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:

11/30/21

 

 

 

 
             

 

 

 
 

FORM N-CSR

Item 1. Reports to Stockholders.

 

BNY Mellon Strategic Municipal Bond Fund, Inc.

 

ANNUAL REPORT

November 30, 2021

 

 

 

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

   

Discussion of Fund Performance

2

Fund Performance
and Distribution Information

4

Selected Information

7

Statement of Investments

8

Statement of Assets and Liabilities

27

Statement of Operations

28

Statement of Cash Flows

29

Statement of Changes in Net Assets

30

Financial Highlights

31

Notes to Financial Statements

33

Report of Independent Registered
Public Accounting Firm

42

Additional Information

43

Important Tax Information

57

Information About the Renewal of
the Fund’s Investment Advisory
and Sub-Investment Advisory
Agreements

58

Board Members Information

63

Officers of the Fund

66

Officers and Directors

69

FOR MORE INFORMATION

 

Back Cover

 
 

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DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period of December 1, 2020 through November 30, 2021, as provided by portfolio managers Daniel Rabasco and Jeffrey Burger of Insight North America LLC Sub-Investment Adviser

Market and Fund Performance Overview

For the 12-month period ended November 30, 2021, BNY Mellon Strategic Municipal Bond Fund, Inc. achieved a total return of 6.32% on a net-asset-value basis and a total return of 12.46% on a market price basis.1 Over the same period, the fund paid dividends of $0.36 per share, which reflects a distribution rate of 4.37%.2

During the reporting period, municipal bonds continued to recover from the market turmoil resulting from COVID-19. Investors’ preference for quality assets and protection from potentially higher tax rates also supported the market. The fund’s performance was driven primarily by its security selection, asset allocation and curve positioning decisions.

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 BNY Mellon Investment Adviser, Inc.

The fund also has issued auction-rate preferred stock (ARPS), a percentage of which remains outstanding from its initial public offering, 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. The cost of leverage was relatively low and advantageous to shareholders. Additionally, the enhanced yield generated from the leverage was beneficial to performance. Contributions to the additional duration associated with the leverage were mixed throughout the performance year.

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 also sought to upgrade the fund with newly issued bonds that, in our opinion, have better structural or income characteristics than existing holdings. When such opportunities arise, we evaluate selling bonds that are close to their optional redemption date or maturity.

Strong Demand Continues Amid Political Uncertainty

During the reporting period, the market continued to benefit from policies put in place in response to the COVID-19 pandemic, including support from the Federal Reserve (the “Fed”). This and a number of other factors produced strong inflows to the market during the period. For example, a Democrat-controlled Congress made federal support for state and local governments more likely, and this resulted in a COVID-19 relief package, which included $350 billion in support for state and local governments.

The fiscal health of issuers has continued to be stronger than expected because real-estate and income-tax collections failed to decline as much as predicted. Progressive tax regimes proved beneficial because higher-earning, white-collar workers were less impacted financially by the pandemic. In addition, ongoing federal support to households, school systems, the transportation system and other segments bolstered the economy and prevented sales taxes from declining as much as originally feared.

The election also increased the likelihood of income-tax hikes for higher-income households, adding to the appeal of tax-exempt municipal securities. The prospect of an increase in the corporate tax rate

2

 

made municipal bonds more appealing to institutional buyers, and low interest rates overseas attracted foreign investors to the market.

The latter part of the period was characterized by limited trading volumes and some volatility, given rising Treasury rates. The size and scope of the infrastructure bill being debated in Congress, as well as the stalemate over the debt limit, also contributed to some uncertainties.

Late in the reporting period, the market received support from investors interested in holding quality assets and in protecting their income from potentially higher tax rates. Credit fundamentals, which also remained strong, also helped drive investor demand.

Security Selection, Asset Allocation and Curve Positioning Drove Results

The fund’s performance was driven primarily by security selection, asset allocation and curve positioning decisions. Security selections were especially positive in the education, housing, health care and special tax sectors. Selections in the continuing care segment of health care were especially beneficial. General obligation bonds, especially those issued by the state of Illinois and the City of Chicago, also contributed positively. Curve positioning contributed positively, with longer maturities outperforming intermediate maturities. In our opinion, the distribution policy did not have a material impact on the fund’s investment strategy or distribution of capital.

On the other hand, the fund’s performance was hindered by its security selections in the airport and prepaid gas bond segments. The fund’s overweight positions in transportation, public power and education also detracted from performance, as did its duration positioning. The fund did not use derivatives during the reporting period.

Fundamentals Remain Strong

We are relatively optimistic about the municipal bond market in the short-to-medium term. The strong economy, vaccine distribution and fiscal support from the federal government all have contributed to fundamentals that are better than expected. An increase in infrastructure spending could be beneficial since it would relieve states and municipalities of the need to issue more debt.

On the other hand, Treasury bond yields are expected to rise in 2022, and with a more hawkish stance on inflation, the Fed is expected to raise interest rates in the coming year. Inflation could become a risk, but historically, municipal bonds have outperformed Treasuries when long-term rates rise.

We will continue to emphasize security selection, with a focus on strong fundamentals and attractive valuations, and to look for opportunities to add incremental yield.

December 15, 2021

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. 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 absorption of certain fund expenses by The BNY Mellon Investment Adviser, Inc. pursuant to an undertaking in effect through May 31, 2022, at which time it may be extended, terminated or modified. Had these expenses not been absorbed, the fund’s returns would have been lower.

2 Distribution rate per share is based upon dividends per share paid from net investment income during the period, and divided by the market price per share at the end of the period, adjusted for any capital gain distributions.

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.

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

3

 

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 11/30/11 to a hypothetical investment of $10,000 made in the Index on that date. All figures for the fund are based on market price. All dividends and capital gain distributions are reinvested.

The fund invests primarily in municipal securities and its performance shown in the line graph takes into account fees and expenses. The Index covers the U.S. dollar-denominated long-term tax-exempt bond market. Unlike a fund, the Index is not subject to fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights within this report and elsewhere in this report.

4

 

       

Average Annual Total Returns as of 11/30/2021

 

1 Year

5 Years

10 Years

BNY Mellon Strategic Municipal Bond Fund, Inc.
Market Price

12.46%

5.82%

5.86%

BNY Mellon Strategic Municipal Bond Fund, Inc.
Net Asset Value

6.32%

5.86%

6.41%

Bloomberg U.S. Municipal Bond Index

1.97%

4.38%

3.90%

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.comfor the fund’s most recent month-end returns.

The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares.

5

 

FUND PERFORMANCE (Unaudited) (continued)

DISTRIBUTION INFORMATION

The following information regarding the fund’s distributions is current as of November 30, 2021, 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%

0.00%

0.00%

$0.36

$0.36

$0.00

$0.00

6

 

SELECTED INFORMATION

November 30, 2021 (Unaudited)

                             

Market Price per share November 30, 2021

 

$ 8.24

   

Shares Outstanding November 30, 2021

 

49,421,511

   

New York Stock Exchange Ticker Symbol

 

DSM

   

MARKET PRICE (NEW YORK STOCK EXCHANGE)

 

 

 

Fiscal Year Ended November 30, 2021

 

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Ended

 

Ended

 

Ended

 

Ended

 

February 28, 2021

 

May 31, 2021

 

August 31, 2021

 

November 30, 2021

High

$8.06

 

$8.20

 

$8.58

 

$8.44

Low

7.61

 

7.73

 

8.12

 

7.84

Close

7.79

 

8.16

 

8.44

 

8.24

PERCENTAGE GAIN (LOSS) based on change in Market Price

November 22, 1989 (commencement of operations)

through November 30, 2021

556.74%

December 1, 2011 through November 30, 2021

76.66

December 1, 2016 through November 30, 2021

32.67

December 1, 2020 through November 30, 2021

12.46

March 1, 2021 through November 30, 2021

9.33

June 1, 2021 through November 30, 2021

3.21

September 1, 2021 through November 30, 2021

(1.28)

         

NET ASSET VALUE PER SHARE

 

November 22, 1989 (commencement of operations)

$9.32

November 30, 2020

8.24

February 28, 2021

   

8.22

May 31, 2021

8.44

August 31, 2021

8.48

November 30, 2021

8.38

PERCENTAGE GAIN (LOSS) based on change in Net Asset Value 

 

November 22, 1989 (commencement of operations)

through November 30, 2021

616.64%

December 1, 2011 through November 30, 2021

86.09

December 1, 2016 through November 30, 2021

32.96

December 1, 2020 through November 30, 2021

6.32

March 1, 2021 through November 30, 2021

5.37

June 1, 2021 through November 30, 2021

1.48

September 1, 2021 through November 30, 2021

(0.07)

With dividends reinvested.

 

7

 

STATEMENT OF INVESTMENTS

November 30, 2021

                   
 

Description

Coupon
Rate (%)

 

Maturity

Date

 

Principal

Amount ($)

 

Value ($)

 

Bonds and Notes - .3%

         

Collateralized Municipal-Backed Securities - .3%

         

Arizona Industrial Development Authority, Revenue Bonds, Ser. 2019-2
(cost $1,375,757)

 

3.63

 

5/20/2033

 

1,253,434

 

1,405,129

 
           

 

   

Long-Term Municipal Investments - 143.3%

         

Alabama - 5.7%

         

Alabama Special Care Facilities Financing Authority, Revenue Bonds (Methodist Home for the Aging Obligated Group)

 

5.50

 

6/1/2030

 

1,800,000

 

1,920,042

 

Alabama Special Care Facilities Financing Authority, Revenue Bonds (Methodist Home for the Aging Obligated Group)

 

5.75

 

6/1/2045

 

1,250,000

 

1,309,351

 

Alabama Special Care Facilities Financing Authority, Revenue Bonds (Methodist Home for the Aging Obligated Group)

 

6.00

 

6/1/2050

 

1,500,000

 

1,581,327

 

Jefferson County, Revenue Bonds, Refunding, Ser. F

 

7.75

 

10/1/2046

 

6,000,000

a 

6,202,199

 

Southeast Energy Authority, Revenue Bonds (Project No. 2) Ser. B

 

4.00

 

12/1/2031

 

1,500,000

b 

1,806,330

 

The Lower Alabama Gas District, Revenue Bonds, Ser. A

 

5.00

 

9/1/2046

 

5,000,000

 

7,383,290

 

University of Alabama at Birmingham, Revenue Bonds, Ser. B

 

4.00

 

10/1/2036

 

2,745,000

 

3,254,140

 
 

23,456,679

 

Arizona - 7.2%

         

Arizona Industrial Development Authority, Revenue Bonds (Equitable School Revolving Fund Obligated Group) Ser. A

 

4.00

 

11/1/2050

 

1,500,000

 

1,716,140

 

Arizona Industrial Development Authority, Revenue Bonds (Legacy Cares Project) Ser. A

 

7.75

 

7/1/2050

 

4,305,000

c 

5,167,660

 

Arizona Industrial Development Authority, Revenue Bonds (Phoenix Children's Hospital Obligated Group)

 

4.00

 

2/1/2050

 

1,500,000

 

1,732,235

 

8

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Arizona - 7.2% (continued)

         

Arizona Industrial Development Authority, Revenue Bonds, Refunding (BASIS Schools Projects) Ser. A

 

5.25

 

7/1/2047

 

1,500,000

c 

1,710,223

 

Glendale Industrial Development Authority, Revenue Bonds, Refunding (Sun Health Services Obligated Group) Ser. A

 

5.00

 

11/15/2054

 

1,500,000

 

1,722,394

 

Maricopa County Industrial Development Authority, Revenue Bonds, Refunding (Legacy Traditional Schools Project)

 

5.00

 

7/1/2049

 

1,775,000

c 

2,054,449

 

Salt Verde Financial Corp., Revenue Bonds

 

5.00

 

12/1/2037

 

1,345,000

 

1,887,731

 

Tender Option Bond Trust Receipts (Series 2018-XF2537), (Salt Verde Financial Corporation, Revenue Bonds) Recourse, Underlying Coupon Rate (%) 5.00

 

17.54

 

12/1/2037

 

4,550,000

c,d,e 

6,294,702

 

The Phoenix Industrial Development Authority, Revenue Bonds (Legacy Traditional Schools Project) Ser. A

 

6.75

 

7/1/2044

 

1,000,000

c 

1,135,799

 

The Phoenix Industrial Development Authority, Revenue Bonds, Refunding (BASIS Schools Projects) Ser. A

 

5.00

 

7/1/2046

 

3,000,000

c 

3,307,255

 

The Pima County Industrial Development Authority, Revenue Bonds (American Leadership Academy Project)

 

5.00

 

6/15/2047

 

3,000,000

c 

3,075,511

 
 

29,804,099

 

California - 9.1%

         

Golden State Tobacco Securitization Corp., Revenue Bonds, Refunding, Ser. A1

 

5.00

 

6/1/2047

 

1,000,000

 

1,021,692

 

Jefferson Union High School District, COP (Teacher & Staff Housing Project) (Insured; Build America Mutual)

 

4.00

 

8/1/2055

 

1,500,000

 

1,728,122

 

Tender Option Bond Trust Receipts (Series 2016-XM0379), (Los Angeles Department of Water & Power, Revenue Bonds, Refunding) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.10

 

7/1/2043

 

5,000,000

c,d,e 

5,131,641

 

9

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

California - 9.1% (continued)

         

Tender Option Bond Trust Receipts (Series 2016-XM0387), (Los Angeles Department of Airports, Revenue Bonds (Los Angeles International Airport)) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.04

 

5/15/2038

 

6,000,000

c,d,e 

6,355,961

 

Tender Option Bond Trust Receipts (Series 2016-XM0390), (The Regents of the University of California, Revenue Bonds, Refunding) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.10

 

5/15/2036

 

6,260,000

c,d,e 

6,662,115

 

Tender Option Bond Trust Receipts (Series 2020-XF1220), (North Texas Tollway Authority, Revenue Bonds, Refunding, Ser. B) Non-recourse, Underlying Coupon Rate (%) 3.00

 

10.15

 

1/1/2051

 

10,000,000

c,d,e 

10,467,694

 

Tender Option Bond Trust Receipts (Series 2020-XF2876), (San Francisco California City & County Airport Commission, Revenue Bonds, Refunding, Ser. E) Recourse, Underlying Coupon Rate (%) 5.00

 

17.75

 

5/1/2050

 

5,190,000

c,d,e 

6,332,478

 
 

37,699,703

 

Colorado - 6.3%

         

Belleview Station Metropolitan District No. 2, GO, Refunding

 

5.13

 

12/1/2046

 

2,375,000

 

2,446,250

 

Colorado Educational & Cultural Facilities Authority, Revenue Bonds, Refunding (Johnson & Wales University) Ser. B

 

5.00

 

4/1/2023

 

2,235,000

f 

2,371,007

 

Colorado Health Facilities Authority, Revenue Bonds, Refunding (Covenant Living Communities & Services Obligated Group) Ser. A

 

4.00

 

12/1/2050

 

4,000,000

 

4,563,884

 

Denver City & County Airport System, Revenue Bonds, Refunding, Ser. A

 

5.00

 

12/1/2048

 

2,300,000

 

2,779,675

 

Dominion Water & Sanitation District, Revenue Bonds

 

6.00

 

12/1/2046

 

3,100,000

 

3,172,244

 

Sterling Ranch Community Authority Board, Revenue Bonds (Insured; Municipal Government Guaranteed) Ser. A

 

5.00

 

12/1/2047

 

1,250,000

 

1,310,456

 

10

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Colorado - 6.3% (continued)

         

Tender Option Bond Trust Receipts (Series 2016-XM0385), (Board of Governors of the Colorado State University, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.07

 

3/1/2038

 

4,960,000

c,d,e 

5,017,447

 

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

 

17.12

 

8/1/2044

 

3,260,000

c,d,e 

4,456,180

 
 

26,117,143

 

Connecticut - 1.5%

         

Connecticut, Revenue Bonds, Ser. A

 

5.00

 

5/1/2034

 

1,500,000

 

1,985,900

 

Connecticut, Special Tax Bonds, Ser. A

 

5.00

 

5/1/2038

 

1,000,000

 

1,283,244

 

Connecticut Health & Educational Facilities Authority, Revenue Bonds, Refunding, Ser. S

 

4.00

 

6/1/2051

 

2,000,000

 

2,376,175

 

Connecticut Housing Finance Authority, Revenue Bonds, Refunding, Ser. A1

 

3.65

 

11/15/2032

 

530,000

 

545,082

 
 

6,190,401

 

District of Columbia - 4.0%

         

Metropolitan Washington Airports Authority, Revenue Bonds, Refunding, Ser. B

 

4.00

 

10/1/2049

 

1,000,000

 

1,132,895

 

Tender Option Bond Trust Receipts (Series 2016-XM0437), (District of Columbia, Revenue Bonds) Recourse, Underlying Coupon Rate (%) 5.00

 

18.06

 

12/1/2035

 

14,834,680

c,d,e 

15,490,248

 
 

16,623,143

 

Florida - 8.4%

         

Alachua County Health Facilities Authority, Revenue Bonds (Shands Teaching Hospital & Clinics Obligated Group)

 

4.00

 

12/1/2049

 

1,600,000

 

1,829,459

 

Atlantic Beach, Revenue Bonds (Fleet Landing Project) Ser. A

 

5.00

 

11/15/2048

 

2,500,000

 

2,831,351

 

Florida Higher Educational Facilities Financial Authority, Revenue Bonds (Ringling College Project)

 

5.00

 

3/1/2049

 

2,000,000

 

2,376,603

 

Greater Orlando Aviation Authority, Revenue Bonds, Ser. A

 

4.00

 

10/1/2044

 

1,500,000

 

1,728,714

 

11

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Florida - 8.4% (continued)

         

Lee County Industrial Development Authority, Revenue Bonds (Shell Point/Waterside Health Project)

 

5.00

 

11/15/2049

 

1,540,000

 

1,791,476

 

Palm Beach County Health Facilities Authority, Revenue Bonds (ACTS Retirement-Life Communities Obligated Group)

 

5.00

 

11/15/2045

 

5,775,000

 

6,635,986

 

Palm Beach County Health Facilities Authority, Revenue Bonds (Lifespace Communities Obligated Group) Ser. B

 

4.00

 

5/15/2053

 

2,000,000

 

2,150,885

 

Seminole County Industrial Development Authority, Revenue Bonds, Refunding (Legacy Pointe at UCF Project)

 

5.75

 

11/15/2054

 

1,000,000

 

1,118,937

 

Tender Option Bond Trust Receipts (Series 2019-XF0813), (Fort Myers Florida Utility, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 4.00

 

14.31

 

10/1/2049

 

2,980,000

c,d,e 

3,410,972

 

Tender Option Bond Trust Receipts (Series 2019-XM0782), (Palm Beach County Florida Health Facilities Authority, Revenue Bonds, Refunding (Baptist Health South Florida Obligated Group)) Recourse, Underlying Coupon Rate (%) 4.00

 

14.27

 

8/15/2049

 

5,535,000

c,d,e 

6,337,346

 

Tender Option Bond Trust Receipts (Series 2020-XF2877), (Greater Orlando Aviation Authority, Revenue Bonds, Ser. A) Recourse, Underlying Coupon Rate (%) 4.00

 

14.20

 

10/1/2049

 

4,065,000

c,d,e 

4,636,509

 
 

34,848,238

 

Georgia - 5.3%

         

Atlanta Water & Wastewater, Revenue Bonds, Ser. D

 

3.50

 

11/1/2028

 

600,000

c 

656,769

 

Georgia Municipal Electric Authority, Revenue Bonds, Refunding (Plant Vogtle Units 3&4 Project) Ser. A

 

4.00

 

1/1/2051

 

500,000

 

570,142

 

Tender Option Bond Trust Receipts (Series 2016-XM0435), (Private Colleges & Universities Authority, Revenue Bonds, Refunding (Emory University)) Recourse, Underlying Coupon Rate (%) 5.00

 

18.07

 

10/1/2043

 

6,000,000

c,d,e 

6,417,519

 

12

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Georgia - 5.3% (continued)

         

Tender Option Bond Trust Receipts (Series 2019-XF2847), (Municipal Electric Authority of Georgia, Revenue Bonds (Plant Vogtle Unis 3&4 Project, Ser. A)) Recourse, Underlying Coupon Rate (%) 5.00

 

17.88

 

1/1/2056

 

2,720,000

c,d,e 

3,278,806

 

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

 

15.56

 

7/1/2044

 

4,220,000

c,d,e 

5,256,425

 

The Atlanta Development Authority, Revenue Bonds, Ser. A1

 

5.25

 

7/1/2040

 

1,000,000

 

1,148,464

 

The Burke County Development Authority, Revenue Bonds, Refunding (Oglethorpe Power Corp.) Ser. D

 

4.13

 

11/1/2045

 

4,200,000

 

4,770,147

 
 

22,098,272

 

Hawaii - .7%

         

Hawaii Department of Budget & Finance, Revenue Bonds, Refunding (Hawaiian Electric Co.)

 

4.00

 

3/1/2037

 

2,500,000

 

2,773,811

 

Illinois - 13.6%

         

Chicago Board of Education, GO, Refunding, Ser. A

 

5.00

 

12/1/2033

 

1,250,000

 

1,523,588

 

Chicago Board of Education, GO, Refunding, Ser. B

 

5.00

 

12/1/2032

 

400,000

 

498,060

 

Chicago Board of Education, GO, Refunding, Ser. B

 

5.00

 

12/1/2031

 

500,000

 

623,991

 

Chicago II, GO, Refunding, Ser. A

 

6.00

 

1/1/2038

 

3,000,000

 

3,720,991

 

Chicago II, GO, Refunding, Ser. C

 

5.00

 

1/1/2024

 

1,265,000

 

1,378,908

 

Chicago II, GO, Ser. A

 

5.00

 

1/1/2044

 

3,000,000

 

3,643,601

 

Chicago II Wastewater Transmission, Revenue Bonds, Refunding, Ser. C

 

5.00

 

1/1/2039

 

2,330,000

 

2,618,167

 

Chicago O'Hare International Airport, Revenue Bonds, Refunding, Ser. A

 

5.00

 

1/1/2048

 

4,000,000

 

4,802,271

 

Chicago Transit Authority, Revenue Bonds, Refunding, Ser. A

 

5.00

 

12/1/2045

 

1,000,000

 

1,239,971

 

Illinois, GO, Refunding, Ser. A

 

5.00

 

10/1/2029

 

1,000,000

 

1,228,569

 

Illinois, GO, Ser. A

 

5.00

 

5/1/2038

 

2,850,000

 

3,399,778

 

Illinois, GO, Ser. B

 

5.00

 

11/1/2030

 

1,500,000

 

1,873,669

 

Illinois, GO, Ser. D

 

5.00

 

11/1/2028

 

3,000,000

 

3,626,960

 

13

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Illinois - 13.6% (continued)

         

Illinois Finance Authority, Revenue Bonds, Refunding (Plymouth Place Obligated Group)

 

5.25

 

5/15/2025

 

1,000,000

f 

1,157,896

 

Illinois Toll Highway Authority, Revenue Bonds, Ser. A

 

4.00

 

1/1/2044

 

1,500,000

 

1,744,939

 

Metropolitan Pier & Exposition Authority, Revenue Bonds (McCormick Place Expansion Project)

 

5.00

 

6/15/2057

 

2,500,000

 

2,918,416

 

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

g 

1,761,482

 

Metropolitan Pier & Exposition Authority, Revenue Bonds, Refunding (McCormick Place Project) Ser. B

 

5.00

 

6/15/2052

 

3,550,000

 

3,639,783

 

Metropolitan Pier & Exposition Authority, Revenue Bonds, Refunding (McCormick Place Project) Ser. B

 

5.00

 

12/15/2028

 

2,000,000

 

2,050,582

 

Sales Tax Securitization Corp., Revenue Bonds, Refunding, Ser. A

 

4.00

 

1/1/2039

 

2,250,000

 

2,645,853

 

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

 

18.07

 

10/1/2040

 

9,000,000

c,d,e 

10,316,204

 
 

56,413,679

 

Indiana - 2.1%

         

Indiana Finance Authority, Revenue Bonds (Green Bond)

 

7.00

 

3/1/2039

 

4,425,000

c 

4,199,872

 

Indiana Finance Authority, Revenue Bonds (Parkview Health System Obligated Group) Ser. A

 

5.00

 

11/1/2043

 

3,500,000

 

4,323,232

 
 

8,523,104

 

Iowa - 2.3%

         

Iowa Finance Authority, Revenue Bonds, Refunding (Iowa Fertilizer Co. Project)

 

5.25

 

12/1/2025

 

5,125,000

 

5,522,832

 

Iowa Finance Authority, Revenue Bonds, Refunding (Lifespace Communities Obligated Group) Ser. A

 

4.00

 

5/15/2046

 

1,000,000

 

1,081,765

 

14

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Iowa - 2.3% (continued)

         

Iowa Tobacco Settlement Authority, Revenue Bonds, Refunding, Ser. A2

 

4.00

 

6/1/2049

 

1,400,000

 

1,622,722

 

Iowa Tobacco Settlement Authority, Revenue Bonds, Refunding, Ser. B1

 

4.00

 

6/1/2049

 

1,000,000

 

1,155,340

 
 

9,382,659

 

Kentucky - 1.4%

         

Christian County, Revenue Bonds, Refunding (Jennie Stuart Medical Center Obligated Group)

 

5.50

 

2/1/2044

 

2,800,000

 

3,194,968

 

Kentucky Public Energy Authority, Revenue Bonds, Ser. A1

 

4.00

 

6/1/2025

 

2,560,000

b 

2,827,691

 
 

6,022,659

 

Louisiana - 3.0%

         

Louisiana Local Government Environmental Facilities & Community Development Authority, Revenue Bonds, Refunding (Westlake Chemical Project)

 

3.50

 

11/1/2032

 

2,400,000

 

2,634,934

 

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

 

17.89

 

7/1/2047

 

8,195,000

c,d,e 

9,690,805

 
 

12,325,739

 

Maryland - 2.3%

         

Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Adventist Healthcare Obligated Group) Ser. A

 

5.50

 

1/1/2046

 

3,250,000

 

3,921,345

 

Maryland Health & Higher Educational Facilities Authority, Revenue Bonds, Refunding (Stevenson University Project)

 

4.00

 

6/1/2051

 

1,000,000

 

1,142,190

 

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

 

18.07

 

7/1/2042

 

4,000,000

c,d,e 

4,379,366

 
 

9,442,901

 

15

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Massachusetts - 4.7%

         

Massachusetts Development Finance Agency, Revenue Bonds, Refunding (UMass Memorial Health Care Obligated Group) Ser. K

 

5.00

 

7/1/2038

 

2,130,000

 

2,524,649

 

Massachusetts Development Finance Agency, Revenue Bonds, Refunding, Ser. A

 

5.00

 

7/1/2029

 

1,000,000

 

1,251,640

 

Massachusetts Development Finance Agency, Revenue Bonds, Refunding, Ser. G

 

4.00

 

7/1/2046

 

1,250,000

 

1,473,345

 

Tender Option Bond Trust Receipts (Series 2016-XM0386), (University of Massachusetts Building Authority, Revenue Bonds, Refunding) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.05

 

5/1/2043

 

7,409,991

c,d,e 

7,892,084

 

Tender Option Bond Trust Receipts (Series 2018-XF0610), (Massachusetts Transportation Fund, Revenue Bonds (Rail Enhancement & Accelerated Bridge Programs)) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.37

 

6/1/2047

 

5,250,000

c,d,e 

6,346,684

 
 

19,488,402

 

Michigan - 4.9%

         

Great Lakes Water Authority Sewage Disposal System, Revenue Bonds, Refunding, Ser. C

 

5.00

 

7/1/2036

 

2,000,000

 

2,364,186

 

Michigan Building Authority, Revenue Bonds, Refunding

 

4.00

 

4/15/2054

 

2,500,000

 

2,911,217

 

Michigan Finance Authority, Revenue Bonds, Refunding (Insured; National Public Finance Guarantee Corp.) Ser. D6

 

5.00

 

7/1/2036

 

1,000,000

 

1,108,053

 

Michigan Strategic Fund, Revenue Bonds (AMT-I-75 Improvement Project)

 

5.00

 

6/30/2048

 

5,000,000

 

5,966,366

 

Pontiac School District, GO

 

4.00

 

5/1/2050

 

3,000,000

 

3,502,943

 

Tender Option Bond Trust Receipts (Series 2019-XF2837), (Michigan State Finance Authority, Revenue Bonds (Henry Ford Health System)) Recourse, Underlying Coupon Rate (%) 4.00

 

14.21

 

11/15/2050

 

3,900,000

c,d,e 

4,418,018

 
 

20,270,783

 

16

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Minnesota - 1.1%

         

Duluth Economic Development Authority, Revenue Bonds, Refunding (Essentia Health Obligated Group) Ser. A

 

5.00

 

2/15/2058

 

4,000,000

 

4,734,298

 

Missouri - 2.4%

         

St. Louis Land Clearance for Redevelopment Authority, Revenue Bonds

 

5.13

 

6/1/2046

 

4,755,000

 

5,374,554

 

The Missouri Health & Educational Facilities Authority, Revenue Bonds (Lutheran Senior Services Projects) Ser. A

 

5.00

 

2/1/2042

 

1,000,000

 

1,105,384

 

The Missouri Health & Educational Facilities Authority, Revenue Bonds (Mercy Health)

 

4.00

 

6/1/2050

 

2,000,000

 

2,316,233

 

The Missouri Health & Educational Facilities Authority, Revenue Bonds, Refunding (Lutheran Senior Services Projects)

 

5.00

 

2/1/2046

 

1,200,000

 

1,337,007

 
 

10,133,178

 

Multi-State - .6%

         

Federal Home Loan Mortgage Corp. Multifamily Variable Rate Certificates, Revenue Bonds, Ser. M048

 

3.15

 

1/15/2036

 

2,390,000

c 

2,672,159

 

Nevada - 1.6%

         

Clark County School District, GO (Insured; Assured Guaranty Municipal Corp.) Ser. A

 

4.00

 

6/15/2039

 

950,000

 

1,127,578

 

Reno, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.)

 

4.00

 

6/1/2058

 

5,000,000

 

5,528,440

 
 

6,656,018

 

New Hampshire - .4%

         

New Hampshire Business Finance Authority, Revenue Bonds, Refunding (Springpoint Senior Living Obligated Group)

 

4.00

 

1/1/2051

 

1,500,000

 

1,620,067

 

New Jersey - 5.1%

         

New Jersey, GO (COVID-19 Emergency Bonds) Ser. A

 

4.00

 

6/1/2031

 

1,000,000

 

1,231,006

 

New Jersey Housing & Mortgage Finance Agency, Revenue Bonds, Refunding, Ser. D

 

4.00

 

10/1/2024

 

2,370,000

 

2,569,016

 

New Jersey Transportation Trust Fund Authority, Revenue Bonds

 

5.00

 

6/15/2046

 

1,365,000

 

1,643,342

 

17

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

New Jersey - 5.1% (continued)

         

New Jersey Transportation Trust Fund Authority, Revenue Bonds

 

5.25

 

6/15/2043

 

1,500,000

 

1,838,043

 

New Jersey Turnpike Authority, Revenue Bonds, Ser. A

 

4.00

 

1/1/2051

 

2,400,000

 

2,824,425

 

South Jersey Port Corp., Revenue Bonds, Ser. B

 

5.00

 

1/1/2042

 

2,025,000

 

2,361,354

 

Tender Option Bond Trust Receipts (Series 2018-XF2538), (New Jersey Economic Development Authority, Revenue Bonds) Recourse, Underlying Coupon Rate (%) 5.25

 

18.56

 

6/15/2040

 

4,250,000

c,d,e 

4,843,582

 

Tobacco Settlement Financing Corp., Revenue Bonds, Refunding, Ser. A

 

5.25

 

6/1/2046

 

1,500,000

 

1,796,651

 

Tobacco Settlement Financing Corp., Revenue Bonds, Refunding, Ser. B

 

5.00

 

6/1/2046

 

1,670,000

 

1,948,333

 
 

21,055,752

 

New York - 10.7%

         

Monroe County Industrial Development Corp., Revenue Bonds, Refunding (University of Rochester Project) Ser. A

 

4.00

 

7/1/2050

 

1,500,000

 

1,740,576

 

New York City, GO, Ser. D1

 

4.00

 

3/1/2050

 

4,750,000

 

5,504,092

 

New York Convention Center Development Corp., Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) Ser. B

 

0.00

 

11/15/2049

 

5,600,000

g 

2,641,143

 

New York Liberty Development Corp., Revenue Bonds, Refunding (Class 1-3 World Trade Center Project)

 

5.00

 

11/15/2044

 

3,400,000

c 

3,715,588

 

New York State Dormitory Authority, Revenue Bonds, Refunding (Montefiore Obligated Group) Ser. A

 

4.00

 

9/1/2045

 

1,000,000

 

1,144,074

 

New York Transportation Development Corp., Revenue Bonds (LaGuardia Airport Terminal B Redevelopment Project) Ser. A

 

5.25

 

1/1/2050

 

3,000,000

 

3,332,937

 

New York Transportation Development Corp., Revenue Bonds, Refunding (JFK International Air Terminal) Ser. A

 

5.00

 

12/1/2035

 

1,100,000

 

1,385,753

 

Niagara Area Development Corp., Revenue Bonds, Refunding (Covanta Holding Project) Ser. A

 

4.75

 

11/1/2042

 

1,000,000

c 

1,040,493

 

18

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

New York - 10.7% (continued)

         

Port Authority of New York & New Jersey, Revenue Bonds, Refunding, Ser. 223

 

4.00

 

7/15/2051

 

2,250,000

 

2,611,427

 

Tender Option Bond Trust Receipts (Series 2016-XM0436), (New York City Municipal Water Finance Authority, Revenue Bonds, Refunding) Recourse, Underlying Coupon Rate (%) 5.00

 

18.07

 

6/15/2044

 

12,600,000

c,d,e 

12,621,441

 

Tender Option Bond Trust Receipts (Series 2020-XM0826), (Metropolitan Transportation Authority, Revenue Bonds, Refunding (Green Bond) (Insured; Assured Guaranty Municipal Corp., Ser. C)) Non-recourse, Underlying Coupon Rate (%) 4.00

 

14.16

 

11/15/2046

 

6,100,000

c,d,e 

7,060,461

 

Westchester County Local Development Corp., Revenue Bonds (Purchase Senior Learning Community Obligated Group)

 

5.00

 

7/1/2056

 

1,500,000

c 

1,604,795

 
 

44,402,780

 

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

 

2,170,114

 

North Carolina Turnpike Authority, Revenue Bonds (Insured; Assured Guaranty Municipal Corp.)

 

4.00

 

1/1/2055

 

1,500,000

 

1,733,335

 
 

3,903,449

 

Ohio - 4.0%

         

Buckeye Tobacco Settlement Financing Authority, Revenue Bonds, Refunding, Ser. A2

 

4.00

 

6/1/2048

 

1,250,000

 

1,414,168

 

Buckeye Tobacco Settlement Financing Authority, Revenue Bonds, Refunding, Ser. B2

 

5.00

 

6/1/2055

 

10,650,000

 

12,228,504

 

Centerville, Revenue Bonds, Refunding (Graceworks Lutheran Services Obligated Group)

 

5.25

 

11/1/2047

 

1,500,000

 

1,651,708

 

Cuyahoga County, Revenue Bonds, Refunding (The MetroHealth System)

 

5.00

 

2/15/2052

 

1,000,000

 

1,168,899

 
 

16,463,279

 

19

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Oregon - .6%

         

Medford Hospital Facilities Authority, Revenue Bonds, Refunding (Asante Project) Ser. A

 

4.00

 

8/15/2039

 

1,000,000

 

1,186,741

 

Yamhill County Hospital Authority, Revenue Bonds, Refunding (Friendsview Manor Obligated Group) Ser. A

 

5.00

 

11/15/2056

 

1,000,000

 

1,156,604

 
 

2,343,345

 

Pennsylvania - 3.5%

         

Allentown School District, GO, Refunding (Insured; Build America Mutual) Ser. B

 

5.00

 

2/1/2031

 

1,510,000

 

1,920,051

 

Crawford County Hospital Authority, Revenue Bonds, Refunding (Meadville Medical Center Project) Ser. A

 

6.00

 

6/1/2046

 

1,000,000

 

1,121,019

 

Franklin County Industrial Development Authority, Revenue Bonds (Menno-Haven Project)

 

5.00

 

12/1/2054

 

1,000,000

 

1,088,704

 

Pennsylvania Economic Development Financing Authority, Revenue Bonds, Refunding

 

4.00

 

7/1/2046

 

1,000,000

 

1,113,089

 

Pennsylvania Higher Educational Facilities Authority, Revenue Bonds, Refunding (University of Sciences)

 

5.00

 

11/1/2033

 

2,805,000

 

3,176,348

 

Pennsylvania Turnpike Commission, Revenue Bonds, Ser. A

 

4.00

 

12/1/2050

 

1,500,000

 

1,732,548

 

Philadelphia Water & Wastewater, Revenue Bonds, Ser. A

 

5.00

 

11/1/2050

 

1,500,000

 

1,892,246

 

The Philadelphia School District, GO (Insured; State Aid Withholding) Ser. A

 

4.00

 

9/1/2039

 

2,000,000

 

2,333,500

 
 

14,377,505

 

Rhode Island - .1%

         

Providence Public Building Authority, Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) Ser. A

 

5.00

 

9/15/2037

 

500,000

 

620,147

 

South Carolina - 2.9%

         

South Carolina Jobs-Economic Development Authority, Revenue Bonds (Bishop Gadsden Episcopal Retirement Community Obligated Group)

 

5.00

 

4/1/2054

 

1,000,000

 

1,131,969

 

20

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

South Carolina - 2.9% (continued)

         

Tender Option Bond Trust Receipts (Series 2016-XM0384), (South Carolina Public Service Authority, Revenue Bonds, Refunding (Santee Cooper)) Non-recourse, Underlying Coupon Rate (%) 5.13

 

13.97

 

12/1/2043

 

10,200,000

c,d,e 

11,087,830

 
 

12,219,799

 

Tennessee - .8%

         

Tender Option Bond Trust Receipts (Series 2016-XM0388), (Metropolitan Government of Nashville & Davidson County, Revenue Bonds, Refunding) Non-recourse, Underlying Coupon Rate (%) 5.00

 

17.86

 

7/1/2040

 

3,000,000

c,d,e 

3,215,737

 

Texas - 10.7%

         

Central Texas Regional Mobility Authority, Revenue Bonds

 

5.00

 

1/1/2048

 

2,500,000

 

2,975,763

 

Central Texas Regional Mobility Authority, Revenue Bonds, Ser. A

 

5.00

 

7/1/2025

 

1,500,000

f 

1,737,983

 

Clifton Higher Education Finance Corp., Revenue Bonds (Uplift Education) Ser. A

 

4.50

 

12/1/2044

 

2,500,000

 

2,667,004

 

Clifton Higher Education Finance Corp., Revenue Bonds, Ser. A

 

5.75

 

8/15/2045

 

2,500,000

 

2,845,379

 

Clifton Higher Education Finance Corp., Revenue Bonds, Ser. D

 

6.13

 

8/15/2048

 

3,000,000

 

3,451,028

 

Grand Parkway Transportation Corp., Revenue Bonds, Refunding

 

4.00

 

10/1/2049

 

2,000,000

 

2,319,337

 

Harris County-Houston Sports Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. A

 

0.00

 

11/15/2051

 

7,500,000

g 

2,090,368

 

Love Field Airport Modernization Corp., Revenue Bonds (Southwest Airlines Co. Project)

 

5.00

 

11/1/2028

 

1,000,000

 

1,042,042

 

Tarrant County Cultural Education Facilities Finance Corp., Revenue Bonds, Refunding (MRC Stevenson Oaks Project)

 

6.75

 

11/15/2051

 

1,000,000

 

1,175,088

 

Tender Option Bond Trust Receipts (Series 2016-XM0377), (San Antonio, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.00

 

18.07

 

2/1/2043

 

12,450,000

c,d,e 

13,123,059

 

Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds (Segment 3C Project)

 

5.00

 

6/30/2058

 

6,150,000

 

7,393,329

 

21

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Texas - 10.7% (continued)

         

Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds, Refunding (LBJ Infrastructure Group)

 

4.00

 

6/30/2040

 

1,350,000

 

1,587,025

 

Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds, Refunding (LBJ Infrastructure Group)

 

4.00

 

6/30/2039

 

1,500,000

 

1,767,877

 
 

44,175,282

 

U.S. Related - 2.4%

         

Puerto Rico, GO, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. A

 

5.00

 

7/1/2035

 

2,500,000

 

2,519,302

 

Puerto Rico, GO, Refunding, Ser. A

 

8.00

 

7/1/2035

 

5,965,000

h 

5,234,287

 

Puerto Rico Highway & Transportation Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. CC

 

5.25

 

7/1/2034

 

2,000,000

 

2,169,800

 
 

9,923,389

 

Utah - .6%

         

Utah Infrastructure Agency, Revenue Bonds, Refunding, Ser. A

 

5.00

 

10/15/2037

 

2,000,000

 

2,355,828

 

Virginia - 5.3%

         

Chesterfield County Economic Development Authority, Revenue Bonds, Refunding (Brandermill Woods Project)

 

5.13

 

1/1/2043

 

700,000

 

702,788

 

Henrico County Economic Development Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.)

 

11.52

 

8/23/2027

 

4,300,000

d 

5,720,043

 

Tender Option Bond Trust Receipts (Series 2018-XM0593), (Hampton Roads Transportation Accountability Commission, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.50

 

20.41

 

7/1/2057

 

7,500,000

c,d,e 

9,280,486

 

Virginia College Building Authority, Revenue Bonds (Green Bond) (Marymount University Project)

 

5.00

 

7/1/2045

 

1,000,000

c 

1,055,898

 

Virginia Small Business Financing Authority, Revenue Bonds (Transform 66 P3 Project)

 

5.00

 

12/31/2052

 

4,350,000

 

5,174,776

 
 

21,933,991

 

22

 

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Washington - 4.5%

         

King County School District No. 210, GO (Insured; School Bond Guaranty)

 

4.00

 

12/1/2034

 

2,000,000

 

2,347,793

 

Port of Seattle, Revenue Bonds

 

4.00

 

4/1/2044

 

1,000,000

 

1,133,148

 

Tender Option Bond Trust Receipts (Series 2018-XM0680), (Washington Convention Center Public Facilities District, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.00

 

9.09

 

7/1/2058

 

10,000,000

c,d,e 

11,979,154

 

Washington Higher Education Facilities Authority, Revenue Bonds (Seattle University Project)

 

4.00

 

5/1/2050

 

1,200,000

 

1,370,020

 

Washington Housing Finance Commission, Revenue Bonds (Transforming Age Project) Ser. A

 

5.00

 

1/1/2055

 

1,465,000

c 

1,634,560

 
 

18,464,675

 

Wisconsin - 2.6%

         

Public Finance Authority, Revenue Bonds (Appalachian State University Project) (Insured; Assured Guaranty Municipal Corp.) Ser. A

 

4.00

 

7/1/2055

 

1,750,000

 

1,955,283

 

Public Finance Authority, Revenue Bonds (CHF - Wilmington) (Insured; Assured Guaranty Municipal Corp.)

 

5.00

 

7/1/2058

 

3,665,000

 

4,346,443

 

Public Finance Authority, Revenue Bonds (Gannon University Project)

 

5.00

 

5/1/2042

 

750,000

 

872,790

 

Public Finance Authority, Revenue Bonds, Refunding (Mary's Woods At Marylhurst Project)

 

5.25

 

5/15/2042

 

750,000

c 

819,260

 

23

 

STATEMENT OF INVESTMENTS (continued)

                   
 

Description

Coupon
Rate (%)

 

 Maturity Date

 

Principal Amount ($)

 

Value ($)

 

Long-Term Municipal Investments - 143.3% (continued)

         

Wisconsin - 2.6% (continued)

         

Wisconsin Health & Educational Facilities Authority, Revenue Bonds (Children's Hospital of Wisconsin Obligated Group)

 

4.00

 

8/15/2050

 

1,135,000

 

1,327,319

 

Wisconsin Health & Educational Facilities Authority, Revenue Bonds, Refunding (St. Camillus Health System Obligated Group)

 

5.00

 

11/1/2054

 

1,250,000

 

1,386,036

 
 

10,707,131

 

Total Long-Term Municipal Investments
(cost $542,538,472)

 

593,459,224

 

Total Investments (cost $543,914,229)

 

143.6%

594,864,353

 

Liabilities, Less Cash and Receivables

 

(31.7%)

(131,302,485)

 

Preferred Stock, at redemption value

 

(11.9%)

(49,300,000)

 

Net Assets Applicable to Common Shareholders

 

100.0%

414,261,868

 

a Zero coupon until a specified date at which time the stated coupon rate becomes effective until maturity.

b These securities have a put feature; the date shown represents the put date and the bond holder can take a specific action to retain the bond after the put date.

c 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, 2021, these securities were valued at $245,651,245 or 59.3% of net assets.

d The Variable Rate shall be 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 These securities are prerefunded; the date shown represents the prerefunded date. Bonds which are prerefunded are collateralized by U.S. Government securities which are held in escrow and are used to pay principal and interest on the municipal issue and to retire the bonds in full at the earliest refunding date.

g Security issued with a zero coupon. Income is recognized through the accretion of discount.

h Non-income producing—security in default.

24

 

   

Portfolio Summary (Unaudited)

Value (%)

General

25.9

Education

18.7

Transportation

18.1

Medical

15.3

Nursing Homes

12.6

Water

11.3

General Obligation

8.1

Airport

7.2

Development

5.5

Tobacco Settlement

5.1

Power

4.8

School District

3.3

Utilities

3.2

Housing

1.5

Prerefunded

1.3

Multifamily Housing

1.0

Single Family Housing

.7

 

143.6

 Based on net assets.

See notes to financial statements.

25

 

       
 

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

U.S. T-Bill

U.S. Treasury Bill Money Market Yield

XLCA

XL Capital Assurance

       

See notes to financial statements.

26

 

STATEMENT OF ASSETS AND LIABILITIES

November 30, 2021

             

 

 

 

 

 

 

 

 

 

 

Cost

 

Value

 

Assets ($):

 

 

 

 

Investments in securities—See Statement of Investments

543,914,229

 

594,864,353

 

Cash

 

 

 

 

48,111

 

Interest receivable

 

8,127,387

 

Prepaid expenses

 

 

 

 

12,627

 

 

 

 

 

 

603,052,478

 

Liabilities ($):

 

 

 

 

Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 2(b)

 

250,139

 

Payable for floating rate notes issued—Note 3

 

138,704,671

 

Interest and expense payable related to
floating rate notes issued—Note 3

 

397,606

 

Commissions payable—Note 1

 

22,500

 

Directors’ fees and expenses payable

 

2,673

 

Dividends payable to Preferred Shareholders

 

808

 

Other accrued expenses

 

 

 

 

112,213

 

 

 

 

 

 

139,490,610

 

Auction Preferred Stock, Series A, B and C, par value $.001 per share (1,972 shares issued and outstanding at $25,000 per share liquidation value)—Note 1

 

49,300,000

 

Net Assets Applicable to Common Shareholders ($)

 

 

414,261,868

 

Composition of Net Assets ($):

 

 

 

 

Common Stock, par value, $.001 per share
(49,421,511 shares issued and outstanding)

 

 

 

 

49,422

 

Paid-in capital

 

 

 

 

368,326,701

 

Total distributable earnings (loss)

 

 

 

 

45,885,745

 

Net Assets Applicable to Common Shareholders ($)

 

 

414,261,868

 

         

Shares Outstanding

 

 

(110 million shares authorized)

49,421,511

 

Net Asset Value Per Share of Common Stock ($)

 

8.38

 

 

 

 

 

 

See notes to financial statements.

 

 

  

 

27

 

STATEMENT OF OPERATIONS

Year Ended November 30, 2021

             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income ($):

 

 

 

 

Interest Income

 

 

22,740,027

 

Expenses:

 

 

 

 

Investment advisory fee—Note 2(a)

 

 

2,322,370

 

Administration fee—Note 2(a)

 

 

1,161,185

 

Interest and expense related to floating rate notes issued—Note 3

 

 

1,050,063

 

Professional fees

 

 

169,016

 

Commission fees—Note 1

 

 

88,562

 

Registration fees

 

 

48,169

 

Directors’ fees and expenses—Note 2(c)

 

 

43,396

 

Shareholders’ reports

 

 

38,161

 

Shareholder servicing costs

 

 

12,408

 

Chief Compliance Officer fees—Note 2(b)

 

 

8,417

 

Custodian fees—Note 2(b)

 

 

4,332

 

Miscellaneous

 

 

40,029

 

Total Expenses

 

 

4,986,108

 

Less—reduction in expenses due to undertaking—Note 2(a)

 

 

(464,474)

 

Less—reduction in fees due to earnings credits—Note 2(b)

 

 

(3,264)

 

Net Expenses

 

 

4,518,370

 

Investment Income—Net

 

 

18,221,657

 

Realized and Unrealized Gain (Loss) on Investments—Note 3 ($):

 

 

Net realized gain (loss) on investments

(936,258)

 

Net change in unrealized appreciation (depreciation) on investments

7,729,741

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

6,793,483

 

Dividends to Preferred Shareholders

 

 

(50,742)

 

Net Increase in Net Assets Applicable to Common
Shareholders Resulting from Operations

 

24,964,398

 

 

 

 

 

 

 

 

See notes to financial statements.

         

28

 

STATEMENT OF CASH FLOWS

Year Ended November 30, 2021

             

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities ($):

 

 

 

 

 

Purchases of portfolio securities

 

(45,209,402)

 

 

 

Proceeds from sales of portfolio securities

57,529,124

 

 

 

Dividends paid to Preferred Shareholders

(50,948)

 

 

 

Interest receivable

 

23,073,750

 

 

 

Interest and expense related to floating rate notes issued

 

(1,066,867)

 

 

 

Paid to BNY Mellon Investment Adviser, Inc. and affiliates

 

(3,025,006)

 

 

 

Operating expenses paid

 

(456,295)

 

 

 

Net Cash Provided (or Used) in Operating Activities

 

 

 

30,794,356

 

Cash Flows from Financing Activities ($):

 

 

 

 

 

Dividends paid to Common Shareholders

 

(17,791,743)

 

 

 

Decrease in payable for floating rate notes issued

 

(13,480,000)

 

 

 

Net Cash Provided (or Used) in Financing Activities

 

(31,271,743)

 

Net Increase (Decrease) in Cash

 

(477,387)

 

Cash at beginning of period

 

525,498

 

Cash at End of Period

 

48,111

 

Reconciliation of Net Increase (Decrease) in Net Assets Applicable to

 

 

 

 

Common Shareholders Resulting from Operations to

 

 

 

 

Net Cash Provided (or Used) in Operating Activities ($):

 

 

 

Net Increase in Net Assets Resulting From Operations

 

24,964,398

 

Adjustments to Reconcile Net Increase in Net Assets

 

 

 

 

Applicable to Common Shareholders Resulting from

 

 

 

 

Operations to Net Cash Provided (or Used) in Operating Activities ($):

 

 

 

Decrease in investments in securities at cost

 

14,602,325

 

Decrease in interest receivable

 

333,723

 

Decrease in prepaid expenses

 

119

 

Increase in Due to BNY Mellon Investment Adviser, Inc. and affiliates

 

6,824

 

Decrease in payable for investment securities purchased

 

(1,346,345)

 

Decrease in interest and expense payable related to floating rate notes issued

 

(16,804)

 

Decrease in dividends payable to Preferred Shareholders

 

(206)

 

Decrease in Directors' fees and expenses payable

 

(22,896)

 

Increase in commissions payable and other accrued expenses

 

2,959

 

Net change in unrealized (appreciation) depreciation on investments

 

(7,729,741)

 

Net Cash Provided (or Used) in Operating Activities

 

30,794,356

 

 

 

 

 

 

 

 

See notes to financial statements.

         

29

 

STATEMENT OF CHANGES IN NET ASSETS

                   

 

 

 

 

Year Ended November 30,

 

 

 

 

2021

 

2020

 

Operations ($):

 

 

 

 

 

 

 

 

Investment income—net

 

 

18,221,657

 

 

 

19,809,340

 

Net realized gain (loss) on investments

 

(936,258)

 

 

 

(7,022,793)

 

Net change in unrealized appreciation
(depreciation) on investments

 

7,729,741

 

 

 

2,628,636

 

Dividends to Preferred Shareholders

 

 

(50,742)

 

 

 

(592,434)

 

Net Increase (Decrease) in Net Assets Applicable
to Common Shareholders Resulting from
Operations

24,964,398

 

 

 

14,822,749

 

Distributions ($):

 

Distributions to Common Shareholders

 

 

(17,791,743)

 

 

 

(17,792,020)

 

Capital Stock Transactions ($):

 

Distributions reinvested

 

 

-

 

 

 

86,478

 

Increase (Decrease) in Net Assets
from Capital Stock Transactions

-

 

 

 

86,478

 

Total Increase (Decrease) in Net Assets
Applicable to Common Shareholders

7,172,655

 

 

 

(2,882,793)

 

Net Assets Applicable to Common Shareholders ($):

 

Beginning of Period

 

 

407,089,213

 

 

 

409,972,006

 

End of Period

 

 

414,261,868

 

 

 

407,089,213

 

Capital Share Transactions (Common Shares):

 

Shares issued for distributions reinvested

 

 

-

 

 

 

10,449

 

Net Increase (Decrease) in Shares Outstanding

-

 

 

 

10,449

 

 

 

 

 

 

 

 

 

 

 

See notes to financial statements.

               

30

 

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,

 

2021

2020

2019

2018

2017

Per Share Data ($):

           

Net asset value, beginning of period

 

8.24

8.30

7.91

8.29

8.19

Investment Operations:

           

Investment income—neta

 

.37

.40

.41

.47

.49

Net realized and unrealized
gain (loss) on investments

 

.13

(.09)

.43

(.43)

.13

Dividends to Preferred Shareholders
from investment income—net

 

(.00)b

(.01)

(.03)

(.03)

(.02)

Total from Investment Operations

 

.50

.30

.81

.01

.60

Distributions to Common Shareholders:

           

Dividends from investment
income—net

 

(.36)

(.36)

(.42)

(.43)

(.50)

Net asset value resulting from Auction
Preferred Stock tender as a discount

 

-

-

-

.04

-

Net asset value, end of period

 

8.38

8.24

8.30

7.91

8.29

Market value, end of period

 

8.24

7.66

8.19

7.13

8.40

Market Price Total Return (%)

 

12.46

(1.87)

21.12

(10.14)

10.46

31

 

FINANCIAL HIGHLIGHTS (continued)

               
     
 

Year Ended November 30,

 

2021

2020

2019

2018

2017

Ratios/Supplemental Data (%):

           

Ratio of total expenses to
average net assets
applicable to Common Stockc

 

1.20

1.56

1.86

1.73

1.41

Ratio of net expenses to
average net assets
applicable to Common Stockc

 

1.09

1.44

1.75

1.62

1.28

Ratio of interest and expense related to
floating rate notes issued to average net
assets applicable to Common Stockc

 

.25

.60

.90

.72

.35

Ratio of net investment income to
average net assets
applicable to Common Stockc

 

4.39

4.98

5.05

5.78

5.87

Ratio of total expenses to
total average net assets

 

1.07

1.38

1.66

1.51

1.15

Ratio of net expenses to
total average net assets

 

.97

1.28

1.56

1.41

1.05

Ratio of interest and expense related to
floating rate notes issued to
total average net assets

 

.23

.53

.80

.63

.29

Ratio of net investment income to
total average net assets

 

3.92

4.43

4.50

5.02

4.79

Portfolio Turnover Rate

 

9.10

26.56

41.28

24.57

11.20

Asset Coverage of Preferred Stock,
end of period

 

940

926

932

892

540

Net Assets, applicable to
Common Shareholders,
end of period ($ x 1,000)

 

414,262

407,089

409,972

390,350

409,095

Preferred Stock Outstanding,
end of period ($ x 1,000)

 

49,300

49,300

49,300

49,300

93,000

Floating Rate Notes Outstanding,
end of period ($ x 1,000)

 

138,705

152,185

182,074

162,357

109,669

a Based on average common shares outstanding.

b Amount represents less than $.01 per share.

c Does not reflect the effect of dividends to Preferred Shareholders.

See notes to financial statements.

32

 

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. Effective September 1, 2021 (the “Effective Date”), the Adviser has engaged its affiliate, Insight North America LLC (the “Sub-Adviser”), as the fund’s sub-investment adviser pursuant to a sub-investment advisory agreement between the Adviser and Sub-Adviser. As the fund’s sub-investment adviser, the Sub-Adviser provides the day-to-day management of the fund’s investments, subject to the Adviser’s supervision and approval. The Adviser (and not the fund) pays the Sub-Adviser for its sub-advisory services. As of the Effective Date, portfolio managers responsible for managing the fund’s investments who were employees of Mellon Investments Corporation (“Mellon”) in a dual employment arrangement with the Adviser, have become employees of the Sub-Adviser, and are no longer employees of Mellon. The fund’s Common Stock trades on the New York Stock Exchange (the “NYSE”) under the ticker symbol DSM.

The fund has outstanding 698 Series A shares, 662 Series B shares and 612 Series C shares, 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 are determined pursuant to periodic auctions or by reference to a market rate. Deutsche Bank Trust Company America, as the Auction Agent, receives a fee from the fund for its services in connection with such auctions. The fund also compensates broker-dealers generally at an annual rate of .15%-.25% of the purchase price of shares of APS.

The fund is subject to certain restrictions relating to the APS. Failure to comply with these restrictions could preclude the fund from declaring any distributions to shareholders of Common Stock (“Common Shareholders”) or repurchasing shares of Common Stock and/or could trigger the mandatory redemption of APS at liquidation value. Thus, redemptions of APS may be deemed to be outside of the control of the fund.

The holders of APS, voting as a separate class, have the right to elect at least two directors. The holders of APS will vote as a separate class on

33

 

NOTES TO FINANCIAL STATEMENTS (continued)

certain other matters, as required by law. 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 APS.

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

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

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

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

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

34

 

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

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

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:

Investments in 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). Debt investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of the following: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. All of the preceding securities are generally categorized within Level 2 of the fair value hierarchy.

The Service is engaged under the general oversight of the Board.

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.

35

 

NOTES TO FINANCIAL STATEMENTS (continued)

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, 2021 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:

   

Collateralized Municipal-Backed Securities

-

1,405,129

 

-

1,405,129

 

Municipal Securities

-

593,459,224

 

-

593,459,224

 

Liabilities ($)

   

Other Financial Instruments:

   

Floating Rate Notes††

-

(138,704,671)

 

-

(138,704,671)

 

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

†† Certain of the fund’s liabilities are held at carrying amount, which approximates fair value for financial reporting purposes.

(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed delivery basis may be settled a month or more after the trade date.

(c) 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 world-wide. Recent

36

 

examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. The COVID-19 pandemic has had, and any other outbreak of an infectious disease or other serious public health concern could have, a significant negative impact on economic and market conditions and could trigger a prolonged period of global economic slowdown. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund's exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.

(d) Dividends and distributions to Common Shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net 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 Shareholders will have their distributions reinvested in additional shares of the fund, unless such Common Shareholders 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, 2021, the Board declared a cash dividend of $.030 per share from investment income-net, payable on December 31, 2021 to Common shareholders of record as of the close of business on December 14, 2021. The ex-dividend date was December 13, 2021.

(e) Dividends and distributions to shareholders of APS: Dividends, which are cumulative, are generally reset every seven days for each series of APS pursuant to a process specified in related fund charter documents.

37

 

NOTES TO FINANCIAL STATEMENTS (continued)

Dividend rates as of November 30, 2021, for each series of APS were as follows: Series A-0.110%, Series B-0.110% and Series C-0.110%. These rates reflect the “maximum rates” under the governing instruments as a result of “failed auctions” in which sufficient clearing bids are not received. The average dividend rates for the period ended November 30, 2021 for each series of APS were as follows: Series A-0.103%, Series B-0.102% and Series C-0.103%.

(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, 2021, 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, 2021, the fund did not incur any interest or penalties.

Each tax year in the four-year period ended November 30, 2021 remains subject to examination by the Internal Revenue Service and state taxing authorities.

At November 30, 2021, the components of accumulated earnings on a tax basis were as follows: undistributed tax-exempt income $3,112,851, accumulated capital losses $8,624,863 and unrealized appreciation $51,398,565.

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, 2021. The fund has $6,379,671 of short-term capital losses and $2,245,192 of long-term capital losses which can be carried forward for an unlimited period.

The tax character of distributions paid to shareholders during the fiscal periods ended November 30, 2021 and November 30, 2020 were as follows: tax-exempt income $17,842,485 and $18,180,918, and ordinary income $0 and $203,536, respectively.

(g) New accounting pronouncements:In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial

38

 

Reporting (“ASU 2020-04”), and in January 2021, the FASB issued Accounting Standards Update 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the LIBOR and other interbank offered rates as of the end of 2021. The temporary relief provided by ASU 2020-04 and ASU 2021-01 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 and ASU 2021-01 on the fund’s investments, derivatives, debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform. Management is also currently actively working with other financial institutions and counterparties to modify contracts as required by applicable regulation and within the regulatory deadlines.

NOTE 2—Investment Advisory Fee, Sub-Investment 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, inclusive of the outstanding APS, 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, inclusive of the outstanding APS. 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, 2020 through May 31, 2022, to waive receipt of a portion of the fund’s investment advisory fee, in the amount of .10% of the value of the fund’s average weekly net assets (including net assets representing APS outstanding). The reduction in expenses, pursuant to the undertaking, amounted to $464,474 during the period ended November 30, 2021.

As of the Effective Date, 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).

39

 

NOTES TO FINANCIAL STATEMENTS (continued)

(b) The fund compensates the Custodian under a custody agreement for providing custodial services for the fund. These fees are determined based on transaction activity. During the period ended November 30, 2021, the fund was charged $4,332 for out-of-pocket and custody transaction expenses, pursuant to the custody agreement. These fees were partially offset by earnings credits of the amount of $3,264.

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 custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.

During the period ended November 30, 2021, the fund was charged $8,417 for services performed by the Chief Compliance Officer and his staff. These fees are included in Chief Compliance Officer fees in the Statement of Operations.

The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: investment advisory fees of $189,741, Administration fees of $94,566, Custodian fees of $2,734 and Chief Compliance Officer fees of $3,538, which are offset against an expense reimbursement currently in effect in the amount of $40,440.

(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, 2021, amounted to $43,775,591 and $41,613,008, 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

40

 

interest on the other securities and various expenses of the Inverse Floater Trust. An Inverse Floater Trust may be collapsed without the consent of the fund due to certain termination events such as bankruptcy, default or other credit event.

The fund accounts for the transfer of bonds to the Inverse Floater Trust as secured borrowings, with the securities transferred remaining in the fund’s investments, and the Trust Certificates reflected as fund liabilities in the Statement of Assets and Liabilities.

The fund may invest in inverse floater securities on either a non-recourse or recourse basis. These securities are typically supported by a liquidity facility provided by a bank or other financial institution (the “Liquidity Provider”) that allows the holders of the Trust Certificates to tender their certificates in exchange for payment from the Liquidity Provider of par plus accrued interest on any business day prior to a termination event. When the fund invests in inverse floater securities on a non-recourse basis, the Liquidity Provider is required to make a payment under the liquidity facility due to a termination event to the holders of the Trust Certificates. When this occurs, the Liquidity Provider typically liquidates all or a portion of the municipal securities held in the Inverse Floater Trust. A liquidation shortfall occurs if the Trust Certificates exceed the proceeds of the sale of the bonds in the Inverse Floater Trust (“Liquidation Shortfall”). When a fund invests in inverse floater securities on a recourse basis, the fund typically enters into a reimbursement agreement with the Liquidity 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, 2021 was approximately $139,678,945, with a related weighted average annualized interest rate of .75%.

At November 30, 2021, the cost of investments for federal income tax purposes was $404,761,117; accordingly, accumulated net unrealized appreciation on investments was $51,398,565, consisting of $51,939,726 gross unrealized appreciation and $541,161 gross unrealized depreciation.

41

 

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, 2021, 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, 2021, 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, 2021, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

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

New York, New York
January 24, 2022

42

 

ADDITIONAL INFORMATION (Unaudited)

Dividend Reinvestment Plan

Under the fund’s Dividend Reinvestment Plan (the “Plan”), a Common Shareholder 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 Shareholder 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 Shareholder 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 Shareholder 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 Shareholder’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 Shareholder 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

43

 

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 seek 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 ordinary invests all of its net assets in municipal obligations that provide income exempt from federal 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 Adviser in the case of bonds, and in the two highest rating categories of Moody’s, S&P or Fitch or the unrated equivalent as determined by the Adviser in the case of short term obligations having or deemed to have maturities of less than one year. 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 primarily in bonds rated no lower than Ba by Moody’s and BB by S&P and Fitch. Bonds rated

44

 

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 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, for temporary defensive purposes and after the closing of this offering as the fund selects longer term municipal obligations to purchase for its portfolio.

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 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

45

 

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 45 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.

Use of Derivatives. The fund may invest in, or enter into, certain types of derivatives, such as futures, options and swap transactions, including interest rate swaps, interest rate locks, caps, collars and floors, for a variety of reasons, including to increase current income, reduce fluctuations in net asset value and protect against a decline in the value of municipal obligations held by the fund or an increase in the price of municipal obligations the fund proposes to purchase in the future. The fund’s ability to engage in certain derivative transactions may be limited as a condition to S&P’s “AAA” rating of the fund’s APS. The fund will limit its use of derivatives that do not constitute municipal obligations to 20% of the its net assets.

The fund may purchase call and put options and may write (i.e., sell) covered call and put option contracts on specific municipal obligations. The fund generally would purchase these call options to protect the fund from the issuer of the related municipal obligation redeeming, or other holder of the call option from calling away, the municipal obligation before maturity. The sale by the fund of a call option it owns on a specific municipal obligation could result in the receipt of taxable income by the fund.

A futures contract is an agreement between two parties to buy and sell a security for a set price on a future date. These contracts are traded on exchanges, so that, in most

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cases, either party can close out its position on the exchange for cash, without delivering the security. An option on a futures contract gives the holder of the option the right to buy from or sell to the writer of the option a position in a futures contract at a specified price on or before a specified expiration date. The fund may invest in futures contracts and options on futures contracts, including those with respect to interest rates, securities, and security indexes. The fund may enter into futures contracts and options thereon in U.S. domestic markets. Futures contracts may be based on various debt securities and securities indexes (such as the Municipal Bond Index traded on the Chicago Board of Trade).

The fund may enter into interest rate swaps and interest rate locks and purchase and sell interest rate caps, collars and floors. Swap transactions may be individually negotiated and include exposure to a variety of different interest rates. Swaps involve two parties exchanging a series of cash flows at specified intervals. In the case of an interest rate swap, the parties exchange interest payments based upon an agreed upon principal amount (referred to as the “notional principal amount”). Under the most basic scenario, Party A would pay a fixed rate on the notional principal amount to Party B, which would pay a floating rate on the same notional principal amount to Party A. Swap agreements can take many forms and are known by a variety of names.

In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. An interest rate collar combines elements of buying a cap and selling a floor. In a typical interest rate lock transaction, if Party A desires to lock in a particular interest rate on a given date it may enter into an agreement to pay, or receive a payment from, Party B based on the yield of a reference index or security. At the maturity of the term of the agreement, one party makes a payment to the other party as determined by the relative change in the yield of the reference index or security. An interest rate lock transaction may be terminated prior to its stated maturity date by calculating the payment due as of the termination date, which generally differs from the make-whole provisions for an early termination of an interest rate swap transaction in which the party terminating the swap early is required to give its counterparty the economic benefit of the transaction.

Depending on the circumstances, gains from a swap transaction will be treated either as ordinary income or as short- or long-term capital gains. The fund currently intends to enter into swap transactions on a “forward settlement” basis (settlement set out several months) and to close-out such transactions before the settlement date. This methodology should result in there being no exchange of income and, therefore, no taxable income to report. Any principal gain or loss at settlement would be a capital gain or loss.

The fund is operated by the Adviser in reliance on an exclusion, granted to operators of registered investment companies such as the fund, from registration as a “commodity pool operator” with respect to the fund under the Commodity Exchange Act (“CEA”) and, therefore is not subject to registration or regulation with respect to the fund under the CEA. The fund may be limited in its ability to use commodity futures or options thereon, engage in certain swap transactions or make certain other investments if the

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ADDITIONAL INFORMATION (Unaudited) (continued)

Adviser continues to claim the exclusion from the definition of “commodity pool operator” with respect to the fund.

Inverse Floating Rate Securities. The fund may invest in residual interest municipal obligations whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index (“inverse floaters”). An investment in inverse floaters may involve greater risk than an investment in a fixed-rate bond. Because changes in the interest rate on the other security or index inversely affect the residual interest paid on the inverse floater, the value of an inverse floater is generally more volatile than that of a fixed-rate bond. Inverse floaters have interest rate adjustment formulas which generally reduce or, in the extreme, eliminate the interest paid to the fund when short term interest rates rise, and increase the interest paid to the fund when short term interest rates fall. Inverse floaters have varying degrees of liquidity, and the market for these securities is relatively volatile. These securities tend to underperform the market for fixed-rate bonds in a rising interest rate environment, but tend to outperform the market for fixed-rate bonds when interest rates decline. Shifts in long term interest rates may, however, alter this tendency. Although volatile, inverse floaters typically offer the potential for yields exceeding the yields available on fixed-rate bonds with comparable credit quality, coupon, call provisions and maturity. These securities usually permit the investor to convert the floating-rate to a fixed- rate (normally adjusted downward), and this optional conversion feature may provide a partial hedge against rising rates if exercised at an opportune time.

Investments in Investment Companies. The fund may invest in securities of other investment companies to the extent permitted under the Act.

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 issues APS and 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 Shareholders 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 Shareholders, 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 Shareholders. If either of these conditions change along with other factors that may have an effect on APS 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

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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), which are at or near historic lows in the United States. 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.

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 Adviser’s judgment may play a greater role in valuation because less reliable, objective data may be available.

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ADDITIONAL INFORMATION (Unaudited) (continued)

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. 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 currently are at or near historic lows due to market forces and actions of the Board of Governors of the Federal Reserve System in the U.S., primarily in response to the novel coronavirus (COVID-19) pandemic and resultant market disruptions. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, may result in heightened market volatility and may detract from fund performance.

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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 Shareholders 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 Shareholders may receive distributions that are attributable to derivatives contracts that are treated as ordinary income for federal income tax purposes

Liquidity Risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities in a timely manner at or near their perceived value. In such a market, the value of such securities and the fund’s net asset value per share of Common Stock may fall dramatically, even during periods of declining interest rates. Other market developments can adversely affect fixed-income securities markets. Regulations and business practices, for example, have led some financial intermediaries to curtail their capacity to engage in trading (i.e., “market making”) activities for certain fixed-income securities, which could have the potential to decrease liquidity and increase volatility in the fixed-income securities markets. The secondary market for certain municipal obligations tends to be less well developed or liquid than many other securities markets, which may adversely affect the fund’s ability to sell such municipal obligations at attractive prices. Investments that are illiquid or that trade in lower volumes may be more difficult to value. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates).

When-Issued 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 Derivatives Risk. Derivatives can be volatile and involve various types and degrees of risk, depending upon the characteristics of the particular derivative and the portfolio as a whole. Derivatives may entail investment exposures that are greater than their cost would suggest, meaning that a small investment in derivatives could have a large potential impact on the fund’s performance. If the fund invests in derivatives at

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ADDITIONAL INFORMATION (Unaudited) (continued)

inopportune times or judges market conditions incorrectly, such investments may lower the fund’s return or result in a loss. The fund also could experience losses if its derivatives were poorly correlated with the underlying instruments or the fund’s other investments, or if the fund were unable to liquidate its position because of an illiquid secondary market. The market for many derivatives is, or suddenly can become, illiquid. Although the fund intends to purchase or sell futures contracts or options only if there is an active market for such contracts or options, no assurance can be given that a liquid market will exist for any particular contract or option at any particular time. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives. Additionally, some derivatives the fund may use may involve economic leverage, which may increase the volatility of these instruments as they may increase or decrease in value more quickly than the underlying security, index, futures contract, or other economic variable.

Derivatives may be purchased on established exchanges or through privately negotiated transactions referred to as over-the-counter derivatives. Exchange-traded derivatives, such as futures contracts and certain options, generally are guaranteed by the clearing agency that is the issuer or counterparty to such derivatives. This guarantee usually is supported by a daily variation margin system operated by the clearing agency in order to reduce overall credit risk. As a result, unless the clearing agency defaults, there is relatively little counterparty credit risk associated with derivatives purchased on an exchange. In contrast, no clearing agency guarantees over-the-counter derivatives, including some options and most swap agreements, and, therefore, there is a risk the counterparty will default. Accordingly, the Adviser will consider the creditworthiness of counterparties to over-the-counter derivatives in the same manner as it would review the credit quality of a security to be purchased by the fund. If there were a default by the other party to such transaction the fund would have to rely on its contractual remedies (which may be limited by bankruptcy, insolvency or similar laws) pursuant to the agreement relating to the transaction. Over-the-counter derivatives are less liquid than exchange-traded derivatives since the other party to the transaction may be the only investor with sufficient understanding of the derivative to be interested in bidding for it. In addition, mandatory margin requirements have been imposed on over-the-counter derivative instruments, which will add to the costs of such transactions.

Options and futures contracts prices can diverge from the prices of their underlying instruments. Options and futures contracts prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect the prices of the underlying instruments in the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. If price changes in the fund’s options or futures positions used for hedging purposes are poorly correlated with the investments the fund is attempting to hedge, the options or futures positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments.

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Engaging in futures transactions involves risk of loss to the fund which could adversely affect the fund’s net asset value. No assurance can be given that a liquid market will exist for any particular contract at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and potentially leading to substantial losses.

The use of interest rate swaps and caps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. Depending on the state of interest rates in general, the fund’s use of interest rate swaps or caps could enhance or harm the overall performance of the fund. To the extent there is a decline in interest rates, the value of the interest rate swap or cap could decline, and could result in a decline in the fund’s net asset value. In addition, if short-term interest rates are lower than the fund’s rate of payment on the interest rate swap, this will reduce the performance of the fund. If, on the other hand, short-term interest rates are higher than the fund’s rate of payment on the interest rate swap, this will enhance the performance of the fund.

It is possible that developments in the derivatives markets, including potential government regulation, could adversely affect the ability to terminate existing derivatives positions or to realize amounts to be received in such transactions. In particular, prior to the recent global financial crisis, the swaps market was largely an unregulated market. It is possible that developments in the swaps market, including new regulatory requirements, could limit or prevent the fund’s ability to utilize swap agreements or options on swaps as part of its investment strategy, terminate existing swap agreements or realize amounts to be received under such agreements, which could negatively affect the fund. In particular, the Dodd-Frank Act resulted in new clearing and exchange-trading requirements for swaps and other over-the-counter derivatives. The Dodd-Frank Act also requires the Commodities Futures Trading Commission (“CFTC”) and/or the SEC, in consultation with banking regulators, to establish capital requirements for swap dealers and major swap participants as well as requirements for margin on over-the-counter derivatives, including swaps. Many provisions of the Dodd-Frank Act have either already been implemented through rulemaking by the CFTC and/or the SEC or must be implemented through future rulemaking by those and other federal agencies, and all regulatory or legislative activity may not necessarily have a direct, immediate effect upon the fund. However, compliance with these rules could potentially limit or completely restrict the ability of the fund to use certain derivatives as a part of its investment strategy, increase the cost of entering into derivatives transactions or require more assets of the fund to be used for collateral in support of those derivatives than is currently the case. Limits or restrictions applicable to the counterparties with which the fund engages in derivative transactions also could prevent

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ADDITIONAL INFORMATION (Unaudited) (continued)

the fund from using derivatives or affect the pricing or other factors relating to these transactions, or may change the availability of certain derivatives.

Some derivatives may involve leverage (e.g., an instrument linked to the value of a securities index may return income calculated as a multiple of the price movement of the underlying index). This economic leverage will increase the volatility of these instruments as they may increase or decrease in value more quickly than the underlying security, index, futures contract, currency or other economic variable. Currently, the fund may segregate permissible liquid assets, or engage in other measures approved by the SEC or its staff, to “cover” the fund’s obligations relating to its transactions in derivatives. Where permitted, by setting aside assets equal to only its net obligations under cash-settled derivatives, the fund may employ leverage to a greater extent than if the fund were required to segregate assets equal to the full notional value of such contracts. These coverage practices also might impair the fund’s ability to sell a portfolio security, meet current obligations or make an investment at a time when it would otherwise be favorable to do so, or require that the fund sell a portfolio security at a disadvantageous time.

The SEC recently adopted Rule 18f-4 under the Act, which will regulate the use of derivatives by the fund and is effective in August 2022. Under the new rule, the fund may be required to establish a comprehensive derivatives risk management program, to comply with certain value-at-risk based leverage limits, to appoint a derivatives risk manager and to provide additional disclosure both publicly and to the SEC regarding its derivatives positions. Compliance with the new rule by the fund could, among other things, make derivatives more costly, limit their availability or utility or otherwise adversely affect their performance. The new rule may limit the fund’s ability to use derivatives as part of its investment strategy. In addition, in connection with the adoption of Rule 18f-4, the SEC also eliminated the asset segregation framework for covering derivatives and certain financial instruments arising from SEC and staff guidance. As the fund transitions into reliance on Rule 18f-4, its approach to asset segregation and coverage requirements may be impacted.

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 Shareholders, 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 Shareholders; 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

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may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies worldwide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken worldwide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. The COVID-19 pandemic has had, and any other outbreak of an infectious disease or other serious public health concern could have, a significant negative impact on economic and market conditions and could trigger a prolonged period of global economic slowdown. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund’s exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.

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 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 Adviser actively manages the fund. The Adviser and the fund’s portfolio managers will apply investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that these will produce the desired results.

Cybersecurity Risk. The fund and its service providers are susceptible to operational and information security risks due to cybersecurity incidents. In general, cybersecurity incidents can result from deliberate attacks or unintentional events. Cybersecurity attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber attacks also may be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make services unavailable to intended users). Cybersecurity incidents affecting the Adviser or other service providers, as well as financial intermediaries, have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, including by interference with the fund’s ability to calculate its net asset value; impediments to trading for the fund’s portfolio; the inability of Common Shareholders to transact business with the fund; violations of applicable privacy, data security or other laws; regulatory fines and penalties; reputational damage; reimbursement or other

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ADDITIONAL INFORMATION (Unaudited) (continued)

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.

Recent Changes

The following information in this annual report is a summary of certain changes since November 30, 2020. This information may not reflect all of the changes that have occurred since you purchased the fund.

The fund has updated its derivatives risk factor to reflect certain risks associated with new Rule 18f-4 under the 1940 Act.

During the period ended November 30, 2021, except as noted above, 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.

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IMPORTANT TAX INFORMATION (Unaudited)

In accordance with federal tax law, the fund hereby reports all the dividends paid from investment income-net during its fiscal year ended November 30, 2021 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 2021 calendar year on Form 1099-DIV, which will be mailed in early 2022.

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INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited)

At a meeting of the fund’s Board of Directors held on November 1-2, 2021, the Board considered the renewalof the fund’s Investment Advisory Agreement and Administration Agreement, pursuant to which the Adviser provides the fund with investment advisory services and administrative services (together, the “Agreement”), and the Sub-Investment Advisory Agreement (together with the Agreement, the “Agreements”), pursuant to which Insight North America LLC (the “Subadviser”) 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 Subadviser. 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 Subadviser.

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, 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 September 30, 2021, 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

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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. The Board discussed with representatives of the Adviser and the Subadviser 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 except the one-year period when it was above the Performance Group and Performance Universe medians and the ten-year period when it was at the Performance Group median. The Board also considered that the fund’s total return performance, on a market price basis, was below the Performance Group and Performance Universe medians for all periods except the one-year period when it was above the Performance Group and Performance Universe medians. The Board also considered that the fund’s yield performance, on a net asset value basis, was at or above the Performance Group and Performance Universe medians for nine of the ten one-year periods ended September 30thand, on a market price basis, was at or above the Performance Group medians for all of the ten one-year periods ended September 30th and above the Performance Universe medians for nine of the ten one-year periods ended September 30th. The Board considered the relative proximity of the fund’s performance to the relevant Performance Group and/or Performance Universe medians in certain periods when performance was below median. The Adviser also provided a comparison of the fund’s calendar year total returns, on a net asset value basis, 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 seven 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 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 Subadviser, 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.

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 and the fund’s actual management fee was lower than the Expense Group median and the Expense Universe median actual management fee and the fund’s total expenses were lower than the Expense Group median and the Expense Universe median total expenses. The Board also considered that, based on common and leveraged assets

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INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)

together, the fund’s actual management fee was higher than the Expense Group median and the Expense Universe median actual management fee and the fund’s total expenses were lower than the Expense Group median and the Expense Universe median total expenses.

Representatives of the Adviser stated that the Adviser has contractually agreed, until May 31, 2022, 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 (including net assets representing auction preferred stock outstanding).

Representatives of the Adviser reviewed with the Board the contractual management fee paid by funds advised or administered 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 Subadviser that are considered to have similar investment strategies and policies as the fund.

The Board considered the fee payable to the Subadviser in relation to the fee payable to the Adviser by the fund and the respective services provided by the Subadviser and the Adviser. The Board also took into consideration that the Subadviser’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.

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 Subadviser, 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

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scale for the benefit of fund shareholders. Since the Adviser, and not the fund, pays the Subadviser pursuant to the Sub-Investment Advisory Agreement, the Board did not consider the Subadviser’s profitability to be relevant to its deliberations. Representatives of the Adviser stated that, because the fund is a closed-end fund without daily inflows and outflows of capital, there were not significant economies of scale at this time to be realized by the Adviser in managing the fund’s assets. Representatives of the Adviser also stated that, as a result of shared and allocated costs among funds in the BNY Mellon fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to the Adviser and the Subadviser 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 Subadviser are adequate and appropriate.

· The Board generally was satisfied with the fund’s improved overall performance.

· The Board concluded that the fees paid to the Adviser and the Subadviser continued to be appropriate under the circumstances and in light of the factors and the totality of the services provided as discussed above.

· The Board determined that the economies of scale which may accrue to the Adviser and its affiliates in connection with the management of the fund had been adequately considered by the Adviser in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.

In evaluating the Agreements, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with the Adviser and its affiliates and the Subadviser, of the Adviser and the Subadviser and the services provided to the fund by the Adviser and the Subadviser. 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

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INFORMATION ABOUT THE RENEWAL OF THE FUND’S INVESTMENT ADVISORY AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited) (continued)

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 their consideration of the fund’s arrangements, or substantially similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined to renew the Agreements.

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BOARD MEMBERS INFORMATION (Unaudited)

Independent Board Members

Joseph S. DiMartino (78)

Chairman of the Board (1995)

Current term expires in 2024.

Principal Occupation During Past 5 Years:

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

Other Public Company Board Memberships During Past 5 Years:

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

No. of Portfolios for which Board Member Serves: 97

———————

Joni Evans (79)

Board Member (2006)

Current term expires in 2024.

Principal Occupation During Past 5 Years:

· www.wowOwow.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: 18

———————

Joan Gulley (74)

Board Member (2017)

Current term expires in 2023.

Principal Occupation During Past 5 Years:

· Nantucket Atheneum, public library, Chair (2018-June 2021) and Director(2015-June 2021)

· Orchard Island Club, golf and beach club, Governor (2016-Present)

No. of Portfolios for which Board Member Serves: 42

———————

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BOARD MEMBERS INFORMATION (Unaudited) (continued)

Alan H. Howard (62)

Board Member (2018)

Current term expires in 2024.

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(2012-2019); and Board Member of its two operating subsidiaries, Dynatech International LLC and Military Parts Exchange LLC (2012-2019), including Chief Executive Officer of an operating subsidiary, Dynatech International LLC (2013-2019)

· 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: 18

———————

Robin A. Melvin (58)

Board Member (1995)

Current term expires in 2022.

Principal Occupation During Past 5 Years:

· Westover School, a private girls’ boarding school in Middlebury, Connecticut, Trustee(2019-Present)

· Mentor Illinois, a non-profit organization dedicated to increasing the quality of mentoring services in Illinois. Co-Chair(2014–2020); Board Member, Mentor Illinois (2013-2020)

· JDRF, a non-profit juvenile diabetes research foundation, Board Member (June 2021-Present)

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: 75

———————

Burton N. Wallack (71)

Board Member (2006)

Current term expires in 2023.

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: 18

———————

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Benaree Pratt Wiley (75)

Board Member (1998)

Current term expires in 2023.

Principal Occupation During Past 5 Years:

· The Wiley Group, a firm specializing in strategy and business development. Principal(2005-Present)

Other Public Company Board Memberships During Past 5 Years:

· CBIZ, Inc., a public company providing professional business services, products and solutions, Director (2008-Present)

· Blue Cross Blue Shield of Massachusetts Director (2004-2020)

No. of Portfolios for which Board Member Serves: 63

———————

Gordon J. Davis (80)

Advisory Board Member (2021)

Principal Occupation During Past 5 Years:

· Venable LLP, a law firm Partner (2012-Present)

No. of Portfolios for which Advisory Board Member Serves: 41

———————

The address of the Board Members and Officers is c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street, New York, New York 10286.

William Hodding Carter III, Emeritus Board Member
Ehud Houminer, Emeritus Board Member
Hans C. Mautner, Emeritus Board Member

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OFFICERS OF THE FUND (Unaudited)

DAVID DIPETRILLO, President since January 2021.

Vice President and Director of Adviser since February 2021; Head of North America Product, BNY Mellon Investment Management since January 2018; Director of Product Strategy, BNY Mellon Investment Management from January 2016 to December 2017. He is an officer of 57 investment companies (comprised of 107 portfolios) managed by Adviser or an affiliate of Adviser. He is 43 years old and has been an employee of BNY Mellon since 2005.

JAMES WINDELS, Treasurer since November 2001.

Vice President of Adviser since September 2020; Director–BNY Mellon Fund Administration, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 63 years old and has been an employee of 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 Adviser since July 2021; Associate General Counsel of BNY Mellon since July 2021; Senior Managing Counsel of BNY Mellon from December 2020 to July 2021; Managing Counsel of BNY Mellon from March 2009 to December 2020, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 53 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; Secretary of Adviser, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 55 years old and has been an employee of Adviser since December 1996.

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

Counsel of BNY Mellon since August 2018; Senior Regulatory Specialist at BNY Mellon Investment Management Services from February 2016 to August 2018. She is an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. She is 31 years old and has been an employee of Adviser since August 2018.

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

Vice President since February 2020 of BNY Mellon ETF Investment Adviser; LLC; Senior Managing Counsel of BNY Mellon since September 2021; Managing Counsel from December 2017 to September 2021; Senior Counsel of BNY Mellon from March 2013 to December 2017. She is an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. She is 46 years old and has been an employee of Adviser since March 2013.

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

Senior Managing Counsel of BNY Mellon, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 56 years old and has been an employee of Adviser since October 1990.

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

Counsel of BNY Mellon since June 2019; Regulatory Administration Manager at BNY Mellon Investment Management Services from September 2018 to May 2019; Senior Regulatory Specialist at BNY Mellon Investment Management Services from April 2015 to August 2018. She is an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. She is 36 years old and has been an employee of Adviser since June 2019.

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 from December 2019 to August 2021 of BNY Mellon; Counsel from May 2016 to December 2019 of BNY Mellon; Assistant Secretary of Adviser from April 2018 to August 2021. She is an officer of 57 investment companies (comprised of 128 portfolios) managed by Adviser or an affiliate of Adviser. She is 36 years old and has been an employee of BNY Mellon since May 2016.

GAVIN C. REILLY, Assistant Treasurer since December 2005.

Tax Manager–BNY Mellon Fund Administration, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 53 years old and has been an employee of Adviser since April 1991.

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ROBERT SALVIOLO, Assistant Treasurer since May 2007.

Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 54 years old and has been an employee of Adviser since June 1989.

ROBERT SVAGNA, Assistant Treasurer since August 2005.

Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 58 investment companies (comprised of 129 portfolios) managed by Adviser or an affiliate of Adviser. He is 54 years old and has been an employee of 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; Chief Compliance Officer of Adviser from 2004 until June 2021. He is an officer of 57 investment companies (comprised of 119 portfolios) managed by Adviser. He is 64 years old.

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OFFICERS AND DIRECTORS
BNY Mellon Strategic Municipal Bond Fund, Inc.

240 Greenwich Street
New York, NY 10286