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 |
811-05877 |
|
|
|
BNY Mellon Strategic Municipal Bond Fund, Inc. |
|
|
(Exact name of Registrant as specified in charter) |
|
|
|
|
|
c/o BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, New York 10286 |
|
|
(Address of principal executive offices) (Zip code) |
|
|
|
|
|
Deirdre Cunnane, Esq.
240 Greenwich Street
New York, New York 10286 |
|
|
(Name and address of agent for service) |
|
|
Registrant's telephone number, including area code: |
(212) 922-6400 |
|
|
Date of fiscal year end:
|
11/30 |
|
Date of reporting period: |
11/30/23
|
|
|
|
|
|
|
|
|
FORM N-CSR
Item 1. Reports to Stockholders.
BNY Mellon Strategic Municipal Bond Fund, Inc.
|
ANNUAL REPORT November
30, 2023 |
|
|
|
BNY Mellon Strategic Municipal Bond Fund,
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. |
|
The views expressed
in this report reflect those of the portfolio manager(s) only through the end of the period covered and
do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in
the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time
based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility
to update such views. These views may not be relied on as investment advice and, because investment decisions
for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
|
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
FOR MORE INFORMATION
Back Cover
|
|
Save time. Save paper. View your next shareholder report online as soon as it’s
available. Log into www.im.bnymellon.com and sign up for eCommunications. It’s simple and only takes
a few minutes. |
DISCUSSION
OF FUND PERFORMANCE (Unaudited)
For the period of December 1, 2022, through November 30, 2023,
as provided by portfolio managers, Daniel Rabasco and Jeffrey Burger of Insight North America LLC, sub-investment
adviser.
Fund
and Market Performance Overview
For the 12-month period ended November 30,
2023, BNY Mellon Strategic Municipal Bond Fund, Inc. (the “fund”) achieved a total return of 2.88%
on a net-asset-value basis and −4.48% on a market-price basis.1
Over the same period, the fund provided aggregate income dividends of $.248 per share, which reflect
a distribution rate of 4.58%. In comparison, the Bloomberg U.S. Municipal Bond Index (the “Index”),
the fund’s benchmark, posted a total return of 4.28% for the same period.2
During the reporting period, municipal bonds posted gains as inflation fears subsided,
and interest-rate hikes eased. The fund’s performance was driven primarily by its security selection.
The
Fund’s Investment Approach
The fund seeks to maximize current income exempt from federal
income tax to the extent believed by BNY Mellon Investment Adviser, Inc. to be consistent with the preservation
of capital. In pursuing this goal, the fund invests at least 80% of its assets in municipal bonds. Under
normal market conditions, the weighted average maturity of the fund’s portfolio is expected to exceed
10 years. Under normal market conditions, the fund invests at least 80% of its net assets in municipal
bonds considered investment grade or the unrated equivalent as determined by Insight North America LLC,
the fund’s Sub-adviser.
The fund also has issued Variable Rate MuniFund Term Preferred Shares (“VMTPS”)
and has invested the proceeds in a manner consistent with its investment objective. This, along with
the fund’s participation in secondary, inverse-floater structures, has the effect of “leveraging”
the portfolio, which can magnify gain-and-loss potential depending on market conditions.3,4
Over time, many of the fund’s older, higher-yielding bonds have matured or were
redeemed by their issuers. We have attempted to replace those bonds with investments consistent with
the fund’s investment policies. We have bought newly issued bonds that have better structural or income
characteristics than previous holdings. When such opportunities arise, we usually look to sell bonds
that are close to their optional redemption date or maturity.
Market Rebounds Late in the Period
The
municipal bond market remained roughly flat through the first half of the reporting period, but the U.S.
Federal Reserve’s (the “Fed”) rate hike in July 2023, a rise in inflation in August and the Fed’s
reiteration of its “higher-for-longer” stance caused the market to decline. But the market rebounded
strongly in November 2023 as investors increasingly began to anticipate the end of the Fed’s tightening
cycle, capitalizing on attractive yields.
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 five
times between December 1, 2022 and November 30, 2023, bringing the federal funds target rate from 3.75%–4.00%
to 5.25%–5.50%. Though inflation eased during the period, it remained above the Fed’s 2% target rate.
2
Despite the rate increases, 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, 2.1% in the second quarter and 5.2% in the third 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. For a time, the stalemate
in Congress over the federal debt ceiling also gave investors pause as the outcome appeared uncertain.
Nevertheless, the normal seasonal decline in supply, combined with the seasonal reinvestment of maturing
bonds, buoyed the market.
Finally, after a few difficult months, the municipal bond
market rallied strongly in November 2023 as both institutional and retail investors increasingly recognized
the market’s solid fundamentals and attractive yields. Historically, the municipal bond market has
performed well when the Fed has ended a tightening cycle, and that appeared to be driving the market
again. In addition, constrained supply and a flight to quality resulting from an uncertain geopolitical
environment also provided support.
Security Selection Hindered Results
The fund’s performance
was driven primarily by unfavorable security selection. Selection was particularly detrimental in the
education, health care, industrial development, special tax and water & sewer sectors. Positions
in Colorado Health, University of Chicago and certain Texas school districts were especially notable.
An overweight position in continuing care retirement communities (“CCRCs”) also hampered relative
returns.
On the other hand, the fund’s performance was helped by
an overweight to revenue bonds, especially in the airport, prepaid gas and tobacco sectors. Strong selections
in certain sectors were also advantageous, including in transportation, tobacco, housing, prepaid gas
and public power. Leading contributors included California state general obligation bonds, Iowa tobacco
bonds, New York transportation (LaGuardia Airport) and the Municipal Electric Authority of Georgia. The
fund’s longer duration also produced a positive effect. The fund did not make use of derivatives during
the period.
A
Favorable Environment
A range of factors bode well for the municipal bond market.
Historically, the market has performed well when the Fed has ended a rate-hiking cycle, and the market
appears to be at that point again. The Fed opted not to raise rates late in 2023 as inflation continued
to decline, and the Fed’s “dot plot” showing the future path of the federal funds rate indicates
a reduction in rates could occur in mid-2024. Also favoring the market are the solid fundamentals, which
have helped fuel the recent rebound. State and local issuers generally remain flush with cash, assisted
by robust tax revenues stemming from a relatively strong economy and resilient residential real estate
values. Finally, should the economy weaken in the near term, municipal bonds are likely to benefit if
the stock market weakens.
As for the fund, we have positioned it to withstand a potential
economic slowdown. While general obligation bonds are positively correlated with the economy, revenue
bonds tend to be less cyclical. Accordingly, we remain well-diversified across the revenue bond sector
and are positioned to benefit from its relative resilience if a downturn occurs. In that event, we also
believe the market will benefit as investors again see the diversification advantages of an allocation
to the municipal bond market. In addition to maintaining the fund’s duration and leverage, we will
be looking to add yield, especially as opportunities arise among revenue bonds.
3
DISCUSSION
OF FUND PERFORMANCE (Unaudited) (continued)
We will also be considering opportunities in longer bonds in order to capitalize
on the likelihood of falling rates and produce a favorable total return.
December
15, 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 fluctuate. 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. Return figures provided reflect the waiver
of a portion of the management fee by BNY Mellon Investment Adviser, Inc. pursuant to an undertaking
in effect through May 31, 2024, at which time it may be extended, terminated or modified. Had a portion
of the management fee not been waived, the fund’s returns would have been lower.
2 Source: Lipper, Inc. ---The Bloomberg U.S. Municipal Bond
Index (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.
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 VMTPS is a type of preferred stock where the dividends issued
will vary with Securities Industry and Financial Markets Association Municipal Swap Index. The value
of the dividend from the preferred share is set by a predetermined formula to move with rates.
4 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.
Bonds are subject generally to interest-rate, credit, liquidity
and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus.
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 Strategic Municipal Bond Fund, 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
$10,000 investment made in BNY Mellon Strategic Municipal Bond Fund, Inc. on 11/30/13 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 charges, fees and other expenses. Investors cannot invest directly in any index. Further
information relating to fund performance, including expense reimbursements, if applicable, is contained
in the Financial Highlights within this report and elsewhere in this report.
5
FUND
PERFORMANCE (Unaudited) (continued)
| | | |
Average Annual Total Returns as of 11/30/2023 |
| 1 Year | 5
Years | 10 Years |
BNY Mellon Strategic Municipal Bond Fund, Inc.-Market Price
| -4.48% | -.66% | 2.54% |
BNY
Mellon Strategic Municipal Bond Fund, Inc.-Net Asset Value | 2.88% | .84% | 3.52% |
Bloomberg
U.S. Municipal Bond Index | 4.28% | 2.03% | 2.77% |
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.
6
DISTRIBUTION INFORMATION
The following information regarding the
fund’s distributions is current as of November 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 Strategic Municipal Bond Fund, Inc. | 100.00% | .00% | .00% | $.25 | $.25 | $.00 | $.00 |
7
SELECTED
INFORMATION
November
30, 2023 (Unaudited)
| | | | | | | | | | | | | | |
Market Price per share November 30, 2023 | | $ 5.41 | | |
Shares
Outstanding November 30, 2023 | | 49,428,691 | | |
New
York Stock Exchange Ticker Symbol | | DSM | | |
MARKET PRICE (NEW YORK STOCK EXCHANGE) |
| | | Fiscal Year Ended November
30, 2023 | | |
| Quarter | | Quarter | | Quarter | | Quarter |
| Ended | | Ended | | Ended | | Ended |
| February 28, 2023 | | May
31, 2023 | | August 31, 2023 | | November 30, 2023 |
High | $6.12 | | $6.02 | | $5.77 | | $5.42 |
Low | 5.63 | | 5.50 | | 5.37 | | 4.72 |
Close | 5.74 | | 5.58 | | 5.42 | | 5.41 |
PERCENTAGE
GAIN (LOSS) based on change in Market Price† |
November
22, 1989 (commencement of operations) through
November 30, 2023 | 375.41% |
December
1, 2013 through November 30, 2023 | 28.45 |
December
1, 2018 through November 30, 2023 | (3.24) |
December
1, 2022 through November 30, 2023 | (4.48) |
March
1, 2023 through November 30, 2023 | (2.59) |
June
1, 2023 through November 30, 2023 | (0.93) |
September
1, 2023 through November 30, 2023 | 0.89 |
| | | | |
NET
ASSET VALUE PER SHARE | |
November 22, 1989 (commencement of operations) | $9.32 |
November 30, 2022 | 6.57 |
February
28, 2023 | | | 6.51 |
May
31, 2023 | 6.54 |
August
31, 2023 | 6.39 |
November
30, 2023 | 6.47 |
PERCENTAGE
GAIN (LOSS) based on change in Net Asset Value† | |
November
22, 1989 (commencement of operations) through
November 30, 2023 | 509.72% |
December
1, 2013 though November 30, 2023 | 41.35 |
December
1, 2018 through November 30, 2023 | 4.25 |
December
1, 2022 through November 30, 2023 | 2.88 |
March
1, 2023 through November 30, 2023 | 2.66 |
June
1, 2023 through November 30, 2023 | 1.04 |
September
1, 2023 through November 30, 2023 | 2.28 |
†
With dividends reinvested. | |
8
STATEMENT
OF INVESTMENTS
November 30, 2023
| | | | | | | | | |
|
Description
| Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% | | | | | |
Alabama
- 5.0% | | | | | |
Alabama Special Care Facilities Financing Authority, Revenue Bonds (Methodist
Home for the Aging Obligated Group) | | 5.50 | | 6/1/2030 | | 1,800,000 | | 1,706,794 | |
Alabama Special Care Facilities Financing Authority, Revenue
Bonds (Methodist Home for the Aging Obligated Group) | | 6.00 | | 6/1/2050 | | 2,710,000 | | 2,283,015 | |
Black Belt Energy Gas District, Revenue Bonds, Refunding (Gas
Project) Ser. D1 | | 5.50 | | 2/1/2029 | | 4,625,000 | a | 4,851,668 | |
Black Belt Energy Gas District, Revenue Bonds, Refunding, Ser.
D1 | | 4.00 | | 6/1/2027 | | 1,000,000 | a | 995,626 | |
Jefferson County, Revenue Bonds, Refunding, Ser. F | | 7.75 | | 10/1/2046 | | 6,000,000 | | 6,309,967 | |
| 16,147,070 | |
Alaska - .8% | | | | | |
Northern
Tobacco Securitization Corp., Revenue Bonds, Refunding, Ser. A | | 4.00 | | 6/1/2050 | | 2,900,000 | | 2,570,084 | |
Arizona - 5.6% | | | | | |
Arizona Industrial Development Authority, Revenue Bonds (Legacy
Cares Project) Ser. A | | 7.75 | | 7/1/2050 | | 4,305,000 | b,c | 258,300 | |
Arizona Industrial Development Authority, Revenue Bonds (Sustainable
Bond) (Equitable School Revolving Fund Obligated Group) Ser. A | | 4.00 | | 11/1/2045 | | 1,500,000 | | 1,368,111 | |
Arizona Industrial Development Authority, Revenue Bonds, Refunding
(BASIS Schools Projects) Ser. A | | 5.25 | | 7/1/2047 | | 2,000,000 | b | 1,864,374 | |
Glendale Industrial Development Authority, Revenue Bonds, Refunding
(Sun Health Services Obligated Group) Ser. A | | 5.00 | | 11/15/2054 | | 1,500,000 | | 1,417,025 | |
La Paz County Industrial Development Authority, Revenue Bonds
(Harmony Public Schools) Ser. A | | 5.00 | | 2/15/2048 | | 1,550,000 | | 1,460,849 | |
Maricopa County Industrial
Development Authority, Revenue Bonds, Refunding (Legacy Traditional Schools Project) | | 5.00 | | 7/1/2049 | | 1,775,000 | b | 1,617,601 | |
9
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Arizona
- 5.6% (continued) | | | | | |
Salt Verde Financial Corp., Revenue Bonds | | 5.00 | | 12/1/2037 | | 1,345,000 | | 1,428,065 | |
Tender Option Bond Trust Receipts (Series 2018-XF2537), (Salt
Verde Financial Corporation, Revenue Bonds) Recourse, Underlying Coupon Rate 5.00% | | 7.07 | | 12/1/2037 | | 4,550,000 | b,d,e | 4,830,963 | |
The Phoenix Arizona Industrial Development Authority, Revenue
Bonds (Legacy Traditional Schools Project) Ser. A | | 6.75 | | 7/1/2044 | | 1,000,000 | b | 1,007,994 | |
The Phoenix Arizona Industrial Development Authority, Revenue
Bonds, Refunding (BASIS Schools Projects) Ser. A | | 5.00 | | 7/1/2046 | | 3,000,000 | b | 2,713,873 | |
| 17,967,155 | |
Arkansas
- .6% | | | | | |
Arkansas Development Finance Authority, Revenue Bonds (Sustainable Bond) (U.S.
Steel Corp.) | | 5.70 | | 5/1/2053 | | 1,900,000 | | 1,903,296 | |
California
- 7.7% | | | | | |
California Community Choice Financing Authority, Revenue Bonds (Sustainable Bond)
(Clean Energy Project) | | 5.25 | | 10/1/2031 | | 1,500,000 | a | 1,546,630 | |
California Housing Finance Agency, Revenue Bonds, Ser. A | | 3.25 | | 8/20/2036 | | 1,647,744 | | 1,513,563 | |
California Municipal
Finance Authority, Revenue Bonds (United Airlines Project) | | 4.00 | | 7/15/2029 | | 1,000,000 | | 968,304 | |
California Municipal Finance Authority, Revenue Bonds, Ser.
A | | 4.00 | | 2/1/2051 | | 1,500,000 | | 1,292,300 | |
Golden State Tobacco
Securitization Corp., Revenue Bonds, Refunding, Ser. B | | 5.00 | | 6/1/2051 | | 1,000,000 | | 1,026,574 | |
Jefferson Union High School District, COP (Teacher & Staff
Housing Project) (Insured; Build America Mutual) | | 4.00 | | 8/1/2055 | | 1,500,000 | | 1,450,659 | |
San Diego County Regional Airport Authority, Revenue Bonds,
Ser. B | | 5.00 | | 7/1/2051 | | 5,250,000 | | 5,382,391 | |
Tender Option Bond
Trust Receipts (Series 2022-XF3024), (San Francisco City & County, Revenue Bonds, Refunding, Ser.
A) Recourse, Underlying Coupon Rate 5.00% | | 8.59 | | 5/1/2044 | | 5,280,000 | b,d,e | 5,413,381 | |
10
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
California
- 7.7% (continued) | | | | | |
Tender Option Bond Trust Receipts (Series 2023-XM1114), (Long
Beach Finance Authority, Revenue Bonds) Non-recourse, Underlying Coupon Rate 4.00% | | 4.51 | | 8/1/2053 | | 6,400,000 | b,d,e | 6,116,867 | |
| 24,710,669 | |
Colorado
- 5.2% | | | | | |
Colorado Health Facilities Authority, Revenue Bonds (CommonSpirit Health Obligated
Group) | | 5.25 | | 11/1/2052 | | 1,000,000 | | 1,031,927 | |
Colorado Health Facilities
Authority, Revenue Bonds, Refunding (Covenant Living Communities & Services Obligated Group) Ser.
A | | 4.00 | | 12/1/2050 | | 4,000,000 | | 3,224,620 | |
Colorado High Performance
Transportation Enterprise, Revenue Bonds (C-470 Express Lanes System) | | 5.00 | | 12/31/2056 | | 1,000,000 | | 995,149 | |
Dominion Water & Sanitation District, Revenue Bonds, Refunding | | 5.88 | | 12/1/2052 | | 2,750,000 | | 2,665,231 | |
Tender Option Bond
Trust Receipts (Series 2020-XM0829), (Colorado Health Facilities Authority, Revenue Bonds, Refunding
(CommonSpirit Health Obligated Group) Ser. A1) Recourse, Underlying Coupon Rate 4.00% | | 7.50 | | 8/1/2044 | | 3,260,000 | b,d,e | 3,561,418 | |
Tender Option Bond Trust Receipts (Series 2023-XM1124), (Colorado
Health Facilities Authority, Revenue Bonds (Adventist Health System/Sunbelt Obligated Group) Ser. A)
Recourse, Underlying Coupon Rate 4.00% | | 4.67 | | 11/15/2048 | | 5,535,000 | b,d,e | 5,139,287 | |
| 16,617,632 | |
Connecticut
- .2% | | | | | |
Connecticut Housing Finance Authority, Revenue Bonds, Refunding, Ser. A1 | | 3.65 | | 11/15/2032 | | 530,000 | | 497,889 | |
Delaware
- 1.1% | | | | | |
Delaware Economic Development Authority, Revenue Bonds (ACTS Retirement-Life Communities
Inc Obligated Group) | | 5.00 | | 11/15/2048 | | 3,700,000 | | 3,508,051 | |
11
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
District
of Columbia - .3% | | | | | |
Metropolitan Washington Airports Authority, Revenue Bonds,
Refunding (Dulles Metrorail) Ser. B | | 4.00 | | 10/1/2049 | | 1,000,000 | | 898,153 | |
Florida - 6.6% | | | | | |
Atlantic Beach, Revenue Bonds (Fleet Landing Project) Ser.
A | | 5.00 | | 11/15/2053 | | 2,500,000 | | 2,135,786 | |
Greater Orlando Aviation
Authority, Revenue Bonds, Ser. A | | 4.00 | | 10/1/2049 | | 4,065,000 | | 3,696,363 | |
Hillsborough County Port District, Revenue Bonds (Tampa Port
Authority Project) Ser. B | | 5.00 | | 6/1/2046 | | 2,500,000 | | 2,514,549 | |
Lee Memorial Health
System, Revenue Bonds, Refunding, Ser. A1 | | 4.00 | | 4/1/2049 | | 1,600,000 | | 1,455,536 | |
Palm Beach County Health Facilities Authority, Revenue Bonds
(ACTS Retirement-Life Communities Obligated Group) | | 5.00 | | 11/15/2045 | | 2,075,000 | | 1,994,746 | |
Palm Beach County Health Facilities Authority, Revenue Bonds
(Lifespace Communities Obligated Group) Ser. B | | 4.00 | | 5/15/2053 | | 2,000,000 | | 1,252,340 | |
Seminole County Industrial Development Authority, Revenue Bonds,
Refunding (Legacy Pointe at UCF Project) | | 5.75 | | 11/15/2054 | | 1,000,000 | | 769,246 | |
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% | | 4.43 | | 10/1/2049 | | 7,500,000 | b,d,e | 7,162,544 | |
| 20,981,110 | |
Georgia - 6.9% | | | | | |
Atlanta Water & Wastewater, Revenue Bonds (Proctor Creek
Watershed) Ser. D | | 3.50 | | 11/1/2028 | | 500,000 | b | 504,762 | |
Georgia Municipal Electric Authority, Revenue Bonds (Plant
Vogtle Units 3&4 Project) Ser. A | | 5.00 | | 7/1/2052 | | 2,500,000 | | 2,551,326 | |
Main Street Natural Gas, Revenue Bonds, Ser. A | | 5.00 | | 6/1/2030 | | 1,000,000 | a | 1,033,088 | |
12
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Georgia
- 6.9% (continued) | | | | | |
Tender Option Bond Trust Receipts (Series 2016-XM0435), (Private
Colleges & Universities Authority, Revenue Bonds, Refunding (Emory University)) Recourse, Underlying
Coupon Rate 5.00% | | 8.45 | | 10/1/2043 | | 6,000,000 | b,d,e | 6,000,937 | |
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% | | 5.94 | | 7/1/2044 | | 4,220,000 | b,d,e | 4,397,309 | |
Tender Option Bond Trust Receipts (Series 2023-XF3183), (Municipal
Electric Authority of Georgia, Revenue Bonds (Plant Vogtle Units 3 & 4 Project) Ser. A) Recourse,
Underlying Coupon Rate 5.00% | | 8.25 | | 1/1/2059 | | 2,720,000 | b,d,e | 2,727,690 | |
The Atlanta Development Authority, Revenue Bonds, Ser. A1 | | 5.25 | | 7/1/2040 | | 1,000,000 | | 1,017,261 | |
The Burke County Development
Authority, Revenue Bonds, Refunding (Oglethorpe Power Corp.) Ser. D | | 4.13 | | 11/1/2045 | | 4,200,000 | | 3,676,612 | |
| 21,908,985 | |
Hawaii
- 1.4% | | | | | |
Hawaii Airports System, Revenue Bonds, Ser. A | | 5.00 | | 7/1/2047 | | 2,500,000 | | 2,594,814 | |
Hawaii Department of Budget & Finance, Revenue Bonds, Refunding
(Hawaiian Electric Co.) | | 4.00 | | 3/1/2037 | | 2,500,000 | | 1,759,177 | |
| 4,353,991 | |
Illinois - 13.7% | | | | | |
Chicago
Board of Education, GO, Refunding, Ser. A | | 5.00 | | 12/1/2033 | | 1,250,000 | | 1,273,253 | |
Chicago Board of Education, GO, Refunding, Ser. B | | 5.00 | | 12/1/2031 | | 500,000 | | 512,855 | |
Chicago Board of Education,
GO, Refunding, Ser. B | | 5.00 | | 12/1/2032 | | 400,000 | | 409,673 | |
Chicago II, GO, Refunding,
Ser. A | | 6.00 | | 1/1/2038 | | 3,000,000 | | 3,123,637 | |
Chicago II, GO, Ser.
A | | 5.00 | | 1/1/2044 | | 3,000,000 | | 3,023,941 | |
Chicago II Wastewater
Transmission, Revenue Bonds, Refunding, Ser. C | | 5.00 | | 1/1/2039 | | 2,330,000 | | 2,334,976 | |
Chicago Transit Authority, Revenue Bonds, Refunding, Ser. A | | 5.00 | | 12/1/2057 | | 1,000,000 | | 1,000,761 | |
13
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Illinois
- 13.7% (continued) | | | | | |
Chicago Transit Authority, Revenue Bonds, Refunding, Ser. A | | 5.00 | | 12/1/2045 | | 1,000,000 | | 1,030,042 | |
Illinois, GO, Ser.
A | | 5.00 | | 5/1/2038 | | 2,850,000 | | 2,956,566 | |
Illinois, GO, Ser.
B | | 5.00 | | 11/1/2030 | | 1,500,000 | | 1,605,205 | |
Illinois, GO, Ser.
D | | 5.00 | | 11/1/2028 | | 3,000,000 | | 3,177,960 | |
Metropolitan Pier &
Exposition Authority, Revenue Bonds (McCormick Place Expansion Project) | | 5.00 | | 6/15/2057 | | 2,500,000 | | 2,519,153 | |
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 | 1,440,922 | |
Sales Tax Securitization Corp., Revenue Bonds, Refunding, Ser.
A | | 4.00 | | 1/1/2039 | | 2,250,000 | | 2,233,273 | |
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% | | 8.32 | | 4/1/2025 | | 3,880,000 | b,d,e | 3,948,891 | |
Tender Option Bond Trust Receipts (Series 2023-XF1623), (Regional
Transportation Authority Illinois, Revenue Bonds, Ser. B) Non-Recourse, Underlying Coupon Rate 4.00% | | 4.26 | | 6/1/2048 | | 2,625,000 | b,d,e | 2,538,567 | |
Tender Option Bond Trust Receipts (Series 2023-XM1112), (Chicago
IL Water Works, Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) Ser. A) Non-recourse, Underlying
Coupon Rate 5.25% | | 8.87 | | 11/1/2053 | | 10,000,000 | b,d,e | 10,689,802 | |
| 43,819,477 | |
Indiana - 1.4% | | | | | |
Indiana Finance Authority, Revenue Bonds (Sustainable Bond) | | 7.00 | | 3/1/2039 | | 4,225,000 | b | 3,088,917 | |
Indianapolis Local Public Improvement Bond Bank, Revenue Bonds
(Insured; Build America Mutual) Ser. F1 | | 5.25 | | 3/1/2067 | | 1,250,000 | | 1,295,403 | |
| 4,384,320 | |
Iowa
- 1.5% | | | | | |
Iowa Finance Authority, Revenue Bonds, Refunding (Iowa Fertilizer Co. Project) | | 5.00 | | 12/1/2050 | | 2,195,000 | | 2,166,172 | |
14
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Iowa
- 1.5% (continued) | | | | | |
Iowa Finance Authority, Revenue Bonds, Refunding (Lifespace
Communities Obligated Group) Ser. A | | 4.00 | | 5/15/2053 | | 1,000,000 | | 626,170 | |
Iowa Student Loan Liquidity Corp., Revenue Bonds, Ser. B | | 5.00 | | 12/1/2032 | | 1,000,000 | | 1,079,163 | |
Iowa Tobacco Settlement
Authority, Revenue Bonds, Refunding, Ser. B1 | | 4.00 | | 6/1/2049 | | 815,000 | | 792,127 | |
| 4,663,632 | |
Kentucky
- 2.5% | | | | | |
Christian County, Revenue Bonds, Refunding (Jennie Stuart Medical Center Obligated
Group) | | 5.50 | | 2/1/2044 | | 2,800,000 | | 2,826,632 | |
Kentucky Public Energy
Authority, Revenue Bonds, Ser. A1 | | 4.00 | | 6/1/2025 | | 2,560,000 | a | 2,548,879 | |
Kentucky Public Energy Authority, Revenue Bonds, Ser. A1 | | 4.00 | | 8/1/2030 | | 2,680,000 | a | 2,625,283 | |
| 8,000,794 | |
Louisiana - 3.6% | | | | | |
Louisiana Local Government
Environmental Facilities & Community Development Authority, Revenue Bonds, Refunding (Westlake Chemical
Project) | | 3.50 | | 11/1/2032 | | 2,400,000 | | 2,233,749 | |
New Orleans Aviation
Board, Revenue Bonds (General Airport-N Terminal Project) Ser. A | | 5.00 | | 1/1/2048 | | 1,000,000 | | 1,018,221 | |
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% | | 8.16 | | 7/1/2047 | | 8,195,000 | b,d,e | 8,243,499 | |
| 11,495,469 | |
Maryland
- 3.4% | | | | | |
Maryland Economic Development Corp., Revenue Bonds (Sustainable Bond) Ser. B | | 5.25 | | 6/30/2055 | | 2,575,000 | | 2,610,683 | |
Maryland Health &
Higher Educational Facilities Authority, Revenue Bonds (Adventist Healthcare Obligated Group) Ser. A | | 5.50 | | 1/1/2046 | | 3,250,000 | | 3,282,333 | |
15
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Maryland
- 3.4% (continued) | | | | | |
Maryland Health & Higher Educational Facilities Authority,
Revenue Bonds, Refunding (Stevenson University Project) | | 4.00 | | 6/1/2051 | | 1,000,000 | | 882,552 | |
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% | | 6.22 | | 1/1/2024 | | 4,000,000 | b,d,e | 4,004,945 | |
| 10,780,513 | |
Massachusetts - 3.7% | | | | | |
Massachusetts Development
Finance Agency, Revenue Bonds, Refunding (Boston Medical Center Corp. Obligated Group) | | 5.25 | | 7/1/2052 | | 1,000,000 | | 1,043,881 | |
Massachusetts Development Finance Agency, Revenue Bonds, Refunding
(UMass Memorial Health Care Obligated Group) Ser. K | | 5.00 | | 7/1/2038 | | 2,130,000 | | 2,170,978 | |
Massachusetts Development Finance Agency, Revenue Bonds, Refunding,
Ser. A | | 5.00 | | 7/1/2029 | | 1,000,000 | | 1,025,827 | |
Massachusetts Educational
Financing Authority, Revenue Bonds, Ser. B | | 5.00 | | 7/1/2030 | | 1,000,000 | | 1,064,953 | |
Tender Option Bond Trust Receipts (Series 2023-XF1604), (Massachusetts
State Transportation Fund, Revenue Bonds, Ser. B) Non-recourse, Underlying Coupon Rate 5.00% | | 8.70 | | 6/1/2053 | | 6,000,000 | b,d,e | 6,450,469 | |
| 11,756,108 | |
Michigan - 4.4% | | | | | |
Great Lakes Water Authority
Sewage Disposal System, Revenue Bonds, Refunding, Ser. C | | 5.00 | | 7/1/2036 | | 2,000,000 | | 2,056,308 | |
Michigan Building Authority, Revenue Bonds, Refunding | | 4.00 | | 10/15/2049 | | 2,500,000 | | 2,398,395 | |
Michigan Finance Authority,
Revenue Bonds, Refunding | | 4.00 | | 4/15/2042 | | 1,000,000 | | 961,643 | |
Michigan Finance Authority,
Revenue Bonds, Refunding (Insured; National Public Finance Guarantee Corp.) Ser. D6 | | 5.00 | | 7/1/2036 | | 1,000,000 | | 1,004,485 | |
16
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Michigan
- 4.4% (continued) | | | | | |
Michigan Strategic Fund, Revenue Bonds (AMT-I-75 Improvement
Project) | | 5.00 | | 12/31/2043 | | 5,000,000 | | 5,052,219 | |
Pontiac School District,
GO (Insured; Qualified School Board Loan Fund) | | 4.00 | | 5/1/2045 | | 2,700,000 | | 2,616,125 | |
| 14,089,175 | |
Minnesota
- 1.2% | | | | | |
Duluth Economic Development Authority, Revenue Bonds, Refunding (Essentia Health
Obligated Group) Ser. A | | 5.00 | | 2/15/2058 | | 4,000,000 | | 3,968,411 | |
Missouri
- 4.5% | | | | | |
Missouri Health & Educational Facilities Authority, Revenue Bonds, Refunding
(Lutheran Senior Services Projects) | | 5.00 | | 2/1/2046 | | 1,200,000 | | 1,103,444 | |
St. Louis Land Clearance for Redevelopment Authority, Revenue
Bonds | | 5.13 | | 6/1/2046 | | 4,665,000 | | 4,674,004 | |
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% | | 4.64 | | 12/1/2053 | | 6,000,000 | b,d,e | 5,800,476 | |
The Missouri Health & Educational Facilities Authority,
Revenue Bonds (Lutheran Senior Services Projects) Ser. A | | 5.00 | | 2/1/2042 | | 1,000,000 | | 946,254 | |
The Missouri Health & Educational Facilities Authority,
Revenue Bonds (Mercy Health) | | 4.00 | | 6/1/2053 | | 2,000,000 | | 1,824,788 | |
| 14,348,966 | |
Multi-State - .6% | | | | | |
Federal
Home Loan Mortgage Corp. Multifamily Variable Rate Certificates, Revenue Bonds, Ser. M048 | | 3.15 | | 1/15/2036 | | 2,360,000 | b | 2,020,430 | |
Nevada - 2.3% | | | | | |
Clark
County School District, GO (Insured; Assured Guaranty Municipal Corp.) Ser. A | | 4.25 | | 6/15/2041 | | 2,770,000 | | 2,833,516 | |
Reno, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal
Corp.) | | 4.00 | | 6/1/2058 | | 5,000,000 | | 4,389,758 | |
| 7,223,274 | |
17
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
New
Hampshire - .9% | | | | | |
New Hampshire Business Finance Authority, Revenue Bonds (University
of Nevada Reno Project) (Insured; Build America Mutual) Ser. A | | 5.25 | | 6/1/2051 | | 1,500,000 | | 1,620,856 | |
New Hampshire Business Finance Authority, Revenue Bonds, Refunding
(Springpoint Senior Living Obligated Group) | | 4.00 | | 1/1/2051 | | 1,500,000 | | 1,104,028 | |
| 2,724,884 | |
New
Jersey - 6.4% | | | | | |
New Jersey Health Care Facilities Financing Authority, Revenue Bonds (RWJ Barnabas
Health Obligated Group) | | 4.00 | | 7/1/2051 | | 1,250,000 | | 1,190,550 | |
New Jersey Housing
& Mortgage Finance Agency, Revenue Bonds, Refunding, Ser. D | | 4.00 | | 10/1/2024 | | 2,170,000 | | 2,170,251 | |
New Jersey Transportation Trust Fund Authority, Revenue Bonds | | 5.00 | | 6/15/2044 | | 1,500,000 | | 1,599,170 | |
New Jersey Transportation
Trust Fund Authority, Revenue Bonds | | 5.25 | | 6/15/2043 | | 1,500,000 | | 1,573,348 | |
New Jersey Transportation Trust Fund Authority, Revenue Bonds | | 5.50 | | 6/15/2050 | | 2,000,000 | | 2,172,359 | |
New Jersey Turnpike
Authority, Revenue Bonds, Ser. A | | 4.00 | | 1/1/2048 | | 2,400,000 | | 2,343,788 | |
South Jersey Port Corp., Revenue Bonds, Ser. B | | 5.00 | | 1/1/2042 | | 2,025,000 | | 2,060,330 | |
Tender Option Bond
Trust Receipts (Series 2018-XF2538), (New Jersey Economic Development Authority, Revenue Bonds) Recourse,
Underlying Coupon Rate 5.25% | | 8.94 | | 6/15/2040 | | 4,250,000 | b,d,e | 4,390,809 | |
Tobacco Settlement Financing Corp., Revenue Bonds, Refunding,
Ser. A | | 5.25 | | 6/1/2046 | | 1,500,000 | | 1,530,010 | |
Tobacco Settlement
Financing Corp., Revenue Bonds, Refunding, Ser. B | | 5.00 | | 6/1/2046 | | 1,555,000 | | 1,559,330 | |
| 20,589,945 | |
New
York - 9.9% | | | | | |
New York Convention Center Development Corp., Revenue Bonds (Insured; Assured
Guaranty Municipal Corp.) Ser. B | | 0.00 | | 11/15/2052 | | 6,400,000 | f | 1,425,548 | |
New York Liberty Development Corp., Revenue Bonds, Refunding
(Class 1-3 World Trade Center Project) | | 5.00 | | 11/15/2044 | | 3,400,000 | b | 3,313,744 | |
18
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
New
York - 9.9% (continued) | | | | | |
New York State Dormitory Authority, Revenue Bonds, Refunding
(Montefiore Obligated Group) Ser. A | | 4.00 | | 9/1/2045 | | 1,000,000 | | 872,671 | |
New York Transportation Development Corp., Revenue Bonds | | 5.63 | | 4/1/2040 | | 1,000,000 | | 1,038,466 | |
New York Transportation
Development Corp., Revenue Bonds (JFK International Air Terminal) | | 5.00 | | 12/1/2040 | | 3,050,000 | | 3,153,805 | |
New York Transportation Development Corp., Revenue Bonds (LaGuardia
Airport Terminal B Redevelopment Project) Ser. A | | 5.00 | | 7/1/2046 | | 3,000,000 | | 2,974,033 | |
New York Transportation Development Corp., Revenue Bonds (Sustainable
Bond) (JFK International Airport Terminal One Project) (Insured; Assured Guaranty Municipal Corp.) | | 5.13 | | 6/30/2060 | | 1,000,000 | | 1,007,132 | |
New York Transportation
Development Corp., Revenue Bonds, Refunding (JFK International Air Terminal) Ser. A | | 5.00 | | 12/1/2035 | | 1,100,000 | | 1,157,252 | |
Niagara Area Development Corp., Revenue Bonds, Refunding (Covanta
Project) Ser. A | | 4.75 | | 11/1/2042 | | 1,000,000 | b | 804,521 | |
Tender Option Bond Trust Receipts (Series 2022-XM1004), (Metropolitan
Transportation Authority, Revenue Bonds, Refunding (Sustainable Bond) (Insured; Assured Guaranty Municipal
Corp.) Ser. C) Non-recourse, Underlying Coupon Rate 4.00% | | 4.16 | | 11/15/2047 | | 5,400,000 | b,d,e | 5,038,170 | |
Tender Option Bond Trust Receipts (Series 2023-XF1638), (New
York City Transitional Finance Authority, Revenue Bonds, Ser. E1) Non-recourse, Underlying Coupon Rate
4.00% | | 4.34 | | 2/1/2049 | | 10,000,000 | b,d,e | 9,666,286 | |
19
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
New
York - 9.9% (continued) | | | | | |
Westchester County Local Development Corp., Revenue Bonds,
Refunding (Purchase Senior Learning Community Obligated Group) | | 5.00 | | 7/1/2046 | | 1,650,000 | b | 1,337,300 | |
| 31,788,928 | |
North
Carolina - .9% | | | | | |
North Carolina Medical Care Commission, Revenue Bonds, Refunding (Lutheran Services
for the Aging Obligated Group) | | 4.00 | | 3/1/2051 | | 2,000,000 | | 1,342,558 | |
North Carolina Turnpike
Authority, Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) | | 4.00 | | 1/1/2055 | | 1,500,000 | | 1,399,275 | |
| 2,741,833 | |
Ohio
- 3.3% | | | | | |
Buckeye Tobacco Settlement Financing Authority, Revenue Bonds, Refunding, Ser.
B2 | | 5.00 | | 6/1/2055 | | 9,350,000 | | 8,261,116 | |
Centerville, Revenue
Bonds, Refunding (Graceworks Lutheran Services Obligated Group) | | 5.25 | | 11/1/2047 | | 1,500,000 | | 1,296,711 | |
Cuyahoga County, Revenue Bonds, Refunding (The MetroHealth
System) | | 5.00 | | 2/15/2052 | | 1,000,000 | | 993,086 | |
| 10,550,913 | |
Oklahoma - 3.0% | | | | | |
Tender
Option Bond Trust Receipts (Series 2023-XF1572), (Oklahoma Water Resources Board State Loan Program,
Revenue Bonds, Ser. B) Non-recourse, Underlying Coupon Rate 4.13% | | 4.89 | | 10/1/2053 | | 10,000,000 | b,d,e | 9,599,390 | |
Oregon - 1.3% | | | | | |
Medford Hospital Facilities Authority, Revenue Bonds, Refunding
(Asante Project) Ser. A | | 4.00 | | 8/15/2039 | | 1,000,000 | | 979,921 | |
Port of Portland, Revenue
Bonds, Refunding, Ser. 28 | | 4.00 | | 7/1/2047 | | 2,720,000 | | 2,504,096 | |
Yamhill County Hospital
Authority, Revenue Bonds, Refunding (Friendsview Retirement Community) Ser. A | | 5.00 | | 11/15/2046 | | 1,000,000 | | 770,350 | |
| 4,254,367 | |
20
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Pennsylvania
- 9.4% | | | | | |
Allentown School District, GO, Refunding (Insured; Build America Mutual) Ser.
B | | 5.00 | | 2/1/2031 | | 1,510,000 | | 1,627,466 | |
Crawford County Hospital
Authority, Revenue Bonds, Refunding (Meadville Medical Center Project) Ser. A | | 6.00 | | 6/1/2046 | | 1,000,000 | | 1,010,922 | |
Franklin County Industrial Development Authority, Revenue Bonds,
Refunding (Menno-Haven Project) | | 5.00 | | 12/1/2053 | | 1,000,000 | | 752,563 | |
Pennsylvania Economic
Development Financing Authority, Revenue Bonds | | 6.00 | | 6/30/2061 | | 2,000,000 | | 2,197,960 | |
Pennsylvania Economic Development Financing Authority, Revenue
Bonds, Refunding (Presbyterian Senior Living) | | 4.00 | | 7/1/2046 | | 1,000,000 | | 810,704 | |
Pennsylvania Higher Educational Facilities Authority, Revenue
Bonds, Refunding (University of Sciences in Philadelphia) | | 5.00 | | 11/1/2033 | | 2,805,000 | | 2,851,200 | |
Pennsylvania Turnpike Commission, Revenue Bonds, Ser. A | | 4.00 | | 12/1/2050 | | 1,500,000 | | 1,408,461 | |
Tender Option Bond
Trust Receipts (Series 2022-XF1408), (Pennsylvania State Turnpike Commission, Revenue Bonds, Refunding,
Ser. A) Non-recourse, Underlying Coupon Rate 4.00% | | 4.28 | | 12/1/2051 | | 10,000,000 | b,d,e | 9,396,051 | |
Tender Option Bond Trust Receipts (Series 2023-XF1525), (Pennsylvania
Economic Development Financing Authority UPMC, Revenue Bonds, Ser. A) Recourse, Underlying Coupon Rate
4.00% | | 4.08 | | 5/15/2053 | | 3,440,000 | b,d,e | 3,108,219 | |
Tender Option Bond Trust Receipts (Series 2023-XM1133), (Philadelphia
Water & Wastewater, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. B)
Non-recourse, Underlying Coupon Rate 5.50% | | 10.48 | | 9/1/2053 | | 4,380,000 | b,d,e | 4,868,097 | |
The Philadelphia School District, GO (Insured; State Aid Withholding)
Ser. A | | 4.00 | | 9/1/2039 | | 2,000,000 | | 1,984,124 | |
| 30,015,767 | |
21
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Rhode
Island - 2.0% | | | | | |
Providence Public Building Authority, Revenue Bonds (Insured; Assured Guaranty
Municipal Corp.) Ser. A | | 5.00 | | 9/15/2037 | | 500,000 | | 524,662 | |
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% | | 4.91 | | 10/1/2053 | | 6,000,000 | b,d,e | 5,916,439 | |
| 6,441,101 | |
South
Carolina - 5.0% | | | | | |
South Carolina Jobs-Economic Development Authority, Revenue
Bonds (Bishop Gadsden Episcopal Retirement Community Obligated Group) | | 5.00 | | 4/1/2054 | | 1,000,000 | | 854,837 | |
South Carolina Jobs-Economic Development Authority, Revenue
Bonds, Refunding (Bon Secours Mercy Health) | | 4.00 | | 12/1/2044 | | 3,500,000 | | 3,283,866 | |
South Carolina Public Service Authority, Revenue Bonds, Refunding
(Santee Cooper) Ser. A | | 4.00 | | 12/1/2055 | | 2,000,000 | | 1,753,451 | |
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% | | 7.07 | | 12/1/2043 | | 10,200,000 | b,d,e | 10,194,968 | |
| 16,087,122 | |
South
Dakota - 1.0% | | | | | |
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% | | 8.84 | | 7/1/2046 | | 3,200,000 | b,d,e | 3,229,718 | |
Texas - 9.6% | | | | | |
Arlington
Higher Education Finance Corp., Revenue Bonds (Uplift Education) (Insured; Permanent School Fund Guarantee
Program) Ser. A | | 4.25 | | 12/1/2048 | | 1,500,000 | | 1,431,219 | |
Clifton Higher Education
Finance Corp., Revenue Bonds (IDEA Public Schools) Ser. A | | 4.00 | | 8/15/2051 | | 2,000,000 | | 1,621,688 | |
22
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Texas
- 9.6% (continued) | | | | | |
Clifton Higher Education Finance Corp., Revenue Bonds (International
Leadership of Texas) Ser. A | | 5.75 | | 8/15/2045 | | 2,500,000 | | 2,418,580 | |
Clifton Higher Education
Finance Corp., Revenue Bonds (International Leadership of Texas) Ser. D | | 6.13 | | 8/15/2048 | | 3,000,000 | | 3,015,750 | |
Clifton Higher Education Finance Corp., Revenue Bonds (Uplift
Education) Ser. A | | 4.50 | | 12/1/2044 | | 2,500,000 | | 2,327,631 | |
Grand Parkway Transportation
Corp., Revenue Bonds, Refunding | | 4.00 | | 10/1/2049 | | 2,000,000 | | 1,931,234 | |
Harris County-Houston
Sports Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. A | | 0.00 | | 11/15/2051 | | 7,500,000 | f | 1,733,065 | |
Houston Airport System, Revenue Bonds, Refunding (Insured;
Assured Guaranty Municipal Corp.) Ser. A | | 4.50 | | 7/1/2053 | | 1,700,000 | | 1,643,733 | |
Houston Airport System, Revenue Bonds, Refunding, Ser. A | | 4.00 | | 7/1/2046 | | 1,000,000 | | 919,624 | |
Lamar Consolidated
Independent School District, GO | | 4.00 | | 2/15/2053 | | 1,000,000 | | 931,685 | |
Love Field Airport
Modernization Corp., Revenue Bonds (Southwest Airlines Co. Project) | | 5.00 | | 11/1/2028 | | 850,000 | | 850,095 | |
Mission Economic Development Corp., Revenue Bonds, Refunding
(Natgasoline Project) | | 4.63 | | 10/1/2031 | | 1,000,000 | b | 971,483 | |
Tarrant County Cultural Education Facilities Finance Corp.,
Revenue Bonds (Baylor Scott & White Health Obligated Group) | | 5.00 | | 11/15/2051 | | 1,500,000 | | 1,559,089 | |
Tarrant County Cultural Education Facilities Finance Corp.,
Revenue Bonds, Refunding (MRC Stevenson Oaks Project) | | 6.75 | | 11/15/2051 | | 1,000,000 | | 883,234 | |
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% | | 4.59 | | 2/15/2053 | | 6,000,000 | b,d,e | 5,788,641 | |
23
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Texas
- 9.6% (continued) | | | | | |
Texas Private Activity Bond Surface Transportation Corp., Revenue
Bonds, Refunding (LBJ Infrastructure Group) | | 4.00 | | 12/31/2039 | | 1,345,000 | | 1,315,873 | |
Texas Private Activity Bond Surface Transportation Corp., Revenue
Bonds, Refunding (LBJ Infrastructure Group) | | 4.00 | | 6/30/2039 | | 1,500,000 | | 1,468,239 | |
| 30,810,863 | |
U.S.
Related - 1.4% | | | | | |
Puerto Rico, GO, Ser. A | | 0.00 | | 7/1/2024 | | 35,840 | f | 34,984 | |
Puerto Rico, GO, Ser. A | | 0.00 | | 7/1/2033 | | 284,274 | f | 173,422 | |
Puerto Rico, GO, Ser. A1 | | 4.00 | | 7/1/2037 | | 170,415 | | 152,671 | |
Puerto Rico, GO, Ser. A1 | | 4.00 | | 7/1/2041 | | 231,699 | | 200,637 | |
Puerto Rico, GO, Ser. A1 | | 4.00 | | 7/1/2046 | | 240,964 | | 200,832 | |
Puerto Rico, GO, Ser. A1 | | 4.00 | | 7/1/2035 | | 198,557 | | 182,081 | |
Puerto Rico, GO, Ser. A1 | | 4.00 | | 7/1/2033 | | 220,898 | | 206,645 | |
Puerto Rico, GO, Ser. A1 | | 5.38 | | 7/1/2025 | | 246,018 | | 250,371 | |
Puerto Rico, GO, Ser. A1 | | 5.63 | | 7/1/2029 | | 2,489,835 | | 2,635,300 | |
Puerto Rico, GO, Ser. A1 | | 5.63 | | 7/1/2027 | | 243,790 | | 254,791 | |
Puerto Rico, GO, Ser. A1 | | 5.75 | | 7/1/2031 | | 232,950 | | 250,993 | |
| 4,542,727 | |
Utah
- 1.7% | | | | | |
Salt Lake City, Revenue Bonds, Ser. A | | 5.00 | | 7/1/2048 | | 2,000,000 | | 2,029,365 | |
Salt Lake City, Revenue Bonds, Ser. A | | 5.00 | | 7/1/2042 | | 1,265,000 | | 1,290,575 | |
Utah Infrastructure Agency, Revenue Bonds, Refunding, Ser.
A | | 5.00 | | 10/15/2037 | | 2,000,000 | | 1,973,197 | |
| 5,293,137 | |
Virginia - 5.9% | | | | | |
Henrico
County Economic Development Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal
Corp.) | | 4.01 | | 8/23/2027 | | 3,200,000 | d | 3,585,367 | |
Tender Option Bond Trust Receipts (Series 2018-XM0593), (Hampton
Roads Transportation Accountability Commission, Revenue Bonds) Non-recourse, Underlying Coupon Rate 5.50% | | 10.51 | | 7/1/2057 | | 7,500,000 | b,d,e | 8,315,132 | |
Virginia College Building Authority, Revenue Bonds (Green Bond)
(Marymount University Project) | | 5.00 | | 7/1/2045 | | 1,000,000 | b | 904,476 | |
Virginia Small Business Financing Authority, Revenue Bonds
(Transform 66 P3 Project) | | 5.00 | | 12/31/2052 | | 4,350,000 | | 4,365,348 | |
24
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Virginia
- 5.9% (continued) | | | | | |
Virginia Small Business Financing Authority, Revenue Bonds,
Refunding (95 Express Lanes) | | 4.00 | | 1/1/2048 | | 1,000,000 | | 883,995 | |
Williamsburg Economic
Development Authority, Revenue Bonds (William & Mary Project) (Insured; Assured Guaranty Municipal
Corp.) Ser. A | | 4.13 | | 7/1/2058 | | 1,000,000 | | 953,354 | |
| 19,007,672 | |
Washington - .3% | | | | | |
Washington
Housing Finance Commission, Revenue Bonds, Refunding (Presbyterian Retirement Communities Northwest Obligated
Group) Ser. A | | 5.00 | | 1/1/2051 | | 1,465,000 | b | 1,090,146 | |
Wisconsin - 3.6% | | | | | |
Public
Finance Authority, Revenue Bonds (CHF - Wilmington) (Insured; Assured Guaranty Municipal Corp.) | | 5.00 | | 7/1/2058 | | 3,665,000 | | 3,729,533 | |
Public Finance Authority,
Revenue Bonds (Cone Health) Ser. A | | 5.00 | | 10/1/2052 | | 1,000,000 | | 1,037,989 | |
Public Finance Authority, Revenue Bonds (EMU Campus Living)
(Insured; Build America Mutual) Ser. A1 | | 5.50 | | 7/1/2052 | | 1,500,000 | | 1,627,260 | |
Public Finance Authority, Revenue Bonds (EMU Campus Living)
(Insured; Build America Mutual) Ser. A1 | | 5.63 | | 7/1/2055 | | 1,650,000 | | 1,803,092 | |
Public Finance Authority, Revenue Bonds (Gannon University
Project) | | 5.00 | | 5/1/2042 | | 750,000 | | 730,440 | |
Public Finance Authority,
Revenue Bonds, Refunding (Mary's Woods at Marylhurst Project) | | 5.25 | | 5/15/2042 | | 750,000 | b | 680,730 | |
Wisconsin Health & Educational Facilities Authority, Revenue
Bonds (Bellin Memorial Hospital Obligated Group) | | 5.50 | | 12/1/2052 | | 1,000,000 | | 1,069,785 | |
25
STATEMENT
OF INVESTMENTS (continued)
| | | | | | | | | |
|
Description | Coupon
Rate (%) | | Maturity Date | | Principal Amount
($) | | Value
($) | |
Long-Term
Municipal Investments - 149.8% (continued) | | | | | |
Wisconsin
- 3.6% (continued) | | | | | |
Wisconsin Health & Educational Facilities Authority, Revenue
Bonds, Refunding (St. Camillus Health System Obligated Group) | | 5.00 | | 11/1/2046 | | 1,250,000 | | 974,902 | |
| 11,653,731 | |
Total
Investments (cost $491,411,235) | | 149.8% | 479,036,898 | |
Liabilities, Less Cash and Receivables | | (49.8%) | (159,288,077) | |
Net Assets Applicable
to Common Stockholders | | 100.0% | 319,748,821 | |
a 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.
b Security
exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may
be resold in transactions exempt from registration, normally to qualified institutional buyers. At November
30, 2023, these securities were valued at $188,717,616 or 59.02% of net assets.
c Non-income producing—security in default.
d 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.
e Collateral for floating rate borrowings. The coupon rate given
represents the current interest rate for the inverse floating rate security.
f Security issued with a zero coupon. Income is recognized through
the accretion of discount.
| |
Portfolio Summary (Unaudited) † | Value
(%) |
General | 26.0 |
Medical | 18.9 |
Water | 17.9 |
Transportation | 17.5 |
Education | 12.3 |
Nursing
Homes | 11.4 |
Airport | 10.9 |
Development | 6.9 |
Power | 6.5 |
General
Obligation | 5.8 |
School District | 5.6 |
Tobacco Settlement | 4.9 |
Housing | 2.2 |
Multifamily
Housing | 1.1 |
Single Family Housing | .8 |
Student Loan | .7 |
Bond Bank | .4 |
| 149.8 |
† Based
on net assets.
See notes to financial
statements.
26
| | | |
|
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 MuniFund Term Preferred Shares |
| | | |
See notes to financial statements.
27
STATEMENT
OF ASSETS AND LIABILITIES
November 30, 2023
| | | | | | |
| | | | | | |
| | | Cost | | Value | |
Assets ($): | | | | |
Investments in securities—See Statement of Investments | 491,411,235 | | 479,036,898 | |
Cash | | | | | 722,872 | |
Interest
receivable | | 7,352,256 | |
Prepaid expenses | | | | | 24,065 | |
| | | | |
487,136,091 | |
Liabilities ($): | | | | |
Due to BNY Mellon Investment Adviser, Inc.
and affiliates—Note 2(b) | | 193,501 | |
Payable for inverse floater notes issued—Note
3 | | 113,555,000 | |
VMTPS
at liquidation value—Note 1 ($49,300,000 face amount, respectively,
report net of unamortized VMTPS deferred offering cost of $247,614)—Note 1(g) | | 49,052,386 | |
Payable
for investment securities purchased | | 2,204,767
| |
Interest
and expense payable related to inverse floater notes issued—Note 3 | | 1,359,841 | |
Dividends
payable to Common Stockholders | | 889,716 | |
Directors’ fees and expenses payable | | 23,036 | |
Other
accrued expenses | | | | | 109,023 | |
| | | | |
167,387,270 | |
Net Assets Applicable
to Common Stockholders ($) | | | 319,748,821 | |
Composition
of Net Assets ($): | | | | |
Common Stock, par value, $.001 per share (49,428,691
shares issued and outstanding) | | | | | 49,429 | |
Paid-in
capital | | | | | 368,386,722 | |
Total distributable earnings
(loss) | | | | | (48,687,330) | |
Net
Assets Applicable to Common Stockholders ($) | | | 319,748,821 | |
| | | | |
Shares Outstanding | | |
(110 million shares authorized) | 49,428,691 | |
Net
Asset Value Per Share of Common Stock ($) | | 6.47 | |
| | | | |
See notes to financial statements. | | | | |
28
STATEMENT
OF OPERATIONS
Year
Ended November 30, 2023
| | | | | | |
| | | | | | |
| | | | | | |
Investment
Income ($): | | | | |
Interest Income | | | 20,427,716 | |
Expenses: | | | | |
Management
fee—Note 2(a) | | | 1,847,026 | |
Interest
and expense related to inverse floater notes issued—Note 3 | | | 4,205,348 | |
Administration
fee—Note 2(a) | | | 923,513 | |
VMTPS
interest expense—Note 1(g) | | | 874,893 | |
Professional
fees | | | 110,111 | |
Directors’
fees and expenses—Note 2(c) | | | 59,874 | |
Shareholders’
reports | | | 56,957 | |
Commission
fees—Note 1 and Redemption and Paying Agent fees—Note 2(b) | | | 56,065 | |
Registration
fees | | | 40,117 | |
Amortization
of VMTPS offering costs—Note 1(g) | | | 33,221 | |
Chief Compliance Officer fees—Note 2(b) | | | 12,426 | |
Shareholder
servicing costs | | | 5,184 | |
Custodian
fees—Note 2(b) | | | 3,797 | |
Miscellaneous | | | 38,934 | |
Total
Expenses | | |
8,267,466 | |
Less—reduction in expenses
due to undertaking—Note 2(a) | | | (369,405) | |
Less—reduction
in fees due to earnings credits—Note 2(b) | | | (3,797) | |
Net Expenses | | | 7,894,264 | |
Net
Investment Income | | | 12,533,452 | |
Realized
and Unrealized Gain (Loss) on Investments—Note 3 ($): | | |
Net realized gain (loss) on
investments | (15,440,055) | |
Net change in unrealized appreciation
(depreciation) on investments |
11,997,957 | |
Net Realized and Unrealized Gain (Loss) on
Investments | | | (3,442,098) | |
Dividends
to Preferred Stockholders | | | (1,747,418) | |
Net
Increase in Net Assets Applicable to Common Stockholders Resulting from Operations | | 7,343,936 | |
| | | | | | |
See notes to financial statements. | | | | | |
29
STATEMENT
OF CASH FLOWS
Year
Ended November 30, 2023
| | | | | | |
| | | | | |
| | | | | | |
Cash Flows from Operating Activities ($): | | | | | |
Purchases of portfolio securities | |
(190,647,086) | | | |
Proceeds from sales of portfolio securities | 195,071,451 | | | |
Dividends paid to Preferred Stockholders | (1,768,134) | | | |
Interest income received | | 20,737,001 | | | |
Interest and expense related to inverse floater
notes issued | | (3,710,854) | | | |
VMTPS interest expense | | (874,893) | | | |
VMTPS offering costs paid | | (280,835) | | | |
Expenses paid to BNY Mellon Investment
Adviser, Inc. and affiliates | | (2,426,189) | | | |
Operating expenses paid | | (395,706) | | | |
Net Cash Provided (or Used) in Operating Activities | | | | 15,704,755 | |
Cash
Flows from Financing Activities ($): | | | | | |
Net proceeds from VMTPS sold | | 49,300,000 | | | |
Dividends paid to Common Stockholders | | (12,456,029) | | | |
Cost of Auction Preferred Stock shares redeemed | (49,300,000) | | | |
Decrease in payable for inverse floater notes issued | | (2,859,671) | | | |
Net Cash Provided (or Used) in Financing Activities | | (15,315,700) | |
Net Increase
(Decrease) in Cash | | 389,055 | |
Cash at beginning of period | | 333,817 | |
Cash at
End of Period | |
722,872 | |
Reconciliation
of Net Increase (Decrease) in Net Assets Applicable to | | | |
| Common Stockholders Resulting from Operations to | | | |
| Net Cash Provided (or Used) in Operating Activities ($): | | | |
Net
Increase in Net Assets Resulting From Operations | | 7,343,936 | |
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
($): | | | |
Decrease in investments in securities at cost | | 17,659,653 | |
Decrease
in interest receivable | | 309,285 | |
Increase in unamortization deferred VMTPS offering costs | | (247,614) | |
Increase
in prepaid expenses | | (7,460) | |
Decrease in Due to BNY Mellon Investment Adviser, Inc. and affiliates | | (2,629) | |
Increase
in payable for investment securities purchased | | 2,204,767
| |
Increase in interest and expense payable
related to inverse floater notes issued | | 494,494
| |
Decrease in dividends payable to Preferred
Stockholders | | (20,716) | |
Decrease in Directors' fees and expenses payable | | (10,304) | |
Decrease
in commissions payable and other accrued expenses | | (20,700) | |
Net change in unrealized (appreciation) depreciation
on investments | | (11,997,957) | |
Net Cash Provided (or Used) in Operating Activities | | 15,704,755 | |
| | | | | | |
See notes to financial statements. | | | | | |
30
STATEMENT
OF CHANGES IN NET ASSETS
| | | | | | | | | |
| | | | Year Ended November 30, |
| | | | 2023 | | 2022 | |
Operations ($): | | | | | | | | |
Net investment income | | | 12,533,452 | | | | 16,503,441 | |
Net
realized gain (loss) on investments | | (15,440,055) | | | | (12,630,458) | |
Net
change in unrealized appreciation
(depreciation) on investments | | 11,997,957
| | | | (75,322,418) | |
Dividends
to Preferred Stockholders | | | (1,747,418) | | | | (810,577) | |
Net Increase
(Decrease) in Net Assets Applicable to Common Stockholders Resulting from
Operations | 7,343,936 | | | | (72,260,012) | |
Distributions
($): | |
Distributions to stockholders | | | (12,258,315) | | | | (17,398,684) | |
Distributions
to Common Stockholders | | | (12,258,315) | | | | (17,398,684) | |
Capital
Stock Transactions ($): | |
Net proceeds from VMTPS sold | 49,300,000 | | | | - | |
Distributions
reinvested | | | - | | | | 60,028 | |
Cost
of Auction Preferred Stock shares redeemed |
(49,300,000) | | | | - | |
Increase
(Decrease) in Net Assets from Capital Stock Transactions | - | | | | 60,028 | |
Total
Increase (Decrease) in Net Assets Applicable to Common Stockholders | (4,914,379) | | | | (89,598,668) | |
Net Assets
Applicable to Common Stockholders ($): | |
Beginning
of Period | | | 324,663,200 | | | | 414,261,868 | |
End of
Period | | | 319,748,821 | | | | 324,663,200 | |
Capital
Share Transactions (Common Shares): | |
Shares issued for distributions
reinvested | | | - | | | | 7,180 | |
Net
Increase (Decrease) in Shares Outstanding |
- | | | | 7,180 | |
| | | | | | | | | |
See notes to financial statements. | | | | | | | | |
31
FINANCIAL
HIGHLIGHTS
The following table describes the performance
for the fiscal periods indicated. Market price total return is calculated assuming an initial investment
made at the market price at the beginning of the period, reinvestment of all dividends and distributions
at market price during the period, and sale at the market price on the last day of the period. These
figures have been derived from the fund’s financial statements, and with respect to common stock, market
price data for the fund’s common shares.
| | | | | | | |
| | |
| Year
Ended November 30, |
| 2023a | 2022b | 2021c | 2020d | 2019e |
Per Share
Data ($): | | | | | | |
Net
asset value, beginning of period | | 6.57 | 8.38 | 8.24 | 8.30 | 7.91 |
Investment
Operations: | | | | | | |
Net
investment incomef | | .25 | .33 | .37 | .40 | .41 |
Net
realized and unrealized gain (loss) on investments | | (.06) | (1.77) | .13 | (.09) | .43 |
Dividends
to Preferred Stockholders from net investment income | | (.04) | (.02) | (.00)g | (.01) | (.03) |
Total from Investment
Operations | | .15 | (1.46) | .50 | .30 | .81 |
Distributions to Common
Stockholders: | | | | | | |
Dividends
from net investment income | | (.25) | (.35) | (.36) | (.36) | (.42) |
Net
asset value, end of period | | 6.47 | 6.57 | 8.38 | 8.24 | 8.30 |
Market value, end of period | | 5.41 | 5.92 | 8.24 | 7.66 | 8.19 |
Market Price Total Return (%) | | (4.48) | (24.21) | 12.46 | (1.87) | 21.12 |
32
| | | | | | | |
| | |
| Year Ended November 30, |
| 2023a | 2022b | 2021c | 2020d | 2019e |
Ratios/Supplemental
Data (%): | | | | | | |
Ratio of total expenses to average
net assets | | 2.58 | 1.54 | 1.20 | 1.56 | 1.86 |
Ratio
of net expenses to average net assets | | 2.47 | 1.43 | 1.09 | 1.44 | 1.75 |
Ratio
of interest and expense related to inverse floater notes issued, VMTPS interest
expense to average net assets | | 1.59 | .56 | .25 | .60 | .90 |
Ratio
of net investment income to average net assets | | 3.92 | 4.64 | 4.39 | 4.98 | 5.05 |
Portfolio
Turnover Rate | | 34.88 | 30.58 | 9.10 | 26.56 | 41.28 |
Asset Coverage of VMTPS and Preferred Stock, end of period | | 749 | 759 | 940 | 926 | 932 |
Net
Assets, applicable to Common Stockholders, end
of period ($ x 1,000) | | 319,749 | 324,663 | 414,262 | 407,089 | 409,972 |
VMTPS
and Preferred Stock Outstanding, end of period ($ x 1,000) | | 49,300 | 49,300 | 49,300 | 49,300 | 49,300 |
Floating
Rate Notes Outstanding, end of period ($ x 1,000) | | 113,555 | 116,415 | 138,705 | 152,185 | 182,074 |
a The
ratios based on total average net assets including equity to Preferred Stockholders are as follows: total
expense ratio of 2.36%, a net expense ratio of 2.25%, an interest expense related to floating rate notes
issued ratio of 1.45% and a net investment income of 3.58%.
b The ratios based on total average net assets including equity
to Preferred Stockholders are as follows: total expense ratio of 1.35%, a net expense ratio of 1.25%,
an interest expense related to floating rate notes issued ratio of .49% and a net investment income of
4.07%.
c The
ratios based on total average net assets including equity to Preferred Stockholders are as follows: total
expense ratio of 1.07%, a net expense ratio of .97%, an interest expense related to floating rate notes
issued ratio of .23% and a net investment income of 3.92%.
d The ratios based on total average net assets including equity
to Preferred Stockholders are as follows: total expense ratio of 1.38%, a net expense ratio of 1.28%,
an interest expense related to floating rate notes issued ratio of .53% and a net investment income of
4.43%.
e The
ratios based on total average net assets including equity to Preferred Stockholders are as follows: total
expense ratio of 1.66%, a net expense ratio of 1.56%, an interest expense related to floating rate notes
issued ratio of .80% and a net investment income of 4.50%
f Based on average common shares outstanding.
g Amount represents less than $.01 per share.
See notes to financial statements.
33
NOTES
TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
BNY
Mellon Strategic Municipal Bond Fund, 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 seek 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 New York Stock Exchange (the “NYSE”) under the ticker symbol DSM.
Prior to July 12, 2023, the fund had outstanding 698 Series A shares, 662 Series
B shares and 612 series C shares for a total of 1,972 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 $49,300,000 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 1,972 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 option of the holders to retain the VMTPS. VMTPS that are neither
34
retained by the holder nor successfully remarketed by the early redemption date
will be redeemed by the fund.
As of the VMTPS 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, The Bank of New York 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 designated for election by holders of VMTPS. The fund’s Board of Directors (the
“Board”) has designated Joni Evans and Robin A. Melvin 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.
(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
35
NOTES
TO FINANCIAL STATEMENTS (continued)
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 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 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
36
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 November 30, 2023 in valuing the fund’s investments:
| | | | | | |
| Level
1-Unadjusted Quoted Prices | Level 2- Other Significant Observable Inputs | | Level
3-Significant Unobservable Inputs | Total | |
Assets ($) | | |
Investments
in Securities:† | | |
Municipal Securities | - | 479,036,898 | | - | 479,036,898 | |
Liabilities ($) | | |
Other Financial Instruments: | | |
Inverse
Floater Notes†† | - | (113,555,000) | | - | (113,555,000) | |
VMTPS†† | - | (49,300,000) | | - | (49,300,000) | |
† 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
37
NOTES
TO FINANCIAL STATEMENTS (continued)
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’s 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 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 November 29, 2023, the Board declared a cash dividend of $.018 per share from
net investment income, payable on December 29, 2023 to Common Stockholders of record as of the close
of business on December 14, 2023. The ex-dividend date was December 13, 2023.
38
(e)
Dividends and distributions to stockholders of APS: Prior to July 12, 2023, dividends, which
were cumulative, were generally reset every seven days for each series of APS pursuant to a process specified
in related fund charter documents. These rates reflected 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-5.774%, Series B-5.849% and Series C-5.866%. During the period ended November 30, 2023, Dividends
to Preferred Stockholders paid was $1,747,418 which is in Statement of Operations and Statement of Changes
In Net Assets.
Dividends to stockholders 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. The Applicable Rate of the VMTPS was equal to the sum of .95% per annum
plus the Securities Industry and Financial Markets Association Municipal Swap Index rate of 3.30% on
November 30, 2023. The dividend rate as of November 30, 2023 for the VMTPS was 4.25% (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.
As of and during the period ended November 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
November 30, 2023, the fund did not incur any interest or penalties.
Each tax year in the
four-year period ended November 30, 2023 remains subject to examination by the Internal Revenue Service
and state taxing authorities.
At November 30, 2023, the components of accumulated earnings
on a tax basis were as follows: undistributed tax-exempt income $986,655, accumulated capital losses
$36,720,085 and unrealized depreciation $12,064,184.
39
NOTES
TO FINANCIAL STATEMENTS (continued)
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 November 30, 2023. The fund has $16,199,661 of short-term capital losses and $20,520,424
of long-term capital losses which can be carried forward for an unlimited period.
The
tax character of distributions paid to Common Stockholders during the fiscal years ended November 30,
2023 and November 30, 2022 were as follows: tax-exempt income $14,005,733 and $18,209,261, respectively.
(g)
VMTPS: The fund’s VMTPS aggregate liquidation preference is shown as a liability 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.
During the period ended
November 30, 2023, the fund was charged $874,893 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 November 30, 2023 was approximately
$49,300,000, with a related weighted average annualized interest rate of 4.59%.
NOTE 2—Management Fee,
Sub-Advisory Fee, Administration Fee, and Other Transactions with Affiliates:
(a) Pursuant to an investment
advisory agreement with the Adviser, the management fee is computed at the annual rate of .50% 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, liabilities representing VMTPS outstanding) and is payable
monthly. The fund also has an administration agreement with the Adviser and a custody agreement with
The Bank of New York Mellon (the “Custodian”), a subsidiary of BNY Mellon and an affiliate of the
Adviser. The fund pays in the aggregate for administration, custody and transfer agency services, a monthly
fee based on an annual rate of .25% 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, liabilities
representing VMTPS
40
outstanding). All out-of-pocket transfer agency and custody expenses, including
custody transaction expenses, are paid separately by the fund.
The Adviser has undertaken,
from December 1, 2022 through May 31, 2024, to waive receipt of a portion of the fund’s management
fee, in the amount of .10% 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, liabilities representing
VMTPS outstanding). The reduction in expenses, pursuant to the undertaking, amounted to $369,405 during
the period ended November 30, 2023.
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 .24% 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, liabilities representing
VMTPS outstanding).
(b) The fund has an arrangement
with the Custodian 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 November 30, 2023, the fund was charged $3,797 pursuant to
the custody agreement. These fees were offset by earnings credits of $3,797.
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 November 30, 2023,
the
fund was charged $10,000 for the services provided by the Redemption and Paying Agent (the “Redemption
and Payment Agent”).
During the period ended November 30, 2023, the fund was charged
$12,426 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 $145,309, Administration fee of $72,654, the Redemption
and Paying Agent fees of $2,500 and Chief Compliance Officer fees of $2,063,
41
NOTES
TO FINANCIAL STATEMENTS (continued)
which are offset against an expense reimbursement currently in effect in the amount
of $29,025.
(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 (including paydowns) of investment securities, excluding short-term
securities, during the period ended November 30, 2023, amounted to $129,481,759 and $127,040,352, 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
42
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 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 November 30, 2023
was approximately $106,309,311, with a related weighted average annualized interest rate of 3.96%.
At
November 30, 2023, the cost of investments for federal income
tax purposes was $377,546,082; accordingly, accumulated net unrealized depreciation on investments was
$12,064,184, consisting of $9,738,838 gross unrealized appreciation and $21,803,022 gross unrealized
depreciation.
43
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of BNY Mellon Strategic Municipal
Bond Fund, Inc.
Opinion on the Financial Statements
We
have audited the accompanying statement of assets and liabilities of BNY Mellon Strategic Municipal Bond
Fund, Inc. (the “Fund”), including the statement of investments, as of November 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 November 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 November 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
January 22, 2024
44
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 or her 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 or her 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 or her 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.
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 Common Stockholder’s name and address as they appear on the Administrator’s
records and will be effective only if received more than fifteen 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 written 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.
Level Distribution Policy
The
fund’s dividend policy is to distribute substantially all of its net investment income to its shareholders
on a monthly basis. In order to provide shareholders with a more consistent yield to the current trading
price of shares of Common Stock of the fund, the fund may at
45
ADDITIONAL
INFORMATION (Unaudited) (continued)
times pay out less than the entire amount of net investment income earned in any
particular month and may at times in any month pay out such 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 believed by the
Adviser to be consistent with the preservation of capital. The fund’s investment
objective is fundamental and 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. The fund ordinarily invests all of its net assets in municipal
obligations that provide income exempt from federal personal income tax, and has adopted a fundamental
investment policy to invest, under normal market conditions, at least
80% of its net assets in municipal obligations. 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 multi-state
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 invests at least 80% of its net assets in municipal obligations considered investment
grade by Moody’s, S&P or Fitch or the unrated equivalent as determined by the Sub-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 Sub-Adviser in the case of short term obligations having or deemed to
have maturities of less than one year. The fund may invest the remainder of its assets in municipal obligations
considered below investment grade by Moody’s, S&P and Fitch, including those rated no lower than
C, but it currently is the intention of the fund to invest such remainder of its assets
46
primarily in bonds rated no lower than Ba by Moody’s and BB by S&P and Fitch.
Bonds rated below investment grade and short term obligations rated below the two highest rating categories
of Moody’s, S&P and Fitch will be purchased only if the Sub-Adviser determines that the purchase
is consistent with the fund’s investment objective. 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. At least 65% of the value of the fund’s net assets
(except when maintaining a temporary defensive position) will be invested in bonds and debentures.
Under normal market conditions, the weighted average maturity of the fund’s
portfolio is expected to exceed ten years. 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. Under normal market conditions, long term municipal obligations generally provide
a higher yield than short term municipal obligations. The fund, however, may invest in short term municipal
obligations when their yields are greater than yields available on long term municipal obligations and
for temporary defensive purposes.
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. If the fund, as a regulated investment company, receives
such interest, a proportionate share of any exempt-interest dividend paid by the fund will be treated
as a preference item to an investor. 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 of these techniques
may give rise to taxable income.
Temporary Investments. From time to time,
on a temporary basis other than for temporary defensive purposes (but not to exceed 20% of the fund’s
net assets) or 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
47
ADDITIONAL
INFORMATION (Unaudited) (continued)
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 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 and, 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.
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
48
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 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. If 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
The
fund is a diversified, closed-end management investment company designed primarily as a long-term investment
and not as a short-term trading vehicle. The fund is not intended to be a complete investment program
and, due to the uncertainty inherent 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.
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 obligations. Other factors include the
general conditions of the municipal obligations market, the size of the particular offering, and the
maturity of the obligation and the rating of the issue. The municipal obligations market can be susceptible
to increases in volatility and decreases in liquidity. 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). During periods
of reduced market liquidity, the fund may not be able to readily sell municipal obligations at prices
at or near their perceived value. Changes in economic, business or political conditions relating to a
particular municipal project, municipality, or state, territory or possession of the United States in
which the fund invests may have an impact on the fund’s net asset value per share of Common Stock.
A credit rating downgrade relating to, default by, or insolvency or bankruptcy of, one or several municipal
security issuers of a state, territory or possession of the United States in which the fund invests could
affect the market values and marketability of many or all municipal securities of such state, territory
or possession.
49
ADDITIONAL
INFORMATION (Unaudited) (continued)
In addition, the fund may invest up to 20% of its net assets in below investment
grade municipal obligations. Below investment grade municipal obligations (commonly referred to as “high
yield” or “junk” bonds) involve substantial risk of loss and are considered predominantly speculative
with respect to the issuer’s or obligor’s ability to pay interest and repay principal and are susceptible
to default or decline in market value due to adverse economic and business developments. The market values
for high yield municipal obligations tend to be very volatile, and those bonds are less liquid than investment
grade municipal obligations.
Because there is no established retail secondary market for
many of these municipal obligations, it may be anticipated that such obligations could be sold only to
a limited number of dealers or institutional investors. To the extent a secondary trading market for
these obligations does exist, it generally is not as liquid as the secondary market for higher-rated
municipal obligations. The lack of a liquid secondary market may have an adverse impact on market price
and yield and the fund’s ability to dispose of particular issues in response to a specific economic
event such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market
for certain municipal obligations also may make it more difficult for the fund to obtain accurate market
quotations for purposes of valuing the fund’s portfolio and calculating its net asset value. In such
cases, the Sub-Adviser’s judgment may play a greater role in valuation because less reliable, objective
data may be available.
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 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 bonds 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 obligations involve greater credit risk than investment grade municipal obligations.
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. A wide variety of market
factors can cause
50
interest rates to rise, including central bank monetary policy, rising inflation
and changes in general economic conditions. 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. 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%. Conversely,
the market price of the same security would be expected to increase 3% if interest rates fell 1%. Interest
rates in the United States, however, have been rising and are expected to continue to increase in the
future. Changing interest rates may have unpredictable effects on markets, may result in heightened market
volatility and may detract from fund performance.
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 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
51
ADDITIONAL
INFORMATION (Unaudited) (continued)
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 Securities 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.
Use of 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.
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. In addition, turbulence
in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively
affect many issuers, which could adversely affect the fund. Global economies and financial markets are
becoming increasingly interconnected, and conditions and events in one country, region or financial market
may adversely impact issuers in a different country, region or financial market. These risks may be magnified
if certain events or developments adversely interrupt the global supply chain; in these and other circumstances,
such risks might affect companies worldwide. A widespread outbreak of an infectious disease, such as
COVID-19, and efforts to contain its spread, may result in market volatility, inflation, reduced liquidity
or disruption in the trading of certain financial instruments, and systemic economic weakness. To the
extent the fund may overweight its investments in certain regions, companies, industries or market sectors,
such positions will increase the fund’s exposure to risk of loss from adverse developments affecting
those regions, companies, industries or sectors.
Risk of Market Price Discount from Net
Asset Value. Shares of closed-end funds, such as the fund, frequently trade at a discount
from their net asset value. This characteristic is a risk separate and distinct from the risk that net
asset value could decrease as a result of
52
investment activities. The fund cannot predict whether its Common Stock will trade
at, above or below net asset value.
Management Risk. The fund is subject to management risk
because the fund is actively managed. The Sub-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.
Risk of Mandatory and Optional Redemptions
of
VMTP Shares. The fund may be forced to redeem VMTP Shares to meet regulatory or rating agency
requirements, or requirements under the fund’s articles supplementary, or may voluntarily redeem VMTP
Shares at any time. The fund would have to sell portfolio securities to raise the cash necessary to redeem
the VMTP Shares. Such sale could occur under unfavorable market conditions adversely effecting the net
asset value per share of the fund’s Common Stock.
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.
Given the risks described
above, an investment in Common Stock may not be appropriate for all investors. You should carefully consider
your ability to assume these risks before making an investment in the fund.
53
ADDITIONAL
INFORMATION (Unaudited) (continued)
Recent
Changes
During the period ended November 30, 2023, there were: (i) no material changes
in the fund’s investment objectives or policies that have not been approved by shareholders, (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 shareholders, (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.
54
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 November
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.
55
INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY,
ADMINISTRATION AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited)
At a meeting of the fund’s Board of Directors (the “Board”)
held on October 30-31, 2023, the Board considered the renewal of the fund’s Investment Advisory Agreement
and Administration Agreement, pursuant to which the Adviser provides the fund with investment advisory
and administrative services, respectively, and the Sub-Investment Advisory Agreement (together with the
Investment Advisory Agreement and Administration 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 fund’s performance with the performance of a group of
leveraged closed-end general and insured municipal debt funds selected by Broadridge as comparable to
the fund (the “Performance Group”) and with a broader group of funds consisting of all leveraged
closed-end general and insured municipal debt funds (the “Performance Universe”), all for various
periods ended August 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 funds consisting of all leveraged closed-end general and insured municipal debt
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
56
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 and the extent and manner in which leverage is
employed that may be applicable to the fund and comparison funds and the end date selected. They also
considered that performance generally should be considered over longer periods of time, although it is
possible that long-term performance can be adversely affected by even one period of significant underperformance
so that a single investment decision or theme has the ability to affect disproportionately long-term
performance. 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, on a net asset value basis,
was below the Performance Group and Performance Universe medians for all periods and the fund’s total
return performance, on a market price basis, was below the Performance Group and Performance Universe
medians for all periods. The Board also considered that the fund’s yield performance, on a net asset
value basis, was above or at the Performance Group and Performance Universe medians for nine of the ten
of the one-year periods ended August 31st, and, on a market price basis, was above
or at the Performance Group median for nine of the ten one-year periods ended August 31st
and above the Performance Universe medians for eight of the ten one-year periods ended August 31st.
The Board discussed with representatives of the Adviser and the Sub-Adviser the reasons for the fund’s
underperformance versus the Performance Group and Performance Universe during certain periods under review
and noted that the portfolio managers are very experienced with an impressive long-term track record
and continued to apply a consistent investment strategy. 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 (i.e., the aggregate of the investment advisory and administration
fees pursuant to the Investment Advisory Agreement and Administration Agreement) 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, which
included reductions for a fee waiver arrangement in place that reduced the management fee paid to the
Adviser. 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.
57
INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY,
ADMINISTRATION AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)
The Board considered that, based on common assets alone, the fund’s contractual
management fee was higher than the Expense Group median contractual management fee, the fund’s actual
management fee was lower than the Expense Group median and lower than the Expense Universe median actual
management fee, and the fund’s total expense were lower than the Expense Group median and slightly
lower than the Expense Universe median total expenses, and that, based on common assets and leveraged
assets together, the fund’s contractual management fee was higher than the Expense Group median contractual
management fee, based on common assets and leveraged assets together, the fund’s actual management
fee was higher than the Expense Group median and higher than the Expense Universe median actual management
fee, and the fund’s total expenses were higher than the Expense Group median and higher than the Expense
Universe median total expenses.
Representatives of the Adviser stated
that the Adviser has agreed, until May 31, 2024, to waive receipt of a portion of its management fee
from the fund in the amount of .10% of the value of the fund’s average weekly net assets.
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 considered the fee waiver arrangement and its effect on the profitability of the Adviser
and its affiliates. The Board also had been provided with information prepared by an independent consulting
firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of,
individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where
any economies of scale might emerge in connection with the management of a fund.
58
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. 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 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 long-term
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 Investment Advisory Agreement and Administration 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
59
INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY,
ADMINISTRATION AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)
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 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.
60
BOARD
MEMBERS INFORMATION (Unaudited)
Independent
Board Members
Joseph
S. DiMartino (80)
Chairman of the Board (1995)
Current term expires in 2024.
Principal Occupation During Past 5 Years:
· Director or Trustee of funds in the BNY Mellon Family of Funds
and certain other entities (as described in the fund’s Statement of Additional Information) (1995-Present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ, Inc., a public company providing professional business
services, products and solutions, Director (1997-May 2023)
No. of Portfolios for
which Board Member Serves: 86
———————
Joni
Evans (81)
Board Member (2006)
Current term expires in 2024.
Principal
Occupation During Past 5 Years:
· www.PureWow.com,
an online community dedicated to women’s conversations and publications, Chief Executive Officer
(2007-2019)
· Joni
Evans Ltd. publishing, Principal (2006-2019)
No. of Portfolios for which Board Member
Serves: 17
———————
Joan Gulley
(76)
Board Member (2017)
Current term expires in 2026.
Principal
Occupation During Past 5 Years:
· Nantucket
Atheneum, public library, Chair (June 2018-June 2021) and Director
(2015-June 2021)
· Orchard
Island Club, golf and beach club, Governor (2016-Present) and President (February
2023-Present)
No. of Portfolios for which Board Member Serves: 39
———————
61
BOARD
MEMBERS INFORMATION (Unaudited) (continued)
Alan
H. Howard (64)
Board Member (2018)
Current term expires in 2025.
Principal
Occupation During Past 5 Years:
· Heathcote
Advisors LLC, a financial advisory services firm, Managing Partner (2008-Present)
· Dynatech/MPX
Holdings LLC, a global supplier and service provider of military aircraft parts, President
(2012-May 2019); and Board Member of its two operating subsidiaries, Dynatech International
LLC and Military Parts Exchange LLC (2012-December 2019), including Chief Executive Officer
of an operating subsidiary, Dynatech International LLC (2013-May 2019)
· Rossoff & Co., an independent investment banking firm,
Senior
Advisor (2013-June 2021)
Other Public Company Board Memberships
During Past 5 Years:
· Movado
Group, Inc., a public company that designs, sources, markets and distributes watches, Director
(1997-Present)
· Diamond
Offshore Drilling, Inc., a public company that provides contract drilling services, Director
(March 2020-April 2021)
No. of Portfolios for which Board Member Serves: 17
———————
Robin
A. Melvin (60)
Board Member (1995)
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–March 2020); Board Member
(2013-March 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
———————
Burton
N. Wallack (73)
Board Member (2006)
Current term expires in 2026.
Principal
Occupation During Past 5 Years:
Wallack Management Company, a real estate management company,
President
and Co-owner (1987-Present)
Other Public Company Board Memberships
During Past 5 Years:
Mount Sinai Hospital Urology, Board Member
(2017-Present)
No. of Portfolios for which Board Member Serves: 17
———————
62
Benaree
Pratt Wiley (77)
Board Member (1998)
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-December 2020)
No. of Portfolios for
which Board Member Serves: 57
———————
Gordon
J. Davis (81)
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.
63
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 Mellon
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; and 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.
64
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 the Distributor 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 47 years old
and has been an employee of the Distributor 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.
65
This page intentionally left blank.
66
This page intentionally left blank.
67
This page intentionally left blank.
68
OFFICERS
AND DIRECTORS
BNY Mellon Strategic Municipal Bond Fund, Inc.
240 Greenwich Street
New
York, NY 10286
| | | |
Directors | | Chief
Compliance Officer | |
Joseph S. DiMartino, Chairman | | Joseph W. Connolly | |
Joni Evans† | | Portfolio
Managers | |
Joan
Gulley | | Daniel
A. Rabasco | |
Alan
H. Howard | | Jeffrey
B. Burger | |
Robin A. Melvin† | | | |
Burton N. Wallack | | | |
Benaree Pratt Wiley | | Investment Adviser and Administrator | |
Gordon Davis†† | | BNY Mellon Investment
Adviser, Inc. | |
†
Elected by VMTPS Holders | | Sub-Adviser | |
††
Advisory Board Member | | Insight
North America LLC | |
Officers | | Custodian | |
President | | The Bank of New York
Mellon | |
David DiPetrillo | | Counsel | |
Chief Legal Officer | | Proskauer
Rose LLP | |
Peter M. Sullivan | | Transfer
Agent, | |
Vice
President and Secretary | | Dividend
-Paying Agent | |
James Bitetto | | Disbursing Agent and Registrar | |
Vice President and Secretaries | | Computershare Inc. | |
Deirdre Cunnane | | (Common Stock) | |
Sarah S. Kelleher | | The Bank of New York Mellon | |
Jeff Prusnofsky | | (VMTP Shares) | |
Amanda Quinn | | Stock Exchange Listing | |
Joanee Skerrett | | NYSE Symbol: DSM | |
Natalya Zelensky | | Initial SEC Effective Date | |
Treasurer | | 11/22/89 | |
James Windels | | | |
Vice Presidents | | | |
Daniel Goldstein | | | |
Joseph Martella | | | |
Assistant Treasurers | | | |
Gavin C. Reilly | | | |
Robert Salviolo | | | |
Robert Svagna | | | |
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; and 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. |
69
BNY
Mellon Strategic Municipal Bond Fund, Inc.
240 Greenwich Street
New
York, NY 10286
Adviser
and Administrator
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.
| |
0852AR1123
| |
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
Alan H. Howard, 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"). Mr. Howard 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 $34,498 in 2022 and $35,335
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 $2,144,335
in 2022 and $1,886,566 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 Registrant.
During the reporting period, the Registrant had a separately-designated
standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. From June 1, 2023
to November 30, 2023, the Registrant's audit committee consisted of the following non-interested Board members: Joseph S. DiMartino, Joni
Evans, Joan Gulley, Alan H. Howard, Robin A. Melvin, Burton N. Wallack and Benaree P. Wiley.
Item 6. Investments.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Due to the nature of the investments held in connection with the
Registrant's investment strategy, the Registrant does not anticipate regular proxy voting activity. If presented with a proxy voting opportunity,
Insight North America LLC will seek to make voting decisions that
are consistent with its proxy voting policy and procedures. The Registrant does not currently participate in a securities lending program.
The Registrant's Board of Directors has adopted the following procedures
with respect to proxy voting by the Registrant.
SUMMARY OF THE REGISTRANT'S PROXY VOTING
POLICY AND PROCEDURES
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 Registrant's portfolio to Insight North America LLC ("INA"), the Registrant's sub-investment adviser, as described
below. BNY Mellon Investment Adviser, Inc. ("BNYM Investment Adviser") serves as the Registrant's investment adviser.
In addition, the Board has adopted INA's proxy voting procedures
pursuant to which proxies of companies held in the Registrant's portfolio will be voted.
Proxy Voting Operations
The Registrant has engaged Institutional Shareholder Services Inc.
("ISS") as its proxy voting agent to administer the ministerial, non-discretionary elements of proxy voting and reporting.
Voting Shares of Certain Registered Investment Companies
Under certain circumstances, when the Registrant owns shares of
another registered investment company (an "Acquired Fund"), the Registrant 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.
Securities on Loan
The Registrant may participate in a securities lending program to
generate income for its portfolio. Generally, the voting rights pass with the securities on loan and any securities on loan as of a record
date cannot be voted by the Registrant. In certain circumstances, BNYM Investment Adviser may seek to recall a security on loan before
a record date in order to cast a vote (for example, if INA determines, based on the information available at the time, that there is a
material proxy event that could affect the value of the loaned security and recalling the security for voting purposes would be in the
best interest of the Registrant). However, BNYM Investment Adviser anticipates that, in most cases, the potential income the Registrant
may derive from a loaned security would outweigh the benefit the Registrant could receive from voting the security. In addition, the ability
to timely recall securities on loan is not entirely within the control of BNYM Investment Adviser or INA. Under certain circumstances,
the recall of securities in time for such securities to be voted may not be possible due to applicable proxy voting record dates occurring
before the proxy statements are released or other administrative considerations.
Policies and Procedures; Oversight
The Registrant's Chief Compliance Officer is responsible for confirming
that INA has adopted and implemented written policies and procedures that are reasonably designed to ensure that the Registrant's proxies
are voted in the best interests of the Registrant. In addition, the adequacy of such policies and
procedures are reviewed at least annually, and proxy voting for
the Registrant is monitored to ensure compliance with INA's procedures, as applicable, such as by sampling votes cast for the Registrant,
including routine proposals as well as those that require more analysis, to determine whether they complied with the applicable INA's
Proxy Voting Procedures.
Oversight of ISS for Voting Proxies for of Designated BHC Securities.
For ISS's voting activities in respect of proxies for securities of the Designated BHCs, BNYM Investment Adviser, through its legal, operational
and administrative support groups, as well as certain BNY Mellon vendor review groups and engaged external consulting firms, shall provide
ongoing oversight of ISS in order to ensure that ISS continues to vote proxies in the best interests of the Registrant and shall establish
and implement measures reasonably designed to identify and address any conflicts involving ISS that can arise on an ongoing basis by requiring
ISS to provide updates regarding any changes to its business, including with respect to capacity and competency to provide proxy voting
advice, or its conflict policies and procedures.
Review of Proxy Voting
BNYM Investment Adviser reports annually to the boards on the Registrant's
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 Registrant Proxy Voting Records
Pursuant to Rule 30b1-4 under the 1940 Act, the Registrant 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 Registrant 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 INA'S PROXY VOTING POLICY AND
PROCEDURES
1. Introduction
INA seeks to actively exercise its rights and responsibilities in
regard to proxy voting on behalf of Clients and is an essential part of maximising shareholder value, ensuring good governance and delivering
investment performance aligned with our Clients' long-term economic interests.
The INA 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").
2. Policy Statement
Insight is committed to supporting good governance practices and
also 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
This Policy applies to financial instruments with voting rights
where Insight has discretionary voting authority. Alternatively, where a Client retains control over the voting decision, Insight will
only lodge votes in instances where the client agreement hands responsibility to Insight to cast the votes on their behalf.
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 Independent 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.
Voting activity is most usually performed by the Chair of the PVG,
a senior portfolio manager with no day to day 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 or their delegate. 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, (see section 4.1). 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"). 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 Voting Guidelines and providing a voting analysis based upon the Voting Guidelines. The Voting Agent also identifies resolutions
that require specific shareholder judgement – often relating to corporate transactions or shareholder resolutions. 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 review for contentious resolutions, and in the event
of one will determine if an actual or potential conflict exists in which case the resolution will be escalated to the PVG voting committee
(see section 5.1).
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 on its website (see section 7). Insight conducts an annual
due diligence to review the Voting Guidelines and the Voting Agent's 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
·
present 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
·
create 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.
·
create 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
5.1 Escalation of Contentious Voting Issue
When a contentious voting issue is identified, the PVG Chairman
or delegate will review, evaluate and determine whether an actual material conflict of interest exists, and if so, will escalate the matter
to the PVG voting committee. 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 and
·
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
An unconflicted contentious resolution will be voted by the Chair
or their delegate. Where a conflict is deemed to exist the vote, widened to the PVG voting committee, will be determined by majority vote.
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 their delegate for additional input.
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 Clients
·
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 |
| · | Resolution Assessment: 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
day to day investment discretion) and attended by portfolio management personal, the Senor Stewardship Analyst (Deputy Chair), Corporate
Risk, Compliance, and Operations personal. The PVG is accountable to and provides quarterly updates to the Investment Management Group
("IMG").
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. 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.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a)(1) The following information is as of November 30, 2023:
Daniel Rabasco and Jeffrey Burger, are the Registrant's primary
portfolio managers, positions they have held since July 2016 and July 2014, respectively. Messrs. Rabasco and Burger are jointly and primarily
responsible for the day-to-day management of the Registrant's portfolio.
Mr. Rabasco is the head of municipal bond strategies at INA. He
has been employed at INA or a predecessor company of INA since 1998.
Mr. Burger is a senior portfolio manager for tax-sensitive strategies
at INA and has served as a primary portfolio manager of the Registrant since July 2014. He has been employed at INA or a predecessor company
of INA since 2009.
(a)(2) Information about the other accounts managed by the Registrant’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 |
11 |
$3.5 billion |
None |
N/A |
400 |
$2.1 billion |
Daniel Rabasco |
13 |
$5.4 billion |
None |
N/A |
60 |
$2.2 billion |
None of the Registrants or accounts are subject to a performance-based advisory fee.
Portfolio managers may manage multiple accounts for a diverse client
base, including mutual Registrants, separate accounts (assets managed on behalf of institutions such as pension Registrants, insurance
companies and foundations), bank common trust accounts and wrap fee programs ("Other Accounts").
Potential conflicts of interest may arise because of BNYM Investment
Adviser's, INA's or a portfolio manager's management of the Registrant 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. 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 Registrant, that they are managing on behalf
of BNYM Investment 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 Registrant. 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 Registrant.
Other Accounts may have investment objectives, strategies and risks
that differ from those of the Registrant. For these or other reasons, the portfolio manager may purchase different securities for the
Registrant and the Other Accounts, and the performance of securities purchased for the Registrant 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 Registrant, which could have the potential to adversely impact the Registrant, depending
on market conditions.
A potential conflict of interest may be perceived to arise if transactions
in one account closely follow related transactions in another account, such as when a 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.
BNY Mellon and its affiliates, including BNYM Investment Adviser,
INA and others involved in the management, investment activities or business operations of the Registrant, are engaged in businesses and
have interests other than that of managing the Registrant. These activities and interesting include potential multiple advisory, transactional,
financial and other interesting in securities, instruments and companies that may be directly or indirectly purchased or sold by the Registrant
of the Registrant's service providers, which may cause conflicts that could disadvantaged the Registrant.
BNYM Investment Adviser's goal is to provide high quality investment
services to all of its clients, while meeting BNYM Investment Adviser's fiduciary obligation to treat all clients fairly. BNYM Investment
Adviser has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, that it
believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, BNYM Investment Adviser monitors
a variety of areas, including compliance with Registrant guidelines, the allocation of IPOs, and compliance with the firm's Code of Ethics.
Furthermore, senior investment and business personnel at BNYM Investment Adviser periodically review the performance of BNYM Investment
Adviser's portfolio managers.
(a)(3) Portfolio Manager Compensation. 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 Registrant shares beneficially owned
by the primary portfolio manager is as follows as of the end of the Registrant's fiscal year:
Primary Portfolio Manager |
Registrant |
Dollar Range of Registrant Shares Beneficially Owned |
Daniel Rabasco |
BNY Mellon Strategic Municipals, Inc. |
None |
Jeffrey Burger |
BNY Mellon Strategic Municipals, 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 Registrant 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 Strategic Municipal Bond Fund, Inc.
By: /s/ David J. DiPetrillo
David J. DiPetrillo
President (Principal Executive Officer)
Date: January 19, 2024
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: January 19, 2024
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: January 19, 2024
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 Strategic Municipal Bond Fund, 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: January
19, 2024
SECTION 302 CERTIFICATION
I, James Windels, certify that:
1. I have reviewed this report
on Form N-CSR of BNY Mellon Strategic Municipal Bond Fund, 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: January
19, 2024
[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: January
19, 2024
By: /s/ James
Windels
James Windels
Treasurer (Principal Financial Officer)
Date: January
19, 2024
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.
BNY Mellon Strategic Mun... (NYSE:DSM)
Historical Stock Chart
From Apr 2024 to May 2024
BNY Mellon Strategic Mun... (NYSE:DSM)
Historical Stock Chart
From May 2023 to May 2024