Certified Annual Shareholder Report for Management Investment Companies (n-csr)
November 25 2020 - 2:00PM
Edgar (US Regulatory)
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
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811-05652
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BNY Mellon Municipal Income, Inc.
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(Exact name of Registrant as specified in charter)
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c/o BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, New York 10286
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(Address of principal executive offices) (Zip code)
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Bennett A. MacDougall, Esq.
240 Greenwich Street
New York, New York 10286
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(Name and address of agent for service)
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Registrant's telephone number, including area code:
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(212) 922-6400
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Date of fiscal year end:
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09/30
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Date of reporting period:
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09/30/2020
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FORM N-CSR
Item 1. Reports to Stockholders.
BNY Mellon Municipal Income, Inc.
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ANNUAL REPORT
September 30, 2020
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BNY Mellon Municipal Income, Inc.
Protecting Your Privacy
Our Pledge to You
THE FUND IS COMMITTED TO YOUR PRIVACY. On this page, you will find the fund’s policies and practices for collecting, disclosing, and safeguarding “nonpublic personal information,” which may include financial or other customer information. These policies apply to individuals who purchase fund shares for personal, family, or household purposes, or have done so in the past. This notification replaces all previous statements of the fund’s consumer privacy policy, and may be amended at any time. We’ll keep you informed of changes as required by law.
YOUR ACCOUNT IS PROVIDED IN A SECURE ENVIRONMENT. The fund maintains physical, electronic and procedural safeguards that comply with federal regulations to guard nonpublic personal information. The fund’s agents and service providers have limited access to customer information based on their role in servicing your account.
THE FUND COLLECTS INFORMATION IN ORDER TO SERVICE AND ADMINISTER YOUR ACCOUNT. The fund collects a variety of nonpublic personal information, which may include:
• Information we receive from you, such as your name, address, and social security number.
• Information about your transactions with us, such as the purchase or sale of fund shares.
• Information we receive from agents and service providers, such as proxy voting information.
THE FUND DOES NOT SHARE NONPUBLIC PERSONAL INFORMATION WITH ANYONE, EXCEPT AS PERMITTED BY LAW.
Thank you for this opportunity to serve you.
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The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds.
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Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
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Contents
THE FUND
FOR MORE INFORMATION
Back Cover
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BNY Mellon Municipal Income, Inc.
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The Fund
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A LETTER FROM THE PRESIDENT OF BNY MELLON INVESTMENT ADVISER, INC.
Dear Shareholder:
We are pleased to present this annual report for BNY Mellon Municipal Income, Inc., covering the 12-month period from October 1, 2019 through September 30, 2020. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Accommodative rate policies from the U.S. Federal Reserve (the “Fed”) and progress towards a U.S./China trade deal stoked optimism about future economic growth prospects in the final months of 2019, fueling an equity rally. As the calendar year turned over, optimism turned to concern as COVID-19 spread across portions of Asia and Europe. When the virus reached the U.S. in March 2020, stocks became volatile. U.S. equities posted historic losses during the month due to investor concern over the economic impact of a widespread quarantine. Global central banks and governments launched emergency stimulus measures to support their respective economies, and equity valuations began to rebound, trending upward until the fall. Stocks stalled in September 2020, as concerns over a second wave of COVID-19, continued trade tensions and the U.S. Congress’ failure to pass additional financial assistance constrained equity valuations.
In fixed-income markets, interest rates were heavily influenced by changes in Fed policy and investor concern over COVID-19. In 2019, as stocks rallied in response to Fed rate cuts, risk-asset valuations also rose while Treasuries lagged. When COVID-19 began to emerge, a flight to quality ensued, and Treasury rates fell significantly. The Fed cut rates twice in March 2020, resulting in an overnight lending target rate of nearly zero, and the government launched a large stimulus package. Many governments and central banks around the globe followed suit. Risk-asset prices began to rebound, and bond indices generally rose until September 2020, when weakness in the U.S. corporate bond sector weighed on returns.
We believe the near-term outlook for the U.S. will be challenging, as the country continues to battle COVID-19. However, we think ongoing central bank responses may continue to support economic progress. As always, we will monitor relevant data for any signs of a change. We encourage you to discuss the risks and opportunities in today’s investment environment with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
Renee LaRoche-Morris
President
BNY Mellon Investment Adviser, Inc.
October 15, 2020
2
DISCUSSION OF FUND PERFORMANCE (Unaudited)
For the period from October 1, 2019 through September 30, 2020, as provided by Daniel Rabasco and Jeffrey Burger, Primary Portfolio Managers
Market and Fund Performance Overview
For the 12-month period ended September 30, 2020, BNY Mellon Municipal Income, Inc. produced a total return of 1.47% on a net-asset-value basis and -3.13% on a market price basis.1 Over the same period, the fund provided aggregate income dividends of $0.42 per share, which reflects a distribution rate of 4.87%.2
Municipal bonds rose during the reporting period, as the market recovered from the market turmoil that resulted from the COVID-19 pandemic. The emergence of the pandemic resulted in a flight to safety that hurt municipal market performance midway through the reporting period, but the market later rallied, supported by strong demand and a relief program from the Federal Reserve (the “Fed”).
The Fund’s Investment Approach
The fund seeks to maximize current income exempt from federal income tax to the extent consistent with the preservation of capital. Under normal market conditions, the fund invests at least 80% of the value of its net assets in municipal obligations and invests in municipal obligations which, at the time of purchase, are rated investment grade or the unrated equivalent as determined by BNY Mellon Investment Adviser, Inc. in the case of bonds, and rated in the two highest rating categories or the unrated equivalent as determined by BNY Mellon Investment Adviser, Inc. in the case of short-term obligations having, or deemed to have, maturities of less than one year.
To this end, we have constructed a portfolio based on identifying income opportunities through analysis of each bond’s structure, including paying close attention to each bond’s yield, maturity and early redemption features. Over time, many of the fund’s relatively higher-yielding bonds mature or are redeemed by their issuers, and we generally attempt to replace those bonds with investments consistent with the fund’s investment policies, albeit with yields that reflect the then-current interest-rate environment. When making new investments, we focus on identifying undervalued sectors and securities, and we minimize the use of interest-rate forecasting. We use fundamental analysis to estimate the relative value and attractiveness of various sectors and securities and to exploit pricing inefficiencies in the municipal bond market.
Policy Support and Economic Recovery Aid Market Recovery
The municipal bond market recovered from unprecedented volatility that occurred during the reporting period when the COVID-19 virus spread, and government shutdowns caused the economy to slow dramatically. Yields on municipal bonds had reached record lows prior to the pandemic, but large outflows from municipal bond mutual funds, combined with illiquidity, caused yields to soar before the market recovered later in the reporting period.
In response to the pandemic, the Fed made two emergency interest-rate cuts in March 2020 and launched a $500 billion Municipal Liquidity Facility (MLF) to purchase short-term municipal securities. This, combined with the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, dramatically changed investor sentiment, which helped the municipal bond market to bounce back relatively quickly.
While new issuance dried up during the height of the crisis in the first quarter of 2020, it rebounded along with bond prices, as issuers sought to take advantage of record-low funding costs. Much of the new issuance was in taxable bonds, as low yields have made taxable issuance attractive to issuers. Toward the end of the reporting period, new issuance increased, as state and local governments sought to avoid the uncertainty associated with the election.
Given the pandemic and its economic fallout, lower-risk bonds outperformed, including general obligation bonds as well as AAA and AA rated bonds. In addition, the investment-grade market
3
DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)
outperformed the high-yield market. Demand was strong late in the period, as both retail and institutional investors continued to find the yields attractive.
Asset Allocation and Security Selection Hindered Results
The fund’s performance was hindered during the reporting period by its overweight position in revenue bonds and an underweight position in general obligation bonds. Security selection was unfavorable as well, as positions in Illinois and Chicago general obligation bonds underperformed. In addition, positions in the health care and education sectors were also detrimental. Security selections in the transportation sector and the special tax sector also detracted from performance. In transportation, bonds supported by the I-66 high-speed lane project in Virginia performed poorly, as did a bond backed by a similar project in Colorado. In the special tax sector, bonds supported by civic centers and convention centers were a drag on performance. The fund employed derivatives, hedging against rising rates by shorting long-term Treasuries. But the hedge detracted from performance as the Treasury market rallied and rates declined and was closed out.
On a more positive note, the fund’s performance was assisted by its yield curve positioning. Two-year and five-year bonds, in particular, performed well, as this was the portion of the yield curve that experienced the greatest decline in rates. In addition, the fund’s longer duration proved advantageous.
A Constructive Market View
Despite the recent turmoil and the continuing economic uncertainty, we remain constructive on the market. The economy will be supported by the CARES Act, and programs announced by the Fed, including the potential for direct lending to municipalities, should support the municipal bond market.
We believe the market reflects uncertainty regarding the possibility of an additional stimulus package from Congress to provide aid to states and municipalities. Although municipal bond issuers should be able to cover any budget gaps that occur, some spending reductions may be necessary. We expect some credit ratings downgrades, but defaults should be limited to lower-quality issues. We continue to focus on issuers with sound fundamentals and to look to increase income generation. We will also maintain the fund’s leverage in order to boost yield.
October 15, 2020
1 Total return includes reinvestment of dividends and any capital gains paid, based upon net asset value per share or market price per share, as applicable. Past performance is no guarantee of future results. Market price per share, net asset value per share and investment return fluctuate. Income may be subject to state and local taxes, and some income may be subject to the federal alternative minimum tax (AMT) for certain investors. Capital gains, if any, are fully taxable.
2 Distribution rate per share is based upon dividends per share paid from net investment income during the period, 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. 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.
The fund may, but is not required to, use derivative instruments. A small investment in derivatives could have a potentially large impact on the fund’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets.
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.
4
SELECTED INFORMATION
September 30, 2020 (Unaudited)
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Market Price per share September 30, 2020
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$8.63
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Shares Outstanding September 30, 2020
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20,750,798
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NYSE MKT Ticker Symbol
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DMF
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MARKET PRICE (NYSE MKT)
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Fiscal Year Ended September 30, 2020
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Quarter
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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Ended
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Ended
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December 31, 2019
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March 31, 2020
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June 30, 2020
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September 30, 2020
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High
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$9.50
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$9.78
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$8.74
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$8.88
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Low
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8.71
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6.67
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7.66
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8.32
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Close
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8.89
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8.22
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8.32
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8.63
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PERCENTAGE GAIN (LOSS) based on change in Market Price†
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October 24, 1988 (commencement of operations)
through September 30, 2020
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575.48%
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October 1, 2010 through September 30, 2020
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57.35
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October 1, 2015 through September 30, 2020
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18.69
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October 1, 2019 through September 30, 2020
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(3.13)
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January 1, 2020 through September 30, 2020
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0.68
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April 1, 2020 through September 30, 2020
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7.62
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July 1, 2020 through September 30, 2020
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5.00
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NET ASSET VALUE PER SHARE
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October 24, 1988 (commencement of operations)
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$9.26
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September 30, 2019
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9.36
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December 31, 2019
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9.32
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March 31, 2020
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8.76
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June 30, 2020
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8.93
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September 30, 2020
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9.05
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PERCENTAGE GAIN (LOSS) based on change in Net Asset Value†
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October 24, 1988 (commencement of operations)
through September 30, 2020
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664.98%
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October 1, 2010 through September 30, 2020
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69.79
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October 1, 2015 through September 30, 2020
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23.29
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October 1, 2019 through September 30, 2020
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1.47
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January 1, 2020 through September 30, 2020
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0.71
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April 1, 2020 through September 30, 2020
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5.90
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July 1, 2020 through September 30, 2020
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2.59
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† Total return includes reinvestment of dividends and any capital gains paid.
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5
STATEMENT OF INVESTMENTS
September 30, 2020
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Description
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Coupon
Rate (%)
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Maturity
Date
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Principal
Amount ($)
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Value ($)
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Long-Term Municipal Investments - 152.2%
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Alabama - 4.9%
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Jefferson County, Revenue Bonds, Refunding, Ser. F
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7.75
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10/1/2046
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4,000,000
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a
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3,955,080
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The Lower Alabama Gas District, Revenue Bonds, Ser. A
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5.00
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9/1/2046
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2,500,000
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3,489,975
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University of Alabama at Birmingham, Revenue Bonds, Ser. B
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4.00
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10/1/2036
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1,500,000
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1,783,245
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9,228,300
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Arizona - 5.3%
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Arizona Industrial Development Authority, Revenue Bonds (Equitable School Revolving Fund Obligated Group) Ser. A
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4.00
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11/1/2050
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1,355,000
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1,531,096
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Arizona Industrial Development Authority, Revenue Bonds (Phoenix Children's Hospital Obligated Group)
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4.00
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2/1/2050
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1,000,000
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1,130,960
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Glendale Industrial Development Authority, Revenue Bonds, Refunding (Sun Health Services Obligated Group) Ser. A
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5.00
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11/15/2054
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1,500,000
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1,676,310
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La Paz County Industrial Development Authority, Revenue Bonds (Charter School Solutions) Ser. A
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5.00
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2/15/2046
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1,500,000
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b
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1,611,540
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La Paz County Industrial Development Authority, Revenue Bonds (Charter School Solutions) Ser. A
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5.00
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2/15/2036
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1,000,000
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b
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1,093,840
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Salt Verde Financial Corp., Revenue Bonds
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5.00
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12/1/2037
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2,190,000
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2,958,471
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10,002,217
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California - 9.4%
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California, GO, Refunding
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6.00
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3/1/2033
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305,000
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306,382
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California, GO, Refunding
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6.00
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3/1/2033
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115,000
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115,541
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California County Tobacco Securitization Agency, Revenue Bonds, Refunding, Ser. A
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4.00
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6/1/2039
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565,000
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654,157
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Santa Ana Community Redevelopment Agency, Tax Allocation Bonds, Refunding (Merged Project Area) Ser. A
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6.75
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3/1/2021
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1,750,000
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c
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1,798,142
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6
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Description
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Coupon
Rate (%)
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Maturity
Date
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Principal
Amount ($)
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Value ($)
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Long-Term Municipal Investments - 152.2% (continued)
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California - 9.4% (continued)
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Southern California Tobacco Securitization Authority, Revenue Bonds, Refunding (San Diego County Tobacco Asset Securitization)
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5.00
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6/1/2048
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2,000,000
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2,425,420
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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
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17.85
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5/15/2038
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4,000,000
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b,d,e
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4,353,020
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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
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17.94
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5/15/2036
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3,740,000
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b,d,e
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4,171,185
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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
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17.49
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5/1/2050
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3,250,000
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b,d,e
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3,843,467
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17,667,314
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Colorado - 6.8%
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Colorado Educational & Cultural Facilities Authority, Revenue Bonds, Refunding (Johnson & Wales University) Ser. B
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5.00
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4/1/2031
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1,680,000
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1,793,333
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Colorado High Performance Transportation Enterprise, Revenue Bonds
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5.00
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12/31/2056
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1,500,000
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1,614,315
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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
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12.89
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3/1/2038
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2,540,000
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b,d,e
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2,709,202
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Tender Option Bond Trust Receipts (Series 2016-XM0433), (Colorado Springs, Revenue Bonds) Recourse, Underlying Coupon Rate (%) 5.00
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17.85
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11/15/2043
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3,997,093
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b,d,e
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4,474,223
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7
STATEMENT OF INVESTMENTS (continued)
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Description
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Coupon
Rate (%)
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Maturity
Date
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Principal
Amount ($)
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Value ($)
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Long-Term Municipal Investments - 152.2% (continued)
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Colorado - 6.8% (continued)
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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
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16.89
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8/1/2044
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1,645,000
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b,d,e
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2,172,706
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12,763,779
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Connecticut - 2.2%
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Connecticut, Special Tax Bonds, Ser. A
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5.00
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5/1/2040
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1,000,000
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1,257,770
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Connecticut Health & Educational Facilities Authority, Revenue Bonds, Refunding (Trinity Health Obligated Group)
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5.00
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12/1/2045
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2,500,000
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2,909,250
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4,167,020
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District of Columbia - 4.1%
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Tender Option Bond Trust Receipts (Series 2016-XM0437), (District of Columbia, Revenue Bonds) Recourse, Underlying Coupon Rate (%) 5.00
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17.86
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12/1/2035
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6,997,490
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b,d,e
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7,634,910
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Florida - 8.2%
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Atlantic Beach, Revenue Bonds (Fleet Landing Project) Ser. A
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5.00
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11/15/2048
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1,500,000
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1,614,960
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Davie, Revenue Bonds (Nova Southeastern University Project) Ser. A
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|
5.63
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4/1/2023
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1,000,000
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c
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1,134,530
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Florida Higher Educational Facilities Financial Authority, Revenue Bonds (Ringling College Project)
|
|
5.00
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|
3/1/2049
|
|
1,500,000
|
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1,604,580
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Halifax Hospital Medical Center, Revenue Bonds, Refunding
|
|
4.00
|
|
6/1/2041
|
|
1,000,000
|
|
1,057,770
|
|
Mid-Bay Bridge Authority, Revenue Bonds, Ser. A
|
|
7.25
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|
10/1/2021
|
|
1,250,000
|
c
|
1,337,350
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Palm Beach County Health Facilities Authority, Revenue Bonds (Lifespace Communities Obligated Group) Ser. B
|
|
4.00
|
|
5/15/2053
|
|
1,000,000
|
|
968,070
|
|
Tampa, Revenue Bonds (H. Lee Moffitt Cancer Center & Research Institute Obligated Group) Ser. B
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|
5.00
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|
7/1/2050
|
|
1,500,000
|
|
1,825,815
|
|
Tender Option Bond Trust Receipts (Series 2019-XF0813), (Fort Myers Florida Utility, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 4.00
|
|
14.08
|
|
10/1/2049
|
|
1,015,000
|
b,d,e
|
1,167,199
|
|
8
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|
|
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|
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|
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|
|
Description
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Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
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|
|
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Florida - 8.2% (continued)
|
|
|
|
|
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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
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|
13.95
|
|
8/15/2049
|
|
2,770,000
|
b,d,e
|
3,099,696
|
|
Tender Option Bond Trust Receipts (Series 2020-XF2877), (Greater Orlando Aviation Authority, Revenue Bonds) Ser. A, Recourse, Underlying Coupon Rate (%) 4.00
|
|
13.88
|
|
10/1/2049
|
|
1,380,000
|
b,d,e
|
1,512,756
|
|
|
15,322,726
|
|
Georgia - 4.5%
|
|
|
|
|
|
Gainesville & Hall County Development Authority, Revenue Bonds, Refunding (Riverside Military Academy)
|
|
5.00
|
|
3/1/2037
|
|
1,000,000
|
|
949,050
|
|
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
|
|
17.68
|
|
1/1/2056
|
|
1,270,000
|
b,d,e
|
1,512,640
|
|
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
|
|
15.35
|
|
7/1/2044
|
|
2,660,000
|
b,d,e
|
3,263,720
|
|
The Atlanta Development Authority, Revenue Bonds, Ser. A1
|
|
5.25
|
|
7/1/2040
|
|
1,500,000
|
|
1,649,445
|
|
The Burke County Development Authority, Revenue Bonds, Refunding (Oglethorpe Power Corp.) Ser. D
|
|
4.13
|
|
11/1/2045
|
|
1,000,000
|
|
1,110,890
|
|
|
8,485,745
|
|
Illinois - 21.0%
|
|
|
|
|
|
Chicago Board of Education, Revenue Bonds
|
|
5.00
|
|
4/1/2046
|
|
1,725,000
|
|
1,859,136
|
|
Chicago II, GO, Refunding, Ser. A
|
|
6.00
|
|
1/1/2038
|
|
2,000,000
|
|
2,187,700
|
|
Chicago II, GO, Ser. A
|
|
5.00
|
|
1/1/2044
|
|
1,000,000
|
|
1,016,590
|
|
Chicago II Wastewater Transmission, Revenue Bonds, Refunding, Ser. C
|
|
5.00
|
|
1/1/2039
|
|
1,100,000
|
|
1,254,264
|
|
9
STATEMENT OF INVESTMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Illinois - 21.0% (continued)
|
|
|
|
|
|
Chicago II Waterworks, Revenue Bonds (2nd Lien Project)
|
|
5.00
|
|
11/1/2028
|
|
1,000,000
|
|
1,135,420
|
|
Chicago O'Hare International Airport, Revenue Bonds
|
|
5.63
|
|
1/1/2035
|
|
270,000
|
|
273,048
|
|
Chicago O'Hare International Airport, Revenue Bonds, Refunding, Ser. A
|
|
5.00
|
|
1/1/2048
|
|
2,000,000
|
|
2,346,200
|
|
Chicago Transit Authority Sales Tax Receipts Fund, Revenue Bonds, Refunding, Ser. A
|
|
5.00
|
|
12/1/2045
|
|
1,000,000
|
|
1,190,580
|
|
Illinois, GO, Refunding, Ser. A
|
|
5.00
|
|
10/1/2029
|
|
1,000,000
|
|
1,095,650
|
|
Illinois, GO, Refunding, Ser. A
|
|
5.00
|
|
10/1/2028
|
|
1,800,000
|
|
1,987,902
|
|
Illinois, GO, Ser. A
|
|
5.00
|
|
5/1/2038
|
|
1,250,000
|
|
1,302,950
|
|
Illinois, GO, Ser. D
|
|
5.00
|
|
11/1/2028
|
|
1,000,000
|
|
1,075,780
|
|
Illinois Finance Authority, Revenue Bonds, Refunding (Rosalind Franklin University)
|
|
5.00
|
|
8/1/2047
|
|
1,350,000
|
|
1,467,382
|
|
Metropolitan Pier & Exposition Authority, Revenue Bonds (McCormick Place Expansion Project)
|
|
5.00
|
|
6/15/2057
|
|
2,500,000
|
|
2,720,325
|
|
Metropolitan Pier & Exposition Authority, Revenue Bonds (McCormick Place Project) (Insured; National Public Finance Guarantee Corp.) Ser. A
|
|
0.00
|
|
12/15/2036
|
|
2,500,000
|
f
|
1,414,850
|
|
Metropolitan Pier & Exposition Authority, Revenue Bonds, Refunding (McCormick Place Project) Ser. B
|
|
5.00
|
|
12/15/2028
|
|
1,500,000
|
|
1,566,180
|
|
Railsplitter Tobacco Settlement Authority, Revenue Bonds
|
|
6.00
|
|
6/1/2021
|
|
2,000,000
|
c
|
2,078,020
|
|
Sales Tax Securitization Corp., Revenue Bonds, Refunding, Ser. A
|
|
4.00
|
|
1/1/2039
|
|
1,500,000
|
|
1,629,990
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0378), (Greater Chicago Metropolitan Water Reclamation District, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
16.52
|
|
12/1/2032
|
|
2,500,000
|
b,d,e
|
2,615,500
|
|
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
|
|
17.88
|
|
10/1/2040
|
|
7,000,000
|
b,d,e
|
8,112,475
|
|
10
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Illinois - 21.0% (continued)
|
|
|
|
|
|
University of Illinois, Revenue Bonds, Refunding (Auxiliary Facilities System) Ser. A
|
|
5.13
|
|
4/1/2036
|
|
1,000,000
|
|
1,015,900
|
|
|
39,345,842
|
|
Indiana - .6%
|
|
|
|
|
|
Indiana Finance Authority, Revenue Bonds (Parkview Health System Obligated Group) Ser. A
|
|
5.00
|
|
11/1/2043
|
|
1,000,000
|
|
1,220,020
|
|
Kentucky - .6%
|
|
|
|
|
|
Kentucky Economic Development Finance Authority, Revenue Bonds, Refunding (Louisville Arena Project) (Insured; Assured Guaranty Municipal Corp.) Ser. A
|
|
5.00
|
|
12/1/2045
|
|
1,000,000
|
|
1,171,310
|
|
Louisiana - 4.5%
|
|
|
|
|
|
Louisiana Local Government Environmental Facilities & Community Development Authority, Revenue Bonds, Refunding (Westlake Chemical Project)
|
|
3.50
|
|
11/1/2032
|
|
1,000,000
|
|
1,069,200
|
|
Tender Option Bond Trust Receipts (Series 2018-XF2584), (Louisiana Public Facilities Authority, Revenue Bonds (Franciscan Missionaries of Our Lady Health System Project)) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
17.34
|
|
7/1/2047
|
|
6,320,000
|
b,d,e
|
7,324,532
|
|
|
8,393,732
|
|
Maine - .7%
|
|
|
|
|
|
Maine Health & Higher Educational Facilities Authority, Revenue Bonds (Maine General Medical Center Obligated Group)
|
|
7.50
|
|
7/1/2032
|
|
1,250,000
|
|
1,288,350
|
|
Maryland - 2.1%
|
|
|
|
|
|
Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Adventist Healthcare Obligated Group) Ser. A
|
|
5.50
|
|
1/1/2046
|
|
1,500,000
|
|
1,681,590
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0391), (Mayor & City Council of Baltimore, Revenue Bonds, Refunding (Water Projects)) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
15.78
|
|
7/1/2042
|
|
2,000,000
|
b,d,e
|
2,223,580
|
|
|
3,905,170
|
|
11
STATEMENT OF INVESTMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Massachusetts - 6.7%
|
|
|
|
|
|
Massachusetts Development Finance Agency, Revenue Bonds, Refunding (Atrius Health Obligated Group) Ser. A
|
|
4.00
|
|
6/1/2049
|
|
1,500,000
|
|
1,611,015
|
|
Massachusetts Development Finance Agency, Revenue Bonds, Refunding (Umass Memorial Health Care Obligated Group) Ser. I
|
|
5.00
|
|
7/1/2046
|
|
1,835,000
|
|
2,081,367
|
|
Massachusetts Development Finance Agency, Revenue Bonds, Refunding, Ser. A
|
|
5.00
|
|
7/1/2026
|
|
950,000
|
|
1,131,441
|
|
Massachusetts Development Finance Agency, Revenue Bonds, Refunding, Ser. I
|
|
7.25
|
|
1/1/2021
|
|
900,000
|
c
|
915,741
|
|
Massachusetts Educational Financing Authority, Revenue Bonds, Refunding, Ser. K
|
|
5.25
|
|
7/1/2029
|
|
1,090,000
|
|
1,147,192
|
|
Massachusetts Port Authority, Revenue Bonds, Refunding (Bosfuel Project) Ser. A
|
|
4.00
|
|
7/1/2044
|
|
1,500,000
|
|
1,623,405
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0386), (University of Massachusetts Building Authority, Revenue Bonds, Refunding) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
17.86
|
|
5/1/2043
|
|
3,695,009
|
b,d,e
|
4,141,960
|
|
|
12,652,121
|
|
Michigan - 4.8%
|
|
|
|
|
|
Detroit Water Supply System, Revenue Bonds, Ser. A
|
|
5.00
|
|
7/1/2021
|
|
3,000,000
|
c
|
3,109,320
|
|
Detroit Water Supply System, Revenue Bonds, Ser. A
|
|
5.00
|
|
7/1/2021
|
|
1,500,000
|
c
|
1,554,660
|
|
Michigan Finance Authority, Revenue Bonds, Refunding (Insured; National Public Finance Guarantee Corp.) Ser. D6
|
|
5.00
|
|
7/1/2036
|
|
500,000
|
|
570,195
|
|
Pontiac School District, GO
|
|
4.00
|
|
5/1/2050
|
|
1,000,000
|
|
1,133,840
|
|
Tender Option Bond Trust Receipts (Series 2019-XF2837), (Michigan State Finance Authority, Revenue Bonds (Henry Ford Health System)) Recourse, Underlying Coupon Rate (%) 4.00
|
|
13.51
|
|
11/15/2050
|
|
2,440,000
|
b,d,e
|
2,729,390
|
|
|
9,097,405
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Minnesota - 1.4%
|
|
|
|
|
|
Duluth Economic Development Authority, Revenue Bonds, Refunding (Essentia Health Obligated Group) Ser. A
|
|
5.00
|
|
2/15/2058
|
|
1,000,000
|
|
1,153,440
|
|
St. Paul Housing & Redevelopment Authority, Revenue Bonds, Refunding (HealthEast Care System Project)
|
|
5.00
|
|
11/15/2025
|
|
1,200,000
|
c
|
1,481,496
|
|
|
2,634,936
|
|
Mississippi - 1.1%
|
|
|
|
|
|
Warren County, Revenue Bonds (International Paper Project) Ser. A
|
|
5.38
|
|
12/1/2035
|
|
2,000,000
|
|
2,089,760
|
|
Missouri - 2.2%
|
|
|
|
|
|
Kansas City Industrial Development Authority, Revenue Bonds, Ser. A
|
|
5.00
|
|
3/1/2044
|
|
750,000
|
|
891,150
|
|
Missouri Health & Educational Facilities Authority, Revenue Bonds (Lutheran Senior Services Projects) Ser. A
|
|
5.00
|
|
2/1/2042
|
|
2,000,000
|
|
2,206,400
|
|
Missouri Health & Educational Facilities Authority, Revenue Bonds (Lutheran Senior Services Projects) Ser. B
|
|
2.88
|
|
2/1/2022
|
|
1,000,000
|
|
998,880
|
|
|
4,096,430
|
|
Multi-State - .9%
|
|
|
|
|
|
Federal Home Loan Mortgage Corp. Multifamily Variable Rate Certificates, Revenue Bonds, Ser. M048
|
|
3.15
|
|
1/15/2036
|
|
1,485,000
|
b
|
1,653,072
|
|
Nebraska - .6%
|
|
|
|
|
|
Douglas County Hospital Authority No. 2, Revenue Bonds (Children's Hospital Obligated Group)
|
|
5.00
|
|
11/15/2036
|
|
1,000,000
|
|
1,189,840
|
|
Nevada - 1.4%
|
|
|
|
|
|
Reno, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.)
|
|
4.00
|
|
6/1/2058
|
|
1,250,000
|
|
1,322,200
|
|
Reno, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.)
|
|
4.13
|
|
6/1/2058
|
|
1,250,000
|
|
1,356,750
|
|
|
2,678,950
|
|
New Jersey - 7.1%
|
|
|
|
|
|
New Jersey Economic Development Authority, Revenue Bonds, Refunding, Ser. XX
|
|
5.25
|
|
6/15/2027
|
|
1,000,000
|
|
1,143,360
|
|
13
STATEMENT OF INVESTMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
New Jersey - 7.1% (continued)
|
|
|
|
|
|
New Jersey Economic Development Authority, Revenue Bonds, Ser. WW
|
|
5.25
|
|
6/15/2040
|
|
1,180,000
|
|
1,296,749
|
|
New Jersey Transportation Trust Fund Authority, Revenue Bonds
|
|
5.00
|
|
6/15/2046
|
|
1,250,000
|
|
1,385,400
|
|
New Jersey Transportation Trust Fund Authority, Revenue Bonds
|
|
5.25
|
|
6/15/2043
|
|
2,000,000
|
|
2,265,040
|
|
New Jersey Transportation Trust Fund Authority, Revenue Bonds, Ser. AA
|
|
5.25
|
|
6/15/2033
|
|
1,000,000
|
|
1,114,410
|
|
South Jersey Port Corp., Revenue Bonds, Ser. B
|
|
5.00
|
|
1/1/2048
|
|
1,000,000
|
|
1,076,460
|
|
Tobacco Settlement Financing Corp., Revenue Bonds, Refunding, Ser. A
|
|
5.00
|
|
6/1/2046
|
|
3,860,000
|
|
4,494,005
|
|
Tobacco Settlement Financing Corp., Revenue Bonds, Refunding, Ser. A
|
|
5.25
|
|
6/1/2046
|
|
390,000
|
|
460,785
|
|
|
13,236,209
|
|
New York - 10.6%
|
|
|
|
|
|
New York City, GO, Ser. D1
|
|
4.00
|
|
3/1/2050
|
|
1,500,000
|
|
1,692,510
|
|
New York City Educational Construction Fund, Revenue Bonds, Ser. A
|
|
6.50
|
|
4/1/2028
|
|
1,500,000
|
|
1,545,795
|
|
New York City Industrial Development Agency, Revenue Bonds (Yankee Stadium Project) (Insured; Assured Guaranty Corp.)
|
|
7.00
|
|
3/1/2049
|
|
1,435,000
|
|
1,441,515
|
|
New York Convention Center Development Corp., Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) Ser. B
|
|
0.00
|
|
11/15/2049
|
|
5,600,000
|
f
|
2,085,608
|
|
New York Transportation Development Corp., Revenue Bonds (LaGuardia Airport Terminal B Redevelopment Project) Ser. A
|
|
5.25
|
|
1/1/2050
|
|
1,500,000
|
|
1,612,515
|
|
Port Authority of New York & New Jersey, Revenue Bonds (JFK International Air Terminal Project)
|
|
6.00
|
|
12/1/2036
|
|
1,500,000
|
|
1,513,125
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0436), (New York City Municipal Water Finance Authority, Revenue Bonds, Refunding) Recourse, Underlying Coupon Rate (%) 5.00
|
|
17.86
|
|
3/14/2021
|
|
7,400,000
|
b,d,e
|
7,781,266
|
|
14
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
New York - 10.6% (continued)
|
|
|
|
|
|
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
|
|
13.84
|
|
11/15/2046
|
|
2,070,000
|
b,d,e
|
2,235,906
|
|
|
19,908,240
|
|
Ohio - 1.4%
|
|
|
|
|
|
Buckeye Tobacco Settlement Financing Authority, Revenue Bonds, Refunding, Ser. A2
|
|
4.00
|
|
6/1/2048
|
|
1,000,000
|
|
1,093,860
|
|
Butler County, Revenue Bonds
|
|
5.50
|
|
11/1/2020
|
|
450,000
|
c
|
451,944
|
|
Cuyahoga County, Revenue Bonds, Refunding (The MetroHealth System)
|
|
5.00
|
|
2/15/2052
|
|
1,000,000
|
|
1,116,740
|
|
|
2,662,544
|
|
Pennsylvania - 7.0%
|
|
|
|
|
|
Allentown School District, GO, Refunding (Insured; Build American Mutual) Ser. B
|
|
5.00
|
|
2/1/2032
|
|
1,255,000
|
|
1,600,414
|
|
Clairton Municipal Authority, Revenue Bonds, Refunding, Ser. B
|
|
5.00
|
|
12/1/2042
|
|
1,000,000
|
|
1,063,650
|
|
Montgomery County Industrial Development Authority, Revenue Bonds, Refunding (ACTS Retirement-Life Communities Obligated Group)
|
|
5.00
|
|
11/15/2036
|
|
1,000,000
|
|
1,153,280
|
|
Pennsylvania Higher Educational Facilities Authority, Revenue Bonds, Refunding (University of Sciences)
|
|
5.00
|
|
11/1/2033
|
|
2,000,000
|
|
2,130,800
|
|
Pennsylvania Housing Finance Agency, Revenue Bonds, Refunding, Ser. 114A
|
|
3.35
|
|
10/1/2026
|
|
1,500,000
|
|
1,535,040
|
|
Pennsylvania Turnpike Commission, Revenue Bonds, Ser. A1
|
|
5.00
|
|
12/1/2046
|
|
1,000,000
|
|
1,157,160
|
|
Pennsylvania Turnpike Commission, Revenue Bonds, Ser. B
|
|
5.25
|
|
12/1/2048
|
|
1,000,000
|
|
1,223,290
|
|
Philadelphia Water & Wastewater, Revenue Bonds, Ser. A
|
|
5.00
|
|
11/1/2050
|
|
1,000,000
|
|
1,262,100
|
|
15
STATEMENT OF INVESTMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Pennsylvania - 7.0% (continued)
|
|
|
|
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0373), (Geisinger Authority, Revenue Bonds (Geisinger Health System)) Non-recourse, Underlying Coupon Rate (%) 5.13
|
|
18.21
|
|
6/1/2041
|
|
2,000,000
|
b,d,e
|
2,043,535
|
|
|
13,169,269
|
|
Rhode Island - .3%
|
|
|
|
|
|
Providence Public Building Authority, Revenue Bonds (Insured; Assured Guaranty Municipal Corp.) Ser. A
|
|
5.00
|
|
9/15/2037
|
|
500,000
|
|
619,685
|
|
South Carolina - 6.3%
|
|
|
|
|
|
South Carolina Jobs-Economic Development Authority, Revenue Bonds (Bishop Gadsden Episcopal Retirement Community Obligated Group)
|
|
5.00
|
|
4/1/2054
|
|
1,000,000
|
|
1,089,180
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0384), (South Carolina Public Service Authority, Revenue Bonds, Refunding (Santee Cooper)) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
13.55
|
|
12/1/2043
|
|
4,800,000
|
b,d,e
|
5,266,704
|
|
Tobacco Settlement Management Authority, Revenue Bonds, Ser. B
|
|
6.38
|
|
5/15/2030
|
|
3,750,000
|
|
5,406,075
|
|
|
11,761,959
|
|
Tennessee - 1.2%
|
|
|
|
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0388), (Metropolitan Government of Nashville & Davidson County, Revenue Bonds, Refunding) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
17.64
|
|
7/1/2040
|
|
2,000,000
|
b,d,e
|
2,214,460
|
|
Texas - 10.4%
|
|
|
|
|
|
Clifton Higher Education Finance Corp., Revenue Bonds (Uplift Education) Ser. A
|
|
4.25
|
|
12/1/2034
|
|
1,000,000
|
|
1,044,620
|
|
Harris County-Houston Sports Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. A
|
|
0.00
|
|
11/15/2052
|
|
4,000,000
|
f
|
962,200
|
|
Houston Airport System, Revenue Bonds, Refunding, Ser. A
|
|
5.00
|
|
7/1/2021
|
|
1,300,000
|
c
|
1,345,370
|
|
North Texas Education Finance Corp., Revenue Bonds (Uplift Education) Ser. A
|
|
5.13
|
|
6/1/2022
|
|
2,000,000
|
c
|
2,161,440
|
|
16
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Texas - 10.4% (continued)
|
|
|
|
|
|
Tender Option Bond Trust Receipts (Series 2016-XM0377), (San Antonio, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
17.88
|
|
2/1/2043
|
|
6,300,000
|
b,d,e
|
6,902,406
|
|
Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds (Blueridge Transportation Group)
|
|
5.00
|
|
12/31/2055
|
|
1,000,000
|
|
1,065,840
|
|
Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds (Blueridge Transportation Group)
|
|
5.00
|
|
12/31/2050
|
|
1,200,000
|
|
1,281,228
|
|
Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds (Segment 3C Project)
|
|
5.00
|
|
6/30/2058
|
|
2,500,000
|
|
2,871,600
|
|
Texas Private Activity Bond Surface Transportation Corp., Revenue Bonds, Refunding (LBJ Infrastructure Group)
|
|
4.00
|
|
12/31/2039
|
|
1,600,000
|
|
1,807,504
|
|
|
19,442,208
|
|
U.S. Related - 1.3%
|
|
|
|
|
|
Puerto Rico, GO, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. A
|
|
5.00
|
|
7/1/2035
|
|
1,250,000
|
|
1,303,862
|
|
Puerto Rico Highway & Transportation Authority, Revenue Bonds, Refunding (Insured; Assured Guaranty Municipal Corp.) Ser. CC
|
|
5.25
|
|
7/1/2034
|
|
1,000,000
|
|
1,109,660
|
|
|
2,413,522
|
|
Utah - 1.5%
|
|
|
|
|
|
Utah Charter School Finance Authority, Revenue Bonds, Refunding (Summit Academy) Ser. A
|
|
5.00
|
|
4/15/2031
|
|
860,000
|
|
1,082,921
|
|
Utah Infrastructure Agency, Revenue Bonds, Refunding, Ser. A
|
|
5.00
|
|
10/15/2037
|
|
1,500,000
|
|
1,662,690
|
|
|
2,745,611
|
|
Virginia - 1.2%
|
|
|
|
|
|
Virginia Small Business Financing Authority, Revenue Bonds (Transform 66 P3 Project)
|
|
5.00
|
|
12/31/2052
|
|
2,000,000
|
|
2,244,980
|
|
Washington - 9.9%
|
|
|
|
|
|
Port of Seattle, Revenue Bonds
|
|
4.00
|
|
4/1/2044
|
|
1,000,000
|
|
1,073,130
|
|
17
STATEMENT OF INVESTMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
Description
|
Coupon
Rate (%)
|
|
Maturity
Date
|
|
Principal
Amount ($)
|
|
Value ($)
|
|
Long-Term Municipal Investments - 152.2% (continued)
|
|
|
|
|
|
Washington - 9.9% (continued)
|
|
|
|
|
|
Tender Option Bond Trust Receipts (Series 2017-XF2423), (King County, Revenue Bonds, Refunding) Recourse, Underlying Coupon Rate (%) 5.00
|
|
18.00
|
|
1/1/2029
|
|
3,000,000
|
b,d,e
|
3,036,135
|
|
Tender Option Bond Trust Receipts (Series 2018-XM0680), (Washington Convention Center Public Facilities District, Revenue Bonds) Non-recourse, Underlying Coupon Rate (%) 5.00
|
|
9.01
|
|
7/1/2058
|
|
13,000,000
|
b,d,e
|
14,430,260
|
|
|
18,539,525
|
|
Total Investments (cost $265,357,372)
|
|
152.2%
|
285,647,161
|
|
Liabilities, Less Cash and Receivables
|
|
(36.1%)
|
(67,719,447)
|
|
Preferred Stock, at redemption value
|
|
(16.1%)
|
(30,225,000)
|
|
Net Assets Applicable to Common Shareholders
|
|
100.0%
|
187,702,714
|
|
a Zero coupon until a specified date at which time the stated coupon rate becomes effective until maturity.
b Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2020, these securities were valued at $115,331,285 or 61.44% of net assets.
c 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.
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 Security issued with a zero coupon. Income is recognized through the accretion of discount.
18
|
|
Portfolio Summary (Unaudited) †
|
Value (%)
|
General
|
27.0
|
Education
|
22.4
|
Medical
|
21.3
|
Water
|
13.1
|
Transportation
|
10.7
|
Prerefunded
|
9.3
|
Airport
|
8.3
|
General Obligation
|
7.8
|
Tobacco Settlement
|
7.7
|
Utilities
|
6.6
|
Nursing Homes
|
5.2
|
Development
|
4.8
|
Power
|
4.2
|
School District
|
1.5
|
Multifamily Housing
|
.9
|
Single Family Housing
|
.8
|
Student Loan
|
.6
|
|
152.2
|
† Based on net assets.
See notes to financial statements.
19
|
|
|
|
|
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
|
CIFG
|
CDC Ixis Financial Guaranty
|
COP
|
Certificate of Participation
|
CP
|
Commercial Paper
|
DRIVERS
|
Derivative Inverse Tax-Exempt Receipts
|
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
|
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.
20
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
Value
|
|
Assets ($):
|
|
|
|
|
Investments in securities—See Statement of Investments
|
265,357,372
|
|
285,647,161
|
|
Cash
|
|
|
|
|
263,904
|
|
Interest receivable
|
|
3,674,276
|
|
Prepaid expenses
|
|
|
|
|
8,876
|
|
|
|
|
|
|
289,594,217
|
|
Liabilities ($):
|
|
|
|
|
Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 2(b)
|
|
129,031
|
|
Payable for floating rate notes issued—Note 3
|
|
71,179,592
|
|
Interest and expense payable related to
floating rate notes issued—Note 3
|
|
194,457
|
|
Commissions payable—Note 1
|
|
54,496
|
|
Directors’ fees and expenses payable
|
|
1,250
|
|
Dividends payable to Preferred Shareholders
|
|
625
|
|
Other accrued expenses
|
|
|
|
|
107,052
|
|
|
|
|
|
|
71,666,503
|
|
Auction Preferred Stock, Series A and B, par value $.001 per share (1,209 shares issued and outstanding at $25,000 per share liquidation preference)—Note 1
|
|
30,225,000
|
|
Net Assets Applicable to Common Shareholders ($)
|
|
|
187,702,714
|
|
Composition of Net Assets ($):
|
|
|
|
|
Common Stock, par value, $.001 per share
(20,750,798 shares issued and outstanding)
|
|
|
|
|
20,751
|
|
Paid-in capital
|
|
|
|
|
178,953,916
|
|
Total distributable earnings (loss)
|
|
|
|
|
8,728,047
|
|
Net Assets Applicable to Common Shareholders ($)
|
|
|
187,702,714
|
|
|
|
|
|
|
Shares Outstanding
|
|
|
(110 million shares authorized)
|
20,750,798
|
|
Net Asset Value Per Share of Common Stock ($)
|
|
9.05
|
|
|
|
|
|
|
See notes to financial statements.
|
|
|
|
|
21
STATEMENT OF OPERATIONS
Year Ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($):
|
|
|
|
|
Interest Income
|
|
|
12,166,251
|
|
Expenses:
|
|
|
|
|
Management fee—Note 2(a)
|
|
|
1,531,677
|
|
Interest and expense related to floating rate notes issued—Note 3
|
|
|
1,268,821
|
|
Professional fees
|
|
|
96,134
|
|
Commission fees—Note 1
|
|
|
86,145
|
|
Directors’ fees and expenses—Note 2(c)
|
|
|
43,413
|
|
Shareholders’ reports
|
|
|
39,687
|
|
Shareholder servicing costs
|
|
|
23,580
|
|
Registration fees
|
|
|
20,000
|
|
Chief Compliance Officer fees—Note 2(b)
|
|
|
8,415
|
|
Custodian fees—Note 2(b)
|
|
|
3,076
|
|
Miscellaneous
|
|
|
39,702
|
|
Total Expenses
|
|
|
3,160,650
|
|
Less—reduction in fees due to earnings credits—Note 2(b)
|
|
|
(3,076)
|
|
Net Expenses
|
|
|
3,157,574
|
|
Investment Income—Net
|
|
|
9,008,677
|
|
Realized and Unrealized Gain (Loss) on Investments—Note 3 ($):
|
|
|
Net realized gain (loss) on investments
|
(3,399,478)
|
|
Net realized gain (loss) on futures
|
(1,143,256)
|
|
Net Realized Gain (Loss)
|
|
|
(4,542,734)
|
|
Net change in unrealized appreciation (depreciation) on investments
|
(1,471,226)
|
|
Net change in unrealized appreciation (depreciation) on futures
|
(267,811)
|
|
Net Change in Unrealized Appreciation (Depreciation)
|
|
|
(1,739,037)
|
|
Net Realized and Unrealized Gain (Loss) on Investments
|
|
|
(6,281,771)
|
|
Dividends to Preferred Shareholders
|
|
|
(464,846)
|
|
Net Increase in Net Assets Applicable to Common
Shareholders Resulting from Operations
|
|
2,262,060
|
|
|
|
|
|
|
|
|
See notes to financial statements.
|
|
|
|
|
|
22
STATEMENT OF CASH FLOWS
Year Ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities ($):
|
|
|
|
|
|
Purchases of portfolio securities
|
|
(58,074,388)
|
|
|
|
Proceeds from sales of portfolio securities
|
59,379,177
|
|
|
|
Net purchase (sales) of short-term securities
|
14,562,277
|
|
|
|
Dividends paid to Preferred Shareholders
|
(474,085)
|
|
|
|
Interest paid
|
|
(1,757,852)
|
|
|
|
Paid to BNY Mellon Investment Adviser, Inc.
|
|
(1,536,992)
|
|
|
|
Operating expenses paid
|
|
(362,370)
|
|
|
|
Net Realized and Unrealized Gain (Loss) on futures†
|
|
(1,413,629)
|
|
|
|
Net Cash Provided (or Used) in Operating Activities
|
|
|
|
10,322,138
|
|
Cash Flows from Financing Activities ($):
|
|
|
|
|
|
Dividends paid to Shareholders
|
|
(8,673,799)
|
|
|
|
Interest and expense related to floating
|
|
|
|
|
|
|
rate notes issued paid
|
|
(1,631,459)
|
|
|
|
Net Cash Provided (or Used) in Financing Activities
|
|
(10,305,258)
|
|
Net Increase (Decrease) in cash
|
|
16,880
|
|
Cash at beginning of period††
|
|
247,024
|
|
Cash at end of period
|
|
263,904
|
|
Reconciliation of Net Increase (Decrease) in Net Assets Applicable to
|
|
|
|
|
Common Shareholders Resulting from Operations to
|
|
|
|
|
Net Cash Provided (or Used) in Operating Activities ($):
|
|
|
|
Net Increase in Net Assets Resulting From Operations
|
|
2,262,060
|
|
Adjustments to reconcile net increase in net assets
|
|
|
|
|
applicable to Common Shareholder resulting from
|
|
|
|
|
operations to net cash provided (or Used) in operating activities ($):
|
|
|
|
Decrease in investments in securities at cost
|
|
19,349,931
|
|
Decrease in interest receivable
|
|
388,652
|
|
Increase in prepaid expenses
|
|
(35)
|
|
Decrease in Due to BNY Mellon Investment Adviser, Inc. and affiliates
|
|
(5,315)
|
|
Net change in unrealized appreciation (depreciation) on futures†
|
|
(270,373)
|
|
Decrease in payable for floating rate notes issued
|
|
(14,312,755)
|
|
Interest and expense related to floating rate notes issued
|
|
1,268,821
|
|
Decrease in dividends payable to Preferred Shareholders
|
|
(9,239)
|
|
Decrease in Directors' fees and expenses payable
|
|
(5,757)
|
|
Increase in commissions payable and other accrued expenses
|
|
498
|
|
Net change in unrealized (appreciation) depreciation on investments
|
|
1,739,037
|
|
Net amortization of premiums on investments
|
|
(83,387)
|
|
Net Cash Provided (or Used) in Operating Activities
|
|
10,322,138
|
|
Supplemental Disclosure Cash Flow Information ($):
|
|
|
|
Non-cash financing activities:
|
|
|
|
Reinvestment of dividends
|
|
40,892
|
|
|
|
|
|
|
|
|
†Includes change in variation margin from beginning of period.
|
††Includes deposits held as collateral by broker.
|
See notes to financial statements.
|
|
|
|
|
|
23
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|
|
|
|
2020
|
|
2019
|
|
Operations ($):
|
|
|
|
|
|
|
|
|
Investment income—net
|
|
|
9,008,677
|
|
|
|
9,467,301
|
|
Net realized gain (loss) on investments
|
|
(4,542,734)
|
|
|
|
307,435
|
|
Net change in unrealized appreciation
(depreciation) on investments
|
|
(1,739,037)
|
|
|
|
9,265,784
|
|
Dividends to Preferred Shareholders
|
|
|
(464,846)
|
|
|
|
(799,608)
|
|
Net Increase (Decrease) in Net Assets Applicable
to Common Shareholders Resulting from
Operations
|
2,262,060
|
|
|
|
18,240,912
|
|
Distributions ($):
|
|
Distributions to Common Shareholders
|
|
|
(8,714,691)
|
|
|
|
(8,713,439)
|
|
Capital Stock Transactions ($):
|
|
Distributions reinvested
|
|
|
40,892
|
|
|
|
-
|
|
Increase (Decrease) in Net Assets
from Capital Stock Transactions
|
40,892
|
|
|
|
-
|
|
Total Increase (Decrease) in Net Assets
Applicable to Common Shareholders
|
(6,411,739)
|
|
|
|
9,527,473
|
|
Net Assets Applicable to Common Shareholders ($):
|
|
Beginning of Period
|
|
|
194,114,453
|
|
|
|
184,586,980
|
|
End of Period
|
|
|
187,702,714
|
|
|
|
194,114,453
|
|
Capital Share Transactions (Common Shares):
|
|
Shares issued for distributions reinvested
|
|
|
4,517
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
See notes to financial statements.
|
|
|
|
|
|
|
|
|
24
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements and, with respect to common stock, market price data for the fund’s common shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|
|
2020
|
2019
|
2018
|
2017
|
2016
|
Per Share Data ($):
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
9.36
|
8.90
|
9.35
|
9.84
|
9.54
|
Investment Operations:
|
|
|
|
|
|
|
Investment income-neta
|
|
.43
|
.46
|
.50
|
.52
|
.52
|
Net realized and unrealized gain
(loss) on investments
|
|
(.30)
|
.46
|
(.52)
|
(.49)
|
.33
|
Dividends to Preferred Shareholders
from investment income—net
|
|
(.02)
|
(.04)
|
(.04)
|
(.03)
|
(.01)
|
Total from Investment Operations
|
|
.11
|
.88
|
(.06)
|
-
|
.84
|
Distributions to Common Shareholders:
|
|
|
|
|
|
Dividends from investment
income-net
|
|
(.42)
|
(.42)
|
(.44)
|
(.49)
|
(.54)
|
Net asset value resulting from
Auction Preferred Stock
tendered as a discount
|
|
-
|
-
|
.05
|
-
|
-
|
Net asset value, end of period
|
|
9.05
|
9.36
|
8.90
|
9.35
|
9.84
|
Market value, end of period
|
|
8.63
|
9.35
|
7.83
|
9.13
|
9.60
|
Total Return (%)b
|
|
(3.13)
|
25.58
|
(9.55)
|
.44
|
7.39
|
25
FINANCIAL HIGHLIGHTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|
2020
|
2019
|
2018
|
2017
|
2016
|
Ratios/Supplemental Data (%):
|
|
|
|
|
|
|
Ratio of total expenses to average
net assets applicable to
Common Stockc
|
|
1.68
|
1.89
|
1.75
|
1.48
|
1.33
|
Ratio of net expenses to average net
assets applicable to Common Stockc
|
|
1.67
|
1.89
|
1.75
|
1.48
|
1.33
|
Ratio of interest and expense related
to floating rate notes issued to
average net assets applicable to
Common Stockc
|
|
.67
|
.90
|
.60
|
.37
|
.20
|
Ratio of net investment income
to average net assets applicable to
Common Stockc
|
|
4.78
|
5.04
|
5.46
|
5.57
|
5.35
|
Ratio of total expenses to
total average net assets
|
|
1.44
|
1.63
|
1.45
|
1.18
|
1.07
|
Ratio of net expense to total average
net assets
|
|
1.44
|
1.63
|
1.45
|
1.18
|
1.07
|
Ratio of interest and expense related
to floating rate notes issued to total
average net assets
|
|
.58
|
.78
|
.50
|
.29
|
.16
|
Ratio of net investment income to
total average net assets
|
|
4.12
|
4.34
|
4.52
|
4.43
|
4.29
|
Portfolio Turnover Rate
|
|
26.85
|
31.62
|
17.70
|
12.49
|
11.66
|
Asset Coverage of Preferred Stock,
end of period
|
|
721
|
742
|
711
|
488
|
508
|
Net Assets applicable to
Common Shareholders,
end of period ($ x 1,000)
|
|
187,703
|
194,114
|
184,587
|
194,063
|
204,069
|
Preferred Stock Outstanding,
end of period ($ x 1,000)
|
|
30,225
|
30,225
|
30,225
|
50,000
|
50,000
|
Floating Rate Notes Outstanding,
end of period ($ x 1,000)
|
|
71,180
|
85,492
|
74,682
|
51,742
|
46,492
|
a Based on average common shares outstanding.
b Calculated based on market value.
c Does not reflect the effect of dividends to Preferred Shareholders.
See notes to financial statements.
26
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
BNY Mellon Municipal Income, Inc. (the “fund”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), is a non-diversified closed-end management investment company. The fund’s investment objective is to maximize current income exempt from federal income tax to the extent consistent with the preservation of capital. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. The fund’s Common Stock trades on the New York Stock Exchange (the “NYSE American”) under the ticker symbol DMF.
The fund has outstanding 616 Series A shares and 593 Series B 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 certain other matters, as required by law. The fund’s Board of Directors (the “Board”) has designated Nathan Leventhal and Benaree Pratt Wiley as directors to be elected by the holders of 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-
27
NOTES TO FINANCIAL STATEMENTS (continued)
Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in securities, excluding short-term investment (other than U.S. Treasury Bills) are valued each business day by an independent pricing
28
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.
For securities where observable inputs are limited, assumptions about market activity and risk are used and such securities are generally categorized within Level 3 of the fair value hierarchy.
The following is a summary of the inputs used as of September 30, 2020 in valuing the fund’s investments:
29
NOTES TO FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
Level 1 - Unadjusted Quoted Prices
|
Level 2 - Other Significant Observable Inputs
|
Level 3 -Significant Unobservable Inputs
|
Total
|
Assets ($)
|
|
|
|
|
Investments in Securities: †
|
|
|
|
|
Municipal Securities
|
-
|
285,647,161
|
-
|
285,647,161
|
Liabilities ($)
|
|
|
|
|
Floating Rate Notes††
|
-
|
(71,179,592)
|
-
|
(71,179,592)
|
† 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: Certain events particular to the industries in which the fund’s investments conduct their operations, as well as general economic, political and public health conditions, may have a significant negative impact on the investee’s operations and profitability. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the fund. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies world-wide. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken world-wide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. 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.
The use of the London Interbank Offered Rate (“LIBOR”) is expected to be phased out by the end of 2021. LIBOR may be used as a reference rate for certain financial instruments invested in by the fund. We are currently
30
evaluating the impact of the LIBOR transition and continue to monitor the efforts of various parties, including government agencies, seeking to identify an alternative rate to replace LIBOR.
(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 September 29, 2020, the Board declared a cash dividend of $.035 per share from investment income-net, payable on October 30, 2020 to Common Shareholders of record as of the close of business on October 15, 2020. The ex-dividend date was October 14, 2020.
(e) Dividends and distributions to shareholders of APS: Dividends, which are cumulative, are generally reset every 7 days for each Series of APS pursuant to a process specified in related fund charter documents. Dividend rates as of September 30, 2020, for each Series of APS were as follows: Series A–.220% and Series B–.220%. 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 September 30, 2020 for each Series of APS were as follows: Series A–1.517% and Series B–1.560%.
(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.
31
NOTES TO FINANCIAL STATEMENTS (continued)
As of and during the period ended September 30, 2020, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended September 30, 2020, the fund did not incur any interest or penalties.
Each tax year in the four-year period ended September 30, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At September 30, 2020, the components of accumulated earnings on a tax basis were as follows: undistributed tax-exempt income $396,107, accumulated capital losses $11,990,696 and unrealized appreciation $20,323,261.
The fund is permitted to carry forward capital losses for an unlimited period. Furthermore, capital loss carryovers retain their character as either short-term or long-term capital losses.
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to September 30, 2020. The fund has $6,323,893 of short-term capital losses and $5,666,803 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 September 30, 2020 and September 30, 2019 were as follows: tax-exempt income $9,177,734 and $9,513,047, and ordinary income $1,803 and $0, respectively.
During the period ended September 30, 2020, as a result of permanent book to tax differences, primarily due to the tax treatment for amortization adjustments and dividend reclassification, the fund increased total distributable earnings (loss) by $343,182 and decreased paid-in capital by the same amount. Net assets and net asset value per share were not affected by this reclassification.
NOTE 2—Management Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement (the “Agreement”) with the Adviser, the management fee is computed at the annual rate of .70% of the value of the fund’s average weekly net assets, inclusive of the outstanding APS, and is payable monthly. The Agreement provides that if in any full fiscal year the aggregate expenses of the fund (excluding taxes, interest on borrowings, brokerage fees and extraordinary expenses) exceed the expense limitation of any state having jurisdiction over the fund, the fund
32
may deduct from payments to be made to the Adviser, or the Adviser will bear, the amount of such excess to the extent required by state law. During the period ended September 30, 2020, there was no expense reimbursement pursuant to the Agreement.
(b) The fund compensates The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets and transaction activity. During the period ended September 30, 2020, the fund was charged $3,076 pursuant to the custody agreement. These fees were offset by earnings credits of $3,076.
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, if any, as an expense offset in the Statement of Operations.
During the period ended September 30, 2020, the fund was charged $8,415 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: management fees of $125,447, custodian fees of $1,538 and Chief Compliance Officer fees of $2,046.
(c) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 3—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities and futures, during the period ended September 30, 2020, amounted to $57,991,703 and $58,344,283, 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
33
NOTES TO FINANCIAL STATEMENTS (continued)
Trust, which is transferred to the fund, and is paid interest based on the remaining cash flows of the Inverse Floater Trust, after payment of interest on the other securities and various expenses of the Inverse Floater Trust. An Inverse Floater Trust may be collapsed without the consent of the fund due to certain termination events such as bankruptcy, default or other credit event.
The fund accounts for the transfer of bonds to the Inverse Floater Trust as secured borrowings, with the securities transferred remaining in the fund’s investments, and the Trust Certificates reflected as fund liabilities in the Statement of Assets and Liabilities.
The fund may invest in inverse floater securities on either a non-recourse or recourse basis. These securities are typically supported by a liquidity facility provided by a bank or other financial institution (the “Liquidity Provider”) that allows the holders of the Trust Certificates to tender their certificates in exchange for payment from the Liquidity Provider of par plus accrued interest on any business day prior to a termination event. When the fund invests in inverse floater securities on a non-recourse basis, the Liquidity Provider is required to make a payment under the liquidity facility due to a termination event to the holders of the Trust Certificates. When this occurs, the Liquidity Provider typically liquidates all or a portion of the municipal securities held in the Inverse Floater Trust. A liquidation shortfall occurs if the Trust Certificates exceed the proceeds of the sale of the bonds in the Inverse Floater Trust (“Liquidation Shortfall”). When a fund invests in inverse floater securities on a recourse basis, the fund typically enters into a reimbursement agreement with the Liquidity Provider where the fund is required to repay the Liquidity Provider the amount of any Liquidation Shortfall. As a result, a fund investing in a recourse inverse floater security bears the risk of loss with respect to any Liquidation Shortfall.
The average amount of borrowings outstanding under the inverse floater structure during the period ended September 30, 2020 was approximately $81,781,158, with a related weighted average annualized interest rate of 1.55%.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended September 30, 2020 is discussed below.
Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including interest rate risk, as a result of changes in value of underlying financial instruments. The fund invests in
34
futures in order to manage its exposure to or protect against changes in the market. A futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents. The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations. When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Statement of Operations. There is minimal counterparty credit risk to the fund with futures since they are exchange traded, and the exchange guarantees the futures against default. At September 30, 2020 there were no futures outstanding.
The following summarizes the average market value of derivatives outstanding during the period ended September 30, 2020:
|
|
|
|
|
Average Market Value ($)
|
Interest rate futures
|
|
3,912,510
|
|
|
|
At September 30, 2020, the cost of investments for federal income tax purposes was $194,144,308; accordingly, accumulated net unrealized appreciation on investments was $20,323,261, consisting of $20,933,403 gross unrealized appreciation and $610,142 gross unrealized depreciation.
35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of BNY Mellon Municipal Income, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of BNY Mellon Municipal Income, Inc. (the “Fund”), including the statement of investments, as of September 30, 2020, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at September 30, 2020, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2020, 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
November 24, 2020
36
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 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 broker/dealer (i.e., in “street name”) may not participate in the Plan, but may elect to have cash dividends and distributions reinvested by his broker/dealer in additional shares of the fund if such service is provided by the broker/dealer; otherwise such dividends and distributions will be treated like any other cash dividend or distribution.
A Common 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 shareholder’s name and address as they appear on the Administrator’s records and will be effective only if received more than ten business days prior to the record date for any distribution.
The Administrator maintains all Common 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 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.
37
ADDITIONAL INFORMATION (Unaudited) (continued)
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 times pay out more or less than the entire amount of net investment income earned in any particular month and may at times in any month pay out any accumulated but undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the fund for any particular month may be more or less than the amount of net investment income earned by the fund during such month.
Benefits and Risks of Leveraging
The fund utilizes leverage to seek to enhance the yield and net asset value of its Common Stock. These objectives cannot be achieved in all interest rate environments. To leverage, the fund has issued 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.
Supplemental Information
During the period ended September 30, 2020, there were: (i) no material changes in the fund’s investment objectives or fundamental investment policies, (ii) no changes in the fund’s charter or by-laws that would delay or prevent a change of control of the fund, and (iii) no change in the persons primarily responsible for the day-to-day management of the fund’s portfolio.
38
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 September 30, 2020 as “exempt-interest dividends” (not generally subject to regular Federal income tax), except $1,803 that is being designated as an ordinary income distribution for reporting purposes. 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 2020 calendar year on Form 1099-DIV, which will be mailed in early 2021.
39
PROXY RESULTS (Unaudited)
Common Shareholders and holders of APS voted together as a single class on the following proposal presented at the annual shareholders’ meeting held on June 16, 2020.
|
|
|
|
|
|
|
Shares
|
|
|
For
|
|
Authority Withheld
|
To elect four Class III Directors:†
|
|
|
|
|
Joseph S. DiMartino
|
16,934,613
|
|
1,001,507
|
|
Andrew J. Donohue
|
17,138,510
|
|
797,610
|
|
Isabel P. Dunst
|
17,126,674
|
|
809,446
|
|
Benaree Pratt Wiley††
|
961
|
|
17
|
† The terms of these Class III Directors expire in 2023.
†† Elected solely by APS holders; Common Shareholders not entitled to vote.
40
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited)
At a meeting of the fund’s Board of Directors held on July 20-21, 2020, the Board considered the renewal of the fund’s Management Agreement pursuant to which the Adviser provides the fund with investment advisory and administrative services (the “Agreement”). The Board members, a majority of whom are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Adviser. In considering the renewal of the Agreement, 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. Representatives of 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.
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 general and insured municipal debt leveraged closed-end funds, selected by Broadridge as comparable to the fund (the “Performance Group”) and with a broader group of funds consisting of all general and insured municipal debt leveraged closed-end funds (the “Performance Universe”), all for various periods ended May 31, 2020, 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 other general and insured municipal debt closed-end leveraged funds, excluding outliers (the “Expense Universe”), the information for which was derived in part from fund financial statements available to Broadridge as of the date of its analysis. The Adviser previously had furnished the Board with a description of the methodology Broadridge used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
Performance Comparisons. Representatives of the Adviser stated that the usefulness of performance comparisons may be affected by a number of factors, including different
41
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)
investment limitations and policies that may be applicable to the fund and comparison funds and the end date selected. The Board discussed with representatives of the Adviser the results of the comparisons and considered that the fund’s total return performance, on a net asset value basis, was below the Performance Group and Performance Universe medians for all periods, and, on a market price basis, the fund’s total return performance was above the Performance Group and Performance Universe medians for all periods, except the five-year period when it was below the medians.
The Board also considered that, on a net asset value basis, the fund’s yield performance was at or above the Performance Group median for six of the ten one-year periods ended May 31st and above the Performance Universe median for six of the ten one-year periods ended May 31st, and, on a market price basis, was above the Performance Group median for five of the ten one-year periods and above the Performance Universe median for four of the ten one-year periods ended May 31st. The Board considered the relative proximity of the fund’s yield performance on both a net asset value and market value basis to the Performance Group and/or Performance Universe medians in certain periods when the yield 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 payable by the fund to the Adviser in light of the nature, extent and quality of the management services provided by the Adviser. In addition, the Board reviewed and considered the actual management fee rate paid by the fund over the fund’s last fiscal year. The Board also reviewed the range of actual and contractual management fees and total expenses 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, the fund’s actual management fee was lower than the Expense Group and Expense Universe actual management fee medians and the fund’s total expenses were lower than the Expense Group and Expense Universe total expenses medians. The Board also considered that, based on both common and leveraged assets together, the fund’s actual management fee was higher than the Expense Group and Expense Universe actual management fee medians and the fund’s total expenses were above the Expense Group and Expense Universe total expenses medians.
Representatives of the Adviser reviewed with the Board the management or investment advisory fees 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
42
separate accounts and/or other types of client portfolios advised by the Adviser that are considered to have similar investment strategies and policies as the fund.
Analysis of Profitability and Economies of Scale. Representatives of the Adviser reviewed the expenses allocated and profit received by the Adviser and its affiliates and the resulting profitability percentage for managing the fund and the aggregate profitability percentage to the Adviser and its affiliates for managing the funds in the BNY Mellon fund complex, and the method used to determine the expenses and profit. The Board concluded that the profitability results were not excessive, given the services rendered and service levels provided by the Adviser and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
The Board considered on the advice of its counsel, the profitability analysis (1) as part of its evaluation of whether the fees under the Agreement, considered in relation to the mix of services provided by the Adviser, including the nature, extent and quality of such services, supported the renewal of the Agreement and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Representatives of the Adviser stated that, 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 from acting as investment adviser 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 Agreement. Based on the discussions and considerations as described above, the Board concluded and determined as follows.
· The Board concluded that the nature, extent and quality of the services provided by the Adviser are adequate and appropriate.
· The Board accepted the strengths and weaknesses of the fund’s performance relative to the Performance Group and Performance Universe.
43
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)
· The Board concluded that the fee paid to the Adviser continued to be appropriate under the circumstances and in light of the factors and the totality of the services provided as discussed above.
· The Board determined that the economies of scale which may accrue to the Adviser and its affiliates in connection with the management of the fund had been adequately considered by the Adviser in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
In evaluating the Agreement, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with the Adviser and its affiliates, of the Adviser and the services provided to the fund by the Adviser. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreement, including information on the investment performance of the fund in comparison to similar funds and benchmark performance indices; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for the fund had the benefit of a number of years of reviews of the Agreement for the fund, or substantially similar agreements for other BNY Mellon funds that the Board oversees, during which lengthy discussions took place between the Board and representatives of the Adviser. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the fund’s arrangements, or substantially similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined to renew the Agreement.
44
BOARD MEMBERS INFORMATION (Unaudited)
INDEPENDENT BOARD MEMBERS
Joseph S. DiMartino (76)
Chairman of the Board (1995)
Current term expires in 2020
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: 110
———————
Francine J. Bovich (69)
Board Member (2015)
Current term expires in 2021
Principal Occupation During Past 5 Years:
· Trustee, The Bradley Trusts, private trust funds (2011-Present)
Other Public Company Board Membership During Past 5 Years:
· Annaly Capital Management, Inc., a real estate investment trust, Director (2014-Present)
No. of Portfolios for which Board Member Serves: 67
———————
J. Charles Cardona (64)
Board Member (2014)
Current term expires in 2022
Principal Occupation During Past 5 Years:
· President of the Adviser (2008-2016)
· Chief Executive Officer of Dreyfus Cash Investment Strategies, a division of the Adviser (2009-2016)
· Chairman (2013-2016) and Executive Vice President (1997-2013) of the BNY Mellon Securities Corporation
Other Public Company Board Memberships During Past 5 Years:
· BNY Mellon ETF Trust, Chairman and Director (2020-Present)
· BNY Mellon Liquidity Funds, Chairman and Director (2019-Present)
No. of Portfolios for which Board Member Serves: 39
———————
45
BOARD MEMBERS INFORMATION (Unaudited) (continued)
INDEPENDENT BOARD MEMBERS (continued)
Andrew J. Donohue (70)
Board Member (2019)
Current term expires in 2022
Principal Occupation During Past 5 Years:
· Of Counsel, Shearman & Sterling LLP (2017-2019)
· Chief of Staff to the Chair of the SEC (2015-2017)
· Managing Director and Investment Company General Counsel of Goldman Sachs (2012-2015)
Other Public Company Board Memberships During Past 5 Years:
· Oppenheimer Funds (58 funds), Director (2017-2019)
No. of Portfolios for which Board Member Serves: 53
———————
Isabel P. Dunst (73)
Board Member (2014)
Current term expires in 2020
Principal Occupation During Past 5 Years:
· Senior Counsel, Hogan Lovells LLP (2018-2019); Of Counsel (2015-2018); Partner (1990-2015)
No. of Portfolios for which Board Member Serves: 31
———————
Nathan Leventhal (77)
Board Member (2009)
Current term expires in 2022
Principal Occupation During Past 5 Years:
· President Emeritus of Lincoln Center for the Performing Arts (2001-Present)
· President of the Palm Beach Opera (2016-Present)
Other Public Company Board Membership During Past 5 Years:
· Movado Group, Inc., a public company that designs sources, markets and distributes watches Director (2003-2020)
No. of Portfolios for which Board Member Serves: 45
———————
Robin A. Melvin (57)
Board Member (2014)
Current term expires in 2022
Principal Occupation During Past 5 Years:
· Trustee, Westover School, a private girls’ boarding school in Middlebury, Connecticut (2019 – Present); Co-chairman, Mentor Illinois, a non-profit organization dedicated to increasing the quality of mentoring services in Illinois (2014 – 2020); Board member, Mentor Illinois (2013 – 2020).
No. of Portfolios for which Board Member Serves: 88
———————
46
Roslyn M. Watson (70)
Board Member (2014)
Current term expires in 2021
Principal Occupation During Past 5 Years:
· Principal, Watson Ventures, Inc., a real estate investment company (1993-Present)
Other Public Company Board Membership During Past 5 Years:
· American Express Bank, FSB, Director (1993-2018)
No. of Portfolios for which Board Member Serves: 53
———————
Benaree Pratt Wiley (73)
Board Member (2009)
Current term expires in 2020
Principal Occupation During Past 5 Years:
· Principal, The Wiley Group, a firm specializing in strategy and business development (2005-Present)
Other Public Company Board Membership During Past 5 Years:
· CBIZ, Inc., a public company providng professional business services, products and solutions, Director (2008-Present)
· Blue Cross Blue Shield of Massachusetts, Director (2004-Present)
No. of Portfolios for which Board Member Serves: 71
———————
47
BOARD MEMBERS INFORMATION (Unaudited) (continued)
INTERESTED BOARD MEMBER
Gordon J. Davis (79)
Board Member (2012)
Current term expires in 2021
Principal Occupation During Past 5 Years:
· Partner in the law firm of Venable LLP (2012-Present)
No. of Portfolios for which Board Member Serves: 49
Gordon J. Davis is deemed to be an “interested person” (as defined under the Act) of the fund as a result of his affiliation with Venable LLP, which provides legal services to the fund.
———————
The address of the Board Members and Officers is c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street, New York, New York 10286.
Clifford L. Alexander, Jr., Emeritus Board Member
Whitney I. Gerard, Emeritus Board Member
George L. Perry, Emeritus Board Member
48
OFFICERS OF THE FUND (Unaudited)
RENEE LAROCHE-MORRIS, President since May 2019.
President and a director of BNY Mellon Investment Adviser, Inc. since January 2018. She is an officer of 61 investment companies (comprised of 110 portfolios) managed by Adviser. She is 49 years old and has been an employee of BNY Mellon since 2003.
JAMES WINDELS, Treasurer since November 2001.
Director-BNY Mellon Fund Administration, and an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 62 years old and has been an employee of Adviser since April 1985.
BENNETT A. MACDOUGALL, Chief Legal Officer since October 2015.
Chief Legal Officer of the Adviser and Associate General Counsel and Managing Director of BNY Mellon since June 2015; Director and Associate General Counsel of Deutsche Bank–Asset & Wealth Management Division from June 2005 to June 2015, and as Chief Legal Officer of Deutsche Investment Management Americas Inc. from June 2012 to May 2015. He is an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 49 years old and has been an employee of Adviser since June 2015.
DAVID DIPETRILLO, Vice President since May 2019.
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; Head of US Retail Product and Channel Marketing, BNY Mellon Investment Management from January 2014 to December 2015. He is an officer of 62 investment companies (comprised of 118 portfolios) managed by Adviser or an affiliate of Adviser. He is 42 years old and has been an employee of BNY Mellon since 2005.
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 the Adviser, and an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 54 years old and has been an employee of Adviser since December 1996.
SONALEE CROSS, Vice President and Assistant Secretary since March 2018.
Counsel of BNY Mellon since October 2016; Associate at Proskauer Rose LLP from April 2016 to September 2016; Attorney at EnTrust Capital from August 2015 to February 2016; Associate at Sidley Austin LLP from September 2013 to August 2015. She is an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. She is 32 years old and has been an employee of Adviser since October 2016.
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; Trustee Associate at BNY Mellon Trust Company (Ireland) Limited from August 2013 to February 2016. She is an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. She is 30 years old and has been an employee of Adviser since August 2018.
SARAH S. KELLEHER, Vice President and Assistant Secretary since April 2014.
Managing Counsel of BNY Mellon since December 2017, Senior Counsel of BNY Mellon from March 2013 to December 2017. She is an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. She is 45 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 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 55 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 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. She is 35 years old and has been an employee of Adviser since June 2019.
49
OFFICERS OF THE FUND (Unaudited) (continued)
PETER M. SULLIVAN, Vice President and Assistant Secretary since March 2019.
Managing Counsel of BNY Mellon since March 2009, Senior Counsel of BNY Mellon from April 2004 to March 2009, and an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 52 years old and has been an employee of Adviser since January 2019.
NATALYA ZELENSKY, Vice President and Assistant Secretary since March 2017.
Managing Counsel of BNY Mellon since December 2019; Counsel of BNY Mellon from May 2016 to December 2019; Attorney at Wildermuth Endowment Strategy Fund/Wildermuth Advisory, LLC from November 2015 to May 2016 and Assistant General Counsel at RCS Advisory Services from July 2014 to November 2015. She is an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. She is 35 years old and has been an employee of Adviser since May 2016.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager-BNY Mellon Fund Administration, and an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 52 years old and has been an employee of Adviser since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager-BNY Mellon Fund Administration, and an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 56 years old and has been an employee of Adviser since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since May 2007.
Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 53 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 63 investment companies (comprised of 141 portfolios) managed by Adviser or an affiliate of Adviser. He is 53 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 Adviser, the BNY Mellon Family of Funds and BNY Mellon Funds Trust (62 investment companies, comprised of 133 portfolios). He is 63 years old and has served in various capacities with Adviser since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
50
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52
OFFICERS AND DIRECTORS
BNY Mellon Municipal Income, Inc.
240 Greenwich Street
New York, NY 10286
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Directors
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Officers (continued)
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|
Joseph S. DiMartino, Chairman
|
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Assistant Treasurers (continued)
|
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Francine J. Bovich
|
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Robert Salviolo
|
|
J. Charles Cardona
|
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Robert Svagna
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Gordon J. Davis†
|
|
Chief Compliance Officer
|
|
Andrew J. Donohue
|
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Joseph W. Connolly
|
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Isabel P. Dunst
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|
|
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Nathan Leventhal††
|
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Portfolio Managers
|
|
Robin A. Melvin
|
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Daniel A. Rabasco
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Roslyn M. Watson
|
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Jeffrey B. Burger
|
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Benaree Pratt Wiley††
|
|
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† Interested Board Member
|
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†† Elected by APS Holders
|
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Adviser
|
|
Officers
|
|
BNY Mellon Investment Adviser, Inc.
|
|
President
|
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Custodian
|
|
Renee-Laroche-Morris
|
|
The Bank of New York Mellon
|
|
Chief Legal Officer
|
|
Counsel
|
|
Bennett A. MacDougall
|
|
Proskauer Rose LLP
|
|
Vice President and Secretary
|
|
Transfer Agent,
|
|
James Bitetto
|
|
Dividend Disbursing Agent
|
|
Vice Presidents and Assistant Secretaries
|
|
and Registrar
|
|
Sonalee Cross
|
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Computershare Inc.
|
|
Deirdre Cunnane
|
|
(Common Stock)
|
|
Sarah S. Kelleher
|
|
Deutsche Bank Trust Company America
|
|
Jeff Prusnofsky
|
|
(Auction Preferred Stock)
|
|
Peter M. Sullivan
|
|
Stock Exchange Listing
|
|
Amanda Quinn
|
|
NYSE American Symbol: DMF
|
|
Natalya Zelensky
|
|
Initial SEC Effective Date
|
|
Vice President
|
|
10/21/88
|
|
David DiPetrillo
|
|
Auction Agent
|
|
Treasurer
|
|
Deutsche Bank Trust Company America
|
|
James Windels
|
|
(Auction Preferred Stock)
|
|
Assistant Treasurers
|
|
|
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Gavin C. Reilly
|
|
|
|
Robert S. Robol
|
|
|
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The fund’s net asset value per share appears in the following publications: Barron’s, Closed-End Bond Funds section under the
heading “Municipal Bond Funds” every Monday; The Wall Street Journal, Mutual Funds section under the heading
“Closed-End Funds” every Monday.
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Notice is hereby given in accordance with Section 23(c) of the Act that the fund may purchase shares of its common stock in the
open market when it can do so at prices below the then current net asset value per share.
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53
BNY Mellon Municipal Income, Inc.
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Registrar (Common Stock)
Computershare Inc.
480 Washington Boulevard
Jersey City, NJ 07310
Dividend Disbursing Agent (Common Stock)
Computershare Inc.
P.O. Box 30170
College Station, TX 77842
For more information about the fund, visit https://im.bnymellon.com/us/en/products/closed-end-funds.jsp. Here you will find the fund’s most recently available quarterly fact sheets and other information about the fund. The information posted on the fund’s website is subject to change without notice.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.bnymellonim.com/us and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-373-9387.
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0424AR0920
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Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.
Item 3. Audit Committee Financial Expert.
The Registrant's Board has determined that Francine Bovich, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). Francine Bovich is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $38,144 in 2019 and $36,686 in 2020.
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $32,993 in 2019 and $30,605 in 2020. These services consisted of one or more of the following: (i) agreed upon procedures related to compliance with Internal Revenue Code section 817(h), (ii) security counts required by Rule 17f-2 under the Investment Company Act of 1940, as amended, (iii) advisory services as to the accounting or disclosure treatment of Registrant transactions or events, (iv) advisory services to the accounting or disclosure treatment of the actual or potential impact to the Registrant of final or proposed rules, standards or interpretations by the Securities and Exchange Commission, the Financial Accounting Standards Boards or other regulatory or standard-setting bodies and (v) agreed upon procedures in evaluating compliance by the Fund with provisions of the Fund's articles supplementary creating the series of action rate preferred stock.
The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 2019 and $0 in 2020.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice, and tax planning ("Tax Services") were $3,765 in 2019 and $2,610 in 2020. These services consisted of: (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held. The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates, which required pre-approval by the Audit Committee were $0 in 2019 and $0 in 2020.
(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $0 in 2019 and $0 in 2020.
The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee, were $0 in 2019 and $0 in 2020.
(e)(1) Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. The pre-approved services in the Policy can include pre-approved audit services, pre-approved audit-related services, pre-approved tax services and pre-approved all other services. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.
(e)(2) Note. None of the services described in paragraphs (b) through (d) of this Item 4 were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) None of the hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $772,155 in 2019 and $726,833 in 2020.
Auditor Independence. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Auditor's independence.
Item 5. Audit Committee of Listed Registrants.
The Registrant is a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act and the following persons constitute the Audit Committee and full Board of Trustees of the Registrant: Francine J. Bovich, Charles Cardona, Joseph S. DiMartino, Andrew J. Donahue, Isabel P. Dunst, Nathan Leventhal, Robin A. Melvin , Roslyn L. Watson and Benaree Pratt Wiley.
The Fund has determined that each member of the Audit Committee of the Registrant is not an “interested person” of the Registrant as defined by Section 2(a)(19) of the Investment Company Act of 1940, as amended, and for purposes of Rule 10A-3(b)(1)(iii) under the Exchange Act, is considered independent.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The board has delegated to BNY Mellon Investment Adviser, Inc. (“BNYM Investment Adviser”) the authority to vote proxies of companies held in the fund’s portfolio.
Information regarding how the fund's proxies were voted during the most recent 12-month period ended June 30th is available on BNYM Investment Adviser's website, by the following August 31st, at www.im.bnymellon.com and on the SEC's website at www.sec.gov on the fund's Form N-PX.
Proxy Voting by BNYM Investment Adviser
BNYM Investment Adviser, through its participation in The Bank of New York Mellon Corporation’s (“BNY Mellon”) Proxy Voting and Governance Committee (the “Proxy Voting Committee”), applies detailed, pre-determined, written proxy voting guidelines for specific types of proposals and matters commonly submitted to shareholders (the “BNY Mellon Voting Guidelines”). This includes guidelines for proxy voting with respect to open-end registered investment company shares (other than securities of a registered investment company over which BNY Mellon and its direct and indirect subsidiaries, including Dreyfus (“BNYM”) has proxy voting authority).
Securities Out on Loan. It is the policy of BNYM Investment Adviser to seek to vote all proxies for securities held in the funds’ portfolios for which BNYM Investment Adviser has voting authority. However, situations may arise in which the Proxy Voting Committee cannot, or has adopted a policy not to, vote certain proxies, such as refraining from securities out on loan in instances in which the costs are believed to outweigh the benefits, such as when the matters presented are not likely to have a material impact on shareholder value or clients’ voting will not impact the outcome of the vote.
Securities Out on Loan. For securities that the fund has loaned to another party, any voting rights that accompany the loaned securities generally pass to the borrower of the securities, but the fund retains the right to recall a security and may then exercise the security’s voting rights. In order to vote the proxies of securities out on loan, the securities must be recalled prior to the established record date. The fund may recall the loan to vote proxies if a material issue affecting the fund’s investment is to be voted upon.
Material Conflicts of Interest. BNYM Investment Adviser seeks to avoid material conflicts of interest between the fund and fund shareholders, on the one hand, and BNYM Investment Adviser, the Distributor, or any affiliated person of the fund, BNYM Investment Adviser or the Distributor, on the other, through its participation in the Proxy Voting Committee. The BNY Mellon Proxy Voting Policy states that the Proxy Voting Committee seeks to avoid material conflicts of interest through the establishment of the committee structure, which applies the BNY Mellon Voting Guidelines in an objective and consistent manner across client accounts, based on internal and external research and recommendations provided by third party proxy advisory services (including Institutional Shareholder Services, Inc. and Glass Lewis & Co., LLC (the “Proxy Advisers”)) and without consideration of any client relationship factors. The Proxy Voting Committee utilizes the research services of the Proxy Advisers most frequently in connection with proposals that may be controversial or require a case-by-case analysis in accordance with the BNY Mellon Proxy Voting Guidelines. In addition, the BNY Mellon Proxy Voting Policy states that the Proxy Voting Committee engages a third party as an independent fiduciary to vote all proxies for securities of BNY Mellon or securities of a registered investment company over which BNYM has proxy voting authority and may engage an independent fiduciary to vote proxies of other issuers at the Proxy Voting Committee discretion.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) The following information is as of September 30, 2020:
Jeffrey Burger and Daniel Rabasco of Mellon Investments Corporation ("Mellon"), an affiliate of BNYM Investment Adviser, are primarily responsible for the day-to-day management of the registrant’s portfolio.
Mr. Burger is a senior portfolio manager for tax sensitive strategies at Mellon. He has been employed by Mellon or a predecessor company of Mellon since 2009, and by BNYM Investment Adviser since 2009. He
manages the fund in his capacity as an employee of BNYM Investment Adviser and also manages certain other municipal bond funds managed by BNYM Investment Adviser.
Mr. Rabasco is a managing director and the head of municipal bonds at Mellon. He has been employed by Mellon or a predecessor company of Mellon since 1998 and by BNYM Investment Adviser since 2012. He manages the fund in his capacity as an employee of BNYM Investment Adviser.
(a)(2) Information about the other accounts managed by the fund’s primary portfolio managers is provided below.
Primary
Portfolio
Manager
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Registered Investment Companies
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Total Assets Managed
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Other Pooled Investment Vehicles
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Total Assets Managed
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Other Accounts
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Total Assets Managed
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Jeffrey Burger
|
14
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$7.0 billion
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None
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$0
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55
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$2.6 billion
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Daniel Rabasco
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14
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$6.0 billion
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1
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$547 million
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450
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$1.8 billion
|
None of the funds or accounts are subject to a performance-based advisory fee.
Portfolio managers may manage multiple accounts for a diverse client base, including mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, insurance companies and foundations), bank common trust accounts and wrap fee programs (“Other Accounts”).
Potential conflicts of interest may arise because of BNYM Investment Adviser's management of the Fund and Other Accounts. For example, conflicts of interest may arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities, as BNYM Investment Adviser may be perceived as causing accounts it manages to participate in an offering to increase BNYM Investment Adviser's overall allocation of securities in that offering, or to increase BNYM Investment Adviser's ability to participate in future offerings by the same underwriter or issuer. Allocations of bunched trades, particularly trade orders that were only partially filled due to limited availability, and allocation of investment opportunities generally, could raise a potential conflict of interest, as BNYM Investment Adviser may have an incentive to allocate securities that are expected to increase in value to preferred accounts. Initial public offerings, in particular, are frequently of very limited availability. Additionally, portfolio managers may be perceived to have a conflict of interest if there are a large number of Other Accounts, in addition to the Fund, that they are managing on behalf of BNYM Investment Adviser. BNYM Investment Adviser periodically reviews each portfolio manager's overall responsibilities to ensure that he or she is able to allocate the necessary time and resources to effectively manage the Fund. In addition, BNYM Investment Adviser could be viewed as having a conflict of interest to the extent that BNYM Investment Adviser or its affiliates and/or portfolios managers have a materially larger investment in Other Accounts than their investment in the Fund.
Other Accounts may have investment objectives, strategies and risks that differ from those of the Fund. For these or other reasons, the portfolio manager may purchase different securities for the Fund and the Other Accounts, and the performance of securities purchased for the Fund may vary from the performance of securities purchased for Other Accounts. The portfolio manager may place transactions on behalf of Other Accounts that are directly or indirectly contrary to investment decisions made for the Fund, which could have the potential to adversely impact the Fund, depending on market conditions.
A potential conflict of interest may be perceived to arise if transactions in one account closely follow related transactions in another account, such as when a purchase increases the value of securities previously purchased by the other account, or when a sale in one account lowers the sale price received in a sale by a second account.
Conflicts of interest similar to those described above arise when portfolio managers are employed by a sub-investment adviser or are dual employees of the Manager and an affiliated entity and such portfolio managers also manage other accounts.
The goal of BNYM Investment Adviser is to provide high quality investment services to all of its clients, while meeting BNYM Investment Adviser's fiduciary obligation to treat all clients fairly. BNYM Investment Adviser has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, that it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, BNYM Investment Adviser monitors a variety of areas, including compliance with Fund guidelines, the allocation of IPOs, and compliance with the firm's Code of Ethics. Furthermore, senior investment and business personnel at BNYM Investment Adviser periodically review the performance of BNYM Investment Adviser's portfolio managers.
(a)(3) Portfolio Manager Compensation. The portfolio managers' compensation is comprised primarily of a market-based salary and an incentive compensation plan (annual and long-term). Funding for the Mellon Investments Corporation Incentive Plan is through a pre-determined fixed percentage of overall company profitability. Therefore, all bonus awards are based initially on Mellon Investments Corporation's overall performance as opposed to the performance of a single product or group. All investment professionals are eligible to receive incentive awards. Cash awards are payable in the February month end pay of the following year. Most of the awards granted have some portion deferred for three years in the form of deferred cash, BNY Mellon equity, interests in investment vehicles (consisting of investments in a range of Mellon Investments Corporation products), or a combination of the above. Individual awards for portfolio managers are discretionary, based on both individual and multi-sector product risk adjusted performance relative to both benchmarks and peer comparisons over one year, three year and five-year periods. Also considered in determining individual awards are team participation and general contributions to Mellon Investments Corporation. Individual objectives and goals are also established at the beginning of each calendar year and are taken into account. Portfolio managers whose compensation exceeds certain levels may elect to defer portions of their base salaries and/or incentive compensation pursuant to BNY Mellon's Elective Deferred Compensation Plan.
(a)(4) The dollar range of Fund shares beneficially owned by the primary portfolio manager is as follows as of the end of the Fund's fiscal year:
Primary Portfolio Manager
|
Fund
|
Dollar Range of Fund Shares Beneficially Owned
|
Jeffrey Burger
|
BNY Mellon Municipal Income, Inc.
|
None
|
Daniel Rabasco
|
BNY Mellon Municipal Income, Inc.
|
None
|
(b) Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
None.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
The fund did not participate in a securities lending program during this period.
Item 13. Exhibits.
(a)(1)
Code of ethics referred to in Item 2.
(a)(2)
Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b)
Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
BNY Mellon Municipal Income, Inc.
By: /s/ Renee LaRoche-Morris
Renee LaRoche-Morris
President (Principal Executive Officer)
Date: November 23, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ Renee LaRoche-Morris
Renee LaRoche-Morris
President (Principal Executive Officer)
Date: November 23, 2020
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: November 23, 2020
EXHIBIT INDEX
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)
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