obligated Group) Ser. A | | 5.00 | | 11/15/2054 | | 1,500,000 | | 1,297,808 | |
La Paz County Industrial Development Authority, Revenue Bonds
(Harmony Public Schools) Ser. A | | 5.00 | | 2/15/2046 | | 1,500,000 | a | 1,337,041 | |
La Paz County Industrial Development Authority, Revenue Bonds
(Harmony Public Schools) Ser. A | | 5.00 | | 2/15/2036 | | 1,100,000 | a | 1,076,874 | |
Salt Verde Financial Corp., Revenue Bonds | | 5.00 | | 12/1/2037 | | 2,190,000 | | 2,152,936 | |
| 7,959,278 | |
California
- 10.3% | | | | | |
California Community Choice Financing Authority, Revenue Bonds (Green Bond) (Clean
Energy Project) | | 5.25 | | 10/1/2031 | | 1,000,000 | b | 998,286 | |
California County Tobacco Securitization Agency, Revenue Bonds,
Refunding, Ser. A | | 4.00 | | 6/1/2049 | | 1,000,000 | | 841,097 | |
California County Tobacco
Securitization Agency, Revenue Bonds, Refunding, Ser. A | | 4.00 | | 6/1/2039 | | 565,000 | | 518,883 | |
8
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Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
California
- 10.3% (continued) | | | | | |
Golden State Tobacco Securitization Corp., Revenue Bonds, Refunding,
Ser. B | | 5.00 | | 6/1/2051 | | 2,000,000 | | 2,032,021 | |
San Diego County Regional
Airport Authority, Revenue Bonds, Ser. B | | 5.00 | | 7/1/2051 | | 3,750,000 | | 3,680,530 | |
Tender Option Bond Trust Receipts (Series 2022-XF3024), (San
Francisco City & County, Revenue Bonds, Refunding, Ser. A) Recourse, Underlying Coupon Rate (%) 5.00 | | 6.57 | | 5/1/2044 | | 3,360,000 | a,c,d | 3,353,979 | |
Tender Option Bond Trust Receipts (Series 2023-XM1114), (Long
Beach Finance Authority, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 4.00 | | 3.15 | | 8/1/2053 | | 3,600,000 | a,c,d | 3,179,042 | |
| 14,603,838 | |
Colorado
- 8.7% | | | | | |
Colorado Health Facilities Authority, Revenue Bonds, Refunding (Covenant Living
Communities & Services Obligated Group) Ser. A | | 4.00 | | 12/1/2050 | | 2,000,000 | | 1,483,835 | |
Colorado High Performance Transportation Enterprise, Revenue
Bonds (C-470 Express Lanes System) | | 5.00 | | 12/31/2056 | | 3,000,000 | | 2,793,499 | |
Tender Option Bond Trust Receipts (Series 2016-XM0433), (Colorado
Springs, Revenue Bonds) Recourse, Underlying Coupon Rate (%) 5.00 | | 6.38 | | 11/15/2043 | | 3,997,093 | a,c,d | 4,001,341 | |
Tender Option Bond Trust Receipts (Series 2020-XM0829), (Colorado
Health Facilities Authority, Revenue Bonds, Refunding (CommonSpirit Health Obligated Group) Ser. A1)
Recourse, Underlying Coupon Rate (%) 4.00 | | 5.49 | | 8/1/2044 | | 1,645,000 | a,c,d | 1,660,441 | |
Tender Option Bond Trust Receipts (Series 2023-XM1124), (Colorado
Health Facilities Authority, Revenue Bonds (Adventist Health System/Sunbelt Obligated Group) Ser. A)
Recourse, Underlying Coupon Rate (%) 4.00 | | 2.66 | | 11/15/2048 | | 2,770,000 | a,c,d | 2,382,921 | |
| 12,322,037 | |
Connecticut
- .7% | | | | | |
Connecticut, Revenue Bonds, Ser. A | | 5.00 | | 5/1/2040 | | 1,000,000 | | 1,039,912 | |
9
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Florida
- 11.4% | | | | | |
Atlantic Beach, Revenue Bonds (Fleet Landing Project) Ser. A | | 5.00 | | 11/15/2053 | | 1,500,000 | | 1,248,662 | |
Florida Higher Educational Facilities Financial Authority,
Revenue Bonds (Ringling College Project) | | 5.00 | | 3/1/2049 | | 1,500,000 | | 1,352,775 | |
Halifax Hospital Medical Center, Revenue Bonds, Refunding | | 4.00 | | 6/1/2025 | | 1,000,000 | e | 1,002,865 | |
Hillsborough County Port District, Revenue Bonds (Tampa Port
Authority Project) Ser. B | | 5.00 | | 6/1/2046 | | 1,450,000 | | 1,371,314 | |
Palm Beach County Health
Facilities Authority, Revenue Bonds (Lifespace Communities Obligated Group) Ser. B | | 4.00 | | 5/15/2053 | | 1,000,000 | | 596,287 | |
Tender Option Bond Trust Receipts (Series 2020-XF2877), (Greater
Orlando Aviation Authority, Revenue Bonds, Ser. A) Recourse, Underlying Coupon Rate (%) 4.00 | | 2.54 | | 10/1/2049 | | 1,380,000 | a,c,d | 1,169,662 | |
Tender Option Bond Trust Receipts (Series 2022-XF1385), (Fort
Myers FL Utility, Revenue Bonds, Refunding, Ser. A) Non-recourse, Underlying Coupon Rate (%) 4.00 | | 2.97 | | 10/1/2044 | | 1,050,000 | a,c,d | 925,309 | |
Tender Option Bond Trust Receipts (Series 2023-XM1122), (Miami-Dade
FL County Water & Sewer System, Revenue Bonds, Refunding, Ser. B) Recourse, Underlying Coupon Rate
(%) 4.00 | | 3.09 | | 10/1/2049 | | 9,750,000 | a,c,d | 8,470,140 | |
| 16,137,014 | |
Georgia - 5.2% | | | | | |
Georgia Municipal Electric Authority, Revenue Bonds (Plant
Vogtle Units 3&4 Project) Ser. A | | 5.00 | | 7/1/2052 | | 1,250,000 | | 1,220,672 | |
Tender Option Bond Trust Receipts (Series 2019-XF2847), (Municipal
Electric Authority of Georgia, Revenue Bonds (Plant Vogtle Unis 3&4 Project) Ser. A) Recourse, Underlying
Coupon Rate (%) 5.00 | | 7.23 | | 1/1/2056 | | 1,270,000 | a,c,d | 1,226,870 | |
Tender Option Bond Trust Receipts (Series 2020-XM0825), (Brookhaven
Development Authority, Revenue Bonds (Children's Healthcare of Atlanta) Ser. A) Recourse, Underlying
Coupon Rate (%) 4.00 | | 3.93 | | 7/1/2044 | | 2,660,000 | a,c,d | 2,563,303 | |
10
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Georgia
- 5.2% (continued) | | | | | |
The Atlanta Development Authority, Revenue Bonds, Ser. A1 | | 5.25 | | 7/1/2040 | | 1,500,000 | | 1,512,990 | |
The Burke County Development
Authority, Revenue Bonds, Refunding (Oglethorpe Power Corp.) Ser. D | | 4.13 | | 11/1/2045 | | 1,000,000 | | 808,237 | |
| 7,332,072 | |
Hawaii
- .9% | | | | | |
Hawaii Airports System, Revenue Bonds, Ser. A | | 5.00 | | 7/1/2047 | | 1,250,000 | | 1,246,178 | |
Illinois - 17.3% | | | | | |
Chicago Board of Education,
Revenue Bonds | | 5.00 | | 4/1/2046 | | 1,725,000 | | 1,635,950 | |
Chicago II, GO, Refunding,
Ser. A | | 6.00 | | 1/1/2038 | | 2,000,000 | | 2,077,436 | |
Chicago II, GO, Ser.
A | | 5.00 | | 1/1/2044 | | 1,000,000 | | 970,287 | |
Chicago II Wastewater
Transmission, Revenue Bonds, Refunding, Ser. C | | 5.00 | | 1/1/2039 | | 1,100,000 | | 1,059,898 | |
Chicago II Waterworks, Revenue Bonds (2nd Lien Project) | | 5.00 | | 11/1/2028 | | 1,000,000 | | 1,007,809 | |
Chicago O'Hare International
Airport, Revenue Bonds, Ser. A | | 5.50 | | 1/1/2055 | | 1,500,000 | | 1,533,110 | |
Chicago Park District,
GO, Refunding, Ser. A | | 5.00 | | 1/1/2045 | | 1,000,000 | | 997,057 | |
Chicago Transit Authority,
Revenue Bonds, Refunding, Ser. A | | 5.00 | | 12/1/2045 | | 1,000,000 | | 1,004,563 | |
Illinois, GO, Refunding, Ser. A | | 5.00 | | 10/1/2029 | | 1,000,000 | | 1,035,487 | |
Illinois, GO, Ser. A | | 5.00 | | 5/1/2038 | | 1,250,000 | | 1,253,354 | |
Illinois, GO, Ser. D | | 5.00 | | 11/1/2028 | | 1,000,000 | | 1,032,896 | |
Illinois Finance Authority, Revenue Bonds, Refunding (Rosalind
Franklin University of Medicine & Science) | | 5.00 | | 8/1/2047 | | 1,350,000 | | 1,248,783 | |
Metropolitan Pier & Exposition Authority, Revenue Bonds
(McCormick Place Expansion Project) | | 5.00 | | 6/15/2057 | | 2,500,000 | | 2,395,241 | |
Metropolitan Pier & Exposition Authority, Revenue Bonds
(McCormick Place Project) (Insured; National Public Finance Guarantee Corp.) Ser. A | | 0.00 | | 12/15/2036 | | 2,500,000 | f | 1,323,285 | |
Sales Tax Securitization Corp., Revenue Bonds, Refunding, Ser.
A | | 4.00 | | 1/1/2039 | | 1,500,000 | | 1,341,472 | |
11
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Illinois
- 17.3% (continued) | | | | | |
Tender Option Bond Trust Receipts (Series 2017-XM0492), (Illinois
Finance Authority, Revenue Bonds, Refunding (The University of Chicago)) Non-recourse, Underlying Coupon
Rate (%) 5.00 | | 6.28 | | 4/1/2025 | | 4,600,000 | a,c,d | 4,624,846 | |
| 24,541,474 | |
Iowa - 1.0% | | | | | |
Iowa Finance Authority, Revenue Bonds, Refunding (Iowa Fertilizer
Co. Project) | | 5.00 | | 12/1/2050 | | 1,500,000 | | 1,435,494 | |
Kentucky
- 2.3% | | | | | |
Kentucky Economic Development Finance Authority, Revenue Bonds, Refunding (Louisville
Arena Project) (Insured; Assured Guaranty Municipal Corp.) Ser. A | | 5.00 | | 12/1/2045 | | 1,000,000 | | 1,008,824 | |
Kentucky Public Energy Authority, Revenue Bonds, Ser. A1 | | 4.00 | | 8/1/2030 | | 2,320,000 | b | 2,192,602 | |
| 3,201,426 | |
Louisiana - 5.6% | | | | | |
Louisiana Local Government
Environmental Facilities & Community Development Authority, Revenue Bonds, Refunding (Westlake Chemical
Project) | | 3.50 | | 11/1/2032 | | 1,000,000 | | 921,910 | |
New Orleans Aviation
Board, Revenue Bonds (General Airport-N Terminal Project) Ser. A | | 5.00 | | 1/1/2048 | | 1,000,000 | | 992,588 | |
Tender Option Bond Trust Receipts (Series 2018-XF2584), (Louisiana
Public Facilities Authority, Revenue Bonds (Franciscan Missionaries of Our Lady Health System Project))
Non-recourse, Underlying Coupon Rate (%) 5.00 | | 6.15 | | 7/1/2047 | | 6,320,000 | a,c,d | 6,021,250 | |
| 7,935,748 | |
Maryland
- 3.6% | | | | | |
Maryland Economic Development Corp., Revenue Bonds (Green Bond) (Purple Line Transit
Partners) Ser. B | | 5.25 | | 6/30/2055 | | 1,000,000 | | 954,435 | |
Maryland Health &
Higher Educational Facilities Authority, Revenue Bonds (Adventist Healthcare Obligated Group) Ser. A | | 5.50 | | 1/1/2046 | | 1,500,000 | | 1,458,857 | |
12
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Maryland
- 3.6% (continued) | | | | | |
Maryland Health & Higher Educational Facilities Authority,
Revenue Bonds, Refunding (Stevenson University Project) | | 4.00 | | 6/1/2046 | | 750,000 | | 627,740 | |
Tender Option Bond Trust Receipts (Series 2016-XM0391), (Mayor
& City Council of Baltimore, Revenue Bonds, Refunding (Water Projects)) Non-recourse, Underlying
Coupon Rate (%) 5.00 | | 6.28 | | 1/1/2024 | | 2,000,000 | a,c,d | 2,004,559 | |
| 5,045,591 | |
Massachusetts - 3.9% | | | | | |
Massachusetts Development
Finance Agency, Revenue Bonds, Refunding (Atrius Health Obligated Group) Ser. A | | 4.00 | | 6/1/2029 | | 1,500,000 | e | 1,537,326 | |
Massachusetts Development Finance Agency, Revenue Bonds, Refunding
(UMass Memorial Health Care Obligated Group) | | 5.00 | | 7/1/2046 | | 1,835,000 | | 1,772,303 | |
Massachusetts Development Finance Agency, Revenue Bonds, Refunding,
Ser. A | | 5.00 | | 7/1/2026 | | 950,000 | | 944,142 | |
Massachusetts Port
Authority, Revenue Bonds, Refunding (Bosfuel Project) Ser. A | | 4.00 | | 7/1/2044 | | 1,500,000 | | 1,301,697 | |
| 5,555,468 | |
Michigan
- 1.6% | | | | | |
Michigan Finance Authority, Revenue Bonds, Refunding (Beaumont-Spectrum) | | 4.00 | | 4/15/2042 | | 1,000,000 | | 895,547 | |
Michigan Finance Authority,
Revenue Bonds, Refunding (Insured; National Public Finance Guarantee Corp.) Ser. D6 | | 5.00 | | 7/1/2036 | | 500,000 | | 501,139 | |
Pontiac School District, GO (Insured; Qualified School Board
Loan Fund) | | 4.00 | | 5/1/2045 | | 1,000,000 | | 871,924 | |
| 2,268,610 | |
Minnesota - 1.0% | | | | | |
Duluth
Economic Development Authority, Revenue Bonds, Refunding (Essentia Health Obligated Group) Ser. A | | 5.00 | | 2/15/2058 | | 1,000,000 | | 938,247 | |
13
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Minnesota
- 1.0% (continued) | | | | | |
St. Paul Minnesota Housing & Redevelopment Authority, Revenue
Bonds, Refunding (HealthEast Care System Project) | | 5.00 | | 11/15/2025 | | 500,000 | e | 510,707 | |
| 1,448,954 | |
Missouri
- 3.2% | | | | | |
Tender Option Bond Trust Receipts (Series 2023-XM1116), (Jackson County Missouri
Special Obligation, Revenue Bonds, Refunding, Ser. A) Non-recourse, Underlying Coupon Rate (%) 4.25 | | 0.55 | | 12/1/2053 | | 3,000,000 | a,c,d | 2,648,535 | |
The Missouri Health & Educational Facilities Authority,
Revenue Bonds (Lutheran Senior Services Projects) Ser. A | | 5.00 | | 2/1/2042 | | 2,000,000 | | 1,850,476 | |
| 4,499,011 | |
Multi-State
- .9% | | | | | |
Federal Home Loan Mortgage Corp. Multifamily Variable Rate Certificates, Revenue
Bonds, Ser. M048 | | 3.15 | | 1/15/2036 | | 1,410,000 | a | 1,197,514 | |
Nebraska - .7% | | | | | |
Douglas
County Hospital Authority No. 2, Revenue Bonds (Children's Hospital Obligated Group) | | 5.00 | | 11/15/2036 | | 1,000,000 | | 1,013,866 | |
Nevada - 2.3% | | | | | |
Clark County School District, GO (Insured; Assured Guaranty
Municipal Corp.) Ser. A | | 4.25 | | 6/15/2041 | | 1,340,000 | | 1,262,130 | |
Reno, Revenue Bonds,
Refunding (Insured; Assured Guaranty Municipal Corp.) | | 4.00 | | 6/1/2058 | | 1,250,000 | | 996,437 | |
Reno, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal
Corp.) | | 4.13 | | 6/1/2058 | | 1,250,000 | | 1,014,410 | |
| 3,272,977 | |
New Hampshire - 1.2%
| | | | | |
New Hampshire Business Finance Authority, Revenue Bonds (University of Nevada
Reno Project) (Insured; Build America Mutual) Ser. A | | 5.25 | | 6/1/2051 | | 1,000,000 | | 1,037,111 | |
New Hampshire Business Finance Authority, Revenue Bonds, Refunding
(Springpoint Senior Living Obligated Group) | | 4.00 | | 1/1/2051 | | 1,000,000 | | 716,420 | |
| 1,753,531 | |
14
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
New
Jersey - 9.2% | | | | | |
New Jersey Economic Development Authority, Revenue Bonds, Refunding, Ser. WW | | 5.25 | | 6/15/2025 | | 1,180,000 | e | 1,208,473 | |
New Jersey Economic Development Authority, Revenue Bonds, Refunding,
Ser. XX | | 5.25 | | 6/15/2027 | | 350,000 | | 355,310 | |
New Jersey Economic
Development Authority, Revenue Bonds, Refunding, Ser. XX | | 5.25 | | 6/15/2025 | | 300,000 | e | 307,239 | |
New Jersey Health Care Facilities Financing Authority, Revenue
Bonds (RWJ Barnabas Health Obligated Group) | | 4.00 | | 7/1/2051 | | 855,000 | | 738,668 | |
New Jersey Transportation Trust Fund Authority, Revenue Bonds | | 5.00 | | 6/15/2046 | | 1,250,000 | | 1,254,542 | |
New Jersey Transportation
Trust Fund Authority, Revenue Bonds | | 5.25 | | 6/15/2043 | | 2,000,000 | | 2,037,730 | |
New Jersey Transportation Trust Fund Authority, Revenue Bonds,
Ser. AA | | 5.25 | | 6/15/2033 | | 1,000,000 | | 1,013,268 | |
New Jersey Turnpike
Authority, Revenue Bonds, Ser. A | | 4.00 | | 1/1/2048 | | 1,200,000 | | 1,053,663 | |
South Jersey Port Corp., Revenue Bonds, Ser. B | | 5.00 | | 1/1/2048 | | 1,000,000 | | 980,769 | |
Tobacco Settlement
Financing Corp., Revenue Bonds, Refunding, Ser. A | | 5.00 | | 6/1/2046 | | 3,860,000 | | 3,752,678 | |
Tobacco Settlement Financing Corp., Revenue Bonds, Refunding,
Ser. A | | 5.25 | | 6/1/2046 | | 390,000 | | 392,212 | |
| 13,094,552 | |
New York - 5.6% | | | | | |
New
York Convention Center Development Corp., Revenue Bonds (Hotel Unit Fee) (Insured; Assured Guaranty Municipal
Corp.) Ser. B | | 0.00 | | 11/15/2049 | | 5,600,000 | f | 1,358,246 | |
New York Transportation Development Corp., Revenue Bonds (JFK
International Air Terminal) | | 5.00 | | 12/1/2040 | | 1,000,000 | | 989,443 | |
New York Transportation
Development Corp., Revenue Bonds (LaGuardia Airport Terminal B Redevelopment Project) Ser. A | | 5.25 | | 1/1/2050 | | 1,500,000 | | 1,472,258 | |
Port Authority of New
York & New Jersey, Revenue Bonds, Refunding, Ser. 223 | | 4.00 | | 7/15/2051 | | 750,000 | | 622,574 | |
15
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
New
York - 5.6% (continued) | | | | | |
Tender Option Bond Trust Receipts (Series 2022-XM1004), (Metropolitan
Transportation Authority, Revenue Bonds, Refunding (Green Bond) (Insured; Assured Guaranty Municipal
Corp.) Ser. C) Non-recourse, Underlying Coupon Rate (%) 4.00 | | 3.46 | | 11/15/2047 | | 2,000,000 | a,c,d | 1,760,479 | |
Triborough Bridge & Tunnel Authority, Revenue Bonds, Ser.
C1A | | 4.00 | | 5/15/2046 | | 2,000,000 | | 1,768,798 | |
| 7,971,798 | |
Ohio - .6% | | | | | |
Cuyahoga
County, Revenue Bonds, Refunding (The MetroHealth System) | | 5.00 | | 2/15/2052 | | 1,000,000 | | 892,182 | |
Oregon - .5% | | | | | |
Salem Hospital Facility Authority, Revenue Bonds, Refunding
(Capital Manor Project) | | 4.00 | | 5/15/2057 | | 1,000,000 | | 680,808 | |
Pennsylvania
- 10.8% | | | | | |
Allentown School District, GO, Refunding (Insured; Build America Mutual) Ser.
B | | 5.00 | | 2/1/2032 | | 1,255,000 | | 1,300,673 | |
Clairton Municipal
Authority, Revenue Bonds, Refunding, Ser. B | | 5.00 | | 12/1/2042 | | 1,000,000 | | 960,203 | |
Montgomery County Industrial Development Authority, Revenue
Bonds, Refunding (ACTS Retirement-Life Communities Obligated Group) | | 5.00 | | 11/15/2036 | | 1,000,000 | | 994,243 | |
Pennsylvania Economic Development Financing Authority, Revenue
Bonds (The Penndot Major Bridges) | | 6.00 | | 6/30/2061 | | 1,000,000 | | 1,056,508 | |
Pennsylvania Economic Development Financing Authority, Revenue
Bonds, Refunding (Presbyterian Senior Living) | | 4.00 | | 7/1/2046 | | 1,000,000 | | 793,390 | |
Pennsylvania Higher Educational Facilities Authority, Revenue
Bonds, Refunding (University of Sciences) | | 5.00 | | 11/1/2033 | | 2,000,000 | | 2,012,989 | |
Pennsylvania Turnpike Commission, Revenue Bonds, Ser. A | | 4.00 | | 12/1/2050 | | 1,000,000 | | 852,502 | |
Pennsylvania Turnpike
Commission, Revenue Bonds, Ser. A1 | | 5.00 | | 12/1/2046 | | 1,000,000 | | 1,002,335 | |
16
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Pennsylvania
- 10.8% (continued) | | | | | |
Pennsylvania Turnpike Commission Oil Franchise, Revenue Bonds,
Ser. B | | 5.25 | | 12/1/2048 | | 1,000,000 | | 1,013,199 | |
Tender Option Bond
Trust Receipts (Series 2023-XF1525), (Pennsylvania Economic Development Financing Authority UPMC, Revenue
Bonds, Ser. A) Recourse, Underlying Coupon Rate (%) 4.00 | | 3.40 | | 5/15/2053 | | 1,700,000 | a,c,d | 1,413,593 | |
Tender Option Bond Trust Receipts (Series 2023-XM1133), (Philadelphia
Water & Wastewater, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. B),
Underlying Coupon Rate (%) 5.50 | | 8.38 | | 9/1/2053 | | 2,400,000 | a,c,d | 2,543,645 | |
The Philadelphia School District, GO (Insured; State Aid Withholding)
Ser. A | | 4.00 | | 9/1/2037 | | 1,500,000 | | 1,346,725 | |
| 15,290,005 | |
Rhode Island - 2.9% | | | | | |
Providence
Public Building Authority, Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) Ser. A | | 5.00 | | 9/15/2037 | | 500,000 | | 509,475 | |
Tender Option Bond
Trust Receipts (Series 2023-XM1117), (Rhode Island Infrastructure Bank State Revolving Fund, Revenue
Bonds, Ser. A) Non-recourse, Underlying Coupon Rate (%) 4.25 | | 4.49 | | 10/1/2053 | | 4,000,000 | a,c,d | 3,624,744 | |
| 4,134,219 | |
South
Carolina - 8.1% | | | | | |
South Carolina Jobs-Economic Development Authority, Revenue
Bonds (Bishop Gadsden Episcopal Retirement Community Obligated Group) | | 5.00 | | 4/1/2054 | | 1,000,000 | | 825,948 | |
South Carolina Jobs-Economic Development Authority, Revenue
Bonds, Refunding (Bon Secours Mercy Health) | | 4.00 | | 12/1/2044 | | 1,000,000 | | 875,104 | |
South Carolina Public Service Authority, Revenue Bonds, Refunding
(Santee Cooper) Ser. A | | 4.00 | | 12/1/2055 | | 1,000,000 | | 799,121 | |
17
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
South
Carolina - 8.1% (continued) | | | | | |
Tender Option Bond Trust Receipts (Series 2016-XM0384), (South
Carolina Public Service Authority, Revenue Bonds, Refunding (Santee Cooper)) Non-recourse, Underlying
Coupon Rate (%) 5.13 | | 7.13 | | 12/1/2043 | | 4,800,000 | a,c,d | 4,730,138 | |
Tobacco Settlement Revenue Management Authority, Revenue Bonds,
Ser. B | | 6.38 | | 5/15/2030 | | 3,750,000 | | 4,257,354 | |
| 11,487,665 | |
South Dakota - 1.4% | | | | | |
Tender
Option Bond Trust Receipts (Series 2022-XF1409), (South Dakota Heath & Educational Facilities Authority,
Revenue Bonds, Refunding (Avera Health Obligated Group)) Non-recourse, Underlying Coupon Rate (%) 5.00 | | 6.80 | | 7/1/2046 | | 2,000,000 | a,c,d | 1,908,164 | |
Texas - 13.2% | | | | | |
Clifton
Higher Education Finance Corp., Revenue Bonds (IDEA Public Schools) Ser. A | | 4.00 | | 8/15/2051 | | 1,100,000 | | 837,209 | |
Clifton Higher Education Finance Corp., Revenue Bonds (IDEA
Public Schools) Ser. A | | 4.00 | | 8/15/2047 | | 1,175,000 | | 921,066 | |
Clifton Higher Education
Finance Corp., Revenue Bonds (Uplift Education) Ser. A | | 4.25 | | 12/1/2034 | | 1,000,000 | | 922,565 | |
Harris County-Houston Sports Authority, Revenue Bonds, Refunding
(Insured; Assured Guaranty Municipal Corp.) Ser. A | | 0.00 | | 11/15/2052 | | 4,000,000 | f | 742,767 | |
Houston Airport System, Revenue Bonds, Refunding (Insured;
Assured Guaranty Municipal Corp.) Ser. A | | 4.50 | | 7/1/2053 | | 1,000,000 | | 896,808 | |
Houston Airport System, Revenue Bonds, Refunding, Ser. A | | 4.00 | | 7/1/2047 | | 1,560,000 | | 1,315,396 | |
Lamar Consolidated
Independent School District, GO | | 4.00 | | 2/15/2053 | | 1,000,000 | | 842,193 | |
New Hope Cultural Education
Facilities Finance Corp., Revenue Bonds, Refunding (Westminster Project) | | 4.00 | | 11/1/2055 | | 1,650,000 | | 1,223,496 | |
North Texas Tollway Authority, Revenue Bonds, Refunding, Ser.
A | | 4.00 | | 1/2/2038 | | 1,750,000 | | 1,619,114 | |
18
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Texas
- 13.2% (continued) | | | | | |
San Antonio Education Facilities Corp., Revenue Bonds, Refunding
(University of the Incarnate Word) | | 4.00 | | 4/1/2046 | | 1,675,000 | | 1,314,981 | |
Tender Option Bond Trust Receipts (Series 2023-XM1125), (Medina
Valley Independent School District, GO (Insured; Permanent School Fund Guarantee Program)) Non-recourse,
Underlying Coupon Rate (%) 4.00 | | 0.69 | | 2/15/2053 | | 3,000,000 | a,c,d | 2,666,993 | |
Texas Private Activity Bond Surface Transportation Corp., Revenue
Bonds (Blueridge Transportation Group) | | 5.00 | | 12/31/2055 | | 1,000,000 | | 932,431 | |
Texas Private Activity Bond Surface Transportation Corp., Revenue
Bonds (Blueridge Transportation Group) | | 5.00 | | 12/31/2050 | | 1,200,000 | | 1,131,539 | |
Texas Private Activity Bond Surface Transportation Corp., Revenue
Bonds (Segment 3C Project) | | 5.00 | | 6/30/2058 | | 1,000,000 | | 957,094 | |
Texas Private Activity
Bond Surface Transportation Corp., Revenue Bonds, Refunding (LBJ Infrastructure Group) | | 4.00 | | 12/31/2039 | | 1,600,000 | | 1,423,507 | |
Waxahachie Independent School District, GO, (Insured; Permanent
School Fund Guarantee Program) | | 4.25 | | 2/15/2053 | | 1,000,000 | | 912,272 | |
| 18,659,431 | |
Utah - 2.3% | | | | | |
Salt
Lake City, Revenue Bonds, Ser. A | | 5.00 | | 7/1/2048 | | 1,000,000 | | 981,429 | |
Utah Charter School Finance Authority, Revenue Bonds, Refunding
(Summit Academy) Ser. A | | 5.00 | | 4/15/2031 | | 860,000 | | 886,013 | |
Utah Infrastructure
Agency, Revenue Bonds, Refunding, Ser. A | | 5.00 | | 10/15/2037 | | 1,500,000 | | 1,430,153 | |
| 3,297,595 | |
Virginia
- 3.2% | | | | | |
Virginia Small Business Financing Authority, Revenue Bonds (Transform 66 P3 Project) | | 5.00 | | 12/31/2052 | | 2,000,000 | | 1,902,599 | |
Virginia Small Business
Financing Authority, Revenue Bonds, Refunding | | 5.00 | | 12/31/2057 | | 1,000,000 | | 939,787 | |
19
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value
($) | |
| | | | | | | | |
Long-Term
Municipal Investments - 152.8% (continued) | | | | | |
Virginia
- 3.2% (continued) | | | | | |
Virginia Small Business Financing Authority, Revenue Bonds,
Refunding (95 Express Lanes) | | 4.00 | | 1/1/2048 | | 1,000,000 | | 832,887 | |
Williamsburg Economic
Development Authority, Revenue Bonds (William & Marry Project) (Insured; Assured Guaranty Municipal
Corp.) Ser. A | | 4.13 | | 7/1/2058 | | 1,000,000 | | 859,405 | |
| 4,534,678 | |
Wisconsin - 2.2% | | | | | |
Public
Finance Authority, Revenue Bonds (EMU Campus Living) (Insured; Build America Mutual) Ser. A1 | | 5.50 | | 7/1/2052 | | 1,000,000 | | 1,045,297 | |
Public Finance Authority,
Revenue Bonds (EMU Campus Living) (Insured; Build America Mutual) Ser. A1 | | 5.63 | | 7/1/2055 | | 1,000,000 | | 1,053,415 | |
Wisconsin Health & Educational Facilities Authority, Revenue
Bonds (Bellin Memorial Hospital Obligated Group) | | 5.50 | | 12/1/2052 | | 1,000,000 | | 1,022,406 | |
| 3,121,118 | |
Total
Investments (cost $232,352,713) | | 152.8% | 216,508,693 | |
Liabilities, Less Cash and Receivables | | (31.5%) | (44,629,504) | |
VMTPS, at liquidation
value | | (21.3%) | (30,225,000) | |
Net Assets Applicable
to Common Stockholders | | 100.0% | 141,654,189 | |
a Security exempt from registration pursuant to Rule 144A under
the Securities Act of 1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At September 30, 2023, these securities were valued at $66,491,383
or 46.94% of net assets.
b These
securities have a put feature; the date shown represents the put date and the bond holder can take a
specific action to retain the bond after the put date.
c The Variable Rate is determined by the Remarketing Agent in
its sole discretion based on prevailing market conditions and may, but need not, be established by reference
to one or more financial indices.
d Collateral for floating rate borrowings. The coupon rate given
represents the current interest rate for the inverse floating rate security.
e These securities are prerefunded; the date shown represents
the prerefunded date. Bonds which are prerefunded are collateralized by U.S. Government securities which
are held in escrow and are used to pay principal and interest on the municipal issue and to retire the
bonds in full at the earliest refunding date.
f Security issued with a zero coupon. Income is recognized through
the accretion of discount.
20
| |
Portfolio Summary (Unaudited) † | Value
(%) |
General | 23.2 |
Medical | 18.7 |
Water | 17.2 |
Transportation | 15.9 |
Education | 15.7 |
Airport | 13.8 |
Tobacco Settlement | 9.1 |
Nursing Homes | 8.3 |
School District | 6.5 |
Power | 6.2 |
General
Obligation | 5.2 |
Development | 4.0 |
Utilities | 3.5 |
Prerefunded | 3.2 |
Housing | 1.5 |
Multifamily Housing | .8 |
| 152.8 |
† Based
on net assets.
See notes to financial
statements.
21
| | | |
|
Summary
of Abbreviations (Unaudited) |
|
ABAG | Association
of Bay Area Governments | AGC | ACE Guaranty Corporation |
AGIC | Asset Guaranty Insurance Company | AMBAC | American Municipal Bond Assurance Corporation |
BAN | Bond Anticipation Notes | BSBY | Bloomberg
Short-Term Bank Yield Index |
CIFG | CDC
Ixis Financial Guaranty | COP | Certificate of Participation |
CP | Commercial Paper | DRIVERS | Derivative
Inverse Tax-Exempt Receipts |
EFFR | Effective
Federal Funds Rate | FGIC | Financial Guaranty Insurance Company |
FHA | Federal Housing Administration | FHLB | Federal Home Loan Bank |
FHLMC | Federal Home Loan Mortgage Corporation | FNMA | Federal National Mortgage Association |
GAN | Grant Anticipation Notes | GIC | Guaranteed
Investment Contract |
GNMA | Government National Mortgage Association | GO | General Obligation |
IDC | Industrial
Development Corporation | LIBOR | London Interbank Offered Rate |
LOC | Letter of Credit | LR | Lease
Revenue |
NAN | Note Anticipation Notes | MFHR | Multi-Family
Housing Revenue |
MFMR | Multi-Family Mortgage Revenue | MUNIPSA | Securities Industry and Financial Markets
Association Municipal Swap Index Yield |
OBFR | Overnight
Bank Funding Rate | PILOT | Payment in Lieu of Taxes |
PRIME | Prime Lending Rate | PUTTERS | Puttable
Tax-Exempt Receipts |
RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes |
RIB | Residual Interest Bonds | SFHR | Single
Family Housing Revenue |
SFMR | Single
Family Mortgage Revenue | SOFR | Secured Overnight Financing Rate |
TAN | Tax Anticipation Notes | TRAN | Tax
and Revenue Anticipation Notes |
TSFR | Term
Secured Overnight Financing Rate | U.S.
T-BILL | U.S.
Treasury Bill Money Market Yield |
XLCA | XL
Capital Assurance | | |
VMTPS | Variable
Rate Muni Term Preferred Shares | | |
See notes to financial statements.
22
STATEMENT OF ASSETS AND LIABILITIES
September
30, 2023
| | | | | | |
| | | | | | |
| | | Cost | | Value | |
Assets ($): | | | | |
Investments in securities—See Statement of Investments | 232,352,713 | | 216,508,693 | |
Cash | | | | | 249,920 | |
Interest
receivable | | 3,066,937 | |
Receivable for investment securities sold | | 955,547 | |
Deferred
VMTPS offering costs—Note 1(g) | | 263,336
| |
| | | | |
221,044,433 | |
Liabilities ($): | | | | |
Due to BNY Mellon Investment Adviser, Inc.
and affiliates—Note 2(b) | | 114,720 | |
Payable for inverse floater notes issued—Note
3 | | 47,127,093 | |
Payable for investment securities
purchased | | 950,407 | |
Interest and expense payable
related to inverse floater notes issued—Note 3 | | 586,644 | |
Dividends
payable to Common Stockholders | | 311,227 | |
Other accrued expenses | | | | | 75,153 | |
| | | | |
49,165,244 | |
VMTPS, $.001 par value per share (1,209 shares
issued and outstanding at $25,000 per share liquidation value)—Note 1 | |
30,225,000 | |
Net Assets Applicable to Common Stockholders
($) | | | 141,654,189 | |
Composition
of Net Assets ($): | | | | |
Common Stock, par value, $.001 per share (20,757,267
shares issued and outstanding) | | | | | 20,757 | |
Paid-in
capital | | | | | 179,014,708 | |
Total distributable earnings
(loss) | | | | | (37,381,276) | |
Net
Assets Applicable to Common Stockholders ($) | | | 141,654,189 | |
| | | | |
Shares Outstanding | | |
(110 million shares authorized) | 20,757,267 | |
Net
Asset Value Per Share of Common Stock ($) | | 6.82 | |
| | | | |
See notes to financial statements. | | | | |
23
STATEMENT OF OPERATIONS
Year
Ended September 30, 2023
| | | | | | |
| | | | | | |
| | | | | | |
Investment
Income ($): | | | | |
Interest Income | | | 9,569,455 | |
Expenses: | | | | |
Management
fee—Note 2(a) | | | 1,274,568 | |
Interest
and expense related to inverse floater notes issued—Note 3 | | | 1,815,761 | |
VMTPS
interest expense—Note 1(g) and Note 3 | | | 303,103 | |
Professional fees | | | 103,714 | |
Directors’
fees and expenses—Note 2(c) | | | 81,075 | |
Commission
fees—Note 1 and Redemption and Paying Agent fees—Note 2(b) | | | 42,489 | |
Shareholders’
reports | | | 34,361 | |
Shareholder
servicing costs | | | 23,055 | |
Amortization
of VMTPS offering costs—Note 1(g) | | | 16,486 | |
Chief Compliance Officer fees—Note 2(b) | | | 11,609 | |
Registration
fees | | | 10,000 | |
Custodian
fees—Note 2(b) | | | 3,345 | |
Miscellaneous | | | 47,864 | |
Total
Expenses | | |
3,767,430 | |
Less—reduction in fees due
to earnings credits—Note 2(b) | | | (2,688) | |
Net
Expenses | | | 3,764,742 | |
Net Investment Income | | | 5,804,713 | |
Realized
and Unrealized Gain (Loss) on Investments—Note 3 ($): | | |
Net realized gain (loss) on
investments | (5,432,377) | |
Net change in unrealized appreciation
(depreciation) on investments |
3,026,877 | |
Net Realized and Unrealized Gain (Loss) on
Investments | | | (2,405,500) | |
Dividends
to Preferred Stockholders | | | (1,275,815) | |
Net
Increase in Net Assets Applicable to Common Stockholders Resulting from Operations | | 2,123,398 | |
| | | | | | |
See notes to financial statements. | | | | | |
24
STATEMENT OF CASH FLOWS
Year
Ended September 30, 2023
| | | | | | |
| | | | | |
| | | | | | |
Cash Flows from Operating Activities ($): | | | | | |
Purchases of portfolio securities | |
(67,501,968) | | | |
Proceeds
from sales of portfolio securities |
75,884,767 | | | |
Dividends
paid to Preferred Stockholders |
(1,280,935) | | | |
Interest
income received | | 9,824,663 | | | |
Interest and expense related to inverse floater
notes issued | | (1,561,530) | | | |
VMTPS interest expense and fees paid | | (303,103) | | | |
Amortization of VMTPS offering costs paid | | (279,822) | | | |
Expenses paid to BNY Mellon Investment
Adviser, Inc. and affiliates | | (1,287,701) | | | |
Operating expenses paid | | (363,625) | | | |
Net Cash Provided (or Used) in Operating Activities | | | | 13,130,746 | |
Cash
Flows from Financing Activities ($): | | | | | |
Net proceeds from VMTPS sold | | 30,225,000 | | | |
Dividends paid to Common Stockholders | | (4,608,248) | | | |
Cost of Auction Preferred Stock shares redeemed | (30,225,000) | | | |
Decrease in payable for inverse floater notes issued | | (10,117,499) | | | |
Net Cash Provided (or Used) in Financing Activities | | (14,725,747) | |
Net Increase
(Decrease) in Cash | | (1,595,001) | |
Cash at beginning of period | | 1,844,921 | |
Cash at
End of Period | |
249,920 | |
Reconciliation
of Net Increase (Decrease) in Net Assets Applicable to | | | |
| Common Stockholders Resulting from Operations to | | | |
| Net Cash Provided (or Used) in Operating Activities ($): | | | |
Net
Increase in Net Assets Resulting From Operations | | 2,123,398 | |
Adjustments to Reconcile Net Increase (Decrease) in Net Assets | | | |
| Applicable to Common Stockholders Resulting from | | | |
| Operations to Net Cash Provided (or Used) in Operating Activities
($): | | | |
Decrease in investments in securities at cost | | 15,416,256 | |
Decrease
in interest receivable | | 255,208 | |
Increase in receivable for investment securities sold | | (955,547) | |
Increase
in Amortization of VMTPS offering costs | | (263,336) | |
Decrease in prepaid expenses | | 10,442 | |
Increase
in Due to BNY Mellon Investment Adviser, Inc. and affiliates | | 6,633 | |
Decrease
in payable for investment securities purchased | | (645,533) | |
Increase in interest and expense payable
related to inverse floater notes issued | | 254,231
| |
Decrease in dividends payable to Preferred
Stockholders | | (5,120) | |
Decrease in commissions payable and other accrued expenses | | (39,009) | |
Net
change in unrealized (appreciation) depreciation on investments | | (3,026,877) | |
Net Cash Provided (or
Used) in Operating Activities | |
13,130,746 | |
| | | | | | |
See
notes to financial statements. | | | | | |
25
STATEMENT
OF CHANGES IN NET ASSETS
| | | | | | | | | |
| | | | Year Ended September 30, |
| | | | 2023 | | 2022 | |
Operations ($): | | | | | | | | |
Net investment income | | | 5,804,713 | | | | 7,460,956 | |
Net
realized gain (loss) on investments | | (5,432,377) | | | | (4,908,390) | |
Net
change in unrealized appreciation (depreciation) on investments | | 3,026,877 | | | | (43,966,411) | |
Dividends
to Preferred Stockholders | | | (1,275,815) | | | | (301,213) | |
Net Increase
(Decrease) in Net Assets Applicable to Common Stockholders Resulting from
Operations | 2,123,398 | | | | (41,715,058) | |
Distributions
($): | |
Distributions to stockholders | | | (4,421,298) | | | | (7,140,441) | |
Distributions
to Common Stockholders | | | (4,421,298) | | | | (7,140,441) | |
Capital
Stock Transactions ($): | |
Net proceeds from VMTPS sold | 30,225,000 | | | | - | |
Distributions
reinvested | | | - | | | | 17,869 | |
Cost
of Auction Preferred Stock shares redeemed |
(30,225,000) | | | | - | |
Increase
(Decrease) in Net Assets from Capital Stock Transactions | - | | | | 17,869 | |
Total
Increase (Decrease) in Net Assets Applicable to Common Stockholders | (2,297,900) | | | | (48,837,630) | |
Net Assets
Applicable to Common Stockholders ($): | |
Beginning
of Period | | | 143,952,089 | | | | 192,789,719 | |
End of
Period | | | 141,654,189 | | | | 143,952,089 | |
Capital
Share Transactions (Common Shares): | |
VMTPS sold | 1,209 | | | | - | |
Shares
issued for distributions reinvested | | | - | | | | 1,936 | |
Auction
Preferred Stock Shares redeemed |
(1,209) | | | | - | |
Net
Increase (Decrease) in Shares Outstanding |
- | | | | 1,936 | |
| | | | | | | | | |
See notes to financial statements. | | | | | | | | |
26
FINANCIAL
HIGHLIGHTS
The following table describes the performance
for the fiscal periods indicated. Market price total return is calculated assuming an initial investment
made at the market price at the beginning of the period, reinvestment of all dividends and distributions
at market price during the period, and sale at the market price on the last day of the period. These
figures have been derived from the fund’s financial statements and, with respect to common stock, market
price data for the fund’s common shares.
| | | | | | | | | | | |
| | | | | |
| Year Ended September 30, |
| | 2023a | 2022b | 2021c | 2020d | 2019e |
Per Share
Data ($): | | | | | | |
Net asset value, beginning of period | | 6.94 | 9.29 | 9.05 | 9.36 | 8.90 |
Investment Operations: | | | | | | |
Net investment incomef | | .28 | .36 | .41 | .43 | .46 |
Net
realized and unrealized gain (loss) on investments | | (.13) | (2.35) | .25 | (.30) | .46 |
Dividends
to Preferred Stockholders from net investment income | | (.06) | (.02) | (.00)g | (.02) | (.04) |
Total
from Investment Operations | | (.09) | (2.01) | .66 | .11 | .88 |
Distributions
to Common Stockholders: | | | | | | |
Dividends
from net investment income | | (.21) | (.34) | (.42) | (.42) | (.42) |
Net asset value, end
of period | | 6.82 | 6.94 | 9.29 | 9.05 | 9.36 |
Market value, end of
period | | 5.67 | 6.01 | 9.63 | 8.63 | 9.35 |
Market
Price Total Return (%) | | (2.41) | (34.69) | 16.90 | (3.13) | 25.58 |
27
FINANCIAL
HIGHLIGHTS (continued)
| | | | | | | | | | |
| | | | | |
| Year Ended September 30, |
| 2023a | 2022b | 2021c | 2020d | 2019e |
Ratios/Supplemental
Data (%): | | | | | | |
Ratio
of total expenses to average net assets | | 2.48 | 1.48 | 1.25 | 1.68 | 1.89 |
Ratio
of net expenses to average net assets | | 2.48 | 1.48 | 1.25 | 1.67 | 1.89 |
Ratio
of interest and expense related to inverse floater notes issued, VMTPS interest
expense to average net assets | | 1.40 | .42 | .25 | .67 | .90 |
Ratio
of net investment income to average net assets | | 3.82 | 4.30 | 4.37 | 4.78 | 5.04 |
Portfolio
Turnover Rate | | 25.17 | 31.87 | 11.33 | 26.85 | 31.62 |
Asset Coverage of VMTPS
and Preferred Stock, end of period | | 569 | 576 | 738 | 721 | 742 |
Net
Assets applicable to Common Stockholders, end
of period ($ x 1,000) | | 141,654 | 143,952 | 192,790 | 187,703 | 194,114 |
VMTPS
and Preferred Stock Outstanding, end of period ($ x 1,000) | | 30,225 | 30,225 | 30,225 | 30,225 | 30,225 |
Floating
Rate Notes Outstanding, end of period ($ x 1,000) | | 47,127 | 57,245 | 67,430 | 71,180 | 85,492 |
a The
ratios based on total average net assets including dividends to Preferred Stockholders are as follows:
total expense ratio of 2.13%, a net expense ratio of 2.13%, an interest expense related to floating rate
notes issued ratio of 1.20% and a net investment income of 3.29%.
b The ratios based on total average net assets including dividends
to Preferred Stockholders are as follows: total expense ratio of 1.26%, a net expense ratio of 1.26%,
an interest expense related to floating rate notes issued ratio of .36% and a net investment income of
3.66%.
c The
ratios based on total average net assets including dividends to Preferred Stockholders are as follows:
total expense ratio of 1.08%, a net expense ratio of 1.08%, an interest expense related to floating rate
notes issued ratio of .22% and a net investment income of 3.78%.
d The ratios based on total average net assets including dividends
to Preferred Stockholders are as follows: total expense ratio of 1.44%, a net expense ratio of 1.44%,
an interest expense related to floating rate notes issued ratio of .58% and a net investment income of
4.12%.
e The
ratios based on total average net assets including dividends to Preferred Stockholders are as follows:
total expense ratio of 1.63%, a net expense ratio of 1.63%, an interest expense related to floating rate
notes issued ratio of .78% and a net investment income of 4.34%.
f Based on average common shares outstanding.
g Amount represents less than $.01 per share.
See notes to financial statements.
28
NOTES
TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
BNY
Mellon Municipal Income, Inc. (the “fund”), which is registered under the Investment Company Act
of 1940, as amended (the “Act”), is a diversified closed-end management investment company. The
fund’s investment objective is to maximize current income exempt from federal income tax to the extent
consistent with the preservation of capital. BNY Mellon Investment Adviser, Inc. (the “Adviser”),
a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the
fund’s investment adviser. Insight North America LLC (the “Sub-Adviser”), an indirect wholly-owned
subsidiary of BNY Mellon and an affiliate of the Adviser, serves as the fund’s sub-adviser. The fund’s
Common Stock trades on the NYSE American under the ticker symbol DMF.
Prior
to July 12, 2023, the fund had outstanding 616 Series A shares and 593 Series B shares, for a total of
1,209 shares of Auction Preferred Stock (“APS”), with a liquidation preference of $25,000 per share
(plus an amount equal to accumulated but unpaid dividends upon liquidation). APS dividend rates were
determined pursuant to periodic auctions or by reference to a market rate. Deutsche Bank Trust Company
America, was the Auction Agent, which received a fee from the fund for its services in connection with
such auctions. The fund had also compensated broker-dealers generally at an annual rate of .15%-.25%
of the purchase price of shares of APS.
On July 12, 2023 (the “VMTP Shares Effective
Date”), the fund announced the successful redemption of APS and the sale of $30,225,000 of Variable
Rate MuniFund Term Preferred Shares (“VMTPS”) to a qualified institutional buyer (as defined in Rule
144A under the Securities Act), pursuant to an offering exempt from registration under the Securities
Act.
The fund has outstanding 1,209 shares of VMTPS. As with the APS, the fund is subject
to certain restrictions relating to the VMTPS. Failure to comply with these restrictions could preclude
the fund from declaring any distributions to holders of the fund’s Common Stock (“Common Stockholders”)
or repurchasing shares of Common Stock and/or could trigger the mandatory redemption of VMTPS at their
liquidation value (i.e., $25,000 per share). Thus, redemptions of VMTPS may be deemed to be outside of
the control of the fund.
The VMTPS have a mandatory redemption date of July 14, 2053,
and are subject to an initial early redemption date of July 13, 2026, subject to the
29
NOTES
TO FINANCIAL STATEMENTS (continued)
option of the holders to retain the VMTPS. VMTPS that are neither retained by
the holder nor successfully remarketed by the early redemption date will be redeemed by the fund.
As of the VMTP Shares Effective Date, the fund entered into a Redemption and Paying
Agent Agreement with The Bank of New York Mellon with respect to the VMTPS. Under the Redemption and
Paying Agreement, BNY Mellon provides certain transfer agency and payment services with respect to the
VMTPS for the fund.
The holders of VMTPS, voting as a separate class, have the
right to elect at least two directors. The holders of VMTPS will vote as a separate class on certain
other matters, as required by law. The same directors that were designated for election by holders of
the APS are designed for election by holders of VMTPS. The fund’s Board of Directors (the “Board”)
has designated Nathan Leventhal and Benaree Pratt Wiley as directors to be elected by the holders of
VMTPS.
Dividends on VMTPS are normally declared daily and paid monthly. The Dividend
Rate on the VMTPS is, except as otherwise provided, equal to the rate per annum that results from the
sum of (1) the Index Rate plus (2) the Applicable Spread as determined for the VMTPS on the Rate Determination
Date immediately preceding such Subsequent Rate Period plus (3) the Failed Remarketing Spread (all defined
terms as defined in the fund’s articles supplementary).
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 fund enters into contracts
that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is
unknown. The fund does not anticipate recognizing any loss related to these arrangements.
30
(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).
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:
The Board has designated the Adviser as
the fund’s valuation designee to make all fair value determinations with respect to the fund’s portfolio
investments, subject to the Board’s oversight and pursuant to Rule 2a-5 under the Act.
Investments
in municipal securities, excluding short-term investment (other than U.S. Treasury Bills), are valued
each business day by an independent pricing service (the “Service”) approved by the Board. Investments
for which quoted bid prices are readily available and are representative of the bid side of the market
in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the
31
NOTES
TO FINANCIAL STATEMENTS (continued)
Service from dealers in such securities) and asked prices (as calculated by the
Service based upon its evaluation of the market for such securities). Municipal investments (which constitute
a majority of the portfolio securities) are carried at fair value as determined by the Service, based
on methods which include consideration of the following: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from dealers; and general market
conditions. The Service is engaged under the general oversight of the Board. All of the preceding securities
are generally categorized within 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, but before the fund
calculates its net asset value, the fund may value these investments at fair value as determined in accordance
with the procedures approved by the Board. Certain factors may be considered when fair valuing investments
such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation
of the forces that influence the market in which the securities are purchased and sold, and public trading
in similar securities of the issuer or comparable issuers. These securities are either categorized within
Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For
securities where observable inputs are limited, assumptions about market activity and risk are used and
such securities are generally categorized within Level 3 of the fair value hierarchy.
The following is a summary
of the inputs used as of September 30, 2023 in valuing the fund’s investments:
32
| | | | | | |
| Level
1-Unadjusted Quoted Prices | Level 2- Other Significant Observable Inputs | | Level
3-Significant Unobservable Inputs | Total | |
Assets ($) | | |
Investments
in Securities:† | | |
Municipal Securities | - | 216,508,693 | | - | 216,508,693 | |
Liabilities ($) | | |
Other Financial Instruments: | | |
Inverse
Floater Notes†† | - | (47,127,093) | | - | (47,127,093) | |
VMTPS†† | - | (30,225,000) | | - | (30,225,000) | |
† See
Statement of Investments for additional detailed categorizations, if any.
†† Certain of the fund’s liabilities are held at carrying amount,
which approximates fair value for financial reporting purposes.
(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. Interest income, adjusted
for accretion of discount and amortization of premium on investments, is earned from settlement date
and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the trade date.
(c) Market Risk: The value of the securities
in which the fund invests may be affected by political, regulatory, economic and social developments,
and developments that impact specific economic sectors, industries or segments of the market. The value
of a security may also decline due to general market conditions that are not specifically related to
a particular company or industry, such as real or perceived adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or currency rates, changes to inflation,
adverse changes to credit markets or adverse investor sentiment generally.
Additional
Information section within this annual report provides more details about the fund principal risk factors.
(d)
Dividends and distributions to Common Stockholders: Dividends and distributions are recorded
on the ex-dividend date. Dividends from net investment income are normally declared and paid monthly.
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
33
NOTES
TO FINANCIAL STATEMENTS (continued)
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.
Common Stockholders will have their distributions
reinvested in additional shares of the fund, unless such Common Stockholders elect to receive cash, at
the lower of the market price or net asset value per share (but not less than 95% of the market price).
If market price is equal to or exceeds net asset value, shares will be issued at net asset value. If
net asset value exceeds market price, Computershare Inc., the transfer agent for the fund’s Common
Stock, will buy fund shares in the open market and reinvest those shares accordingly.
On
September 28, 2023, the Board declared a cash dividend of $.015 per share from net investment income,
payable on October 31, 2023 to Common Stockholders of record as of the close of business on October 16,
2023. The ex-dividend date was October 13, 2023.
(e) Dividends and distributions to stockholders of APS:
Prior to July 12, 2023, Dividends, which were cumulative, are generally reset every seven days for each
series of APS pursuant to a process specified in related fund charter documents. These rates reflect
the “maximum rates” under the governing instruments as a result of “failed auctions” in which
sufficient clearing bids were not received. The average dividend rates for the period ended July 10,
2023 for each series of APS were as follows: Series A–5.318% and Series B–5.575%.
Dividends to stockholders
of VMTPS: The Dividend Rate on the VMTPS is, except as otherwise provided, equal to the
rate per annum that results from the sum of (1) the Index Rate plus (2) the Applicable Spread as determined
for the VMTPS on the Rate Determination Date immediately preceding such Subsequent Rate Period plus (3)
the Failed Remarketing Spread. The Applicable Rate of the VMTPS was equal to the sum of 0.95% per annum
plus the Securities Industry and Financial Markets Association Municipal Swap Index rate of 3.98% on
September 30, 2023. The dividend rate as of September 30, 2023 for the VMTPS was 4.93% (all terms as
defined in the fund’s articles supplementary).
(f) Federal income taxes: It is the policy of
the fund to continue to qualify as a regulated investment company, which can distribute tax-exempt dividends,
by complying with the applicable provisions of the Code, and to make distributions of income and net
realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
34
As of and during the period ended September 30, 2023, 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
September 30, 2023, the fund did not incur any interest or penalties.
Each
tax year in the four-year period ended September 30, 2023 remains subject to examination by the Internal
Revenue Service and state taxing authorities.
At September 30, 2023, the components
of accumulated earnings on a tax basis were as follows: undistributed tax-exempt income $564,507, accumulated
capital losses $21,816,045 and unrealized depreciation $15,818,511.
The fund is permitted
to carry forward capital losses for an unlimited period. Furthermore, capital loss carryovers retain
their character as either short-term or long-term capital losses.
The accumulated capital loss carryover
is available for federal income tax purposes to be applied against future net realized
capital gains, if any, realized subsequent to September 30, 2023. The fund has $10,377,632 of short-term
capital losses and $11,438,413 of long-term capital losses which can be carried forward for an unlimited
period.
The tax character of distributions paid to shareholders during
the fiscal years ended September 30, 2023 and September 30, 2022 were as follows: tax-exempt income $5,697,113
and $7,441,654, respectively.
(g) VMTPS: The fund’s VMTPS aggregate liquidation preference is shown
as a liability, if any, since they have a stated mandatory redemption date of July 14, 2053. Dividends
paid on VMTPS are treated as interest expense and recorded on the accrual basis. Costs directly related
to the issuance of the VMTPS are considered debt issuance costs which have been deferred and are being
amortized into expense over 36 months from VMTP Shares Effective Date.
NOTE 2—Management Fee,
Sub-Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management
agreement (the “Agreement”) with the Adviser, the management fee is computed at the annual rate of
..70% of the value of the fund’s average weekly net assets (including, net assets representing APS outstanding
until July 11, 2023 and, effective July 12, 2023, net assets representing VMTPS outstanding) and is payable
monthly. The Agreement provides that if in any full fiscal year the aggregate expenses of the fund (excluding
taxes, interest on borrowings, brokerage
35
NOTES
TO FINANCIAL STATEMENTS (continued)
fees and extraordinary expenses) exceed the expense limitation of any state having
jurisdiction over the fund, the fund may deduct from payments to be made to the Adviser, or the Adviser
will bear, the amount of such excess to the extent required by state law. During the period ended September
30, 2023, there was no expense reimbursement pursuant to the Agreement.
Pursuant
to a sub-investment advisory agreement between the Adviser and the Sub-Adviser, the Adviser pays the
Sub-Adviser a monthly fee at an annual rate of .336% of the value of the fund’s average weekly net
assets (including, net assets representing APS outstanding until July 11, 2023 and, effective July 12,
2023, net assets representing VMTPS outstanding).
(b) The
fund has an arrangement with The Bank of New York Mellon (the “Custodian”), a subsidiary of BNY Mellon
and an affiliate of the Adviser, whereby the fund may receive earnings credits when
positive cash balances are maintained, which are used to offset Custodian fees. For financial reporting
purposes, the fund includes custody net earnings credits as an expense offset in the Statement of Operations.
The
fund compensates the Custodian, 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 September 30, 2023, the fund was charged $3,345 pursuant to
the custody agreement. These fees were partially offset by earnings credits of $2,688.
The
fund compensates The Bank of New York Mellon under a Redemption and Paying Agent Agreement for providing
certain transfer agency and payment services with respect to the VMTPS. During the period ended September
30, 2023, the fund was charged $7,500 for the services provided by the Redemption and Paying Agent (the
“Redemption and Paying Agent”).
During the period ended September 30,
2023, the fund was charged $11,609 for services performed by the fund’s Chief Compliance Officer and
his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.
The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates”
in the Statement of Assets and Liabilities consist of: management fee of $102,424, Custodian fees of
$2,073, the Redemption and Paying Agent fees of $7,500 and Chief Compliance Officer fees of $2,723.
36
(c)
Each board member also serves as a board member of other funds in the BNY Mellon Family of Funds complex.
Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE
3—Securities Transactions:
The aggregate amount of purchases and sales of investment
securities, excluding short-term securities, during the period ended September 30, 2023, amounted to
$45,994,699 and $44,903,117, respectively.
Inverse Floater Securities: The fund participates
in secondary inverse floater structures in which fixed-rate, tax-exempt municipal bonds are transferred
to a trust (the “Inverse Floater Trust”). The Inverse Floater Trust typically issues two variable
rate securities that are collateralized by the cash flows of the fixed-rate, tax-exempt municipal bonds.
One of these variable rate securities pays interest based on a short-term floating rate set by a remarketing
agent at predetermined intervals (“Trust Certificates”). A residual interest tax-exempt security
is also created by the Inverse Floater Trust, which is transferred to the fund, and is paid interest
based on the remaining cash flows of the Inverse Floater Trust, after payment of interest on the other
securities and various expenses of the Inverse Floater Trust. An Inverse Floater Trust may be collapsed
without the consent of the fund due to certain termination events such as bankruptcy, default or other
credit event.
The fund accounts for the transfer of bonds to the Inverse
Floater Trust as secured borrowings, with the securities transferred remaining in the fund’s investments,
and the Trust Certificates reflected as fund liabilities in the Statement of Assets and Liabilities.
The fund may invest in inverse floater securities on either a non-recourse or
recourse basis. These securities are typically supported by a liquidity facility provided by a bank or
other financial institution (the “Liquidity Provider”) that allows the holders of the Trust Certificates
to tender their certificates in exchange for payment from the Liquidity Provider of par plus accrued
interest on any business day prior to a termination event. When the fund invests in inverse floater securities
on a non-recourse basis, the Liquidity Provider is required to make a payment under the liquidity facility
due to a termination event to the holders of the Trust Certificates. When this occurs, the Liquidity
Provider typically liquidates all or a portion of the municipal securities held in the Inverse Floater
Trust. A liquidation shortfall occurs if the Trust Certificates exceed the proceeds of the sale of the
bonds in the Inverse Floater Trust (“Liquidation Shortfall”). When a fund invests in inverse floater
securities on a recourse basis, the fund typically enters into a reimbursement agreement with the Liquidity
37
NOTES
TO FINANCIAL STATEMENTS (continued)
Provider where the fund is required to repay the Liquidity Provider the amount
of any Liquidation Shortfall. As a result, a fund investing in a recourse inverse floater security bears
the risk of loss with respect to any Liquidation Shortfall.
The average amount
of borrowings outstanding under the inverse floater structure during the period ended September 30, 2023
was approximately $49,613,049, with a related weighted average annualized interest rate of 3.66%.
VMTPS:
During the period ended September 30, 2023, the fund was charged $303,103 for VMTPS interest expense.
These fees are included in VMTPS interest expense in the Statement of Operations.
The
average amount of borrowings outstanding for the VMTPS from July 12, 2023 through September 30, 2023
was approximately $30,225,000, with a related weighted average annualized interest rate of 4.52%.
At
September 30, 2023, the cost of investments for federal income
tax purposes was $185,200,097; accordingly, accumulated net unrealized depreciation on investments was
$15,818,497, consisting of $1,292,734 gross unrealized appreciation and $17,111,231 gross unrealized
depreciation.
38
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of BNY Mellon Municipal Income,
Inc.
Opinion on the Financial Statements
We
have audited the accompanying statement of assets and liabilities of BNY Mellon Municipal Income, Inc.
(the “Fund”), including the statement of investments, as of September 30, 2023, and the related statements
of operations and cash flows for the year then ended, the statements of changes in net assets for each
of the two years in the period then ended, the financial highlights for each of the five years in the
period then ended and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Fund at September 30, 2023, the results of its operations and its cash flows for the year then
ended, the changes in its net assets for each of the two years in the period then ended and its financial
highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Basis for Opinion
These financial statements
are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent
with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we
engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our
audits, we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audits included
performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence
with the custodian, brokers and others; when replies were not received from brokers and others, we performed
other auditing procedures. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
We have served as the
auditor of one or more investment companies in the BNY Mellon Family of Funds since at least 1957, but
we are unable to determine the specific year.
New York, New York
November 22, 2023
39
ADDITIONAL
INFORMATION (Unaudited)
Dividend Reinvestment Plan
Under the fund’s Dividend Reinvestment
Plan (the “Plan”), a Common Stockholder who has fund shares registered in his name will have all
dividends and distributions reinvested automatically by Computershare Trust Company, N.A., as Plan administrator
(the “Administrator”), in additional shares of the fund at the lower of prevailing market price or
net asset value (but not less than 95% of market value at the time of valuation) unless such Common Stockholder
elects to receive cash as provided below. If market price is equal to or exceeds net asset value, shares
will be issued at net asset value. If net asset value exceeds market price or if a cash dividend only
is declared, the Administrator, as agent for the Plan participants, will buy fund shares in the open
market. A Plan participant is not relieved of any income tax that may be payable on such dividends or
distributions.
A Common Stockholder who owns fund shares registered in nominee
name through his broker/dealer (i.e., in “street name”) may not participate in the Plan, but may
elect to have cash dividends and distributions reinvested by his broker/dealer in additional shares of
the fund if such service is provided by the broker/dealer; otherwise such dividends and distributions
will be treated like any other cash dividend or distribution.
A Common Stockholder
who has fund shares registered in his or her name may elect to withdraw from the Plan at any time for
a $5.00 fee and thereby elect to receive cash in lieu of shares of the fund. Changes in elections must
be in writing, sent to The Bank of New York Mellon, c/o Computershare Inc., P.O. Box 30170, College Station,
TX 77842-3170, should include the Stockholder’s name and address as they appear on the Administrator’s
records and will be effective only if received more than ten business days prior to the record date for
any distribution.
The Administrator maintains all Common Stockholder accounts
in the Plan and furnishes written confirmations of all transactions in the account. Shares in the account
of each Plan participant will be held by the Administrator in non-certificated form in the name of the
participant, and each such participant’s proxy will include those shares purchased pursuant to the
Plan.
The fund pays the Administrator’s fee for reinvestment of dividends and distributions.
Plan participants pay a pro rata share of brokerage commissions incurred with respect to the Administrator’s
open market purchases in connection with the reinvestment of dividends or distributions.
The
fund reserves the right to amend or terminate the Plan as applied to any dividend or distribution paid
subsequent to notice of the change sent to Plan participants at least 90 days before the record date
for such dividend or distribution. The Plan also may be amended or terminated by the Administrator on
at least 90 days’ written notice to Plan participants.
40
Level
Distribution Policy
The fund’s dividend policy is to distribute substantially
all of its net investment income to its Stockholders on a monthly basis. In order to provide Stockholders
with a more consistent yield to the current trading price of shares of Common Stock of the fund, the
fund may at times pay out more or less than the entire amount of net investment income earned in any
particular month and may at times in any month pay out any accumulated but undistributed income in addition
to net investment income earned in that month. As a result, the dividends paid by the fund for any particular
month may be more or less than the amount of net investment income earned by the fund during such month.
Investment
Objective and Principal Investment Strategies
Investment Objective. The fund’s investment
objective is to maximize current income exempt from federal income tax to the extent consistent with
the preservation of capital. The fund’s investment objective may not be changed without the affirmative
vote of the holders of a majority (as defined in the Act) of the fund’s outstanding voting securities.
No assurance can be given that the fund will achieve its investment objective.
Fundamental Investment
Policy. Under normal market conditions, the fund invests at least 80% of its net assets
in municipal obligations. The income from which is exempt from federal personal income tax. As with the
fund’s investment objective, this investment policy may not be changed without the affirmative vote
of the holders of a majority (as defined in the Act) of the fund’s outstanding voting securities.
Municipal obligations are debt obligations issued by states, territories and possessions
of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities,
or multistate agencies or authorities, that provide income exempt from federal income tax. Municipal
obligations are classified as general obligation bonds, revenue bonds and notes. General obligation bonds
are secured by the issuer’s pledge of its faith, credit and taxing power for the payment of principal
and interest. Revenue bonds are payable from the revenue derived from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source,
but not from the general taxing power. Notes are short term instruments which are obligations of the
issuing municipalities or agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. The fund may purchase floating and variable rate obligations, municipal derivatives,
such as custodial receipt programs created by financial intermediaries, tender option bonds, and participations
in municipal obligations.
Non-Fundamental Investment Policies. Under normal market
conditions, the fund ordinarily invests all of its net assets in municipal obligations considered at
the time of purchase to be investment grade by Moody’s, S&P or Fitch or the unrated equivalent
as determined by the Adviser in the case of bonds, and in the two highest rating categories of Moody’s,
S&P or Fitch or the unrated equivalent as determined by the Adviser in the case of short term obligations
having or deemed to have maturities of less than one year. When the fund invests in unrated municipal
obligations, it may be more dependent on
41
ADDITIONAL
INFORMATION (Unaudited) (continued)
the research capabilities of the Adviser than when it invests in rated municipal
obligations. The foregoing credit quality policies apply only at the time a security is purchased and
the fund is not required to dispose of a security in the event Moody’s, S&P or Fitch downgrades
its assessment of the credit characteristics of a particular issue. Investment grade bonds are those
rated in the four highest rating categories of Moody’s, S&P or Fitch. The fund also may invest
in Taxable Investments to the extent and of the quality described below.
The
fund emphasizes investments in municipal obligations with long term maturities, but the degree of such
emphasis depends upon market conditions existing at the time of investment.
From
time to time, the fund may invest more than 25% of the value of its total assets in industrial development
bonds which, although issued by industrial development authorities, may be backed only by the assets
and revenues of the non-governmental users. Interest on certain municipal obligations (including certain
industrial development bonds) which are specific private activity bonds, while exempt from federal income
tax, is a preference item for the purpose of the federal alternative minimum tax (“AMT”). Where the
fund receives such interest, a proportionate share of any exempt-interest dividend paid by the fund will
be treated as a preference item to the Stockholder. The fund may invest without limitation in such municipal
obligations if the Sub-Adviser determines that their purchase is consistent with the fund’s investment
objective.
Taxable Investments and Other Investment Techniques. The fund may employ,
among others, the investment techniques described below. Use of certain techniques may give rise to taxable
income.
Temporary Investments. From time to time,
(a) on a temporary basis other than for temporary defensive purposes (but not to exceed 20% of the fund’s
net assets) or (b) for temporary defensive purposes without limitation, the fund may invest in taxable
short term investments (“Taxable Investments”) consisting of: notes of issuers having, at the time
of purchase, a quality rating within the two highest grades of Moody’s, S&P or Fitch; obligations
of the U.S. Government, its agencies or instrumentalities; commercial paper rated at least P-2 by Moody’s
or at least A-2 by S&P or Fitch; certificates of deposit of U.S. domestic banks, including foreign
branches of domestic banks, with assets of $1 billion or more; bankers’ acceptances; time deposits;
and repurchase agreements in respect of any of the foregoing. Dividends paid by the fund that are attributable
to interest earned from Taxable Investments will be taxable to investors. Under normal market conditions,
the fund anticipates that not more than 5% of its total assets will be invested in any of the foregoing
categories of Taxable Investments.
When-Issued Securities. New issues of municipal
obligations usually are offered on a when-issued basis, which means that delivery and payment for such
municipal obligations normally take place within 35 days after the date of the commitment to purchase.
The payment obligation and the interest rate that will be received on the municipal obligations are fixed
at the time the buyer enters into the commitment. The fund will make commitments to purchase such municipal
obligations only with the intention of
42
actually acquiring the securities, but the fund may sell these securities before
the settlement date if it is deemed advisable, although any gain realized on such sale would be taxable.
The fund will not accrue income with respect to a when-issued security before its stated delivery date.
No additional when-issued commitments will be made if more than 20% of the fund’s net assets would
be so committed.
Stand-By Commitments. The fund may acquire “stand-by commitments” with respect
to municipal obligations held in its portfolio. Under a stand-by commitment the fund obligates a broker,
dealer or bank to repurchase at the fund’s option specified securities at a specified price. In this
respect, stand-by commitments are comparable to put options. The exercise of a stand-by commitment, therefore,
is subject to the ability of the seller to make payment on demand. The fund will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading
purposes. The fund anticipates that stand-by commitments will be available from brokers, dealers and
banks without the payment of any direct or indirect consideration. The fund may pay for stand-by commitments
if such action is deemed necessary, thus increasing to a degree the cost of the underlying municipal
obligation and similarly decreasing such security’s yield to investors.
Derivatives.
The fund, to a limited extent, may invest in, or enter into, certain types of derivatives, such as futures
and options, for a variety of reasons, including to increase current income, reduce fluctuations in net
asset value and protect against a decline in the value of municipal obligations held by the fund or an
increase in the price of municipal obligations the fund proposes to purchase in the future. Distributions
by the fund of any gains realized on the Fund’s futures and options transactions will be taxable.
The SEC adopted Rule 18f-4 under the 1940 Act, which regulates the use of derivatives
transactions for certain funds registered under the 1940 Act. The rule defines “derivatives transactions”
as (i) any swap, security-based swap, futures contract, forward contract, option, any combination of
the foregoing, or any similar instrument (“derivatives instrument”), under which a fund is or may
be required to make any payment or delivery of cash or other assets during the life of the instrument
or at maturity or early termination, whether as margin or settlement payment or otherwise; (ii) investment
in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, unless
(a) the fund intends to physically settle the transaction and (b) the transaction will settle within
35 days of its trade date; (iii) any short sale borrowing; and (iv) any reverse repurchase agreement
or similar financing transactions if a fund relies on Rule 18f-4(d)(1)(ii) and therefore is required
to treat its reverse repurchase agreements and similar financing transactions as derivatives transactions.
Funds that use derivatives, other than “limited” derivatives users, must comply with one of two value-at-risk
based limits on fund leverage and adopt and implement a written derivatives risk management program administered
by a board approved derivatives risk manager. A fund will qualify as a “limited” derivatives user
if its derivative exposure does not exceed 10% of its net assets, excluding derivatives transactions
used to hedge certain currency and interest rate risks. The rule defines the term “derivatives exposure”
to mean the sum of: (1) the gross notional amounts of a fund's derivatives transactions
43
ADDITIONAL
INFORMATION (Unaudited) (continued)
and (2) in the case of short sale borrowings, the value of any asset sold short.
Derivatives instruments that do not involve future payment obligations—and therefore are not a “derivatives
transaction” under the rule are not included in a fund's derivatives exposure. The fund has been deemed
to be “limited” derivatives users and the fund has adopted and implemented policies and procedures
reasonably designed to manage the fund’s derivatives risks, including counterparty risk, leverage risk,
liquidity risk, market risk, operational risk, and legal risk.
Inverse Floating Rate Securities.
The fund may invest in residual interest municipal obligations whose interest rates bear an inverse relationship
to the interest rate on another security or the value of an index (“inverse floaters”). An investment
in inverse floaters may involve greater risk than an investment in a fixed-rate bond. Because changes
in the interest rate on the other security or index inversely affect the residual interest paid on the
inverse floater, the value of an inverse floater is generally more volatile than that of a fixed-rate
bond. Inverse floaters have interest rate adjustment formulas which generally reduce or, in the extreme,
eliminate the interest paid to the fund when short term interest rates rise, and increase the interest
paid to the fund when short term interest rates fall. Inverse floaters have varying degrees of liquidity,
and the market for these securities is relatively volatile. These securities tend to underperform the
market for fixed-rate bonds in a rising interest rate environment, but tend to outperform the market
for fixed-rate bonds when interest rates decline. Shifts in long term interest rates may, however, alter
this tendency. Although volatile, inverse floaters typically offer the potential for yields exceeding
the yields available on fixed-rate bonds with comparable credit quality, coupon, call provisions and
maturity. These securities usually permit the investor to convert the floating-rate to a fixed- rate
(normally adjusted downward), and this optional conversion feature may provide a partial hedge against
rising rates if exercised at an opportune time.
Use of Leverage. The fund utilizes leverage
to seek to enhance the yield and net asset value of its Common Stock. These objectives cannot be achieved
in all interest rate environments. To leverage, the fund has issued VMTPS and issues floating rate certificate
securities, which pay dividends or interest at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on these investments is paid to Common Stockholders
in the form of dividends, and the value of these portfolio holdings is reflected in the per share net
asset value of the fund’s Common Stock. In order for either of these forms of leverage to benefit Common
Stockholders, the yield curve must be positively sloped: that is, short-term interest rates must be lower
than long-term interest rates. At the same time, a period of generally declining interest rates will
benefit Common Stockholders. When either of these conditions change along with other factors that may
have an effect on VMTPS dividends or floating rate certificate securities, then the risk of leveraging
will begin to outweigh the benefits.
Principal Risk Factors
An investment in the
fund involves special risk considerations, which are described below. The fund is a diversified, closed-end
management investment company designed
44
as a long-term investment and not as a vehicle for short-term trading purposes.
An investment in the fund’s Common Stock may be speculative and it involves a high degree of risk.
The fund should not constitute a complete investment program. Due to the uncertainty in all investments,
there can be no assurance that the fund will achieve its investment objective. Different risks may be
more significant at different times depending on market conditions. Your Common Stock at any point in
time may be worth less than your original investment, even after taking into account the reinvestment
of fund dividends and distributions.
Municipal Obligations Risk. The amount of public
information available about municipal obligations is generally less than that for corporate equities
or bonds. Special factors, such as legislative changes and state and local economic and business developments,
may adversely affect the yield and/or value of the fund’s investments in municipal bonds. The yields
on and market prices of municipal bonds are dependent on a variety of factors.
Changes
in economic, business or political conditions relating to a particular municipality or state in which
the fund invests may have an effect on the fund’s net asset value. The secondary market for certain
municipal bonds, particularly below investment grade municipal bonds, tends to be less well-developed
or liquid than many other securities markets, which may adversely affect the fund’s ability to sell
its portfolio securities at attractive prices. The ability of issuers of municipal bonds to make timely
payments of interest and repayments of principal may be diminished during general economic downturns
and as governmental cost burdens are reallocated among federal, state and local governments. In addition,
laws enacted in the future by Congress or state legislatures or referenda could extend the time for payment
of principal and/or interest, or impose other constraints on enforcement of such obligations, or on the
ability of municipal issuers to levy taxes. Issuers of municipal bonds might seek protection under the
bankruptcy laws. In the event of bankruptcy of such an issuer, the fund could experience delays in collecting
principal and interest and the fund may not be able to collect all principal and interest to which it
is entitled. To enforce its rights in the event of a default in the payment of interest or repayment
of principal, or both, the fund may take possession of, and manage, the assets securing the issuer’s
obligations on such securities, which may increase the fund’s operating expenses. Any income derived
from the fund’s ownership or operation of such assets may not be tax-exempt.
Call Risk.
Some municipal obligations give the issuer the option to “call,” or prepay, the securities before
their maturity date. If interest rates fall, it is possible that issuers of callable bonds with high
interest coupons will call their bonds. If a call were exercised by the issuer of a bond held by the
fund during a period of declining interest rates, the fund is likely to replace such called bond with
a lower yielding bond. If that were to happen, it could decrease the fund’s distributions and possibly
could affect the market price of the Common Stock. Similar risks exist when the fund invests the proceeds
from matured, traded or prepaid bonds at market interest rates that are below the fund’s current earnings
rate. A decline in income could affect the market price or overall return of the
45
ADDITIONAL
INFORMATION (Unaudited) (continued)
Common Stock. During periods of market illiquidity or rising interest rates, prices
of “callable” issues are subject to increased price fluctuation.
Credit Risk. Credit risk is the
risk that one or more municipal obligations in the fund’s portfolio will decline in price, or the issuer
or obligor thereof will fail to pay interest or repay principal when due, because the issuer or obligor
experiences a decline or there is a perception of a decline in its financial status. Below investment
grade municipal bonds involve greater credit risk than investment grade municipal bonds. In addition,
sizable investments by the fund in revenue obligations could involve an increased risk to the fund should
any of the related facilities experience financial difficulties.
Interest Rate Risk.
Prices of municipal obligations and other fixed-income securities tend to move inversely with changes
in interest rates. Typically, a rise in rates will adversely affect fixed-income securities and, accordingly,
will cause the value of the fund’s investments in these securities to decline. Interest rates in the
United States have recently been rasing. A wide variety of market factors can cause interest rates to
rise, including central bank monetary policy, rising inflation and changes in general economic conditions.
It is difficult to predict the pace at which central banks or monetary authorities may increase (or decrease)
interest rates or the timing, frequency, or magnitude of such changes. During periods of very low interest
rates, which occur from time to time due to market forces or actions of governments and/or their central
banks, including the Board of Governors of the Federal Reserve System in the U.S., the fund may be subject
to a greater risk of principal decline from rising interest rates. When interest rates fall, the values
of already-issued fixed-income securities generally rise. However, when interest rates fall, the fund’s
investments in new securities may be at lower yields and may reduce the fund’s income. Changing interest
rates may have unpredictable effects on markets, may result in heightened market volatility and may detract
from fund performance. The magnitude of these fluctuations in the market price of fixed-income securities
is generally greater for securities with longer effective maturities and durations because such instruments
do not mature, reset interest rates or become callable for longer periods of time. The change in the
value of a fixed-income security or portfolio can be approximated by multiplying its duration by a change
in interest rates. For example, the market price of a fixed-income security with a duration of three
years would be expected to decline 3% if interest rates rose 1%.
The
fund’s use of leverage may increase its interest rate risk. The fund may use certain strategies to
seek to reduce the interest rate sensitivity of the fund’s portfolio and decrease its exposure to interest
rate risk. However, there is no assurance that the fund will do so or that such strategies will be successful.
Tax
Risk. To be tax-exempt, municipal obligations generally must meet certain regulatory
requirements. Although the fund will invest in municipal obligations that pay income that is exempt,
in the opinion of counsel to the issuer (or on the basis of other authority believed by the Adviser to
be reliable), from regular federal income tax, if any such municipal obligation fails to meet these regulatory
requirements, the income received by the fund from its investment in such obligations and distributed
by the fund to Common Stockholders will be taxable. Changes or proposed changes in federal tax
46
laws may cause the prices of municipal obligations to fall. In addition, the federal
income tax treatment of payments in respect of certain derivatives contracts is unclear. Common Stockholders
may receive distributions that are attributable to derivatives contracts that are treated as ordinary
income for federal income tax purposes.
Liquidity Risk. When there is little or no active trading
market for specific types of securities, it can become more difficult to sell the securities in a timely
manner at or near their perceived value. In such a market, the value of such securities and the fund’s
net asset value per share of Common Stock may fall dramatically, even during periods of declining interest
rates. Other market developments can adversely affect fixed-income securities markets. Regulations and
business practices, for example, have led some financial intermediaries to curtail their capacity to
engage in trading (i.e., “market making”) activities for certain fixed-income securities, which could
have the potential to decrease liquidity and increase volatility in the fixed-income securities markets.
The secondary market for certain municipal obligations tends to be less well developed or liquid than
many other securities markets, which may adversely affect the fund’s ability to sell such municipal
obligations at attractive prices. Investments that are illiquid or that trade in lower volumes may be
more difficult to value. Liquidity can decline unpredictably in response to overall economic conditions
or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest
rates (or the expectation of a rise in interest rates).
When-Issued, Delayed Delivery and Forward
Commitment Transactions Risk. When purchasing a security on a forward commitment basis,
the fund assumes the rights and risks of ownership of the security, including the risk of price and yield
fluctuations. Because the fund is not required to pay for these securities until the delivery date, these
risks are in addition to the risks associated with the fund’s other investments. Securities purchased
on a forward commitment, when-issued or delayed-delivery basis are subject to changes in value (generally
appreciating when interest rates decline and depreciating when interest rates rise) based upon the public’s
perception of the creditworthiness of the issuer and changes, real or anticipated, in the level of interest
rates. Securities purchased on a forward commitment, when-issued or delayed-delivery basis may expose
the fund to risks because they may experience such fluctuations prior to their actual delivery.
Derivatives
Transactions Risk. Derivatives can be volatile and involve various types and degrees of risk, depending
upon the characteristics of the particular derivative and the portfolio as a whole. Derivatives may entail
investment exposures that are greater than their cost would suggest, meaning that a small investment
in derivatives could have a large potential impact on the fund’s performance. If the fund invests in
derivatives at inopportune times or judges market conditions incorrectly, such investments may lower
the fund’s return or result in a loss. The fund also could experience losses if its derivatives were
poorly correlated with the underlying instruments or the fund’s other investments, or if the fund were
unable to liquidate its position because of an illiquid secondary market. The market for many derivatives
is, or suddenly can become, illiquid. Although the fund intends to purchase or sell futures contracts
or options only if there is an active market for such contracts or options, no assurance can be given
that a liquid
47
ADDITIONAL
INFORMATION (Unaudited) (continued)
market will exist for any particular contract or option at any particular time.
Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives.
Additionally, some derivatives the fund may use may involve economic leverage, which may increase the
volatility of these instruments as they may increase or decrease in value more quickly than the underlying
security, index, futures contract, or other economic variable.
Derivatives may be
purchased on established exchanges or through privately negotiated transactions referred to as over-the-counter
derivatives. Exchange-traded derivatives, such as futures contracts and certain options, generally are
guaranteed by the clearing agency that is the issuer or counterparty to such derivatives. This guarantee
usually is supported by a daily variation margin system operated by the clearing agency in order to reduce
overall credit risk. As a result, unless the clearing agency defaults, there is relatively little counterparty
credit risk associated with derivatives purchased on an exchange. In contrast, no clearing agency guarantees
over-the-counter derivatives, including some options and most swap agreements, and, therefore, there
is a risk the counterparty will default. Accordingly, the Adviser will consider the creditworthiness
of counterparties to over-the-counter derivatives in the same manner as it would review the credit quality
of a security to be purchased by the fund. Over-the-counter derivatives are less liquid than exchange-traded
derivatives since the other party to the transaction may be the only investor with sufficient understanding
of the derivative to be interested in bidding for it. In addition, mandatory margin requirements have
been imposed on over-the-counter derivative instruments, which will add to the costs of such transactions.
Options and futures contracts prices can diverge from the prices of their underlying
instruments. Options and futures contracts prices are affected by such factors as current and anticipated
short-term interest rates, changes in volatility of the underlying instrument, and the time remaining
until expiration of the contract, which may not affect the prices of the underlying instruments in the
same way. Imperfect correlation may also result from differing levels of demand in the options and futures
markets and the securities markets, from structural differences in how options and futures and securities
are traded, or from imposition of daily price fluctuation limits or trading halts. If price changes in
the fund’s options or futures positions used for hedging purposes are poorly correlated with the investments
the fund is attempting to hedge, the options or futures positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
Engaging
in futures transactions involves risk of loss to the fund which could adversely affect the fund’s net
asset value. No assurance can be given that a liquid market will exist for any particular contract at
any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move to the limit for several
consecutive trading days with little or no trading, thereby
48
preventing prompt liquidation of futures positions and potentially leading to
substantial losses.
Leverage Risk. Leverage is a speculative technique and there are special
risks and costs associated with leveraging. There is no assurance that leveraging strategy will be successful.
Leverage involves risks and special considerations for Common Stockholders, including: the likelihood
of greater volatility of net asset value, market price and dividend rate of Common Stock than a comparable
portfolio without leverage; the risk that fluctuations in the interest or dividend rates that the fund
must pay on any leverage will reduce the return to Common Stockholders; the effect of leverage in a declining
market, which is likely to cause a greater decline in the net asset value of Common Stock than if the
fund were not leveraged, which may result in a greater decline in the market price of Common Stock.
Investment
and Market Risk. An investment in the fund is subject to investment risk, including the possible
loss of the entire amount that you invest. Your investment in Common Stock represents an indirect investment
in the credit instruments and other investments and assets owned by the fund. The value of the fund’s
portfolio investments may move up or down, sometimes rapidly and unpredictably. The value of the instruments
in which the fund invests may be affected by political, regulatory, economic and social developments,
and developments that impact specific economic sectors, industries or segments of the market. In addition,
turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may
negatively affect many issuers, which could adversely affect the fund. Global economies and financial
markets are becoming increasingly interconnected, and conditions and events in one country, region or
financial market may adversely impact issuers in a different country, region or financial market. These
risks may be magnified if certain events or developments adversely interrupt the global supply chain;
in these and other circumstances, such risks might affect companies world-wide. Recent examples include
pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments,
including closing borders, restricting international and domestic travel, and imposition of prolonged
quarantines of large populations, and by businesses, including changes to operations and reducing staff.
Risk
of Market Price Discount from Net Asset Value. Shares of closed-end funds frequently
trade at a market price that is below their net asset value. This is commonly referred to as “trading
at a discount.” This characteristic of shares of closed-end funds is a risk separate and distinct from
the risk that the fund’s net asset value may decrease.
Whether Common Stockholders
will realize a gain or loss upon the sale of Common Stock will depend upon whether the market value of
Common Stock at the time of sale is above or below the price the Common Stockholder paid, taking into
account transaction costs, for Common Stock and is not directly dependent upon the fund’s net asset
value. Because the market value of Common Stock will be determined by factors such as the relative demand
for and supply of Common Stock in the market, general market conditions and other factors beyond the
control of the fund, the fund cannot
49
ADDITIONAL
INFORMATION (Unaudited) (continued)
predict whether its Common Stock will trade at, below or above net asset value,
or below or above the initial offering price for such Common Stock.
Management Risk. The fund is subject
to management risk because the Adviser actively manages the fund. The Adviser and the fund’s portfolio
managers will apply investment techniques and risk analyses in making investment decisions for the fund,
but there can be no guarantee that these will produce the desired results.
Cybersecurity Risk.
The fund and its service providers are susceptible to operational and information security risks due
to cybersecurity incidents. In general, cybersecurity incidents can result from deliberate attacks or
unintentional events. Cybersecurity attacks include, but are not limited to, gaining unauthorized access
to digital systems (e.g., through “hacking” or malicious software coding) for
purposes of misappropriating assets or sensitive information, corrupting data or causing operational
disruption. Cyber attacks also may be carried out in a manner that does not require gaining unauthorized
access, such as causing denial-of-service attacks on websites (i.e., efforts to make services
unavailable to intended users). Cybersecurity incidents affecting the Adviser or other service providers,
as well as financial intermediaries, have the ability to cause disruptions and impact business operations,
potentially resulting in financial losses, including by interference with the fund’s ability to calculate
its net asset value; impediments to trading for the fund’s portfolio; the inability of Common Stockholders
to transact business with the fund; violations of applicable privacy, data security or other laws; regulatory
fines and penalties; reputational damage; reimbursement or other compensation or remediation costs; legal
fees; or additional compliance costs. Similar adverse consequences could result from cybersecurity incidents
affecting issuers of securities in which the fund invests, counterparties with which the fund engages
in transactions, governmental and other regulatory authorities, exchange and other financial market operators,
banks, brokers, dealers, insurance companies and other financial institutions and other parties. While
information risk management systems and business continuity plans have been developed which are designed
to reduce the risks associated with cybersecurity, there are inherent limitations in any cybersecurity
risk management systems or business continuity plans, including the possibility that certain risks have
not been identified.
Recent Changes
During the period ended September 30,
2023, there were: (i) no material changes in the fund’s investment objectives or policies that have
not been approved by Stockholders, (ii) no changes in the fund’s charter or by-laws that would delay
or prevent a change of control of the fund that have not been approved by Stockholders, (iii) no material
changes to the principal risk factors associated with investment in the fund, and (iv) no change in the
persons primarily responsible for the day-to-day management of the fund’s portfolio.
50
IMPORTANT
TAX INFORMATION (Unaudited)
In accordance with federal tax law, the
fund hereby reports all the dividends paid from net investment income during its fiscal year ended September
30, 2023 as “exempt-interest dividends” (not generally subject to regular Federal income tax). Where
required by federal tax law rules, shareholders will receive notification of their portion of the fund’s
taxable ordinary dividends (if any), capital gains distributions (if any) and tax-exempt dividends paid
for the 2023 calendar year on Form 1099-DIV, which will be mailed in early 2024.
51
PROXY
RESULTS (Unaudited)
Common Stockholders and holders of APS voted together as a single class on the
following proposal presented at the annual shareholders’ meeting held on June 14, 2023.
| | | | |
| | Shares |
| | For | | Authority Withheld |
To elect four Class III Directors:† | | | |
| Joseph S. DiMartino | 12,382,699 | | 4,029,449 |
| Andrew J. Donohue | 12,650,073 | | 3,762,075 |
| Isabel P. Dunst | 12,637,677 | | 3,774,472 |
| Benaree
Pratt Wiley†† | 980 | | 1 |
† The
terms of these Class III Directors expire in 2026.
†† Elected solely by APS holders; Common Stockholders not entitled
to vote.
52
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 August 1-2, 2023, 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,
and the Sub-Investment Advisory Agreement (together with the Management Agreement, the “Agreements”),
pursuant to which Insight North America LLC (the “Sub-Adviser”) provides day-to-day management of
the fund’s investments. The Board members, none of whom are “interested persons” (as defined in
the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent
legal counsel and met with counsel in executive session separate from representatives of the Adviser
and the Sub-Adviser. 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 noted that the fund is a closed-end fund without daily inflows and outflows
of capital and provided the fund’s asset size.
The Board also considered
research support available to, and portfolio management capabilities of, the fund’s portfolio management
personnel and that the Adviser also provides oversight of day-to-day fund operations, including fund
accounting and administration and assistance in meeting legal and regulatory requirements. The Board
also considered the Adviser’s extensive administrative, accounting and compliance infrastructures,
as well as the Adviser’s supervisory activities over the Sub-Adviser.
Comparative Analysis
of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed
reports prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider
of investment company data based on classifications provided by Thomson Reuters Lipper (“Lipper”),
which included information comparing (1) the performance of the fund with the performance of a group
of general and insured municipal debt leveraged closed-end funds selected by Broadridge as comparable
to the fund (the “Performance Group”) and with a broader group of funds consisting of all general
and insured municipal debt leveraged closed-end funds (the “Performance Universe”), all for various
periods ended May 31, 2023, and (2) the fund’s actual and contractual management fees and total expenses
with those of the same group of funds in the Performance Group (the “Expense Group”) and with a broader
group of all funds consisting of all general and insured municipal debt leveraged closed-end 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
53
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AND
SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)
description of the methodology Broadridge used to select the Performance Group
and Performance Universe and the Expense Group and Expense Universe.
Performance Comparisons. Representatives of
the Adviser stated that the usefulness of performance comparisons may be affected by a number of factors,
including different investment limitations and policies that may be applicable to the fund and comparison
funds and the end date selected. The Board also considered the fund’s performance in light of overall
financial market conditions. The Board discussed with representatives of the Adviser and the Sub-Adviser
the results of the comparisons and considered that the fund’s total return performance was, on a net
asset value basis, below the Performance Group and Performance Universe medians for each period, except
three-year period when the fund’s total return performance was above the Performance Group median.
The Board also considered that the fund’s total return performance, on a market price basis, was below
the Performance Group median and below or at the Performance Universe median for all periods. The Board
also considered that the fund’s yield performance, on a net asset value basis, was at or above the
Performance Group median for six of the ten one-year periods ended May 31st and above the Performance
Universe medians for five of the ten one-year periods ended May 31st and, on a market price basis, was
above the Performance Group for six of the ten one-year periods ended May 31st and above the Performance
Universe medians for five of the ten one-year periods ended May 31st. The Adviser also provided a comparison
of the fund’s calendar year total returns to the returns of the fund’s benchmark index, and it was
noted that the fund’s returns were above the returns of the index in six of the ten calendar years
shown.
Management Fee and Expense Ratio Comparisons. The Board reviewed
and considered the contractual management fee rate payable by the fund to the Adviser in light of the
nature, extent and quality of the management services and the sub-advisory services provided by the Adviser
and the Sub-Adviser, respectively. In addition, the Board reviewed and considered the actual management
fee rate paid by the fund over the fund’s last fiscal year. The Board also reviewed the range of actual
and contractual management fees and total expenses as a percentage of average net assets of the Expense
Group and Expense Universe funds and discussed the results of the comparisons.
The
Board considered that the fund’s contractual management fee was higher than the Expense Group median
contractual management fee, the fund’s actual management fee, based on common assets and leveraged
assets together, was higher than the Expense Group median and higher than the Expense Universe median
actual management fees and, based on common assets alone, was lower than the Expense Group median and
the Expense Universe median actual management fees, and the fund’s total expenses, based on common
assets and leveraged assets together, were higher than the Expense Group median and the Expense Universe
median total expenses and, based on common assets alone, were lower than the Expense Group median and
lower than the Expense Universe median total expenses.
54
Representatives of the Adviser reviewed with the Board the management or investment
advisory fees paid by funds advised by the Adviser that are in the same Lipper category as the fund (the
“Similar Funds”), and explained the nature of the Similar Funds. They discussed differences in fees
paid and the relationship of the fees paid in light of any differences in the services provided and other
relevant factors, noting that the fund is a closed-end fund. The Board considered the relevance of the
fee information provided for the Similar Funds to evaluate the appropriateness of the fund’s management
fee. Representatives of the Adviser noted that there were no separate accounts and/or other types of
client portfolios advised by the Adviser or the Sub-Adviser that are considered to have similar investment
strategies and policies as the fund.
The Board considered the fee payable to
the Sub-Adviser in relation to the fee payable to the Adviser by the fund and the respective services
provided by the Sub-Adviser and the Adviser. The Board also took into consideration that the Sub-Adviser’s
fee is paid by the Adviser, out of its fee from the fund, and not the fund.
Analysis of Profitability
and Economies of Scale. Representatives of the Adviser reviewed the expenses allocated and profit received
by the Adviser and its affiliates and the resulting profitability percentage for managing the fund and
the aggregate profitability percentage to the Adviser and its affiliates for managing the funds in the
BNY Mellon fund complex, and the method used to determine the expenses and profit. The Board concluded
that the profitability results were not excessive, given the services rendered and service levels provided
by the Adviser and its affiliates. The Board also had been provided with information prepared by an
independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining
the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also
had analyzed where any economies of scale might emerge in connection with the management of a fund.
The Board considered, on the advice of its counsel, the profitability analysis
(1) as part of its evaluation of whether the fees under the Agreements, considered in relation to the
mix of services provided by the Adviser and the Sub-Adviser, 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 Sub-Adviser pursuant to the Sub-Investment Advisory Agreement, the Board did
not consider the Sub-Adviser’s profitability to be relevant to its deliberations. Representatives
of the Adviser stated that, because the fund is a closed-end fund without daily inflows and outflows
of capital, there were not significant economies of scale at this time to be realized by the Adviser
in managing the fund’s assets. 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
55
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AND
SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)
the fund’s asset level. The Board also considered potential benefits to the
Adviser and the Sub-Adviser from acting as investment adviser and sub-investment adviser, respectively,
and took into consideration that there were no soft dollar arrangements in effect for trading the fund’s
investments.
At the conclusion of these discussions, the Board agreed that
it had been furnished with sufficient information to make an informed business decision with respect
to the renewal of the Agreements. Based on the discussions and considerations as described above, the
Board concluded and determined as follows.
· The
Board concluded that the nature, extent and quality of the services provided by the Adviser and the Sub-Adviser
are adequate and appropriate.
· The
Board generally was satisfied with the fund’s relative performance compared to the fund’s benchmark
index and determined to continue to monitor the fund’s performance.
· The Board concluded that the fees paid to the Adviser and
the Sub-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 Management
Agreement and that, to the extent in the future it were determined that material economies of scale had
not been shared with the fund, the Board would seek to have those economies of scale shared with the
fund.
In evaluating the Agreements, the Board considered these conclusions
and determinations and also relied on its previous knowledge, gained through meetings and other interactions
with the Adviser and its affiliates and the Sub-Adviser, of the Adviser and the Sub-Adviser and the services
provided to the fund by the Adviser and the Sub-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 Agreements, including information on the investment
performance of the fund in comparison to similar mutual funds and benchmark performance indices; general
market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration
of the contractual fee arrangements for the fund had the benefit of a number of years of reviews of the
Agreements for the fund, or substantially similar agreements for other BNY Mellon funds that the Board
oversees, during which lengthy discussions took place between the Board and representatives of the Adviser.
Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the
Board’s conclusions may be based, in part, on its consideration of the fund’s arrangements, or substantially
similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined
to renew the Agreements.
56
BOARD
MEMBERS INFORMATION (Unaudited)
Independent
Board Members
Joseph
S. DiMartino (79)
Cairman of the Board (1995)
Current term expires in 2026
Principal
Occupation During Past 5 Years:
· Director
or Trustee of funds in the BNY Mellon Family of Funds and certain other entities (1995-Present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ, Inc., a public company providing professional business
services, products and solutions, Director (1997-May 2023)
No. of Portfolios for
which Board Member Serves: 86
———————
Francine J. Bovich
(72)
Board Member (2015)
Current term expires in 2024
Principal
Occupation During Past 5 Years:
· The
Bradley Trusts, private trust funds, Trustee (2011-Present)
Other
Public Company Board Memberships During Past 5 Years:
· Annaly Capital Management, Inc., a real estate investment
trust, Director (2014-Present)
No. of Portfolios for which Board Member
Serves: 47
———————
J. Charles Cardona (67)
Board Member (2014)
Current term expires in 2025
Principal
Occupation During Past 5 Years:
· BNY
Mellon ETF Trust, Chairman and Trustee (2020-Present)
· BNY Mellon Liquidity Funds, Director
(2004-Present) and Chairman (2019-2021)
No. of Portfolios for which Board Member
Serves: 38
———————
57
BOARD
MEMBERS INFORMATION (Unaudited) (continued)
Andrew J. Donohue
(73)
Board Member (2019)
Current term expires in 2026
Principal
Occupation During Past 5 Years:
· Attorney,
Solo Law Practice (2019-Present)
· Shearman
& Sterling LLP, a law firm, Of Counsel (2017-2019)
· Chief of Staff to the Chair of the SEC (2015-2017)
Other Public Company Board Memberships During Past 5 Years:
· Oppenheimer Funds (58 funds), Director
(2017-2019)
No. of Portfolios for which Board Member Serves: 40
———————
Isabel P. Dunst
(76)
Board Member (2014)
Current term expires in 2026
Principal
Occupation During Past 5 Years:
· Hogan
Lovells LLP, a law firm, Retired (2019-Present); Senior Counsel (2018-2019); Of Counsel (2015-2018)
· Hebrew
Union College Jewish Institute of Religion, Member of the Board of Governors (2015-Present)
· Bend
the ARC, a civil rights organization, Board Member (2016-December 2021)
No. of Portfolios for
which Board Member Serves: 22
———————
Nathan Leventhal
(80)
Board Member (2009)
Current term expires in 2025
Principal
Occupation During Past 5 Years:
· Lincoln
Center for the Performing Arts, President Emeritus (2001-Present)
· Palm Beach Opera, President (2016-Present)
Other Public Company Board Memberships During Past 5 Years:
· Movado Group, Inc., a public company that designs, sources,
markets and distributes watches Director (2003-2020)
No. of Portfolios for
which Board Member Serves: 29
———————
58
Robin A. Melvin
(60)
Board Member (2014)
Current term expires in 2025
Principal
Occupation During Past 5 Years:
· Westover
School, a private girls' boarding school in Middlebury, Connecticut, Trustee
(2019-June 2023)
· Mentor
Illinois, a non-profit organization dedicated to increasing the quantity and quality of mentoring services
in Illinois, Co-Chair (2014-2020); Board Member (2013-2020)
· JDRF,
a non-profit juvenile diabetes research foundation, Board Member (June 2021-June 2022)
Other Public Company Board Memberships During Past 5 Years:
· HPS Corporate Lending Fund, a closed-end management investment
company regulated as a business development company, Trustee (August 2021-Present)
No.
of Portfolios for which Board Member Serves: 68
———————
Roslyn M. Watson
(73)
Board Member (2014)
Current term expires in 2024
Principal
Occupation During Past 5 Years:
· Watson
Ventures, Inc., a real estate investment company. Principal (1993-Present)
Other Public Company Board Memberships During Past 5 Years:
· American Express Bank, FSB, Director
(1993-2018)
No. of Portfolios for which Board Member Serves: 40
———————
Benaree Pratt Wiley
(77)
Board Member (2009)
Current term expires in 2026
Principal
Occupation During Past 5 Years:
· The
Wiley Group, a firm specializing in strategy and business development, Principal
(2005-Present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ,
Inc., a public company providing professional business services, products and solutions, Director
(2008-Present)
· Blue
Cross-Blue Shield of Massachusetts, Director (2004-2020)
No. of Portfolios for
which Board Member Serves: 57
———————
59
BOARD
MEMBERS INFORMATION (Unaudited) (continued)
Tamara
Belinfanti (48)
Advisory Board Member (2021)
Principal Occupation
During Past 5 Years:
· New
York Law School, Lester Martin Professor of Law (2009-Present)
No. of Portfolios for
which Advisory Board Member Serves: 22
———————
Gordon
J. Davis (82)
Advisory Board Member (2021)
Principal Occupation
During Past 5 Years:
· Venable
LLP, a law firm, Partner (2012-Present)
Other Public Company Board Memberships
During Past 5 Years:
· BNY
Mellon Family of Funds (53 funds), Board Member (1995-August 2021)
No. of Portfolios for
which Advisory Board Member Serves: 39
———————
The address of the Board Members and Officers is c/o BNY Mellon Investment Adviser,
Inc., 240 Greenwich Street, New York, New York 10286.
60
OFFICERS
OF THE FUND (Unaudited)
DAVID DIPETRILLO, President since January 2021.
Vice
President and Director of the Adviser since February 2021; Head of North America Distribution, BNY Investment
Management since February 2023; and Head of North America Product, BNY Mellon Investment Management from
January 2018 to February 2023. He is an officer of 53 investment companies (comprised of 102 portfolios)
managed by the Adviser or an affiliate of the Adviser. He is 45 years old and has been an employee of
BNY Mellon since 2005.
JAMES WINDELS, Treasurer since November 2001.
Director
of the Adviser since February 2023; Vice President of the Adviser since September 2020; and Director–BNY
Mellon Fund Administration. He is an officer of 54 investment companies (comprised of 121 portfolios)
managed by the Adviser or an affiliate of the Adviser. He is 65 years old and has been an employee of
the Adviser since April 1985.
PETER M. SULLIVAN, Chief Legal Officer since July 2021 and Vice President and
Assistant Secretary since March 2019.
Chief Legal Officer of the Adviser and
Associate General Counsel of BNY Mellon since July 2021; Senior Managing Counsel of BNY Mellon from
December 2020 to July 2021; and Managing Counsel of BNY Mellon from March 2009 to December 2020. He is
an officer of 54 investment companies (comprised of 121 portfolios) managed by the Adviser or an affiliate
of the Adviser. He is 55 years old and has been an employee of BNY Mellon since April 2004.
JAMES
BITETTO, Vice President since August 2005 and Secretary since February 2018.
Senior
Managing Counsel of BNY Mellon since December 2019; Managing Counsel of BNY Mellon from April 2014 to
December 2019; and Secretary of the Adviser. He is an officer of 54 investment companies (comprised of
121 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 57 years old and has been
an employee of the Adviser since December 1996.
DEIRDRE CUNNANE, Vice President and Assistant
Secretary since March 2019.
Managing Counsel of BNY Mellon since December
2021; and Counsel of BNY Mellon from August 2018 to December 2021. She is an officer of 54 investment
companies (comprised of 121 portfolios) managed by the Adviser or an affiliate of the Adviser. She is
33 years old and has been an employee of BNY Mellon since August 2013.
SARAH S. KELLEHER, Vice
President and Assistant Secretary since April 2014.
Vice
President of BNY Mellon ETF Investment Adviser; LLC since February 2020; Senior Managing Counsel of BNY
Mellon since September 2021; and Managing Counsel of BNY Mellon from December 2017 to September 2021.
She is an officer of 54 investment companies (comprised of 121 portfolios) managed by the Adviser or
an affiliate of the Adviser. She is 48 years old and has been an employee of BNY Mellon since March 2013.
JEFF
PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior
Managing Counsel of BNY Mellon. He is an officer of 54 investment companies (comprised of 121 portfolios)
managed by the Adviser or an affiliate of the Adviser. He is 58 years old and has been an employee of
the Adviser since October 1990.
AMANDA QUINN, Vice President and Assistant Secretary since March 2020.
Counsel of BNY Mellon since June 2019; Regulatory Administration Manager at BNY
Mellon Investment Management Services from September 2018 to May 2019. She is an officer of 54 investment
companies (comprised of 121 portfolios) managed by the Adviser or an affiliate of the Adviser. She is
38 years old and has been an employee of BNY Mellon since June 2012.
JOANNE SKERRETT, Vice President and Assistant
Secretary since March 2023.
Managing Counsel of BNY Mellon since June
2022; and Senior Counsel with the Mutual Fund Directors Forum, a leading funds industry organization,
from 2016 to June 2022. She is an officer of 54 investment companies (comprised of 121 portfolios) managed
by the Adviser or an affiliate of the Adviser. She is 51 years old and has been an employee of the Adviser
since June 2022.
61
OFFICERS
OF THE FUND (Unaudited) (continued)
NATALYA
ZELENSKY, Vice President and Assistant Secretary since March 2017.
Chief
Compliance Officer since August 2021 and Vice President since February 2020 of BNY Mellon ETF Investment
Adviser, LLC; Chief Compliance Officer since August 2021 and Vice President and Assistant Secretary since
February 2020 of BNY Mellon ETF Trust; Managing Counsel of BNY Mellon from December 2019 to August 2021;
Counsel of BNY Mellon from May 2016 to December 2019; and Assistant Secretary of the Adviser from April
2018 to August 2021. She is an officer of 54 investment companies (comprised of 121 portfolios) managed
by the Adviser or an affiliate of the Adviser. She is 38 years old and has been an employee of BNY Mellon
since May 2016.
DANIEL GOLDSTEIN, Vice President since
March 2022.
Head of Product Development of North America
Distribution, BNY Mellon Investment Management since January 2018; Executive Vice President of North
America Product, BNY Mellon Investment Management since April 2023; and Senior Vice President, Development
& Oversight of North America Product, BNY Mellon Investment Management from 2010 to March 2023. He
is an officer of 53 investment companies (comprised of 102 portfolios) managed by the Adviser or an affiliate
of the Adviser. He is 54 years old and has been an employee of BNY Mellon Securities Corporation since
1991.
JOSEPH MARTELLA, Vice President since
March 2022.
Vice President of the Adviser since December
2022; Head of Product Management of North America Distribution, BNY Mellon Investment Management since
January 2018; Executive Vice President of North America Product, BNY Mellon Investment Management since
April 2023; and Senior Vice President of North America Product, BNY Mellon Investment Management from
2010 to March 2023. He is an officer of 53 investment companies (comprised of 102 portfolios) managed
by the Adviser or an affiliate of the Adviser. He is 46 years old and has been an employee of BNY Mellon
Securities Corporation since 1999.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager–BNY Mellon Fund Administration. He is an officer of 54 investment
companies (comprised of 121 portfolios) managed by the Adviser or an affiliate of the Adviser. He is
55 years old and has been an employee of the Adviser since April 1991.
ROBERT SALVIOLO, Assistant
Treasurer since May 2007.
Senior Accounting Manager–BNY Mellon
Fund Administration. He is an officer of 54 investment companies (comprised of 121 portfolios) managed
by the Adviser or an affiliate of the Adviser. He is 56 years old and has been an employee of the Adviser
since June 1989.
ROBERT SVAGNA, Assistant Treasurer since August 2005.
Senior
Accounting Manager–BNY Mellon Fund Administration. He is an officer of 54 investment companies (comprised
of 121 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 56 years old and has
been an employee of the Adviser since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer
since October 2004.
Chief Compliance Officer of the BNY Mellon
Family of Funds and BNY Mellon Funds Trust since 2004; and Chief Compliance Officer of the Adviser from
2004 until June 2021. He is the Chief Compliance Officer of 53 investment companies (comprised of 105
portfolios) managed by the Adviser. He is 66 years old.
62
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63
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64
OFFICERS
AND DIRECTORS
BNY Mellon Municipal Income, Inc.
240 Greenwich Street
New York, NY 10286
| | | |
Directors | | Officers (continued) | |
Joseph S. DiMartino,
Chairman | | Assistant
Treasurers (continued) | |
Francine J. Bovich | | Robert Salviolo | |
J. Charles Cardona | | Robert Svagna | |
Andrew J. Donohue | | Chief Compliance Officer | |
Isabel P. Dunst | | Joseph W. Connolly | |
Nathan Leventhal† | | Portfolio
Managers | |
Robin
A. Melvin | | Daniel
A. Rabasco | |
Roslyn
M. Watson | | Jeffrey
B. Burger | |
Benaree
Pratt Wiley† | | | |
Gordon J. Davis†† | | | |
Tamara
Belinfanti†† | | Adviser | |
†
Elected by VMTPS Holders | | BNY Mellon Investment Adviser, Inc. | |
††
Advisory Board Member | | Sub-Adviser | |
Officers | | Insight North America LLC | |
President | | Custodian | |
David DiPetrillo | | The Bank of New York Mellon | |
Chief Legal Officer | | Counsel | |
Peter M. Sullivan | | Proskauer Rose LLP | |
Vice President and Secretary | | Transfer Agent, | |
James Bitetto | | Dividend Disbursing Agent | |
Vice Presidents and
Assistant Secretaries | | and
Registrar | |
Deirdre Cunnane | | Computershare
Inc. | |
Sarah S. Kelleher | | (Common
Stock) | |
Jeff Prusnofsky | | The
Bank of New York Mellon | |
Amanda Quinn | | (VMTP Shares) | |
Joanee Skerrett | | Stock Exchange Listing | |
Natalya Zelensky | | NYSE American Symbol: DMF | |
Treasurer | | Initial SEC Effective Date | |
James Windels | | 10/21/88 | |
Vice Presidents | | | |
Daniel Goldstein | | | |
Joseph Martella | | | |
Assistant Treasurers | | | |
Gavin C. Reilly | | | |
The fund’s net asset value per share
appears in the following publications: Barron’s, Closed-End Bond Funds section under the heading
“Municipal Bond Funds” every Monday; The Wall Street Journal, Mutual Funds section under the heading “Closed-End
Funds” every Monday. |
Notice is hereby given
in accordance with Section 23(c) of the Act that the fund may purchase shares of its common stock in
the open market when it can do so at prices below the then current net asset value
per share. |
65
BNY
Mellon Municipal Income, Inc.
240
Greenwich Street
New York, NY 10286
Adviser
BNY Mellon
Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Sub-Adviser
Insight North
America LLC
200 Park Avenue, 7th
Floor
New York, NY 10166
Custodian
The Bank of
New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer
Agent &
Registrar (Common Stock)
Computershare Inc.
480 Washington Boulevard
Jersey City, NJ 07310
Dividend Disbursing Agent (Common Stock)
Computershare
Inc.
P.O. Box 30170
College Station, TX 77842
For more information about
the fund, visit https://im.bnymellon.com/closed-end-funds. Here you will find the fund’s most recently
available quarterly fact sheets and other information about the fund. The information posted on the fund’s
website is subject to change without notice.
The fund files its complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms
N-PORT are available on the SEC’s website at www.sec.gov.
A
description of the policies and procedures that the fund uses to determine how to vote proxies relating
to portfolio securities and information regarding how the fund voted these proxies for the most recent
12-month period ended June 30 is available at www.im.bnymellon.com
and
on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.
| |
0424AR0923
| |
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics
that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller,
or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the
period covered by this Report.
Item 3. Audit Committee Financial Expert.
The Registrant's Board has determined that
J. Charles Cardona, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities
and Exchange Commission (the "SEC"). J. Charles Cardona is "independent" as defined by the SEC for purposes of audit
committee financial expert determinations.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed for
each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal
accountant (the "Auditor") for the audit of the Registrant's annual financial statements or services that are normally provided
by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $37,420 in 2022
and $38,168 in 2023.
(b) Audit-Related Fees. The aggregate fees
billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the
audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $31,056 in 2022 and $35,212
in 2023. These services consisted of one or more of the following: (i) agreed upon procedures related to compliance with Internal Revenue
Code section 817(h), (ii) security counts required by Rule 17f-2 under the Investment Company Act of 1940, as amended, (iii) advisory
services as to the accounting or disclosure treatment of Registrant transactions or events and (iv) advisory services to the accounting
or disclosure treatment of the actual or potential impact to the Registrant of final or proposed rules, standards or interpretations by
the Securities and Exchange Commission, the Financial Accounting Standards Boards or other regulatory or standard-setting bodies.
The aggregate fees billed in the Reporting Periods
for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser
whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling,
controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"),
that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit
Committee were $0 in 2022 and $0 in 2023.
(c) Tax Fees. The aggregate fees billed in
the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice, and tax planning ("Tax Services")
were $3,342 in 2022 and $3,342 in 2023. These services consisted of: (i) review or preparation of U.S. federal, state, local and excise
tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative
developments; (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed
to be acquired or held, and (iv) determination of Passive Foreign Investment Companies. The aggregate fees billed in the Reporting Periods
for Tax Services by the Auditor to Service Affiliates, which required pre-approval by the Audit Committee were $8,158 in 2022 and $8,158
in 2023.
(d) All Other Fees. The aggregate fees billed
in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through
(c) of this Item, were $0 in 2022 and $0 in 2023. These services consisted of a review of the Registrant's anti-money laundering program.
The aggregate fees billed in the Reporting Periods
for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item,
which required pre-approval by the Audit Committee, were $0 in 2022 and $0 in 2023.
(e)(1) Audit Committee
Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy")
for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates
without specific case-by-case consideration. The pre-approved services in the Policy can include pre-approved audit services, pre-approved
audit-related services, pre-approved tax services and pre-approved all other services. Pre-approval considerations include whether the
proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.
(e)(2) Note. None of the services described
in paragraphs (b) through (d) of this Item 4 were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation
S-X.
(f) None
of the hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal
year were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
Non-Audit Fees. The aggregate non-audit fees
billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $2,219,815
in 2022 and $1,797,238 in 2023.
Auditor Independence. The Registrant's Audit
Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved
(not requiring pre-approval), is compatible with maintaining the Auditor's independence.
(j) Not applicable.
Item 5. Audit Committee of Listed Registrants.
The Registrant is a listed
issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Registrant
has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act and the following
persons constitute the Audit Committee and full Board of Trustees of the Registrant: Francine J. Bovich, J. Charles Cardona, Joseph S.
DiMartino, Andrew J. Donohue, Isabel P. Dunst, Nathan Leventhal, Robin A. Melvin, Roslyn M. Watson and Benaree Pratt Wiley.
The Fund has determined that each member of the Audit Committee
of the Registrant is not an “interested person” of the Registrant as defined by Section 2(a)(19) of the Investment Company
Act of 1940, as amended, and for purposes of Rule 10A-3(b)(1)(iii) under the Exchange Act, is considered independent.
Item 6. Investments.
(a) Not applicable.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
SUMMARY OF THE FUND'S
PROXY VOTING POLICY AND PROCEDURES
The board of the Fund has adopted the following
procedures with respect to proxy voting by the Fund.
Delegation of Proxy Voting Responsibility
and Adoption of Proxy Voting Procedures
The board has delegated the authority to vote
proxies of companies held in the Fund's portfolio to Insight North America, LLC ("INA" or the Sub-Adviser"), the fund's
sub-adviser. In addition, the board has adopted proxy voting procedures pursuant to which proxies of companies held in the Fund's portfolio
will be voted. The proxy voting policies and procedures adopted for the fund are those of the Sub-Adviser, as described below.
Proxy Voting Operations
The Fund has engaged ISS as its proxy voting
agent to administer the ministerial, non-discretionary elements of proxy voting and reporting. The Fund in the BNY Mellon Family of Funds
bears an equal share of ISS's fees in connection with the proxy voting and related services that ISS provides in respect to the funds.
Voting Shares of Certain Registered Investment
Companies
Under certain circumstances, when the Fund
owns shares of another registered investment company (an "Acquired Fund"), the Fund may be required by the 1940 Act or the rules
thereunder, or exemptive relief from the 1940 Act and/or the rules thereunder, to vote such Acquired Fund shares in a certain manner,
such as voting the Acquired Fund shares in the same proportion as the vote of all other shareholders of such Acquired Fund.
Policies and Procedures; Oversight
The Fund's Chief Compliance Officer is responsible
for confirming that the Sub-Adviser has adopted and implemented written policies and procedures that are reasonably designed to ensure
that the Fund's proxies are voted in the best interests of the Fund. In addition, the adequacy of such policies and procedures are reviewed
at least annually, and proxy voting for the Fund is monitored to ensure compliance with the Sub-Adviser's procedures, as applicable, such
as by sampling votes cast for the Fund, including routine proposals as well as those that require more analysis, to determine whether
they complied with the Sub-Adviser's Proxy Voting Procedures.
Review of Proxy Voting
BNYM Investment Adviser reports annually to
the Board on the Funds' proxy voting, including information regarding: (1) proxy voting proposals that were voted; (2) proxy voting proposals
that were voted against the management company's recommended vote, but in accordance with the applicable proxy voting guidelines; and
(3) proxy voting proposals that were not voted, including the reasons the proxy voting proposals were not voted.
Availability of Fund Proxy Voting Records
Pursuant to Rule 30b1-4 under the 1940 Act,
the Fund is required to file its complete proxy voting record with the SEC on Form N-PX not later than August 31st of each
year for the most recent twelve-month period ended June 30th. In addition, this information is available, by August 31st
of each year, at www.im.bnymellon.com. The Fund has delegated the responsibility for gathering this information, filing Form N-PX and
posting voting information to the website to BNYM Investment Adviser, with the assistance of ISS.
SUMMARY OF INSIGHT'S PROXY VOTING POLICY
AND PROCEDURES
1. Introduction
Insight seeks to actively exercise its rights
and responsibilities in regard to proxy voting on behalf of Clients and is an essential part of maximizing shareholder value, ensuring
good governance and delivering investment performance aligned with our Clients' long-term economic interests.
The Insight Proxy Voting Policy ("Policy")
sets out the arrangements employed by Insight Investment Management (Global) Limited, Insight Investment Management (Europe) Limited,
Insight North America LLC and Insight Investment International Limited (collectively "Insight"), where Insight has been granted
by its Clients the authority to vote the proxies of the securities held in Client portfolios.
2. Policy Statement
Insight is committed to integrating governance
and voting all our proxies where it is deemed appropriate and responsible to do so for the relevant asset class. In such cases, Insight's
objective is to vote proxies in the best interests of its Clients.
3. Scope
Insight is committed to integrating governance
and voting all our proxies where it is deemed appropriate and responsible to do so for the relevant asset class. In such cases, Insight's
objective is to vote proxies in the best interests of its Clients.
4. Proxy Voting Process
Insight's proxy voting activity adheres to
best-practice standards and is a component of Insight's Stewardship and Engagement Policy. In implementing its Voting Policy, Insight
will take into account a number of factors used to provide a framework for voting each proxy. These include:
Leadership: Every company should be led
by an effective board whose approach is consistent with creating sustainable long-term growth.
| · | Strategy: Company leadership should define a clear purpose and set long
term objectives for delivering value to shareholders. |
| · | Culture: The board should promote a diverse and inclusive culture which
strongly aligns to the values of the company. It should seek to monitor culture and ensure that it is regularly engaging with its workforce. |
| · | Engagement with Shareholders: The board and senior management should be
transparent and engaged with existing shareholders. The board should have a clear understanding of the views of shareholders. The board
should seek to minimize unnecessary dilution of equity and preserve the rights of existing shareholders. |
| · | Sustainability: The board should take account of environmental, social and
governance risks and opportunities when setting strategy and in their company monitoring role. |
Structure: The board should have clear division
of responsibilities.
| · | The Chair: The chair of the board should demonstrate objective judgment
and promote transparency and facilitate constructive debate to promote overall effectiveness. |
| · | The Board: There should be an appropriate balance of executive and non-executive
directors. Non-executive directors should be evaluated for independence. No one individual should have unfettered decision-making. There
should be a clear division, between the board and the executive leadership of the company. |
| · | Resources: The board should ensure it has sufficient governance policies,
influence and resources to function effectively. Non-executive directors should have sufficient time to fulfil their obligations to the
company as directors. |
Effectiveness: The board should seek to
build strong institutional knowledge to ensure long term efficient and sustainable operations.
| · | Appointment: There should be a formal appointment process, which ensures
that the most qualified individuals are selected for the board. This process should be irrespective of bias to ensure appropriate diversity
of the board. |
| · | Knowledge: The board should be comprised of those with the knowledge, skills
and experience to effectively discharge their duties. The board should have sufficient independence to serve as an effective check on
company management and ensure the best outcomes for shareholders. |
| · | Evaluation: The board should be evaluated for effectiveness on a regular
basis. Board member's contributions should be considered individually. |
Independence: The board should present a
fair and balanced view of the company's position and prospects.
| · | Integrity: The board should ensure that all reports produced accurately
reflect the financial position, prospects and risks relevant to the company. The board should ensure the independence and effectiveness
of internal and external audit functions. |
| · | Audit: The board should ensure that clear, uncontentious accounts are produced.
These should conform to the relevant best accountancy practices and accurately represent the financial position of the company. Deviations
from standard accounting practices should be clearly documented with a corresponding rationale. |
| · | Risk: The board should ensure the company has sound risk management and
internal control systems. There should be a regular assessment and communication of the company's emerging and principal risks. |
Remuneration: Levels of remuneration should
be sufficient to attract, retain and motivate talent of the quality required to run the company successfully.
| · | Goal Based: The board should base remuneration on goal- based, qualitative,
discretionary cash incentives. Remuneration should consider underlying industry and macroeconomic conditions and not be structured in
a tax oriented manner. |
| · | Transparent: Remuneration arrangements should be transparent and should
avoid complexity. |
| · | Sustainable: Remuneration should not be excessively share based and should
be accurately represented and controlled as an operational cost. The remuneration of executives should promote long term focus and respect
the interests of existing shareholders. |
The relevant factors are used by Insight to
develop Voting Guidelines enabling a consistent approach to proxy voting, which are reviewed annually by the Proxy Voting Group ("PVG")
– (see section 6). Voting Guidelines are available at the following link: www.insightinvestment.com/ri.
Day to day voting activity is performed by
the Chair of the PVG, a senior portfolio manager with no investment discretion. This creates an independent governance structure for voting,
helping to mitigate actual and potential conflicts of interest (see section 5).
The Chair of the PVG can seek support from
portfolio managers, who have active discretion over the securities, to provide additional input into the voting decision such as company
background, however the vote will be cast by the Chair of the PVG. Insight seeks to vote on all holdings with associated voting rights
in one of three ways: in support of, against, or in abstention. If the chair is unable to cast a vote, the decision will be cast by
the deputy chair. Insight uses a Voting Agent
to assist in the analysis and administration of the vote (see section 4.1). For contentious issues the rationale for voting for, against,
or abstaining is retained on a case-by-case basis as appropriate and reviewed by the PVG on a regular basis.
4.1 Voting Agent
To assist Insight professionals with implementing
its proxy voting strategy, Insight retains the services of an independent proxy voting service, namely Minerva ("Voting Agent").
Insight provides detailed Voting Guidelines to the Voting Agent on the operational and reporting capacity of the service. The Voting Agent's
responsibilities include, but are not limited to, monitoring company meeting agendas and items to be voted on, reviewing each vote against
Insight's specific Voting Guidelines and providing a voting analysis based upon the Voting Guidelines. The Voting Agent also identifies
contentious issues that represent a significant monetary or strategic decision. This enables Insight to review situations where the Voting
Guidelines require additional consideration or assist in the identification of potential conflicts of interest impacting the proxy vote
decision. The Chair of the PVG will decide if the issue is contentious or not, and if conflicts are deemed to exist, these will be escalated
to the PVG (see section 5.2).
Voting decisions are communicated by Insight
to the Voting Agent and submitted to shareholder meetings through a specific proxy.
On a monthly basis the Voting Agent provides
reports on voting activity to Insight. Voting data is available to Clients upon request and is posted annually on Insights website (see
section 7). Insight conducts an annual due diligence with the Voting Agent to review the Voting Guidelines and related services.
5. Conflicts of Interest
Effective stewardship requires protecting our
Clients against any potential conflicts of interest and managing them with appropriate governance. To comply with applicable legal and
regulatory requirements, Insight believes managing perceived conflicts is as important as managing actual conflicts.
In the course of normal business, Insight and
its personnel may encounter situations where it faces a conflict of interest or a conflict of interest could be perceived. A conflict
of interest occurs whenever the interests of Insight or its personnel could diverge from those of a Client or when Insight or its personnel
could have obligations to more than one party whose interests are different to each other or those of Insight's Clients.
In identifying a potential conflict situation,
as a minimum, consideration will be made as to whether Insight, or a member of staff, is likely to:
| · | make a financial gain or avoid a financial loss at the expense of the Client |
| · | material differences in the thoughts of two PM's who own the same security |
| · | benefit if it puts the interest of one Client over the interests of another
Client |
| · | gain an interest from a service provided to, or transaction carried out
on behalf of a Client which may not be in, or which may be different from, the Client's interest |
| · | obtain a higher than usual benefit from a third party in relation to a service
provided to the Client |
| · | receive an inducement in relation to a service provided to the Client, in
the form of monies, goods or services other than standard commission or fee for that service or |
| · | have a personal interest that could be seen to conflict with their duties
at Insight |
| · | creates a conflict where Insight invests in firms which are Clients or potential
Clients of Insight. Insight might give preferential treatment in its research (including external communication of the same) and/or investment
management to issuers of publicly traded debt or equities which are also clients or closely related to clients (e.g. sponsors of pension
schemes). This includes financial and ESG considerations. |
| · | creates a conflict between investment teams with fixed income holdings in
publicly listed firms or material differences in the thoughts of two PM's who own the same security |
In situations where there is a conflict of
interest or perceived conflict of interest that creates a contentious voting issue, as determined by the chair of the PVG, the issue will
be escalated to the PVG. A contentious voting issue is a voting decision which would have a detrimental impact to Clients or Insight's
reputation. All conflicts are handled in line with the Insight Conflicts of Interest Policy.
5.2 Escalation of Contentious Voting Issue
When a contentious voting issue has been identified,
the PVG will review, evaluate and determine whether an actual material conflict of interest exist, and if so, will recommend how to vote
the proxy. Depending upon the nature of the material conflict of interest, Insight may elect to take one or more of the following measures:
| · | removing certain Insight personnel from the proxy voting process |
| · | walling off personnel with knowledge of the material conflict to ensure
that such personnel do not influence the relevant proxy vote |
| · | voting in accordance with the applicable Voting Guidelines, if any, if the
application of the Voting Guidelines would objectively result in the casting of a proxy vote in a predetermined manner and |
| · | deferring the vote to the Independent Voting Service, if any, which will
vote in accordance with its own recommendation, this may include an affiliated entity |
The resolution of all contentious voting issues,
will be documented in order to demonstrate that Insight acted in the best interests of its Clients. Any voting decision not resolved by
the PVG will be escalated to the Insight Chief Investment Officer ("CIO") or delegate.
6. Proxy Voting Group
The PVG is responsible for overseeing the implementation
of voting decisions where Insight has voting authority on behalf of Clients. The PVG meets at least quarterly, or more frequently as required.
In ensuring that votes casted are in the best interest of Clients, the PVG will oversee the following proxy voting activities:
| · | Casting votes on behalf of Client |
| · | Voting Policy: Oversee and set the Proxy Voting Policy |
| · | Voting Guidelines: Oversee and set the Voting Guidelines which are
reviewed and approved on an annual basis |
| · | Stewardship Code & Engagement Policy: Review for consistency
with Proxy Voting Policy and Voting Guidelines |
| · | Conflicts of interest: Manage conflicts when making voting instructions
in line with Insight's Conflict of Interest Policy |
| · | Monitoring: Review upcoming votes that cannot be made using Voting
Guidelines and make voting decisions |
| · | Voting Agent: Appoint and monitor third-party proxy agencies, including
the services they perform for Insight in implementing its voting strategy and |
| · | Reporting: Ensure voting activity aligns with local regulations and
standards |
The PVG is chaired by a Senior Portfolio Manager
(who has no direct investment discretion) and attended by portfolio management personal, the Head of Responsible Investment Research &
Stewardship, Corporate Risk, Compliance, Client Services and Operations personal. The PVG is accountable to and provides biannual updates
to the Investment Management Group ("IMG") and Insight Risk Committee ("IROC").
7. Disclosure and Recording Keeping
In certain foreign jurisdictions, the voting
of proxies can result in additional restrictions that have an economic impact to the security, such as "share-blocking." If
Insight votes on the proxy share- blocking may prevent Insight from selling the shares of the security for a period of time. In determining
whether to vote proxies subject to such restrictions Insight, in consultation with the PVG, considers whether the vote, either in itself
or together with the votes of other shareholders, is expected to affect the value of the security that outweighs the cost of voting. If
Insight votes on a proxy and during the "share-blocking period" Insight would like to sell the affected security Insight, in
consultation with the PVG, will attempt to recall the shares (as allowable within the market time-frame and practices).
Insight publishes its voting activity in full
on its website and annual report. This can be found at www.insightinvestment.com/ri.
8. Proxy Voting Policy Review
Insight will review its Proxy Voting arrangements
regularly through the PVG. Insight reviews this Policy at least annually or whenever a material change occurs and will notify Clients
of any material change that affects our ability to vote in line with the best interests of its Clients.
A material change shall be a significant event
that could impact Insight's ability to vote proxies such as a change in voting agent. Notification of changes to the policy will be published
at the following link: www.insightinvestment.com/ri.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a)(1) The following
information is as of September 30, 2023:
Jeffrey Burger and
Daniel Rabasco of INA, an affiliate of BNYM Investment Adviser, are primarily responsible for the day-to-day management of the registrant’s
portfolio.
Mr. Burger, a senior
portfolio manager for tax sensitive strategies at INA, has served as a primary portfolio manager since November 2014. He has been employed
by INA or a predecessor company of INA since 2009.
Mr. Rabasco, the head
of municipal bonds strategies at INA, has served as a primary portfolio manager since July 2016. He has been employed by INA or a predecessor
company of INA since 1998.
(a)(2) Information
about the other accounts managed by the fund's primary portfolio managers is provided below.
Primary
Portfolio Manager |
Registered Investment Companies |
Total Assets Managed |
Other Pooled Investment Vehicles |
Total Assets Managed |
Other Accounts |
Total Assets Managed |
Jeffrey Burger |
15 |
$6.3B |
None |
N/A |
60 |
$2.3B |
Daniel Rabasco |
10 |
$3.2B |
None |
N/A |
426 |
$2.0B |
None of the funds or
accounts are subject to a performance-based advisory fee.
Portfolio managers may manage multiple accounts
for a diverse client base, including mutual funds, separate accounts (assets managed on behalf of private clients or institutions such
as pension funds, insurance companies and foundations), private funds, bank collective trust funds or common trust accounts and wrap fee
programs that invest in securities in which a fund may invest or that may pursue a strategy similar to a fund's component strategies ("Other
Accounts").
Potential conflicts of interest may arise because
of BNYM Investment Adviser's, INA's or a portfolio manager's management of the Fund and Other Accounts. For example, conflicts of interest
may arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities, as BNYM
Investment Adviser or INA may be perceived as causing accounts it manages to participate in an offering to increase BNYM Investment Adviser's
or INA's overall allocation of securities in that offering, or to increase BNYM Investment Adviser's or INA's ability to participate in
future offerings by the same underwriter or issuer. Allocations of bunched trades, particularly trade orders that were only partially
filled due to limited availability, and allocation of investment opportunities generally, could raise a potential conflict of interest,
as BNYM Investment Adviser or INA may have an incentive to allocate securities that are expected to increase in value to preferred accounts.
Initial public offerings, in particular, are frequently of very limited availability. A potential conflict of interest may be perceived
to arise if transactions in one account closely follow related transactions in a different account, such as when a fund purchase increases
the value of securities previously purchased by the Other Account or when a sale in one account lowers the sale price received in a sale
by a second account. Conflicts of interest may also exist with respect to portfolio managers who also manage performance-based fee accounts,
which could give the portfolio managers an incentive to favor such Other Accounts over the corresponding funds such as deciding which
securities to allocate to a fund versus the performance-based fee account. Additionally, portfolio managers may be perceived to have a
conflict of interest if there are a large number of Other Accounts, in addition to the fund, that they are managing on behalf of BNYM
Adviser or INA. BNYM Investment Adviser and INA periodically reviews each portfolio manager's overall responsibilities to ensure that
he or she is able to allocate the necessary time and resources to effectively manage the Fund. In addition, BNYM Investment Adviser and
INA could be viewed as having a conflict of interest to the extent that BNYM Investment Adviser, INA or their affiliates and/or portfolios
managers have a materially larger investment in Other Accounts than their investment in the Fund.
Other Accounts may have investment objectives,
strategies and risks that differ from those of the Fund. For these or other reasons, the portfolio managers may purchase different securities
for the Fund and the Other Accounts, and the performance of securities purchased for the Fund may vary from the performance of securities
purchased for Other Accounts. The portfolio manager may place transactions on behalf of Other Accounts that are directly or indirectly
contrary to investment decisions made for the Fund, which could have the potential to adversely impact the Fund, depending on market conditions.
BNY Mellon and its affiliates, including BNYM
Investment Adviser, INA and others involved in the management, sales, investment activities, business operations or distribution of the
Fund, are engaged in businesses and have interests other than that of managing the Fund. These activities and interests include potential
multiple advisory, transactional, financial and other interests in securities, instruments and companies that may be directly or indirectly
purchased or sold by the Fund or the Fund's service providers, which may cause conflicts that could disadvantaged the Fund.
(a)(3) Portfolio Manager Compensation. The
portfolio managers' compensation is comprised primarily of a market-based salary and an incentive compensation plan (annual and long-term).
INA has a flexible and progressive remuneration policy which allows
it to attract and retain what it believes to be the best available talent in the industry. INA's approach to remuneration is designed
to ensure that top performance is recognized with top quartile industry pay. This includes matching each individual with a suitable peer
group that reflects competitors at every level and specialism within the industry. The components of remuneration are base salary and
variable pay which is made up of two elements; discretionary annual cash amount and a deferral into the INA Long Term Incentive Plan.
Cash and deferred pay play a significant role in total compensation. The overall value of these payments is based on company performance
while individual payments are made with the dual aims of ensuring that key individuals are incentivized and rewarded for their contribution
and that their total remuneration is competitive. INA also has a competitive benefits package (including eligibility for company pension
and private medical plans) broadly aligned with the firm's parent company, BNY Mellon.
Discretionary pay is allocated following a detailed annual evaluation
and performance appraisal against individual objectives, based on key performance indicators such as mandate performance (including effective
management of risk and generation of relative returns where appropriate), contribution to team-based investment decisions, team management
and professional development. Account is also taken of non-investment related issues such as business wins, client feedback, product and
service development and internal relationship building, as well as experience, tenure and status within the team. For investment teams,
including portfolio managers, performance is typically assessed over a multi-year framework including fund performance over one-, three-
and five-years performance cycles. This is also supported by the INA Long Term Incentive Plan, which typically vests over three years.
The application of the above policy and principles are reviewed
at least twice each year by the INA Remuneration Committee, where compensation proposals in respect of the relevant performance year are
considered and approved.
(a)(4) The dollar range of Fund shares beneficially
owned by the primary portfolio manager is as follows as of the end of the Fund's fiscal year:
Primary
Portfolio Managers |
Fund |
Dollar Range of Fund Shares Beneficially Owned |
Jeffrey Burger |
BNY Mellon Municipal Income, Inc |
None |
Daniel Rabasco |
BNY Mellon Municipal Income, Inc |
None |
(b) Not applicable.
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. |
None.
| 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 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. |
The fund did not participate in a securities
lending program during this period.
(a)(1) Code of ethics referred to in Item 2.
(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 Municipal Income, Inc.
By: /s/ David J. DiPetrillo
David J. DiPetrillo
President (Principal Executive Officer)
Date: November 21, 2023
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/ David J. DiPetrillo
David J. DiPetrillo
President (Principal Executive Officer)
Date: November 21, 2023
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: November 21, 2023
EXHIBIT INDEX
(a)(1) Code of ethics referred to
in Item 2.
(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)
THE BNY MELLON FAMILY OF
FUNDS
BNY MELLON FUNDS TRUST
Principal Executive Officer and Senior Financial
Officer
Code of Ethics
I.
Covered Officers/Purpose of the
Code
This code of ethics (the "Code"), adopted by
the funds in the BNY Mellon Family of Funds and BNY Mellon Funds Trust (each, a
"Fund"), applies to each Fund's Principal Executive Officer,
Principal Financial Officer, Principal Accounting Officer or Controller, or
other persons performing similar functions, each of whom is listed on Exhibit A (the "Covered Officers"),
for the purpose of promoting:
·
honest and ethical conduct,
including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
·
full, fair, accurate, timely and
understandable disclosure in reports and documents that the Fund files with, or
submits to, the Securities and Exchange Commission (the "SEC") and in
other public communications made by the Fund;
·
compliance with applicable laws
and governmental rules and regulations;
·
the prompt internal reporting of
violations of the Code to an appropriate person or persons identified in the
Code; and
·
accountability for adherence to
the Code.
Each Covered Officer should adhere to a high standard
of business ethics and should be sensitive to situations that may give rise to
actual as well as apparent conflicts of interest.
II.
Covered Officers Should Handle
Ethically Actual and Apparent Conflicts of Interest
Overview. A
"conflict of interest" occurs when a Covered Officer's private
interest interferes with the interests of, or his service to, the Fund. For
example, a conflict of interest would arise if a Covered Officer, or a member
of his family, receives improper personal benefits as a result of his position
with the Fund.
Certain conflicts of interest arise out of the
relationships between Covered Officers and the Fund and already are subject to
conflict of interest provisions in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the Investment Advisers Act
of 1940, as amended (the "Investment Advisers Act"). For example,
Covered Officers may not individually engage in certain transactions (such as
the purchase or sale of securities or other property) with the Fund because of
their status as "affiliated persons" of the Fund. The compliance
programs and procedures of the Fund and the Fund's investment adviser (the
"Adviser") are designed to prevent, or identify and correct,
violations of these provisions. The Code does not, and is not intended to,
repeat or replace these programs and procedures, and the circumstances they
cover fall outside of the parameters of the Code.
Although typically not presenting an opportunity for
improper personal benefit, conflicts arise from, or as a result of, the
contractual relationship between the Fund and the Adviser of which the Covered
Officers are also officers or employees. As a result, the Code recognizes that
the Covered Officers, in the ordinary course of their duties (whether formally
for the Fund or for the Adviser, or for both), will be involved in establishing policies and implementing decisions that will
have different effects on the Adviser and the Fund. The participation of the
Covered Officers in such activities is inherent in the contractual relationship
between the Fund and the Adviser and is consistent with the performance by the
Covered Officers of their duties as officers of the Fund and, if addressed in
conformity with the provisions of the Investment Company Act and the Investment
Advisers Act, will be deemed to have been handled ethically. In addition, it
is recognized by the Fund's Board that the Covered Officers also may be
officers or employees of one or more other investment companies covered by this
or other codes of ethics.
Other conflicts of interest are covered by the Code,
even if such conflicts of interest are not subject to provisions in the
Investment Company Act and the Investment Advisers Act. Covered Officers
should keep in mind that the Code cannot enumerate every possible scenario.
The overarching principle of the Code is that the personal interest of a
Covered Officer should not be placed improperly before the interest of the
Fund.
Each Covered Officer must:
·
not use his personal influence or
personal relationships improperly to influence investment decisions or
financial reporting by the Fund whereby the Covered Officer would benefit
personally to the detriment of the Fund;
·
not cause the Fund to take action,
or fail to take action, for the individual personal benefit of the Covered
Officer rather than the benefit of the Fund; and
·
not retaliate against any employee
or Covered Officer for reports of potential violations that are made in good
faith.
III.
Disclosure and Compliance
·
Each Covered Officer should
familiarize himself with the disclosure requirements generally applicable to
the Fund within his area of responsibility;
·
each Covered Officer should not
knowingly misrepresent, or cause others to misrepresent, facts about the Fund
to others, whether within or outside the Fund, including to the Fund's Board
members and auditors, and to governmental regulators and self-regulatory
organizations;
·
each Covered Officer should, to
the extent appropriate within his area of responsibility, consult with other
officers and employees of the Fund and the Adviser with the goal of promoting
full, fair, accurate, timely and understandable disclosure in the reports and
documents the Fund files with, or submits to, the SEC and in other public
communications made by the Fund; and
·
it is the responsibility of each
Covered Officer to promote compliance with the standards and restrictions
imposed by applicable laws, rules and regulations.
IV.
Reporting and Accountability
Each Covered Officer must:
·
upon adoption of the Code (or
thereafter, as applicable, upon becoming a Covered Officer), affirm in writing
to the Board that he has received, read, and understands the Code;
·
annually thereafter affirm to the Board
that he has complied with the requirements of the Code; and
·
notify the Adviser's General
Counsel (the "General Counsel") promptly if he knows of any violation
of the Code. Failure to do so is itself a violation of the Code.
The General Counsel is responsible for applying the
Code to specific situations in which questions are presented under it and has
the authority to interpret the Code in any particular situation. However,
waivers sought by any Covered Officer will be considered by the Fund's Board.
The Fund will follow these procedures in investigating
and enforcing the Code:
·
the General Counsel will take all
appropriate action to investigate any potential violations reported to him;
·
if, after such investigation, the
General Counsel believes that no violation has occurred, the General Counsel is
not required to take any further action;
·
any matter that the General
Counsel believes is a violation will be reported to the Board;
·
if the Board concurs that a
violation has occurred, it will consider appropriate action, which may include:
review of, and appropriate modifications to, applicable policies and
procedures; notification to appropriate personnel of the Adviser or its board;
or dismissal of the Covered Officer;
·
the Board will be responsible for
granting waivers, as appropriate; and
·
any waivers of or amendments to
the Code, to the extent required, will be disclosed as provided by SEC rules.
V.
Other Policies and Procedures
The Code shall be the sole code of ethics adopted by
the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the
rules and forms applicable to registered investment companies thereunder. The Fund's,
its principal underwriter's and the Adviser's codes of ethics under Rule 17j-1
under the Investment Company Act and the Adviser's additional policies and
procedures, including its Code of Conduct, are separate requirements applying
to the Covered Officers and others, and are not part of the Code.
VI.
Amendments
Except as to Exhibit A, the Code may not be amended
except in written form, which is specifically approved or ratified by a
majority vote of the Fund's Board, including a majority of independent Board
members.
VII.
Confidentiality
All reports and records prepared or maintained
pursuant to the Code will be considered confidential and shall be maintained
and protected accordingly. Except as otherwise required by law or the Code,
such matters shall not be disclosed to anyone other than the appropriate Funds
and their counsel, the appropriate Boards (or Committees) and their counsel and
the Adviser.
VIII.
Internal Use
The Code is intended solely for the internal use by
the Fund and does not constitute an admission, by or on behalf of the Fund, as
to any fact, circumstance, or legal conclusion.
Dated as of: January 14, 2021
Exhibit A
Persons Covered by the
Code of Ethics
David J. DiPetrillo
|
President
|
(Principal Executive
Officer, BNY Mellon Family of Funds)
|
|
|
|
Patrick T. Crowe
|
President
|
(Principal Executive
Officer, BNY Mellon Funds Trust)
|
|
|
|
James M. Windels
|
Treasurer
|
(Principal Financial and
Accounting Officer)
|
[EX-99.CERT]—Exhibit (a)(2)
SECTION 302 CERTIFICATION
I, David J. DiPetrillo, certify that:
1. I have reviewed this report
on Form N-CSR of BNY Mellon Municipal Income, Inc.;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement
of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other
certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the registrant and have:
(a) Designed such
disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such
internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the
effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;
and
(d) Disclosed in this
report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other
certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
By: /s/ David
J. DiPetrillo
David J. DiPetrillo
President (Principal Executive Officer)
Date: November
21, 2023
SECTION 302 CERTIFICATION
I, James Windels, certify that:
1. I have reviewed this report
on Form N-CSR of BNY Mellon Municipal Income, Inc.;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement
of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other
certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the registrant and have:
(a) Designed such
disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such
internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the
effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;
and
(d) Disclosed in this
report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other
certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
By: /s/ James
Windels
James Windels
Treasurer (Principal Financial Officer)
Date: November
21, 2023
[EX-99.906CERT]
Exhibit (b)
SECTION 906 CERTIFICATIONS
In connection with this report
on Form N-CSR for the Registrant as furnished to the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and
(2) the
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Registrant.
By: /s/ David
J. DiPetrillo
David J. DiPetrillo
President (Principal Executive Officer)
Date: November
21, 2023
By: /s/ James
Windels
James Windels
Treasurer (Principal Financial Officer)
Date: November
21, 2023
This certificate is furnished pursuant to the requirements of Form N-CSR
and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the
liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934.
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