UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number

811-07502

 

 

 

BNY Mellon International Securities Funds, Inc.

 

 

(Exact name of Registrant as specified in charter)

 

 

 

 

 

 

c/o BNY Mellon Investment Adviser, Inc.

240 Greenwich Street

New York, New York  10286

 

 

(Address of principal executive offices)        (Zip code)

 

 

 

 

 

Bennett A. MacDougall, Esq.

240 Greenwich Street

New York, New York  10286

 

 

(Name and address of agent for service)

 

 

Registrant's telephone number, including area code: 

(212) 922-6400

 

 

Date of fiscal year end:

 

05/31

 

Date of reporting period:

05/31/2020

 

 

 

 

             

The following N-CSR relates only to the Registrant's series listed below and does not relate to any series of the Registrant with a different fiscal year end and, therefore, different N-CSR reporting requirements.  A separate N-CSR will be filed for any series with a different fiscal year end, as appropriate.

 

BNY Mellon Emerging Markets Securities Fund

 

 


 

FORM N-CSR

Item 1.             Reports to Stockholders.

 


 

BNY Mellon Emerging Markets Securities Fund

 

ANNUAL REPORT

May 31, 2020

 

 

 

Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.bnymellonim.com/us and sign up for eCommunications. It’s simple and only takes a few minutes.

 

The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds.

 

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

 

Contents

THE FUND

FOR MORE INFORMATION

 

Back Cover

 

       
 


BNY Mellon Emerging Markets Securities Fund

 

The Fund

A LETTER FROM THE PRESIDENT OF BNY MELLON INVESTMENT ADVISER, INC.

Dear Shareholder:

We are pleased to present this annual report for BNY Mellon Emerging Markets Securities Fund (formerly, Dreyfus Emerging Markets Securities Fund), covering the 12-month period from June 1, 2019 through May 31, 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.

Early in the reporting period, equity markets benefited from the U.S. Federal Reserve’s (the “Fed”) more accommodative stance on interest rates. Trade tensions between the U.S. and China emerged at times, which disrupted markets. Despite the disruption, the pace of the U.S. economy remained steady, and stocks rose in mid-2019. Volatility subsequently returned when investors grew more concerned about the state of the global economy. However, stocks eventually rebounded, rallying through the end of 2019 due to supportive interest rate cuts and the announcement of a trade deal between the U.S. and China. Early in 2020, as COVID-19 spread across the globe, concerns about the economic effects of a widespread quarantine worked to depress equity valuations. Stocks posted historic losses in March 2020, but regained ground in April and May.

Fixed-income markets benefited from Fed interest rate cuts and investor concerns about an economic slowdown. Responding to global economic concerns, the Fed reduced rates in July, September and October 2019. As stocks subsequently rallied, Treasury bonds declined, and rates across much of the yield curve rose until early in 2020, when the potential threat posed by COVID-19 began to emerge. A flight-to-quality ensued, and rates fell significantly. March 2020 brought high volatility and risk-asset spread widening. The Fed cut rates twice in March, resulting in an overnight lending target rate of nearly zero, and the government launched a large stimulus package. In April and May 2020, risk-assets began to recover. Investment-grade bonds generally posted positive returns for the period.

We believe the near-term outlook for the U.S. will be challenging, as the country curbs the spread of COVID-19 and determines a path forward for recovery. However, we are confident that once the economic effects of the virus have been mitigated, the economy will rebound. 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.
June 15, 2020

2

 

DISCUSSION OF FUND PERFORMANCE (Unaudited)

For the period from June 1, 2019 through May 31, 2020, as provided by Julianne D. McHugh and Chris Yao, CFA, Portfolio Managers

Market and Fund Performance Overview

For the 12-month period ended May 31, 2020, the BNY Mellon Emerging Markets Securities Fund’s (formerly Dreyfus Emerging Markets Fund) Class A shares produced a total return of -5.90%, Class C shares returned -6.60%, Class I shares returned -5.62% and Class Y shares returned -5.57%.1 In comparison, the fund’s benchmark, the MSCI Emerging Markets Index (the “Index”), had a -4.39% total return for the same period.2

Emerging-market equities lost ground over the reporting period, due in part to volatility caused by trade disagreements, pandemic and falling oil prices. The fund underperformed the Index due to security selection within the health care and industrials sectors, particularly among companies domiciled in India.

The Fund’s Investment Approach

The fund seeks long-term capital growth. To pursue this goal, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in the stock of companies organized, or with a majority of assets or business, in emerging-market countries. In selecting stocks, we identify potential investments through extensive quantitative and fundamental research, using a value-oriented, research-driven approach. In emphasizing individual stock selection rather than economic and industry trends, we focus on value, business health and business momentum. The fund considers emerging-market countries to be generally all countries represented by the Index.

Geopolitical Events and Pandemic Drive Market Activity

Emerging markets came under pressure during the summer months of 2019, after concerns over slowing global growth and trade issues between the U.S. and China spooked investors. However, come fall, improving sentiment regarding the U.S. and China trade talks and interest-rate cuts by the U.S. Federal Reserve (the “Fed”), some emerging-market central banks succeeded in fueling a risk-on appetite, and valuations rose very strongly in the final quarter of 2019. The People’s Bank of China cut its bank-funding rate but did not aggressively stimulate, in stark contrast to the U.S., where the slowdown led to rapid loosening of policy and a consequent spike in money-supply growth. In December 2019, the U.S. announced “phase-one” of a trade deal with China.

The positive sentiment carried over into 2020. However, the strong emerging-market equity index gains that had accumulated by mid-January started to reverse, as optimism about the “phase-one” U.S. and China trade agreement was replaced by escalating tensions between the U.S. and Iran following a drone attack by the U.S. that killed a senior Iranian general, and as fears grew over the potential impact of the COVID-19 outbreak in China. By the end of the first quarter of 2020, all global markets had suffered substantial falls, as COVID-19 spread across the world and many countries went into lockdown, stalling the global economy. The situation was exacerbated by a breakdown in the OPEC (Organization of the Petroleum Exporting Countries) alliance, which led to a steep drop in oil prices. In recognition of the worsening economic conditions brought by the global pandemic, many global central banks and governments intervened, with an unprecedented level of stimulus

3

 

DISCUSSION OF FUND PERFORMANCE (Unaudited) (continued)

being directed at markets. Emerging-market valuations saw a slight uptick to end the reporting period.

Fund Results Driven by Security Selection

Selection decisions among health care and industrials companies, as well as corporations based in India and South Korea, constrained relative results. Within industrials, a position in India-based construction company Larsen & Toubro provided a headwind, as the stock price was hurt due to a weak macroeconomic backdrop in India over the reporting period. India-based drug manufacturer Aurobindo Pharma was also among the top individual detractors. We have since exited the position. Elsewhere in the markets, the portfolio was overweight financial companies domiciled in South Korea, which detracted, as the area struggled during the period. In addition, a lack of exposure to South Korea-based telecommunications companies, which outperformed the broader market during the period, also took away from relative returns.

Conversely, relative results were helped during the period by security selection and allocation decisions within the information technology and consumer discretionary sectors. Stock choices within South Africa and China were also additive. South Africa-based materials company Sibanye-Stillwater was a top performing position. The price of gold increased during the period, and the stock price of the company benefited from that appreciation. China-based consumer discretionary company Meituan Dianping was among the leading contributors to performance. Elsewhere, Taiwan-based technology company Taiwan Semiconductor Manufacturing was also among the leading contributors. The company benefited from increased demand for its products and services, as well as an improvement in valuations within the semiconductor industry as a whole.

Positioned for Opportunity

The COVID-19 outbreak has caused significant uncertainty within the markets. With developed economies going into recession, emerging-market economies have experienced extreme pressure. However, we believe there are signs of life. China has shown evidence of improving manufacturing activities, which we think may be a sign of an impending recovery. Given the recent collapse of oil prices, we think many of the commodity-driven economies within the emerging-markets space may continue to experience challenges until the price of oil recovers. As the economic effects of COVID-19 dissipate, we believe the demand for oil may increase, which could help these economies regain their strength. It is our opinion that low future earnings expectations have been priced into the market, which leaves an opportunity for positive earnings surprises, which may work to lift valuations.

4

 

Over the past few months, we have increased our weight to China and Taiwan, while reducing positions in Brazil and India. From a sector perspective, we have added to communication services and consumer staples companies, while reducing our energy and financials exposure. We continue to utilize market volatility to take advantage of compelling value opportunities.

June 15, 2020

1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. The fund’s return reflects the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an agreement in effect through September 30, 2020, at which time it may be extended, modified or terminated. Had these expenses not been absorbed, returns would have been lower.

2 Source: Lipper Inc. — The MSCI Emerging Markets Index is a free float-adjusted, market capitalization-weighted index that is designed to measure equity market performance of emerging markets. It reflects reinvestment of net dividends and, where applicable, capital gain distributions. Investors cannot invest directly in any index.

Please note: the position in any security highlighted with italicized typeface was sold during the reporting period.

Equities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.

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.

Emerging markets tend to be more volatile than the markets of more mature economies and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. The securities of companies located in emerging markets are often subject to rapid and large changes in price. An investment in this fund should be considered only as a supplement to a complete investment program for those investors willing to accept the greater risks associated with investing in emerging-market countries.

Investing internationally involves special risks, including changes in currency exchange rates, political, economic, and social instability, a lack of comprehensive company information, differing auditing and legal standards and less market liquidity. These risks generally are greater with emerging-market countries than with more economically and politically established foreign countries.

From time to time, the fund’s investments may be concentrated in issuers located in China and, therefore, at such times, the fund may be particularly exposed to the economy, industries, securities and currency markets of China, which may be adversely affected by protectionist trade policies, slow economic activity in other Asian countries or worldwide, political and social instability, environmental events and natural disasters, regional and global conflicts, terrorism and war, including actions that are contrary to the interests of the United States. China remains a totalitarian country with continuing risk of nationalization, expropriation or confiscation of property. The legal system is still developing, making it more difficult to obtain and/or enforce judgments. Further, the government could at any time alter or discontinue economic reforms. China’s economy may be dependent on the economies of other Asian countries, many of which are developing countries. Each of these risks could increase the fund’s volatility.

5

 

FUND PERFORMANCE (Unaudited)

Comparison of change in value of a $10,000 investment in Class A shares, Class C shares and Class I shares of BNY Mellon Emerging Markets Securities Fund with a hypothetical investment of $10,000 in the MSCI Emerging Markets Index (the “Index”)

 Source: Lipper Inc.

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of BNY Mellon Emerging Markets Securities Fund on 5/31/10 to a hypothetical investment of $10,000 made in the Index on that date. All dividends and capital gain distributions are reinvested.

The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes. The Index, unlike the fund, is a free float-adjusted market capitalization-weighted index that is designed to measure equity market performance of emerging markets. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.

6

 

Comparison of change in value of a $1,000,000 investment in Class Y shares of BNY Mellon Emerging Markets Securities Fund with a hypothetical investment of $1,000,000 in the MSCI Emerging Markets Index (the “Index”)

 Source: Lipper Inc.

†† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.

Past performance is not predictive of future performance.

The above graph compares a $1,000,000 investment made in Class Y shares of BNY Mellon Emerging Markets Securities Fund on 5/31/10 to a $1,000,000 investment made in the Index on that date. All dividends and capital gain distributions are reinvested.

The fund’s performance shown in the graph above takes into account all applicable fees and expenses of the fund’s Class Y shares. The Index, unlike the fund, is a free float-adjusted market capitalization-weighted index that is designed to measure equity market performance of emerging markets. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.

7

 

FUND PERFORMANCE (Unaudited) (continued)

         

Average Annual Total Returns as of 5/31/2020

 

Inception

     

 

Date

1 Year

5 Years

10 Years

Class A shares

       

with maximum sales charge (5.75%)

6/28/96

-11.34%

-2.36%

-0.53%

without sales charge

6/28/96

-5.90%

-1.20%

0.06%

Class C shares

       

with applicable redemption charge

11/15/02

-7.53%

-1.93%

-0.70%

without redemption

11/15/02

-6.60%

-1.93%

-0.70%

Class I shares

11/15/02

-5.62%

-0.96%

0.31%

Class Y shares

7/1/13

-5.57%

-0.79%

0.41%††

MSCI Emerging Markets Index

 

-4.39%

0.88%

2.57%

 

 The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.

†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales load for Class A shares.

The performance data quoted represents past performance, which is no guarantee of future results. Share price and investment return fluctuate and an investor’s shares may be worth more or less than original cost upon redemption. Current performance may be lower or higher than the performance quoted. Go to www.bnymellonim.com/us for the fund’s most recent month-end returns.

The fund’s performance shown in the graphs and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.

8

 

UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.

Review your fund’s expenses

The table below shows the expenses you would have paid on a $1,000 investment in BNY Mellon Emerging Markets Securities Fund from December 1, 2019 to May 31, 2020. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

             

Expenses and Value of a $1,000 Investment

 

Assume actual returns for the six months ended May 31, 2020

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expense paid per $1,000

$9.37

$12.86

$8.20

$7.97

 

Ending value (after expenses)

$873.60

$871.00

$874.40

$875.00

 

COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)

Using the SEC’s method to compare expenses

The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

             

Expenses and Value of a $1,000 Investment

 

Assuming a hypothetical 5% annualized return for the six months ended May 31, 2020

 

 

 

 

 

 

 

 

 

 

Class A

Class C

Class I

Class Y

 

Expense paid per $1,000

$10.08

$13.83

$8.82

$8.57

 

Ending value (after expenses)

$1,015.00

$1,011.25

$1,016.25

$1,016.50

 

†  Expenses are equal to the fund’s annualized expense ratio of 2.00% for Class A, 2.75% for Class C, 1.75% for Class I and 1.70% for Class Y, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).

9

 

STATEMENT OF INVESTMENTS
May 31, 2020

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 99.1%

         

Brazil - 4.1%

         

Banco do Brasil

     

47,700

 

271,828

 

BRF

     

162,300

a

696,488

 

EDP - Energias do Brasil

     

190,600

 

633,274

 

Minerva

     

385,600

a

950,216

 

YDUQS Participacoes

     

87,100

 

465,182

 
       

3,016,988

 

China - 39.4%

         

Alibaba Group Holding, ADR

     

29,641

a

6,147,247

 

Anhui Conch Cement, Cl. H

     

143,000

 

1,078,233

 

China Construction Bank, Cl. H

     

2,715,399

 

2,145,084

 

China Medical System Holdings

     

343,000

 

392,978

 

China Minsheng Banking, Cl. H

     

501,000

 

350,246

 

China Resources Sanjiu Medical & Pharmaceutical, Cl. A

     

115,600

 

437,670

 

China Yangtze Power, Cl. A

     

220,600

 

537,626

 

CNOOC, ADR

     

9,117

 

1,040,432

 

ENN Energy Holdings

     

114,200

 

1,339,456

 

Jointown Pharmaceutical Group, CI. A

     

134,800

 

339,817

 

Meituan Dianping, Cl. B

     

67,700

a

1,289,218

 

Midea Group, Cl. A

     

86,700

 

716,948

 

New China Life Insurance, Cl. H

     

150,500

 

470,213

 

PICC Property & Casualty, Cl. H

     

380,000

 

332,193

 

Ping An Insurance Group Company of China, Cl. H

     

241,000

 

2,392,702

 

Shanghai Pharmaceuticals Holding, Cl. H

     

379,100

 

600,559

 

Tencent Holdings

     

145,950

 

7,779,345

 

Times China Holdings

     

357,000

 

526,379

 

Wuliangye Yibin, Cl. A

     

43,200

a

897,579

 
       

28,813,925

 

Greece - .9%

         

OPAP

     

66,809

 

625,595

 

Hong Kong - 1.8%

         

China Overseas Land & Investment

     

105,500

 

323,999

 

China Unicom Hong Kong

     

1,040,000

 

605,382

 

Galaxy Entertainment Group

     

54,000

 

368,371

 
       

1,297,752

 

Hungary - .9%

         

Richter Gedeon

     

28,698

 

626,850

 

India - 8.4%

         

ACC

     

44,714

 

752,142

 

Adani Ports & Special Economic Zone

     

137,038

 

588,011

 

10

 

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 99.1% (continued)

         

India - 8.4% (continued)

         

Chennai Super Kings Cricket

     

5,440,206

a,b

0

 

Hindustan Petroleum

     

168,903

 

435,684

 

Hindustan Unilever

     

31,740

 

866,833

 

Housing Development Finance

     

38,348

 

838,611

 

ICICI Bank

     

139,717

 

610,652

 

Larsen & Toubro

     

52,000

 

643,548

 

Maruti Suzuki India

     

6,906

 

512,545

 

Shriram Transport Finance

     

57,221

 

433,868

 

UPL

     

83,752

a

448,455

 
       

6,130,349

 

Malaysia - .5%

         

MISC

     

202,500

 

387,501

 

Mexico - 4.0%

         

America Movil, ADR, Cl. L

     

65,716

 

871,394

 

Gruma, Cl. B

     

55,690

 

552,543

 

Grupo Aeroportuario del Centro Norte

     

121,900

a

536,812

 

Grupo Financiero Banorte, Cl. O

     

136,000

 

414,296

 

Wal-Mart de Mexico

     

214,900

 

537,868

 
       

2,912,913

 

Netherlands - .4%

         

VEON, ADR

     

192,507

 

286,835

 

Philippines - .7%

         

International Container Terminal Services

     

280,400

 

486,364

 

Poland - .5%

         

Play Communications

     

56,930

c

405,378

 

Russia - 6.1%

         

Gazprom, ADR

     

198,788

 

1,123,152

 

Lukoil

     

22,893

d

1,707,290

 

Lukoil, ADR

     

892

 

66,665

 

Sberbank of Russia

     

378,669

d

1,079,351

 

X5 Retail Group, GDR

     

15,502

 

457,553

 
       

4,434,011

 

South Africa - 3.2%

         

Impala Platinum Holdings

     

53,395

 

358,293

 

Mediclinic International

     

108,841

 

365,127

 

Sibanye Stillwater

     

863,597

a

1,613,202

 
       

2,336,622

 

South Korea - 8.5%

         

Hyundai Mobis

     

8,030

 

1,288,385

 

Korea Investment Holdings

     

8,907

 

380,698

 

POSCO, ADR

     

15,825

 

584,101

 

Samsung Electronics

     

71,163

 

2,921,832

 

11

 

STATEMENT OF INVESTMENTS (continued)

               
 

Description

     

Shares

 

Value ($)

 

Common Stocks - 99.1% (continued)

         

South Korea - 8.5% (continued)

         

Shinhan Financial Group

     

24,121

 

589,172

 

SK Hynix

     

6,879

 

454,207

 
       

6,218,395

 

Taiwan - 16.4%

         

Chailease Holding

     

434,890

 

1,690,793

 

Chicony Electronics

     

255,000

 

730,908

 

MediaTek

     

96,000

 

1,481,084

 

Taiwan Semiconductor Manufacturing

     

636,638

 

6,200,354

 

Win Semiconductors

     

61,000

a

522,384

 

Wiwynn

     

23,000

a

614,454

 

Yageo

     

62,000

a

765,495

 
       

12,005,472

 

Thailand - .7%

         

Advanced Info Service

     

89,100

 

538,375

 

Turkey - 1.9%

         

BIM Birlesik Magazalar

     

78,698

 

751,690

 

Eregli Demir ve Celik Fabrikalari

     

534,432

a

629,374

 
       

1,381,064

 

United Arab Emirates - .7%

         

Dubai Islamic Bank

     

510,576

 

494,167

 

Total Common Stocks (cost $68,480,101)

     

72,398,556

 
   

Preferred Dividend
Yield (%)

         

Preferred Stocks - .6%

         

Brazil - .6%

         

Banco do Estado do Rio Grande do Sul, Cl. B
(cost $704,953)

 

6.76

 

187,800

 

446,246

 

Total Investments (cost $69,185,054)

 

99.7%

 

72,844,802

 

Cash and Receivables (Net)

 

.3%

 

215,600

 

Net Assets

 

100.0%

 

73,060,402

 


ADR—American Depository Receipt

GDR—Global Depository Receipt

aNon-income producing security.

bThe fund held Level 3 securities at May 31, 2020, these securities were valued at $0 or .0% of net assets.

cSecurity 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 May 31, 2020, these securities were valued at $405,378 or .55% of net assets.

dThe valuation of this security has been determined in good faith by management under the direction of the Board of Directors. At May 31, 2020, the value of this securities amounted to $2,786,641 or 3.81% of net assets.

12

 

   

Portfolio Summary (Unaudited)

Value (%)

Semiconductors & Semiconductor Equipment

11.8

Media & Entertainment

10.6

Retailing

10.2

Banks

9.9

Materials

7.5

Technology Hardware & Equipment

6.9

Energy

6.0

Insurance

4.4

Food, Beverage & Tobacco

4.2

Telecommunication Services

3.7

Utilities

3.4

Diversified Financials

3.4

Transportation

2.7

Automobiles & Components

2.5

Food & Staples Retailing

2.4

Consumer Services

2.0

Pharmaceuticals Biotechnology & Life Sciences

2.0

Health Care Equipment & Services

1.8

Household & Personal Products

1.2

Real Estate

1.2

Consumer Durables & Apparel

1.0

Capital Goods

.9

 

99.7


 Based on net assets.

See notes to financial statements.

13

 

STATEMENT OF INVESTMENTS IN AFFILIATED ISSUERS

             

Investment Companies

Value
5/31/19 ($)

Purchases ($)

Sales ($)

Value
5/31/20 ($)

Net
Assets (%)

Dividends/
Distributions ($)

Registered Investment Companies;

Dreyfus Institutional Preferred Government Plus Money Market Fund

-

26,699,490

(26,699,490)

-

-

9,992

Investment of Cash Collateral for Securities Loaned;

Dreyfus Institutional Preferred Government Plus Money Market Fund

-

257,584

(257,584)

-

-

-

Total

-

26,957,074

26,957,074

-

-

9,992

See notes to financial statements.

14

 

STATEMENT OF ASSETS AND LIABILITIES
May 31, 2020

             

 

 

 

 

 

 

 

 

 

 

Cost

 

Value

 

Assets ($):

 

 

 

 

Investments in securities—See Statement of Investments

69,185,054

 

72,844,802

 

Cash denominated in foreign currency

 

 

527,756

 

530,962

 

Receivable for investment securities sold

 

312,376

 

Dividends receivable

 

166,097

 

Tax reclaim receivable

 

11,859

 

Receivable for shares of Common Stock subscribed

 

6,477

 

Prepaid expenses

 

 

 

 

38,786

 

 

 

 

 

 

73,911,359

 

Liabilities ($):

 

 

 

 

Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 3(c)

 

119,177

 

Cash overdraft due to Custodian

 

 

 

 

124,203

 

Payable for shares of Common Stock redeemed

 

506,588

 

Directors’ fees and expenses payable

 

1,497

 

Interest payable—Note 2

 

111

 

Other accrued expenses

 

 

 

 

99,381

 

 

 

 

 

 

850,957

 

Net Assets ($)

 

 

73,060,402

 

Composition of Net Assets ($):

 

 

 

 

Paid-in capital

 

 

 

 

374,495,329

 

Total distributable earnings (loss)

 

 

 

 

(301,434,927)

 

Net Assets ($)

 

 

73,060,402

 

           

Net Asset Value Per Share

Class A

Class C

Class I

Class Y

 

Net Assets ($)

30,636,282

1,321,878

14,987,001

26,115,241

 

Shares Outstanding

3,480,148

153,021

1,657,375

2,963,280

 

Net Asset Value Per Share ($)

8.80

8.64

9.04

8.81

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

15

 

STATEMENT OF OPERATIONS
Year Ended May 31, 2020

             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income ($):

 

 

 

 

Income:

 

 

 

 

Cash dividends (net of $361,719 foreign taxes withheld at source):

 

Unaffiliated issuers

 

 

3,008,954

 

Affiliated issuers

 

 

9,992

 

Income from securities lending—Note 1(c)

 

 

313

 

Total Income

 

 

3,019,259

 

Expenses:

 

 

 

 

Management fee—Note 3(a)

 

 

1,196,449

 

Shareholder servicing costs—Note 3(c)

 

 

215,246

 

Professional fees

 

 

140,173

 

Custodian fees—Note 3(c)

 

 

113,944

 

Registration fees

 

 

64,411

 

Prospectus and shareholders’ reports

 

 

26,779

 

Chief Compliance Officer fees—Note 3(c)

 

 

14,781

 

Distribution fees—Note 3(b)

 

 

14,500

 

Directors’ fees and expenses—Note 3(d)

 

 

8,674

 

Loan commitment fees—Note 2

 

 

2,241

 

Interest expense—Note 2

 

 

333

 

Miscellaneous

 

 

18,662

 

Total Expenses

 

 

1,816,193

 

Less—reduction in expenses due to undertaking—Note 3(a)

 

 

(57,326)

 

Net Expenses

 

 

1,758,867

 

Investment Income—Net

 

 

1,260,392

 

Realized and Unrealized Gain (Loss) on Investments—Note 4 ($):

 

 

Net realized gain (loss) on investments and foreign currency transactions

(3,309,068)

 

Net realized gain (loss) on forward foreign currency exchange contracts

(82,372)

 

Net Realized Gain (Loss)

 

 

(3,391,440)

 

Net change in unrealized appreciation (depreciation) on investments
and foreign currency transactions

(2,949,667)

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

(6,341,107)

 

Net (Decrease) in Net Assets Resulting from Operations

 

(5,080,715)

 

 

 

 

 

 

 

 

See notes to financial statements.

         

16

 

STATEMENT OF CHANGES IN NET ASSETS

                   

 

 

 

 

Year Ended May 31,

 

 

 

 

2020

 

2019

 

Operations ($):

 

 

 

 

 

 

 

 

Investment income—net

 

 

1,260,392

 

 

 

1,013,566

 

Net realized gain (loss) on investments

 

(3,391,440)

 

 

 

(5,675,267)

 

Net change in unrealized appreciation
(depreciation) on investments

 

(2,949,667)

 

 

 

(8,178,597)

 

Net Increase (Decrease) in Net Assets
Resulting from Operations

(5,080,715)

 

 

 

(12,840,298)

 

Distributions ($):

 

Distributions to shareholders:

 

 

 

 

 

 

 

 

Class A

 

 

(441,583)

 

 

 

(148,595)

 

Class I

 

 

(255,941)

 

 

 

(147,324)

 

Class Y

 

 

(602,528)

 

 

 

(354,236)

 

Total Distributions

 

 

(1,300,052)

 

 

 

(650,155)

 

Capital Stock Transactions ($):

 

Net proceeds from shares sold:

 

 

 

 

 

 

 

 

Class A

 

 

3,532,243

 

 

 

2,248,121

 

Class C

 

 

7,825

 

 

 

54,535

 

Class I

 

 

1,588,673

 

 

 

3,254,627

 

Class Y

 

 

516,744

 

 

 

2,718,182

 

Distributions reinvested:

 

 

 

 

 

 

 

 

Class A

 

 

405,447

 

 

 

137,453

 

Class I

 

 

254,085

 

 

 

146,316

 

Class Y

 

 

593,614

 

 

 

339,639

 

Cost of shares redeemed:

 

 

 

 

 

 

 

 

Class A

 

 

(10,205,402)

 

 

 

(10,083,995)

 

Class C

 

 

(1,343,953)

 

 

 

(1,534,760)

 

Class I

 

 

(5,453,165)

 

 

 

(8,887,930)

 

Class Y

 

 

(11,504,604)

 

 

 

(4,520,143)

 

Increase (Decrease) in Net Assets
from Capital Stock Transactions

(21,608,493)

 

 

 

(16,127,955)

 

Total Increase (Decrease) in Net Assets

(27,989,260)

 

 

 

(29,618,408)

 

Net Assets ($):

 

Beginning of Period

 

 

101,049,662

 

 

 

130,668,070

 

End of Period

 

 

73,060,402

 

 

 

101,049,662

 

17

 

STATEMENT OF CHANGES IN NET ASSETS (continued)

                   

 

 

 

 

Year Ended May 31,

 

 

 

 

2020

 

2019

 

Capital Share Transactions (Shares):

 

Class Aa,b

 

 

 

 

 

 

 

 

Shares sold

 

 

389,629

 

 

 

227,016

 

Shares issued for distributions reinvested

 

 

37,265

 

 

 

14,941

 

Shares redeemed

 

 

(1,094,205)

 

 

 

(1,030,098)

 

Net Increase (Decrease) in Shares Outstanding

(667,311)

 

 

 

(788,141)

 

Class Ca

 

 

 

 

 

 

 

 

Shares sold

 

 

811

 

 

 

5,663

 

Shares redeemed

 

 

(143,564)

 

 

 

(159,905)

 

Net Increase (Decrease) in Shares Outstanding

(142,753)

 

 

 

(154,242)

 

Class Ib

 

 

 

 

 

 

 

 

Shares sold

 

 

164,797

 

 

 

320,102

 

Shares issued for distributions reinvested

 

 

22,768

 

 

 

15,500

 

Shares redeemed

 

 

(554,134)

 

 

 

(875,121)

 

Net Increase (Decrease) in Shares Outstanding

(366,569)

 

 

 

(539,519)

 

Class Y

 

 

 

 

 

 

 

 

Shares sold

 

 

51,229

 

 

 

279,850

 

Shares issued for distributions reinvested

 

 

54,560

 

 

 

36,918

 

Shares redeemed

 

 

(1,313,280)

 

 

 

(459,279)

 

Net Increase (Decrease) in Shares Outstanding

(1,207,491)

 

 

 

(142,511)

 

 

 

 

 

 

 

 

 

 

 

During the period ended May 31, 2020, 507 Class C shares representing $4,204 were automatically converted to 498 Class A shares. During the period ended May 31, 2019, 519 Class C shares representing $5,416 were automatically converted to 509 Class A shares.

 

During the period ended May 31, 2019, 64 Class A shares representing $644 were exchanged for 63 Class I shares.

 

See notes to financial statements.

               

18

 

FINANCIAL HIGHLIGHTS

The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.

             
   
 

Year Ended May 31,

Class A Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

9.45

10.59

10.32

7.82

9.88

Investment Operations:

           

Investment income—neta

 

.11

.07

.07

.07

.08

Net realized and unrealized
gain (loss) on investments

 

(.65)

(1.18)

.31

2.49

(2.02)

Total from Investment Operations

 

(.54)

(1.11)

.38

2.56

(1.94)

Distributions:

           

Dividends from
investment income-net

 

(.11)

(.03)

(.11)

(.07)

(.19)

Payment by affiliate

 

-

-

.00b

.01

.07

Net asset value, end of period

 

8.80

9.45

10.59

10.32

7.82

Total Return (%)c

 

(5.90)

(10.43)

3.70d

32.83d

(18.91)d

Ratios/Supplemental Data (%):

           

Ratio of total expenses
to average net assets

 

2.10

2.05

1.98

2.11

2.20

Ratio of net expenses
to average net assets

 

2.00

2.00

1.98

1.83

2.00

Ratio of net investment income
to average net assets

 

1.15

.75

.66

.72

1.02

Portfolio Turnover Rate

 

56.88

107.25

72.11

80.10

80.11

Net Assets, end of period ($ x 1,000)

 

30,636

39,201

52,269

59,634

54,529


a
 Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Exclusive of sales charge.

d Payment by affiliate had no impact on total return for 2018.The total return would have been 32.70% for 2017 and (19.63%) for 2016 had payments not been made by The Bank of New York Mellon Corporation related to a class action settlement.

See notes to financial statements.

19

 

FINANCIAL HIGHLIGHTS (continued)

             
   
 

Year Ended May 31,

Class C Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

9.25

10.40

10.11

7.66

9.65

Investment Operations:

           

Investment income (loss)—neta

 

.06

.01

(.01)

(.00)b

.03

Net realized and unrealized
gain (loss) on investments

 

(.67)

(1.16)

.30

2.44

(1.99)

Total from Investment Operations

 

(.61)

(1.15)

.29

2.44

(1.96)

Distributions:

           

Dividends from
investment income-net

 

-

-

-

(.00)b

(.10)

Payment by affiliate

 

-

-

.00b

.01

.07

Net asset value, end of period

 

8.64

9.25

10.40

10.11

7.66

Total Return (%)c

 

(6.60)

(11.06)

2.87d

32.00d

(19.57)d

Ratios/Supplemental Data (%):

           

Ratio of total expenses
to average net assets

 

2.95

2.82

2.73

2.89

2.90

Ratio of net expenses
to average net assets

 

2.75

2.75

2.73

2.60

2.70

Ratio of net investment income
(loss) to average net assets

 

.61

.08

(.08)

(.03)

.35

Portfolio Turnover Rate

 

56.88

107.25

72.11

80.10

80.11

Net Assets, end of period ($ x 1,000)

 

1,322

2,735

4,681

6,671

6,647


a
 Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Exclusive of sales charge.

d Payment by affiliate had no impact on total return for 2018. The total return would have been 31.87% for 2017 and (20.20%) for 2016 had payments not been made by The Bank of New York Mellon Corporation related to a class action settlement.

See notes to financial statements.

20

 

             
   
 

Year Ended May 31,

Class I Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

9.71

10.89

10.60

8.03

9.90

Investment Operations:

           

Investment income—neta

 

.14

.10

.10

.08

.12

Net realized and unrealized
gain (loss) on investments

 

(.67)

(1.21)

.32

2.57

(2.05)

Total from Investment Operations

 

(.53)

(1.11)

.42

2.65

(1.93)

Distributions:

           

Dividends from
investment income-net

 

(.14)

(.07)

(.13)

(.09)

(.01)

Payment by affiliate

 

-

-

.00b

.01

.07

Net asset value, end of period

 

9.04

9.71

10.89

10.60

8.03

Total Return (%)

 

(5.62)

(10.28)

3.92c

33.37c

(18.81)c

Ratios/Supplemental Data (%):

           

Ratio of total expenses
to average net assets

 

1.83

1.76

1.72

1.90

1.76

Ratio of net expenses
to average net assets

 

1.75

1.75

1.72

1.59

1.56

Ratio of net investment income
to average net assets

 

1.41

1.01

.91

.83

1.44

Portfolio Turnover Rate

 

56.88

107.25

72.11

80.10

80.11

Net Assets, end of period ($ x 1,000)

 

14,987

19,643

27,907

34,247

24,495


a
 Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Payment by affiliate had no impact on total return for 2018. The total return would have been 33.24% for 2017 and (19.51%) for 2016 had payments not been made by The Bank of New York Mellon Corporation related to a class action settlement.

See notes to financial statements.

21

 

FINANCIAL HIGHLIGHTS (continued)

             
     
   

Year Ended May 31,

Class Y Shares

 

2020

2019

2018

2017

2016

Per Share Data ($):

           

Net asset value, beginning of period

 

9.46

10.62

10.34

7.84

9.90

Investment Operations:

           

Investment income—neta

 

.15

.11

.12

.10

.13

Net realized and unrealized
gain (loss) on investments

 

(.65)

(1.18)

.30

2.50

(2.04)

Total from Investment Operations

 

(.50)

(1.07)

.42

2.60

(1.91)

Distributions:

           

Dividends from
investment income-net

 

(.15)

(.09)

(.14)

(.11)

(.22)

Payment by affiliate

 

-

-

.00b

.01

.07

Net asset value, end of period

 

8.81

9.46

10.62

10.34

7.84

Total Return (%)

 

(5.57)

(10.09)

4.03c

33.49c

(18.50)c

Ratios/Supplemental Data (%):

           

Ratio of total expenses
to average net assets

 

1.67

1.61

1.58

1.78

1.68

Ratio of net expenses
to average net assets

 

1.67

1.61

1.57

1.42

1.48

Ratio of net investment income
to average net assets

 

1.48

1.08

1.07

1.14

1.59

Portfolio Turnover Rate

 

56.88

107.25

72.11

80.10

80.11

Net Assets, end of period ($ x 1,000)

 

26,115

39,470

45,810

50,538

34,113


a
 Based on average shares outstanding.

b Amount represents less than $.01 per share.

c Payment by affiliate had no impact on total return for 2018. The total return would have been 33.36% for 2017 and (19.23%) for 2016 had payments not been made by The Bank of New York Mellon Corporation related to a class action settlement.

See notes to financial statements.

22

 

NOTES TO FINANCIAL STATEMENTS

NOTE 1—Significant Accounting Policies:

BNY Mellon Emerging Markets Securities Fund (the “fund”) is the sole series of BNY Mellon International Securities Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as a non-diversified open-end management investment company. The fund’s investment objective is to seek long-term capital growth. 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 Company’s Board of Director (the “Board”) approved, effective December 31, 2019 (the “Effective Date”), the termination of the fund’s authorized Class T shares. Prior to the Effective Date, the fund did not offer such Class T shares for purchase. The authorized Class T shares were reallocated to authorized Class I and Class Y shares, increasing authorized Class I shares from 100 million to 150 million and increasing authorized Class Y shares from 100 million to 150 million.

Effective June 3, 2019, the fund changed its name from Dreyfus Emerging Markets Fund to BNY Mellon Emerging Markets Securities Fund and the Company changed its name from Dreyfus International Funds, Inc. to BNY Mellon International Securities Funds, Inc. In addition, The Dreyfus Corporation, the fund’s investment adviser, changed its name to “BNY Mellon Investment Adviser, Inc.”, MBSC Securities Corporation, the fund’s distributor, changed its name to “BNY Mellon Securities Corporation” and Dreyfus Transfer, Inc., the fund’s transfer agent, changed its name to “BNY Mellon Transfer, Inc.”

BNY Mellon Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Adviser, is the distributor of the fund’s shares. The fund is authorized to issue 500 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized), Class I (150 million shares authorized) and Class Y (150 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class C shares automatically convert to Class A shares ten years after the date of purchase, without the imposition of a sales charge. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of

23

 

NOTES TO FINANCIAL STATEMENTS (continued)

certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund is an investment company and applies the accounting and reporting guidance of the FASB ASC Topic 946 Financial Services-Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

The Company 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.

24

 

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 equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.

Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.

Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.

When market quotations or official closing prices are not readily available, or are determined not to accurately reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the 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

25

 

NOTES TO FINANCIAL STATEMENTS (continued)

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.

Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.

The following is a summary of the inputs used as of May 31, 2020 in valuing the fund’s investments:

         
 

Level 1- Unadjusted Quoted Prices

Level 2-Other Significant Observable Inputs

Level 3- Significant Unobservable Inputs

Total

Assets ($)

Investments in Securities:

Equity Securities -
Common Stocks

15,111,668

57,286,888††

0

72,398,556

Equity Securities-
Preferred Stocks

446,246

446,246


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

†† Securities classified within Level 2 at period end as the values were determined pursuant to the fund’s fair valuation procedures.

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

   
 

Equity Securities-
Foreign Common Stock($)

Balance as of 5/31/2019

0

Realized gain (loss)

-

Change in unrealized appreciation (depreciation)

-

Purchases/ issuances

-

Sales/ dispositions

-

Transfers into Level 3

-

Transfers out of Level 3

-

Balance as of 5/31/2020

0

The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to investments still held at 5/31/2020

-

 Securities deemed as Level 3 have been determined to be worthless causing a lack of significant unobservable inputs by managements own assessment.

26

 

(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.

Foreign Taxes: The fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, realized and unrealized capital gains on investments or certain foreign currency transactions. Foreign taxes are recorded in accordance with the fund’s understanding of the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the fund invests. These foreign taxes, if any, are paid by the fund and are reflected in the Statements of Operations. Foreign taxes payable or deferred as of May 31, 2020, if any, are disclosed in the fund’s Statements of Assets and Liabilities.

(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of the Adviser, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Adviser, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on

27

 

NOTES TO FINANCIAL STATEMENTS (continued)

securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended May 31, 2020, The Bank of New York Mellon earned $61 from the lending of the fund’s portfolio securities, pursuant to the securities lending agreement.

(d) Affiliated issuers: Investments in other investment companies advised by the Adviser are considered “affiliated” under the Act.

Certain affiliated investment companies may also invest in the fund. At May 31, 2020, BNY Mellon Diversified International Fund, an affiliate of the fund, held 2,912,072 Class Y shares representing approximately 35.12% of the fund’s net assets.

(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political, economic developments and public health conditions. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S. 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.

28

 

The fund follows an investment policy of investing primarily in emerging market countries. Because the fund’s investments are concentrated in emerging market countries, the fund’s performance is expected to be closely tied to social, political and economic conditions within such countries and to be more volatile than the performance of more geographically diversified funds.

(f) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.

(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.

As of and during the period ended May 31, 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 May 31, 2020, the fund did not incur any interest or penalties.

Each tax year in the four-year period ended May 31, 2020 remains subject to examination by the Internal Revenue Service and state taxing authorities.

At May 31, 2020, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $79,797, accumulated capital losses $304,813,841 and unrealized appreciation $3,299,117.

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 May 31, 2020. The fund has $26,819,537 of short-

29

 

NOTES TO FINANCIAL STATEMENTS (continued)

term capital losses and $277,994,304 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 May 31, 2020 and May 31, 2019 were as follows: ordinary income $1,300,052 and $650,155, respectively.

(h) New Accounting Pronouncements: Effective June 1, 2019, the fund adopted Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The update provides guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. The adoption of ASU 2018-13 had no impact on the operations of the fund for the period ended May 31, 2020.

NOTE 2—Bank Lines of Credit:

The fund participates with other long-term open-end funds managed by the Adviser in a $927 million unsecured credit facility led by Citibank, N.A. (the “Citibank Credit Facility”) and a $300 million unsecured credit facility provided by The Bank of New York Mellon (the “BNYM Credit Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions (each, a “Facility”). The Citibank Credit Facility is available in two tranches: (i) Tranche A is in an amount equal to $747 million and is available to all long-term open-ended funds, including the fund, and (ii) Tranche B is an amount equal to $180 million and is available only to BNY Mellon Floating Rate Income Fund, a series of BNY Mellon Investment Funds IV, Inc. Prior to March 11, 2020, the Citibank Credit Facility was $1.030 billion with Tranche A available in an amount equal to $830 million and Tranche B available in an amount equal to $200 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for Tranche A of the Citibank Credit Facility and the BNYM Credit Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing.

The average amount of borrowings outstanding under the Facilities during the period ended May 31, 2020 was approximately $19,672 with a related weighted average annualized interest rate of 1.69%.

NOTE 3—Management Fee and Other Transactions with Affiliates:

(a) Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of 1.25% of the value of

30

 

the fund’s average daily net assets and is payable monthly. The Adviser has contractually agreed from June 1, 2019 until September 30, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.75% of the value of the fund’s average daily net assets. On or after September 30, 2020, the Adviser may terminate this expense limitation at any time. The reduction in expenses, pursuant to the undertaking, amounted to $57,326 during the period ended May 31, 2020.

During the period ended May 31, 2020, the Distributor retained $463 from commissions earned on sales of the fund’s Class A shares and $649 from CDSC fees on redemptions of the fund’s Class C shares.

(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended May 31, 2020, Class C shares were charged $14,500 pursuant to the Distribution Plan.

(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2020, Class A and Class C shares were charged $94,878 and $4,833, respectively, pursuant to the Shareholder Services Plan.

The fund has an arrangement with the transfer agent whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency fees. For financial reporting purposes, the fund includes net earnings credits, if any, as an expense offset in the Statement of Operations.

The fund has an arrangement with the custodian whereby the fund will receive interest income or be charged an overdraft fees when cash balances are maintained. For financial reporting purposes, the fund includes this

31

 

NOTES TO FINANCIAL STATEMENTS (continued)

interest income and overdraft fees, if any, as interest income in the Statements of Operations.

The fund compensates BNY Mellon Transfer, Inc., a wholly-owned subsidiary of the Adviser, under a transfer agency agreement for providing transfer agency and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended May 31, 2020, the fund was charged $19,911 for transfer agency services. These fees are included in Shareholder servicing costs in the Statement of Operations.

The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended May 31, 2020, the fund was charged $113,944 pursuant to the custody agreement.

During the period ended May 31, 2020, the fund was charged $14,781 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 $77,069, Distribution Plan fees of $828, Shareholder Services Plan fees of $6,733, custodian fees of $49,282, Chief Compliance Officer fees of $3,130 and transfer agency fees of $5,230, which are offset against an expense reimbursement currently in effect in the amount of $23,095.

(d) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.

(e) A 2% redemption fee is charged and retained by the fund on certain shares redeemed within sixty days following the date of issuance subject to certain exceptions, including redemptions made through use of the fund’s exchange privilege. During the period ended May 31, 2020, redemption fees charged and retained by the fund amounted to $2,299.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities and forward foreign currency exchange contracts (“forward contracts”), during the period ended May 31, 2020, amounted to $53,163,225 and $74,114,223, respectively.

32

 

Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its over-the-counter (“OTC”) derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default or termination.

Each type of derivative instrument that was held by the fund during the period ended May 31, 2020 is discussed below.

Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. At May 31, 2020, there were no forward contracts outstanding.

33

 

NOTES TO FINANCIAL STATEMENTS (continued)

The following summarizes the average market value of derivatives outstanding during the period ended May 31, 2020:

     

 

 

Average Market Value ($)

Forward contracts

 

60,262

 

 

 

At May 31, 2020, the cost of investments for federal income tax purposes was $69,544,090; accordingly, accumulated net unrealized appreciation on investments was $3,300,712, consisting of $12,896,677 gross unrealized appreciation and $9,595,965 gross unrealized depreciation.

34

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of BNY Mellon Emerging Markets Securities Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of BNY Mellon Emerging Markets Securities Fund (the “Fund”) (the sole fund constituting BNY Mellon International Securities Funds, Inc.), including the statements of investments and investments in affiliated issuers, as of May 31, 2020, and the related statement of operations 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 (the sole fund constituting BNY Mellon International Securities Funds, Inc.) at May 31, 2020, the results of its operations 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 May 31, 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
July 27, 2020

35

 

IMPORTANT TAX INFORMATION (Unaudited)

In accordance with federal tax law, the fund elects to provide each shareholder with their portion of the fund’s foreign taxes paid and the income sourced from foreign countries. Accordingly, the fund hereby reports the following information regarding its fiscal year ended May 31, 2020:

- the total amount of taxes paid to foreign countries was $361,719.

- the total amount of income sourced from foreign countries was $3,352,252.

As required by federal tax law rules, shareholders will receive notification of their proportionate share of foreign taxes paid and foreign source income for the 2020 calendar year with Form 1099-DIV which will be mailed in early 2021. Also, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $1,300,052 represents the maximum amount that may be considered qualified dividend income.

36

 

INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited)

At a meeting of the fund’s Board of Directors held on February 10-11, 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, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Adviser. In considering the renewal of the Agreement, the Board considered several factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.

Analysis of Nature, Extent, and Quality of Services Provided to the Fund. The Board considered information provided to it at the meeting and in previous presentations from representatives of the Adviser regarding the nature, extent, and quality of the services provided to funds in the BNY Mellon fund complex, including the fund. The Adviser provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. The Adviser also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the BNY Mellon fund complex (such as retail direct or intermediary, in which intermediaries typically are paid by the fund and/or the Adviser) and the Adviser’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each intermediary or distribution channel, as applicable to the fund.

The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that the Adviser also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board also considered the Adviser’s extensive administrative, accounting and compliance infrastructures. The Board also considered portfolio management’s brokerage policies and practices (including policies and practices regarding soft dollars) and the standards applied in seeking best execution.

Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed reports prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, which included information comparing (1) the performance of the fund’s Class I shares with the performance of a group of institutional emerging markets funds (the “Performance Group”) and with a broader group of retail and institutional emerging markets funds (the “Performance Universe”), all for various periods ended December 31, 2019, 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 institutional emerging markets funds, excluding outliers (the “Expense

37

 

INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)

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.

Representatives of the Adviser stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations and policies that may be applicable to the fund and comparison funds and the end date selected. The Board discussed with representatives of the Adviser the results of the comparisons and considered that the fund’s total return performance was below the Performance Group and Performance Universe medians for all periods, except for the one-year and four-year periods when performance was slightly above the Performance Group and Performance Universe medians, respectively. The Board considered the relative proximity of the fund’s performance to the Performance Group and/or Performance Universe median in certain periods when performance was below median. The Adviser also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark index. The Board noted that the primary portfolio managers for the fund had assumed responsibility for managing the fund’s portfolio in March and December 2019, respectively.

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 which reflected reductions for a fee waiver arrangement in place that reduced the investment advisory fee paid to the Adviser. The Board also reviewed the range of actual and contractual management fees and total expenses as a percentage of average net assets of the Expense Group and Expense Universe funds and discussed the results of the comparisons. The Board considered that the fund’s contractual management fee was higher than the Expense Group median contractual management fee, 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 higher than the Expense Group and Expense Universe total expenses medians.

Representatives of the Adviser stated that the Adviser has contractually agreed, until September 30, 2020, to waive receipt of its fees and/or assume the direct expenses of the fund so that the direct expenses of none of its classes (excluding Rule 12b-1 fees, shareholder services fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.75% of the fund’s average daily net assets.

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 Clients”), and explained the nature of the Similar Clients. They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors. The

38

 

Board considered the relevance of the fee information provided for the Similar Clients to evaluate the appropriateness of the fund’s management fee. Representatives of the Adviser noted that there were no separate accounts and/or other types of client portfolios advised by the Adviser 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 considered the expense limitation arrangement and its effect on the profitability of the Adviser and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.

The Board considered, on the advice of its counsel, the profitability analysis (1) as part of its evaluation of whether the fees under the Agreement, considered in relation to the mix of services provided by the Adviser, including the nature, extent and quality of such services, supported the renewal of the Agreement and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Representatives of the Adviser stated that a discussion of economies of scale is predicated on a fund having achieved a substantial size with increasing assets and that, if a fund’s assets had been stable or decreasing, the possibility that the Adviser may have realized any economies of scale would be less. Representatives of the Adviser also stated that, as a result of shared and allocated costs among funds in the BNY Mellon fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to the Adviser from acting as investment adviser and took into consideration the soft dollar arrangements in effect for trading the fund’s investments.

At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreement. Based on the discussions and considerations as described above, the Board concluded and determined as follows.

· The Board concluded that the nature, extent and quality of the services provided by the Adviser are adequate and appropriate.

39

 

INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)

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

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

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

In evaluating the Agreement, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with the Adviser and its affiliates, of the Adviser and the services provided to the fund by the Adviser. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreement, including information on the investment performance of the fund in comparison to similar mutual funds and benchmark performance indices; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for 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.

40

 

LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited)

Effective June 1, 2019, the fund adopted a liquidity risk management program (the “Liquidity Risk Management Program”) pursuant to the requirements of Rule 22e-4 under the Investment Company Act of 1940, as amended. Rule 22e-4 requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish liquidity risk management programs in order to effectively manage fund liquidity and shareholder redemptions. The rule is designed to mitigate the risk that a fund could not meet redemption requests without significantly diluting the interests of remaining investors.

The rule requires the funds to assess, manage and review their liquidity risk at least annually considering applicable factors such as investment strategy and liquidity during normal and foreseeable stressed conditions, including whether the strategy is appropriate for an open-end fund and whether the fund has a relatively concentrated portfolio or large positions in particular issuers. The fund must also assess its use of borrowings and derivatives, short-term and long-term cash flow projections in normal and stressed conditions, holdings of cash and cash equivalents, and borrowing arrangements and other funding sources.

The rule also requires the fund to classify its investments as highly liquid, moderately liquid, less liquid or illiquid based on the number of days the fund expects it would take to liquidate the investment, and to review these classifications at least monthly or more often under certain conditions. The periods range from three or fewer business days for a highly liquid investment to greater than seven calendar days for settlement of a less liquid investment. Illiquid investments are those a fund does not expect to be able to sell or dispose of within seven calendar days without significantly changing the market value. The fund is prohibited from acquiring an investment if, after the acquisition, its holdings of illiquid assets will exceed 15% of its net assets. In addition, if a fund permits redemptions in-kind, the rule requires the fund to establish redemption in-kind policies and procedures governing how and when it will engage in such redemptions.

Pursuant to the rule’s requirements, the Liquidity Risk Management Program has been reviewed and approved by the fund’s board. Furthermore, the board has received a written report prepared by the Program’s Administrator that addresses the operation of the Program, assesses its adequacy and effectiveness and describes any material changes made to the Program.

Assessment of Program

In the opinion of the Program Administrator, the Program approved by the fund board continues to be adequate for the fund and the Program has been implemented effectively. The Program Administrator has monitored the fund’s liquidity risk and the liquidity classification of the securities held by the fund and has determined that the Program is operating effectively.

During the period from June 1, 2019 to March 31, 2020, there were no material changes to the Program and no material liquidity events that impacted the fund. During the period, the fund held sufficient highly liquid assets to meet fund redemptions.

41

 

LIQUIDITY RISK MANAGEMENT PROGRAM (Unaudited) (continued)

Under normal expected foreseeable fund redemption forecasts and foreseeable stressed fund redemption forecasts, the Program Administrator believes that the fund maintains sufficient highly liquid assets to meet expected fund redemptions.

42

 

BOARD MEMBERS INFORMATION (Unaudited)
INDEPENDENT BOARD MEMBERS

Joseph S. DiMartino (76)
Chairman of the Board (1995)
Principal Occupation During Past 5 Years:

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

Other Public Company Board Memberships During Past 5 Years:

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

No. of Portfolios for which Board Member Serves: 114

———————

Peggy C. Davis (77)
Board Member (2006)
Principal Occupation During Past 5 Years:

· Shad Professor of Law, New York University School of Law (1983-present)

No. of Portfolios for which Board Member Serves: 40

———————

Gina D. France (61)
Board Member (2019)
Principal Occupation During Past 5 Years:

· Founder, President and Chief Executive Officer, France Strategic Partners, a strategy and advisory firm serving corporate clients across the United States (2003 –Present)

· Corporate Director and Trustee (2004 – Present)

Other Public Company Board Memberships During Past 5 Years:

· Huntington Bancshares, a bank holding company headquartered in Columbus, Ohio, Director (2016 – Present)

· Cedar Fair, L.P., a publicly-traded partnership that owns and operates amusement parks and hotels in the U.S. and Canada, Director (2011 – Present)

· CBIZ, Inc., a public company providing professional business services, products and solutions, Director (2015 – Present)

· Baldwin Wallace University, Trustee (2013- 2019)

· FirstMerit Corporation, a diversified financial services company, Director (2004 – 2016)

No. of Portfolios for which Board Member Serves: 26

———————

43

 

BOARD MEMBERS INFORMATION (Unaudited) (continued)
INDEPENDENT BOARD MEMBERS (continued)

Joan Gulley (72)
Board Member (2017)
Principal Occupation During Past 5 Years:

· PNC Financial Services Group, Inc.(1993-2014), Executive Vice President and Chief Human Resources Officer and Executive Committee Member (2008-2014)

· Director, Nantucket Library (2015-Present)

No. of Portfolios for which Board Member Serves: 46

———————

Ehud Houminer (79)
Board Member (2006)
Principal Occupation During Past 5 Years:

· Board of Overseers at the Columbia Business School, Columbia University (1992-Present)

· Trustee, Ben Gurion University (2012-2018)

No. of Portfolios for which Board Member Serves: 46

———————

Robin A. Melvin (56)
Board Member (2013)
Principal Occupation During Past 5 Years:

· Co-chairman, Mentor Illinois, a non-profit organization dedicated to increasing the quantity and quality of mentoring services in Illinois; (2014-Present); Board member (2013-Present)

No. of Portfolios for which Board Member Serves: 92

———————

Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80. The address of the Board Members and Officers is c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street, New York, New York 10286. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from the Adviser free of charge by calling this toll free number: 1-800-373-9387.

James F. Henry, Emeritus Board Member
David P. Felfman, Emeritus Board Member
Lynn Martin, Emeritus Board Member
Dr. Martin Peretz, Emeritus Board Member
Philip L. Toia, Emeritus Board Member

44

 

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 62 investment companies (comprised of 114 portfolios) managed by the Adviser. She is 48 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 61 years old and has been an employee of the 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 48 years old and has been an employee of the 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 63 investment companies (comprised of 122 portfolios) managed by the Adviser or an affiliate of the 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 53 years old and has been an employee of the 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 32 years old and has been an employee of the 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 29 years old and has been an employee of the 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 44 years old and has been an employee of the Adviser since March 2013.

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

Senior Managing Counsel of BNY Mellon, and an officer of 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 55 years old and has been an employee of the Adviser since October 1990.

45

 

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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 52 years old and has been an employee of the Adviser since January 2019.

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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 35 years old and has been an employee of the Adviser since June 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 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 35 years old and has been an employee of the Adviser since May 2016.

GAVIN C. REILLY, Assistant Treasurer since December 2005.

Tax Manager-BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 51 years old and has been an employee of the Adviser since April 1991.

ROBERT S. ROBOL, Assistant Treasurer since August 2005.

Senior Accounting Manager-BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 56 years old and has been an employee of the Adviser since October 1988.

ROBERT SALVIOLO, Assistant Treasurer since July 2007.

Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 53 years old and has been an employee of the Adviser since June 1989.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager–BNY Mellon Fund Administration, and an officer of 64 investment companies (comprised of 145 portfolios) managed by the Adviser or an affiliate of the Adviser. He is 53 years old and has been an employee of the Adviser since November 1990.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Adviser, the BNY Mellon Family of Funds and BNY Mellon Funds Trust (63 investment companies, comprised of 137 portfolios). He is 63 years old and has served in various capacities with the Adviser since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.

CARIDAD M. CAROSELLA, Anti-Money Laundering Compliance Officer since January 2016.

Anti-Money Laundering Compliance Officer of the BNY Mellon Family of Funds and BNY Mellon Funds Trust since January 2016; from May 2015 to December 2015, Interim Anti-Money Laundering Compliance Officer of the BNY Mellon Family of Funds and BNY Mellon Funds Trust and the Distributor; from January 2012 to May 2015, AML Surveillance Officer of the Distributor. She is an officer of 57 investment companies (comprised of 138 portfolios) managed by the Adviser or an affiliate of the Adviser. She is 51 years old and has been an employee of the Distributor since 1997.

46

 

NOTES

47

 

NOTES

48

 

NOTES

49

 

For More Information

BNY Mellon Emerging Markets Securities Fund
240 Greenwich Street
New York, NY 10286

Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286

Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286

Transfer Agent &
Dividend Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286

Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286

   

Ticker Symbols:

Class A: DRFMX          Class C: DCPEX          Class I: DRPEX          Class Y: DYPEX

Telephone Call your financial representative or 1-800-373-9387

Mail The BNY Mellon Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144

E-mail Send your request to info@bnymellon.com

Internet Information can be viewed online or downloaded at www.bnymellonim.com/us

The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-PORT. The fund’s Forms N-PORT are available on the SEC’s website 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.

   

© 2020 BNY Mellon Securities Corporation
0327AR0520

 


 

 

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 Joseph DiMartino, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC").  Mr. DiMartino 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 $50,298 in 2019 and $47,500 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 $6,807 in 2019 and $17,263 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 and (iv) advisory services to the accounting or disclosure treatment of the actual or potential impact to the Registrant of final or proposed rules, standards or interpretations by the Securities and Exchange Commission, the Financial Accounting Standards Boards or other regulatory or standard-setting bodies.

 

The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 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 $5,940 in 2019 and $5,399 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; (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held, and (iv) determination of Passive Foreign Investment Companies.  The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates, which required pre-approval by the Audit Committee were $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 $346 in 2019 and $335 in 2020.  These services consisted of a review of the Registrant's anti-money laundering program.

 

The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee, were $0 in 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 $679,886 in 2019 and $751,270 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.

                        Not applicable. 

Item 6.             Investments.

(a)                    Not applicable.

Item 7.             Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

                        Not applicable. 

Item 8.             Portfolio Managers of Closed-End Management Investment Companies.

Not applicable. 

Item 9.             Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.

                        Not applicable. 


 

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.

Not applicable. 

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 International Securities Funds, Inc.

By:       /s/ Renee LaRoche-Morris

            Renee LaRoche-Morris

            President (Principal Executive Officer)

 

Date:    July 27, 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:    July 27, 2020

 

By:       /s/ James Windels

            James Windels

            Treasurer (Principal Financial Officer)

 

Date:    July 24, 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)

THE BNY MELLON FAMILY OF FUNDS

BNY MELLON FUNDS TRUST

 

Principal Executive Officer and Senior Financial Officer

Code of Ethics

I.                Covered Officers/Purpose of the Code

This code of ethics (the "Code"), adopted by the funds in the BNY Mellon Family of Funds and BNY Mellon Funds Trust (each, a "Fund"), applies to each Fund's Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or other persons performing similar functions, each of whom is listed on Exhibit A (the "Covered Officers"), for the purpose of promoting:

·          honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·          full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (the "SEC") and in other public communications made by the Fund;

·          compliance with applicable laws and governmental rules and regulations;

·          the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

·          accountability for adherence to the Code.

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II.              Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest

Overview.  A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Fund.  For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund.

Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act").  For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund.  The compliance programs and procedures of the Fund and the Fund's investment adviser (the "Adviser") are designed to prevent, or identify and correct, violations of these provisions.  The Code does not, and is not intended to, repeat or replace these programs and procedures, and the circumstances they cover fall outside of the parameters of the Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the Adviser of which the Covered Officers are also officers or employees.  As a result, the Code recognizes that the Covered Officers, in the ordinary course of their duties (whether formally for the Fund or for the Adviser, or for both), will be involved in establishing policies and implementing decisions that will have different effects on the Adviser and the Fund.  The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund and, if addressed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, will be deemed to have been handled ethically.  In addition, it is recognized by the Fund's Board that the Covered Officers also may be officers or employees of one or more other investment companies covered by this or other codes of ethics.


 

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act.  Covered Officers should keep in mind that the Code cannot enumerate every possible scenario.  The overarching principle of the Code is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund.

Each Covered Officer must:

·          not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

·          not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; and

·          not retaliate against any employee or Covered Officer for reports of potential violations that are made in good faith.

III.            Disclosure and Compliance

·          Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the Fund within his area of responsibility;

·          each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Board members and auditors, and to governmental regulators and self-regulatory organizations;

·          each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Fund and the Adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and

·          it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

IV.            Reporting and Accountability

Each Covered Officer must:

·          upon adoption of the Code (or thereafter, as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he has received, read, and understands the Code;

2


 

·          annually thereafter affirm to the Board that he has complied with the requirements of the Code; and

·          notify the Adviser's General Counsel (the "General Counsel") promptly if he knows of any violation of the Code.  Failure to do so is itself a violation of the Code.

The General Counsel is responsible for applying the Code to specific situations in which questions are presented under it and has the authority to interpret the Code in any particular situation.  However, waivers sought by any Covered Officer will be considered by the Fund's Board.

The Fund will follow these procedures in investigating and enforcing the Code:

·          the General Counsel will take all appropriate action to investigate any potential violations reported to him;

·          if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action;

·          any matter that the General Counsel believes is a violation will be reported to the Board;

·          if the Board concurs that a violation has occurred, it will consider appropriate action, which may include: review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Adviser or its board; or dismissal of the Covered Officer;

·          the Board will be responsible for granting waivers, as appropriate; and

·          any waivers of or amendments to the Code, to the extent required, will be disclosed as provided by SEC rules.

V.              Other Policies and Procedures

The Code shall be the sole code of ethics adopted by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder.  The Fund's, its principal underwriter's and the Adviser's codes of ethics under Rule 17j-1 under the Investment Company Act and the Adviser's additional policies and procedures, including its Code of Conduct, are separate requirements applying to the Covered Officers and others, and are not part of the Code.

VI.            Amendments

Except as to Exhibit A, the Code may not be amended except in written form, which is specifically approved or ratified by a majority vote of the Fund's Board, including a majority of independent Board members.

VII.          Confidentiality

All reports and records prepared or maintained pursuant to the Code will be considered confidential and shall be maintained and protected accordingly.  Except as otherwise required by law or the Code, such matters shall not be disclosed to anyone other than the appropriate Funds and their counsel, the appropriate Boards (or Committees) and their counsel and the Adviser.

 

3


 

VIII.       Internal Use

The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact, circumstance, or legal conclusion.

 

Dated as of:  June 3, 2019

4


 

Exhibit A

Persons Covered by the Code of Ethics

 

 

Renee LaRoche-Morris

President

(Principal Executive Officer, BNY Mellon Family of Funds)

 

 

 

Patrick T. Crowe

President

(Principal Executive Officer, BNY Mellon Funds Trust)

 

 

 

James M. Windels

Treasurer

(Principal Financial and Accounting Officer)

 

 

5

[EX-99.CERT]—Exhibit  (a)(2)

SECTION 302 CERTIFICATION

 

I, Renee LaRoche-Morris, certify that:

1.  I have reviewed this report on Form N-CSR of BNY Mellon International Securities Fund, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                                                                                      By:         /s/ Renee LaRoche-Morris

                                                                                                     Renee LaRoche-Morris

                                                                                                     President (Principal Executive Officer)

                                                                                      Date:      July 27, 2020


 

SECTION 302 CERTIFICATION

I, James Windels, certify that:

1.  I have reviewed this report on Form N-CSR of BNY Mellon International Securities Funds, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

                                                                                      By:         /s/ James Windels

                                                                                                     James Windels

                                                                                                     Treasurer (Principal Financial Officer)

                                                                                      Date:      July 24, 2020

[EX-99.906CERT]

Exhibit (b)

 

 

SECTION 906 CERTIFICATIONS

              In connection with this report on Form N-CSR for the Registrant as furnished to the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

              (1)          the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and

 

              (2)          the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

                                                                                      By:         /s/ Renee LaRoche-Morris

                                                                                      Renee LaRoche-Morris

                                                                                                     President (Principal Executive Officer)

                                                                                      Date:      July 27, 2020

 

                                                                                      By:         /s/ James Windels

                                                                                                     James Windels

                                                                                                     Treasurer (Principal Financial Officer)

 

                                                                                      Date:      July 24, 2020

 

 

This certificate is furnished pursuant to the requirements of Form N-CSR and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.