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 811-0816
----------------------------------------------
AMERICAN CENTURY MUTUAL FUNDS, INC.
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(Exact name of registrant as specified in charter)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Address of principal executive offices) (Zip code)
DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 816-531-5575
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Date of fiscal year end: OCTOBER 31
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Date of reporting period: APRIL 30, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
[front cover]
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Ultra(reg.sm) Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ULTRA
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 5
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .11
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .13
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .14
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .15
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
OTHER INFORMATION
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .27
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .28
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III
WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Ultra fund for
the six months ended April 30, 2005.
This report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers and
other communications about investments, portfolio strategy and the markets.
Your next shareholder report for this fund will be the annual report dated
October 31, 2005, available in about six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
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1
Ultra - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
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SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
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INVESTOR CLASS -0.07% -7.29% 8.70% 13.18% 11/2/81
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RUSSELL 1000 GROWTH INDEX(1) 0.40% -10.75% 7.71% 11.36%(2) --
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S&P 500 INDEX(1) 6.34% -2.94% 10.26% 13.21%(2) --
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Institutional Class 0.11% -7.10% -- 5.34% 11/14/96
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Advisor Class -0.33% -7.54% -- 5.31% 10/2/96
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C Class -1.09% -- -- 0.89% 10/29/01
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R Class(3) -0.52% -- -- 5.00% 8/29/03
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(1) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
Lipper Fund Performance - Performance data is total return, and is
preliminary and subject to revision.
Lipper Rankings - Rankings are based only on the universe shown. This
listing might not represent the complete universe of funds tracked by Lipper
Inc.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. -- A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made
by Lipper.
(2) Since 10/31/81, the date nearest the Investor Class's inception for which
data are available.
(3) Returns would have been lower if service and distribution fees had not been
reimbursed.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
(continued)
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2
Ultra - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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Investor Class 36.42% 10.69% 39.75% 25.52% 27.06% -26.70% -9.83% -14.79% 21.64% -0.07%
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Russell 1000
Growth Index 32.55% 22.06% 42.09% 26.53% 27.58% -32.25% -20.10% -14.35% 21.65% 0.40%
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S&P 500 Index 30.21% 25.13% 41.07% 21.82% 10.13% -12.97% -12.63% -13.31% 22.88% 6.34%
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Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
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3
Ultra - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE ULTRA INVESTMENT TEAM: BRUCE WIMBERLY, JERRY SULLIVAN
AND WADE SLOME.
Ultra gained 0.07%* during the six months ended April 30, 2005. The Russell 1000
Growth Index, a widely followed barometer of the large-cap growth stocks Ultra
generally invests in, rose 1.14%. The S&P 500 Index returned 3.28%.
Ultra has returned an average of 13.18% on an annual basis since its inception
November 2, 1981. Although its most recent one-year return is down 0.07% and
ranks in the 67th percentile (438th out of 659) in its Lipper Large-Cap Growth
peer group, the portfolio's average five-year return, down 7.29%, ranks in the
top 27% of that group (110th out of 420). In addition, its 10-year return of
8.70% ranks in the top 26% (35th out of 137). The average return of the Lipper
group was 1.13%, -9.52%, and 7.08%, for the one-, five-, and 10-year periods
ended April 30, 2005, respectively (see footnote 1 on page 2).
EQUITIES GAIN AMID CHALLENGES
Stocks rallied during the final stretch of 2004, gaining strength from the
resolution of the presidential election and a temporary decline in oil prices.
However, investor optimism waned in the early months of 2005 as concern grew
about the effects of rising commodity and oil prices and interest rates on the
economy and corporate profit growth. Though volatility prevailed, equities
ultimately booked gains for the period with value stocks generally outpacing
their growth counterparts.
HEALTH CARE PROVIDES BIGGEST LIFT
Ultra's strongest performance during the period came from investments in the
health care sector. UnitedHealth Group was the portfolio's top contributor. The
nation's largest health insurer benefited from improving productivity, enhancing
customer service, controlling costs and increasing membership across its
businesses. Investments in pharmaceutical companies also turned in solid
results, led by Teva Pharmaceutical Industries, American Pharmaceutical Partners
and Johnson & Johnson. Biopharmaceutical company Genetech was another top
contributor, lifted by positive news from
TOP TEN HOLDINGS AS OF APRIL 30, 2005
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% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
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Wal-Mart Stores, Inc. 2.9% 2.1%
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Medtronic, Inc. 2.5% 2.1%
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Dell Inc. 2.3% 2.1%
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First Data Corp. 2.2% 1.4%
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Apollo Group Inc. Cl A 2.1% 1.0%
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Teva Pharmaceutical
Industries Ltd. ADR 2.0% 1.5%
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UnitedHealth
Group Incorporated 2.0% 1.9%
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Microsoft Corporation 1.9% 1.8%
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Pfizer, Inc. 1.9% 1.4%
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International
Game Technology 1.9% 1.3%
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*All fund returns referenced in this commentary
are for Investor Class shares. Returns for periods
less than one year are not annualized. (continued)
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4
Ultra - Portfolio Commentary
clinical trials of its breast-cancer drugs Avastin and Herceptin.
Outside of health care, videogame software publisher Electronic Arts was a
leading contributor during the period. Nevertheless, Ultra's information
technology stake, on average its largest sector exposure, weighed on returns.
Security software maker Symantec was the biggest detractor in the tech sector,
suffering from the perception that its acquisition of Veritas Software and
competition from Microsoft would slow Symantec's growth.
Investments in the energy sector lifted the portfolio's results. Among the
contributors was ExxonMobil Corp., which reported a record quarterly profit in
February.
CONSUMER DISCRETIONARY AMONG DETRACTORS
Ultra was slowed most by investments in the consumer discretionary sector.
Online auction firm eBay was the portfolio's top detractor during the period.
International Game Technology also hurt Ultra's returns after the slot machine
maker reported lower top- and bottom-line figures for its fiscal second quarter
in large part due to charges for obsolete technology and severance.
Looking at the consumer staples sector, Wal-Mart Stores, on average one of
Ultra's largest positions, underperformed during the period. Like many other
U.S. corporations this year, the world's largest retailer felt the sting of high
gasoline prices. In April, Wal-Mart's chief financial officer said high gasoline
prices hurt its same-store sales - or sales at stores open at least a year - as
lower-income customers reined in purchases as their spending on gasoline
increased. He also noted that the fleet of trucks it uses to distribute
merchandise to stores was also impacted by high gas prices.
OUR COMMITMENT
Announced late last year, Jim Stowers III succeeded his father as chairman of
American Century Companies, Inc. In order to give his full attention to the new
corporate responsibilities, Stowers relinquished portfolio management
responsibilities in February and is no longer serving as CIO for U.S. Growth
Equity. Portfolio managers Bruce Wimberly, Wade Slome and Jerry Sullivan
continue to manage the Ultra fund. Wimberly has been on the portfolio since
1994, the past nine years as manager.
The Ultra management team remains committed to seeking long-term capital growth
by investing in stocks of companies it believes will increase in value over
time.
TOP FIVE INDUSTRIES AS OF APRIL 30, 2005
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% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
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Pharmaceuticals 7.7% 5.7%
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Health Care
Equipment & Supplies 7.5% 7.6%
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Insurance 5.8% 4.6%
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IT Services 5.7% 4.3%
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Software 5.5% 6.3%
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TYPES OF INVESTMENTS IN PORTFOLIO
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% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
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Common Stocks 96.4% 94.3%
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Temporary
Cash Investments 0.6% 1.6%
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Collateral Received
for Securities Lending 3.0% 4.1%
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5
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
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6
Shareholder Fee Example (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
- ------------------------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD(1) ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO
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ULTRA SHAREHOLDER FEE EXAMPLE
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ACTUAL
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Investor Class $1,000 $1,000.70 $4.91 0.99%
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Institutional Class $1,000 $1,001.80 $3.92 0.79%
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Advisor Class $1,000 $999.60 $6.15 1.24%
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C Class $1,000 $995.80 $9.85 1.99%
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R Class (after reimbursement)(2) $1,000 $998.90 $6.84 1.38%
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R Class (before reimbursement) $1,000 $998.90(3) $7.38 1.49%
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HYPOTHETICAL
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Investor Class $1,000 $1,019.89 $4.96 0.99%
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Institutional Class $1,000 $1,020.88 $3.96 0.79%
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Advisor Class $1,000 $1,018.65 $6.21 1.24%
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C Class $1,000 $1,014.93 $9.94 1.99%
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R Class (after reimbursement)(2) $1,000 $1,017.95 $6.90 1.38%
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R Class (before reimbursement) $1,000 $1,017.41 $7.45 1.49%
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(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 181, the number of days in the most recent fiscal half-year,
divided by 365, to reflect the one-half year period.
(2) During the six months ended April 30, 2005, the class received a partial
reimbursement of its service and distribution fee. Had fees not been
reimbursed, the annualized ratio of operating expenses to average net assets
would have been 1.49%.
(3) Ending account value assumes the return earned after reimbursement. The
return would have been lower had fee not been reimbursed and would have
resulted in a lower ending redeemable value.
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7
Ultra - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
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COMMON STOCKS -- 98.8%
AEROSPACE & DEFENSE -- 1.2%
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1,300,000 General Dynamics Corp. $ 136,565
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1,091,000 United Technologies Corp. 110,977
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247,542
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AIR FREIGHT & LOGISTICS -- 2.4%
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862,000 C.H. Robinson Worldwide, Inc. 44,479
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1,872,000 Expeditors International
of Washington, Inc. 91,934
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1,371,000 FedEx Corporation 116,466
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3,500,000 United Parcel
Service, Inc. Cl B 249,586
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502,465
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AUTOMOBILES -- 1.1%
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4,863,000 Harley-Davidson, Inc. 228,658
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BEVERAGES -- 3.0%
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3,424,000 Anheuser-Busch
Companies, Inc. 160,483
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3,747,000 Coca-Cola Company (The) 162,770
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5,505,000 PepsiCo, Inc. 306,298
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629,551
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BIOTECHNOLOGY -- 2.1%
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3,618,000 Amgen Inc.(1) 210,604
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3,242,000 Genentech, Inc.(1) 229,987
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440,591
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 2.2%
- --------------------------------------------------------------------------------
1,893,000 Goldman Sachs
Group, Inc. (The) 202,154
- --------------------------------------------------------------------------------
1,500,000 Legg Mason, Inc.(2) 106,290
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2,861,000 T. Rowe Price Group Inc.(2) 157,841
- --------------------------------------------------------------------------------
466,285
- --------------------------------------------------------------------------------
CHEMICALS -- 0.3%
- --------------------------------------------------------------------------------
1,098,000 Monsanto Co. 64,365
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 0.9%
- --------------------------------------------------------------------------------
3,357,000 Wells Fargo & Co. 201,219
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 2.1%
- --------------------------------------------------------------------------------
6,257,000 Apollo Group Inc. Cl A(1) 451,255
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 2.4%
- --------------------------------------------------------------------------------
15,514,000 Cisco Systems Inc.(1) 268,082
- --------------------------------------------------------------------------------
6,797,000 QUALCOMM Inc. 237,147
- --------------------------------------------------------------------------------
505,229
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 2.3%
- --------------------------------------------------------------------------------
14,265,000 Dell Inc.(1) 496,850
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 2.4%
- --------------------------------------------------------------------------------
2,579,000 American Express Co. 135,913
- --------------------------------------------------------------------------------
7,762,000 SLM Corporation(2) 369,782
- --------------------------------------------------------------------------------
505,695
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
DIVERSIFIED -- 0.1%
- --------------------------------------------------------------------------------
449,000 iShares FTSE/Xinhua
China 25 Index Fund(1) $ 24,839
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 3.7%
- --------------------------------------------------------------------------------
1,003,000 Chicago Mercantile
Exchange Holdings Inc.(2) 196,107
- --------------------------------------------------------------------------------
5,611,000 Citigroup Inc. 263,492
- --------------------------------------------------------------------------------
2,108,000 McGraw-Hill
Companies, Inc. (The) 183,565
- --------------------------------------------------------------------------------
1,671,432 Moody's Corp.(2) 137,291
- --------------------------------------------------------------------------------
780,455
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 5.4%
- --------------------------------------------------------------------------------
1,292,000 Costco Wholesale Corporation 52,429
- --------------------------------------------------------------------------------
4,808,000 Sysco Corp. 166,357
- --------------------------------------------------------------------------------
13,048,000 Wal-Mart Stores, Inc. 615,082
- --------------------------------------------------------------------------------
4,580,000 Walgreen Co. 197,215
- --------------------------------------------------------------------------------
1,098,000 Whole Foods Market, Inc.(2) 109,493
- --------------------------------------------------------------------------------
1,140,576
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 0.4%
- --------------------------------------------------------------------------------
1,173,000 Wrigley (Wm.) Jr. Company 81,089
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 7.5%
- --------------------------------------------------------------------------------
1,600,000 Biomet Inc. 61,904
- --------------------------------------------------------------------------------
12,687,000 Boston Scientific Corp.(1) 375,281
- --------------------------------------------------------------------------------
965,000 Guidant Corp. 71,487
- --------------------------------------------------------------------------------
9,904,000 Medtronic, Inc. 521,942
- --------------------------------------------------------------------------------
3,026,000 St. Jude Medical, Inc.(1) 118,105
- --------------------------------------------------------------------------------
3,071,000 Stryker Corp. 149,097
- --------------------------------------------------------------------------------
3,554,000 Varian Medical Systems, Inc.(1) 119,912
- --------------------------------------------------------------------------------
2,343,000 Zimmer Holdings Inc.(1) 190,767
- --------------------------------------------------------------------------------
1,608,495
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 2.0%
- --------------------------------------------------------------------------------
4,408,000 UnitedHealth
Group Incorporated 416,600
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 4.8%
- --------------------------------------------------------------------------------
2,009,949 Applebee's International Inc. 49,807
- --------------------------------------------------------------------------------
6,099,000 Carnival Corporation 298,119
- --------------------------------------------------------------------------------
2,227,633 Cheesecake Factory Inc.(1)(2) 68,366
- --------------------------------------------------------------------------------
14,829,000 International Game Technology 398,752
- --------------------------------------------------------------------------------
825,620 PF Chang's China
Bistro, Inc.(1)(2) 45,838
- --------------------------------------------------------------------------------
3,039,000 Starbucks Corporation(1) 150,491
- --------------------------------------------------------------------------------
1,011,373
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 0.5%
- --------------------------------------------------------------------------------
3,258,000 D.R. Horton, Inc. 99,369
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.8%
- --------------------------------------------------------------------------------
1,295,000 Colgate-Palmolive Co. 64,478
- --------------------------------------------------------------------------------
5,945,000 Procter & Gamble Co. (The) 321,922
- --------------------------------------------------------------------------------
386,400
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
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8
Ultra - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 3.0%
- --------------------------------------------------------------------------------
1,570,000 3M Co. $ 120,058
- --------------------------------------------------------------------------------
6,073,000 General Electric Co. 219,843
- --------------------------------------------------------------------------------
9,619,000 Tyco International Ltd. 301,170
- --------------------------------------------------------------------------------
641,071
- --------------------------------------------------------------------------------
INSURANCE -- 5.8%
- --------------------------------------------------------------------------------
4,482,000 Aflac Inc. 182,193
- --------------------------------------------------------------------------------
1,597,000 Ambac Financial Group, Inc. 106,759
- --------------------------------------------------------------------------------
4,180,000 American International
Group, Inc. 212,553
- --------------------------------------------------------------------------------
3,620 Berkshire Hathaway Inc.
Cl A(1)(2) 305,347
- --------------------------------------------------------------------------------
104,958 Berkshire Hathaway Inc.
Cl B(1)(2) 293,674
- --------------------------------------------------------------------------------
1,689,000 Progressive Corp. 154,155
- --------------------------------------------------------------------------------
1,254,681
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 3.7%
- --------------------------------------------------------------------------------
10,668,000 Amazon.com, Inc.(1)(2) 345,216
- --------------------------------------------------------------------------------
12,500,000 eBay Inc.(1) 396,625
- --------------------------------------------------------------------------------
2,421,000 IAC/InterActiveCorp(1)(2) 52,633
- --------------------------------------------------------------------------------
794,474
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 2.3%
- --------------------------------------------------------------------------------
2,393,952 Digital River Inc.(1)(2)(3) 63,679
- --------------------------------------------------------------------------------
343,000 Google Inc. Cl A(1) 75,460
- --------------------------------------------------------------------------------
1,587,058 VeriSign, Inc.(1) 41,994
- --------------------------------------------------------------------------------
8,738,000 Yahoo! Inc.(1) 301,548
- --------------------------------------------------------------------------------
482,681
- --------------------------------------------------------------------------------
IT SERVICES -- 5.7%
- --------------------------------------------------------------------------------
12,884,000 Accenture Ltd. Cl A(1) 279,583
- --------------------------------------------------------------------------------
6,411,000 Checkfree Corp.(1)(2)(3) 235,155
- --------------------------------------------------------------------------------
12,515,000 First Data Corp. 475,946
- --------------------------------------------------------------------------------
8,255,000 Paychex, Inc. 252,603
- --------------------------------------------------------------------------------
1,243,287
- --------------------------------------------------------------------------------
MACHINERY -- 0.4%
- --------------------------------------------------------------------------------
1,548,000 Danaher Corp. 78,375
- --------------------------------------------------------------------------------
MULTILINE RETAIL -- 1.5%
- --------------------------------------------------------------------------------
2,493,000 Kohl's Corp.(1) 118,667
- --------------------------------------------------------------------------------
4,199,000 Target Corporation 194,833
- --------------------------------------------------------------------------------
313,500
- --------------------------------------------------------------------------------
OFFICE ELECTRONICS -- 0.4%
- --------------------------------------------------------------------------------
1,717,000 Zebra Technologies
Corp. Cl A(1) 82,004
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 2.9%
- --------------------------------------------------------------------------------
2,384,620 Apache Corp. 134,230
- --------------------------------------------------------------------------------
1,740,000 ChevronTexaco Corp. 90,480
- --------------------------------------------------------------------------------
5,814,000 Exxon Mobil Corp. 331,572
- --------------------------------------------------------------------------------
723,000 Kinder Morgan, Inc. 55,281
- --------------------------------------------------------------------------------
611,563
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 1.2%
- --------------------------------------------------------------------------------
1,274,000 Alberto-Culver Company Cl B $ 56,693
- --------------------------------------------------------------------------------
4,720,000 Avon Products, Inc. 189,178
- --------------------------------------------------------------------------------
245,871
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 7.7%
- --------------------------------------------------------------------------------
2,403,000 American Pharmaceutical
Partners Inc.(1)(2) 125,244
- --------------------------------------------------------------------------------
2,309,000 Eli Lilly and Company 135,007
- --------------------------------------------------------------------------------
5,057,000 Johnson & Johnson 347,062
- --------------------------------------------------------------------------------
3,357,000 Novartis AG ORD 162,456
- --------------------------------------------------------------------------------
15,019,000 Pfizer, Inc. 408,066
- --------------------------------------------------------------------------------
2,606,000 Schering-Plough Corp. 54,387
- --------------------------------------------------------------------------------
13,411,000 Teva Pharmaceutical
Industries Ltd. ADR(2) 418,961
- --------------------------------------------------------------------------------
1,651,183
- --------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 4.3%
- --------------------------------------------------------------------------------
3,808,000 Applied Materials, Inc.(1) 56,625
- --------------------------------------------------------------------------------
42,769,000 ARM Holdings plc ORD 78,065
- --------------------------------------------------------------------------------
13,674,000 Intel Corp. 321,613
- --------------------------------------------------------------------------------
1,752,000 KLA-Tencor Corp. 68,363
- --------------------------------------------------------------------------------
4,973,000 Maxim Integrated
Products, Inc. 185,990
- --------------------------------------------------------------------------------
5,044,000 Microchip Technology Inc. 143,653
- --------------------------------------------------------------------------------
2,382,000 Xilinx, Inc.(2) 64,171
- --------------------------------------------------------------------------------
918,480
- --------------------------------------------------------------------------------
SOFTWARE -- 5.5%
- --------------------------------------------------------------------------------
6,616,000 Electronic Arts Inc.(1) 353,228
- --------------------------------------------------------------------------------
2,801,000 Intuit Inc.(1) 112,880
- --------------------------------------------------------------------------------
16,187,000 Microsoft Corporation 409,532
- --------------------------------------------------------------------------------
1,680,000 NAVTEQ Corp.(1) 61,186
- --------------------------------------------------------------------------------
8,974,000 Oracle Corp.(1) 103,739
- --------------------------------------------------------------------------------
6,371,000 Symantec Corp.(1)(2) 119,647
- --------------------------------------------------------------------------------
1,160,212
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 5.0%
- --------------------------------------------------------------------------------
6,599,000 Bed Bath & Beyond Inc.(1) 245,549
- --------------------------------------------------------------------------------
4,273,000 Carmax, Inc.(1)(2) 116,567
- --------------------------------------------------------------------------------
148,641 Chico's FAS, Inc.(1) 3,810
- --------------------------------------------------------------------------------
2,378,000 Home Depot, Inc. 84,110
- --------------------------------------------------------------------------------
5,972,000 Lowe's Companies, Inc. 311,200
- --------------------------------------------------------------------------------
1,083,511 Michaels Stores, Inc. 35,973
- --------------------------------------------------------------------------------
5,266,000 PETsMART, Inc. 140,339
- --------------------------------------------------------------------------------
2,892,000 Weight Watchers
International Inc.(1)(2) 120,741
- --------------------------------------------------------------------------------
1,058,289
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 0.8%
- --------------------------------------------------------------------------------
2,807,000 Golden West Financial Corp. 174,960
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $16,246,610) 20,999,532
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
9
Ultra - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.6%
Repurchase Agreement, Morgan Stanley
Group, Inc., (collateralized by various
U.S. Treasury obligations, 9.88%, 11/15/15,
valued at $71,079), in a joint trading
account at 2.82%, dated 4/29/05,
due 5/2/05 (Delivery value $69,616) $ 69,600
- --------------------------------------------------------------------------------
Repurchase Agreement, Credit Suisse
First Boston, Inc., (collateralized by
various U.S. Treasury obligations, 8.125%,
8/15/21, valued at $60,141), in a joint
trading account at 2.81%, dated 4/29/05,
due 5/2/05 (Delivery value $59,014) 59,000
- --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $128,600) 128,600
- --------------------------------------------------------------------------------
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COLLATERAL RECEIVED
FOR SSECURITIES LENDING(4) -- 3.1%
REPURCHASE AGREEMENTS -- 3.0%
- --------------------------------------------------------------------------------
Repurchase Agreement, Barclays Bank plc,
(collateralized by various U.S. Government
Agency obligations in a pooled account at
the lending agent), 2.95%, dated 4/29/05,
due 5/2/05 (Delivery value $12,702) $ 12,699
- --------------------------------------------------------------------------------
Repurchase Agreement, UBS AG,
(collateralized by various U.S. Government
Agency obligations in a pooled account at
the lending agent), 3.00%, dated 4/29/05,
due 5/2/05 (Delivery value $620,155) 620,000
- --------------------------------------------------------------------------------
632,699
- --------------------------------------------------------------------------------
SHORT-TERM DEBT -- 0.1%
- --------------------------------------------------------------------------------
$25,000 Morgan Stanley Master
Note, VRN, 3.18%, 5/2/05 25,000
- --------------------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING
(Cost $657,699) 657,699
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 102.5%
(Cost $17,032,909) 21,785,831
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (2.5)% (527,179)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $21,258,652
================================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
($ IN THOUSANDS)
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
95,674,500 CHF for USD 5/31/2005 $80,115 $624
====================================
(Value on Settlement Date $80,739)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the
future -- and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depository Receipt
CHF = Swiss Franc
ORD = Foreign Ordinary Share
USD = United States Dollar
VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is
effective April 30, 2005.
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of April 30, 2005.
(3) Affiliated Company: the fund's holding represents ownership of 5% or more
of the voting securities of the company; therefore, the company is
affiliated as defined in the Investment Company Act of 1940. (See Note 5
in Notes to Financial Statements for a summary of transactions for each
company which is or was an affiliate at or during the six months ended
April 30, 2005.)
(4) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions. (See Note 6 in
Notes to Financial Statements.)
See Notes to Financial Statements.
- ------
10
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities -- unaffiliated, at value
(cost of $16,161,564) -- including $562,165
of securities on loan $20,829,298
- --------------------------------------------------------------
Investment securities -- affiliated, at value
(cost of $213,646) -- including $81,920
of securities on loan 298,834
- --------------------------------------------------------------
Investments made with cash collateral received
for securities on loan, at value (cost of $657,699) 657,699
- --------------------------------------------------------------------------------
Total investment securities, at value (cost of $17,032,909) 21,785,831
- --------------------------------------------------------------
Receivable for investments sold 440,837
- --------------------------------------------------------------
Receivable for capital shares sold 814
- --------------------------------------------------------------
Receivable for forward foreign currency exchange contracts 624
- --------------------------------------------------------------
Dividends and interest receivable 9,348
- --------------------------------------------------------------------------------
22,237,454
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for collateral received for securities on loan 657,699
- --------------------------------------------------------------
Disbursements in excess of demand deposit cash 5,917
- --------------------------------------------------------------
Payable for investments purchased 297,507
- --------------------------------------------------------------
Payable for capital shares redeemed 2
- --------------------------------------------------------------
Accrued management fees 17,384
- --------------------------------------------------------------
Distribution fees payable 149
- --------------------------------------------------------------
Service fees (and distribution fees -- R Class) payable 144
- --------------------------------------------------------------------------------
978,802
- --------------------------------------------------------------------------------
NET ASSETS $21,258,652
================================================================================
See Notes to Financial Statements.
(continued)
- ------
11
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
- ----------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $17,783,244
- --------------------------------------------------------------
Undistributed net investment income 30,181
- --------------------------------------------------------------
Accumulated net realized loss on investment
and foreign currency transactions (1,308,324)
- --------------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and
liabilities in foreign currencies 4,753,551
- ----------------------------------------------------------------------------------
$21,258,652
==================================================================================
INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- ----------------------------------------------------------------------------------
Net assets $19,342,911,368
- --------------------------------------------------------------
Shares outstanding 711,385,742
- --------------------------------------------------------------
Net asset value per share $27.19
- ----------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- ----------------------------------------------------------------------------------
Net assets $1,280,011,351
- --------------------------------------------------------------
Shares outstanding 46,559,609
- --------------------------------------------------------------
Net asset value per share $27.49
- ----------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- ----------------------------------------------------------------------------------
Net assets $623,887,500
- --------------------------------------------------------------
Shares outstanding 23,246,010
- --------------------------------------------------------------
Net asset value per share $26.84
- ----------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- ----------------------------------------------------------------------------------
Net assets $5,927,974
- --------------------------------------------------------------
Shares outstanding 225,141
- --------------------------------------------------------------
Net asset value per share $26.33
- ----------------------------------------------------------------------------------
R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- ----------------------------------------------------------------------------------
Net assets $5,914,267
- --------------------------------------------------------------
Shares outstanding 219,222
- --------------------------------------------------------------
Net asset value per share $26.98
- ----------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
12
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
- ----------------------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------------------
INCOME:
- --------------------------------------------------------------
Dividends (including $254 from affiliates
and net of foreign taxes withheld of $302) $ 136,356
- --------------------------------------------------------------
Interest 4,268
- --------------------------------------------------------------
Securities lending 2,517
- ----------------------------------------------------------------------------------
143,141
- ----------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------
Management fees 110,813
- --------------------------------------------------------------
Distribution fees:
- --------------------------------------------------------------
Advisor Class 944
- --------------------------------------------------------------
C Class 21
- --------------------------------------------------------------
Service fees:
- --------------------------------------------------------------
Advisor Class 944
- --------------------------------------------------------------
C Class 7
- --------------------------------------------------------------
Service and distribution fees -- R Class 14
- --------------------------------------------------------------
Directors' fees and expenses 157
- --------------------------------------------------------------
Other expenses 64
- ----------------------------------------------------------------------------------
112,964
- ----------------------------------------------------------------------------------
Amount reimbursed (4)
- ----------------------------------------------------------------------------------
112,960
- ----------------------------------------------------------------------------------
NET INVESTMENT INCOME 30,181
- ----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------------------
Net realized gain on investment
and foreign currency transactions
(including $52,740 from affiliates) 1,407,101
- --------------------------------------------------------------
Change in net unrealized appreciation
on investments and translation of assets
and liabilities in foreign currencies (1,365,578)
- ----------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 41,523
- ----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 71,704
==================================================================================
See Notes to Financial Statements.
- ------
13
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
(AMOUNTS IN THOUSANDS)
- ----------------------------------------------------------------------------------
DECREASE IN NET ASSETS 2005 2004
- ----------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income (loss) $ 30,181 $ (46,223)
- ----------------------------------------
Net realized gain 1,407,101 1,073,441
- ----------------------------------------
Change in net unrealized appreciation (1,365,578) (17,867)
- ----------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 71,704 1,009,351
- ----------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- ----------------------------------------------------------------------------------
Net decrease in net assets from
capital share transactions (1,323,860) (1,307,713)
- ----------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (1,252,156) (298,362)
NET ASSETS
- ----------------------------------------------------------------------------------
Beginning of period 22,510,808 22,809,170
- ----------------------------------------------------------------------------------
End of period $ 21,258,652 $ 22,510,808
==================================================================================
Undistributed net investment income $30,181 --
==================================================================================
See Notes to Financial Statements.
- ------
14
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Ultra Fund (the fund) is one fund in a
series issued by the corporation. The fund is diversified under the 1940 Act.
The fund's investment objective is to seek long-term capital growth. The fund
pursues its objective by investing primarily in equity securities. The fund
generally invests in equity securities of large companies, but may invest in
companies of any size. The following is a summary of the fund's significant
accounting policies.
MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the
Institutional Class, the Advisor Class, the C Class and the R Class. The C Class
may be subject to a contingent deferred sales charge. The share classes differ
principally in their respective sales charges and shareholder servicing and
distribution expenses and arrangements. All shares of the fund represent an
equal pro rata interest in the net assets of the class to which such shares
belong, and have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except for class specific expenses and exclusive
rights to vote on matters affecting only individual classes. Income, non-class
specific expenses, and realized and unrealized capital gains and losses of the
fund are allocated to each class of shares based on their relative net assets.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the fund determines that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending
agent to certain approved borrowers in order to earn additional income. The fund
continues to recognize any gain or loss in the market price of the securities
loaned and records any interest earned or dividends declared.
FUTURES CONTRACTS -- The fund may enter into futures contracts in order to
manage the fund's exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the fund is required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the fund. The variation margin is equal to
the daily change in the contract value and is recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is closed
or expires. Net realized and unrealized gains or losses occurring during the
holding period of futures contracts are a component of realized gain (loss) on
investment transactions and unrealized appreciation (depreciation) on
investments, respectively.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. For assets and
liabilities, other than investments in securities, net realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
(continued)
- ------
15
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose taxes
on the contract amount of purchases and sales of foreign currency contracts in
their currency. The fund records the foreign tax expense, if any, as a reduction
to the net realized gain (loss) on foreign currency transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to hedge the fund's exposure to foreign
currency exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The fund bears the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. The
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable the fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to the
fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, the fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
INDEMNIFICATIONS -- Under the corporation organizational documents, its officers
and directors are indemnified against certain liabilities arising out of the
performance of their duties to the fund. In addition, in the normal course of
business, the fund enters into contracts that provide general indemnifications.
The fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the fund. The risk of material
loss from such claims is considered by management to be remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
(continued)
- ------
16
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee (the fee). The
Agreement provides that all expenses of the fund, except brokerage commissions,
taxes, interest, fees and expenses of those directors who are not considered
"interested persons" as defined in the 1940 Act (including counsel fees) and
extraordinary expenses, will be paid by ACIM. The fee is computed and accrued
daily based on the daily net assets of the fund and paid monthly in arrears. For
funds with a stepped fee schedule, the rate of the fee is determined by applying
a fee rate calculation formula. This formula takes into account all of the
investment advisor's assets under management in the fund's investment strategy
(strategy assets) to calculate the appropriate fee rate for the fund. The
strategy assets include the fund's assets and the assets of other clients of the
investment advisor that are not in the American Century family of funds, but
that have the same investment team and investment strategy.
The annual management fee schedule for each class of the fund is as follows:
- ----------------------------------------------------------------------------
INVESTOR, C
AND R INSTITUTIONAL ADVISOR
- ----------------------------------------------------------------------------
STRATEGY ASSETS
- ----------------------------------------------------------------------------
First $20 billion 1.000% 0.800% 0.750%
- ----------------------------------------------------------------------------
Next $10 billion 0.950% 0.750% 0.700%
- ----------------------------------------------------------------------------
Next $10 billion 0.925% 0.725% 0.675%
- ----------------------------------------------------------------------------
Next $10 billion 0.900% 0.700% 0.650%
- ----------------------------------------------------------------------------
Over $50 billion 0.875% 0.675% 0.625%
- ----------------------------------------------------------------------------
The effective annual management fee for each class of the fund for the six
months ended April 30, 2005 was 0.99%, 0.79%, 0.74%, 0.99% and 0.99% for the
Investor, Institutional, Advisor, C and R Classes, respectively.
DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master
Distribution and Shareholder Services Plan for the Advisor Class (the Advisor
Class plan) and a separate Master Distribution and Individual Shareholder
Services Plan for each of the C Class and R Class (collectively with the Advisor
Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans
provide that the Advisor Class and C Class will pay American Century Investment
Services, Inc. (ACIS) the following annual distribution and service fees:
- ----------------------------------------------------------------------------
ADVISOR C
- ----------------------------------------------------------------------------
Distribution Fee 0.25% 0.75%
- ----------------------------------------------------------------------------
Service Fee 0.25% 0.25%
- ----------------------------------------------------------------------------
The plans provide that the R Class will pay ACIS an annual distribution and
service fee of 0.50%. The fees are computed and accrued daily based on each
class's daily net assets and paid monthly in arrears. The distribution fee
provides compensation for expenses incurred in connection with distributing
shares of the classes including, but not limited to, payments to brokers,
dealers, and financial institutions that have entered into sales agreements with
respect to shares of the fund. The service fee provides compensation for
shareholder and administrative services rendered by ACIS, its affiliates or
independent third party providers for Advisor Class shares and for individual
shareholder services rendered by broker/dealers or other independent financial
intermediaries for C Class and R Class shares.
During the six months ended April 30, 2005, classes that received reimbursements
of distribution and service fees were as follows:
- ----------------------------------------------------------------------------
$ IN FULL ADVISOR R
- ----------------------------------------------------------------------------
Distribution Fee $563 --
- ----------------------------------------------------------------------------
Service and
Distibution Fee -- $3,125
- ----------------------------------------------------------------------------
The reimbursement for the Advisor Class had no impact on the ratio of operating
expenses and the ratio of net investment income to average net assets in the
financial highlights. Fees incurred under the plans during the six months ended
April 30, 2005, are detailed in the Statement of Operations.
(continued)
- ------
17
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's
transfer agent, American Century Services, LLC (formerly American Century
Services Corporation).
The fund has a bank line of credit agreement and securities lending agreement
with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly
owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in
ACC.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term investments,
for the six months ended April 30, 2005, were $4,933,166 and $6,049,826,
respectively.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 3,500,000
================================================================================
Sold 25,881 $ 736,152
- ---------------------------------------
Redeemed (76,677) (2,184,725)
- --------------------------------------------------------------------------------
Net decrease (50,796) $(1,448,573)
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 3,500,000
================================================================================
Sold 66,316 $ 1,788,649
- ---------------------------------------
Redeemed (124,663) (3,369,841)
- --------------------------------------------------------------------------------
Net decrease (58,347) $(1,581,192)
================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 200,000
================================================================================
Sold 13,475 $ 390,171
- ---------------------------------------
Redeemed (5,363) (154,134)
- --------------------------------------------------------------------------------
Net increase 8,112 $ 236,037
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 200,000
================================================================================
Sold 13,573 $ 374,299
- ---------------------------------------
Redeemed (6,488) (176,711)
- --------------------------------------------------------------------------------
Net increase 7,085 $ 197,588
================================================================================
(continued)
- ------
18
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 300,000
================================================================================
Sold 4,398 $ 123,836
- ---------------------------------------
Redeemed (8,637) (237,762)
- --------------------------------------------------------------------------------
Net decrease (4,239) $(113,926)
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 300,000
================================================================================
Sold 10,152 $ 272,029
- ---------------------------------------
Redeemed (7,625) (203,174)
- --------------------------------------------------------------------------------
Net increase 2,527 $ 68,855
================================================================================
C CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 100,000
================================================================================
Sold 55 $1,520
- ---------------------------------------
Redeemed (13) (358)
- --------------------------------------------------------------------------------
Net increase 42 $1,162
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 100,000
================================================================================
Sold 158 $ 4,125
- ---------------------------------------
Redeemed (62) (1,689)
- --------------------------------------------------------------------------------
Net increase 96 $ 2,436
================================================================================
R CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 50,000
================================================================================
Sold 68 $1,925
- ---------------------------------------
Redeemed (17) (485)
- --------------------------------------------------------------------------------
Net increase 51 $1,440
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 50,000
================================================================================
Sold 191 $5,227
- ---------------------------------------
Redeemed (23) (627)
- --------------------------------------------------------------------------------
Net increase 168 $4,600
================================================================================
(continued)
- ------
19
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
5. AFFILIATED COMPANY TRANSACTIONS (SHARES IN FULL)
If a fund's holding represents ownership of 5% or more of the voting securities
of a company, the company is affiliated as defined in the 1940 Act. A summary of
transactions for each company which is or was an affiliate at or during the six
months ended April 30, 2005 follows:
- --------------------------------------------------------------------------------------------------------------------
SHARE BALANCE PURCHASE SALES REALIZED DIVIDEND APRIL 30,2005
10/31/04 COST COST GAIN (LOSS) INCOME SHARE BALANCE MARKET VALUE
- --------------------------------------------------------------------------------------------------------------------
Applebee's
International Inc.(1) 3,959,434 $ 6,307 $ 29,680 $ 28,650 $254 2,009,949 $49,807
- ---------------------------
Checkfree Corp.(2)(3) 6,411,000 -- -- -- -- 6,411,000 235,155
- ---------------------------
Cheesecake
Factory Inc.(1)(2)(3) 2,754,000 -- 43,172 18,725 -- 2,227,633 68,366(4)
- ---------------------------
China Yuchai
International Limited(1)(2) 2,178,000 -- 62,991 (34,960) -- -- --
- ---------------------------
Digital River Inc.(2)(3) 3,764,000 -- 40,729 521 -- 2,393,952 63,679
- ---------------------------
Inamed Corp.(1)(2) 2,502,000 -- 127,107 42,902 -- -- --
- ---------------------------
PF Chang's China
Bistro, Inc.(1)(2)(3) 2,175,000 -- 54,520 24,667 -- 825,620 45,838
- ---------------------------
Sina Corp.(1)(2) 2,638,000 18,765 103,483 (27,765) -- -- --
- --------------------------------------------------------------------------------------------------------------------
$25,072 $461,682 $ 52,740 $254 $462,845
====================================================================================================================
(1) Issuer was not an affiliate at April 30, 2005.
(2) Non-income producing.
(3) Security, or a portion thereof, was on loan as of April 30, 2005.
(4) Includes adjustments for shares received from a stock split and/or stock
spinoff during the period.
6. SECURITIES LENDING
As of April 30, 2005, securities in the fund valued at $644,085 were on loan
through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives
and maintains collateral in the form of cash, and/or acceptable securities as
approved by ACIM. Cash collateral is invested in authorized investments by the
lending agent in a pooled account. The value of cash collateral received at
period end is disclosed in the Statement of Assets and Liabilities and
investments made with the cash by the lending agent are listed in the Schedule
of Investments. Any deficiencies or excess of collateral must be delivered or
transferred by the member firms no later than the close of business on the next
business day. The total value of all collateral received, at this date, was
$657,699. The fund's risks in securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
If the borrower defaults, receipt of the collateral by the fund may be delayed
or limited.
7. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $575 million
unsecured bank line of credit agreement with JPMCB, which was renewed from $650
million effective December 15, 2004. The fund may borrow money for temporary or
emergency purposes to fund shareholder redemptions. Borrowings under the
agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not
borrow from the line during the six months ended April 30, 2005.
(continued)
- ------
20
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
8. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST
- --------------------------------------------------------------------------------
Federal tax cost of investments $17,106,172
================================================================================
Gross tax appreciation of investments $4,841,074
- ---------------------------------------------
Gross tax depreciation of investments (161,415)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $4,679,659
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales and the realization for tax purposes of unrealized gains on certain
forward foreign currency contracts.
Following are the capital loss carryover amount as of October 31, 2004:
- --------------------------------------------------------------------------------
Accumulated capital losses $(2,602,763)
- --------------------------------------------------------------------------------
The accumulated capital loss listed above represents net capital loss carryovers
that may be used to offset future realized capital gains for federal income tax
purposes. The capital loss carryovers expire as follows:
- ---------------------------------------------------------
2010 2011
- ---------------------------------------------------------
$(2,421,502) $(181,261)
- ---------------------------------------------------------
- ------
21
Ultra - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ----------------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------
Net Asset Value,
Beginning of Period $27.17 $26.01 $21.83 $25.09 $41.45 $38.97
- ----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.04 (0.05) (0.02) 0.06 (0.06) (0.28)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) (0.02) 1.21 4.26 (3.32) (11.89) 4.14
- ----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.02 1.16 4.24 (3.26) (11.95) 3.86
- ----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income -- -- (0.06) -- -- --
- --------------------------
From Net
Realized Gains -- -- -- -- (4.41) (1.38)
- ----------------------------------------------------------------------------------------------
Total Distributions -- -- (0.06) -- (4.41) (1.38)
- ----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $27.19 $27.17 $26.01 $21.83 $25.09 $41.45
==============================================================================================
TOTAL RETURN(3) 0.07% 4.46% 19.50% (12.99)% (31.44)% 9.81%
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.99%(4) 0.99% 1.00% 0.99% 0.98% 0.99%
- --------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets 0.27%(4) (0.20)% (0.09)% 0.24% (0.18)% (0.64)%
- --------------------------
Portfolio Turnover Rate 22% 34% 82% 92% 86% 62%
- --------------------------
Net Assets,
End of Period
(in millions) $19,343 $20,708 $21,341 $18,616 $24,560 $38,461
- ----------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset value to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
22
Ultra - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ---------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- ---------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ---------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $27.44 $26.22 $22.02 $25.24 $41.65 $39.13
- ---------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.06 --(3) 0.02 0.11 0.01 (0.20)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) (0.01) 1.22 4.29 (3.33) (11.94) 4.10
- ---------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.05 1.22 4.31 (3.22) (11.93) 3.90
- ---------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income -- -- (0.11) -- -- --
- --------------------------
From Net
Realized Gains -- -- -- -- (4.48) (1.38)
- ---------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.11) -- (4.48) (1.38)
- ---------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $27.49 $27.44 $26.22 $22.02 $25.24 $41.65
===================================================================================================
TOTAL RETURN(4) 0.18% 4.65% 19.66% (12.76)% (31.25)% 9.87%
- ---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.79%(5) 0.79% 0.80% 0.79% 0.78% 0.79%
- --------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets 0.47%(5) 0.00% 0.11% 0.44% 0.02% (0.44)%
- --------------------------
Portfolio Turnover Rate 22% 34% 82% 92% 86% 62%
- --------------------------
Net Assets,
End of Period
(in thousands) $1,280,011 $1,055,145 $822,333 $556,316 $593,436 $763,304
- ---------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset value to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
23
Ultra - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
ADVISOR CLASS
- -----------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------
PER-SHARE DATA
- -----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $26.85 $25.77 $21.62 $24.92 $41.23 $38.80
- -----------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) --(3) (0.12) (0.08) --(3) (0.13) (0.40)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) (0.01) 1.20 4.24 (3.30) (11.87) 4.21
- -----------------------------------------------------------------------------------------------------
Total From
Investment Operations (0.01) 1.08 4.16 (3.30) (12.00) 3.81
- -----------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income -- -- (0.01) -- -- --
- --------------------------
From Net
Realized Gains -- -- -- -- (4.31) (1.38)
- -----------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.01) -- (4.31) (1.38)
- -----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $26.84 $26.85 $25.77 $21.62 $24.92 $41.23
=====================================================================================================
TOTAL RETURN(4) (0.04)% 4.19% 19.24% (13.24)% (31.69)% 9.72%
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.24%(5) 1.24% 1.25% 1.24% 1.23% 1.24%
- --------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets 0.02%(5) (0.45)% (0.34)% (0.01)% (0.43)% (0.89)%
- --------------------------
Portfolio Turnover Rate 22% 34% 82% 92% 86% 62%
- --------------------------
Net Assets,
End of Period
(in thousands) $623,888 $738,032 $643,144 $391,968 $437,024 $521,187
- -----------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset value to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
24
Ultra - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ---------------------------------------------------------------------------------------------
C CLASS
- ---------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001(2)
- ---------------------------------------------------------------------------------------------
PER-SHARE DATA
- ---------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $26.44 $25.57 $21.59 $25.09 $25.53
- ---------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(3) (0.11) (0.32) (0.26) (0.19) --(4)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) --(4) 1.19 4.24 (3.31) (0.44)
- ---------------------------------------------------------------------------------------------
Total From
Investment Operations (0.11) 0.87 3.98 (3.50) (0.44)
- ---------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $26.33 $26.44 $25.57 $21.59 $25.09
=============================================================================================
TOTAL RETURN(5) (0.42)% 3.40% 18.43% (13.95)% (1.72)%
- ---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.99%(6) 1.99% 2.00% 1.99% 1.99%(6)
- --------------------------
Ratio of Net
Investment Loss
to Average Net Assets (0.73)%(6) (1.20)% (1.09)% (0.76)% (3.10)%(6)
- --------------------------
Portfolio Turnover Rate 22% 34% 82% 92% 86%(7)
- --------------------------
Net Assets,
End of Period
(in thousands) $5,928 $4,836 $2,232 $502 $95
- ---------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) October 29, 2001 (commencement of sale) through October 31, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset value to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2001.
See Notes to Financial Statements.
- ------
25
Ultra - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -------------------------------------------------------------------------------------
R CLASS
- -------------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- -------------------------------------------------------------------------------------
PER-SHARE DATA
- -------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $27.01 $25.99 $24.87
- -------------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------
Net Investment Loss(3) (0.02) (0.22) (0.04)
- -------------------------------------
Net Realized and
Unrealized Gain (Loss) (0.01) 1.24 1.16
- -------------------------------------------------------------------------------------
Total From Investment Operations (0.03) 1.02 1.12
- -------------------------------------------------------------------------------------
Net Asset Value, End of Period $26.98 $27.01 $25.99
=====================================================================================
TOTAL RETURN(4) (0.11)% 3.92% 4.50%
- -------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.38%(5)(6) 1.49% 1.50%(5)
- -------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.12)%(5)(6) (0.70)% (0.81)%(5)
- -------------------------------------
Portfolio Turnover Rate 22% 34% 82%(7)
- -------------------------------------
Net Assets, End of Period
(in thousands) $5,914 $4,545 $3
- -------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) August 29, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset value to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
(6) During the six months ended April 30, 2005, the class received a partial
reimbursement of its service and distribution fee. Had fees not been
reimbursed the annualized ratio of operating expenses to average net assets
and annualized ratio of net investment income to average net assets would
have been 1.49% and -0.23%, respectively.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
26
Share Class Information
Five classes of shares are authorized for sale by Ultra: Investor Class,
Institutional Class, Advisor Class, C Class and R Class. The total expense ratio
of Institutional Class shares is lower than that of Investor Class shares. The
total expense ratio of Advisor Class, C Class, and R Class shares are higher
than that of Investor Class shares.
INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through a
broker-dealer, which may require payment of a transaction fee to the broker.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and
distribution fee. The total expense ratio of Advisor Class shares is 0.25%
higher than the total expense ratio of Investor Class shares.
C CLASS shares are sold primarily through employer-sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. C Class shares redeemed within 12 months of purchase are
subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC
on shares acquired through reinvestment of dividends or capital gains. C Class
shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%.
R CLASS shares are sold primarily through employer-sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. R Class shares are subject to a 0.50% annual Rule 12b-1
service and distribution fee.
All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.
- ------
27
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the funds' investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the funds. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The 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-Q. The N-Q available on the SEC's Web site at sec.gov, and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. The also complete schedule of portfolio holdings for the most
recent quarter of fiscal year available on Web site at and, upon request, by
calling 1-800-345-2021.
- ------
28
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies (the 1,000 largest of the 3,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth rates.
- ------
29
Notes
- ------
30
Notes
- ------
31
Notes
- ------
32
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
COMPANIES
The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.
0506
SH-SAN-43961S
American Century Investment Services, Inc., Distributor
(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Growth Fund
Focused Growth Fund
Heritage Fund
Vista(SM) Fund
[american century logo and text logo]
Table of Contents
Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GROWTH FUND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . .5
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FOCUSED GROWTH FUND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 10
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .11
HERITAGE FUND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 15
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .16
VISTA FUND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 22
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . 23
Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . 26
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .29
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .31
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 32
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .34
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
OTHER INFORMATION
Approval of Management Agreement for Focused Growth . . . . . . . . . . . .57
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .59
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
The opinions expressed in each of the Portfolio Commentaries reflect those of
the portfolio management team as of the date of the report, and do not
necessarily represent the opinions of American Century or any other person in
the American Century organization. Any such opinions are subject to change at
any time based upon market or other conditions and American Century disclaims
any responsibility to update such opinions. These opinions may not be relied
upon as investment advice and, because investment decisions made by American
Century funds are based on numerous factors, may not be relied upon as an
indication of trading intent on behalf of any American Century fund. Security
examples are used for representational purposes only and are not intended as
recommendations to purchase or sell securities. Performance information for
comparative indices and securities is provided to American Century by third
party vendors. To the best of American Century's knowledge, such information is
accurate at the time of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Growth, Focused
Growth, Heritage and Vista funds for the six months ended April 30, 2005, as
applicable.
The report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings, and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
Your next shareholder report for these funds will be the annual report dated
October 31, 2005, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER AND CHAIRMAN
/s/James E. Stowers III
James E. Stowers III
CO-CHAIRMAN OF THE BOARD
- ------
1
Growth - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
- ----------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------
INVESTOR CLASS 4.99% -8.68% 7.12% 14.85% 6/30/71(1)
- ----------------------------------------------------------------------------------------
RUSSELL 1000
GROWTH INDEX(2) 0.40% -10.75% 7.71% N/A(3) --
- ----------------------------------------------------------------------------------------
Institutional Class 5.21% -8.48% -- 4.04% 6/16/97
- ----------------------------------------------------------------------------------------
Advisor Class 4.71% -8.94% -- 4.25% 6/4/97
- ----------------------------------------------------------------------------------------
C Class 3.97% -- -- -2.03% 11/28/01
- ----------------------------------------------------------------------------------------
R Class 4.46% -- -- 6.93% 8/29/03
- ----------------------------------------------------------------------------------------
(1) Although the fund's actual inception date was 10/31/58, this inception
date corresponds with the management company's implementation of its
current investment philosophy and practices.
(2) (c)2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
Lipper Fund Performance - Performance data is total return, and is
preliminary and subject to revision.
Lipper Rankings - Rankings are based only on the universe shown. This
listing might not represent the complete universe of funds tracked by
Lipper Inc.
The data contained herein has been obtained from company reports,
financial reporting services, periodicals and other resources believed to
be reliable. Although carefully verified, data on compilations is not
guaranteed by Lipper Inc. - A Reuters Company and may be incomplete. No
offer or solicitations to buy or sell any of the securities herein is being
made by Lipper.
(3) Benchmark began 12/29/78.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
- ------
2
Growth - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
- -------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
- -------------------------------------------------------------------------------------------------------
Investor Class 16.31% 13.30% 44.50% 24.48% 32.16% -27.72% -15.05% -16.33% 17.74% 4.99%
- -------------------------------------------------------------------------------------------------------
Russell 1000
Growth Index 32.55% 22.06% 42.09% 26.53% 27.58% -32.25% -20.10% -14.35% 21.65% 0.40%
- -------------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
3
Growth - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE GROWTH INVESTMENT TEAM: PRESCOTT LEGARD AND GREG
WOODHAMS.
Growth gained 1.34%* during the six months ended April 30, 2005, outperforming
the 1.14% rise of its benchmark, the Russell 1000 Growth Index.
Growth has returned an average of 14.85% on an annual basis since its inception
June 30, 1971. Its most recent one-year return of 4.99% ranks in the top 12%
(77th out of 659) in its Lipper large-cap growth peer group. The portfolio's
average five-year return, down 8.68%, ranks in the top 42% of that group (173rd
out of 420), and its 10-year return of 7.12% ranks in the top 52% (71st out of
137). The average return of the Lipper group was 1.13%, -9.52%, and 7.08%, for
the one-, five-, and 10-year periods ended April 30, 2005, respectively (refer
to footnote 2 on page 2).
EQUITIES GAIN AMID CHALLENGES
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004
despite record-high oil prices, rising interest rates and a modest increase of
underlying inflation. Stocks were able to post positive returns for the six
months ended April 30, 2005, but most of those gains came in the last two months
of 2004. Over the past six months, the value style of investing continued to
outperform growth, and midsize companies performed better than the large
companies the fund generally invests in. The best performing sectors of the
Russell 1000 Growth Index over this time period were: utilities, energy and
healthcare. Financials, consumer discretionary and materials were
underperformers.
STOCK SELECTION KEYS RESULTS
Growth's performance was lifted by favorable stock selection in the materials,
financials, industrials and consumer staples sectors. The biggest lift came from
stock selection in the materials sector in which the portfolio's holdings in
aggregate gained roughly 38%. Monsanto was a top contributor as the agricultural
biotechnology company experienced increased corn seed sales and higher revenues
for Roundup(reg.tm) and other herbicides.
The industrials sector also generated solid returns in the portfolio.
Investments in industrial conglomerates boosted results as did holdings in the
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Johnson & Johnson 5.1% 2.9%
- --------------------------------------------------------------------------------
General Electric Co. 4.3% 3.3%
- --------------------------------------------------------------------------------
Microsoft Corporation 3.8% 3.5%
- --------------------------------------------------------------------------------
Procter & Gamble
Co. (The) 3.3% 3.3%
- --------------------------------------------------------------------------------
PepsiCo, Inc. 2.9% 2.4%
- --------------------------------------------------------------------------------
Intel Corp. 2.8% 3.2%
- --------------------------------------------------------------------------------
Cisco Sytems Inc. 2.4% 3.2%
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2.3% 2.0%
- --------------------------------------------------------------------------------
EMC Corp. 2.1% 1.1%
- --------------------------------------------------------------------------------
Bard (C.R.), Inc. 2.1% 1.6%
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
Returns for periods less than one year are not annualized.
(continued)
- ------
4
Growth - Portfolio Commentary
aerospace and defense industry. Aviation electronics manufacturer Rockwell
Collins was a top contributor. The maker of avionics, cockpit radios and
navigation systems said earnings soared and raised its 2005 earnings and revenue
guidance based on steady military sales and the recovery of the commercial-air
industry.
Stock selection in the financials sector, particularly in the thrifts/mortgage
finance industry, was additive to performance as compared to the benchmark.
Moreover, brokerage firms in the capital markets industry benefited from renewed
merger, trading and new issuance activity.
The consumer staples sector was another area of solid performance in the
portfolio. CVS Corp.'s earnings rose as the drug-store chain experienced strong
sales, driven in part by its acquisition last year of Eckerd. Consumer products
maker Gillette was another standout, benefiting from its pending acquisition by
Procter & Gamble.
MIXED RESULTS
The portfolio's health care stake produced mixed results. Investments in
manufacturers of health care equipment and supplies companies, such as C.R.
Bard, advanced. However, an underweight position in health care services and
stock selection in the biotechnology industries hindered performance compared to
the benchmark. One of the top detractors to returns was biopharmaceutical
company Biogen Idec. Its share price declined on the unexpected withdrawal of
the new drug Tysabri following the death of a patient who was being treated for
multiple sclerosis. The stock was removed from the portfolio.
In the consumer discretionary sector, Growth was slowed by media companies. The
portfolio's shares of Univision, a leading Spanish-language media company in the
U.S., declined after the company lowered its guidance for fourth quarter
results. Growth's information technology stake was another area of weakness.
Teradyne was the chief detractor after the semiconductor testing equipment
company posted a net loss as quarterly sales fell below expectations. The stock
was sold.
OUR COMMITMENT
Portfolio manager Tim Reynolds left American Century Investments in February to
pursue another career opportunity. Greg Woodhams, a Growth manager since 1997,
and Prescott LeGard, a member of the team since 1999, remain at the portfolio's
helm. They remain committed to their long-standing investment strategy of
identifying larger-sized companies best able to sustain business improvement.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Pharmaceuticals 10.6% 9.3%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 8.3% 9.1%
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment 7.9% 7.2%
- --------------------------------------------------------------------------------
Industrial Conglomerates 6.4% 5.3%
- --------------------------------------------------------------------------------
Communications
Equipment 4.9% 6.0%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 98.6% 98.3%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 1.4% 1.7%
- --------------------------------------------------------------------------------
- ------
5
Growth - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 98.3%
AEROSPACE & DEFENSE - 2.8%
- ------------------------------------------------------------------------------
1,572,100 Rockwell Collins $ 72,127
- ------------------------------------------------------------------------------
600,900 United Technologies Corp. 61,124
- ------------------------------------------------------------------------------
133,251
- ------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS - 0.9%
- ------------------------------------------------------------------------------
619,200 United Parcel Service, Inc. Cl B 44,155
- ------------------------------------------------------------------------------
BEVERAGES - 3.6%
- ------------------------------------------------------------------------------
672,500 Coca-Cola Company (The) 29,213
- ------------------------------------------------------------------------------
2,478,200 PepsiCo, Inc. 137,887
- ------------------------------------------------------------------------------
167,100
- ------------------------------------------------------------------------------
BIOTECHNOLOGY - 2.9%
- ------------------------------------------------------------------------------
977,800 Amgen Inc.(1) 56,918
- ------------------------------------------------------------------------------
1,123,400 Celgene Corp.(1) 42,588
- ------------------------------------------------------------------------------
531,500 Invitrogen Corp.(1) 38,943
- ------------------------------------------------------------------------------
138,449
- ------------------------------------------------------------------------------
CAPITAL MARKETS - 2.9%
- ------------------------------------------------------------------------------
573,500 Goldman Sachs Group, Inc. (The) 61,244
- ------------------------------------------------------------------------------
1,649,900 Northern Trust Corp. 74,295
- ------------------------------------------------------------------------------
135,539
- ------------------------------------------------------------------------------
CHEMICALS - 1.7%
- ------------------------------------------------------------------------------
1,331,700 Monsanto Co. 78,064
- ------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES - 0.5%
- ------------------------------------------------------------------------------
962,000 Monster Worldwide Inc.(1) 22,136
- ------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 4.9%
- ------------------------------------------------------------------------------
1,775,700 Avaya Inc.(1) 15,413
- ------------------------------------------------------------------------------
6,650,900 Cisco Systems Inc.(1) 114,928
- ------------------------------------------------------------------------------
993,300 Juniper Networks, Inc.(1) 22,439
- ------------------------------------------------------------------------------
682,000 QUALCOMM Inc. 23,795
- ------------------------------------------------------------------------------
1,754,200 Scientific-Atlanta, Inc. 53,643
- ------------------------------------------------------------------------------
230,218
- ------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS - 4.4%
- ------------------------------------------------------------------------------
780,100 Apple Computer, Inc.(1) 28,130
- ------------------------------------------------------------------------------
2,249,800 Dell Inc.(1) 78,361
- ------------------------------------------------------------------------------
7,627,100 EMC Corp.(1) 100,067
- ------------------------------------------------------------------------------
206,558
- ------------------------------------------------------------------------------
CONSUMER FINANCE - 1.9%
- ------------------------------------------------------------------------------
1,717,700 American Express Co. 90,523
- ------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 0.5%
- ------------------------------------------------------------------------------
708,800 J.P. Morgan Chase & Co. 25,155
- ------------------------------------------------------------------------------
FOOD & STAPLES RETAILING - 4.2%
- ------------------------------------------------------------------------------
1,701,300 CVS Corp. 87,753
- ------------------------------------------------------------------------------
2,347,400 Wal-Mart Stores, Inc. 110,656
- ------------------------------------------------------------------------------
198,409
- ------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- ------------------------------------------------------------------------------
FOOD PRODUCTS - 1.0%
- ------------------------------------------------------------------------------
598,700 Delta and Pine Land Company $ 15,087
- ------------------------------------------------------------------------------
912,900 McCormick & Company, Inc. 31,577
- ------------------------------------------------------------------------------
46,664
- ------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES - 8.3%
- ------------------------------------------------------------------------------
1,362,500 Bard (C.R.), Inc. 96,970
- ------------------------------------------------------------------------------
1,239,000 Becton Dickinson & Co. 72,506
- ------------------------------------------------------------------------------
508,800 Cooper Companies, Inc. (The) 34,369
- ------------------------------------------------------------------------------
877,900 Edwards Lifesciences Corporation(1) 38,663
- ------------------------------------------------------------------------------
394,300 Guidant Corp. 29,210
- ------------------------------------------------------------------------------
1,794,900 Hospira Inc.(1) 60,219
- ------------------------------------------------------------------------------
1,077,600 Medtronic, Inc. 56,790
- ------------------------------------------------------------------------------
388,727
- ------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES - 1.8%
- ------------------------------------------------------------------------------
1,002,200 Covance Inc.(1) 45,740
- ------------------------------------------------------------------------------
726,800 Triad Hospitals Inc.(1) 37,249
- ------------------------------------------------------------------------------
82,989
- ------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 0.9%
- ------------------------------------------------------------------------------
901,100 Carnival Corporation 44,046
- ------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 4.2%
- -----------------------------------------------------------------
718,600 Kimberly-Clark Corp. 44,877
- -------------------------------------------------------------------------------
2,837,700 Procter & Gamble Co. (The) 153,661
- -------------------------------------------------------------------------------
198,538
- -------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES - 6.4%
- ------------------------------------------------------------------------------
281,000 3M Co. 21,488
- ------------------------------------------------------------------------------
5,580,600 General Electric Co. 202,017
- ------------------------------------------------------------------------------
1,007,400 Textron Inc. 75,908
- ------------------------------------------------------------------------------
299,413
- ------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL - 0.6%
- ------------------------------------------------------------------------------
928,800 eBay Inc.(1) 29,471
- ------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES - 3.9%
- ------------------------------------------------------------------------------
271,800 Google Inc. Cl A(1) 59,796
- ------------------------------------------------------------------------------
1,026,600 VeriSign, Inc.(1) 27,164
- ------------------------------------------------------------------------------
2,735,800 Yahoo! Inc.(1) 94,412
- ------------------------------------------------------------------------------
181,372
- ------------------------------------------------------------------------------
IT SERVICES - 1.1%
- ------------------------------------------------------------------------------
1,751,200 Paychex, Inc. 53,587
- ------------------------------------------------------------------------------
MEDIA - 3.4%
- ------------------------------------------------------------------------------
1,472,700 Disney (Walt) Co. 38,879
- ------------------------------------------------------------------------------
460,569 Getty Images Inc.(1) 32,954
- ------------------------------------------------------------------------------
3,380,300 News Corp. 51,651
- ------------------------------------------------------------------------------
1,355,500 Univision Communications Inc. Cl A(1) 35,636
- ------------------------------------------------------------------------------
159,120
- ------------------------------------------------------------------------------
MULTILINE RETAIL - 2.8%
- ------------------------------------------------------------------------------
2,431,900 Dollar General Corp. 49,489
- ------------------------------------------------------------------------------
950,800 Kohl's Corp.(1) 45,258
- ------------------------------------------------------------------------------
834,400 Target Corporation 38,716
- ------------------------------------------------------------------------------
133,463
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
(continued)
- ------
6
Growth - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- -------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS - 1.8%
- -------------------------------------------------------------------------------
1,508,100 Apache Corp. $ 84,891
- -------------------------------------------------------------------------------
PERSONAL PRODUCTS - 2.5%
- -------------------------------------------------------------------------------
641,000 Alberto-Culver Company Cl B 28,525
- -------------------------------------------------------------------------------
1,754,000 Gillette Company 90,576
- -------------------------------------------------------------------------------
119,101
- -------------------------------------------------------------------------------
PHARMACEUTICALS - 10.6%
- -------------------------------------------------------------------------------
786,900 Eli Lilly and Company 46,010
- -------------------------------------------------------------------------------
3,488,300 Johnson & Johnson 239,402
- -------------------------------------------------------------------------------
1,264,000 Novartis AG ORD 61,169
- -------------------------------------------------------------------------------
642,100 Novo Nordisk A/S Cl B ORD 32,329
- -------------------------------------------------------------------------------
1,953,800 Pfizer, Inc. 53,085
- -------------------------------------------------------------------------------
540,600 Roche Holding AG ORD 64,884
- -------------------------------------------------------------------------------
496,879
- -------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT - 7.9%
- -------------------------------------------------------------------------------
860,800 Altera Corp.(1) 17,844
- -------------------------------------------------------------------------------
3,992,700 Applied Materials, Inc.(1) 59,372
- -------------------------------------------------------------------------------
1,861,600 Broadcom Corp.(1) 55,680
- -------------------------------------------------------------------------------
5,693,900 Intel Corp. 133,922
- -------------------------------------------------------------------------------
1,543,600 Linear Technology Corp. 55,168
- -------------------------------------------------------------------------------
2,574,900 National Semiconductor Corp. 49,129
- -------------------------------------------------------------------------------
371,115
- -------------------------------------------------------------------------------
SOFTWARE - 4.3%
- -------------------------------------------------------------------------------
239,800 Electronic Arts Inc.(1) 12,803
- -------------------------------------------------------------------------------
7,051,500 Microsoft Corporation 178,403
- -------------------------------------------------------------------------------
1,079,900 Oracle Corp.(1) 12,484
- -------------------------------------------------------------------------------
203,690
- -------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
SPECIALTY RETAIL - 3.5%
- -------------------------------------------------------------------------------
1,349,800 AnnTaylor Stores Corp.(1) $ 33,057
- ------------------------------------------------------------------------------
1,512,500 Home Depot, Inc. 53,497
- ------------------------------------------------------------------------------
684,752 Ross Stores, Inc. 18,297
- ------------------------------------------------------------------------------
1,465,200 Weight Watchers
International Inc.(1) 61,171
- ------------------------------------------------------------------------------
166,022
- ------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS - 0.8%
- -------------------------------------------------------------------------------
516,400 NIKE, Inc. Cl B 39,665
- ------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE - 1.3%
- -------------------------------------------------------------------------------
1,059,600 MGIC Investment Corp. 62,516
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $4,073,943) 4,630,826
- ------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS - 1.4%
Repurchase Agreement, Bank of America
Securities, LLC, (collateralized by various
U.S. Treasury obligations, 4.17%-8.875%,
2/15/13-2/15/19, valued at $64,892), in a
joint trading account at 2.78%, dated 4/29/05,
due 5/2/05 (Delivery value $63,615)
(Cost $63,600) 63,600
- -----------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 99.7%
(Cost $4,137,543) 4,694,426
- -----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES - 0.3% 14,802
- -----------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $4,709,228
=============================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
($ IN THOUSANDS)
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------
74,812,050 CHF for USD 5/31/05 $62,646 $488
- ------------------------------------------------------------------------------------
96,796,575 DKK for USD 5/31/05 16,731 149
- ------------------------------------------------------------------------------------
$79,377 $637
=======================================
(Value on Settlement Date $80,014)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the future -
and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
CHF = Swiss Franc
DKK = Danish Krone
ORD = Foreign Ordinary Share
USD = United States Dollar
(1) Non-income producing.
See Notes to Financial Statements.
- ------
7
Focused Growth - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION(1) DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS -3.50% 2/28/05
- --------------------------------------------------------------------------------
BLENDED INDEX -3.66% --
- --------------------------------------------------------------------------------
Russell 1000 Growth Index(2) -3.69% --
- --------------------------------------------------------------------------------
S&P 500 Index(2) -3.63% --
- --------------------------------------------------------------------------------
(1) Returns for periods less than one year are not annualized.
(2) (c)2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports,
financial reporting services, periodicals and other resources believed to
be reliable. Although carefully verified, data on compilations is not
guaranteed by Lipper Inc. - A Reuters Company and may be incomplete. No
offer or solicitations to buy or sell any of the securities herein is being
made by Lipper.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The fund is considered non-diversified and has the
potential for wide performance swings, both up and down. The fund's investment
approach may also result in high portfolio turnover, which could mean high
transaction costs, affecting both performance and capital gains tax liabilities
to investors.
Data assumes reinvestment of dividends and capital gains, and none of the charts
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Returns for the indices are
provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
- ------
8
Focused Growth - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE FOCUSED GROWTH INVESTMENT TEAM: JOE REILAND AND
GREGORY WOODHAMS.
American Century launched Focused Growth on February 28, 2005. During the
two-month period from inception through April 30, 2005, the portfolio declined
3.50%, outperforming its blended index (defined on page 61), which fell 3.66%.
The blended index's return reflected the performance of its components: the
Russell 1000 Growth Index and the S&P 500 Index, which declined 3.69% and 3.63%,
respectively.
INVESTMENT STRATEGY OVERVIEW
Unlike other funds, Focused Growth normally limits its investments to a core
group of approximately 25-45 common stocks. The portfolio managers look for
stocks of companies they believe will increase in value over time using a
bottom-up approach to stock selection. This means they base their investment
decisions on their analysis of individual companies, rather than on broad
economic forecasts. Using American Century's extensive database, as well as
other analytical research tools, the portfolio managers track financial
information for individual companies to identify and evaluate trends in earnings
and revenues. They also look for additional signs of business improvement, such
as increasing cash flows, and other indications of the relative strength of a
company's business.
Under normal market conditions, the portfolio will primarily consist of
securities of companies whose earnings or revenues are not only growing, but
growing at an accelerating pace. This includes companies whose growth rates,
although still negative, are less negative than prior periods, and companies
whose growth rates are expected to accelerate. The majority of the fund's
investment universe includes stocks listed in the Russell 1000 Growth and S&P
500 indices.
MARKET OVERVIEW
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004. The
stock market struggled in the early months of 2005 as crude oil prices rose,
underlying inflation modestly
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF
NET ASSETS
AS OF
4/30/05
- --------------------------------------------------------------------------------
General Electric Co. 5.0%
- --------------------------------------------------------------------------------
Johnson & Johnson 5.0%
- --------------------------------------------------------------------------------
Becton Dickinson & Co. 4.8%
- --------------------------------------------------------------------------------
NIKE, Inc. Cl B 4.7%
- --------------------------------------------------------------------------------
MGIC Investment Corp. 4.6%
- --------------------------------------------------------------------------------
Kimberly-Clark Corp. 4.5%
- --------------------------------------------------------------------------------
Paychex, Inc. 4.5%
- --------------------------------------------------------------------------------
Rockwell Collins 4.2%
- --------------------------------------------------------------------------------
Monsanto Co. 3.9%
- --------------------------------------------------------------------------------
Textron Inc. 3.8%
- --------------------------------------------------------------------------------
(continued)
- ------
9
Focused Growth - Portfolio Commentary
increased, and the Federal Reserve continued to raise interest rates. Health
care was the only sector in the Russell 1000 Growth Index to post a positive
total return in the two-month time period of this fund's report.
PERFORMANCE REVIEW
A number of positions in the portfolio that performed well in the short time
frame since the fund's launch came from the health care sector. Johnson &
Johnson was a top contributor. The major pharmaceutical company announced record
profit and sales for the first quarter, bolstered by growth in medical devices
and diagnostics. Hospira, one of the largest hospital products manufacturers in
the United States, was another leading contributor.
The portfolio's holdings in the Internet software and services industry in
aggregate gained roughly 11% in the period. The advance was spurred by strong
quarterly earnings reports from bellwethers Google and Yahoo!.
On the downside, athletic shoe maker Nike underperfomed during the period.
Oil-services company Apache also detracted from performance. Its share price
declined along with crude oil prices. Wal-Mart was another disappointment. The
retail giant said unseasonable weather weighed on sales of lawn and garden
items, clothes and other high-margin goods. In addition, high gasoline prices
hurt sales and margins.
OUR COMMITMENT
The Focused Growth management team remains committed to its investment
strategy of identifying companies that appear best able to sustain business
improvement. Management of the fund is based on the belief that, over the long
term, stock price movements follow growth in earnings, revenues and/or cash
flow.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF
NET ASSETS
AS OF
4/30/05
- --------------------------------------------------------------------------------
Industrial Conglomerates 8.8%
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies 7.9%
- --------------------------------------------------------------------------------
Semiconductors &
Semiconductor Equipment 6.8%
- --------------------------------------------------------------------------------
Multiline Retail 5.6%
- --------------------------------------------------------------------------------
Pharmaceuticals 5.0%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND
INVESTMENTS
AS OF
4/30/05
- --------------------------------------------------------------------------------
Common Stocks 100.0%
- --------------------------------------------------------------------------------
- ------
10
Focused Growth - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------
COMMON STOCKS - 99.7%
AEROSPACE & DEFENSE - 4.3%
- --------------------------------------------------------------------------
3,868 Rockwell Collins $ 177
- --------------------------------------------------------------------------
BEVERAGES - 3.3%
- --------------------------------------------------------------------------
2,480 PepsiCo, Inc. 138
- -------------------------------------------------------------------------
BIOTECHNOLOGY - 1.0%
- --------------------------------------------------------------------------
542 Invitrogen Corp.(1) 40
- --------------------------------------------------------------------------
CAPITAL MARKETS - 2.2%
- --------------------------------------------------------------------------
1,995 Northern Trust Corp. 90
- --------------------------------------------------------------------------
CHEMICALS - 3.9%
- --------------------------------------------------------------------------
2,757 Monsanto Co. 162
- -------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES(2)
- --------------------------------------------------------------------------
24 Monster Worldwide Inc.(1) 1
- --------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.1%
- --------------------------------------------------------------------------
501 Juniper Networks, Inc.(1) 11
- -------------------------------------------------------------------------
1,074 Scientific-Atlanta, Inc. 33
- -------------------------------------------------------------------------
44
- -------------------------------------------------------------------------
COMPUTERS & PERIPHERALS - 4.8%
- --------------------------------------------------------------------------
593 Apple Computer, Inc.(1) 21
- -------------------------------------------------------------------------
1,623 Dell Inc.(1) 57
- -------------------------------------------------------------------------
9,298 EMC Corp.(1) 122
- -------------------------------------------------------------------------
200
- -------------------------------------------------------------------------
CONSUMER FINANCE - 3.3%
- --------------------------------------------------------------------------
2,572 American Express Co. 136
- -------------------------------------------------------------------------
FOOD & STAPLES RETAILING - 3.0%
- --------------------------------------------------------------------------
2,660 Wal-Mart Stores, Inc. 125
- -------------------------------------------------------------------------
FOOD PRODUCTS - 2.5%
- --------------------------------------------------------------------------
4,163 Delta and Pine Land Company 105
- -------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES - 7.9%
- --------------------------------------------------------------------------
1,087 Bard (C.R.), Inc. 77
- -------------------------------------------------------------------------
3,417 Becton Dickinson & Co. 201
- -------------------------------------------------------------------------
372 Edwards Lifesciences Corporation(1) 16
- -------------------------------------------------------------------------
1,013 Hospira Inc.(1) 34
- -------------------------------------------------------------------------
65 Medtronic, Inc. 3
- -------------------------------------------------------------------------
331
- -------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES - 3.2%
- --------------------------------------------------------------------------
2,915 Covance Inc.(1) 133
- -------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 0.7%
- --------------------------------------------------------------------------
610 Carnival Corporation 30
- --------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 4.5%
- --------------------------------------------------------------------------
3,022 Kimberly-Clark Corp. 189
- -------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES - 8.8%
- --------------------------------------------------------------------------
5,757 General Electric Co. 208
- -------------------------------------------------------------------------
2,088 Textron Inc. 157
- -------------------------------------------------------------------------
365
- -------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- ------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES - 3.0%
- ------------------------------------------------------------------------
220 Google Inc. Cl A(1) $ 48
- ------------------------------------------------------------------------
2,188 Yahoo! Inc.(1) 76
- ------------------------------------------------------------------------
124
- ------------------------------------------------------------------------
IT SERVICES - 4.5%
- ------------------------------------------------------------------------
6,098 Paychex, Inc. 187
- ------------------------------------------------------------------------
MEDIA - 4.4%
- ------------------------------------------------------------------------
1,560 Getty Images Inc.(1) 111
- ------------------------------------------------------------------------
4,755 News Corp. 73
- ------------------------------------------------------------------------
184
- ------------------------------------------------------------------------
MULTILINE RETAIL - 5.6%
- ------------------------------------------------------------------------
7,469 Dollar General Corp. 152
- ------------------------------------------------------------------------
1,798 Target Corporation 83
- -------------------------------------------------------------------------
235
- -------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS - 2.5%
- ------------------------------------------------------------------------
1,819 Apache Corp. 102
- -------------------------------------------------------------------------
PERSONAL PRODUCTS - 1.3%
- ------------------------------------------------------------------------
1,079 Gillette Company 56
- ------------------------------------------------------------------------
PHARMACEUTICALS - 5.0%
- ------------------------------------------------------------------------
3,031 Johnson & Johnson 208
- ------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT - 6.8%
- ------------------------------------------------------------------------
6,010 Intel Corp. 141
- ------------------------------------------------------------------------
1,568 Linear Technology Corp. 56
- ------------------------------------------------------------------------
4,613 National Semiconductor Corp. 88
- ------------------------------------------------------------------------
285
- ------------------------------------------------------------------------
SPECIALTY RETAIL - 2.8%
- ------------------------------------------------------------------------
2,801 Weight Watchers International Inc.(1) 117
----------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS - 4.7%
- ------------------------------------------------------------------------
2,571 NIKE, Inc. Cl B 197
- ------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE - 4.6%
- ------------------------------------------------------------------------
3,233 MGIC Investment Corp. 191
- -------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 99.7%
(Cost $4,284) 4,152
- ---------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES - 0.3% 14
- ---------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $4,166
===========================================================================
NOTES TO SCHEDULE OF INVESTMENTS
(1) Non-income producing.
(2) Category is less than 0.05% of total net assets.
See Notes to Financial Statements.
- ------
11
Heritage - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
- -----------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -----------------------------------------------------------------------------------------
INVESTOR CLASS 4.61% -3.41% 8.18% 11.17% 11/10/87
- -----------------------------------------------------------------------------------------
RUSSELL MIDCAP
GROWTH INDEX(1) 7.05% -6.15% 9.38% 11.81%(2) --
- -----------------------------------------------------------------------------------------
RUSSELL MIDCAP INDEX(1) 14.62% 5.83% 12.81% 13.71%(2) --
- -----------------------------------------------------------------------------------------
Institutional Class 4.85% -3.21% -- 5.19% 6/16/97
- -----------------------------------------------------------------------------------------
Advisor Class 4.29% -3.68% -- 4.13% 7/11/97
- -----------------------------------------------------------------------------------------
C Class 3.51% -- -- -3.34% 6/26/01
- -----------------------------------------------------------------------------------------
(1) (c)2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports,
financial reporting services, periodicals and other resources believed to
be reliable. Although carefully verified, data on compilations is not
guaranteed by Lipper Inc. - A Reuters Company and may be incomplete. No
offer or solicitations to buy or sell any of the securities herein is being
made by Lipper.
(2) Since 10/31/87, the date nearest the Investor Class's inception for which
data are available.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
(continued)
- ------
12
Heritage - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
- -------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
- -------------------------------------------------------------------------------------------------------
Investor Class 25.04% 6.01% 35.37% -6.05% 54.89% -7.92% -9.34% -19.98% 20.31% 4.61%
- -------------------------------------------------------------------------------------------------------
Russell Midcap
Growth Index 33.79% 3.92% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05%
- -------------------------------------------------------------------------------------------------------
Russell Midcap
Index 30.79% 10.95% 40.98% 5.93% 16.01% 0.29% -0.70% -14.13% 35.45% 14.62%
- -------------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
- ------
13
Heritage - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE HERITAGE INVESTMENT TEAM: KURT STALZER AND DAVID ROSE.
Heritage gained 5.29%* in the six months ended April 30, 2005. The Russell
Midcap Growth Index rose only 4.07% while the Russell Midcap Index increased
6.81%.
EQUITIES GAIN AMID CHALLENGES
Stocks rallied during the final stretch of 2004, gaining strength from the
resolution of the presidential election and a temporary decline in oil prices.
However, investor optimism waned in the early months of 2005 as concern grew
about the effects of rising commodity and oil prices and interest rates on the
economy and corporate profit growth. Though volatility prevailed, equities
ultimately booked gains for the period with value stocks generally outpacing
their growth counterparts.
HEALTH CARE LEADS ADVANCE
Heritage's strongest performance came from investments in the health care
sector, on average one of its largest positions. Health insurer Aetna was the
top contributor, gaining roughly 55% during the period. The managed-care
company's profit rose and it raised its 2005 earnings and membership forecasts
based on higher-than-expected increase in new health-plan members. Medical
device maker C.R. Bard also boosted performance as its shares were buoyed by a
rise in profit.
However, not all was positive in the health care sector. A top detractor to
returns during the period was biopharmaceutical company Elan. Its share price
declined on the unexpected withdrawal of Tysabri following the death of a
patient who was being treated for multiple sclerosis with this drug. The stock
was sold.
Investments in the telecommunication services sector also boosted returns.
Wireless companies exposed to the flourishing Latin American market, such as NII
Holdings, performed well. They received an additional boost from
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
NII Holdings Inc. 5.1% 4.6%
- --------------------------------------------------------------------------------
National Oilwell
Varco, Inc.(1) 3.9% 2.9%
- --------------------------------------------------------------------------------
Bard (C.R.), Inc. 3.8% 3.1%
- --------------------------------------------------------------------------------
Aetna Inc. 3.6% 2.3%
- --------------------------------------------------------------------------------
Monsanto Co. 3.5% 0.1%
- --------------------------------------------------------------------------------
Harrah's
Entertainment, Inc. 3.1% 1.5%
- --------------------------------------------------------------------------------
America Movil SA de
CV Series L ADR 2.8% 0.3%
- --------------------------------------------------------------------------------
Station Casinos Inc. 2.2% 0.5%
- --------------------------------------------------------------------------------
Transocean Inc. 2.2% 0.8%
- --------------------------------------------------------------------------------
Rockwell Collins 2.1% --
- --------------------------------------------------------------------------------
(1) Formerly known as National-Oilwell, Inc.
*All fund returns referenced in this commentary are for Investor Class shares.
Returns for periods less than one year are not annualized.
(continued)
- ------
14
Heritage - Portfolio Commentary
the prospect of more wireless spectrum being auctioned by Mexico's Federal
Telecommunications Commission.
Heritage also booked gains from investments in the consumer discretionary
sector. In particular, homebuilding stocks, such as Toll Brothers, prospered
amid robust housing demand.
HIGH COMMODITY COSTS DOUBLE-EDGED SWORD
High oil and commodity prices were a boon to some firms and a bane to others.
Among the beneficiaries was oil-services company National Oilwell Varco, one of
the portfolio's top contributors during the period. On the other hand, high oil
costs as well as the cancellation of a cruise plagued Royal Caribbean Cruises,
the world's No. 2 cruise company.
In a similar vein, Heritage's investment in steel manufacturer AK Steel Holding
suffered, reflecting uncertainty over steel pricing, demand and China's
production levels.
In the information technology sector, Heritage was slowed by its investment in
Symantec. The security software maker's shares suffered from the perception that
its acquisition of Veritas Software and competition from Microsoft would slow
Symantec's growth. CACI International was another detractor. Despite the overall
negative performance of technology stocks, the Heritage team found some pockets
of success. For example, Apple Computer was a leading contributor, driven by
strong demand for its iPod portable music player and Macintosh computers.
OUR COMMITMENT
The Heritage team remains committed to American Century's growth investment
approach that has been in place for more than thirty years. It will continue
to look for mid-sized and smaller companies with earnings and revenues that are
growing at an accelerating rate.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Energy Equipment
& Services 11.4% 12.8%
- --------------------------------------------------------------------------------
Health Care Providers
& Services 10.5% 3.8%
- --------------------------------------------------------------------------------
Hotels, Restaurants
& Leisure 9.3% 10.0%
- --------------------------------------------------------------------------------
Wireless Telecommunication
Services 8.5% 5.5%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 6.4% 5.5%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 97.2% 99.0%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 2.8% 1.0%
- --------------------------------------------------------------------------------
- ------
15
Heritage - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 99.3%
AEROSPACE & DEFENSE - 4.9%
- ------------------------------------------------------------------------------
78,600 Aviall Inc.(1) $ 2,299
- ------------------------------------------------------------------------------
329,600 Goodrich Corporation 13,283
- ------------------------------------------------------------------------------
203,700 L-3 Communications Holdings, Inc. 14,457
- ------------------------------------------------------------------------------
482,900 Rockwell Collins 22,154
- ------------------------------------------------------------------------------
52,193
- ------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS - 0.3%
- ------------------------------------------------------------------------------
46,900 UTI Worldwide Inc. 3,008
- ------------------------------------------------------------------------------
BEVERAGES - 1.4%
- ------------------------------------------------------------------------------
282,200 Constellation Brands Inc.(1) 14,875
- -------------------------------------------------------------------------------
BIOTECHNOLOGY - 2.5%
- -------------------------------------------------------------------------------
220,053 Affymetrix Inc.(1) 10,146
- ------------------------------------------------------------------------------
131,600 Gilead Sciences, Inc.(1) 4,882
- ------------------------------------------------------------------------------
81,600 Martek Biosciences Corporation(1) 3,123
- ------------------------------------------------------------------------------
175,633 United Therapeutics Corp.(1) 8,429
- ------------------------------------------------------------------------------
26,580
- ------------------------------------------------------------------------------
CHEMICALS - 4.9%
- -------------------------------------------------------------------------------
722,959 Huntsman Corp.(1) 15,211
- ------------------------------------------------------------------------------
629,000 Monsanto Co. 36,872
- ------------------------------------------------------------------------------
52,083
- ------------------------------------------------------------------------------
COMMERCIAL BANKS - 0.6%
- -------------------------------------------------------------------------------
27,800 City National Corp. 1,960
- -----------------------------------------------------------------------------
42,600 Silicon Valley Bancshares(1) 2,019
- -----------------------------------------------------------------------------
28,400 Zions Bancorporation 1,989
- -----------------------------------------------------------------------------
5,968
- -----------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES - 0.1%
- -------------------------------------------------------------------------------
37,079 Mobile Mini Inc.(1) 1,300
- ------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.8%
- -------------------------------------------------------------------------------
190,111 F5 Networks, Inc.(1) 8,139
- -------------------------------------------------------------------------------
373,200 Harris Corp. 10,524
- -------------------------------------------------------------------------------
18,663
- -------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS - 2.8%
- -------------------------------------------------------------------------------
546,864 Apple Computer, Inc.(1) 19,720
- ------------------------------------------------------------------------------
568,900 Seagate Technology 10,001
- ------------------------------------------------------------------------------
29,721
- ------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING - 5.1%
- ------------------------------------------------------------------------------
657,566 Chicago Bridge & Iron
Company New York Shares 14,717
- ------------------------------------------------------------------------------
1,274,000 Chiyoda Corporation ORD 14,334
- ------------------------------------------------------------------------------
211,200 Fluor Corp. 10,889
- ------------------------------------------------------------------------------
298,100 Jacobs Engineering Group Inc.(1) 14,520
- ------------------------------------------------------------------------------
54,460
- ------------------------------------------------------------------------------
CONSUMER FINANCE - 0.6%
- ------------------------------------------------------------------------------
374,400 Providian Financial Corp.(1) 6,241
- ------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- ------------------------------------------------------------------------------
DISTRIBUTORS - 0.6%
- ------------------------------------------------------------------------------
327,461 Prestige Brands Holdings Inc.(1) $ 5,894
- ------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.6%
- ------------------------------------------------------------------------------
74,100 TXU Corp. 6,357
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.2%
- ------------------------------------------------------------------------------
331,200 Ametek Inc. 12,543
- ------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES - 11.4%
- ------------------------------------------------------------------------------
238,500 ENSCO International Inc. 7,775
- ------------------------------------------------------------------------------
143,868 Hydril Co.(1) 7,567
- ------------------------------------------------------------------------------
83,102 Nabors Industries Ltd.(1) 4,477
- ------------------------------------------------------------------------------
1,039,556 National Oilwell Varco, Inc.(1) 41,313
- ------------------------------------------------------------------------------
225,700 Noble Corp. 11,488
- ------------------------------------------------------------------------------
333,400 Pride International Inc.(1) 7,435
- ------------------------------------------------------------------------------
84,100 Smith International, Inc. 4,893
- ------------------------------------------------------------------------------
495,700 Transocean Inc.(1) 22,986
- ------------------------------------------------------------------------------
240,400 Weatherford International Ltd.(1) 12,537
- ------------------------------------------------------------------------------
120,471
- ------------------------------------------------------------------------------
FOOD & STAPLES RETAILING - 0.6%
- ------------------------------------------------------------------------------
113,500 CVS Corp. 5,854
- -----------------------------------------------------------------------------
FOOD PRODUCTS - 0.8%
- ------------------------------------------------------------------------------
263,300 Smithfield Foods Inc.(1) 7,967
- -----------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES - 6.4%
- ------------------------------------------------------------------------------
561,300 Bard (C.R.), Inc. 39,947
- -----------------------------------------------------------------------------
143,422 Immucor, Inc.(1) 4,280
- -----------------------------------------------------------------------------
263,976 Intuitive Surgical Inc.(1) 11,335
- -----------------------------------------------------------------------------
193,600 ResMed Inc.(1) 12,023
- -----------------------------------------------------------------------------
67,585
- -----------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES - 10.5%
- -----------------------------------------------------------------------------
525,936 Aetna Inc. 38,589
- -----------------------------------------------------------------------------
507,800 Caremark Rx Inc.(1) 20,337
- -----------------------------------------------------------------------------
148,300 Community Health Systems Inc.(1) 5,406
- -----------------------------------------------------------------------------
243,733 Covance Inc.(1) 11,124
- -----------------------------------------------------------------------------
140,837 Coventry Health Care Inc.(1) 9,637
- -----------------------------------------------------------------------------
169,100 Henry Schein, Inc.(1) 6,343
- -----------------------------------------------------------------------------
170,151 SFBC International, Inc.(1) 5,309
- -----------------------------------------------------------------------------
227,200 Triad Hospitals Inc.(1) 11,644
- -----------------------------------------------------------------------------
47,700 Universal Health Services, Inc. Cl B 2,706
- -----------------------------------------------------------------------------
111,095
- -----------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 9.3%
- -----------------------------------------------------------------------------
199,438 Applebee's International Inc. 4,942
- -----------------------------------------------------------------------------
497,491 Harrah's Entertainment, Inc. 32,646
- -----------------------------------------------------------------------------
157,000 Orient-Express Hotels Ltd. Cl A 4,124
- -----------------------------------------------------------------------------
170,157 Panera Bread Co.(1) 8,511
- -----------------------------------------------------------------------------
268,900 Penn National Gaming Inc.(1) 8,470
- -----------------------------------------------------------------------------
302,764 Starwood Hotels & Resorts
Worldwide, Inc. 16,452
- -----------------------------------------------------------------------------
367,900 Station Casinos Inc. 23,741
- -----------------------------------------------------------------------------
98,886
- -----------------------------------------------------------------------------
See Notes to Financial Statements.
(continued)
- ------
16
Heritage - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- ------------------------------------------------------------------------------
HOUSEHOLD DURABLES - 1.4%
- -------------------------------------------------------------------------------
88,918 Garmin Ltd. $ 3,512
- -------------------------------------------------------------------------------
113,200 Jarden Corp.(1) 5,057
- -------------------------------------------------------------------------------
358,300 Tempur-Pedic International Inc.(1) 6,840
- -------------------------------------------------------------------------------
15,409
- -------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES - 1.3%
- -------------------------------------------------------------------------------
178,800 Textron Inc. 13,473
- -------------------------------------------------------------------------------
INSURANCE - 1.3%
- -------------------------------------------------------------------------------
106,600 Aflac Inc. 4,333
- -------------------------------------------------------------------------------
276,700 HCC Insurance Holdings, Inc. 9,843
- -------------------------------------------------------------------------------
14,176
- -------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES - 0.4%
- -------------------------------------------------------------------------------
171,300 VeriSign, Inc.(1) 4,533
- -------------------------------------------------------------------------------
IT SERVICES - 2.6%
- -------------------------------------------------------------------------------
161,300 Alliance Data Systems Corp.(1) 6,517
- -------------------------------------------------------------------------------
116,100 Global Payments Inc. 7,519
- -------------------------------------------------------------------------------
741,000 Titan Corp.(1) 13,300
- -------------------------------------------------------------------------------
27,336
- -------------------------------------------------------------------------------
MACHINERY - 2.5%
- -------------------------------------------------------------------------------
118,070 JLG Industries Inc. 2,406
- --------------------------------------------------------------------------------
359,127 Joy Global Inc. 12,164
- --------------------------------------------------------------------------------
157,009 Oshkosh Truck Corp. 11,799
- --------------------------------------------------------------------------------
26,369
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS - 2.2%
- -------------------------------------------------------------------------------
85,600 Peabody Energy Corp. 3,747
- -------------------------------------------------------------------------------
135,800 Valero Energy Corp. 9,306
- -------------------------------------------------------------------------------
348,054 XTO Energy Inc. 10,501
- -------------------------------------------------------------------------------
23,554
- -------------------------------------------------------------------------------
PERSONAL PRODUCTS - 0.9%
- -------------------------------------------------------------------------------
126,742 Chattem, Inc.(1) 5,214
- -------------------------------------------------------------------------------
1,444,961 Revlon Inc. Cl A(1) 4,248
- -------------------------------------------------------------------------------
9,462
- -------------------------------------------------------------------------------
PHARMACEUTICALS - 3.2%
- -------------------------------------------------------------------------------
299,600 American Pharmaceutical
Partners Inc.(1) 15,614
- -------------------------------------------------------------------------------
238,385 Barr Pharmaceuticals Inc.(1) 12,363
- -------------------------------------------------------------------------------
92,400 Sepracor Inc.(1) 5,537
- -------------------------------------------------------------------------------
33,514
- -------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- -------------------------------------------------------------------------------
ROAD & RAIL - 1.7%
- -------------------------------------------------------------------------------
283,000 Burlington Northern
Santa Fe Corp. $ 13,654
- -------------------------------------------------------------------------------
119,100 J.B. Hunt Transport Services, Inc. 4,656
- -------------------------------------------------------------------------------
18,310
- -------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT - 0.4%
- -------------------------------------------------------------------------------
164,356 Tessera Technologies Inc.(1) 4,365
- -------------------------------------------------------------------------------
SOFTWARE - 0.6%
- -------------------------------------------------------------------------------
59,727 MicroStrategy Inc.(1) 2,600
- -------------------------------------------------------------------------------
77,000 Quality Systems Inc. 3,664
- -------------------------------------------------------------------------------
6,264
- -------------------------------------------------------------------------------
SPECIALTY RETAIL - 5.9%
- -------------------------------------------------------------------------------
297,900 Abercrombie & Fitch Co. 16,072
- -------------------------------------------------------------------------------
58,800 Advance Auto Parts, Inc.(1) 3,137
- -------------------------------------------------------------------------------
503,663 Bebe Stores Inc. 16,278
- -------------------------------------------------------------------------------
267,100 Chico's FAS, Inc.(1) 6,846
- -------------------------------------------------------------------------------
250,600 Foot Locker, Inc. 6,681
- -------------------------------------------------------------------------------
152,800 Men's Wearhouse, Inc. (The)(1) 6,306
- -------------------------------------------------------------------------------
229,900 Michaels Stores, Inc. 7,633
- -------------------------------------------------------------------------------
62,953
- -------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES - 8.5%
- -------------------------------------------------------------------------------
464,030 Alamosa Holdings Inc.(1) 6,028
- -------------------------------------------------------------------------------
603,200 America Movil SA de
CV Series L ADR 29,949
- -------------------------------------------------------------------------------
1,088,148 NII Holdings Inc.(1) 54,483
- -------------------------------------------------------------------------------
90,460
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $936,345) 1,051,922
- -------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS - 2.9%
Repurchase Agreement, Bank of America
Securities, LLC, (collateralized by various
U.S. Treasury obligations, 4.17% - 8.875%,
2/15/13 - 2/15/19, valued at $30,915),
in a joint trading account at 2.78%,
dated 4/29/05, due 5/2/05
(Delivery value $30,307)
(Cost $30,300) 30,300
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 102.2%
(Cost $966,645) 1,082,222
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES - (2.2)% (23,521)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $1,058,701
================================================================================
See Notes to Financial Statements.
(continued)
- ------
17
Heritage - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
($ IN THOUSANDS)
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- --------------------------------------------------------------------------------------
742,105,000 JPY for USD 5/31/05 $7,093 $(66)
=======================================
(Value on Settlement Date $7,027)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the future --
and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
JPY = Japanese Yen
ORD = Foreign Ordinary Share
USD = United States Dollar
(1) Non-income producing.
See Notes to Financial Statements.
- ------
18
Vista - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
- ---------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------------------
INVESTOR CLASS 2.10% -4.45% 7.94% 10.30% 11/25/83
- ---------------------------------------------------------------------------------------
RUSSELL MIDCAP
GROWTH INDEX(1) 7.05% -6.15% 9.38% N/A(2) --
- ---------------------------------------------------------------------------------------
Institutional Class 2.30% -4.23% -- 5.15% 11/14/96
- ---------------------------------------------------------------------------------------
Advisor Class 1.83% -4.71% -- 3.78% 10/2/96
- ---------------------------------------------------------------------------------------
C Class 1.16% -- -- 2.19% 7/18/01
- ---------------------------------------------------------------------------------------
(1) (c)2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports,
financial reporting services, periodicals and other resources believed to
be reliable. Although carefully verified, data on compilations is not
guaranteed by Lipper Inc. - A Reuters Company and may be incomplete. No
offer or solicitations to buy or sell any of the securities herein is being
made by Lipper.
(2) Benchmark began 12/31/85.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
- ------
19
Vista - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
- -----------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
- -----------------------------------------------------------------------------------------------------------
Investor Class 47.42% -23.56% 26.13% -15.78% 125.22% -22.00% -15.93% -17.07% 43.43% 2.10%
- -----------------------------------------------------------------------------------------------------------
Russell Midcap
Growth Index 33.79% 3.92% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05%
- -----------------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
20
Vista - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE VISTA INVESTMENT TEAM: GLENN FOGLE AND DAVID M.
HOLLOND.
American Century Vista advanced 3.42%* during the six months ended April 30,
2005, trailing the 4.07% return of its benchmark, the Russell Midcap Growth
Index. Since its inception November 25, 1983, Vista has returned an average of
10.30% on an annual basis.
'CRUDE' MARKET TREATMENT
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004,
despite record-high oil prices, rising interest rates and a modest increase in
underlying inflation.
Slowing economic growth and rising short-term interest rates as the period
progressed also hampered markets, igniting a rotation to mid-cap and large-cap
stocks. In the last half of the period, the S&P 500, consisting primarily of
large-caps, fell just 1.61%, while the S&P MidCap 400 Index dropped 1.76%. By
comparison, the Russell 2000 Index and S&P SmallCap 600 Index, comprising
small-caps, plunged 6.87% and 5.39%, respectively.
Vista's overweight position in energy stocks proved detrimental at the beginning
and the end of the period but yielded strong returns in-between. Overall, the
portfolio benefited from solid security selection in the sector, and it also
realized gains from an overweight stake in utilities. An underweight stake in
financials also reaped positive contributions, but stock choices in information
technology and health care limited gains.
ENERGY'S IMPACT
The performance of Vista's energy holdings generally mirrored the movement of
crude prices, which fell at the beginning of the six-month time frame, rallied
in the first quarter of 2005 then fell toward the end of the period. However, we
managed to maneuver the volatility somewhat with solid stock picks. In
particular, shares in Valero Energy, the leading U.S. refiner of low-grade sour
crude, surged 60% during the period, and shares in Diamond Offshore Drilling
rose 31%.
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
TXU Corp. 4.2% 3.0%
- --------------------------------------------------------------------------------
NII Holdings Inc. 3.3% 3.6%
- --------------------------------------------------------------------------------
Station Casinos Inc. 3.1% 2.1%
- --------------------------------------------------------------------------------
Aetna Inc. 3.1% 2.2%
- --------------------------------------------------------------------------------
Monsanto Co. 3.0% --
- --------------------------------------------------------------------------------
Boyd Gaming Corp. 2.9% 1.7%
- --------------------------------------------------------------------------------
American Pharmaceutical
Partners Inc. 2.4% --
- --------------------------------------------------------------------------------
Apple Computer, Inc. 2.2% 1.7%
- --------------------------------------------------------------------------------
Penn National
Gaming Inc. 2.2% --
- --------------------------------------------------------------------------------
Covance Inc. 2.1% --
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
Returns for periods less than one year are not annualized.
(continued)
- ------
21
Vista - Portfolio Commentary
Meanwhile, two gaming stocks continued helping the portfolio, as Boyd Gaming and
Station Casinos ranked among Vista's top 10 relative performers. The leader of
that list, though, came from the portfolio's top-performing sector on a relative
basis: utilities. TXU Corp., an electrical utility in Texas riding a favorable
cost and pricing structure, rewarded our overweight position in the sector as
its shares soared 42%.
One of Vista's longtime holdings and top five individual positions, Aetna Corp.,
ranked No. 2 on the portfolio's list of relative and absolute contributors.
Eyeing an opportunity in a consolidating industry with considerable pricing
power, we substantially increased our stake in health care providers during the
period.
HARD TIMES FOR SOFTWARE
Vista suffered from stock selection in information technology, particularly in
software companies. TIBCO Software, a maker of business software, led the
portfolio in relative performance in the fourth quarter of 2004 but ended the
six-month period as its biggest relative detractor. TIBCO's shares fell sharply
in early March 2005 after the company warned investors of surprisingly weak
earnings results, and the company's cloudy outlook caused us to liquidate our
position in the stock.
One gaming stock that didn't work in the period, Las Vegas Sands Corp., led all
absolute detractors for Vista during the period. Finally, while we have boosted
our stake in health care providers, we reduced our weighting in health care
equipment and supplies as the period progressed, as several portfolio selections
in that industry produced poor returns.
INVESTMENT PHILOSOPHY
We adhere to an investment process that identifies mid-sized and smaller
companies with accelerating earnings and revenue. Ultimately, we believe this
selection strategy will produce solid, long-term gains for our investors.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Health Care Providers
& Services 16.3% 2.2%
- --------------------------------------------------------------------------------
Hotels, Restaurants
& Leisure 12.2% 7.3%
- --------------------------------------------------------------------------------
Energy Equipment
& Services 7.7% 6.6%
- --------------------------------------------------------------------------------
Specialty Retail 6.4% 3.2%
- --------------------------------------------------------------------------------
Pharmaceuticals 5.5% 0.4%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 97.8% 97.1%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 2.2% 2.9%
- --------------------------------------------------------------------------------
- ------
22
Vista - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- ----------------------------------------------------------------------------
COMMON STOCKS - 98.8%
AEROSPACE & DEFENSE - 4.1%
- ----------------------------------------------------------------------------
933,000 Goodrich Corporation $ 37,600
- ----------------------------------------------------------------------------
127,000 Precision Castparts Corp. 9,355
- ----------------------------------------------------------------------------
609,000 Rockwell Collins 27,941
- ----------------------------------------------------------------------------
74,896
- ----------------------------------------------------------------------------
BEVERAGES - 1.3%
- ----------------------------------------------------------------------------
326,000 Constellation Brands Inc.(1) 17,183
- ----------------------------------------------------------------------------
301,196 PepsiAmericas Inc. 7,437
- ----------------------------------------------------------------------------
24,620
- ----------------------------------------------------------------------------
BIOTECHNOLOGY - 1.8%
- ----------------------------------------------------------------------------
309,000 Affymetrix Inc.(1) 14,248
- ----------------------------------------------------------------------------
258,000 Celgene Corp.(1) 9,781
- ----------------------------------------------------------------------------
196,000 United Therapeutics Corp.(1) 9,406
- ----------------------------------------------------------------------------
33,435
- ----------------------------------------------------------------------------
CHEMICALS - 3.0%
- -----------------------------------------------------------------------------
955,000 Monsanto Co. 55,982
- -----------------------------------------------------------------------------
COMMERCIAL BANKS - 1.5%
- ----------------------------------------------------------------------------
354,593 Colonial BancGroup Inc. (The) 7,822
- ----------------------------------------------------------------------------
198,000 Silicon Valley Bancshares(1) 9,386
- ----------------------------------------------------------------------------
133,000 Zions Bancorporation 9,314
- ----------------------------------------------------------------------------
26,522
- ----------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.5%
- ----------------------------------------------------------------------------
399,000 Comverse Technology, Inc.(1) 9,093
- ----------------------------------------------------------------------------
COMPUTERS & PERIPHERALS - 4.0%
- ----------------------------------------------------------------------------
1,150,000 Apple Computer, Inc.(1) 41,470
- ----------------------------------------------------------------------------
150,849 QLogic Corp.(1) 5,014
- ----------------------------------------------------------------------------
1,566,000 Seagate Technology 27,530
- ----------------------------------------------------------------------------
74,014
- ----------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING - 3.8%
- ----------------------------------------------------------------------------
680,000 Jacobs Engineering Group Inc.(1) 33,123
- ----------------------------------------------------------------------------
1,997,000 Shaw Group Inc. (The)(1) 36,086
- ----------------------------------------------------------------------------
69,209
- ----------------------------------------------------------------------------
ELECTRIC UTILITIES - 4.7%
- ----------------------------------------------------------------------------
191,000 Exelon Corporation 9,455
- ----------------------------------------------------------------------------
896,000 TXU Corp. 76,867
- ----------------------------------------------------------------------------
86,322
- ----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.5%
- ----------------------------------------------------------------------------
203,000 Rockwell Automation Inc. 9,385
- ----------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.0%
- ----------------------------------------------------------------------------
521,000 Itron Inc.(1) 18,792
- ----------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES - 7.7%
- ----------------------------------------------------------------------------
687,000 Diamond Offshore Drilling, Inc. 30,303
- ----------------------------------------------------------------------------
261,000 ENSCO International Inc. 8,509
- ----------------------------------------------------------------------------
264,000 Global SantaFe Corp. 8,870
- ----------------------------------------------------------------------------
597,000 Helmerich & Payne, Inc. 22,949
- ----------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- ---------------------------------------------------------------------------
775,000 National Oilwell Varco, Inc.(1) $ 30,798
- ---------------------------------------------------------------------------
365,000 Noble Corp. 18,579
- ---------------------------------------------------------------------------
161,000 Tenaris SA ADR 9,201
- ---------------------------------------------------------------------------
281,000 Transocean Inc.(1) 13,030
- ---------------------------------------------------------------------------
142,239
- ---------------------------------------------------------------------------
FOOD & STAPLES RETAILING - 0.5%
- ---------------------------------------------------------------------------
189,000 CVS Corp. 9,749
- ---------------------------------------------------------------------------
FOOD PRODUCTS - 1.0%
- ---------------------------------------------------------------------------
298,000 Hershey Foods Corp. 19,042
- ---------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES - 4.0%
- ---------------------------------------------------------------------------
53,378 Advanced Medical Optics Inc.(1) 1,974
- ---------------------------------------------------------------------------
562,000 Cooper Companies, Inc. (The) 37,964
- ---------------------------------------------------------------------------
498,000 Immucor, Inc.(1) 14,860
- ---------------------------------------------------------------------------
428,000 Intuitive Surgical Inc.(1) 18,378
- ---------------------------------------------------------------------------
73,176
- ---------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES - 16.3%
- ---------------------------------------------------------------------------
770,000 Aetna Inc. 56,495
- ---------------------------------------------------------------------------
927,000 Caremark Rx Inc.(1) 37,126
- ---------------------------------------------------------------------------
48,306 Centene Corp.(1) 1,345
- ---------------------------------------------------------------------------
164,000 Cerner Corporation(1) 9,522
- ---------------------------------------------------------------------------
200,695 Community Health Systems Inc.(1) 7,315
- ---------------------------------------------------------------------------
859,000 Covance Inc.(1) 39,205
- ---------------------------------------------------------------------------
202,000 HCA Inc. 11,280
- ---------------------------------------------------------------------------
398,000 Health Management
Associates, Inc. Cl A 9,843
- ---------------------------------------------------------------------------
506,000 Henry Schein, Inc.(1) 18,980
- ---------------------------------------------------------------------------
297,000 Humana Inc.(1) 10,291
- ---------------------------------------------------------------------------
190,000 Laboratory Corporation of
America Holdings(1) 9,405
- ---------------------------------------------------------------------------
239,000 LCA-Vision Inc. 9,366
- ---------------------------------------------------------------------------
216,000 LifePoint Hospitals Inc.(1) 9,601
- ---------------------------------------------------------------------------
526,000 Pharmaceutical Product
Development, Inc.(1) 23,870
- ---------------------------------------------------------------------------
226,000 Psychiatric Solutions, Inc.(1) 9,723
- ---------------------------------------------------------------------------
180,000 Quest Diagnostics Inc. 19,044
- ---------------------------------------------------------------------------
194,000 Triad Hospitals Inc.(1) 9,943
- ---------------------------------------------------------------------------
164,000 Universal Health Services, Inc. Cl B 9,305
- ---------------------------------------------------------------------------
301,659
- ---------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 12.2%
- ---------------------------------------------------------------------------
1,012,000 Boyd Gaming Corp. 53,413
- ---------------------------------------------------------------------------
274,000 Harrah's Entertainment, Inc. 17,980
- ---------------------------------------------------------------------------
324,636 Las Vegas Sands Corp.(1) 12,158
- ---------------------------------------------------------------------------
186,000 Panera Bread Co.(1) 9,304
- ---------------------------------------------------------------------------
1,308,000 Penn National Gaming Inc.(1) 41,202
- ---------------------------------------------------------------------------
882,000 Station Casinos Inc. 56,915
- ---------------------------------------------------------------------------
604,987 WMS Industries Inc.(1) 15,367
- ---------------------------------------------------------------------------
348,000 Wynn Resorts Ltd.(1) 18,423
- ---------------------------------------------------------------------------
224,762
- ---------------------------------------------------------------------------
See Notes to Financial Statements.
(continued)
- ------
23
Vista - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- ----------------------------------------------------------------------------
HOUSEHOLD DURABLES - 2.1%
- ----------------------------------------------------------------------------
338,000 KB Home $ 19,266
- ----------------------------------------------------------------------------
130,000 Pulte Homes Inc. 9,289
- ----------------------------------------------------------------------------
123,000 Toll Brothers Inc.(1) 9,323
- ----------------------------------------------------------------------------
37,878
- ----------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.0%
- ----------------------------------------------------------------------------
291,000 Clorox Company 18,420
- ----------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES - 1.1%
- ----------------------------------------------------------------------------
264,000 Textron Inc. 19,892
- ----------------------------------------------------------------------------
IT SERVICES - 1.5%
- ----------------------------------------------------------------------------
674,000 Cognizant Technology
Solutions Corporation(1) 28,315
- ----------------------------------------------------------------------------
MACHINERY - 3.2%
- ----------------------------------------------------------------------------
574,000 Joy Global Inc. 19,441
- ----------------------------------------------------------------------------
126,000 Oshkosh Truck Corp. 9,469
- ----------------------------------------------------------------------------
745,000 Pentair, Inc. 29,636
- ----------------------------------------------------------------------------
58,546
- ----------------------------------------------------------------------------
MEDIA(2)
- ----------------------------------------------------------------------------
-- KDG Investments Limited
Partnership (Acquired
7/7/00-5/15/01, Cost $18,918(3)(4) 412
- ----------------------------------------------------------------------------
METALS & MINING - 1.1%
- ----------------------------------------------------------------------------
930,000 Allegheny Technologies Inc. 20,832
- ----------------------------------------------------------------------------
MULTI-UTILITIES - 0.5%
- ----------------------------------------------------------------------------
580,000 AES Corporation (The)(1) 9,326
- ----------------------------------------------------------------------------
MULTILINE RETAIL - 0.5%
- ----------------------------------------------------------------------------
187,000 Kohl's Corp.(1) 8,901
- ----------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS - 1.9%
- ----------------------------------------------------------------------------
517,000 Valero Energy Corp. 35,430
- ----------------------------------------------------------------------------
PHARMACEUTICALS - 5.5%
- ----------------------------------------------------------------------------
856,000 American Pharmaceutical
Partners Inc.(1) 44,615
- ----------------------------------------------------------------------------
720,000 Barr Pharmaceuticals Inc.(1) 37,339
- ----------------------------------------------------------------------------
431,000 K-V Pharmaceutical Co. Cl A(1) 10,085
- ----------------------------------------------------------------------------
154,000 Sepracor Inc.(1) 9,228
- ----------------------------------------------------------------------------
101,267
- ----------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- ----------------------------------------------------------------------------
REAL ESTATE - 1.5%
- ----------------------------------------------------------------------------
246,000 General Growth Properties, Inc. $ 9,621
- ----------------------------------------------------------------------------
146,000 Simon Property Group, Inc. 9,646
- ----------------------------------------------------------------------------
122,000 Vornado Realty Trust 9,327
- ----------------------------------------------------------------------------
28,594
- ----------------------------------------------------------------------------
ROAD & RAIL - 0.5%
- ----------------------------------------------------------------------------
190,000 Burlington Northern Santa Fe Corp. 9,168
- ----------------------------------------------------------------------------
SOFTWARE - 0.3%
- ----------------------------------------------------------------------------
147,259 Cognos, Inc.(1) 5,572
- ----------------------------------------------------------------------------
SPECIALTY RETAIL - 6.4%
- ----------------------------------------------------------------------------
249,000 Abercrombie & Fitch Co. 13,434
- ----------------------------------------------------------------------------
1,104,000 American Eagle Outfitters, Inc. 28,946
- ----------------------------------------------------------------------------
292,427 Bebe Stores Inc. 9,451
- ----------------------------------------------------------------------------
343,000 Foot Locker, Inc. 9,144
- ----------------------------------------------------------------------------
466,000 Men's Wearhouse, Inc. (The)(1) 19,232
- ----------------------------------------------------------------------------
269,000 Michaels Stores, Inc. 8,931
- ----------------------------------------------------------------------------
480,000 The Finish Line, Inc. Cl A 8,650
- ----------------------------------------------------------------------------
474,000 Urban Outfitters Inc.(1) 20,998
- ----------------------------------------------------------------------------
118,786
- ----------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES - 3.8%
- ----------------------------------------------------------------------------
724,000 Alamosa Holdings Inc.(1) 9,405
- ----------------------------------------------------------------------------
1,230,494 NII Holdings Inc.(1) 61,611
- ----------------------------------------------------------------------------
71,016
- ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,656,084) 1,825,252
- ------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS - 2.3%
Repurchase Agreement, Credit Suisse
First Boston, Inc., (collateralized by various
U.S. Treasury obligations, 8.125%, 8/15/21,
valued at $42,812), in a joint trading account
at 2.81%, dated 4/29/05, due 5/2/05
(Delivery value $42,010)
(Cost $42,000) 42,000
- ---------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 101.1%
(Cost $1,698,084) 1,867,252
- ---------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES - (1.1)% (19,977)
- ---------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $1,847,275
===========================================================================
See Notes to Financial Statements.
(continued)
- ------
24
Vista - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
($ IN THOUSANDS)
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- ---------------------------------------------------------------------------------------
71,882 Euro for USD 5/31/05 $ 92 $1
- ---------------------------------------------------------------------------------------
106,356 Euro for USD 5/31/05 137 1
- ---------------------------------------------------------------------------------------
139,650 Euro for USD 5/31/05 180 1
- ---------------------------------------------------------------------------------------
$ 409 $3
============================================
(Value on Settlement Date $412)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the future --
and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
USD = United States Dollar
(1) Non-income producing.
(2) Category is less than 0.05% of total net assets.
(3) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at April 30, 2005, was $412 (in
thousands), which represented 0.02% of total net assets.
(4) Indicates a fair valued security which has not been valued utilizing an
independent quote, but has been valued pursuant to guidelines established
by the Board of Directors. The aggregate value of fair valued securities at
April 30, 2005, was $412, which represented 0.02% of total net assets.
See Notes to Financial Statements.
- ------
25
Shareholder Fee Examples (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
personal accounts (including American Century Brokerage accounts) registered
under your Social Security number. Personal accounts include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical
(continued)
- ------
26
Shareholder Fee Examples (Unaudited)
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD(1) ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO(1)
GROWTH SHAREHOLDER
FEE EXAMPLE
- ---------------------------------------------------------------------------------------------
ACTUAL
- ---------------------------------------------------------------------------------------------
Investor Class $1,000 $1,013.40 $4.99 1.00%
- ---------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,014.70 $4.00 0.80%
- ---------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,012.10 $6.24 1.25%
- ---------------------------------------------------------------------------------------------
C Class $1,000 $1,008.90 $9.96 2.00%
- ---------------------------------------------------------------------------------------------
R Class $1,000 $1,010.90 $7.48 1.50%
- ---------------------------------------------------------------------------------------------
HYPOTHETICAL
- ---------------------------------------------------------------------------------------------
Investor Class $1,000 $1,019.84 $5.01 1.00%
- ---------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,020.83 $4.01 0.80%
- ---------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,018.60 $6.26 1.25%
- ---------------------------------------------------------------------------------------------
C Class $1,000 $1,014.88 $9.99 2.00%
- ---------------------------------------------------------------------------------------------
R Class $1,000 $1,017.36 $7.50 1.50%
- ---------------------------------------------------------------------------------------------
FOCUSED GROWTH
SHAREHOLDER FEE EXAMPLE
- ---------------------------------------------------------------------------------------------
ACTUAL
- ---------------------------------------------------------------------------------------------
Investor Class $1,000 $965.00(2) $1.64(3) 1.00%
- ---------------------------------------------------------------------------------------------
HYPOTHETICAL
- ---------------------------------------------------------------------------------------------
Investor Class $1,000 $1,019.84(4) $5.01(4) 1.00%
- ---------------------------------------------------------------------------------------------
(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 181, the number of days in the most recent fiscal half-year,
divided by 365, to reflect the one-half year period.
(2) Ending account value based on actual return from February 28, 2005 (class
inception) through April 30, 2005.
(3) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 61, the number of days in the period from February 28, 2005
(class inception) through April 30, 2005, divided by 365, to reflect the
period ended. Had the class been available for the full period, the
expenses paid during the period would have been higher.
(4) Ending account value and expenses paid during period assumes the class had
been available throughout the entire period and are calculated using the
class's annualized expense ratio listed in the table above.
(continued)
- ------
27
Shareholder Fee Examples (Unaudited)
EXPENSES PAID
BEGINNING ENDING DURING PERIOD(1) ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO(1)
HERITAGE SHAREHOLDER
FEE EXAMPLE
- -----------------------------------------------------------------------------------------------
ACTUAL
- -----------------------------------------------------------------------------------------------
Investor Class $1,000 $1,052.90 $5.09 1.00%
- -----------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,054.30 $4.07 0.80%
- -----------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,051.70 $6.36 1.25%
- -----------------------------------------------------------------------------------------------
C Class
(after reimbursement)(2) $1,000 $1,048.00 $10.11 1.99%
- -----------------------------------------------------------------------------------------------
C Class
(before reimbursement) $1,000 $1,048.00(3) $10.16 2.00%
- -----------------------------------------------------------------------------------------------
HYPOTHETICAL
- -----------------------------------------------------------------------------------------------
Investor Class $1,000 $1,019.84 $5.01 1.00%
- -----------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,020.83 $4.01 0.80%
- -----------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,018.60 $6.26 1.25%
- -----------------------------------------------------------------------------------------------
C Class
(after reimbursement)(2) $1,000 $1,014.93 $9.94 1.99%
- -----------------------------------------------------------------------------------------------
C Class
(before reimbursement) $1,000 $1,014.88 $9.99 2.00%
- -----------------------------------------------------------------------------------------------
VISTA SHAREHOLDER
FEE EXAMPLE
- -----------------------------------------------------------------------------------------------
ACTUAL
- -----------------------------------------------------------------------------------------------
Investor Class $1,000 $1,034.20 $5.04 1.00%
- -----------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,035.30 $4.04 0.80%
- -----------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,032.40 $6.30 1.25%
- -----------------------------------------------------------------------------------------------
C Class $1,000 $1,029.10 $10.06 2.00%
- -----------------------------------------------------------------------------------------------
HYPOTHETICAL
- -----------------------------------------------------------------------------------------------
Investor Class $1,000 $1,019.84 $5.01 1.00%
- -----------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,020.83 $4.01 0.80%
- -----------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,018.60 $6.26 1.25%
- -----------------------------------------------------------------------------------------------
C Class $1,000 $1,014.88 $9.99 2.00%
- -----------------------------------------------------------------------------------------------
(1) Expenses are equal to the class's annualized expense ratio listed in
the table above, multiplied by the average account value over the period,
multiplied by 181, the number of days in the most recent fiscal half-year,
divided by 365, to reflect the one-half year period.
(2) During the six months ended April 30, 2005, the class had received a
partial reimbursment of its distribution and service fees. Had fees not
been reimbursed, the annualized ratio of operating expenses to average net
assets would have been 2.00%.
(3) Ending account value assumes the return earned after reimbursement. The
return would have been lower had fees not been reimbursed and may have
resulted in a lower ending account value.
- ------
28
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
- ----------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) GROWTH FOCUSED GROWTH HERITAGE VISTA
- ----------------------------------------------------------------------------------------
ASSETS
Investment securities, at value
(cost of $4,137,543,
$4,284, $966,645 and
$1,698,084, respectively) $4,694,426 $4,152 $1,082,222 $1,867,252
- -------------------------------
Cash 228 72 -- 12,526
- -------------------------------
Receivable for
investments sold 30,213 51 140,174 100,744
- -------------------------------
Receivable for forward
foreign currency
exchange contracts 637 -- -- 3
- -------------------------------
Receivable for
capital shares sold 149 -- 18 152
- -------------------------------
Dividends and
interest receivable 3,638 2 163 271
- ----------------------------------------------------------------------------------------
4,729,291 4,277 1,222,577 1,980,948
- ----------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of
demand deposit cash -- -- 147,154 --
- -------------------------------
Payable for
investments purchased 16,248 108 15,624 132,069
- -------------------------------
Payable for forward
foreign currency
exchange contracts -- -- 66 --
- -------------------------------
Accrued management fees 3,781 3 1,025 1,532
- -------------------------------
Distribution fees payable 17 -- 4 36
- -------------------------------
Service fees
(and distribution
fees - R Class) payable 17 -- 3 36
- ----------------------------------------------------------------------------------------
20,063 111 163,876 133,673
- ----------------------------------------------------------------------------------------
NET ASSETS $4,709,228 $4,166 $1,058,701 $1,847,275
========================================================================================
See Notes to Financial Statements.
(continued)
- ------
29
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
- -------------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS
- -------------------------------------------------------------------------------------------------
EXCEPT PER-SHARE AMOUNTS) GROWTH FOCUSED GROWTH HERITAGE VISTA
- -------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital
(par value and paid-in surplus) $5,560,790 $4,308 $1,071,167 $1,850,380
- ----------------------------------
Accumulated undistributed net
investment income (loss) 18,014 -- (2,775) (1,344)
- ----------------------------------
Accumulated net realized
loss on investment
and foreign
currency transactions (1,427,117) (10) (125,203) (170,932)
- ----------------------------------
Net unrealized appreciation
(depreciation) on
investments and
translation of assets and
liabilities in
foreign currencies 557,541 (132) 115,512 169,171
- -------------------------------------------------------------------------------------------------
$4,709,228 $4,166 $1,058,701 $1,847,275
=================================================================================================
INVESTOR CLASS,
$0.01 PAR VALUE
($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------
Net assets $3,970,948,757 $4,166,156 $984,070,578 $1,604,445,349
- ----------------------------------
Shares outstanding 212,684,416 431,709 86,819,422 118,050,193
- ----------------------------------
Net asset value per share $18.67 $9.65 $11.33 $13.59
- -------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS,
$0.01 PAR VALUE
($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------
Net assets $656,512,184 N/A $58,359,634 $74,044,357
- ----------------------------------
Shares outstanding 34,886,873 N/A 5,094,870 5,369,133
- ----------------------------------
Net asset value per share $18.82 N/A $11.45 $13.79
- -------------------------------------------------------------------------------------------------
ADVISOR CLASS,
$0.01 PAR VALUE
($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------
Net assets $81,024,069 N/A $15,405,285 $166,841,664
- ----------------------------------
Shares outstanding 4,392,939 N/A 1,376,820 12,478,277
- ----------------------------------
Net asset value per share $18.44 N/A $11.19 $13.37
- -------------------------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE
($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------
Net assets $711,360 N/A $865,984 $1,943,844
- ----------------------------------
Shares outstanding 39,369 N/A 79,363 148,436
- ----------------------------------
Net asset value per share $18.07 N/A $10.91 $13.10
- -------------------------------------------------------------------------------------------------
R CLASS, $0.01 PAR VALUE
($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------
Net assets $31,703 N/A N/A N/A
- ----------------------------------
Shares outstanding 1,712 N/A N/A N/A
- ----------------------------------
Net asset value per share $18.52 N/A N/A N/A
- -------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
30
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) (EXCEPT AS NOTED)
- -------------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) GROWTH FOCUSED GROWTH(1) HERITAGE VISTA
INVESTMENT INCOME (LOSS)
INCOME:
- ---------------------------------
Dividends (net of foreign
taxes withheld of $386,
$-, $26 and $67, respectively) $44,699 $ 4 $ 3,432 $ 6,992
- ---------------------------------
Interest 476 1 124 623
- -------------------------------------------------------------------------------------------------
45,175 5 3,556 7,615
- -------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------
Management fees 23,827 5 6,274 8,611
- ---------------------------------
Distribution fees:
- ---------------------------------
Advisor Class 101 -- 20 161
- ---------------------------------
C Class 3 -- 4 7
- ---------------------------------
Service fees:
- ---------------------------------
Advisor Class 101 -- 20 161
- ---------------------------------
C Class 1 -- 1 2
- ---------------------------------
Service and distribution
fees - R Class -- -- -- --
- ---------------------------------
Directors' fees and expenses 33 -- 8 12
- ---------------------------------
Other expenses 14 -- 4 5
- -------------------------------------------------------------------------------------------------
24,080 5 6,331 8,959
- -------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 21,095 -- (2,775) (1,344)
- -------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
- ---------------------------------
Investment transactions 146,902 (10) 96,800 70,991
- ---------------------------------
Foreign currency transactions (3,798) -- (231) (6)
- -------------------------------------------------------------------------------------------------
143,104 (10) 96,569 70,985
- -------------------------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED
APPRECIATION (DEPRECIATION) ON:
- ---------------------------------
Investments (88,278) (132) (27,399) (37,799)
- ---------------------------------
Translation of assets and liabilities
in foreign currencies 804 -- (92) 3
- -------------------------------------------------------------------------------------------------
(87,474) (132) (27,491) (37,796)
- -------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS) 55,630 (142) 69,078 33,189
- -------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $76,725 $(142) $66,303 $31,845
=================================================================================================
(1) February 28, 2005 (inception date) through April 30, 2005.
See Notes to Financial Statements.
- ------
31
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
(EXCEPT AS NOTED)
- -----------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) GROWTH FOCUSED GROWTH
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2005 2004 2005(1)
OPERATIONS
Net investment income (loss) $ 21,095 $ (1,976) $ --
- ------------------------------------
Net realized gain (loss) 143,104 538,878 (10)
- ------------------------------------
Change in net unrealized
appreciation (depreciation) (87,474) (205,241) (132)
- -----------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 76,725 331,661 (142)
- -----------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
- ------------------------------------
Investor Class (1,613) -- --
- ------------------------------------
Institutional Class (1,650) -- --
- -----------------------------------------------------------------------------
Decrease in net assets
from distributions (3,263) -- --
- -----------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease)
in net assets from
capital share transactions (302,437) (417,621) 4,308
- -----------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS (228,975) (85,960) 4,166
NET ASSETS
Beginning of period 4,938,203 5,024,163 --
- -----------------------------------------------------------------------------
End of period $4,709,228 $4,938,203 $4,166
=============================================================================
Undistributed net
investment income $18,014 $182 --
=============================================================================
(1) February 28, 2005 (inception date) through April 30, 2005.
See Notes to Financial Statements.
(continued)
- ------
32
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
- ----------------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) HERITAGE VISTA
- ----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2005 2004 2005 2004
OPERATIONS
Net investment loss $ (2,775) $ (5,635) $ (1,344) $ (7,007)
- ------------------------------------
Net realized gain 96,569 103,755 70,985 160,012
- ------------------------------------
Change in net
unrealized appreciation (27,491) (101,497) (37,796) (33,247)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from operations 66,303 (3,377) 31,845 119,758
- ----------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease)
in net assets from capital
share transactions (230,190) (89,270) 246,188 157,574
- ----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS (163,887) (92,647) 278,033 277,332
NET ASSETS
Beginning of period 1,222,588 1,315,235 1,569,242 1,291,910
- ----------------------------------------------------------------------------------------------------
End of period $1,058,701 $1,222,588 $1,847,275 $1,569,242
====================================================================================================
Accumulated net investment loss $(2,775) -- $(1,344) --
====================================================================================================
See Notes to Financial Statements.
- ------
33
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Growth Fund (Growth), Focused Growth
Fund (Focused Growth), Heritage Fund (Heritage) and Vista Fund (Vista)
(collectively, the funds) are four funds in a series issued by the corporation.
Growth, Heritage and Vista are diversified under the 1940 Act. Focused Growth is
nondiversified and normally limits its investments to a core group of
approximately 25-45 common stocks. The funds' investment objective is to seek
long-term capital growth. The funds pursue this objective by investing primarily
in equity securities. Growth and Focused Growth generally invest in larger
companies but may purchase companies of any size. Heritage and Vista generally
invest in companies that are medium-sized and smaller at the time of purchase.
The following is a summary of the funds' significant accounting policies.
MULTIPLE CLASS -- Growth is authorized to issue the Investor Class, the
Institutional Class, the Advisor Class, the C Class and the R Class. Focused
Growth is authorized to issue the Investor Class. Heritage and Vista are
authorized to issue the Investor Class, the Institutional Class, the Advisor
Class and the C Class. The C Class may be subject to a contingent deferred sales
charge. The share classes differ principally in their respective sales charges
and shareholder servicing and distribution expenses and arrangements. All shares
of each fund represent an equal pro rata interest in the assets of the class to
which such shares belong, and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except for class specific
expenses and exclusive rights to vote on matters affecting only individual
classes. Income, non-class specific expenses, and realized and unrealized
capital gains and losses of the funds are allocated to each class of shares
based on their relative net assets. Sale of the Investor Class for Focused
Growth commenced February 28, 2005.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the funds determine that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the funds to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
FUTURES CONTRACTS -- The funds may enter into futures contracts in order to
manage the funds' exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the funds are required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the funds. The variation margin is equal to
the daily change in the contract value and is recorded as unrealized gains and
losses. The funds recognize a realized gain or loss when the contract is closed
or expires. Net realized and unrealized gains or losses occurring during the
holding period of futures contracts are a component of realized gain (loss) on
investment transactions and unrealized appreciation (depreciation) on
investments, respectively.
(continued)
- ------
34
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. For assets and
liabilities, other than investments in securities, net realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose taxes
on the contract amount of purchases and sales of foreign currency contracts in
their currency. The funds record the foreign tax expense, if any, as a reduction
to the net realized gain (loss) on foreign currency transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to hedge the funds' exposure to foreign
currency exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the funds and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The funds bear the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. Each
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable each fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to each
fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, each fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
WHEN-ISSUED AND FORWARD COMMITMENTS -- The funds may engage in securities
transactions on a when-issued or forward commitment basis. Under these
arrangements, the securities' prices and yields are fixed on the date of the
commitment, but payment and delivery are scheduled for a future date. During
this period, securities are subject to market fluctuations. The funds will
segregate cash, cash equivalents or other appropriate liquid securities on their
records in amounts sufficient to meet the purchase price.
INCOME TAX STATUS -- It is each fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
INDEMNIFICATIONS -- Under the corporation's organizational documents, its
officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the funds. In addition, in the normal
course of business, the funds enter into contracts that provide general
indemnifications. The funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the funds.
The risk of material loss from such claims is considered by management to be
remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
(continued
- ------
35
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the funds with investment advisory and
management services in exchange for a single, unified management fee (the fee)
per class. The Agreement provides that all expenses of the funds, except
brokerage commissions, taxes, interest, fees and expenses of those directors who
are not considered "interested persons" as defined in the 1940 Act (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is
computed and accrued daily based on the daily net assets of each specific class
of shares of each fund and paid monthly in arrears. For funds with a stepped fee
schedule, the rate of the fee is determined by applying a fee rate calculation
formula. This formula takes into account all of the investment advisor's assets
under management in each fund's investment strategy (strategy assets) to
calculate the appropriate fee rate for each fund. The strategy assets include
each fund's assets and the assets of other clients of the investment advisor
that are not in the American Century family of funds, but that have the same
investment team and investment strategy. The annual management fee for Focused
Growth, Heritage and Vista is 1.00%, 0.80%, 0.75% and 1.00%, for the Investor
Class, Institutional Class, Advisor Class, and C Class, respectively, as
applicable.
The annual management fee schedule for each class of Growth is as follows:
INVESTOR, C & R INSTITUTIONAL ADVISOR
- --------------------------------------------------------------------------------
STRATEGY ASSETS
- --------------------------------------------------------------------------------
First $20 billion 1.000% 0.800% 0.750%
- --------------------------------------------------------------------------------
Next $10 billion 0.950% 0.750% 0.700%
- --------------------------------------------------------------------------------
Next $10 billion 0.925% 0.725% 0.675%
- --------------------------------------------------------------------------------
Next $10 billion 0.900% 0.700% 0.650%
- --------------------------------------------------------------------------------
Over $50 billion 0.875% 0.675% 0.625%
- --------------------------------------------------------------------------------
The effective annual management fee for each class of Growth for the six months
ended April 30, 2005 was 1.00%, 0.80%, 0.75%, 1.00% and 1.00% for the Investor
Class, Institutional Class, Advisor Class, C Class and R Class, respectively.
DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master
Distribution and Shareholder Services Plan for the Advisor Class (the Advisor
Class plan) and a separate Master Distribution and Individual Shareholder
Services Plan for each of the C Class and R Class (collectively with the Advisor
Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans
provide that the Advisor Class and C Class will pay American Century Investment
Services, Inc. (ACIS) the following annual distribution and service fees:
- --------------------------------------------------------------------------------
ADVISOR C
- --------------------------------------------------------------------------------
Distribution Fee 0.25% 0.75%
- --------------------------------------------------------------------------------
Service Fee 0.25% 0.25%
- --------------------------------------------------------------------------------
The plans provide that the R Class will pay ACIS an annual distribution and
service fee of 0.50%. The fees are computed and accrued daily based on each
class's daily net assets and paid monthly in arrears. The distribution fee
provides compensation for expenses incurred in connection with distributing
shares of the classes including, but not limited to, payments to brokers,
dealers, and financial institutions that have entered into sales agreements with
respect to shares of the funds. The service fee provides compensation for
shareholder and administrative services rendered by ACIS, its affiliates or
independent third party providers for Advisor Class shares and for individual
shareholder services rendered by broker/dealers or other independent financial
intermediaries for C Class and R Class shares.
During the six months ended April 30, 2005, classes in each fund that received
reimbursements of distribution and service fees were as follows:
- --------------------------------------------------------------------------------
($ IN FULL) ADVISOR C
- --------------------------------------------------------------------------------
Growth $5 --
- --------------------------------------------------------------------------------
Heritage $22 $29
- --------------------------------------------------------------------------------
Vista $140 $1
- --------------------------------------------------------------------------------
See Financial Highlights for impact, if any, to the ratio of operating expenses
and the ratio of net investment income to average net assets. Fees incurred
under the plan during the six months ended April 30, 2005, are detailed in the
Statement of Operations.
(continued)
- ------
36
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's
transfer agent, American Century Services, LLC (formerly American Century
Services Corporation).
Growth, Heritage, and Vista have a bank line of credit agreement with JPMorgan
Chase Bank (JPMCB).JPMCB is a custodian of the funds and a wholly owned
subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended April 30, 2005, were as follows:
GROWTH FOCUSED GROWTH HERITAGE VISTA
- -------------------------------------------------------------------------------------
Purchases $1,444,617 $4,484 $1,554,591 $2,276,985
- -------------------------------------------------------------------------------------
Proceeds from sales $1,764,096 $190 $1,792,281 $2,000,742
- -------------------------------------------------------------------------------------
For the six months ended April 30, 2005, Heritage incurred net realized losses
of $2,362 from redemptions in kind. A redemption in kind occurs when a fund
delivers securities from its portfolio in lieu of cash as payment to a redeeming
shareholder.
(continued)
- ------
37
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
GROWTH FOCUSED GROWTH
- ------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------
INVESTOR CLASS
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005(1)
SHARES AUTHORIZED 800,000 300,000
==============================================================================
Sold 5,930 $ 113,408 448 $4,461
- -------------------------
Issued in reinvestment
of distributions 78 1,548 -- --
- -------------------------
Redeemed (19,940) (382,400) (16) (153)
- ------------------------------------------------------------------------------
Net increase (decrease) (13,932) $(267,444) 432 $4,308
==============================================================================
YEAR ENDED
OCTOBER 31, 2004
SHARES AUTHORIZED 800,000 N/A
==============================================================================
Sold 13,385 $ 241,728
- -------------------------
Redeemed (38,762) (700,700)
- ------------------------------------------------------------------------------
Net decrease (25,377) $(458,972)
==============================================================================
INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005
SHARES AUTHORIZED 150,000 N/A
==============================================================================
Sold 1,416 $27,221
- -------------------------
Issued in reinvestment
of distributions 83 1,650
- -------------------------
Redeemed (3,467) (67,179)
- ------------------------------------------------------------------------------
Net decrease (1,968) $(38,308)
==============================================================================
YEAR ENDED
OCTOBER 31, 2004
SHARES AUTHORIZED 100,000 N/A
==============================================================================
Sold 7,170 $130,918
- -------------------------
Redeemed (5,902) (107,320)
- ------------------------------------------------------------------------------
Net increase 1,268 $ 23,598
==============================================================================
(1) February 28, 2005 (fund inception) through April 30, 2005
for Focused Growth.
(continued)
- ------
38
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
GROWTH FOCUSED GROWTH
- -------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------
ADVISOR CLASS
- -------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005
SHARES AUTHORIZED 210,000 N/A
=========================================================================
Sold 857 $16,236
- ---------------------
Redeemed (689) (13,017)
- -------------------------------------------------------------------------
Net increase 168 $ 3,219
=========================================================================
YEAR ENDED
OCTOBER 31, 2004
SHARES AUTHORIZED 210,000 N/A
=========================================================================
Sold 2,568 $45,622
- ---------------------
Redeemed (1,558) (27,851)
- -------------------------------------------------------------------------
Net increase 1,010 $17,771
=========================================================================
C CLASS
- -------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005
SHARES AUTHORIZED 100,000 N/A
=========================================================================
Sold 4 $80
- ---------------------
Redeemed -- (4)
- -------------------------------------------------------------------------
Net increase 4 $76
=========================================================================
YEAR ENDED
OCTOBER 31, 2004
SHARES AUTHORIZED 100,000 N/A
=========================================================================
Sold 9 $163
- ---------------------
Redeemed (11) (190)
- -------------------------------------------------------------------------
Net decrease (2) $(27)
=========================================================================
R CLASS
- -------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005
SHARES AUTHORIZED 50,000 N/A
=========================================================================
Sold 1 $21
- ---------------------
Redeemed -- (1)
- -------------------------------------------------------------------------
Net increase 1 $20
=========================================================================
YEAR ENDED
OCTOBER 31, 2004
SHARES AUTHORIZED 50,000 N/A
=========================================================================
Sold 1 $9
=========================================================================
(continued)
- ------
39
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
HERITAGE VISTA
- ---------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
INVESTOR CLASS
- ---------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 400,000 800,000
=======================================================================================
Sold 6,136 $ 72,173 20,692 $302,923
- ---------------------------------
Redeemed (25,947) (298,193) (10,545) (150,314)
- ---------------------------------------------------------------------------------------
Net increase (decrease) (19,811) $(226,020) 10,147 $152,609
=======================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 400,000 800,000
=======================================================================================
Sold 18,155 $199,799 24,758 $327,118
- ---------------------------------
Redeemed (25,325) (275,696) (20,434) (263,057)
- ---------------------------------------------------------------------------------------
Net increase (decrease) (7,170) $(75,897) 4,324 $ 64,061
=======================================================================================
INSTITUTIONAL CLASS
- ---------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 40,000 80,000
=======================================================================================
Sold 236 $ 2,808 2,675 $38,910
- ---------------------------------
Redeemed (502) (5,928) (514) (7,388)
- ---------------------------------------------------------------------------------------
Net increase (decrease) (266) $(3,120) 2,161 $31,522
=======================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 40,000 80,000
=======================================================================================
Sold 467 $ 5,131 1,199 $15,861
- ---------------------------------
Redeemed (1,894) (20,717) (812) (10,579)
- ---------------------------------------------------------------------------------------
Net increase (decrease) (1,427) $(15,586) 387 $ 5,282
=======================================================================================
(continued)
- ------
40
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
HERITAGE VISTA
- ----------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------
ADVISOR CLASS
- ----------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 100,000 210,000
==================================================================================
Sold 207 $2,378 7,675 $108,056
- ---------------------------------
Redeemed (298) (3,357) (3,442) (46,488)
- ----------------------------------------------------------------------------------
Net increase (decrease) (91) $ (979) 4,233 $ 61,568
==================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 100,000 210,000
==================================================================================
Sold 877 $9,697 7,687 $98,451
- ---------------------------------
Redeemed (688) (7,510) (885) (11,311)
- ----------------------------------------------------------------------------------
Net increase 189 $2,187 6,802 $87,140
==================================================================================
C CLASS
- ----------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 100,000 100,000
==================================================================================
Sold 6 $ 71 54 $750
- ---------------------------------
Redeemed (12) (142) (19) (261)
- ----------------------------------------------------------------------------------
Net increase (decrease) (6) $(71) 35 $489
==================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 100,000 100,000
==================================================================================
Sold 28 $307 101 $1,300
- ---------------------------------
Redeemed (26) (281) (16) (209)
- ----------------------------------------------------------------------------------
Net increase 2 $ 26 85 $1,091
==================================================================================
(continued)
- ------
41
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNT IN THOUSANDS)
5. BANK LINE OF CREDIT
Growth, Heritage and Vista, along with certain other funds managed by ACIM, have
a $575 million unsecured bank line of credit agreement with JPMCB, which was
renewed from $650 million effective December 15, 2004. Growth, Heritage and
Vista may borrow money for temporary or emergency purposes to fund shareholder
redemptions. Borrowings under the agreement bear interest at the Federal Funds
rate plus 0.50%. Growth, Heritage and Vista did not borrow from the line during
the six months ended April 30, 2005.
6. RISK FACTORS
Focused Growth is considered non-diversified which may subject the fund to the
following risks: a price change in any one security may have a greater impact
than would be the case if the fund were diversified; the fund's
non-diversification could result in high portfolio turnover which could mean
increased transaction costs, affecting both the fund's performance and capital
gains tax liabilities to investors.
7. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
GROWTH FOCUSED GROWTH HERITAGE VISTA
- ------------------------------------------------------------------------------------------------
Federal tax
cost of investments $4,143,936 $4,288 $969,353 $1,699,595
================================================================================================
Gross tax
appreciation of investments $691,753 $34 $136,959 $222,426
- -------------------------------
Gross tax
depreciation of investments (141,263) (170) (24,090) (54,769)
- ------------------------------------------------------------------------------------------------
Net tax appreciation
(depreciation) of investments $550,490 $ (136) $112,869 $167,657
================================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
Following are the capital loss carryover amounts as of October 31, 2004:
GROWTH FOCUSED GROWTH HERITAGE VISTA
- -----------------------------------------------------------------------------------------------
Accumulated capital losses $(1,562,879) -- $(218,189) $(239,512)
- -----------------------------------------------------------------------------------------------
The accumulated capital losses listed above represent net capital loss
carryovers that may be used to offset future realized capital gains for federal
income tax purposes. The capital loss carryovers expire as follows:
2009 2010 2011
- ----------------------------------------------------------------------------
Growth -- $(529,714) $(1,033,165)
- ----------------------------------------------------------------------------
Heritage $(105,079) $(108,653) $(4,457)
- ----------------------------------------------------------------------------
Vista $(115,954) $(123,558) --
- ----------------------------------------------------------------------------
- ------
42
Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
PER-SHARE DATA
Net Asset Value,
Beginning of Period $18.43 $17.26 $14.80 $17.85 $31.09 $31.60
- ------------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.08 (0.01) 0.01 (0.01) --(3) (0.10)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.17 1.18 2.45 (3.04) (9.66) 3.73
- ------------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.25 1.17 2.46 (3.05) (9.66) 3.63
- ------------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.01) -- -- -- -- --
- --------------------------
From Net Realized Gains -- -- -- -- (3.58) (4.14)
- ------------------------------------------------------------------------------------------------------
Total Distributions (0.01) -- -- -- (3.58) (4.14)
- ------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.67 $18.43 $17.26 $14.80 $17.85 $31.09
======================================================================================================
TOTAL RETURN(4) 1.34% 6.78% 16.62% (17.09)% (34.14)% 11.49%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets 1.00%(5) 1.00% 1.00% 1.00% 1.00% 1.00%
- --------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.83%(5) (0.07)% 0.05% (0.04)% (0.01)% (0.30)%
- --------------------------
Portfolio Turnover Rate 29% 131% 159% 135% 114% 102%
- --------------------------
Net Assets,
End of Period
(in millions) $3,971 $4,176 $4,350 $3,951 $5,715 $9,557
- ------------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
43
Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- -------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $18.59 $17.38 $14.87 $17.90 $31.15 $31.66
- -------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.10 0.02 0.04 0.02 0.04 (0.03)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.18 1.19 2.47 (3.05) (9.65) 3.72
- -------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.28 1.21 2.51 (3.03) (9.61) 3.69
- -------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.05) -- -- -- -- --
- --------------------------
From Net Realized Gains -- -- -- -- (3.64) (4.20)
- -------------------------------------------------------------------------------------------------
Total Distributions (0.05) -- -- -- (3.64) (4.20)
- -------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.82 $18.59 $17.38 $14.87 $17.90 $31.15
=================================================================================================
TOTAL RETURN(3) 1.47% 6.96% 16.88% (16.93)% (33.94)% 11.70%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 0.80%(4) 0.80% 0.80% 0.80% 0.80% 0.80%
- --------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 1.03%(4) 0.13% 0.25% 0.16% 0.19% (0.10)%
- --------------------------
Portfolio Turnover Rate 29% 131% 159% 135% 114% 102%
- --------------------------
Net Assets,
End of Period
(in thousands) $656,512 $685,090 $618,569 $455,807 $84,189 $98,239
- -------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
44
Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -------------------------------------------------------------------------------------------------
ADVISOR CLASS
- -------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
PER-SHARE DATA
Net Asset Value,
Beginning of Period $18.22 $17.11 $14.70 $17.78 $31.01 $31.52
- -------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.05 (0.06) (0.03) (0.05) (0.06) (0.19)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.17 1.17 2.44 (3.03) (9.66) 3.73
- -------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.22 1.11 2.41 (3.08) (9.72) 3.54
- -------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net Realized Gains -- -- -- -- (3.51) (4.05)
- -------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.44 $18.22 $17.11 $14.70 $17.78 $31.01
=================================================================================================
TOTAL RETURN(3) 1.21% 6.49% 16.39% (17.32)% (34.40)% 11.23%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25%
- --------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets 0.58%(4) (0.32)% (0.20)% (0.29)% (0.26)% (0.55)%
- --------------------------
Portfolio
Turnover Rate 29% 131% 159% 135% 114% 102%
- --------------------------
Net Assets,
End of Period
(in thousands) $81,024 $76,962 $55,010 $32,530 $25,272 $24,750
- -------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
45
Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ---------------------------------------------------------------------------------------
C CLASS
- ---------------------------------------------------------------------------------------
2005(1) 2004 2003 2002(2)
PER-SHARE DATA
Net Asset Value,
Beginning of Period $17.91 $16.95 $14.66 $19.38
- ---------------------------------------------------------------------------------------
Income From
Investment Operations
- -----------------------------
Net Investment Loss(3) (0.02) (0.19) (0.15) (0.16)
- -----------------------------
Net Realized and
Unrealized Gain (Loss) 0.18 1.15 2.44 (4.56)
- ---------------------------------------------------------------------------------------
Total From
Investment Operations 0.16 0.96 2.29 (4.72)
- ---------------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.07 $17.91 $16.95 $14.66
=======================================================================================
TOTAL RETURN(4) 0.89% 5.66% 15.62% (24.36)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00%(5)
- -----------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.17)%(5) (1.07)% (0.95)% (0.99)%(5)
- -----------------------------
Portfolio Turnover Rate 29% 131% 159% 135%(6)
- -----------------------------
Net Assets, End of Period
(in thousands) $711 $632 $623 $482
- ---------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) November 28, 2001 (commencement of sale) through October 31, 2002.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not reflect applicable sales charges. Total returns
for periods less than one year are not annualized. The total return of the classes
may not precisely reflect the class expense differences because of the impact of
calculating the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more closely
reflect the class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended October 31, 2002.
See Notes to Financial Statements.
- ------
46
Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ---------------------------------------------------------------------------------
R CLASS
- ---------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- ---------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $18.32 $17.25 $16.56
- ---------------------------------------------------------------------------------
Income From
Investment Operations
- ---------------------------------
Net Investment
Income (Loss)(3) --(4) (0.13) (0.02)
- ---------------------------------
Net Realized and
Unrealized Gain 0.20 1.20 0.71
- ---------------------------------------------------------------------------------
Total From
Investment Operations 0.20 1.07 0.69
- ---------------------------------------------------------------------------------
Net Asset Value, End of Period $18.52 $18.32 $17.25
=================================================================================
TOTAL RETURN(5) 1.09% 6.20% 4.17%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 1.50%(6) 1.50% 1.50%(6)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.33%(6) (0.57)% (0.58)%(6)
- ---------------------------------
Portfolio Turnover Rate 29% 131% 159%(7)
- ---------------------------------
Net Assets, End of Period
(in thousands) $32 $12 $3
- ---------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) August 29, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences becuause of the impact of calculating
the net asset value to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
47
Focused Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
- --------------------------------------------------------------------------------
2005(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------------------------
Net Investment Loss(2) --(3)
- ----------------------------------------------------------
Net Realized and Unrealized Loss (0.35)
- --------------------------------------------------------------------------------
Total From Investment Operations (0.35)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $9.65
================================================================================
TOTAL RETURN(4) (3.50)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 1.00%(5)
- ----------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets (0.03)%(5)
- ----------------------------------------------------------
Portfolio Turnover Rate 7%
- ----------------------------------------------------------
Net Assets, End of Period (in thousands) $4,166
- --------------------------------------------------------------------------------
(1) February 28, 2005 (inception date) through April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.
(5) Annualized.
See Notes to Financial Statements.
- ------
48
Heritage - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
INVESTOR CLASS
- -----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
PER-SHARE DATA
Net Asset Value,
Beginning of Period $10.76 $10.78 $9.11 $10.13 $19.10 $13.02
- -----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(2) (0.03) (0.05) (0.04) (0.04) --(3) (0.03)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.60 0.03 1.71 (0.98) (5.33) 7.63
- -----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.57 (0.02) 1.67 (1.02) (5.33) 7.60
- -----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income -- -- -- -- -- (0.04)
- --------------------------
From Net Realized Gains -- -- -- -- (3.64) (1.48)
- -----------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- (3.64) (1.52)
- -----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $11.33 $10.76 $10.78 $9.11 $10.13 $19.10
===============================================================================================
TOTAL RETURN(4) 5.29% (0.09)% 18.33% (10.07)% (33.08)% 62.61%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 1.00%(5) 1.00% 1.00% 1.00% 1.00% 1.00%
- --------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.44)%(5) (0.44)% (0.39)% (0.37)% (0.02)% (0.17)%
- --------------------------
Portfolio Turnover Rate 122% 264% 129% 128% 152% 119%
- --------------------------
Net Assets, End of Period
(in millions) $984 $1,148 $1,227 $1,010 $1,206 $1,975
- -----------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
49
Heritage - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
PER-SHARE DATA
Net Asset Value,
Beginning of Period $10.87 $10.86 $9.17 $10.17 $19.14 $13.04
- --------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) (0.01) (0.03) (0.01) (0.02) --(3) --(3)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.59 0.04 1.70 (0.98) (5.30) 7.65
- --------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.58 0.01 1.69 (1.00) (5.30) 7.65
- --------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net Investment Income -- -- -- -- -- (0.07)
- --------------------------
From Net Realized Gains -- -- -- -- (3.67) (1.48)
- --------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- (3.67) (1.55)
- --------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $11.45 $10.87 $10.86 $9.17 $10.17 $19.14
==================================================================================================
TOTAL RETURN(4) 5.43% 0.09% 18.43% (9.83)% (32.84)% 63.00%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 0.80%(5) 0.80% 0.80% 0.80% 0.80% 0.80%
- --------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets (0.24)%(5) (0.24)% (0.19)% (0.17)% 0.18% 0.03%
- --------------------------
Portfolio Turnover Rate 122% 264% 129% 128% 152% 119%
- --------------------------
Net Assets, End of Period
(in thousands) $58,360 $58,259 $73,735 $152,256 $79,882 $8,302
- --------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
50
Heritage - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
ADVISOR CLASS
- -----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $10.64 $10.68 $9.05 $10.09 $19.05 $12.98
- -----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(2) (0.04) (0.07) (0.06) (0.06) (0.04) (0.07)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.59 0.03 1.69 (0.98) (5.32) 7.62
- -----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.55 (0.04) 1.63 (1.04) (5.36) 7.55
- -----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net Investment Income -- -- -- -- -- --(3)
- --------------------------
From Net Realized Gains -- -- -- -- (3.60) (1.48)
- -----------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- (3.60) (1.48)
- -----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $11.19 $10.64 $10.68 $9.05 $10.09 $19.05
===============================================================================================
TOTAL RETURN(4) 5.17% (0.37)% 18.01% (10.31)% (33.30)% 62.26%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 1.25%(5) 1.25% 1.25% 1.25% 1.25% 1.25%
- --------------------------
Ratio of Net Investment
Loss to
Average Net Assets (0.69)%(5) (0.69)% (0.64)% (0.62)% (0.27)% (0.42)%
- --------------------------
Portfolio Turnover Rate 122% 264% 129% 128% 152% 119%
- --------------------------
Net Assets, End of Period
(in thousands) $15,405 $15,623 $13,668 $3,737 $2,146 $2,127
- -----------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
51
Heritage - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------
C CLASS
- -----------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001(2)
- -----------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $10.41 $10.54 $8.99 $10.10 $12.43
- -----------------------------------------------------------------------------------------
Income From
Investment Operations
- ---------------------------
Net Investment Loss(3) (0.08) (0.15) (0.13) (0.13) (0.06)
- ---------------------------
Net Realized and
Unrealized Gain (Loss) 0.58 0.02 1.68 (0.98) (2.27)
- -----------------------------------------------------------------------------------------
Total From
Investment Operations 0.50 (0.13) 1.55 (1.11) (2.33)
- -----------------------------------------------------------------------------------------
Net Asset Value,
End of Period $10.91 $10.41 $10.54 $8.99 $10.10
=========================================================================================
TOTAL RETURN(4) 4.80% (1.23)% 17.24% (10.99)% (18.74)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 1.99%(5)(6) 2.00% 2.00% 2.00% 2.00%(6)
- ---------------------------
Ratio of Net
Investment Loss to
Average Net Assets (1.43)%(5)(6) (1.44)% (1.39)% (1.37)% (1.50)%(6)
- ---------------------------
Portfolio Turnover Rate 122% 264% 129% 128% 152%(7)
- ---------------------------
Net Assets,
End of Period
(in thousands) $866 $889 $872 $146 $3
- -----------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) June 26, 2001 (commencement of sale) through October 31, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not reflect applicable sales charges. Total
returns for periods less than one year are not annualized. The total return of
the classes may not precisely reflect the class expense differences because of
the impact of calculating the net asset values to two decimal places. If net asset
values were calculated to three decimal places, the total return differences would
more closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and does not
result in any gain or loss of value between one class and another.
(5) During the six months ended April 30, 2005, the class received a partial
reimbursement of its service and distribution fees. Had fees not been
reimbursed the annualized ratio of operating expenses to average net assets
and annualized ratio of net investment loss to average net assets would
have been 2.00% and (1.44)%, respectively.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2001.
See Notes to Financial Statements.
- ------
52
Vista - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
INVESTOR CLASS
- -----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $13.14 $11.97 $9.25 $10.62 $24.37 $15.41
- -----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(2) (0.01) (0.06) (0.06) (0.04) (0.04) (0.16)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.46 1.23 2.78 (1.33) (7.38) 10.07
- -----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.45 1.17 2.72 (1.37) (7.42) 9.91
- -----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Realized Gains -- -- -- -- (6.33) (0.95)
- -----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.59 $13.14 $11.97 $9.25 $10.62 $24.37
===============================================================================================
TOTAL RETURN(3) 3.42% 9.77% 29.41% (12.90)% (37.48)% 66.16%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
- --------------------------
Ratio of Net
Investment Loss to
Average Net Assets (0.14)%(4) (0.48)% (0.57)% (0.34)% (0.31)% (0.65)%
- --------------------------
Portfolio Turnover Rate 116% 255% 280% 293% 290% 135%
- --------------------------
Net Assets,
End of Period
(in millions) $1,604 $1,418 $1,240 $966 $1,222 $2,345
- -----------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
53
Vista - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- -----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $13.32 $12.11 $9.34 $10.70 $24.50 $15.51
- -----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) --(3) (0.04) (0.03) (0.02) (0.02) (0.11)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.47 1.25 2.80 (1.34) (7.41) 10.09
- -----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.47 1.21 2.77 (1.36) (7.43) 9.98
- -----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net Realized Gains -- -- -- -- (6.37) (0.99)
- -----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.79 $13.32 $12.11 $9.34 $10.70 $24.50
===============================================================================================
TOTAL RETURN(4) 3.53% 9.99% 29.66% (12.71)% (37.31)% 66.28%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 0.80%(5) 0.80% 0.80% 0.80% 0.80% 0.80%
- --------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 0.06%(5) (0.28)% (0.37)% (0.14)% (0.11)% (0.45)%
- --------------------------
Portfolio Turnover Rate 116% 255% 280% 293% 290% 135%
- --------------------------
Net Assets, End of Period
(in thousands) $74,044 $42,747 $34,177 $37,743 $46,069 $56,022
- -----------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
54
Vista - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
- ---------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $12.95 $11.82 $9.15 $10.53 $24.24 $15.31
- ---------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(2) (0.03) (0.11) (0.08) (0.06) (0.08) (0.22)
- --------------------------
Net Realized
and Unrealized
Gain (Loss) 0.45 1.24 2.75 (1.32) (7.35) 10.05
- ---------------------------------------------------------------------------------------------
Total From
Investment Operations 0.42 1.13 2.67 (1.38) (7.43) 9.83
- ---------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net Realized Gains -- -- -- -- (6.28) (0.90)
- ---------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.37 $12.95 $11.82 $9.15 $10.53 $24.24
=============================================================================================
TOTAL RETURN(3) 3.24% 9.56% 29.18% (13.11)% (37.76)% 65.98%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25%
- --------------------------
Ratio of Net
Investment Loss to
Average Net Assets (0.39)%(4) (0.73)% (0.82)% (0.59)% (0.56)% (0.90)%
- --------------------------
Portfolio Turnover Rate 116% 255% 280% 293% 290% 135%
- --------------------------
Net Assets,
End of Period
(in thousands) $166,842 $106,750 $17,060 $11,333 $13,315 $22,077
- ---------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another
(4) Annualized.
See Notes to Financial Statements.
- ------
55
Vista - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- -------------------------------------------------------------------------------------
C CLASS
- -------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001(2)
- -------------------------------------------------------------------------------------
PER-SHARE DATA
Net Asset Value,
Beginning of Period $12.73 $11.71 $9.12 $10.59 $12.07
- -------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(3) (0.08) (0.19) (0.16) (0.15) (0.06)
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.45 1.21 2.75 (1.32) (1.42)
- -------------------------------------------------------------------------------------
Total From
Investment Operations 0.37 1.02 2.59 (1.47) (1.48)
- -------------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.10 $12.73 $11.71 $9.12 $10.59
=====================================================================================
TOTAL RETURN(4) 2.91% 8.71% 28.40% (13.88)% (12.26)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets 2.00%(5) 2.00% 2.00% 2.00% 2.00%(5)
- --------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.14)%(5) (1.48)% (1.57)% (1.34)% (1.77)%(5)
- --------------------------
Portfolio Turnover Rate 116% 255% 280% 293% 290%(6)
- --------------------------
Net Assets,
End of Period
(in thousands) $1,944 $1,439 $333 $110 $4
- -------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) July 18, 2001 (commencement of sale) through October 31, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not reflect applicable sales charges. Total
returns for periods less than one year are not annualized. The total return
of the classes may not precisely reflect the class expense differences because
of the impact of calculating the net asset values to two decimal places. If net
asset values were calculated to three decimal places, the total return
differences would more closely reflect the class expense differences. The
calculation of net asset values to two decimal places is made in accordance
with SEC guidelines and does not result in any gain or loss of value between
one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2001.
See Notes to Financial Statements.
- ------
56
Approval of Management Agreement for Focused Growth
Under Section 15(c) of the Investment Company Act, contracts for investment
advisory services are required to be reviewed, evaluated and approved by a
majority of a fund's independent directors each year. Under a new Securities and
Exchange Commission rule, each fund is required to disclose in its annual or
semiannual report, as appropriate, the material factors and conclusions that
formed the basis for its board's approval or renewal of any advisory agreements
within the fund's most recently completed fiscal half year period.
At a meeting held February 22, 2005, the board of directors unanimously approved
the initial management agreement for Focused Growth.
In advance of the board's consideration, American Century Investment Management,
Inc. (the "Advisor") provided information concerning the proposed fund. The
materials circulated in advance of the meeting and the discussions held at the
meeting detailed the investment objective and strategy proposed to be utilized
by the Advisor, the fund's characteristics and key attributes, the rationale for
launching the fund, the experience of the portfolio management staff designated
to manage the fund, the proposed pricing, and the markets in which the fund
would be sold.
Consistent with the Advisor's business strategy for all of its other funds, the
Advisor proposed a unified management fee. Under the unified fee structure, the
Advisor charges a single, all-inclusive fee for providing all services for the
management and operation of the fund, except brokerage expenses, taxes,
interest, the fees and expenses of the fund's independent directors (including
their independent legal counsel), and extraordinary costs. Under the unified fee
structure, the Advisor is responsible for providing all investment advisory,
custody, audit, administrative, compliance, record keeping, marketing and
shareholder services, or arranging and supervising third parties who provide
such services. By contrast, most other fund groups are charged a variety of
fees, including an investment advisory fee, a transfer agency fee, an
administrative fee, distribution charges and other expenses. Other than their
investment advisory fees and Rule 12b-1 distribution fees, all other components
of the total fees other advisors charge to their shareholders may be increased
without shareholder approval. The Advisor and the board believe that the unified
fee structure is a benefit to fund shareholders because it clearly discloses the
cost of owning fund shares, and, since the unified fee cannot be increased
without a vote of fund shareholders, it shifts to the Advisor the increased
costs of operating the fund and the risk of administrative inefficiencies.
The Advisor proposed a management agreement for the fund with a 1% unified fee.
In evaluating the proposed fee, the board reviewed comparative data concerning
the total expense ratios of other funds in the large cap growth fund universe
(excluding 12b-1 fees). The proposed fee level compares favorably with such
funds and is in line with the Advisor's other large cap growth funds.
(continued)
- ------
57
Approval of Management Agreement for Focused Growth
When considering the proposed fee, the board considered the entrepreneurial risk
that the Advisor assumes in launching a new fund. In particular, they considered
the effect of the unified management fee structure and the fact that the total
expense ratio of the fund would require the Advisor to assume a substantial part
of the start-up costs of the fund and imposes on the Advisor the risk that the
fund will grow to a level that will become profitable at the proposed fee level.
Although the Advisor did not propose any breakpoints in its management fee at
various asset levels, the board is aware that the Advisor will lose money on the
fund initially and the board will receive information in connection with the
annual contract renewal process that will enable it to determine when, if ever,
one or more breakpoints may be appropriate. Finally, the board considered the
position that the new fund would take in the line up of the American Century
family of funds and the benefits to shareholders of existing funds of the
broadened product offering.
Not specifically discussed, but important in the decision to approve the
management agreement, is the directors' familiarity with the Advisor. The board
of directors oversees and evaluates on a continuous basis the nature and quality
of all services the Advisor performs for other funds within the American Century
complex. As such, the directors have confidence in the Advisor's integrity and
competence in providing services to funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and each director attributed
different weights to various factors. However, based on their evaluation of all
material factors and assisted by the advice of independent legal counsel, the
board, including the independent directors, concluded that the overall
arrangements between the fund and the Advisor, as provided in the management
agreement, were fair and reasonable in light of the services to be performed and
should be approved.
- ------
58
Share Class Information
Five classes of shares are authorized by Growth: Investor Class, Institutional
Class, Advisor Class, C Class, and R Class. Focused Growth offers the Investor
Class. Four classes of shares are authorized for sale by Heritage and Vista:
Investor Class, Institutional Class, Advisor Class, and C Class. The total
expense ratio of Institutional Class shares is lower than that of Investor Class
shares. The total expense ratios of Advisor, C, and R Class shares are higher
than that of Investor Class shares.
INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through a
broker-dealer, which may require payment of a transaction fee to the broker.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and
distribution fee. The total expense ratio of Advisor Class shares is 0.25%
higher than the total expense ratio of Investor Class shares.
C CLASS shares are sold primarily through employer sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. C Class shares redeemed within 12 months of purchase are
subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC
on shares acquired through reinvestment of dividends or capital gains. C Class
shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%.
R CLASS shares are sold primarily through employer-sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. R Class shares are subject to a 0.50% annual Rule 12b-1
service and distribution fee.
All classes of shares represent a pro rata interest in the funds and generally
have the same rights and preferences.
- ------
59
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the funds' investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the funds. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The funds file their 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-Q. The funds' Forms N-Q are available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The funds also make their complete schedule
of portfolio holdings for the most recent quarter of their fiscal year available
on their Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
60
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The BLENDED INDEX is considered the benchmark for Focused Growth. It combines
two widely known indices, the S&P 500 Index and the Russell 1000 Growth Index,
which are both weighted at 50%.
The RUSSELL MIDCAP INDEX measures the performance of the 800 smallest of the
1,000 largest publicly traded U.S. companies, based on total market
capitalization.
The RUSSELL MIDCAP GROWTH INDEX measures the performance of those Russell Midcap
Index companies (the 800 smallest of the 1,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth values.
The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies (the 1,000 largest of the 3,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth rates.
The RUSSELL 2000 INDEX is a market-capitalization weighted index created by
Frank Russell Company to measure the performance of the 2,000 smallest of the
3,000 largest publicly traded U.S. companies, based on total market
capitalization.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
The S&P MIDCAP 400 INDEX, a capitalization-weighted index consisting of 400
domestic stocks, measures the performance of the mid-size company segment of the
U.S. market.
The S&P SMALLCAP 600 INDEX, a capitalization-weighted index consisting of 600
domestic stocks, measures the small company segment of the U.S. market.
- ------
61
Notes
- ------
62
Notes
- ------
63
Notes
- ------
64
PRSRT STD
U.S. POSTAGE PAID
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COMPANIES
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P.O. Box 419200
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0506
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(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
[front cover]
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Giftrust (reg.sm) Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GIFTRUST
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Types of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .10
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .11
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .13
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
OTHER INFORMATION
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .17
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III
WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Giftrust fund
for the six months ended April 30, 2005.
The report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings, and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
Your next shareholder report for this fund will be the annual report dated
October 31, 2005, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
- ------
1
Giftrust - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
- -------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -------------------------------------------------------------------------
GIFTRUST(1) 3.48% -13.99% 1.03% 11.30% 11/25/83
- -------------------------------------------------------------------------
RUSSELL MIDCAP
GROWTH INDEX(2) 7.05% -6.15% 9.38% N/A(3) --
- -------------------------------------------------------------------------
(1) Returns would have been lower if management fees had not been waived
from 2/1/04 to 7/31/04.
(2) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. - A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made
by Lipper.
(3) Benchmark began 12/31/85.
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
- ------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
- ------------------------------------------------------------------------------------------------------
Giftrust 40.16% -27.08% 36.76% -21.02% 113.18% -42.37% -14.35% -23.04% 19.73%* 3.48%
- ------------------------------------------------------------------------------------------------------
Russell Midcap
Growth Index 33.79% 3.92% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05%
- ------------------------------------------------------------------------------------------------------
*Returns would have been lower, along with the ending value, if management fees
had not been waived from 2/1/04 to 7/31/04.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Data assumes reinvestment of dividends and capital gains, and none of the charts
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Returns for the index are
provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
2
Giftrust - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE GIFTRUST INVESTMENT TEAM: KURT STALZER AND DAVID ROSE
Giftrust gained 5.50%* in the six months ended April 30, 2005, outperforming the
4.07% return of its benchmark, the Russell Midcap Growth Index.
EQUITIES GAIN AMID CHALLENGES
Stocks rallied during the final stretch of 2004, gaining strength from the
resolution of the presidential election and a temporary decline in oil prices.
However, investor optimism waned in the early months of 2005 as concern grew
about the effects of rising commodity and oil prices and interest rates on the
economy and corporate profit growth. Though volatility prevailed, equities
ultimately booked gains for the period with value stocks generally outpacing
their growth counterparts.
HEALTH CARE LEADS ADVANCE
Giftrust's strongest performance came from investments in the health care
sector, on average one of its largest positions. Health insurer Aetna was the
top contributor, gaining roughly 55% during the period. The managed-care
company's profit rose and it raised its 2005 earnings and membership forecasts
based on higher-than-expected increase in new health-plan members. Medical
device maker C.R. Bard also boosted performance as its shares were buoyed by a
rise in profit.
However, not all was positive in the health care sector. A top detractor to
returns during the period was biopharmaceutical company Elan. Its share price
declined on the unexpected withdrawal of Tysabri following the death of a
patient who was being treated for multiple sclerosis with this drug. The stock
was sold.
Investments in the telecommunication services sector also boosted returns.
Wireless companies exposed to the flourishing Latin American market, such as NII
Holdings, performed well. They received an additional boost from the prospect of
more wireless spectrum being auctioned by Mexico's Federal Telecommunications
Commission.
Giftrust also booked gains from investments in the consumer discretionary
sector. In particular, homebuilding
TOP TEN HOLDINGS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
NII Holdings Inc. 4.7% 4.9%
- --------------------------------------------------------------------------------
National Oilwell,
Varco, Inc. 3.8% 2.9%
- --------------------------------------------------------------------------------
Bard (C.R.), Inc. 3.7% 3.3%
- --------------------------------------------------------------------------------
Aetna Inc. 3.4% 2.3%
- --------------------------------------------------------------------------------
Monsanto Co. 3.3% 0.1%
- --------------------------------------------------------------------------------
Harrah's
Entertainment, Inc. 3.0% 1.5%
- --------------------------------------------------------------------------------
America Movil SA de
CV Series L ADR 2.8% 0.3%
- --------------------------------------------------------------------------------
Transocean Inc. 2.2% 0.8%
- --------------------------------------------------------------------------------
Station Casinos Inc. 2.2% 0.5%
- --------------------------------------------------------------------------------
Rockwell Collins 2.0% --
- --------------------------------------------------------------------------------
*Returns for periods less than one year are not annualized. (continued)
- ------
3
Giftrust - Portfolio Commentary
stocks, such as Toll Brothers, prospered amid robust housing demand.
HIGH COMMODITY COSTS DOUBLE-EDGED SWORD
High oil and commodity prices were a boon to some firms and a bane to others.
Among the beneficiaries was oil-services company National Oilwell Varco, one of
the portfolio's top contributors during the period. On the other hand, high oil
costs as well as the cancellation of a cruise plagued Royal Caribbean Cruises,
the world's No. 2 cruise company.
In a similar vein, Giftrust's investment in steel manufacturer AK Steel Holding
suffered, reflecting uncertainty over steel pricing, demand and China's
production levels.
In the information technology sector, Giftrust was slowed by its investment in
Symantec. The security software maker's shares suffered from the perception that
its acquisition of Veritas Software and competition from Microsoft would slow
Symantec's growth. CACI International was another detractor. Despite the overall
negative performance of technology stocks, the Giftrust team found some pockets
of success. For example, Apple Computer was a leading contributor, driven by
strong demand for its iPod portable music player and Macintosh computers.
OUR COMMITMENT
The Giftrust team remains committed to American Century's growth investment
approach that has been in place for more than thirty years. They will continue
to look for mid-sized and smaller companies with earnings and revenues that are
growing at an accelerating rate.
TOP FIVE INDUSTRIES AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Energy Equipment
& Services 11.1% 12.9%
- --------------------------------------------------------------------------------
Health Care Providers
& Services 10.6% 3.8%
- --------------------------------------------------------------------------------
Hotels, Restaurants
& Leisure 9.3% 9.5%
- --------------------------------------------------------------------------------
Wireless Telecommunication
Services 8.0% 5.8%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 6.4% 5.6%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS*
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 85.4% 81.7%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 0.4% 0.9%
- --------------------------------------------------------------------------------
Collateral Received
for Securities Lending 14.2% 17.4%
- --------------------------------------------------------------------------------
*See the Schedule of Investments for a presentation of the types of investments
in the portfolio based on net assets.
- ------
4
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
FUND HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
- ------
5
Shareholder Fee Example (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO*
- -------------------------------------------------------------------------------------------------
GIFTRUST SHAREHOLDER FEE EXAMPLE
- -------------------------------------------------------------------------------------------------
Actual $1,000 $1,055.00 $5.10 1.00%
- -------------------------------------------------------------------------------------------------
Hypothetical $1,000 $1,019.84 $5.01 1.00%
- -------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
181, the number of days in the most recent fiscal half-year, divided by 365, to
reflect the one-half year period.
- ------
6
Giftrust - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.1%
AEROSPACE & DEFENSE -- 5.0%
- --------------------------------------------------------------------------------
66,000 Aviall Inc.(1) $ 1,931
- --------------------------------------------------------------------------------
253,000 Goodrich Corporation 10,196
- --------------------------------------------------------------------------------
177,000 L-3 Communications
Holdings, Inc.(2) 12,562
- --------------------------------------------------------------------------------
373,000 Rockwell Collins 17,112
- --------------------------------------------------------------------------------
41,801
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS -- 0.3%
- --------------------------------------------------------------------------------
39,000 UTI Worldwide Inc.(2) 2,501
- --------------------------------------------------------------------------------
BEVERAGES -- 1.3%
- --------------------------------------------------------------------------------
203,000 Constellation Brands Inc.(1) 10,700
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 2.6%
- --------------------------------------------------------------------------------
176,919 Affymetrix Inc.(1)(2) 8,158
- --------------------------------------------------------------------------------
99,000 Gilead Sciences, Inc.(1) 3,673
- --------------------------------------------------------------------------------
71,000 Martek Biosciences
Corporation(1)(2) 2,717
- --------------------------------------------------------------------------------
155,000 United Therapeutics Corp.(1)(2) 7,438
- --------------------------------------------------------------------------------
21,986
- --------------------------------------------------------------------------------
CHEMICALS -- 4.6%
- --------------------------------------------------------------------------------
540,685 Huntsman Corp.(1) 11,376
- --------------------------------------------------------------------------------
471,000 Monsanto Co. 27,610
- --------------------------------------------------------------------------------
38,986
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 0.2%
- --------------------------------------------------------------------------------
7,000 City National Corp. 494
- --------------------------------------------------------------------------------
10,000 Silicon Valley Bancshares(1)(2) 474
- --------------------------------------------------------------------------------
7,000 Zions Bancorporation 490
- --------------------------------------------------------------------------------
1,458
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 0.2%
- --------------------------------------------------------------------------------
47,200 Mobile Mini Inc.(1)(2) 1,655
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 2.0%
- --------------------------------------------------------------------------------
138,466 F5 Networks, Inc.(1) 5,928
- --------------------------------------------------------------------------------
292,000 Harris Corp. 8,234
- --------------------------------------------------------------------------------
190,413 Ixia(1)(2) 3,049
- --------------------------------------------------------------------------------
17,211
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 2.8%
- --------------------------------------------------------------------------------
426,642 Apple Computer, Inc.(1) 15,385
- --------------------------------------------------------------------------------
455,000 Seagate Technology 7,999
- --------------------------------------------------------------------------------
23,384
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING -- 4.9%
- --------------------------------------------------------------------------------
483,950 Chicago Bridge & Iron
Company New York Shares 10,831
- --------------------------------------------------------------------------------
990,000 Chiyoda Corporation ORD 11,139
- --------------------------------------------------------------------------------
165,000 Fluor Corp. 8,507
- --------------------------------------------------------------------------------
220,700 Jacobs Engineering
Group Inc.(1) 10,750
- --------------------------------------------------------------------------------
41,227
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 0.5%
- --------------------------------------------------------------------------------
263,000 Providian Financial Corp.(1) $ 4,384
- --------------------------------------------------------------------------------
DIVERSIFIED -- 1.1%
- --------------------------------------------------------------------------------
77,000 Standard and Poor's
500 Depository Receipt(2) 8,917
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 1.0%
- --------------------------------------------------------------------------------
99,000 TXU Corp. 8,493
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 0.9%
- --------------------------------------------------------------------------------
200,000 Ametek Inc. 7,574
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 11.1%
- --------------------------------------------------------------------------------
179,000 ENSCO International Inc. 5,835
- --------------------------------------------------------------------------------
110,017 Hydril Co.(1)(2) 5,787
- --------------------------------------------------------------------------------
63,699 Nabors Industries Ltd.(1) 3,431
- --------------------------------------------------------------------------------
807,796 National Oilwell Varco, Inc.(1) 32,103
- --------------------------------------------------------------------------------
173,000 Noble Corp.(2) 8,806
- --------------------------------------------------------------------------------
246,000 Pride International Inc.(1) 5,486
- --------------------------------------------------------------------------------
68,000 Smith International, Inc. 3,956
- --------------------------------------------------------------------------------
402,000 Transocean Inc.(1) 18,641
- --------------------------------------------------------------------------------
195,000 Weatherford
International Ltd.(1) 10,169
- --------------------------------------------------------------------------------
94,214
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 1.0%
- --------------------------------------------------------------------------------
85,000 CVS Corp. 4,384
- --------------------------------------------------------------------------------
997,358 Wal-Mart de Mexico SA
de CV, Series V ORD 3,701
- --------------------------------------------------------------------------------
8,085
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 0.8%
- --------------------------------------------------------------------------------
214,000 Smithfield Foods Inc.(1) 6,476
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 6.4%
- --------------------------------------------------------------------------------
437,800 Bard (C.R.), Inc. 31,158
- --------------------------------------------------------------------------------
149,754 Immucor, Inc.(1)(2) 4,469
- --------------------------------------------------------------------------------
206,892 Intuitive Surgical Inc.(1) 8,884
- --------------------------------------------------------------------------------
148,000 ResMed Inc.(1)(2) 9,191
- --------------------------------------------------------------------------------
53,702
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 10.6%
- --------------------------------------------------------------------------------
390,622 Aetna Inc. 28,661
- --------------------------------------------------------------------------------
409,000 Caremark Rx Inc.(1) 16,380
- --------------------------------------------------------------------------------
164,000 Community Health
Systems Inc.(1) 5,978
- --------------------------------------------------------------------------------
190,111 Covance Inc.(1) 8,677
- --------------------------------------------------------------------------------
108,872 Coventry Health Care Inc.(1) 7,450
- --------------------------------------------------------------------------------
174,000 Henry Schein, Inc.(1)(2) 6,527
- --------------------------------------------------------------------------------
131,786 SFBC International, Inc.(1)(2) 4,112
- --------------------------------------------------------------------------------
185,000 Triad Hospitals Inc.(1) 9,481
- --------------------------------------------------------------------------------
38,000 Universal Health
Services, Inc. Cl B 2,156
- --------------------------------------------------------------------------------
89,422
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
7
Giftrust - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 9.3%
- --------------------------------------------------------------------------------
160,011 Applebee's International Inc. $ 3,965
- --------------------------------------------------------------------------------
106,000 Gaylord Entertainment Co.(1)(2) 4,240
- --------------------------------------------------------------------------------
380,440 Harrah's Entertainment, Inc.(2) 24,964
- --------------------------------------------------------------------------------
130,849 Panera Bread Co.(1)(2) 6,545
- --------------------------------------------------------------------------------
205,000 Penn National Gaming Inc.(1) 6,458
- --------------------------------------------------------------------------------
46,000 Red Robin Gourmet
Burgers Inc.(1)(2) 2,229
- --------------------------------------------------------------------------------
227,765 Starwood Hotels &
Resorts Worldwide, Inc. 12,377
- --------------------------------------------------------------------------------
284,000 Station Casinos Inc.(2) 18,327
- --------------------------------------------------------------------------------
79,105
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 1.5%
- --------------------------------------------------------------------------------
82,968 Garmin Ltd.(2) 3,277
- --------------------------------------------------------------------------------
91,000 Jarden Corp.(1)(2) 4,065
- --------------------------------------------------------------------------------
292,000 Tempur-Pedic
International Inc.(1)(2) 5,574
- --------------------------------------------------------------------------------
12,916
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 1.3%
- --------------------------------------------------------------------------------
142,000 Textron Inc. 10,700
- --------------------------------------------------------------------------------
INSURANCE -- 1.0%
- --------------------------------------------------------------------------------
85,000 Aflac Inc. 3,455
- --------------------------------------------------------------------------------
137,000 HCC Insurance Holdings, Inc. 4,873
- --------------------------------------------------------------------------------
8,328
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 1.1%
- --------------------------------------------------------------------------------
135,000 VeriSign, Inc.(1) 3,572
- --------------------------------------------------------------------------------
113,402 Websense Inc.(1)(2) 6,016
- --------------------------------------------------------------------------------
9,588
- --------------------------------------------------------------------------------
IT SERVICES -- 2.4%
- --------------------------------------------------------------------------------
100,000 Alliance Data Systems Corp.(1) 4,040
- --------------------------------------------------------------------------------
86,000 Global Payments Inc. 5,569
- --------------------------------------------------------------------------------
583,000 Titan Corp.(1) 10,465
- --------------------------------------------------------------------------------
20,074
- --------------------------------------------------------------------------------
MACHINERY -- 2.4%
- --------------------------------------------------------------------------------
95,355 JLG Industries Inc.(2) 1,943
- --------------------------------------------------------------------------------
264,914 Joy Global Inc. 8,973
- --------------------------------------------------------------------------------
121,962 Oshkosh Truck Corp. 9,165
- --------------------------------------------------------------------------------
20,081
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 2.5%
- --------------------------------------------------------------------------------
67,000 Forest Oil Corporation(1) 2,582
- --------------------------------------------------------------------------------
68,000 Peabody Energy Corp. 2,976
- --------------------------------------------------------------------------------
109,000 Valero Energy Corp. 7,470
- --------------------------------------------------------------------------------
265,164 XTO Energy Inc. 7,999
- --------------------------------------------------------------------------------
21,027
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 0.8%
- --------------------------------------------------------------------------------
91,673 Chattem, Inc.(1)(2) $ 3,772
- --------------------------------------------------------------------------------
1,018,184 Revlon Inc. Cl A(1) 2,993
- --------------------------------------------------------------------------------
6,765
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 3.1%
- --------------------------------------------------------------------------------
242,000 American Pharmaceutical
Partners Inc.(1)(2) 12,613
- --------------------------------------------------------------------------------
180,396 Barr Pharmaceuticals Inc.(1) 9,355
- --------------------------------------------------------------------------------
75,000 Sepracor Inc.(1) 4,494
- --------------------------------------------------------------------------------
26,462
- --------------------------------------------------------------------------------
ROAD & RAIL -- 1.7%
- --------------------------------------------------------------------------------
222,000 Burlington Northern
Santa Fe Corp. 10,711
- --------------------------------------------------------------------------------
98,000 J.B. Hunt Transport
Services, Inc. 3,831
- --------------------------------------------------------------------------------
14,542
- --------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 0.4%
- --------------------------------------------------------------------------------
131,075 Tessera Technologies Inc.(1)(2) 3,481
- --------------------------------------------------------------------------------
SOFTWARE -- 0.5%
- --------------------------------------------------------------------------------
42,086 MicroStrategy Inc.(1)(2) 1,832
- --------------------------------------------------------------------------------
58,000 Quality Systems Inc.(2) 2,760
- --------------------------------------------------------------------------------
4,592
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 5.8%
- --------------------------------------------------------------------------------
231,000 Abercrombie & Fitch Co. 12,462
- --------------------------------------------------------------------------------
41,000 Advance Auto Parts, Inc.(1) 2,187
- --------------------------------------------------------------------------------
404,700 Bebe Stores Inc.(2) 13,081
- --------------------------------------------------------------------------------
216,000 Chico's FAS, Inc.(1)(2) 5,536
- --------------------------------------------------------------------------------
188,000 Foot Locker, Inc. 5,012
- --------------------------------------------------------------------------------
118,000 Men's Wearhouse, Inc.
(The)(1)(2) 4,870
- --------------------------------------------------------------------------------
179,000 Michaels Stores, Inc. 5,943
- --------------------------------------------------------------------------------
49,091
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION
SERVICES -- 8.0%
- --------------------------------------------------------------------------------
376,000 Alamosa Holdings Inc.(1) 4,884
- --------------------------------------------------------------------------------
470,000 America Movil SA
de CV Series L ADR 23,336
- --------------------------------------------------------------------------------
794,744 NII Holdings Inc.(1)(2) 39,793
- --------------------------------------------------------------------------------
68,013
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $749,259) 836,941
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
8
Giftrust - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.4%
Repurchase Agreement, Bank of America
Securities, LLC, (collateralized by various
U.S. Treasury obligations, 4.17% - 8.875%,
2/15/13 - 2/15/19, valued at $3,877),
in a joint trading account at 2.78%,
dated 4/29/05, due 5/2/05
(Delivery value $3,801)
(Cost $3,800) $ 3,800
- --------------------------------------------------------------------------------
($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COLLATERAL RECEIVED
FOR SECURITIES LENDING(3) -- 16.5%
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
Repurchase Agreement, Barclays Bank plc,
(collateralized by various U.S. Government
Agency obligations in a pooled account at
the lending agent), 2.95%, dated 4/29/05,
due 5/2/05 (Delivery value $13,948) $ 13,945
- --------------------------------------------------------------------------------
Repurchase Agreement, UBS AG,
(collateralized by various U.S.
Government Agency obligations in
a pooled account at the lending agent),
3.00%, dated 4/29/05, due 5/2/05
(Deliver value $125,031) 125,000
- --------------------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED
FOR SECURITIES LENDING
(Cost $138,945) 138,945
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 116.0%
(Cost $892,004) 979,686
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (16.0)% (135,431)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $ 844,255
================================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
($ IN THOUSANDS)
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- -------------------------------------------------------------------------------
576,675,000 JPY for USD 5/31/2005 $5,512 $(52)
- -------------------------------------------------------------------------------
9,761,641 MXN for USD 5/31/2005 879 (5)
- -------------------------------------------------------------------------------
$6,391 $(57)
======================================
(Value on Settlement Date $6,334)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the future -
and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
JPY = Japanese Yen
MXN = Mexican Nuevo Peso
ORD = Foreign Ordinary Share
USD = United States Dollar
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of April 30, 2005.
(3) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions. (See Note 4 in
Notes to Financial Statements.)
See Notes to Financial Statements.
- ------
9
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value
(cost of $753,059) --
including $136,134 of
securities on loan $ 840,741
- ----------------------------------------------------------
Investments made with cash
collateral received for securities
on loan, at value (cost of $138,945) 138,945
- --------------------------------------------------------------------------------
Total investment securities,
at value (cost of $892,004) 979,686
- ----------------------------------------------------------
Receivable for investments sold 15,930
- ----------------------------------------------------------
Dividends and interest receivable 121
- --------------------------------------------------------------------------------
995,737
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for collateral received on securities loaned 138,945
- ----------------------------------------------------------
Disbursements in excess of demand deposit cash 690
- ----------------------------------------------------------
Payable for investments purchased 11,059
- ----------------------------------------------------------
Payable for forward foreign currency exchange contracts 57
- ----------------------------------------------------------
Accrued management fees 731
- --------------------------------------------------------------------------------
151,482
- --------------------------------------------------------------------------------
NET ASSETS $ 844,255
================================================================================
CAPITAL SHARES, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Authorized 200,000
================================================================================
Outstanding 57,948
================================================================================
NET ASSET VALUE PER SHARE $ 14.57
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $1,253,411
- ----------------------------------------------------------
Accumulated net investment loss (1,688)
- ----------------------------------------------------------
Accumulated net realized loss on investment
and foreign currency transactions (495,093)
- ----------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and
liabilities in foreign currencies 87,625
- --------------------------------------------------------------------------------
$ 844,255
================================================================================
See Notes to Financial Statements.
- ------
10
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
INVESTMENT LOSS
- --------------------------------------------------------------------------------
INCOME:
- ---------------------------------------------------
Dividends (net of foreign taxes withheld of $19) $ 2,341
- ---------------------------------------------------
Securities lending 476
- ---------------------------------------------------
Interest 70
- --------------------------------------------------------------------------------
2,887
- --------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------
Management fees 4,567
- ---------------------------------------------------
Directors' fees and expenses 6
- ---------------------------------------------------
Other expenses 2
- --------------------------------------------------------------------------------
4,575
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,688)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on investment
and foreign currency transactions 68,974
- ---------------------------------------------------
Change in net unrealized appreciation
on investments and translation of assets
and liabilities in foreign currencies (15,992)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 52,982
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 51,294
================================================================================
See Notes to Financial Statements.
- ------
11
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment loss $ (1,688) $ (769)
- -------------------------------------------
Net realized gain 68,974 42,726
- -------------------------------------------
Change in net unrealized appreciation (15,992) (56,297)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 51,294 (14,340)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Proceeds from shares sold 6,409 13,366
- -------------------------------------------
Payments for shares redeemed (78,159) (30,236)
- --------------------------------------------------------------------------------
Net decrease in net assets
from capital share transactions (71,750) (16,870)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (20,456) (31,210)
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 864,711 895,921
- --------------------------------------------------------------------------------
End of period $844,255 $864,711
================================================================================
Accumulated net investment loss $ (1,688) --
================================================================================
TRANSACTIONS IN SHARES OF THE FUND
- --------------------------------------------------------------------------------
Sold 426 950
- -------------------------------------------
Redeemed (5,089) (2,159)
- --------------------------------------------------------------------------------
Net decrease in shares of the fund (4,663) (1,209)
================================================================================
See Notes to Financial Statements.
- ------
12
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Giftrust Fund (the fund) is one fund in
a series issued by the corporation. The fund is diversified under the 1940 Act.
The fund's investment objective is to seek long-term capital growth. The fund
pursues its objective by investing primarily in equity securities of medium- and
small-sized companies. The following is a summary of the fund's significant
accounting policies.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the fund determines that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending
agent to certain approved borrowers in order to earn additional income. The fund
continues to recognize any gain or loss in the market price of the securities
loaned and records any interest earned or dividends declared.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. For assets and
liabilities, other than investments in securities, net realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose taxes
on the contract amount of purchases and sales of foreign currency contracts in
their currency. The fund records the foreign tax expense, if any, as a reduction
to the net realized gain (loss) on foreign currency transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to hedge the fund's exposure to foreign
currency exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The fund bears the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. The
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable the fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to the
fund under each repurchase agreement.
(continued)
- ------
13
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, the fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
INDEMNIFICATIONS -- Under the corporation's organizational documents, its
officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the fund. In addition, in the normal
course of business, the fund enters into contracts that provide general
indemnifications. The fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the fund.
The risk of material loss from such claims is considered by management to be
remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee (the fee). The
Agreement provides that all expenses of the fund, except brokerage commissions,
taxes, interest, fees and expenses of those directors who are not considered
"interested persons" as defined in the 1940 Act (including counsel fees) and
extraordinary expenses, will be paid by ACIM. The fee is computed and accrued
daily based on the daily net assets of the fund and paid monthly in arrears. The
annual management fee is 1.00%.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
advisor, ACIM, the distributor of the corporation, American Century Investment
Services, Inc., and the corporation's transfer agent, American Century Services,
LLC (formerly American Century Services Corporation).
The fund has a bank line of credit agreement and securities lending agreement
with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly
owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in
ACC.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term investments,
for the six months ended April 30, 2005, were $1,055,874 and $1,133,641,
respectively.
(continued)
- ------
14
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. SECURITIES LENDING
As of April 30, 2005, securities in the fund valued at $136,134, were on loan
through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives
and maintains collateral in the form of cash, and/or acceptable securities as
approved by ACIM. Cash collateral is invested in authorized investments by the
lending agent in a pooled account. The value of cash collateral received at
period end is disclosed in the Statement of Assets and Liabilities and
investments made with the cash by the lending agent are listed in the Schedule
of Investments. Any deficiencies or excess of collateral must be delivered or
transferred by the member firms no later than the close of business on the next
business day. The total value of all collateral received, at this date, was
$138,945. The fund's risks in securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
If the borrower defaults, receipt of the collateral by the fund may be delayed
or limited.
5. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $575 million
unsecured bank line of credit agreement with JPMCB, which was renewed from $650
million effective December 15, 2004. The fund may borrow money for temporary or
emergency purposes to fund shareholder redemptions. Borrowings under the
agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not
borrow from the line during the six months ended April 30, 2005.
6. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $893,157
================================================================================
Gross tax appreciation of investments $104,556
- ---------------------------------------------------------
Gross tax depreciation of investments (18,027)
- --------------------------------------------------------------------------------
Net tax appreciation (depreciation) of investments $ 86,529
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales and the realization for tax purposes of unrealized gains on certain
forward foreign currency contracts.
As of October 31, 2004, the fund had accumulated capital losses of $561,068,
which represents net capital loss carryovers that may be used to offset future
realized capital gains for federal income tax purposes. The capital loss
carryovers expire as follows:
- ------------------------------------------------------
2009 2010 2011
- ------------------------------------------------------
$(416,365) $(138,462) $(6,241)
- ------------------------------------------------------
- ------
15
Giftrust - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ------------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $13.81 $14.04 $11.88 $14.04 $43.71 $26.80
- ------------------------------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------------
Net Investment Loss(2) (0.03) (0.01) (0.07) (0.06) (0.02) (0.32)
- -------------------------------
Net Realized
and Unrealized
Gain (Loss) 0.79 (0.22) 2.23 (2.10) (21.07) 17.23
- ------------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.76 (0.23) 2.16 (2.16) (21.09) 16.91
- ------------------------------------------------------------------------------------------------------
Distributions
- -------------------------------
From Net
Realized Gains -- -- -- -- (8.58) --
- ------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $14.57 $13.81 $14.04 $11.88 $14.04 $43.71
======================================================================================================
TOTAL RETURN(3) 5.50% (1.64)% 18.18% (15.38)% (56.36)% 63.10%
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 1.00%(4) 0.49%(5) 1.00% 1.00% 1.00% 1.00%
- -------------------------------
Ratio of Net
Investment Loss to
Average Net Assets (0.37)%(4) (0.09)%(5) (0.55)% (0.42)% (0.11)% (0.75)%
- -------------------------------
Portfolio Turnover Rate 116% 260% 140% 140% 196% 92%
- -------------------------------
Net Assets,
End of Period
(in millions) $844 $865 $896 $756 $880 $2,086
- ------------------------------------------------------------------------------------------------------
(1) For the six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.
(4) Annualized.
(5) During a portion of the year ended October 31, 2004, the investment advisor
voluntarily agreed to waive its management fee. The waiver was in effect
from February 1, 2004 through July 31, 2004. Had fees not been waived the
annualized ratio of operating expenses to average net assets and annualized
ratio of net investment loss to average net assets would have been 1.00% and
(0.60)%, respectively.
See Notes to Financial Statements.
- ------
16
Additional Information
INDEX DEFINITIONS
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The RUSSELL MIDCAP GROWTH INDEX measures the performance of those Russell Midcap
Index companies (the 800 smallest of the 1,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth values.
The RUSSELL MIDCAP INDEX measures the performance of the 800 smallest of the
1,000 largest publicly traded U.S. companies, based on total market
capitalization.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
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-Q. The fund's Form N-Q is available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of
portfolio holdings for the most recent quarter of its fiscal year available on
its Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
17
Notes
- ------
18
Notes
- ------
19
Notes
- ------
20
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
COMPANIES
The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.
0506
SH-SAN-43965S
American Century Investment Services, Inc., Distributor
(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Select Fund
Capital Growth Fund
Fundamental Equity Fund
New Opportunities II Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SELECT
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 6
CAPITAL GROWTH
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .13
FUNDAMENTAL EQUITY
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .18
NEW OPPORTUNITIES II
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .24
Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . .26
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .29
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .31
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .32
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .34
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .43
OTHER INFORMATION
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .59
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .61
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
The opinions expressed in each of the Portfolio Commentaries reflect those of
the portfolio management team as of the date of the report, and do not
necessarily represent the opinions of American Century or any other person in
the American Century organization. Any such opinions are subject to change at
any time based upon market or other conditions and American Century disclaims
any responsibility to update such opinions. These opinions may not be relied
upon as investment advice and, because investment decisions made by American
Century funds are based on numerous factors, may not be relied upon as an
indication of trading intent on behalf of any American Century fund. Security
examples are used for representational purposes only and are not intended as
recommendations to purchase or sell securities. Performance information for
comparative indices and securities is provided to American Century by third
party vendors. To the best of American Century's knowledge, such information is
accurate at the time of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III
WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Select, Capital
Growth, Fundamental Equity and New Opportunities II funds for the six months
ended April 30, 2005.
This report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers and
other communications about investments, portfolio strategy and the markets.
Your next shareholder report for these funds will be the annual report dated
October 31, 2005, available in about six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
- ------
1
Select - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS -1.08% -6.70% 7.62% 13.74% 6/30/71(1)
- --------------------------------------------------------------------------------
S&P 500 INDEX(2) 6.34% -2.94% 10.26% 11.13% --
- --------------------------------------------------------------------------------
Institutional Class -0.88% -6.50% -- 5.21% 3/13/97
- --------------------------------------------------------------------------------
Advisor Class -1.33% -6.94% -- 2.36% 8/8/97
- --------------------------------------------------------------------------------
A Class 1/31/03
No sales charge* -1.32% -- -- 11.03%(3)
With sales charge* -7.00% -- -- 8.14%(3)
- --------------------------------------------------------------------------------
B Class 1/31/03
No sales charge* -2.04% -- -- 10.20%(3)
With sales charge* -6.04% -- -- 9.01%(3)
- --------------------------------------------------------------------------------
C Class -2.07% -- -- 10.23%(3) 1/31/03
- --------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial
sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B
Class shares redeemed within six years of purchase are subject to a CDSC that
declines from 5.00% during the first year after purchase to 0.00% the sixth year
after purchase. C Class shares redeemed within 12 months of purchase are subject
to a maximum CDSC of 1.00%. Please see the Share Class Information pages for
more about the applicable sales charges for each share class. The SEC requires
that mutual funds provide performance information net of maximum sales charges
in all cases where charges could be applied.
(1) Although the fund's actual inception date was 10/31/58, this inception date
corresponds with the management company's implementation of its current
investment philosophy and practices.
(2) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. -- A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made
by Lipper.
(3) Class returns would have been lower if service and distribution fees had
not been waived from 2/1/03 to 3/11/03, 2/1/03 to 2/11/03, and 2/1/03 to
3/11/03 for the A, B, and C Class shares, respectively.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
- ------
2
Select - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
- ---------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
- ---------------------------------------------------------------------------------------------------
Investor Class 19.89% 20.54% 40.19% 28.41% 13.38% -17.52% -15.63% -14.23% 19.70% -1.08%
- ---------------------------------------------------------------------------------------------------
S&P 500 Index 30.21% 25.13% 41.07% 21.82% 10.13% -12.97% -12.63% -13.31% 22.88% 6.34%
- ---------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
3
Select - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE SELECT INVESTMENT TEAM: JOHN SYKORA AND KEITH LEE.
American Century Select gained 1.37%(1) in the six months ended April 30, 2005,
compared with the 3.28% return of its benchmark, the S&P 500 Index.
Select has returned an average of 13.74% on an annual basis since its inception
June 30, 1971. Although its most recent one-year return was down 1.08% and ranks
in the 77th percentile (981st out of 1,337 portfolios) among its Morningstar
large growth peer group(2), its average five-year return ranks in the top 28% of
that group, or 217th out of 781. In addition, its 10-year return ranks in the
top 48%, or 126th out of 265.
LARGE CAPS OUTPERFORM
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004,
despite record-high oil prices, rising interest rates and a modest increase in
underlying inflation.
Slowing economic growth and rising interest rates as the period progressed also
hampered markets, particularly small-cap stocks. In the last half of the period,
the Dow Jones Industrial Average and the S&P 500, two indices consisting
primarily of large-cap stocks, fell just 2.28% and 1.61%, respectively. But the
Russell 2000 and S&P SmallCap 600 indices, comprising small caps, plunged 6.87%
and 5.39%, respectively.
An overweight stake in health care, combined with solid security selection in
that sector, made the biggest contribution to Select's return during the period.
That helped overcome underweight positions in energy and utilities that
detracted from performance on a relative basis. An overweight stake in consumer
discretionary stocks also crimped returns as consumer spending slowed while
economic concerns mounted.
BIG STAKES, BIG RETURNS
Select's largest individual stock holding, on average, UnitedHealth Group, made
TOP TEN HOLDINGS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Microsoft Corporation 3.6% 3.6%
- --------------------------------------------------------------------------------
UnitedHealth Group
Incorporated 3.5% 4.7%
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 3.3% 0.9%
- --------------------------------------------------------------------------------
American International
Group, Inc. 3.2% 2.9%
- --------------------------------------------------------------------------------
Johnson & Johnson 3.1% 3.2%
- --------------------------------------------------------------------------------
Aramark Corp. Cl B 3.1% 3.0%
- --------------------------------------------------------------------------------
Weight Watchers
International Inc. 2.7% 1.9%
- --------------------------------------------------------------------------------
Teva Pharmaceutical
Industries Ltd. ADR 2.6% 1.5%
- --------------------------------------------------------------------------------
SLM Corporation 2.3% 2.4%
- --------------------------------------------------------------------------------
Amgen Inc. 2.3% 1.5%
- --------------------------------------------------------------------------------
(1) All fund returns referenced in this commentary are for Investor Class
shares. Returns for periods less than one year are not annualized.
(2) (c) 2005 Morningstar, Inc. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use
of this information. (continued)
- ------
4
Select - Portfolio Commentary
its mark as the portfolio's biggest individual contributor in the period on both
a relative and absolute basis. Leading Select's overweight position among
health-care providers, UnitedHealth's stock surged 31% in the period as its
fourth quarter 2004 and first quarter 2005 earnings rose 34% and 41%,
respectively.
Stakes in pharmaceutical stocks, composing Select's biggest average industry
weighting in the period, also boosted the portfolio's performance. Select's
positioning in the industry overcame problems facing U.S. drug giants Pfizer and
Merck and the threat to domestic drug firms posed by Congress' potential
approval of wide-scale drug reimportation. Teva Pharmaceuticals, a maker of
generic drugs; Altana AG, a Germany-based producer of gastrointestinal and
respiratory drugs; and U.S. behemoth Johnson & Johnson all ranked among Select's
top five performing stocks in the period.
On a relative basis, the portfolio also benefited from an underweight in
telecommunications services and by avoiding several information technology
stocks that suffered amid the softening demand in that sector.
AVOIDING ENERGY, UTILITIES
Given Select's underweight positions in energy and utilities, those surging
sectors hurt the portfolio's relative performance in the period. An underweight
stake in Exxon Mobil, whose shares rallied in the period as rising oil prices
boosted its profit, made that company's stock our second-leading individual
detractor.
An overweight position in consumer discretionary stocks also trimmed the
portfolio's return as consumer spending slowed after the first of the year.
Select's stake in eBay led the weak performance in this sector. The company's
shares fell 35% during the six-month stretch as investors grew worried about
intensifying competition and slower growth rates for the online marketplace.
Select's worst performing stock in the period, American International Group
(AIG), suffered amid an accounting investigation that led to the ouster of its
chief executive and chief financial officers.
OUR COMMITMENT
We continue seeking great companies with attractive risk/reward characteristics
that appear capable of sustaining long-term growth in earnings, revenue and/or
cash flow. We believe this strategy offers our investors the best potential for
long-term investment rewards.
TOP FIVE INDUSTRIES AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Pharmaceuticals 11.2% 11.0%
- --------------------------------------------------------------------------------
Insurance 7.3% 6.9%
- --------------------------------------------------------------------------------
Commercial Services
& Supplies 6.8% 5.7%
- --------------------------------------------------------------------------------
Software 5.9% 5.4%
- --------------------------------------------------------------------------------
Specialty Retail 5.6% 4.2%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO*
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 90.7% 95.8%
- --------------------------------------------------------------------------------
Temporary
Cash Investments 2.0% 2.9%
- --------------------------------------------------------------------------------
Collateral Received
for Securities Lending 7.3% 1.3%
- --------------------------------------------------------------------------------
*See the Schedule of Investments for a presentation of the types of investments
in the portfolio based on net assets.
- ------
5
Select - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 97.6%
AIR FREIGHT & LOGISTICS -- 0.4%
- --------------------------------------------------------------------------------
190,000 United Parcel
Service, Inc. Cl B $ 13,548,900
- --------------------------------------------------------------------------------
AUTO COMPONENTS -- 0.7%
- --------------------------------------------------------------------------------
540,000 Autoliv, Inc. 23,895,000
- --------------------------------------------------------------------------------
AUTOMOBILES -- 1.3%
- --------------------------------------------------------------------------------
1,014,000 Harley-Davidson, Inc. 47,678,280
- --------------------------------------------------------------------------------
BEVERAGES -- 4.1%
- --------------------------------------------------------------------------------
730,000 Anheuser-Busch
Companies, Inc. 34,215,100
- --------------------------------------------------------------------------------
965,000 Coca-Cola Company (The) 41,919,600
- --------------------------------------------------------------------------------
560,000 Diageo plc ORD 8,262,667
- --------------------------------------------------------------------------------
1,152,300 PepsiCo, Inc. 64,113,972
- --------------------------------------------------------------------------------
148,511,339
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 3.0%
- --------------------------------------------------------------------------------
1,426,200 Amgen Inc.(1) 83,019,102
- --------------------------------------------------------------------------------
500,000 Gilead Sciences, Inc.(1) 18,550,000
- --------------------------------------------------------------------------------
175,000 Neurocrine
Biosciences Inc.(1)(2) 6,118,000
- --------------------------------------------------------------------------------
107,687,102
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 1.2%
- --------------------------------------------------------------------------------
909,370 Bank of New York
Co., Inc. (The) 25,407,798
- --------------------------------------------------------------------------------
320,000 Morgan Stanley 16,838,400
- --------------------------------------------------------------------------------
42,246,198
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES
& SUPPLIES -- 6.8%
- --------------------------------------------------------------------------------
910,000 Apollo Group Inc. Cl A(1) 65,629,200
- --------------------------------------------------------------------------------
4,552,379 Aramark Corp. Cl B(2) 111,578,809
- --------------------------------------------------------------------------------
1,407,000 Cintas Corp. 54,296,130
- --------------------------------------------------------------------------------
639,800 Waste Management, Inc. 18,227,902
- --------------------------------------------------------------------------------
249,732,041
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 2.9%
- --------------------------------------------------------------------------------
4,240,000 Cisco Systems Inc.(1) 73,267,200
- --------------------------------------------------------------------------------
945,000 QUALCOMM Inc. 32,971,050
- --------------------------------------------------------------------------------
106,238,250
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 1.6%
- --------------------------------------------------------------------------------
1,725,100 Dell Inc.(1) 60,085,233
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 2.3%
- --------------------------------------------------------------------------------
1,755,000 SLM Corporation 83,608,200
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL
SERVICES -- 2.1%
- --------------------------------------------------------------------------------
1,608,966 Citigroup Inc. 75,557,043
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT
& SERVICES -- 0.2%
- --------------------------------------------------------------------------------
180,000 BJ Services Co. 8,775,000
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 3.3%
- --------------------------------------------------------------------------------
2,570,000 Wal-Mart Stores, Inc. $ 121,149,800
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.6%
- --------------------------------------------------------------------------------
221,564 Nestle SA ORD 57,962,750
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 3.2%
- --------------------------------------------------------------------------------
270,000 Boston Scientific Corp.(1) 7,986,600
- --------------------------------------------------------------------------------
1,455,100 Medtronic, Inc. 76,683,770
- --------------------------------------------------------------------------------
135,000 Stryker Corp. 6,554,250
- --------------------------------------------------------------------------------
395,000 Varian Medical Systems, Inc.(1) 13,327,300
- --------------------------------------------------------------------------------
160,000 Zimmer Holdings Inc.(1) 13,027,200
- --------------------------------------------------------------------------------
117,579,120
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS
& SERVICES -- 3.5%
- --------------------------------------------------------------------------------
1,360,000 UnitedHealth Group
Incorporated 128,533,600
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 4.3%
- --------------------------------------------------------------------------------
1,145,000 Carnival Corporation 55,967,600
- --------------------------------------------------------------------------------
1,150,888 Four Seasons Hotels Inc.(2) 73,046,861
- --------------------------------------------------------------------------------
1,035,000 International Game
Technology 27,831,150
- --------------------------------------------------------------------------------
156,845,611
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 3.4%
- --------------------------------------------------------------------------------
465,000 Koninklijke Royal Philips
Electronics N.V.
New York Shares 11,527,350
- --------------------------------------------------------------------------------
1,350,000 Koninklijke Royal Philips
Electronics N.V. ORD 33,196,813
- --------------------------------------------------------------------------------
2,863,690 Yankee Candle
Company Inc.(1)(2)(3) 79,581,945
- --------------------------------------------------------------------------------
124,306,108
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.9%
- --------------------------------------------------------------------------------
185,000 Colgate-Palmolive Co. 9,211,150
- --------------------------------------------------------------------------------
1,088,600 Procter & Gamble Co. (The) 58,947,690
- --------------------------------------------------------------------------------
68,158,840
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 0.9%
- --------------------------------------------------------------------------------
875,700 General Electric Co. 31,700,340
- --------------------------------------------------------------------------------
INSURANCE -- 7.3%
- --------------------------------------------------------------------------------
2,279,625 American International
Group, Inc. 115,918,932
- --------------------------------------------------------------------------------
1,214,272 Axis Capital Holdings
Limited 32,299,635
- --------------------------------------------------------------------------------
687 Berkshire Hathaway
Inc. Cl A(1) 57,948,450
- --------------------------------------------------------------------------------
20,329 Berkshire Hathaway
Inc. Cl B(1) 56,880,745
- --------------------------------------------------------------------------------
182,000 Marsh & McLennan
Companies, Inc. 5,101,460
- --------------------------------------------------------------------------------
268,149,222
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
6
Select - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 3.8%
- --------------------------------------------------------------------------------
65,000 Amazon.com, Inc.(1) $ 2,103,400
- --------------------------------------------------------------------------------
1,940,000 eBay Inc.(1) 61,556,200
- --------------------------------------------------------------------------------
3,523,961 IAC/InterActiveCorp(1)(2) 76,610,912
- --------------------------------------------------------------------------------
140,270,512
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 0.5%
- --------------------------------------------------------------------------------
40,000 Google Inc. Cl A(1) 8,800,000
- --------------------------------------------------------------------------------
300,000 Yahoo! Inc.(1) 10,353,000
- --------------------------------------------------------------------------------
19,153,000
- --------------------------------------------------------------------------------
IT SERVICES -- 3.8%
- --------------------------------------------------------------------------------
1,720,000 First Data Corp. 65,411,600
- --------------------------------------------------------------------------------
500,000 Iron Mountain
Incorporated(1)(2) 14,850,000
- --------------------------------------------------------------------------------
1,930,000 Paychex, Inc. 59,058,000
- --------------------------------------------------------------------------------
139,319,600
- --------------------------------------------------------------------------------
MEDIA -- 0.9%
- --------------------------------------------------------------------------------
415,000 Univision Communications
Inc. Cl A(1)(2) 10,910,350
- --------------------------------------------------------------------------------
610,000 Viacom, Inc. Cl B 21,118,200
- --------------------------------------------------------------------------------
32,028,550
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 0.8%
- --------------------------------------------------------------------------------
201,380 Apache Corp. 11,335,680
- --------------------------------------------------------------------------------
75,000 BP plc ADR 4,567,500
- --------------------------------------------------------------------------------
225,000 Exxon Mobil Corp. 12,831,750
- --------------------------------------------------------------------------------
28,734,930
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 3.1%
- --------------------------------------------------------------------------------
900,000 Avon Products, Inc. 36,072,000
- --------------------------------------------------------------------------------
1,247,000 Estee Lauder
Companies, Inc. Cl A 47,897,270
- --------------------------------------------------------------------------------
535,000 Gillette Company 27,627,400
- --------------------------------------------------------------------------------
111,596,670
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 11.2%
- --------------------------------------------------------------------------------
800,000 Altana AG ORD 49,890,391
- --------------------------------------------------------------------------------
743,400 Eli Lilly and Company 43,466,598
- --------------------------------------------------------------------------------
1,008,000 Forest Laboratories, Inc. Cl A(1) 35,965,440
- --------------------------------------------------------------------------------
1,632,400 Johnson & Johnson 112,031,612
- --------------------------------------------------------------------------------
678,631 Novartis AG ORD 32,841,101
- --------------------------------------------------------------------------------
1,565,275 Pfizer, Inc. 42,528,522
- --------------------------------------------------------------------------------
3,065,000 Teva Pharmaceutical
Industries Ltd. ADR 95,750,600
- --------------------------------------------------------------------------------
412,474,264
- --------------------------------------------------------------------------------
Shares/Principal Amount Value
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 3.8%
- --------------------------------------------------------------------------------
465,000 Analog Devices, Inc. $ 15,861,150
- --------------------------------------------------------------------------------
2,730,000 Applied Materials, Inc.(1) 40,595,100
- --------------------------------------------------------------------------------
1,430,000 Integrated Circuit
Systems, Inc.(1) 26,126,100
- --------------------------------------------------------------------------------
1,870,000 Intel Corp. 43,982,400
- --------------------------------------------------------------------------------
370,000 Linear Technology Corp. 13,223,800
- --------------------------------------------------------------------------------
139,788,550
- --------------------------------------------------------------------------------
SOFTWARE -- 5.9%
- --------------------------------------------------------------------------------
485,000 Electronic Arts Inc.(1) 25,894,150
- --------------------------------------------------------------------------------
865,000 Intuit Inc.(1) 34,859,500
- --------------------------------------------------------------------------------
5,222,800 Microsoft Corporation 132,136,840
- --------------------------------------------------------------------------------
1,115,000 Oracle Corp.(1) 12,889,400
- --------------------------------------------------------------------------------
490,000 Symantec Corp.(1) 9,202,200
- --------------------------------------------------------------------------------
214,982,090
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 5.6%
- --------------------------------------------------------------------------------
1,345,000 Cabela's Inc.(1)(2) 26,805,850
- --------------------------------------------------------------------------------
1,340,100 Home Depot, Inc. 47,399,337
- --------------------------------------------------------------------------------
590,200 Lowe's Companies, Inc. 30,755,322
- --------------------------------------------------------------------------------
2,340,000 Weight Watchers
International, Inc.(1)(2) 97,695,000
- --------------------------------------------------------------------------------
202,655,509
- --------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE -- 1.3%
- --------------------------------------------------------------------------------
2,218,000 China Merchants Holdings
International Co. Ltd. ORD 4,325,140
- --------------------------------------------------------------------------------
32,730,000 Hopewell Highway
Infrastructure Ltd. ORD 22,884,295
- --------------------------------------------------------------------------------
27,378,000 Zhejiang Expressway
Co. Ltd. ORD 18,966,645
- --------------------------------------------------------------------------------
46,176,080
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.9%
- --------------------------------------------------------------------------------
1,145,000 Nextel Communications, Inc.(1) 32,048,550
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $3,121,779,913) 3,561,176,282
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 2.2%
$79,200,000 FNMA Discount Notes,
2.85%, 5/2/05(4)
(Cost $79,193,730) 79,200,000
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
7
Select - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Value
- --------------------------------------------------------------------------------
COLLATERAL RECEIVED
FOR SECURITIES LENDING(5) -- 7.8%
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
Repurchase Agreement, Barclays Bank plc,
(collateralized by various U.S. Government
Agency obligations in a pooled account at
the lending agent), 2.95%, dated 4/29/05,
due 5/2/05 (Delivery value $59,974,530) $ 59,959,790
- --------------------------------------------------------------------------------
Repurchase Agreement, UBS AG,
(collateralized by various U.S. Government
Agency obligations in a pooled account at
the lending agent), 3.00%, dated 4/29/05,
due 5/2/05 (Delivery value $225,056,250) 225,000,000
- --------------------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED
FOR SECURITIES LENDING
(Cost $284,959,790) 284,959,790
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 107.6%
(Cost $3,485,933,433) $3,925,336,072
- --------------------------------------------------------------------------------
OTHER ASSETS
AND LIABILITIES -- (7.6)% (276,692,069)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $3,648,644,003
================================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
Unrealized
Contracts to Sell Settlement Date Value Gain (Loss)
- --------------------------------------------------------------------------------
29,192,868 Euro for USD 5/31/05 $ 37,573,797 $ 279,712
- --------------------------------------------------------------------------------
21,095,506 Euro for USD 5/31/05 27,151,778 224,605
- --------------------------------------------------------------------------------
14,257,648 Euro for USD 5/31/05 18,350,851 152,341
- --------------------------------------------------------------------------------
2,021,403 GBP for USD 5/31/05 3,847,807 3,370
- --------------------------------------------------------------------------------
2,318,596 GBP for USD 5/31/05 4,413,525 5,767
- --------------------------------------------------------------------------------
107,683,197 CHF for USD 5/31/05 90,171,064 708,000
- --------------------------------------------------------------------------------
$181,508,822 $1,373,795
=================================
(Value on Settlement Date $182,882,617)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the future --
and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
CHF = Swiss Franc
FNMA = Federal National Mortgage Association
GBP = British Pound
ORD = Foreign Ordinary Share
USD = United States Dollar
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of April 30, 2005.
(3) Affiliated Company: the fund's holding represents ownership of 5% or more
of the voting securities of the company; therefore, the company is
affiliated as defined in the Investment Company Act of 1940. (See Note 5
in Notes to Financial Statements.)
(4) The rate indicated is the yield to maturity at purchase.
(5) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions. (See Note 6 in
Notes to Financial Statements.)
See Notes to Financial Statements.
- ------
8
Capital Growth - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
----------------
AVERAGE ANNUAL
RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR INCEPTION DATE
- --------------------------------------------------------------------------------
A CLASS 2/27/04
No sales charge* 4.49% 0.09%
With sales charge* -1.48% -4.85%
- --------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX(1) 0.40% -2.61% --
- --------------------------------------------------------------------------------
B Class 2/27/04
No sales charge* 3.66% -0.68%
With sales charge* -0.34% -4.12%
- --------------------------------------------------------------------------------
C Class 3.66% -0.68% 2/27/04
- --------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial
sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B
Class shares redeemed within six years of purchase are subject to a CDSC that
declines from 5.00% during the first year after purchase to 0.00% the sixth year
after purchase. C Class shares redeemed within 12 months of purchase are subject
to a maximum CDSC of 1.00%. Please see the Share Class Information pages for
more about the applicable sales charges for each share class. The SEC requires
that mutual funds provide performance information net of maximum sales charges
in all cases where charges could be applied.
(1) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. -- A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made
by Lipper.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects A Class shares; performance for
other share classes will vary due to differences in fee structure. For
information about other share classes available, please consult the prospectus.
Data assumes reinvestment of dividends and capital gains, and none of the charts
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Returns for the index are
provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
- ------
9
Capital Growth - Performance
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made February 27, 2004
*From 2/27/04, the A Class's inception date. Not annualized. Capital Growth A
Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales
charge.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects A Class shares; performance for
other share classes will vary due to differences in fee structure. For
information about other share classes available, please consult the prospectus.
Data assumes reinvestment of dividends and capital gains, and none of the charts
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Returns for the index are
provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
10
Capital Growth - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE CAPITAL GROWTH INVESTMENT TEAM: PRESCOTT LEGARD AND
GREG WOODHAMS.
Capital Growth gained 1.21%* during the six months ended April 30, 2005,
outperforming the 1.14% rise of its benchmark, the Russell 1000 Growth Index.
EQUITIES GAIN AMID CHALLENGES
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004
despite record-high oil prices, rising interest rates and a modest increase of
underlying inflation. Stocks were able to post positive returns for the six
months ended April 30, 2005, but most of those gains came in the last two months
of 2004. Over the past six months, the value style of investing continued to
outperform growth, and midsize companies performed better than large companies.
The best performing sectors of the Russell 1000 Growth Index over this time
period were: utilities, energy and healthcare. Financials, consumer
discretionary and materials were underperformers.
STOCK SELECTION KEYS RESULTS
Capital Growth's performance was lifted by favorable stock selection in the
materials, financials, industrials and consumer staples sectors. The biggest
lift came from stock selection in the materials sector in which the portfolio's
holdings in aggregate gained roughly 38%. Monsanto was a top contributor as the
agricultural biotechnology company experienced increased corn seed sales and
higher revenues for Roundup(reg.tm) and other herbicides.
The industrials sector also generated solid returns in the portfolio.
Investments in industrial conglomerates boosted results as did holdings in the
aerospace and defense industry. Aviation electronics manufacturer Rockwell
Collins was a top contributor. The maker of avionics, cockpit radios and
navigation systems said its earnings soared, and the company raised its 2005
earnings and revenue guidance based on steady military sales and the recovery of
the commercial-air industry.
TOP TEN HOLDINGS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Johnson & Johnson 5.1% 2.9%
- --------------------------------------------------------------------------------
General Electric Co. 4.3% 3.3%
- --------------------------------------------------------------------------------
Microsoft Corporation 3.8% 3.5%
- --------------------------------------------------------------------------------
Procter & Gamble
Co. (The) 3.3% 3.3%
- --------------------------------------------------------------------------------
PepsiCo, Inc. 2.9% 2.4%
- --------------------------------------------------------------------------------
Intel Corp. 2.8% 3.1%
- --------------------------------------------------------------------------------
Cisco Systems Inc. 2.4% 3.2%
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2.3% 2.0%
- --------------------------------------------------------------------------------
EMC Corp. 2.1% 1.1%
- --------------------------------------------------------------------------------
Bard (C.R.), Inc. 2.0% 1.6%
- --------------------------------------------------------------------------------
*All portfolio returns referenced in this review are for Class A shares and are
not reduced by sales charges. Class A shares are subject to a maximum sales
charge of 5.75%. Had the sales charge been applied, returns would be lower than
those shown. Returns for periods less than one year are not annualized.
(continued)
- ------
11
Capital Growth - Portfolio Commentary
Stock selection in the financials sector, particularly in the thrifts/mortgage
finance industry, was additive to performance as compared to the benchmark.
Moreover, brokerage firms in the capital markets industry benefited from renewed
merger, trading and new issuance activity.
The consumer staples sector was another area of solid performance in the
portfolio. CVS Corp.'s earnings rose as the drug-store chain experienced strong
sales, driven in part by its acquisition last year of Eckerd. Consumer products
maker Gillette was another standout, benefiting from its pending acquisition by
Procter & Gamble.
MIXED RESULTS
The portfolio's health care stake produced mixed results. Investments in
manufacturers of health care equipment and supplies companies, such as C.R.
Bard, advanced. However, an underweight position in health care services and
stock selection in the biotechnology industries hindered performance compared to
the benchmark. One of the top detractors to returns was biopharmaceutical
company Biogen Idec. Its share price declined on the unexpected withdrawal of
the new drug Tysabri following the death of a patient who was being treated for
multiple sclerosis. The stock was removed from the portfolio.
In the consumer discretionary sector, Capital Growth was slowed by media
companies. The portfolio's shares of Univision, a leading Spanish-language media
company in the U.S., declined after the company lowered its guidance for fourth
quarter results. Capital Growth's information technology stake was another area
of weakness. Teradyne was the chief detractor after the semiconductor testing
equipment company posted a net loss as quarterly sales fell below expectations.
The stock was sold.
OUR COMMITMENT
Portfolio manager Tim Reynolds left American Century Investments in February to
pursue another career opportunity. Greg Woodhams, a Growth manager since 1997,
and Prescott LeGard, a member of the team since 1999, remain at the portfolio's
helm.
The Capital Growth management team remains committed to its investment
strategy of identifying larger-sized companies best able to sustain business
improvement.
TOP FIVE INDUSTRIES AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Pharmaceuticals 10.5% 9.3%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 8.1% 9.1%
- --------------------------------------------------------------------------------
Semiconductors &
Semiconductor
Equipment 7.8% 7.1%
- --------------------------------------------------------------------------------
Industrial Conglomerates 6.3% 5.2%
- --------------------------------------------------------------------------------
Communications
Equipment 4.8% 5.9%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 100.0% 100.0%
- --------------------------------------------------------------------------------
- ------
12
Capital Growth - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.4%
AEROSPACE & DEFENSE -- 2.8%
- --------------------------------------------------------------------------------
675 Rockwell Collins $ 30,969
- --------------------------------------------------------------------------------
258 United Technologies Corp. 26,244
- --------------------------------------------------------------------------------
57,213
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS -- 0.9%
- --------------------------------------------------------------------------------
267 United Parcel Service, Inc. Cl B 19,040
- --------------------------------------------------------------------------------
BEVERAGES -- 3.5%
- --------------------------------------------------------------------------------
293 Coca-Cola Company (The) 12,728
- --------------------------------------------------------------------------------
1,074 PepsiCo, Inc. 59,757
- --------------------------------------------------------------------------------
72,485
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 2.9%
- --------------------------------------------------------------------------------
428 Amgen Inc.(1) 24,913
- --------------------------------------------------------------------------------
480 Celgene Corp.(1) 18,197
- --------------------------------------------------------------------------------
225 Invitrogen Corp.(1) 16,486
- --------------------------------------------------------------------------------
59,596
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 2.8%
- --------------------------------------------------------------------------------
248 Goldman Sachs Group, Inc. (The) 26,484
- --------------------------------------------------------------------------------
715 Northern Trust Corp. 32,196
- --------------------------------------------------------------------------------
58,680
- --------------------------------------------------------------------------------
CHEMICALS -- 1.7%
- --------------------------------------------------------------------------------
580 Monsanto Co. 34,000
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 0.5%
- --------------------------------------------------------------------------------
406 Monster Worldwide Inc.(1) 9,342
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 4.8%
- --------------------------------------------------------------------------------
730 Avaya Inc.(1) 6,336
- --------------------------------------------------------------------------------
2,881 Cisco Systems Inc.(1) 49,783
- --------------------------------------------------------------------------------
419 Juniper Networks, Inc.(1) 9,465
- --------------------------------------------------------------------------------
295 QUALCOMM Inc. 10,293
- --------------------------------------------------------------------------------
758 Scientific-Atlanta, Inc. 23,180
- --------------------------------------------------------------------------------
99,057
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 4.4%
- --------------------------------------------------------------------------------
338 Apple Computer, Inc.(1) 12,188
- --------------------------------------------------------------------------------
975 Dell Inc.(1) 33,959
- --------------------------------------------------------------------------------
3,338 EMC Corp.(1) 43,795
- --------------------------------------------------------------------------------
89,942
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 1.9%
- --------------------------------------------------------------------------------
752 American Express Co. 39,630
- --------------------------------------------------------------------------------
DIVERSIFIED -- 1.1%
- --------------------------------------------------------------------------------
481 iShares Russell 1000
Growth Index Fund 22,140
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 0.5%
- --------------------------------------------------------------------------------
299 J.P. Morgan Chase & Co. 10,612
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 4.2%
- --------------------------------------------------------------------------------
745 CVS Corp. $ 38,427
- --------------------------------------------------------------------------------
1,013 Wal-Mart Stores, Inc. 47,753
- --------------------------------------------------------------------------------
86,180
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.0%
- --------------------------------------------------------------------------------
253 Delta and Pine Land Company 6,376
- --------------------------------------------------------------------------------
394 McCormick & Company, Inc. 13,628
- --------------------------------------------------------------------------------
20,004
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 8.1%
- --------------------------------------------------------------------------------
591 Bard (C.R.), Inc. 42,062
- --------------------------------------------------------------------------------
539 Becton Dickinson & Co. 31,542
- --------------------------------------------------------------------------------
218 Cooper Companies, Inc. (The) 14,726
- --------------------------------------------------------------------------------
377 Edwards Lifesciences Corporation(1) 16,603
- --------------------------------------------------------------------------------
166 Guidant Corp. 12,297
- --------------------------------------------------------------------------------
769 Hospira Inc.(1) 25,800
- --------------------------------------------------------------------------------
463 Medtronic, Inc. 24,400
- --------------------------------------------------------------------------------
167,430
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS
& SERVICES -- 1.8%
- --------------------------------------------------------------------------------
439 Covance Inc.(1) 20,035
- --------------------------------------------------------------------------------
318 Triad Hospitals Inc.(1) 16,298
- --------------------------------------------------------------------------------
36,333
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS
& LEISURE -- 0.9%
- --------------------------------------------------------------------------------
387 Carnival Corporation 18,917
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 4.2%
- --------------------------------------------------------------------------------
310 Kimberly-Clark Corp. 19,360
- --------------------------------------------------------------------------------
1,242 Procter & Gamble Co. (The) 67,254
- --------------------------------------------------------------------------------
86,614
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 6.3%
- --------------------------------------------------------------------------------
119 3M Co. 9,100
- --------------------------------------------------------------------------------
2,429 General Electric Co. 87,930
- --------------------------------------------------------------------------------
435 Textron Inc. 32,777
- --------------------------------------------------------------------------------
129,807
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 0.6%
- --------------------------------------------------------------------------------
390 eBay Inc.(1) 12,375
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 3.8%
- --------------------------------------------------------------------------------
118 Google Inc. Cl A(1) 25,960
- --------------------------------------------------------------------------------
445 VeriSign, Inc.(1) 11,775
- --------------------------------------------------------------------------------
1,181 Yahoo! Inc.(1) 40,756
- --------------------------------------------------------------------------------
78,491
- --------------------------------------------------------------------------------
IT SERVICES -- 1.1%
- --------------------------------------------------------------------------------
756 Paychex, Inc. 23,134
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
13
Capital Growth - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
MEDIA -- 3.3%
- --------------------------------------------------------------------------------
635 Disney (Walt) Co. $ 16,764
- --------------------------------------------------------------------------------
192 Getty Images Inc.(1) 13,738
- --------------------------------------------------------------------------------
1,471 News Corp. 22,476
- --------------------------------------------------------------------------------
582 Univision
Communications Inc. Cl A(1) 15,301
- --------------------------------------------------------------------------------
68,279
- --------------------------------------------------------------------------------
MULTILINE RETAIL -- 2.8%
- --------------------------------------------------------------------------------
1,064 Dollar General Corp. 21,653
- --------------------------------------------------------------------------------
414 Kohl's Corp.(1) 19,706
- --------------------------------------------------------------------------------
353 Target Corporation 16,379
- --------------------------------------------------------------------------------
57,738
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 1.8%
- --------------------------------------------------------------------------------
651 Apache Corp. 36,645
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 2.5%
- --------------------------------------------------------------------------------
281 Alberto-Culver Company Cl B 12,505
- --------------------------------------------------------------------------------
763 Gillette Company 39,401
- --------------------------------------------------------------------------------
51,906
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 10.5%
- --------------------------------------------------------------------------------
336 Eli Lilly and Company 19,646
- --------------------------------------------------------------------------------
1,518 Johnson & Johnson 104,181
- --------------------------------------------------------------------------------
553 Novartis AG ORD 26,761
- --------------------------------------------------------------------------------
278 Novo Nordisk A/S Cl B ORD 13,997
- --------------------------------------------------------------------------------
843 Pfizer, Inc. 22,904
- --------------------------------------------------------------------------------
235 Roche Holding AG ORD 28,205
- --------------------------------------------------------------------------------
215,694
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 7.8%
- --------------------------------------------------------------------------------
377 Altera Corp.(1) $ 7,815
- --------------------------------------------------------------------------------
1,731 Applied Materials, Inc.(1) 25,740
- --------------------------------------------------------------------------------
810 Broadcom Corp.(1) 24,227
- --------------------------------------------------------------------------------
2,467 Intel Corp. 58,024
- --------------------------------------------------------------------------------
676 Linear Technology Corp. 24,160
- --------------------------------------------------------------------------------
1,121 National Semiconductor Corp. 21,389
- --------------------------------------------------------------------------------
161,355
- --------------------------------------------------------------------------------
SOFTWARE -- 4.3%
- --------------------------------------------------------------------------------
101 Electronic Arts Inc.(1) 5,392
- --------------------------------------------------------------------------------
3,086 Microsoft Corporation 78,076
- --------------------------------------------------------------------------------
420 Oracle Corp.(1) 4,855
- --------------------------------------------------------------------------------
88,323
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 3.5%
- --------------------------------------------------------------------------------
583 AnnTaylor Stores Corporation(1) 14,278
- --------------------------------------------------------------------------------
662 Home Depot, Inc. 23,415
- --------------------------------------------------------------------------------
296 Ross Stores, Inc. 7,909
- --------------------------------------------------------------------------------
635 Weight Watchers
International, Inc.(1) 26,511
- --------------------------------------------------------------------------------
72,113
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.8%
- --------------------------------------------------------------------------------
217 NIKE, Inc. Cl B 16,668
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 1.3%
- --------------------------------------------------------------------------------
464 MGIC Investment Corp. 27,397
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 98.4%
(Cost $1,969,271) 2,027,140
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.6% 33,622
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $2,060,762
================================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
31,706 CHF for USD 5/31/05 $26,550 $207
- --------------------------------------------------------------------------------
41,909 DKK for USD 5/31/05 7,244 64
- --------------------------------------------------------------------------------
$33,794 $271
======================================
(Value on Settlement Date $34,065)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the
future -- and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
CHF = Swiss Franc
DKK = Danish Krone
ORD = Foreign Ordinary Share
USD = United States Dollar
(1) Non-income producing.
See Notes to Financial Statements.
- ------
14
Fundamental Equity - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION(2) DATE
- --------------------------------------------------------------------------------
A CLASS 11/30/04
No sales charge* -0.20%
With sales charge* -5.94%
- --------------------------------------------------------------------------------
S&P 500 INDEX(1) -0.74% --
- --------------------------------------------------------------------------------
B Class 11/30/04
No sales charge* -0.50%
With sales charge* -5.50%
- --------------------------------------------------------------------------------
C Class 11/30/04
No sales charge* -0.50%
With sales charge* -1.50%
- --------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial
sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B
Class shares redeemed within six years of purchase are subject to a CDSC that
declines from 5.00% during the first year after purchase to 0.00% the sixth year
after purchase. C Class shares redeemed within 12 months of purchase are subject
to a maximum CDSC of 1.00%. Please see the Share Class Information pages for
more about the applicable sales charges for each share class. The SEC requires
that mutual funds provide performance information net of maximum sales charges
in all cases where charges could be applied.
(1) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. -- A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made
by Lipper.
(2) Returns for periods less than one year are not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects A Class shares; performance for
other share classes will vary due to differences in fee structure. For
information about other share classes available, please consult the prospectus.
Data assumes reinvestment of dividends and capital gains, and none of the charts
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Returns for the index are
provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
15
Fundamental Equity - Portfolio Commentary
[photo of investment team]
PORTFOLIO MANAGERS ON THE FUNDAMENTAL EQUITY INVESTMENT TEAM: ROBERT BROOKBY AND
JERRY SULLIVAN.
American Century launched Fundamental Equity on November 30, 2004. During the
five-month period from inception through April 30, 2005, the portfolio declined
0.20%*, outperforming its benchmark, the S&P 500 Index, which fell 0.74%.
EQUITIES GAIN AMID CHALLENGES
Stocks rallied during the final stretch of 2004, gaining strength from the
resolution of the presidential election and a temporary decline in oil prices.
However, investor optimism waned in the early months of 2005 as concern grew
about the effects of rising commodity and oil prices and interest rates on the
economy and corporate profit growth. Though volatility prevailed, equities
ultimately booked gains for the period with value stocks generally outpacing
their growth counterparts.
ENERGY LEADS ADVANCERS
Fundamental Equity's strongest performance during the period came from
investments in the energy sector. Among the contributors in the portfolio was
ExxonMobil, which reported a record quarterly profit in February.
In the consumer discretionary sector, Michaels Stores was a top contributor. The
nation's largest arts and crafts specialty retailer posted double-digit gains in
revenue and profits on brisk sales of needlework, knitting, scrapbooking,
framing and kids' crafts.
A number of positions in the portfolio that performed well since the fund's
launch came from the health care sector. Managed-care company WellPoint, lifted
by rising enrollment and the effects of a landmark merger, saw first-quarter
profit more than double and it raised its full-year earnings forecast. Anthem
acquired WellPoint Health Networks on November 30, creating the nation's largest
managed-care company. The combined entity changed its name to WellPoint Inc.
Johnson & Johnson was another leading contributor. The major pharmaceutical
company announced record profit and sales for the first quarter,
TOP TEN HOLDINGS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF
NET ASSETS
AS OF
4/30/05
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 3.2%
- --------------------------------------------------------------------------------
Citigroup Inc. 3.0%
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2.9%
- --------------------------------------------------------------------------------
Pfizer, Inc. 2.9%
- --------------------------------------------------------------------------------
Microsoft Corporation 2.7%
- --------------------------------------------------------------------------------
Accenture Ltd. Cl A 2.4%
- --------------------------------------------------------------------------------
General Electric Co. 2.4%
- --------------------------------------------------------------------------------
Republic Services, Inc. Cl A 2.1%
- --------------------------------------------------------------------------------
Berkshire Hathaway Inc. Cl B 2.0%
- --------------------------------------------------------------------------------
First Data Corp. 2.0%
- --------------------------------------------------------------------------------
*All portfolio returns referenced in this review are for Class A shares and are
not reduced by sales charges. Class A shares are subject to a maximum sales
charge of 5.75%. Had the sales charge been applied, returns would be lower than
those shown. Returns for periods less than one year are not annualized.
(continued)
- ------
16
Fundamental Equity - Portfolio Commentary
bolstered by growth in medical devices and diagnostics.
Investments in the telecommunication services sector boosted returns. NII
Holdings, with its exposure to the flourishing Latin American market, performed
well. It received an additional boost from the prospect of more wireless
spectrum being auctioned by Mexico's Federal Telecommunications Commission.
CONSUMER DISCRETIONARY LAGS
Fundamental Equity was slowed most by investments in the consumer discretionary
sector. International Game Technology hurt the portfolio's returns after the
slot machine maker reported lower top- and bottom-line figures for its fiscal
second quarter in large part due to charges for obsolete technology and
severance. Online auction firm eBay was another detractor during the period.
eBay cast a pall over the Internet and catalog retailer industry when its
earnings report disappointed Wall Street analysts in the last quarter of 2004
who had loftier targets in mind. Furthermore, shares of Harley-Davidson fell
after the company cut its motorcycle shipment and earnings growth-rate targets
for 2005 as it moved to keep the supply-and-demand ratio healthy for the year.
Accenture, a consulting, technology-services and outsourcing company, was an
underperformer during the period. With information-technology spending remaining
generally weak, some industry analysts became concerned about Accenture's
earnings growth potential.
OUR COMMITMENT
Fundamental Equity's investment objective is to seek long-term capital growth
with income as a secondary objective. The portfolio managers look for common
stocks of companies that they believe are priced attractively in relation to
their earnings growth potential and estimated dividend production.
TOP FIVE INDUSTRIES AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF
NET ASSETS
AS OF
4/30/05
- --------------------------------------------------------------------------------
Pharmaceuticals 7.6%
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels 7.4%
- --------------------------------------------------------------------------------
Insurance 6.8%
- --------------------------------------------------------------------------------
Specialty Retail 5.1%
- --------------------------------------------------------------------------------
Diversified Financial Services 4.7%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND
INVESTMENTS
AS OF
4/30/05
- --------------------------------------------------------------------------------
Common Stocks 98.4%
- --------------------------------------------------------------------------------
Preferred Stocks 1.6%
- --------------------------------------------------------------------------------
- ------
17
Fundamental Equity - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 96.0%
AEROSPACE & DEFENSE -- 0.8%
- --------------------------------------------------------------------------------
125 United Technologies Corp. $ 12,715
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS -- 0.9%
- --------------------------------------------------------------------------------
203 United Parcel Service, Inc. Cl B 14,476
- --------------------------------------------------------------------------------
AUTOMOBILES -- 2.0%
- --------------------------------------------------------------------------------
401 Harley-Davidson, Inc. 18,855
- --------------------------------------------------------------------------------
168 Toyota Motor Corp. ADR 12,215
- --------------------------------------------------------------------------------
31,070
- --------------------------------------------------------------------------------
BEVERAGES -- 2.7%
- --------------------------------------------------------------------------------
622 Coca-Cola Company (The) 27,020
- --------------------------------------------------------------------------------
266 PepsiCo, Inc. 14,800
- --------------------------------------------------------------------------------
41,820
- --------------------------------------------------------------------------------
BUILDING PRODUCTS -- 0.7%
- --------------------------------------------------------------------------------
336 Masco Corp. 10,581
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 2.7%
- --------------------------------------------------------------------------------
456 Bank of New York Co., Inc. (The) 12,741
- --------------------------------------------------------------------------------
123 Goldman Sachs Group, Inc. (The) 13,135
- --------------------------------------------------------------------------------
306 Morgan Stanley 16,102
- --------------------------------------------------------------------------------
41,978
- --------------------------------------------------------------------------------
CHEMICALS -- 1.9%
- --------------------------------------------------------------------------------
204 du Pont (E.I.) de Nemours & Co. 9,610
- --------------------------------------------------------------------------------
198 Monsanto Co. 11,607
- --------------------------------------------------------------------------------
181 Praxair, Inc. 8,476
- --------------------------------------------------------------------------------
29,693
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 2.8%
- --------------------------------------------------------------------------------
650 Bank of America Corp. 29,276
- --------------------------------------------------------------------------------
221 Wells Fargo & Co. 13,247
- --------------------------------------------------------------------------------
42,523
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES
& SUPPLIES -- 4.1%
- --------------------------------------------------------------------------------
228 Apollo Group Inc. Cl A(1) 16,443
- --------------------------------------------------------------------------------
569 Aramark Corp. Cl B 13,946
- --------------------------------------------------------------------------------
940 Republic Services, Inc. Cl A 32,525
- --------------------------------------------------------------------------------
62,914
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 3.3%
- --------------------------------------------------------------------------------
703 Cisco Systems Inc.(1) 12,148
- --------------------------------------------------------------------------------
574 Motorola, Inc. 8,805
- --------------------------------------------------------------------------------
855 QUALCOMM Inc. 29,831
- --------------------------------------------------------------------------------
50,784
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 1.7%
- --------------------------------------------------------------------------------
309 Dell Inc.(1) 10,762
- --------------------------------------------------------------------------------
1,159 EMC Corp.(1) 15,207
- --------------------------------------------------------------------------------
25,969
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 2.8%
- --------------------------------------------------------------------------------
277 American Express Co. $ 14,598
- --------------------------------------------------------------------------------
716 MBNA Corporation 14,141
- --------------------------------------------------------------------------------
309 SLM Corporation 14,721
- --------------------------------------------------------------------------------
43,460
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 4.7%
- --------------------------------------------------------------------------------
992 Citigroup Inc. 46,585
- --------------------------------------------------------------------------------
723 J.P. Morgan Chase & Co. 25,659
- --------------------------------------------------------------------------------
72,244
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 1.1%
- --------------------------------------------------------------------------------
730 Sprint Corp. 16,250
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 1.5%
- --------------------------------------------------------------------------------
318 National-Oilwell, Inc.(1) 12,638
- --------------------------------------------------------------------------------
147 Schlumberger Ltd. 10,056
- --------------------------------------------------------------------------------
22,694
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 3.6%
- --------------------------------------------------------------------------------
287 Sysco Corp. 9,930
- --------------------------------------------------------------------------------
941 Wal-Mart Stores, Inc. 44,359
- --------------------------------------------------------------------------------
54,289
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 0.4%
- --------------------------------------------------------------------------------
128 General Mills, Inc. 6,323
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 2.2%
- --------------------------------------------------------------------------------
574 Boston Scientific Corp.(1) 16,979
- --------------------------------------------------------------------------------
310 Medtronic, Inc. 16,337
- --------------------------------------------------------------------------------
33,316
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS
& SERVICES -- 2.7%
- --------------------------------------------------------------------------------
151 Aetna Inc. 11,079
- --------------------------------------------------------------------------------
300 IMS Health Inc. 7,194
- --------------------------------------------------------------------------------
105 UnitedHealth Group Incorporated 9,924
- --------------------------------------------------------------------------------
97 WellPoint Inc.(1) 12,391
- --------------------------------------------------------------------------------
40,588
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 2.0%
- --------------------------------------------------------------------------------
420 Carnival Corporation 20,530
- --------------------------------------------------------------------------------
154 Harrah's Entertainment, Inc. 10,105
- --------------------------------------------------------------------------------
30,635
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 0.5%
- --------------------------------------------------------------------------------
103 Pulte Homes Inc. 7,359
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.6%
- --------------------------------------------------------------------------------
181 Colgate-Palmolive Co. 9,012
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 3.6%
- --------------------------------------------------------------------------------
996 General Electric Co. 36,055
- --------------------------------------------------------------------------------
607 Tyco International Ltd. 19,005
- --------------------------------------------------------------------------------
55,060
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
18
Fundamental Equity - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
INSURANCE -- 6.8%
- --------------------------------------------------------------------------------
421 Aflac Inc. $ 17,114
- --------------------------------------------------------------------------------
252 Ambac Financial Group, Inc. 16,846
- --------------------------------------------------------------------------------
373 American International Group, Inc. 18,967
- --------------------------------------------------------------------------------
11 Berkshire Hathaway Inc. Cl B(1) 30,777
- --------------------------------------------------------------------------------
316 Old Republic International Corp. 7,458
- --------------------------------------------------------------------------------
211 Prudential Financial Inc. 12,059
- --------------------------------------------------------------------------------
103,221
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 1.8%
- --------------------------------------------------------------------------------
481 eBay Inc.(1) 15,262
- --------------------------------------------------------------------------------
581 IAC/InterActiveCorp(1) 12,631
- --------------------------------------------------------------------------------
27,893
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 0.6%
- --------------------------------------------------------------------------------
370 VeriSign, Inc.(1) 9,790
- --------------------------------------------------------------------------------
IT SERVICES -- 4.4%
- --------------------------------------------------------------------------------
1,694 Accenture Ltd. Cl A(1) 36,760
- --------------------------------------------------------------------------------
802 First Data Corp. 30,500
- --------------------------------------------------------------------------------
67,260
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS -- 0.6%
- --------------------------------------------------------------------------------
473 Mattel, Inc. 8,538
- --------------------------------------------------------------------------------
MEDIA -- 1.9%
- --------------------------------------------------------------------------------
583 Comcast Corporation(1) 18,720
- --------------------------------------------------------------------------------
639 Time Warner Inc.(1) 10,742
- --------------------------------------------------------------------------------
29,462
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 7.4%
- --------------------------------------------------------------------------------
237 Amerada Hess Corp. 22,195
- --------------------------------------------------------------------------------
457 ChevronTexaco Corp. 23,764
- --------------------------------------------------------------------------------
853 Exxon Mobil Corp. 48,647
- --------------------------------------------------------------------------------
246 Kinder Morgan, Inc. 18,809
- --------------------------------------------------------------------------------
113,415
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 0.7%
- --------------------------------------------------------------------------------
254 Avon Products, Inc. 10,180
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 7.6%
- --------------------------------------------------------------------------------
475 Bristol-Myers Squibb Co. 12,350
- --------------------------------------------------------------------------------
281 Eli Lilly and Company 16,430
- --------------------------------------------------------------------------------
396 Johnson & Johnson 27,177
- --------------------------------------------------------------------------------
300 Novartis AG ADR 14,619
- --------------------------------------------------------------------------------
1,629 Pfizer, Inc. 44,259
- --------------------------------------------------------------------------------
114,835
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
REAL ESTATE -- 0.5%
- --------------------------------------------------------------------------------
375 American Campus
Communities Inc. $ 7,868
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 4.3%
- --------------------------------------------------------------------------------
1,329 ARM Holdings plc ADR 7,177
- --------------------------------------------------------------------------------
980 Intel Corp. 23,049
- --------------------------------------------------------------------------------
234 Maxim Integrated Products, Inc. 8,752
- --------------------------------------------------------------------------------
1,885 MEMC Electronic Materials Inc.(1) 22,110
- --------------------------------------------------------------------------------
149 Microchip Technology Inc. 4,244
- --------------------------------------------------------------------------------
65,332
- --------------------------------------------------------------------------------
SOFTWARE -- 3.6%
- --------------------------------------------------------------------------------
372 Intuit Inc.(1) 14,992
- --------------------------------------------------------------------------------
1,611 Microsoft Corporation 40,758
- --------------------------------------------------------------------------------
55,750
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 5.1%
- --------------------------------------------------------------------------------
701 Gap, Inc. (The) 14,966
- --------------------------------------------------------------------------------
565 Home Depot, Inc. 19,984
- --------------------------------------------------------------------------------
852 Michaels Stores, Inc. 28,286
- --------------------------------------------------------------------------------
322 Sherwin-Williams Co. 14,352
- --------------------------------------------------------------------------------
77,588
- --------------------------------------------------------------------------------
TOBACCO -- 1.4%
- --------------------------------------------------------------------------------
322 Altria Group Inc. 20,927
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,497,636) 1,467,812
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 1.6%
CHEMICALS -- 1.6%
- --------------------------------------------------------------------------------
514 Huntsman Corp., 5.00%, 2/16/08
(Cost $25,771) 24,019
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 97.6%
(Cost $1,523,407) 1,491,831
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 2.4% 36,764
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $1,528,595
================================================================================
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
(1) Non-income producing.
See Notes to Financial Statements.
- ------
19
New Opportunities II - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
----------------
AVERAGE ANNUAL
RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS -1.18% 5.34% 6/1/01
- --------------------------------------------------------------------------------
RUSSELL 2000 GROWTH INDEX(1) -0.55% -3.71%(2) --
- --------------------------------------------------------------------------------
A Class 1/31/03
No sales charge* -1.44% 18.65%(3)
With sales charge* -7.15% 15.60%(3)
- --------------------------------------------------------------------------------
B Class 1/31/03
No sales charge* -2.20% 17.82%(3)
With sales charge* -6.20% 16.72%(3)
- --------------------------------------------------------------------------------
C Class -2.19% 17.99%(3) 1/31/03
- --------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial
sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B
Class shares redeemed within six years of purchase are subject to a CDSC that
declines from 5.00% during the first year after purchase to 0.00% the sixth year
after purchase. C Class shares redeemed within 12 months of purchase are subject
to a maximum CDSC of 1.00%. Please see the Share Class Information pages for
more about the applicable sales charges for each share class. The SEC requires
that mutual funds provide performance information net of maximum sales charges
in all cases where charges could be applied.
(1) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. -- A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made
by Lipper.
(2) Since 5/31/01, the date nearest the Investor Class's inception for which
data are available.
(3) Class returns would have been lower if service and distribution fees had
not been waived from 2/1/03 to 2/21/03, 2/1/03 to 2/10/03, and 2/1/03 to
6/30/03 for the A, B, and C Class shares, respectively.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
- ------
20
New Opportunities II - Performance
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made June 1, 2001
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended April 30
- --------------------------------------------------------------------------------
2002* 2003 2004 2005
- --------------------------------------------------------------------------------
Investor Class 6.00% -21.51% 49.04% -1.18%
- --------------------------------------------------------------------------------
Russell 2000 Growth Index -10.59% -23.50% 41.57% -0.55%
- --------------------------------------------------------------------------------
*From 6/1/01, the Investor Class's inception date. Index data from 5/31/01, the
date nearest the Investor Class's inception for which data are available. Not
annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
21
New Opportunities II - Portfolio Commentary
[photo of investment team]
THE NEW OPPORTUNITIES II INVESTMENT TEAM (FROM LEFT): PORTFOLIO MANAGERS TOM
TELFORD AND HAROLD S. BRADLEY AND INVESTMENT ANALYSTS STAFFORD SOUTHWICK AND
MATT FERRETTI.
American Century New Opportunities II fell 2.59%* during the six months ended
April 30, 2005, lagging the 1.98% return of its benchmark, the Russell 2000
Growth Index.
SMALL CAPS STRUGGLE
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004,
despite record-high oil prices, rising interest rates and a modest increase in
underlying inflation.
Rising interest rates and general compression of price/earnings multiples as the
period progressed also hampered markets, disproportionately affecting small-cap
stocks. In the last half of the six-month period, the Dow Jones Industrial
Average and the S&P 500, two indices consisting primarily of large-cap stocks,
fell just 2.28% and 1.61%, respectively. But the Russell 2000 and S&P SmallCap
600 indices, comprising small-cap stocks, plunged 6.87% and 5.39%, respectively.
During this time, New Opportunities II outperformed its benchmark by 192 basis
points, falling 6.72% compared with the benchmark's 8.64% decline.
An overweight stake and solid stock selection in materials provided the biggest
boost to the portfolio's performance during the six-month period on a relative
basis. We also benefited from solid picks in financials and an overweight
position in utilities. However, security selection in the information technology
sector hindered results, and the sector proved by far the leading detriment to
the portfolio's performance. The energy sector also detracted from relative
performance, though it contributed to the portfolio's absolute return.
MATERIALS SURGE
New Opportunities II realized its largest absolute and relative contributions in
TOP TEN HOLDINGS AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Silicon Valley
Bancshares 2.0% --
- --------------------------------------------------------------------------------
Phoenix
Technologies Ltd. 1.8% --
- --------------------------------------------------------------------------------
Titanium Metals Corp. 1.8% 1.3%
- --------------------------------------------------------------------------------
Itron Inc. 1.7% --
- --------------------------------------------------------------------------------
International Securities
Exchange Inc. 1.6% --
- --------------------------------------------------------------------------------
ICU Medical Inc. 1.5% --
- --------------------------------------------------------------------------------
Radiation Therapy
Services Inc. 1.5% --
- --------------------------------------------------------------------------------
Cryptologic Inc. 1.5% --
- --------------------------------------------------------------------------------
RC2 Corp. 1.4% --
- --------------------------------------------------------------------------------
Orthofix
International N.V. 1.4% --
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
Returns for periods less than one year are not annualized.
(continued)
- ------
22
New Opportunities II - Portfolio Commentary
the six-month period from stakes in the materials sector, specifically in the
metals and mining industry. Titanium Metals Corp., a maker of titanium materials
used in aircraft, constituted the portfolio's best individual performer. Its
stock rose 74% amid rising demand from the aerospace industry.
Metals and mining also produced the portfolio's second-leading performer in AK
Steel Holding, a steel maker with seven plants scattered throughout the Ohio
Valley. AK Steel's stock price almost doubled in the first four months of the
period before tumbling as the period closed. Recognizing the impact that
declining steel prices would have on the stock, we sold the portfolio's stake in
the company before its share price collapsed.
Solid security selection in the financials sector also boosted the portfolio's
performance, as did the stake in utilities. In particular, New Opportunities II
benefited from its stake in UGI Corp., a Pennsylvania-based utility whose share
price rose 32%.
TECHNOLOGY SOFTNESS
With demand for computers and computer-related equipment weakening in early
2005, New Opportunities II maintained an underweight position in information
technology during the period. Nevertheless, that position still accounted for
the portfolio's heaviest sector weighting.
Overall, IT accounted for eight of the portfolio's top 10 detracting securities
in the period on a relative basis. Applix, a business solutions software
provider, and Cree, a maker of ultraviolet LEDs used in lighting applications,
topped the portfolio's list of detracting securities. New Opportunities II
liquidated its position in both stocks.
Energy's volatility proved a challenge during the period. The portfolio
benefited on an absolute basis from stakes in small-cap oil and gas producers
such as Berry Petroleum. Nonetheless, despite the portfolio's overweight
position, the sector crimped New Opportunities II's relative return.
OUR COMMITMENT
We remain committed to pursuing an investment approach of identifying small
companies that appear to have accelerating earnings and revenue growth. We
believe this approach provides the optimum potential for long-term investment
rewards.
TOP FIVE INDUSTRIES AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Specialty Retail 8.8% 6.3%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 5.6% 1.8%
- --------------------------------------------------------------------------------
Machinery 4.8% 4.2%
- --------------------------------------------------------------------------------
Energy Equipment
& Services 4.6% 2.4%
- --------------------------------------------------------------------------------
Textiles, Apparel
& Luxury Goods 4.5% 2.4%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 98.7% 95.8%
- --------------------------------------------------------------------------------
Temporary
Cash Investments 1.3% 4.2%
- --------------------------------------------------------------------------------
- ------
23
New Opportunities II - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 97.7%
AEROSPACE & DEFENSE -- 1.3%
- --------------------------------------------------------------------------------
71,393 AAR Corp.(1) $ 1,051,619
- --------------------------------------------------------------------------------
AIRLINES -- 1.2%
- --------------------------------------------------------------------------------
94,755 AMR Corp.(1) 992,085
- --------------------------------------------------------------------------------
AUTO COMPONENTS -- 0.6%
- --------------------------------------------------------------------------------
22,086 LKQ Corporation(1) 444,812
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 0.8%
- --------------------------------------------------------------------------------
21,391 Greenhill & Co. Inc. 673,817
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 3.5%
- --------------------------------------------------------------------------------
33,367 Silicon Valley Bancshares(1) 1,581,596
- --------------------------------------------------------------------------------
45,416 Summit Bancshares Inc. 746,639
- --------------------------------------------------------------------------------
18,806 Virginia Commerce Bancorp(1) 504,189
- --------------------------------------------------------------------------------
2,832,424
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 2.0%
- --------------------------------------------------------------------------------
33,030 American Reprographics Co.(1) 464,072
- --------------------------------------------------------------------------------
54,598 LECG Corporation(1) 1,131,816
- --------------------------------------------------------------------------------
1,595,888
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 1.0%
- --------------------------------------------------------------------------------
103,538 Arris Group Inc.(1) 785,853
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 3.6%
- --------------------------------------------------------------------------------
58,896 Emulex Corp.(1) 914,655
- --------------------------------------------------------------------------------
43,692 Neoware Systems Inc.(1) 422,545
- --------------------------------------------------------------------------------
23,928 Rimage Corp.(1) 479,756
- --------------------------------------------------------------------------------
87,283 Western Digital Corp.(1) 1,107,622
- --------------------------------------------------------------------------------
2,924,578
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING -- 1.2%
- --------------------------------------------------------------------------------
19,029 Jacobs Engineering Group Inc.(1) 926,903
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS -- 0.9%
- --------------------------------------------------------------------------------
10,217 Eagle Materials Inc. 768,829
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 1.6%
- --------------------------------------------------------------------------------
28,338 United PanAm Financial Corp.(1) 626,837
- --------------------------------------------------------------------------------
27,227 World Acceptance Corp.(1) 692,927
- --------------------------------------------------------------------------------
1,319,764
- --------------------------------------------------------------------------------
DISTRIBUTORS -- 0.6%
- --------------------------------------------------------------------------------
26,813 Prestige Brands Holdings Inc.(1) 482,634
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 1.6%
- --------------------------------------------------------------------------------
49,885 International Securities
Exchange Inc.(1) 1,312,973
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.9%
- --------------------------------------------------------------------------------
231,618 Cincinnati Bell Inc.(1) 926,472
- --------------------------------------------------------------------------------
66,564 Talk America Holdings Inc.(1) 573,116
- --------------------------------------------------------------------------------
1,499,588
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.9%
- --------------------------------------------------------------------------------
43,437 Brightpoint Inc.(1) $ 917,389
- --------------------------------------------------------------------------------
38,934 Itron Inc.(1) 1,404,350
- --------------------------------------------------------------------------------
2,321,739
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 4.6%
- --------------------------------------------------------------------------------
15,164 Atwood Oceanics Inc.(1) 865,409
- --------------------------------------------------------------------------------
43,847 Grant Prideco Inc.(1) 972,526
- --------------------------------------------------------------------------------
162,662 Grey Wolf Inc.(1) 975,972
- --------------------------------------------------------------------------------
32,115 Rowan Companies, Inc. 852,011
- --------------------------------------------------------------------------------
3,665,918
- --------------------------------------------------------------------------------
GAS UTILITIES -- 3.5%
- --------------------------------------------------------------------------------
22,532 Northwest Natural Gas Co. 799,886
- --------------------------------------------------------------------------------
18,974 UGI Corp. 953,064
- --------------------------------------------------------------------------------
34,707 WGL Holdings Inc. 1,051,969
- --------------------------------------------------------------------------------
2,804,919
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 5.6%
- --------------------------------------------------------------------------------
35,034 ICU Medical Inc.(1) 1,241,254
- --------------------------------------------------------------------------------
135,748 OraSure Technologies Inc.(1) 1,080,554
- --------------------------------------------------------------------------------
24,419 Orthofix International N.V.(1) 1,147,693
- --------------------------------------------------------------------------------
17,019 ResMed Inc.(1) 1,056,880
- --------------------------------------------------------------------------------
4,526,381
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS
& SERVICES -- 3.7%
- --------------------------------------------------------------------------------
90,687 HealthTronics Inc.(1) 1,124,519
- --------------------------------------------------------------------------------
16,735 Horizon Health Corp.(1) 685,800
- --------------------------------------------------------------------------------
51,956 Radiation Therapy Services Inc.(1) 1,205,899
- --------------------------------------------------------------------------------
3,016,218
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 4.3%
- --------------------------------------------------------------------------------
21,612 CBRL Group Inc. 832,710
- --------------------------------------------------------------------------------
78,541 Luby's Inc.(1) 592,985
- --------------------------------------------------------------------------------
48,225 O'Charleys Inc.(1) 961,607
- --------------------------------------------------------------------------------
67,559 Sunterra Corp.(1) 1,050,542
- --------------------------------------------------------------------------------
3,437,844
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 2.1%
- --------------------------------------------------------------------------------
17,047 Jarden Corp.(1) 761,489
- --------------------------------------------------------------------------------
46,779 Tempur-Pedic International Inc.(1) 893,012
- --------------------------------------------------------------------------------
1,654,501
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.1%
- --------------------------------------------------------------------------------
21,818 Central Garden and Pet Co.(1) 907,411
- --------------------------------------------------------------------------------
INSURANCE -- 1.2%
- --------------------------------------------------------------------------------
21,863 Brown & Brown Inc. 956,506
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 1.9%
- --------------------------------------------------------------------------------
50,832 Stamps.com Inc.(1) 982,583
- --------------------------------------------------------------------------------
75,494 Systemax Inc.(1) 548,086
- --------------------------------------------------------------------------------
1,530,669
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
24
New Opportunities II - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 3.9%
- --------------------------------------------------------------------------------
100,966 aQuantive, Inc.(1) $ 1,120,723
- --------------------------------------------------------------------------------
41,175 Cryptologic Inc. 1,201,898
- --------------------------------------------------------------------------------
15,687 Websense Inc.(1) 832,195
- --------------------------------------------------------------------------------
3,154,816
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS -- 2.5%
- --------------------------------------------------------------------------------
31,604 MarineMax Inc.(1) 854,888
- --------------------------------------------------------------------------------
33,420 RC2 Corp.(1) 1,158,337
- --------------------------------------------------------------------------------
2,013,225
- --------------------------------------------------------------------------------
MACHINERY -- 4.8%
- --------------------------------------------------------------------------------
16,897 Badger Meter Inc. 573,653
- --------------------------------------------------------------------------------
23,178 Cascade Corp. 730,107
- --------------------------------------------------------------------------------
59,919 Flanders Corp.(1) 594,996
- --------------------------------------------------------------------------------
26,702 Gardner Denver Inc.(1) 975,690
- --------------------------------------------------------------------------------
17,838 Harsco Corp. 957,009
- --------------------------------------------------------------------------------
3,831,455
- --------------------------------------------------------------------------------
METALS & MINING -- 2.9%
- --------------------------------------------------------------------------------
16,012 Carpenter Technology 885,464
- --------------------------------------------------------------------------------
42,080 Titanium Metals Corp.(1) 1,414,729
- --------------------------------------------------------------------------------
2,300,193
- --------------------------------------------------------------------------------
MULTI-UTILITIES -- 1.3%
- --------------------------------------------------------------------------------
38,669 Vectren Corp. 1,044,450
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 2.0%
- --------------------------------------------------------------------------------
18,544 Berry Petroleum Company Cl A 866,376
- --------------------------------------------------------------------------------
20,351 Forest Oil Corporation(1) 784,124
- --------------------------------------------------------------------------------
1,650,500
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 1.4%
- --------------------------------------------------------------------------------
375,887 Revlon Inc. Cl A(1) 1,105,108
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 2.2%
- --------------------------------------------------------------------------------
46,717 Able Laboratories Inc.(1) 1,113,734
- --------------------------------------------------------------------------------
27,535 Hi-Tech Pharmacal Co., Inc.(1) 642,942
- --------------------------------------------------------------------------------
1,756,676
- --------------------------------------------------------------------------------
REAL ESTATE -- 1.4%
- --------------------------------------------------------------------------------
51,276 Trammell Crow Co.(1) 1,092,179
- --------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 1.2%
- --------------------------------------------------------------------------------
41,269 DSP Group Inc.(1) 994,583
- --------------------------------------------------------------------------------
SOFTWARE -- 1.8%
- --------------------------------------------------------------------------------
183,920 Phoenix Technologies Ltd.(1) 1,487,913
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 8.8%
- --------------------------------------------------------------------------------
37,254 Burlington Coat Factory
Warehouse Corp. $ 1,026,348
- --------------------------------------------------------------------------------
30,625 Children's Place Retail
Stores, Inc. (The)(1) 1,139,556
- --------------------------------------------------------------------------------
47,012 Finish Line, Inc. (The) Cl A 847,156
- --------------------------------------------------------------------------------
35,134 Hibbett Sporting Goods Inc.(1) 947,564
- --------------------------------------------------------------------------------
20,623 O'Reilly Automotive Inc.(1) 1,058,372
- --------------------------------------------------------------------------------
51,094 Select Comfort Corp.(1) 1,130,199
- --------------------------------------------------------------------------------
190,532 Wilsons The Leather
Experts Inc.(1) 958,376
- --------------------------------------------------------------------------------
7,107,571
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS -- 4.5%
- --------------------------------------------------------------------------------
31,034 Brown Shoe Company, Inc. 958,951
- --------------------------------------------------------------------------------
57,323 Charles & Colvard Ltd.(1) 1,071,939
- --------------------------------------------------------------------------------
25,875 Kenneth Cole Productions Inc. 775,733
- --------------------------------------------------------------------------------
39,451 Wolverine World Wide, Inc. 800,461
- --------------------------------------------------------------------------------
3,607,084
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 3.7%
- --------------------------------------------------------------------------------
33,965 Astoria Financial Corp. 900,412
- --------------------------------------------------------------------------------
16,027 Downey Financial Corp. 1,037,428
- --------------------------------------------------------------------------------
26,511 IndyMac Bancorp, Inc. 1,020,143
- --------------------------------------------------------------------------------
2,957,983
- --------------------------------------------------------------------------------
TRADING COMPANIES
& DISTRIBUTORS -- 2.6%
- --------------------------------------------------------------------------------
37,119 Applied Industrial
Technologies Inc. 1,035,620
- --------------------------------------------------------------------------------
31,493 GATX Corp. 1,030,452
- --------------------------------------------------------------------------------
2,066,072
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $73,856,335) 78,603,681
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 1.2%
Repurchase Agreement, Merrill Lynch
& Co., Inc., (collateralized by various
U.S. Treasury obligations, 2.25%, 4/30/06,
valued at $1,020,255), in a joint trading
account at 2.75%, dated 4/29/05,
due 5/2/05 (Delivery value $1,000,229)
(Cost $1,000,000) 1,000,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 98.9%
(Cost $74,856,335) 79,603,681
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.1% 892,584
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $80,496,265
================================================================================
NOTES TO SCHEDULE OF INVESTMENTS
(1) Non-income producing.
See Notes to Financial Statements.
- ------
25
Shareholder Fee Examples (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005
(except as noted).
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
- ------
26
Shareholder Fee Examples (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
- --------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO*
- --------------------------------------------------------------------------------
SELECT SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,013.70 $4.99 1.00%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $1,014.90 $4.00 0.80%
- --------------------------------------------------------------------------------
Advisor Class $1,000 $1,012.50 $6.24 1.25%
- --------------------------------------------------------------------------------
A Class $1,000 $1,012.40 $6.24 1.25%
- --------------------------------------------------------------------------------
B Class $1,000 $1,008.80 $9.96 2.00%
- --------------------------------------------------------------------------------
C Class $1,000 $1,008.50 $9.96 2.00%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,019.84 $5.01 1.00%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $1,020.83 $4.01 0.80%
- --------------------------------------------------------------------------------
Advisor Class $1,000 $1,018.60 $6.26 1.25%
- --------------------------------------------------------------------------------
A Class $1,000 $1,018.60 $6.26 1.25%
- --------------------------------------------------------------------------------
B Class $1,000 $1,014.88 $9.99 2.00%
- --------------------------------------------------------------------------------
C Class $1,000 $1,014.88 $9.99 2.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CAPITAL GROWTH SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
A Class $1,000 $1,012.10 $6.34 1.27%
- --------------------------------------------------------------------------------
B Class $1,000 $1,008.10 $10.06 2.02%
- --------------------------------------------------------------------------------
C Class $1,000 $1,008.10 $10.06 2.02%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
A Class $1,000 $1,018.50 $6.36 1.27%
- --------------------------------------------------------------------------------
B Class $1,000 $1,014.78 $10.09 2.02%
- --------------------------------------------------------------------------------
C Class $1,000 $1,014.78 $10.09 2.02%
- --------------------------------------------------------------------------------
*Expenses are equal to the class's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
181, the number of days in the most recent fiscal half-year, divided by 365, to
reflect the one-half year period.
(continued)
- ------
27
Shareholder Fee Examples (Unaudited)
- --------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD(1) ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 -- EXPENSE
11/1/04 4/30/05 4/30/05 RATIO(1)
- --------------------------------------------------------------------------------
FUNDAMENTAL EQUITY SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
A Class $1,000 $998.00(2) $5.29(3) 1.28%
- --------------------------------------------------------------------------------
B Class $1,000 $995.00(2) $8.38(3) 2.03%
- --------------------------------------------------------------------------------
C Class $1,000 $995.00(2) $8.38(3) 2.03%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
A Class $1,000 $1,018.45(4) $6.41(4) 1.28%
- --------------------------------------------------------------------------------
B Class $1,000 $1,014.73(4) $10.14(4) 2.03%
- --------------------------------------------------------------------------------
C Class $1,000 $1,014.73(4) $10.14(4) 2.03%
- --------------------------------------------------------------------------------
(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 181, the number of days in the most recent fiscal half-year,
divided by 365, to reflect the one-half year period.
(2) Ending account value based on actual return from November 30, 2004 (fund
inception) through April 30, 2005.
(3) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 151, the number of days in the period from November 30, 2004
(fund inception) through April 30, 2005, divided by 365, to reflect the
period ended. Had the classes been available for the full period, the
expenses paid during the period would have been higher.
(4) Ending account value and expenses paid during the period assume the classes
had been available throughout the entire period and are calculated using
each class's annualized expense ratio listed in the table above.
- --------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD(1) ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 -- EXPENSE
11/1/04 4/30/05 4/30/05 RATIO(1)
- --------------------------------------------------------------------------------
NEW OPPORTUNITIES II SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $974.10 $7.34 1.50%
- --------------------------------------------------------------------------------
A Class $1,000 $973.00 $8.56 1.75%
- --------------------------------------------------------------------------------
B Class $1,000 $970.10 $12.21 2.50%
- --------------------------------------------------------------------------------
C Class $1,000 $970.20 $12.21 2.50%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,017.36 $7.50 1.50%
- --------------------------------------------------------------------------------
A Class $1,000 $1,016.12 $8.75 1.75%
- --------------------------------------------------------------------------------
B Class $1,000 $1,012.40 $12.47 2.50%
- --------------------------------------------------------------------------------
C Class $1,000 $1,012.40 $12.47 2.50%
- --------------------------------------------------------------------------------
(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 181, the number of days in the most recent fiscal half-year,
divided by 365, to reflect the one-half year period.
- ------
28
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
- -------------------------------------------------------------------------------------------
CAPITAL FUNDAMENTAL NEW
SELECT GROWTH EQUITY OPPORTUNITIES II
- -------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------
Investment securities --
unaffiliated, at value
(cost of $3,124,506,049,
$1,969,271, $1,523,407
and $74,856,335,
respectively) --
including $259,219,521,
$- , $- and $-
of securities
on loan, respectively $3,560,794,337 $2,027,140 $1,491,831 $79,603,681
- --------------------------
Investment securities --
affiliated, at value
(cost of $76,467,594,
$-, $- and $-,
respectively) --
including $18,398,650,
$- , $- and $-
of securities
on loan, respectively 79,581,945 -- -- --
- --------------------------
Investments made with
cash collateral received
for securities on loan,
at value (cost of
$284,959,790, $-, $- and
$-, respectively) 284,959,790 -- -- --
- --------------------------------------------------------------------------------------------
Total investment
securities, at value
(cost of $3,485,933,433,
$1,969,271, $1,523,407 and
$74,856,335, respectively) 3,925,336,072 2,027,140 1,491,831 79,603,681
- --------------------------
Cash -- 37,794 77,146 38,568
- --------------------------
Receivable for
investments sold 33,601,537 12,440 27,956 3,807,141
- --------------------------
Receivable for forward
foreign currency
exchange contracts 1,373,795 271 -- --
- --------------------------
Receivable for capital
shares sold 53,906 9,621 -- 130,701
- --------------------------
Dividends and
interest receivable 3,950,117 1,372 1,741 27,085
- --------------------------------------------------------------------------------------------
3,964,315,427 2,088,638 1,598,674 83,607,176
- --------------------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------------------
Payable for collateral
received for securities
on loan 284,959,790 -- -- --
- --------------------------
Disbursements in excess
of demand deposit cash 763,691 -- -- --
- --------------------------
Payable for
investments purchased 26,861,577 25,133 68,016 2,979,804
- --------------------------
Payable for capital
shares redeemed 34,157 -- -- 17,632
- --------------------------
Accrued management fees 3,028,645 1,668 1,228 102,216
- --------------------------
Distribution fees payable 9,100 658 528 2,539
- --------------------------
Service fees (and
distribution fees --
A Class) payable 14,464 417 307 8,720
- --------------------------------------------------------------------------------------------
315,671,424 27,876 70,079 3,110,911
- --------------------------------------------------------------------------------------------
NET ASSETS $3,648,644,003 $2,060,762 $1,528,595 $80,496,265
============================================================================================
See Notes to Financial Statements. (continued)
- ------
29
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
- -------------------------------------------------------------------------------------------
CAPITAL FUNDAMENTAL NEW
SELECT GROWTH EQUITY OPPORTUNITIES II
- -------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------
Capital (par value and
paid-in surplus) $3,553,090,610 $2,060,276 $1,552,058 $77,167,210
- --------------------------
Accumulated undistributed
net investment
income (loss) 7,480,629 (171) (2,211) (385,033)
- --------------------------
Accumulated undistributed
net realized gain (loss)
on investment and foreign
currency transactions (352,811,206) (57,483) 10,324 (1,033,258)
- --------------------------
Net unrealized
appreciation
(depreciation)
on investments and
translation of assets
and liabilities
in foreign currencies 440,883,970 58,140 (31,576) 4,747,346
- -------------------------------------------------------------------------------------------
$3,648,644,003 $2,060,762 $1,528,595 $80,496,265
===========================================================================================
INVESTOR CLASS, $0.01 PAR VALUE
- -------------------------------------------------------------------------------------------
Net assets $3,375,673,054 N/A N/A $38,857,161
- --------------------------
Shares outstanding 95,889,844 N/A N/A 6,509,122
- --------------------------
Net asset value per share $35.20 N/A N/A $5.97
- -------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE
- -------------------------------------------------------------------------------------------
Net assets $203,305,240 N/A N/A --
- --------------------------
Shares outstanding 5,731,752 N/A N/A --
- --------------------------
Net asset value per share $35.47 N/A N/A --
- -------------------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE
- -------------------------------------------------------------------------------------------
Net assets $25,261,746 N/A N/A N/A
- --------------------------
Shares outstanding 724,716 N/A N/A N/A
- --------------------------
Net asset value per share $34.86 N/A N/A N/A
- -------------------------------------------------------------------------------------------
A CLASS, $0.01 PAR VALUE
- -------------------------------------------------------------------------------------------
Net assets $38,376,971 $985,026 $674,337 $37,548,412
- --------------------------
Shares outstanding 1,093,668 98,407 67,545 6,308,868
- --------------------------
Net asset value per share $35.09 $10.01 $9.98 $5.95
- --------------------------
Maximum offering price
(net asset value
divided by 0.9425) $37.23 $10.62 $10.59 $6.31
- -------------------------------------------------------------------------------------------
B CLASS, $0.01 PAR VALUE
- -------------------------------------------------------------------------------------------
Net assets $2,380,386 $568,829 $338,782 $1,910,975
- --------------------------
Shares outstanding 68,980 57,330 34,040 324,091
- --------------------------
Net asset value per share $34.51 $9.92 $9.95 $5.90
- -------------------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE
- -------------------------------------------------------------------------------------------
Net assets $3,646,606 $506,907 $515,476 $2,179,717
- --------------------------
Shares outstanding 105,600 51,089 51,792 368,252
- --------------------------
Net asset value per share $34.53 $9.92 $9.95 $5.92
- -------------------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
30
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) (EXCEPT AS NOTED)
- -------------------------------------------------------------------------------------------
CAPITAL FUNDAMENTAL NEW
SELECT GROWTH EQUITY(1) OPPORTUNITIES II
- -------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS)
- -------------------------------------------------------------------------------------------
INCOME:
- --------------------------
Dividends (including
$74,309 from affiliates
for Select, and net
of foreign taxes withheld
of $509,555, $159, $5
and $607, respectively) $ 34,519,597 $ 15,532 $ 6,849 $ 227,237
- --------------------------
Interest 1,264,796 53 249 21,279
- --------------------------
Securities lending 108,035 -- -- --
- -------------------------------------------------------------------------------------------
35,892,428 15,585 7,098 248,516
- -------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------
Management fees 19,275,192 9,287 5,255 574,390
- --------------------------
Distribution fees:
- --------------------------
Advisor Class 30,535 -- -- --
- --------------------------
B Class 9,018 2,006 1,064 6,105
- --------------------------
C Class 14,659 1,761 1,261 6,990
- --------------------------
Service fees:
- --------------------------
Advisor Class 30,535 -- -- --
- --------------------------
B Class 3,006 669 355 2,035
- --------------------------
C Class 4,886 587 420 2,330
- --------------------------
Service and distribution
fees -- A Class 45,986 1,066 538 39,879
- --------------------------
Directors' fees
and expenses 25,811 29 13 692
- --------------------------
Other expenses 11,645 405 403 1,150
- -------------------------------------------------------------------------------------------
19,451,273 15,810 9,309 633,571
- -------------------------------------------------------------------------------------------
Amount reimbursed (46) -- -- (22)
- -------------------------------------------------------------------------------------------
19,451,227 15,810 9,309 633,549
- -------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 16,441,201 (225) (2,211) (385,033)
- -------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -------------------------------------------------------------------------------------------
NET REALIZED
GAIN (LOSS) ON:
- --------------------------
Investment transactions
(including $35,966,697
from affiliates
for Select) 283,837,732 (20,110) 10,324 (1,029,814)
- --------------------------
Foreign currency
transactions 1,810,480 (965) -- --
- -------------------------------------------------------------------------------------------
285,648,212 (21,075) 10,324 (1,029,814)
- -------------------------------------------------------------------------------------------
CHANGE IN NET
UNREALIZED APPRECIATION
(DEPRECIATION) ON:
- --------------------------
Investments (237,875,867) 17,319 (31,576) (1,991,940)
- --------------------------
Translation of assets
and liabilities
in foreign currencies 1,491,760 329 -- --
- -------------------------------------------------------------------------------------------
(236,384,107) 17,648 (31,576) (1,991,940)
- -------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS) 49,264,105 (3,427) (21,252) (3,021,754)
- -------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $ 65,705,306 $ (3,652) $(23,463) $(3,406,787)
===========================================================================================
(1) November 30, 2004 (fund inception) through April 30, 2005.
See Notes to Financial Statements.
- ------
31
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004 (EXCEPT AS
NOTED)
- -----------------------------------------------------------------------------------------------
SELECT CAPITAL GROWTH
- -----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2005 2004 2005 2004(1)
- -----------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income (loss) $ 16,441,201 $ (4,556) $ (225) $ (6,761)
- ----------------------------
Net realized gain (loss) 285,648,212 273,150,403 (21,075) (39,170)
- ----------------------------
Change in net
unrealized appreciation (236,384,107) (139,894,825) 17,648 40,492
- -----------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from operations 65,705,306 133,251,022 (3,652) (5,439)
- -----------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------
From net investment income:
- ----------------------------
Investor Class (8,222,602) -- -- --
- ----------------------------
Institutional Class (906,228) -- -- --
- -----------------------------------------------------------------------------------------------
Decrease in net assets
from distributions (9,128,830) -- -- --
- -----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from
capital share transactions (269,465,820) (370,465,757) 578,885 1,490,968
- -----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS (212,889,344) (237,214,735) 575,233 1,485,529
- -----------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------
Beginning of period 3,861,533,347 4,098,748,082 1,485,529 --
- -----------------------------------------------------------------------------------------------
End of period $3,648,644,003 $3,861,533,347 $2,060,762 $1,485,529
===============================================================================================
Accumulated undistributed
net investment income (loss) $7,480,629 $168,258 $(171) $54
===============================================================================================
(1) February 27, 2004 (fund inception) through October 31, 2004.
See Notes to Financial Statements. (continued)
- ------
32
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND
YEAR ENDED OCTOBER 31, 2004 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
FUNDAMENTAL
EQUITY NEW OPPORTUNITIES II
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2005(1) 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment loss $ (2,211) $ (385,033) $ (511,966)
- ----------------------------
Net realized gain (loss) 10,324 (1,029,814) 4,382,876
- ----------------------------
Change in net unrealized
appreciation (depreciation) (31,576) (1,991,940) (239,059)
- --------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (23,463) (3,406,787) 3,631,851
- --------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS
- --------------------------------------------------------------------------------
From net realized gains:
- ----------------------------
Investor Class -- (1,089,667) --
- ----------------------------
A Class -- (642,139) --
- ----------------------------
B Class -- (23,007) --
- ----------------------------
C Class -- (25,472) --
- --------------------------------------------------------------------------------
Decrease in net assets
from distributions -- (1,780,285) --
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 1,552,058 23,972,414 24,426,403
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,528,595 18,785,342 28,058,254
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period -- 61,710,923 33,652,669
- --------------------------------------------------------------------------------
End of period $1,528,595 $80,496,265 $61,710,923
================================================================================
Accumulated net investment loss $(2,211) $(385,033) --
================================================================================
(1) November 30, 2004 (fund inception) through April 30, 2005.
See Notes to Financial Statements.
- ------
33
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Select Fund (Select), Capital Growth
Fund (Capital Growth), Fundamental Equity Fund (Fundamental Equity), and New
Opportunities II Fund (New Opportunities II) (collectively, the funds) are four
funds in a series issued by the corporation. The funds are diversified under the
1940 Act. The funds' investment objective is to seek long-term capital growth.
Select and Capital Growth pursue this objective by purchasing stocks of
larger-sized companies that it believes will increase in value over time.
Fundamental Equity looks for common stocks that the fund's manager believes are
attractively priced relative to the companies' earnings growth potential and
dividend yields. New Opportunities II pursues its objective by purchasing stocks
of smaller-sized companies that it believes will increase in value over time.
The following is a summary of the funds' significant accounting policies.
MULTIPLE CLASS -- Select is authorized to issue the Investor Class, the
Institutional Class, the Advisor Class, the A Class, the B Class and the C
Class. Capital Growth and Fundamental Equity are authorized to issue the A
Class, the B Class and the C Class. New Opportunities II is authorized to issue
the Investor Class, the Institutional Class, the A Class, the B Class and the C
Class. The A Class may incur an initial sales charge. The A Class, B Class and C
Class may be subject to a contingent deferred sales charge. The share classes
differ principally in their respective sales charges and shareholder servicing
and distribution expenses and arrangements. All shares of each fund represent an
equal pro rata interest in the net assets of the class to which such shares
belong, and have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except for class specific expenses and exclusive
rights to vote on matters affecting only individual classes. Income, non-class
specific expenses, and realized and unrealized capital gains and losses of the
funds are allocated to each class of shares based on their relative net assets.
Sale of New Opportunities II's Institutional Class had not commenced as of April
30, 2005.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the funds determine that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the funds to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
SECURITIES ON LOAN -- Select may lend portfolio securities through its lending
agent to certain approved borrowers in order to earn additional income. Select
continues to recognize any gain or loss in the market price of the securities
loaned and records any interest earned or dividends declared.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. Realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose taxes
on the
(continued)
- ------
34
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
contract amount of purchases and sales of foreign currency contracts in their
currency. The funds record the foreign tax expense, if any, as a reduction to
the net realized gain (loss) on foreign currency transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to hedge the funds' exposure to foreign
currency exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the funds and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The funds bear the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. Each
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable each fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to each
fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, each fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is each fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
INDEMNIFICATIONS -- Under the corporation organizational documents, its officers
and directors are indemnified against certain liabilities arising out of the
performance of their duties to the funds. In addition, in the normal course of
business, the funds enter into contracts that provide general indemnifications.
The funds' maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the funds. The risk of material
loss from such claims is considered by management to be remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
(continued)
- ------
35
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the funds with investment advisory and
management services in exchange for a single, unified management fee (the fee)
per class. The Agreement provides that all expenses of the funds, except
brokerage commissions, taxes, interest, fees and expenses of those directors who
are not considered "interested persons" as defined in the 1940 Act (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is
computed and accrued daily based on the daily net assets of each specific class
of shares of each fund and paid monthly in arrears. For funds with a stepped fee
schedule, the rate of the fee is determined by applying a fee rate calculation
formula. This formula takes into account all of the investment advisor's assets
under management in the fund's investment strategy (strategy assets) to
calculate the appropriate fee rate for the fund. The strategy assets include the
fund's assets and the assets of other clients of the investment advisor that are
not in the American Century family of funds but that have the same investment
team and investment strategy.
The annual management fee schedule for each class of Select, Capital Growth and
Fundamental Equity, as applicable, is as follows:
- --------------------------------------------------------------------------------
INVESTOR,
A, B & C INSTITUTIONAL ADVISOR
- --------------------------------------------------------------------------------
STRATEGY ASSETS
- --------------------------------------------------------------------------------
First $20 billion 1.000% 0.800% 0.750%
- --------------------------------------------------------------------------------
Next $10 billion 0.950% 0.750% 0.700%
- --------------------------------------------------------------------------------
Next $10 billion 0.925% 0.725% 0.675%
- --------------------------------------------------------------------------------
Next $10 billion 0.900% 0.700% 0.650%
- --------------------------------------------------------------------------------
Over $50 billion 0.875% 0.675% 0.625%
- --------------------------------------------------------------------------------
The annual management fee schedule for each class of New Opportunities II is as
follows:
- ---------------------------------------------------------------
INVESTOR,
A, B & C INSTITUTIONAL
- ---------------------------------------------------------------
STRATEGY ASSETS
- ---------------------------------------------------------------
First $500 million 1.50% 1.30%
- ---------------------------------------------------------------
Next $500 million 1.30% 1.10%
- ---------------------------------------------------------------
Over $1 billion 1.10% 0.90%
- ---------------------------------------------------------------
The effective annual management fee for each class of the funds for the six
months ended April 30, 2005 was as follows:
- --------------------------------------------------------------------------------
INVESTOR INSTITUTIONAL ADVISOR A, B & C
- --------------------------------------------------------------------------------
Select 1.00% 0.80% 0.75% 1.00%
- --------------------------------------------------------------------------------
Capital Growth N/A N/A N/A 1.00%
- --------------------------------------------------------------------------------
Fundamental Equity N/A N/A N/A 1.00%
- --------------------------------------------------------------------------------
New Opportunities II 1.50% -- N/A 1.50%
- --------------------------------------------------------------------------------
(continued)
- ------
36
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master
Distribution and Shareholder Services Plan for the Advisor Class (the Advisor
Class Plan) and a separate Master Distribution and Individual Shareholder
Services Plan for each of the A Class, B Class and C Class (collectively with
the Advisor Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The
plans provide that the Advisor Class, B Class and C Class will pay American
Century Investment Services, Inc. (ACIS) the following annual distribution and
service fees:
- --------------------------------------------------------------------------------
ADVISOR B & C
- --------------------------------------------------------------------------------
Distribution Fee 0.25% 0.75%
- --------------------------------------------------------------------------------
Service Fee 0.25% 0.25%
- --------------------------------------------------------------------------------
The plans provide that the A Class will pay ACIS an annual distribution and
service fee of 0.25%. The fees are computed and accrued daily based on each
class's daily net assets, and paid monthly in arrears. The distribution fee
provides compensation for expenses incurred in connection with distributing
shares of the classes including, but not limited to, payments to brokers,
dealers, and financial institutions that have entered into sales agreements with
respect to shares of the funds. The service fee provides compensation for
shareholder and administrative services rendered by ACIS, its affiliates or
independent third party providers for Advisor Class shares and for individual
shareholder services rendered by broker/dealers or other independent financial
intermediaries for A Class, B Class and C Class shares.
During the six months ended April 30, 2005, the A class in Select and New
Opportunities II received reimbursements of distribution and service fees as
follows:
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
Select $46
- --------------------------------------------------------------------------------
New Opportunities II $22
- --------------------------------------------------------------------------------
The reimbursements did not effect the ratio of expenses to average net assets or
the ratio of net investment income to average net assets. Fees incurred under
the plans during the six months ended April 30, 2005, are detailed in the
Statement of Operations.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's
transfer agent, American Century Services, LLC (formerly American Century
Services Corporation).
The funds have a bank line of credit agreement and Select has a securities
lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the
funds and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an
equity investor in ACC.
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended April 30, 2005 (except as noted), were as follows:
- --------------------------------------------------------------------------------------
FUNDAMENTAL NEW
SELECT CAPITAL GROWTH EQUITY(1) OPPORTUNITIES II
- --------------------------------------------------------------------------------------
Purchases $1,277,818,828 $1,376,455 $2,039,996 $120,651,364
- --------------------------------------------------------------------------------------
Proceeds from sales $1,496,713,216 $819,575 $526,913 $98,546,526
- --------------------------------------------------------------------------------------
(1) November 30, 2004 (fund inception) through April 30, 2005.
(continued)
- ------
37
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
- -------------------------------------------------------------------------------------------------
SELECT CAPITAL GROWTH
- -------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
INVESTOR CLASS
- -------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 360,000,000 N/A
=================================================================================================
Sold 1,348,007 $ 49,628,963
- ---------------------------------
Issued in reinvestment
of distributions 205,594 7,839,287
- ---------------------------------
Redeemed (8,118,379) (299,293,338)
- -------------------------------------------------------------------------------------------------
Net decrease (6,564,778) $(241,825,088)
=================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 360,000,000 N/A
=================================================================================================
Sold 3,624,507 $ 128,959,593
- ---------------------------------
Redeemed (14,501,975) (516,136,114)
- -------------------------------------------------------------------------------------------------
Net decrease (10,877,468) $(387,176,521)
=================================================================================================
INSTITUTIONAL CLASS
- -------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 40,000,000 N/A
=================================================================================================
Sold 515,383 $ 19,215,707
- ---------------------------------
Issued in reinvestment
of distributions 23,580 904,984
- ---------------------------------
Redeemed (1,498,204) (55,782,148)
- -------------------------------------------------------------------------------------------------
Net decrease (959,241) $(35,661,457)
=================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 40,000,000 N/A
=================================================================================================
Sold 1,041,936 $ 37,331,163
- ---------------------------------
Redeemed (1,105,498) (39,531,415)
- -------------------------------------------------------------------------------------------------
Net decrease (63,562) $ (2,200,252)
=================================================================================================
ADVISOR CLASS
- -------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 100,000,000 N/A
=================================================================================================
Sold 181,025 $ 6,601,756
- ---------------------------------
Redeemed (113,534) (4,159,028)
- -------------------------------------------------------------------------------------------------
Net increase 67,491 $ 2,442,728
=================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 100,000,000 N/A
=================================================================================================
Sold 308,352 $ 10,860,454
- ---------------------------------
Redeemed (521,487) (18,372,964)
- -------------------------------------------------------------------------------------------------
Net decrease (213,135) $ (7,512,510)
=================================================================================================
(continued)
- ------
38
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- ---------------------------------------------------------------------------------------------------
SELECT CAPITAL GROWTH
- ---------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
A CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 25,000,000 100,000,000
===================================================================================================
Sold 241,996 $ 8,877,852 34,407 $354,884
- ---------------------------------
Redeemed (89,673) (3,282,177) (5,980) (62,034)
- ---------------------------------------------------------------------------------------------------
Net increase 152,323 $ 5,595,675 28,427 $292,850
===================================================================================================
YEAR ENDED OCTOBER 31, 2004(1)
SHARES AUTHORIZED 25,000,000 100,000,000
===================================================================================================
Sold 726,527 $25,737,099 69,980 $690,177
- ---------------------------------
Redeemed (90,804) (3,183,330) -- --
- ---------------------------------------------------------------------------------------------------
Net increase 635,723 $22,553,769 69,980 $690,177
===================================================================================================
B CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 25,000,000 100,000,000
===================================================================================================
Sold 8,006 $ 289,575 13,128 $132,517
- ---------------------------------
Redeemed (5,461) (198,492) (1,531) (15,452)
- ---------------------------------------------------------------------------------------------------
Net increase 2,545 $ 91,083 11,597 $117,065
===================================================================================================
YEAR ENDED OCTOBER 31, 2004(1)
SHARES AUTHORIZED 25,000,000 100,000,000
===================================================================================================
Sold 37,593 $1,318,038 45,733 $452,333
- ---------------------------------
Redeemed (1,950) (67,594) -- --
- ---------------------------------------------------------------------------------------------------
Net increase 35,643 $1,250,444 45,733 $452,333
===================================================================================================
C CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 25,000,000 100,000,000
===================================================================================================
Sold 21,990 $ 797,863 16,205 $169,041
- ---------------------------------
Redeemed (25,424) (906,624) (7) (71)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (3,434) $(108,761) 16,198 $168,970
===================================================================================================
YEAR ENDED OCTOBER 31, 2004(1)
SHARES AUTHORIZED 25,000,000 100,000,000
===================================================================================================
Sold 86,243 $3,002,834 34,974 $349,262
- ---------------------------------
Redeemed (11,068) (383,521) (83) (804)
- ---------------------------------------------------------------------------------------------------
Net increase 75,175 $2,619,313 34,891 $348,458
===================================================================================================
(1) February 27, 2004 (fund inception) through October 31, 2004 for Capital Growth.
(continued)
- ------
39
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- ---------------------------------------------------------------------------------------------------
FUNDAMENTAL EQUITY NEW OPPORTUNITIES II
- ---------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED N/A 250,000,000
===================================================================================================
Sold 891,596 $ 5,810,576
- ---------------------------------
Issued in reinvestment
of distributions 149,816 991,781
- ---------------------------------
Redeemed (721,818) (4,628,178)
- ---------------------------------------------------------------------------------------------------
Net increase 319,594 $ 2,174,179
===================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED N/A 250,000,000
===================================================================================================
Sold 1,408,981 $ 8,685,743
- ---------------------------------
Redeemed (870,628) (5,433,330)
- ---------------------------------------------------------------------------------------------------
Net increase 538,353 $ 3,252,413
===================================================================================================
INSTITUTIONAL CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED N/A 50,000,000
===================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED N/A 50,000,000
===================================================================================================
A CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005(1)
SHARES AUTHORIZED 50,000,000 25,000,000
===================================================================================================
Sold 69,103 $701,178 3,475,842 $22,506,133
- ---------------------------------
Issued in reinvestment
of distributions -- -- 95,581 631,788
- ---------------------------------
Redeemed (1,558) (16,000) (510,699) (3,244,692)
- ---------------------------------------------------------------------------------------------------
Net increase 67,545 $685,178 3,060,724 $19,893,229
===================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED N/A 25,000,000
===================================================================================================
Sold 3,302,884 $20,304,602
- ---------------------------------
Redeemed (209,957) (1,284,533)
- ---------------------------------------------------------------------------------------------------
Net increase 3,092,927 $19,020,069
===================================================================================================
B CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005(1)
SHARES AUTHORIZED 50,000,000 25,000,000
===================================================================================================
Sold 34,040 $340,474 135,345 $871,354
- ---------------------------------
Issued in reinvestment
of distributions -- -- 3,232 21,235
- ---------------------------------
Redeemed -- -- (2,690) (17,366)
- ---------------------------------------------------------------------------------------------------
Net increase 34,040 $340,474 135,887 $875,223
===================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED N/A 25,000,000
===================================================================================================
Sold 168,526 $1,021,035
- ---------------------------------
Redeemed (17,922) (112,383)
- ---------------------------------------------------------------------------------------------------
Net increase 150,604 $ 908,652
===================================================================================================
(1) November 30, 2004 (fund inception) through April 30, 2005 for Fundamental
Equity.
(continued)
- ------
40
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- ---------------------------------------------------------------------------------------------------
FUNDAMENTAL EQUITY NEW OPPORTUNITIES II
- ---------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
C CLASS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005(1)
SHARES AUTHORIZED 50,000,000 25,000,000
===================================================================================================
Sold 51,792 $526,406 184,090 $1,181,101
- ---------------------------------
Issued in reinvestment
of distributions -- -- 2,993 19,722
- ---------------------------------
Redeemed -- -- (27,361) (171,040)
- ---------------------------------------------------------------------------------------------------
Net increase 51,792 $526,406 159,722 $1,029,783
===================================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED N/A 25,000,000
===================================================================================================
Sold 213,716 $1,313,126
- ---------------------------------
Redeemed (11,191) (67,857)
- ---------------------------------------------------------------------------------------------------
Net increase 202,525 $1,245,269
===================================================================================================
(1) November 30, 2004 (fund inception) through April 30, 2005 for Fundamental Equity.
5. AFFILIATED COMPANY TRANSACTIONS
If a fund's holding represents ownership of 5% or more of the voting securities
of a company, the company is affiliated as defined in the 1940 Act. A summary of
transactions for each company which is or was an affiliate at or during the six
months ended April 30, 2005 follows:
- -------------------------------------------------------------------------------------------------------------
APRIL 30, 2005
SHARE BALANCE PURCHASE SALES REALIZED DIVIDEND SHARE MARKET
FUND/COMPANY 10/31/04 COST COST GAIN INCOME BALANCE VALUE
- -------------------------------------------------------------------------------------------------------------
SELECT
- -------------------------------------------------------------------------------------------------------------
Four Seasons
Hotels Inc.(1)(2) 1,960,000 -- $24,825,174 $33,609,695 $74,309 1,150,888 $ 73,046,861
- -------------------
Yankee Candle
Company Inc.(1)(3) 4,347,500 -- 42,722,182 2,357,002 -- 2,863,690 79,581,945
- -------------------------------------------------------------------------------------------------------------
-- $67,547,356 $35,966,697 $74,309 $152,628,806
=============================================================================================================
(1) Security, or a portion thereof, was on loan as of April 30, 2005.
(2) Issuer was not an affiliate at April 30, 2005.
(3) Non-income producing.
6. SECURITIES LENDING
As of April 30, 2005, securities in Select valued at $277,618,171, were on loan
through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives
and maintains collateral in the form of cash, and/or acceptable securities as
approved by ACIM. Cash collateral is invested in authorized investments by the
lending agent in a pooled account. The value of cash collateral received at
period end is disclosed in the Statement of Assets and Liabilities and
investments made with the cash by the lending agent are listed in the Schedule
of Investments. Any deficiencies or excess of collateral must be delivered or
transferred by the member firms no later than the close of business on the next
business day. The total value of all collateral received, at this date, was
$284,959,790. Select's risks in securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
If the borrower defaults, receipt of the collateral by Select may be delayed or
limited.
(continued)
- ------
41
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
7. BANK LINE OF CREDIT
The funds, along with certain other funds managed by ACIM, have a $575,000,000
unsecured bank line of credit agreement with JPMCB, which was renewed from
$650,000,000, effective December 15, 2004. The funds may borrow money for
temporary or emergency purposes to fund shareholder redemptions. Borrowings
under the agreement bear interest at the Federal Funds rate plus 0.50%. The
funds did not borrow from the line during the six months ended April 30, 2005.
8. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
- -------------------------------------------------------------------------------------------------------------
FUNDAMENTAL NEW
SELECT CAPITAL GROWTH EQUITY OPPORTUNITIES II
- -------------------------------------------------------------------------------------------------------------
Federal tax cost of investments $3,495,916,120 $1,986,636 $1,523,739 $74,856,335
=============================================================================================================
Gross tax appreciation of investments $527,607,411 $125,807 $ 36,989 $ 6,543,745
- ----------------------------------------
Gross tax depreciation of investments (98,187,459) (85,303) (68,897) (1,796,399)
- -------------------------------------------------------------------------------------------------------------
Net tax appreciation (depreciation)
of investments $429,419,952 $ 40,504 $(31,908) $ 4,747,346
=============================================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales and the realization for tax purposes of unrealized gains on certain
forward foreign currency.
Following are the capital loss carryover amounts as of October 31, 2004:
- --------------------------------------------------------------------------------
NEW
SELECT CAPITAL GROWTH OPPORTUNITIES II
- --------------------------------------------------------------------------------
Accumulated capital losses $(625,546,652) $(28,393) --
- --------------------------------------------------------------------------------
The accumulated capital losses listed above represent net capital loss
carryovers that may be used to offset future realized capital gains for federal
income tax purposes. The capital loss carryovers expire as follows:
- --------------------------------------------------------------------------------------
2009 2010 2011 2012
- --------------------------------------------------------------------------------------
Select $(104,198,293) $(521,348,359) -- --
- --------------------------------------------------------------------------------------
Capital Growth -- -- -- $(28,393)
- --------------------------------------------------------------------------------------
New Opportunities II -- -- -- --
- --------------------------------------------------------------------------------------
- ------
42
Select - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ----------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $34.80 $33.77 $28.91 $34.94 $52.20 $53.32
- ----------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.15 -- 0.01 0.07 0.06 (0.06)
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.33 1.03 4.92 (6.04) (14.53) 4.04
- ----------------------------------------------------------------------------------------
Total From
Investment Operations 0.48 1.03 4.93 (5.97) (14.47) 3.98
- ----------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.08) -- (0.07) (0.06) -- --
- --------------------------
From Net Realized Gains -- -- -- -- (2.79) (5.10)
- ----------------------------------------------------------------------------------------
Total Distributions (0.08) -- (0.07) (0.06) (2.79) (5.10)
- ----------------------------------------------------------------------------------------
Net Asset Value,
End of Period $35.20 $34.80 $33.77 $28.91 $34.94 $52.20
========================================================================================
TOTAL RETURN(3) 1.37% 3.05% 17.11% (17.11)% (28.93)% 7.64%
- ----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
- --------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 0.84%(4) (0.01)% 0.03% 0.21% 0.15% (0.11)%
- --------------------------
Portfolio Turnover Rate 33% 48% 84% 168% 98% 67%
- --------------------------
Net Assets,
End of Period
(in millions) $3,376 $3,565 $3,828 $3,522 $4,745 $7,086
- ----------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
43
Select - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $35.09 $33.99 $29.10 $35.16 $52.36 $53.41
- --------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Income(2) 0.20 0.07 0.07 0.13 0.14 0.04
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.34 1.03 4.95 (6.06) (14.55) 4.01
- --------------------------------------------------------------------------------------------
Total From
Investment Operations 0.54 1.10 5.02 (5.93) (14.41) 4.05
- --------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.16) -- (0.13) (0.13) -- --
- --------------------------
From Net Realized Gains -- -- -- -- (2.79) (5.10)
- --------------------------------------------------------------------------------------------
Total Distributions (0.16) -- (0.13) (0.13) (2.79) (5.10)
- --------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $35.47 $35.09 $33.99 $29.10 $35.16 $52.36
============================================================================================
TOTAL RETURN(3) 1.49% 3.24% 17.34% (16.93)% (28.71)% 7.77%
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.80%(4) 0.80% 0.80% 0.80% 0.80% 0.80%
- --------------------------
Ratio of Net
Investment Income
to Average Net Assets 1.04%(4) 0.19% 0.23% 0.41% 0.35% 0.09%
- --------------------------
Portfolio Turnover Rate 33% 48% 84% 168% 98% 67%
- --------------------------
Net Assets,
End of Period
(in thousands) $203,305 $234,815 $229,596 $185,897 $181,708 $259,092
- --------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
44
Select - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $34.43 $33.49 $28.66 $34.68 $52.01 $53.19
- --------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(2) 0.10 (0.09) (0.07) (0.02) (0.04) (0.21)
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.33 1.03 4.90 (6.00) (14.50) 4.13
- --------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.43 0.94 4.83 (6.02) (14.54) 3.92
- --------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income -- -- --(3) -- -- --
- --------------------------
From Net Realized Gains -- -- -- -- (2.79) (5.10)
- --------------------------------------------------------------------------------------------------
Total Distributions -- -- --(3) -- (2.79) (5.10)
- --------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $34.86 $34.43 $33.49 $28.66 $34.68 $52.01
==================================================================================================
TOTAL RETURN(4) 1.25% 2.81% 16.86% (17.36)% (29.18)% 7.54%
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.25%(5) 1.25% 1.25% 1.25% 1.25% 1.25%
- --------------------------
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.59%(5) (0.26)% (0.22)% (0.04)% (0.10)% (0.36)%
- --------------------------
Portfolio Turnover Rate 33% 48% 84% 168% 98% 67%
- --------------------------
Net Assets,
End of Period
(in thousands) $25,262 $22,626 $29,152 $20,432 $23,389 $22,239
- --------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount is less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
45
Select - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.66 $33.72 $27.75
- --------------------------------------------------------------------------------
Income From Investment Operations
- ------------------------------------------
Net Investment Income (Loss)(3) 0.10 (0.10) (0.14)
- ------------------------------------------
Net Realized and Unrealized Gain 0.33 1.04 6.11
- --------------------------------------------------------------------------------
Total From Investment Operations 0.43 0.94 5.97
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $35.09 $34.66 $33.72
================================================================================
TOTAL RETURN(4) 1.24% 2.79% 21.51%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.25%(5) 1.25% 1.25%(5)
- ------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.59%(5) (0.26)% (0.56)%(5)
- ------------------------------------------
Portfolio Turnover Rate 33% 48% 84%(6)
- ------------------------------------------
Net Assets, End of Period (in thousands) $38,377 $32,624 $10,305
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
46
Select - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.21 $33.53 $27.75
- --------------------------------------------------------------------------------
Income From Investment Operations
- ------------------------------------------
Net Investment Loss(3) (0.03) (0.35) (0.31)
- ------------------------------------------
Net Realized and Unrealized Gain 0.33 1.03 6.09
- --------------------------------------------------------------------------------
Total From Investment Operations 0.30 0.68 5.78
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $34.51 $34.21 $33.53
================================================================================
TOTAL RETURN(4) 0.88% 2.03% 20.83%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00%(5)
- ------------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.16)%(5) (1.01)% (1.28)%(5)
- ------------------------------------------
Portfolio Turnover Rate 33% 48% 84%(6)
- ------------------------------------------
Net Assets, End of Period (in thousands) $2,380 $2,273 $1,032
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
47
Select - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.23 $33.56 $27.75
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------------
Net Investment Loss(3) (0.04) (0.36) (0.31)
- ---------------------------------------
Net Realized and Unrealized Gain 0.34 1.03 6.12
- --------------------------------------------------------------------------------
Total From Investment Operations 0.30 0.67 5.81
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $34.53 $34.23 $33.56
================================================================================
TOTAL RETURN(4) 0.85% 2.03% 20.94%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00%(5)
- ---------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.16)%(5) (1.01)% (1.28)%(5)
- ---------------------------------------
Portfolio Turnover Rate 33% 48% 84%(6)
- ---------------------------------------
Net Assets, End of Period
(in thousands) $3,647 $3,733 $1,136
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
48
Capital Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2005(1) 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.89 $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- ------------------------------------------------------
Net Investment Income (Loss)(3) 0.02 (0.03)
- ------------------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.10 (0.08)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.12 (0.11)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.01 $9.89
================================================================================
TOTAL RETURN(4) 1.21% (1.10)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.27%(5) 1.25%(5)
- ------------------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.41%(5) (0.43)%(5)
- ------------------------------------------------------
Portfolio Turnover Rate 44% 87%
- ------------------------------------------------------
Net Assets, End of Period (in thousands) $985 $692
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) February 27, 2004 (commencement of sale) through October 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
49
Capital Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2005(1) 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.84 $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- --------------------------------------------------
Net Investment Loss(3) (0.02) (0.08)
- --------------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.10 (0.08)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.08 (0.16)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $9.92 $9.84
================================================================================
TOTAL RETURN(4) 0.81% (1.60)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 2.02%(5) 2.00%(5)
- --------------------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.34)%(5) (1.17)%(5)
- --------------------------------------------------
Portfolio Turnover Rate 44% 87%
- --------------------------------------------------
Net Assets, End of Period (in thousands) $569 $450
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) February 27, 2004 (commencement of sale) through October 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
50
Capital Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2005(1) 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.84 $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- --------------------------------------------------
Net Investment Loss(3) (0.02) (0.08)
- ------------------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.10 (0.08)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.08 (0.16)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $9.92 $9.84
================================================================================
TOTAL RETURN(4) 0.81% (1.60)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 2.02%(5) 2.00%(5)
- --------------------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.34)%(5) (1.18)%(5)
- --------------------------------------------------
Portfolio Turnover Rate 44% 87%
- --------------------------------------------------
Net Assets, End of Period (in thousands) $507 $343
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) February 27, 2004 (commencement of sale) through October 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
51
Fundamental Equity - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2005(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------------------------------
Net Investment Income(2) --(3)
- ----------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
- --------------------------------------------------------------------------------
Total From Investment Operations (0.02)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $9.98
================================================================================
TOTAL RETURN(4) (0.20)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.28%(5)
- ----------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 0.07%(5)
- ----------------------------------------------------------------
Portfolio Turnover Rate 44%
- ----------------------------------------------------------------
Net Assets, End of Period (in thousands) $674
- --------------------------------------------------------------------------------
(1) November 30, 2004 (inception) through April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount is less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
52
Fundamental Equity - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2005(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------------------------------
Net Investment Loss(2) (0.03)
- ----------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
- --------------------------------------------------------------------------------
Total From Investment Operations (0.05)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $9.95
================================================================================
TOTAL RETURN(3) (0.50)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 2.03%(4)
- ----------------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets (0.68)%(4)
- ----------------------------------------------------------------
Portfolio Turnover Rate 44%
- ----------------------------------------------------------------
Net Assets, End of Period (in thousands) $339
- --------------------------------------------------------------------------------
(1) November 30, 2004 (inception) through April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
53
Fundamental Equity - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2005(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------------------------------
Net Investment Loss(2) (0.03)
- ----------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
- --------------------------------------------------------------------------------
Total From Investment Operations (0.05)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $9.95
================================================================================
TOTAL RETURN(3) (0.50)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 2.03%(4)
- ----------------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets (0.68)%(4)
- ----------------------------------------------------------------
Portfolio Turnover Rate 44%
- ----------------------------------------------------------------
Net Assets, End of Period (in thousands) $515
- --------------------------------------------------------------------------------
(1) November 30, 2004 (inception) through April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
54
New Opportunities II - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.29 $5.75 $4.15 $4.52 $5.00
- --------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(3) (0.03) (0.07) (0.05) (0.05) (0.01)
- --------------------------
Net Realized and
Unrealized Gain (Loss) (0.12) 0.61 1.65 (0.32) (0.47)
- --------------------------------------------------------------------------------
Total From
Investment Operations (0.15) 0.54 1.60 (0.37) (0.48)
- --------------------------------------------------------------------------------
Distributions
- --------------------------
From Net Realized Gains (0.17) -- -- -- --
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $5.97 $6.29 $5.75 $4.15 $4.52
================================================================================
TOTAL RETURN(4) (2.59)% 9.39% 38.55% (8.19)% (9.60)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.50%(5) 1.50% 1.50% 1.50% 1.50%(5)
- --------------------------
Ratio of Net
Investment Loss
to Average Net Assets (0.85)%(5) (1.09)% (1.11)% (1.02)% (0.81)%(5)
- --------------------------
Portfolio Turnover Rate 130% 255% 236% 182% 89%
- --------------------------
Net Assets,
End of Period
(in thousands) $38,857 $38,917 $32,512 $25,479 $18,217
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) June 1, 2001 (inception) through October 31, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
- ------
55
New Opportunities II - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.26 $5.74 $4.15
- --------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------------
Net Investment Loss(3) (0.04) (0.08) (0.05)
- --------------------------------
Net Realized and
Unrealized Gain (Loss) (0.11) 0.60 1.64
- --------------------------------------------------------------------------------
Total From
Investment Operations (0.15) 0.52 1.59
- --------------------------------------------------------------------------------
Distributions
- --------------------------------
From Net Realized Gains (0.16) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $5.95 $6.26 $5.74
================================================================================
TOTAL RETURN(4) (2.70)% 9.06% 38.31%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.75%(5) 1.75% 1.75%(5)
- --------------------------------
Ratio of Net Investment Loss
to Average Net Assets (1.10)%(5) (1.34)% (1.47)%(5)
- --------------------------------
Portfolio Turnover Rate 130% 255% 236%(6)
- --------------------------------
Net Assets, End of Period
(in thousands) $37,548 $20,337 $891
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
56
New Opportunities II - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.18 $5.71 $4.15
- --------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------------
Net Investment Loss(3) (0.06) (0.13) (0.08)
- --------------------------------
Net Realized and
Unrealized Gain (Loss) (0.11) 0.60 1.64
- --------------------------------------------------------------------------------
Total From
Investment Operations (0.17) 0.47 1.56
- --------------------------------------------------------------------------------
Distributions
- --------------------------------
From Net Realized Gains (0.11) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $5.90 $6.18 $5.71
================================================================================
TOTAL RETURN(4) (2.99)% 8.23% 37.59%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50%(5) 2.50% 2.50%(5)
- --------------------------------
Ratio of Net Investment Loss
to Average Net Assets (1.85)%(5) (2.09)% (2.20)%(5)
- --------------------------------
Portfolio Turnover Rate 130% 255% 236%(6)
- --------------------------------
Net Assets, End of Period
(in thousands) $1,911 $1,163 $215
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
57
New Opportunities II - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.20 $5.73 $4.15
- --------------------------------------------------------------------------------
Income From Investment Operations
- -----------------------------------------
Net Investment Loss(3) (0.06) (0.13) (0.07)
- -----------------------------------------
Net Realized and
Unrealized Gain (Loss) (0.11) 0.60 1.65
- --------------------------------------------------------------------------------
Total From Investment Operations (0.17) 0.47 1.58
- --------------------------------------------------------------------------------
Distributions
- -----------------------------------------
From Net Realized Gains (0.11) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $5.92 $6.20 $5.73
================================================================================
TOTAL RETURN(4) (2.98)% 8.20% 38.07%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50%(5) 2.50% 2.22%(5)(6)
- ---------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (1.85)%(5) (2.09)% (1.97)%(5)(6)
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 130% 255% 236%(7)
- --------------------------------------------------------------------------------
Net Assets, End of Period
(in thousands) $2,180 $1,294 $34
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the
total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(5) Annualized.
(6) During a portion of the period ended October 31, 2003, the distributor
agreed to voluntarily waive the distribution and service fees. Had fees not
been waived the annualized ratio of operating expenses to average net asset
and the annualized ratio of net investment income to average net assets would
have been 2.50% and (2.25)%, respectively.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
58
Share Class Information
Six classes of shares are authorized for sale by Select: Investor Class,
Institutional Class, Advisor Class, A Class, B Class and C Class. Three classes
of shares are authorized for sale by Capital Growth and Fundamental Equity: A
Class, B Class and C Class. Five classes of shares are authorized for sale by
New Opportunities II: Investor Class, Institutional Class, A Class, B Class and
C Class. The total expense ratio of Institutional Class shares is lower than
that of Investor Class shares. The total expense ratios of Advisor Class, A
Class, B Class and C Class shares are higher than that of Investor Class shares.
ON JANUARY 30, 2003, INVESTOR CLASS SHARES OF SELECT AND NEW OPPORTUNITIES II
BECAME UNAVAILABLE TO NEW SELF-DIRECTED RETAIL INVESTORS.
INVESTOR CLASS shares are available for purchase in two ways: 1) by existing
shareholders, directly from American Century without any commissions or other
fees; or 2) through a broker-dealer, which may require payment of a transaction
fee to the broker.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and
distribution fee. The total expense ratio of Advisor Class shares is 0.25%
higher than the total expense ratio of Investor Class shares.
A CLASS shares are sold primarily through employer-sponsored retirement plans
through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. A Class shares are sold at their offering price, which is
net asset value plus an initial sales charge that ranges from 5.75% to 0.00% for
equity funds, depending on the amount invested. The initial sales charge is
deducted from the purchase amount before it is invested. A Class shares may be
subject to a contingent deferred sales charge (CDSC). There is no CDSC on shares
acquired through reinvestment of dividends or capital gains. The prospectus
contains information regarding reductions and waivers of sales charges for A
Class shares. A Class shares also are subject to a 0.25% annual Rule 12b-1
service and distribution fee.
B CLASS shares are sold primarily through employer-sponsored retirement plans
through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. B Class shares redeemed within six years of purchase are
subject to a CDSC that declines from 5.00% during the first year after purchase
to 0.00% the sixth year after purchase. There is no CDSC on shares acquired
through reinvestment of dividends or capital gains. B Class shares also are
subject to a 1.00% annual Rule 12b-1 service and distribution fee.
(continued)
- ------
59
Share Class Information
B Class shares automatically convert to A Class shares (with lower expenses)
eight years after their purchase date.
C CLASS shares are sold primarily through employer-sponsored retirement plans
through institutions such as investment advisors, banks, broker-dealers, and
insurance companies. C Class shares redeemed within 12 months of purchase are
subject to a CDSC of 1.00%. There is no CDSC on shares acquired through
reinvestment of dividends or capital gains. C Class shares also are subject to a
Rule 12b-1 service and distribution fee of 1.00%.
All classes of shares represent a pro rata interest in the funds and generally
have the same rights and preferences.
(continued)
- ------
60
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The funds file their 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-Q. The funds' Forms N-Q are available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The funds also make their complete schedule
of portfolio holdings for the most recent quarter of their fiscal year available
on their Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
61
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials but including
service-oriented firms. Prepared and published by Dow Jones & Co., it is the
oldest and most widely quoted of all the market indicators.
The RUSSELL 1000 INDEX is a market-capitalization weighted, large-cap index
created by Frank Russell Company to measure the performance of the 1,000 largest
companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S.
companies, based on total market capitalization).
The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies (the 1,000 largest of the 3,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth rates.
The RUSSELL 2000 INDEX is a market-capitalization weighted index created by
Frank Russell Company to measure the performance of the 2,000 smallest of the
3,000 largest publicly traded U.S. companies, based on total market
capitalization.
The RUSSELL 2000 GROWTH INDEX measures the performance of those Russell 2000
companies (the 2,000 smallest of the 3,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth rates.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
The S&P SMALLCAP 600 INDEX, a capitalization-weighted index consisting of 600
domestic stocks, measures the small company segment of the U.S. market.
- ------
62
Notes
- ------
63
Notes
- ------
64
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
INVESTORS USING ADVISORS:
1-800-378-9878
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
COMPANIES
The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.
American Century Investment Services, Inc., Distributor
(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
0506
SH-SAN-43963S
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
New Opportunities Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NEW OPPORTUNITIES
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . . 4
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . 9
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 11
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 12
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
OTHER INFORMATION
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III
WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semi-annual report for the New
Opportunities fund for the six months ended April 30, 2005.
This report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers and
other communications about investments, portfolio strategy and the markets.
Your next shareholder report for these funds will be the annual report dated
October 31, 2005, available in about six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
- ------
1
New Opportunities - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
----------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
NEW OPPORTUNITIES -3.73% -14.44% 5.66% 12/26/96
- --------------------------------------------------------------------------------
RUSSELL 2000 GROWTH INDEX(1) -0.55% -5.83% 2.11%(2) --
- --------------------------------------------------------------------------------
(1) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. - A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made by
Lipper.
(2) Since 12/31/96, the date nearest the fund's inception for which data are
available.
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made December 26, 1996
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended April 30
- ----------------------------------------------------------------------------------------------------
1997* 1998 1999 2000 2001 2002 2003 2004 2005
- ----------------------------------------------------------------------------------------------------
New Opportunities -20.00% 50.50% 5.15% 172.82% -46.30% -7.32% -26.32% 29.85% -3.73%
- ----------------------------------------------------------------------------------------------------
Russell 2000 Growth Index -11.52% 43.70% -3.77% 31.39% -24.85% -8.52% -23.50% 41.57% -0.55%
- ----------------------------------------------------------------------------------------------------
* From 12/26/96, the fund's inception date. Index data from 12/31/96, the date
nearest the fund's inception for which data are available. Not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Data assumes reinvestment of dividends and capital gains, and none of the charts
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Returns for the index are
provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
2
New Opportunities - Portfolio Commentary
[photo of Tom Telford, Harold S. Bradley, Stafford Southwick and Matt Ferretti.]
THE NEW OPPORTUNITIES INVESTMENT TEAM (FROM LEFT): PORTFOLIO MANAGERS TOM
TELFORD AND HAROLD S. BRADLEY AND INVESTMENT ANALYSTS STAFFORD SOUTHWICK AND
MATT FERRETTI.
American Century New Opportunities fell 3.16%* during the six months ended April
30, 2005, lagging the return of its benchmark, the Russell 2000 Growth Index,
which fell 1.98%.
SMALL CAPS SLIDE
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004,
despite record-high oil prices, rising interest rates, and a modest increase in
underlying inflation.
Rising interest rates and general compression of price/earnings multiples as the
period progressed also hampered markets, disproportionately affecting small-cap
stocks. In the last half of the six-month period, the Dow Jones Industrial
Average and the S&P 500, two indices consisting primarily of large-cap stocks,
fell just 2.28% and 1.61%, respectively. But the Russell 2000 and S&P SmallCap
600 indices, comprising small-cap stocks, declined 6.87% and 5.39%,
respectively. During this time, New Opportunities outperformed its benchmark by
180 basis points, falling 6.84% compared with the benchmark's 8.64% decline.
An overweight stake and solid stock selection in materials provided the biggest
boost to the portfolio's performance during the six-month period on a relative
and absolute basis. We also benefited from solid picks in financials and an
overweight position in utilities. However, security selection in the information
technology sector hindered results, and the sector proved by far the leading
detriment to the portfolio's performance.
MATERIALS SURGE
New Opportunities realized its largest absolute and relative contributions in
the six-month period from stakes in the materials sector, specifically in the
metals and mining industry. Titanium Metals Corp., a maker of titanium materials
used in aircraft, constituted the portfolio's best individual performer. Its
stock rose 74% amid rising demand from the aerospace industry.
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Silicon Valley Bancshares 2.9% --
- --------------------------------------------------------------------------------
Titanium Metals Corp. 2.6% 1.8%
- --------------------------------------------------------------------------------
UGI Corp. 2.2% 1.5%
- --------------------------------------------------------------------------------
Websense Inc. 2.1% 1.3%
- --------------------------------------------------------------------------------
Greenhill & Co. Inc. 2.0% 1.2%
- --------------------------------------------------------------------------------
HealthTronics Inc. 1.9% --
- --------------------------------------------------------------------------------
Children's Place Retail
Stores, Inc. (The) 1.8% 1.3%
- --------------------------------------------------------------------------------
Berry Petroleum
Company Cl A 1.8% 1.4%
- --------------------------------------------------------------------------------
Gardner Denver Inc. 1.7% --
- --------------------------------------------------------------------------------
Itron Inc. 1.7% --
- --------------------------------------------------------------------------------
*Returns for periods less than one year are not annualized. (continued)
- ------
3
New Opportunities - Portfolio Commentary
Metals and mining also produced the portfolio's second-leading performer in AK
Steel Holding, a steel maker with seven plants scattered throughout the Ohio
Valley. AK Steel's stock price almost doubled in the first four months of the
period before tumbling as the period closed. Recognizing the impact that
declining steel prices would have on the stock, we sold the portfolio's stake in
the company before its share price collapsed.
Solid security selection in the financials sector also boosted the portfolio's
performance, as did the overweight position in utilities. In particular, New
Opportunities II benefited from its stake in UGI Corp., a Pennsylvania-based
utility. The company's French propane distribution business performed especially
well during the period, and UGI's share price rose 32%.
TECHNOLOGY SOFTNESS
With demand for computers and computer-related equipment weakening in early
2005, New Opportunities maintained an underweight position in information
technology during the period, but it still accounted for slightly more than 20%
of the portfolio's overall average weighting. Security selection throughout the
IT sector hurt performance. Overall, IT accounted for six of the portfolio's top
10 detracting securities in the period on a relative basis.
SpectraLink, a maker of commercial wireless systems, topped the portfolio's list
of detracting securities. The portfolio also suffered from the performance of
Merix Corp., which makes circuit boards for sophisticated electrical equipment.
New Opportunities has liquidated its positions in both SpectraLink and Merix.
Meanwhile, energy's volatility proved a challenge during the period. The
portfolio benefited on an absolute basis from stakes in small-cap oil and gas
producers such as Berry Petroleum. Nonetheless, despite the portfolio's
overweight position, the sector crimped New Opportunities' relative return.
OUR COMMITMENT
We remain committed to pursuing an investment approach of identifying small
companies that appear to have accelerating earnings and revenue growth. We
believe this approach provides the optimum potential for long-term investment
rewards.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Specialty Retail 8.0% 6.1%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 5.0% 1.8%
- --------------------------------------------------------------------------------
Computers & Peripherals 4.3% 2.3%
- --------------------------------------------------------------------------------
Machinery 4.2% 1.1%
- --------------------------------------------------------------------------------
Gas Utilities 3.9% 1.5%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 96.3% 96.1%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 3.7% 3.9%
- --------------------------------------------------------------------------------
- ------
4
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
- ------
5
Shareholder Fee Example (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
- ---------------------------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO*
- ---------------------------------------------------------------------------------------------------
NEW OPPORTUNITIES SHAREHOLDER FEE EXAMPLE
- ---------------------------------------------------------------------------------------------------
Actual $1,000 $968.40 $7.32 1.50%
- ---------------------------------------------------------------------------------------------------
Hypothetical $1,000 $1,017.36 $7.50 1.50%
- ---------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
181, the number of days in the most recent fiscal half-year divided by 365, to
reflect the one-half year period.
- ------
6
New Opportunities - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- -------------------------------------------------------------------------------
COMMON STOCKS -- 97.6%
AEROSPACE & DEFENSE -- 1.1%
- -------------------------------------------------------------------------------
171,559 AAR Corp.(1) $ 2,527
- -------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS -- 1.0%
- -------------------------------------------------------------------------------
108,254 Pacer International Inc.(1) 2,244
- -------------------------------------------------------------------------------
AIRLINES -- 1.0%
- -------------------------------------------------------------------------------
218,332 AMR Corp.(1) 2,286
- -------------------------------------------------------------------------------
AUTO COMPONENTS -- 0.6%
- -------------------------------------------------------------------------------
71,279 LKQ Corp.(1) 1,436
- -------------------------------------------------------------------------------
BIOTECHNOLOGY -- 0.4%
- -------------------------------------------------------------------------------
83,134 Kendle International Inc.(1) 983
- -------------------------------------------------------------------------------
CAPITAL MARKETS -- 2.0%
- -------------------------------------------------------------------------------
145,124 Greenhill & Co. Inc. 4,571
- -------------------------------------------------------------------------------
COMMERCIAL BANKS -- 3.3%
- -------------------------------------------------------------------------------
137,024 Silicon Valley Bancshares(1) 6,495
- -------------------------------------------------------------------------------
40,963 Virginia Commerce Bancorp(1) 1,098
- -------------------------------------------------------------------------------
7,593
- -------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 2.8%
- -------------------------------------------------------------------------------
111,773 American Reprographics Co.(1) 1,570
- -------------------------------------------------------------------------------
127,740 LECG Corp.(1) 2,648
- -------------------------------------------------------------------------------
61,238 Mobile Mini Inc.(1) 2,147
- -------------------------------------------------------------------------------
6,365
- -------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 1.0%
- -------------------------------------------------------------------------------
291,003 Arris Group Inc.(1) 2,209
- -------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 4.3%
- -------------------------------------------------------------------------------
207,815 Emulex Corp.(1) 3,227
- -------------------------------------------------------------------------------
148,509 Neoware Systems Inc.(1) 1,436
- -------------------------------------------------------------------------------
80,907 Rimage Corp.(1) 1,622
- -------------------------------------------------------------------------------
272,724 Western Digital Corp.(1) 3,462
- -------------------------------------------------------------------------------
9,747
- -------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING -- 1.3%
- -------------------------------------------------------------------------------
60,166 Jacobs Engineering Group Inc.(1) 2,931
- -------------------------------------------------------------------------------
CONSTRUCTION MATERIALS -- 1.3%
- -------------------------------------------------------------------------------
38,455 Eagle Materials Inc. 2,894
- -------------------------------------------------------------------------------
CONSUMER FINANCE -- 2.9%
- -------------------------------------------------------------------------------
92,585 CompuCredit Corp.(1) 2,453
- -------------------------------------------------------------------------------
32,648 United PanAm Financial Corp.(1) 722
- -------------------------------------------------------------------------------
132,910 World Acceptance Corp.(1) 3,382
- -------------------------------------------------------------------------------
6,557
- -------------------------------------------------------------------------------
DISTRIBUTORS -- 0.7%
- -------------------------------------------------------------------------------
88,030 Prestige Brands Holdings Inc.(1) 1,585
- -------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 1.3%
- -------------------------------------------------------------------------------
112,633 International Securities
Exchange Inc.(1) 2,965
- -------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- -------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.9%
- -------------------------------------------------------------------------------
768,340 Cincinnati Bell Inc.(1) $ 3,073
- -------------------------------------------------------------------------------
156,102 Talk America Holdings Inc.(1) 1,344
- -------------------------------------------------------------------------------
4,417
- -------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 1.3%
- -------------------------------------------------------------------------------
45,053 Roper Industries Inc. 3,049
- -------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.6%
- -------------------------------------------------------------------------------
98,484 Brightpoint Inc.(1) 2,080
- -------------------------------------------------------------------------------
107,484 Itron Inc.(1) 3,877
- -------------------------------------------------------------------------------
5,957
- -------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 3.9%
- -------------------------------------------------------------------------------
48,360 Atwood Oceanics Inc.(1) 2,760
- -------------------------------------------------------------------------------
112,160 Grant Prideco Inc.(1) 2,488
- -------------------------------------------------------------------------------
584,700 Grey Wolf Inc.(1) 3,508
- -------------------------------------------------------------------------------
8,756
- -------------------------------------------------------------------------------
GAS UTILITIES -- 3.9%
- -------------------------------------------------------------------------------
36,599 Northwest Natural Gas Co. 1,299
- -------------------------------------------------------------------------------
101,512 UGI Corp. 5,099
- -------------------------------------------------------------------------------
79,972 WGL Holdings Inc. 2,424
- -------------------------------------------------------------------------------
8,822
- -------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 5.0%
- -------------------------------------------------------------------------------
82,725 ICU Medical Inc.(1) 2,931
- -------------------------------------------------------------------------------
315,228 OraSure Technologies Inc.(1) 2,509
- -------------------------------------------------------------------------------
55,709 Orthofix International N.V.(1) 2,618
- -------------------------------------------------------------------------------
51,406 ResMed Inc.(1) 3,193
- -------------------------------------------------------------------------------
11,251
- -------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 3.3%
- -------------------------------------------------------------------------------
352,982 HealthTronics Inc.(1) 4,377
- -------------------------------------------------------------------------------
132,869 Radiation Therapy Services Inc.(1) 3,084
- -------------------------------------------------------------------------------
7,461
- -------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 3.8%
- -------------------------------------------------------------------------------
42,859 CBRL Group Inc. 1,651
- -------------------------------------------------------------------------------
90,486 Luby's Inc.(1) 683
- -------------------------------------------------------------------------------
126,007 O'Charleys Inc.(1) 2,513
- -------------------------------------------------------------------------------
246,086 Sunterra Corp.(1) 3,827
- -------------------------------------------------------------------------------
8,674
- -------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 3.1%
- -------------------------------------------------------------------------------
75,131 Jarden Corp.(1) 3,356
- -------------------------------------------------------------------------------
189,680 Tempur-Pedic International Inc.(1) 3,621
- -------------------------------------------------------------------------------
6,977
- -------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.7%
- -------------------------------------------------------------------------------
91,524 Central Garden and Pet Co.(1) 3,806
- -------------------------------------------------------------------------------
INSURANCE -- 1.1%
- -------------------------------------------------------------------------------
56,819 Brown & Brown Inc. 2,486
- -------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 1.0%
- -------------------------------------------------------------------------------
119,626 Stamps.com Inc.(1) 2,312
- -------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
7
New Opportunities - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- -------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 3.5%
- -------------------------------------------------------------------------------
284,603 aQuantive, Inc.(1) $ 3,159
- -------------------------------------------------------------------------------
91,874 Websense Inc.(1) 4,874
- -------------------------------------------------------------------------------
8,033
- -------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS -- 2.4%
- -------------------------------------------------------------------------------
100,490 MarineMax Inc.(1) 2,718
- -------------------------------------------------------------------------------
82,043 RC2 Corp.(1) 2,844
- -------------------------------------------------------------------------------
5,562
- -------------------------------------------------------------------------------
MACHINERY -- 4.2%
- -------------------------------------------------------------------------------
38,704 Cascade Corp. 1,219
- -------------------------------------------------------------------------------
150,912 Flanders Corp.(1) 1,499
- -------------------------------------------------------------------------------
106,178 Gardner Denver Inc.(1) 3,879
- -------------------------------------------------------------------------------
53,120 Harsco Corp. 2,850
- -------------------------------------------------------------------------------
9,447
- -------------------------------------------------------------------------------
METALS & MINING -- 3.4%
- -------------------------------------------------------------------------------
31,633 Carpenter Technology 1,749
- -------------------------------------------------------------------------------
178,812 Titanium Metals Corp.(1) 6,012
- -------------------------------------------------------------------------------
7,761
- -------------------------------------------------------------------------------
MULTI-UTILITIES -- 1.0%
- -------------------------------------------------------------------------------
88,218 Vectren Corp. 2,383
- -------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 3.3%
- -------------------------------------------------------------------------------
86,195 Berry Petroleum Company Cl A 4,027
- -------------------------------------------------------------------------------
91,846 Forest Oil Corporation(1) 3,539
- -------------------------------------------------------------------------------
7,566
- -------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 0.9%
- -------------------------------------------------------------------------------
663,274 Revlon Inc. Cl A(1) 1,950
- -------------------------------------------------------------------------------
PHARMACEUTICALS -- 1.8%
- -------------------------------------------------------------------------------
111,217 Able Laboratories Inc.(1) 2,651
- -------------------------------------------------------------------------------
63,622 Hi-Tech Pharmacal Co., Inc.(1) 1,486
- -------------------------------------------------------------------------------
4,137
- -------------------------------------------------------------------------------
REAL ESTATE -- 1.2%
- -------------------------------------------------------------------------------
124,117 Trammell Crow Co.(1) 2,644
- -------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 1.0%
- -------------------------------------------------------------------------------
93,488 DSP Group Inc.(1) 2,253
- -------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- -------------------------------------------------------------------------------
SPECIALTY RETAIL -- 8.0%
- -------------------------------------------------------------------------------
123,583 Burlington Coat Factory
Warehouse Corp. $ 3,405
- -------------------------------------------------------------------------------
110,950 Children's Place Retail
Stores, Inc. (The)(1) 4,129
- -------------------------------------------------------------------------------
153,770 Finish Line, Inc. (The) Cl A 2,771
- -------------------------------------------------------------------------------
138,059 Hibbett Sporting Goods Inc.(1) 3,723
- -------------------------------------------------------------------------------
129,713 Select Comfort Corp.(1) 2,869
- -------------------------------------------------------------------------------
217,339 Wilsons The Leather Experts Inc.(1) 1,093
- -------------------------------------------------------------------------------
17,990
- -------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS -- 3.4%
- -------------------------------------------------------------------------------
72,609 Brown Shoe Co Inc. 2,244
- -------------------------------------------------------------------------------
72,725 Kenneth Cole Productions Inc. 2,180
- -------------------------------------------------------------------------------
160,600 Wolverine World Wide, Inc. 3,258
- -------------------------------------------------------------------------------
7,682
- -------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 3.7%
- -------------------------------------------------------------------------------
95,462 Astoria Financial Corp. 2,531
- -------------------------------------------------------------------------------
51,324 Downey Financial Corp. 3,322
- -------------------------------------------------------------------------------
68,820 IndyMac Bancorp, Inc. 2,648
- -------------------------------------------------------------------------------
8,501
- -------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS -- 2.2%
- -------------------------------------------------------------------------------
94,948 Applied Industrial Technologies Inc. 2,649
- -------------------------------------------------------------------------------
74,095 GATX Corp. 2,424
- -------------------------------------------------------------------------------
5,073
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $204,344) 221,843
- -------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 3.7%
Repurchase Agreement, Merrill Lynch & Co.,
Inc., (collateralized by various U.S. Treasury
obligations, 2.25%, 4/30/06, valued at $8,672),
in a joint trading account at 2.75%, dated
4/29/05, due 5/2/05 (Delivery value $8,502)
(Cost $8,500) 8,500
- -------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 101.3%
(Cost $212,844) 230,343
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (1.3)% (2,860)
- -------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $227,483
===============================================================================
NOTES TO SCHEDULE OF INVESTMENTS
(1) Non-income producing.
See Notes to Financial Statements.
- ------
8
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value (cost of $212,844) $230,343
- --------------------------------------------------------------------
Receivable for investments sold 5,519
- --------------------------------------------------------------------
Dividends and interest receivable 58
- --------------------------------------------------------------------------------
235,920
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Disbursements in excess of demand deposit cash 18
- --------------------------------------------------------------------
Payable for investments purchased 8,126
- --------------------------------------------------------------------
Accrued management fees 293
- --------------------------------------------------------------------------------
8,437
- --------------------------------------------------------------------------------
NET ASSETS $227,483
================================================================================
CAPITAL SHARES, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Authorized 300,000
================================================================================
Outstanding 46,461
================================================================================
NET ASSET VALUE PER SHARE $4.90
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $388,828
- --------------------------------------------------------------------
Accumulated net investment loss (1,210)
- --------------------------------------------------------------------
Accumulated net realized loss on investment transactions (177,634)
- --------------------------------------------------------------------
Net unrealized appreciation on investments 17,499
- --------------------------------------------------------------------------------
$227,483
================================================================================
See Notes to Financial Statements.
- ------
9
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
INVESTMENT LOSS
- --------------------------------------------------------------------------------
INCOME:
- --------------------------------------------------------------------
Dividends $ 734
- --------------------------------------------------------------------
Interest 39
- --------------------------------------------------------------------------------
773
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------
Management fees 1,980
- --------------------------------------------------------------------
Directors' fees and expenses 2
- --------------------------------------------------------------------
Other expenses 1
- --------------------------------------------------------------------------------
1,983
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,210)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on investment transactions 8,573
- --------------------------------------------------------------------
Change in net unrealized appreciation on investments (13,315)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS (4,742)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(5,952)
================================================================================
See Notes to Financial Statements.
- ------
10
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment loss $ (1,210) $ (3,153)
- -----------------------------------------------
Net realized gain 8,573 27,030
- -----------------------------------------------
Change in net unrealized appreciation (13,315) (23,133)
- --------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (5,952) 744
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Proceeds from shares sold 5,918 10,510
- -----------------------------------------------
Payments for shares redeemed(1) (46,038) (55,925)
- --------------------------------------------------------------------------------
Net decrease in net assets
from capital share transactions (40,120) (45,415)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (46,072) (44,671)
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 273,555 318,226
- --------------------------------------------------------------------------------
End of period $227,483 $273,555
================================================================================
Accumulated net investment loss $ (1,210) --
================================================================================
TRANSACTIONS IN SHARES OF THE FUND
- --------------------------------------------------------------------------------
Sold 1,116 2,024
- -----------------------------------------------
Redeemed (8,707) (10,841)
- --------------------------------------------------------------------------------
Net decrease in shares of the fund (7,591) (8,817)
================================================================================
(1) Net of redemption fees of $6 and $219, respectively.
See Notes to Financial Statements.
- ------
11
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. New Opportunities Fund (the fund) is one
fund in a series issued by the corporation. The fund is diversified under the
1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund pursues its objective by investing primarily in common stocks of
smaller-sized companies that management believes will increase in value over
time. The following is a summary of the fund's significant accounting policies.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the fund determines that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
FUTURES CONTRACTS -- The fund may enter into futures contracts in order to
manage the fund's exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the fund is required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the fund. The variation margin is equal to
the daily change in the contract value and is recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is closed
or expires. Net realized and unrealized gains or losses occurring during the
holding period of futures contracts are a component of realized gain (loss) on
investment transactions and unrealized appreciation (depreciation) on
investments, respectively.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. For assets and
liabilities, other than investments in securities, net realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose taxes
on the contract amount of purchases and sales of foreign currency contracts in
their currency. The fund records the foreign tax expense, if any, as a reduction
to the net realized gain (loss) on foreign currency transactions.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. The
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable the fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each
(continued)
- ------
12
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
repurchase agreement is equal to or greater than amounts owed to the fund under
each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, the fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
REDEMPTION -- The fund may impose a 2% redemption fee on shares held less than
180 days. The redemption fee is recorded as a reduction in the cost of shares
redeemed. The redemption fee is retained by the fund and helps cover transaction
costs that long-term investors may bear when a fund sells securities to meet
investor redemptions.
INDEMNIFICATIONS -- Under the corporation's organizational documents, its
officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the fund. In addition, in the normal
course of business, the fund enters into contracts that provide general
indemnifications. The fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the fund.
The risk of material loss from such claims is considered by management to be
remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee (the fee). The
Agreement provides that all expenses of the fund, except brokerage commissions,
taxes, interest, fees and expenses of those directors who are not considered
"interested persons" as defined in the 1940 Act (including counsel fees) and
extraordinary expenses, will be paid by ACIM. The fee is computed and accrued
daily based on the fund's daily net assets and paid monthly in arrears. For
funds with a stepped fee schedule, the rate of the fee is determined by applying
a fee rate calculation formula. This formula takes into account all of the
investment advisor's assets under management in the fund's investment strategy
(strategy assets) to calculate the appropriate fee rate for the fund. The
strategy assets include the fund's assets and the assets of other clients of the
investment advisor that are not in the American Century family of funds but that
have the same investment team and investment strategy.
The annual management fee schedule for fund is as follows:
- ------------------------------------------------------------------------
INVESTOR
CLASS
- ------------------------------------------------------------------------
STRATEGY ASSETS
- ------------------------------------------------------------------------
First $500 million 1.50%
- ------------------------------------------------------------------------
Next $500 million 1.30%
- ------------------------------------------------------------------------
Over $1 billion 1.10%
- ------------------------------------------------------------------------
The effective annual management fee for the fund for the six months ended April
30, 2005 was 1.50%.
(continued)
- ------
13
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
advisor, ACIM, the distributor of the corporation, American Century Investment
Services, Inc., and the corporation's transfer agent, American Century Services,
LLC (formerly American Century Services Corporation).
The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB).
JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan
Chase & Co. (JPM). JPM is an equity investor in ACC.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term investments,
for the six months ended April 30, 2005, were $345,971 and $386,331,
respectively.
4. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $575 million
unsecured bank line of credit agreement with JPMCB, which was renewed from $650
million effective December 15, 2004. The fund may borrow money for temporary or
emergency purposes to fund shareholder redemptions. Borrowings under the
agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not
borrow from the line during the six months ended April 30, 2005.
5. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $215,242
================================================================================
Gross tax appreciation of investments $19,754
- -----------------------------------------------------------------
Gross tax depreciation of investments (4,653)
- --------------------------------------------------------------------------------
Net tax appreciation (depreciation) of investments $15,101
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
As of October 31, 2004, the fund had accumulated capital losses of $186,207,
which represents net capital loss carryovers that may be used to offset future
realized capital gains for federal income tax purposes. Capital loss carryovers
of $148,508 and $37,699 expire in 2009 and 2010, respectively.
- ------
14
New Opportunities - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $5.06 $5.06 $4.01 $4.80 $15.35 $9.16
- --------------------------------------------------------------------------------------------------
Income From
Investment Operations
- ------------------------------
Net Investment Loss (0.03) (0.06) (0.04) (0.05) (0.05) (0.19)
- ------------------------------
Net Realized and
Unrealized Gain (Loss) (0.13) 0.06 1.09 (0.74) (6.85) 7.52
- --------------------------------------------------------------------------------------------------
Total From
Investment Operations (0.16) 0.00 1.05 (0.79) (6.90) 7.33
- --------------------------------------------------------------------------------------------------
Distributions
- ------------------------------
From Net Realized Gains -- -- -- -- (3.65) (1.14)
- --------------------------------------------------------------------------------------------------
Redemption Fees(2) --(3) --(3) --(3) --(3) -- --
- --------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $4.90 $5.06 $5.06 $4.01 $4.80 $15.35
==================================================================================================
TOTAL RETURN(4) (3.16)% 0.00% 26.18% (16.46)% (53.81)% 83.28%
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.50%(5) 1.49% 1.50% 1.50% 1.50% 1.50%
- ------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.92)%(5) (1.04)% (0.98)% (1.02)% (0.72)% (1.28)%
- ------------------------------
Portfolio Turnover Rate 132% 269% 217% 175% 189% 112%
- ------------------------------
Net Assets, End of Period
(in thousands) $227,483 $273,555 $318,226 $297,180 $380,741 $873,376
- --------------------------------------------------------------------------------------------------
(1) For the six months ended April 30, 2005 (unaudited).
(2) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to November 1, 2001, have
not been restated to reflect this change. Amounts computed using average
shares outstanding throughout the period.
(3) Per share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.
(5) Annualized.
See Notes to Financial Statements.
- ------
15
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
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-Q. The fund's Form N-Q is available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of
portfolio holdings for the most recent quarter of its fiscal year available on
its Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
16
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials but including
service-oriented firms. Prepared and published by Dow Jones & Co., it is the
oldest and most widely quoted of all the market indicators.
The RUSSELL 2000 INDEX is a market-capitalization weighted index created by
Frank Russell Company to measure the performance of the 2,000 smallest of the
3,000 largest publicly traded U.S. companies, based on total market
capitalization.
The RUSSELL 2000 GROWTH INDEX measures the performance of those Russell 2000
companies (the 2,000 smallest of the 3,000 largest publicly traded U.S.
companies, based on total market capitalization) with higher price-to-book
ratios and higher forecasted growth rates.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
The S&P SMALLCAP 600 INDEX, a capitalization-weighted index consisting of 600
domestic stocks, measures the small company segment of the U.S. market.
- ------
17
Notes
- ------
18
Notes
- ------
19
Notes
- ------
20
[inside back cover blank]
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
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1-800-345-2021 or 816-531-5575
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1-800-345-3533
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FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
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1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
COMPANIES
The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.
American Century Investment Services, Inc., Distributor
(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
0506
SH-SAN-43964S
[front cover]
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Balanced Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BALANCED
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Ten Stock Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Top Five Stock Industries . . . . . . . . . . . . . . . . . . . . . . . . . 4
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . . . 5
Key Fixed-Income Portfolio Statistics . . . . . . . . . . . . . . . . . . . 5
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 18
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .20
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 21
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
OTHER INFORMATION
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Balanced fund
for the six months ended April 30, 2005.
This report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers and
other communications about investments, portfolio strategy and the markets.
Your next shareholder report for this fund will be the annual report dated
October 31, 2005, available in about six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
- ------
1
Balanced - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 7.23% 1.68% 7.72% 9.04% 10/20/88
- --------------------------------------------------------------------------------
BLENDED INDEX 6.01% 1.48% 9.35% 10.29%(1) --
- --------------------------------------------------------------------------------
S&P 500 INDEX(2) 6.34% -2.94% 10.26% 11.49%(1) --
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
U.S.AGGREGATE
INDEX(2) 5.26% 7.49% 7.14% 7.84%(1) --
- --------------------------------------------------------------------------------
Institutional Class 7.44% -- -- 1.73% 5/1/00
- --------------------------------------------------------------------------------
Advisor Class 6.97% 1.43% -- 5.69% 1/6/97
- --------------------------------------------------------------------------------
(1) Since 10/31/88, the date nearest the Investor Class's inception for which
data are available.
(2) (c)2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. - A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made by
Lipper.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
(continued)
- ------
2
Balanced - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made April 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended April 30
- ---------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
- ---------------------------------------------------------------------------------------------------
Investor Class 17.51% 10.24% 25.61% 10.05% 8.16% -4.25% -5.14% -2.95% 14.98% 7.23%
- ---------------------------------------------------------------------------------------------------
Blended index 21.20% 17.78% 28.45% 16.04% 6.80% -3.14% -4.55% -3.82% 14.15% 6.01%
- ---------------------------------------------------------------------------------------------------
S&P 500 Index 30.21% 25.13% 41.07% 21.82% 10.13% -12.97% -12.63% -13.31% 22.88% 6.34%
- ---------------------------------------------------------------------------------------------------
Lehman Brothers
U.S. Aggregate
Index 8.64% 7.08% 10.91% 6.28% 1.26% 12.38% 7.84% 10.47% 1.83% 5.26%
- ---------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the indices do not.
- ------
3
Balanced - Portfolio Commentary
PORTFOLIO MANAGERS: JEFF TYLER (EQUITY TEAM LEADER) AND JEFF HOUSTON
(FIXED-INCOME TEAM LEADER)
PERFORMANCE SUMMARY
Balanced and its benchmark (a custom blended index that is 60% S&P 500 Index and
40% Lehman Brothers U.S. Aggregate Index) gained 3.54%* and 2.43%, respectively,
in the six months ended April 30, 2005, as the S&P 500 and the Lehman Aggregate
posted modest increases. The fund outperformed because Balanced's stock
portfolio outpaced the S&P 500.
ECONOMIC REVIEW
U.S. economic growth moderated during the six months ended April 30, 2005, as
crude oil prices flared, inflation increased, and interest rates rose. The
annualized real rate of GDP growth declined from 3.8% in the fourth quarter of
2004 to 3.5% in the first quarter of 2005 as the price of crude oil averaged $49
a barrel. Meanwhile, inflation (measured by the 12-month percentage change of
"core" CPI, excluding food and energy prices) climbed from a recent low at the
end of 2003. In the first three months of 2005, it reached its fastest growth
rate since August 2002. To control inflation, the Federal Reserve raised its
target rate four times in six months, from 1.75% to 2.75%.
STOCK MARKET REVIEW
The S&P 500 gained 3.28% in the six months ended April 30, 2005. Most of the
gain occurred from October 31 to December 31, 2004, when the index advanced over
7%. The market reversed in the next four months, when the index declined 4%. A
key factor was the price of oil--it declined 21% at the end of 2004, then
rebounded 28% in the first three months of 2005. Another was the annualized
corporate earnings growth rate for S&P 500 companies--it was 20% in the fourth
quarter of 2004, then about 14% in the first quarter of 2005. As oil prices rose
and earnings growth decelerated, value stocks outpaced growth. The
top-performing sectors of the S&P 500 were utilities, energy, and health care,
while information technology and consumer discretionary lagged.
BALANCED'S TOP TEN STOCK HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF EQUITY % OF S&P
HOLDINGS 500 INDEX
- --------------------------------------------------------------------------------
Johnson & Johnson 3.6% 1.9%
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 3.2% 3.4%
- --------------------------------------------------------------------------------
Intel Corp. 3.0% 1.4%
- --------------------------------------------------------------------------------
ChevronTexaco Corp. 2.4% 1.0%
- --------------------------------------------------------------------------------
Disney (Walt) Co. 2.0% 0.5%
- --------------------------------------------------------------------------------
American Express Co. 2.0% 0.6%
- --------------------------------------------------------------------------------
CIGNA Corp. 2.0% 0.1%
- --------------------------------------------------------------------------------
Wachovia Corp. 2.0% 0.8%
- --------------------------------------------------------------------------------
Sunoco, Inc. 1.9% 0.1%
- --------------------------------------------------------------------------------
Time Warner Inc. 1.9% 0.7%
- --------------------------------------------------------------------------------
BALANCED'S TOP FIVE STOCK INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF EQUITY % OF S&P
HOLDINGS 500 INDEX
- --------------------------------------------------------------------------------
Oil, Gas &
Consumable Fuels 8.6% 7.3%
- --------------------------------------------------------------------------------
Pharmaceuticals 7.2% 7.5%
- --------------------------------------------------------------------------------
Commercial Banks 6.5% 6.0%
- --------------------------------------------------------------------------------
Media 5.9% 3.7%
- --------------------------------------------------------------------------------
Health Care Providers
& Services 5.8% 2.6%
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
Returns for periods less than one year are not annualized.
(continued)
- ------
4
Balanced - Portfolio Commentary
BOND MARKET REVIEW
The Lehman Aggregate gained 0.98% in the six months ended April 30, 2005.
Returns for its fixed-rate mortgage-backed, Treasury, and corporate subsectors
were 1.44%, 0.96%, and 0.49%, respectively. Bond prices generally FELL as
interest rates rose, but interest income offset price declines, producing modest
total returns. Exceptions included the 30-year Treasury bond and other long-term
bonds that use it as a benchmark--the 30-year Treasury bond yield fell during
the six months, producing price GAINS and outperformance compared with
shorter-maturity securities.
PORTFOLIO PERFORMANCE
Balanced's stock and bond portfolios gained 5.12% and 1.48%, respectively, in
the six months ended April 30, 2005. Sectors that contributed most to Balanced's
stock gains were health care and energy, while information technology detracted
most. Stock selection in the consumer discretionary sector contributed most to
outperformance vs. the S&P 500, including overweights (vs. the index) in
homebuilder NVR Inc. and Goodyear Tire & Rubber, and an underweight in eBay. We
believe bond portfolio outperformance vs. the Lehman Aggregate was helped by our
decisions to: 1) lengthen duration (longer-duration bonds generally
outperformed), and 2) overweight securitized (mortgage- and asset-backed) bonds
and Treasury inflation-protected securities, which outperformed the index.
Note: The transaction volume required for our use of mortgage dollar rolls, a
forward commitment defined on pages 21-22, inflated the portfolio turnover rates
shown on pages 26-28 for the 12 months ended October 31, 2004, and the six
months ended April 30, 2005.
OUR COMMITMENT
We remain committed to seeking long-term capital growth and current income by
investing in a balanced portfolio consisting of approximately 60% equity
securities and the remainder in bonds and other fixed-income securities.
TYPES OF INVESTMENTS IN PORTFOLIO*
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 46.6% 50.6%
- --------------------------------------------------------------------------------
Mortgage- & Asset-
Backed Securities 21.9% 21.0%
- --------------------------------------------------------------------------------
Corporate Bonds 8.9% 9.2%
- --------------------------------------------------------------------------------
U.S. Government
Agency Securities 5.6% 3.6%
- --------------------------------------------------------------------------------
U.S. Treasury Securities 5.4% 8.4%
- --------------------------------------------------------------------------------
Other 0.3% 0.1%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 1.9% 0.6%
- --------------------------------------------------------------------------------
Collateral Received for
Securities Lending 9.4% 6.5%
- --------------------------------------------------------------------------------
*See Schedule of Investments for a presentation of the types of investments in
the portfolio based on net assets.
KEY FIXED-INCOME PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Weighted Average
Maturity 5.9 years 4.7 years
- --------------------------------------------------------------------------------
Average Duration
(Effective) 4.4 years 3.7 years
- --------------------------------------------------------------------------------
- ------
5
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
- ------
6
Shareholder Fee Example (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
- --------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO*
- --------------------------------------------------------------------------------
BALANCED SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,035.40 $4.54 0.90%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $1,036.40 $3.53 0.70%
- --------------------------------------------------------------------------------
Advisor Class $1,000 $1,034.10 $5.80 1.15%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,020.33 $4.51 0.90%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $1,021.32 $3.51 0.70%
- --------------------------------------------------------------------------------
Advisor Class $1,000 $1,019.09 $5.76 1.15%
- --------------------------------------------------------------------------------
*Expenses are equal to the class's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
181, the number of days in the most recent fiscal half-year, divided by 365, to
reflect the one-half year period.
- ------
7
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 55.8%
AEROSPACE & DEFENSE(1)
- --------------------------------------------------------------------------------
407 General Dynamics Corp. $ 43
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS -- 0.4%
- --------------------------------------------------------------------------------
4,039 FedEx Corporation 343
- --------------------------------------------------------------------------------
29,711 United Parcel Service, Inc. Cl B 2,119
- --------------------------------------------------------------------------------
2,462
- --------------------------------------------------------------------------------
AIRLINES -- 0.1%
- --------------------------------------------------------------------------------
26,092 Southwest Airlines Co. 388
- --------------------------------------------------------------------------------
AUTO COMPONENTS -- 0.5%
- --------------------------------------------------------------------------------
18,263 Autoliv, Inc. 808
- --------------------------------------------------------------------------------
9,272 Goodyear Tire & Rubber Co. (The)(2) 110
- --------------------------------------------------------------------------------
39,937 Magna International Inc. Cl A 2,442
- --------------------------------------------------------------------------------
3,360
- --------------------------------------------------------------------------------
AUTOMOBILES -- 0.1%
- --------------------------------------------------------------------------------
100,544 Ford Motor Company(3) 916
- --------------------------------------------------------------------------------
BEVERAGES -- 0.8%
- --------------------------------------------------------------------------------
9,645 Molson Coors Brewing Co. 596
- --------------------------------------------------------------------------------
151,397 Pepsi Bottling Group Inc. 4,340
- --------------------------------------------------------------------------------
5,239 PepsiAmericas Inc. 129
- --------------------------------------------------------------------------------
5,065
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 1.0%
- --------------------------------------------------------------------------------
47,924 Amgen Inc.(2) 2,789
- --------------------------------------------------------------------------------
59,420 Applera Corporation-Applied
Biosystems Group 1,260
- --------------------------------------------------------------------------------
46,733 Cephalon, Inc.(2)(3) 2,052
- --------------------------------------------------------------------------------
1,127 Invitrogen Corp.(2) 83
- --------------------------------------------------------------------------------
6,184
- --------------------------------------------------------------------------------
BUILDING PRODUCTS -- 0.1%
- --------------------------------------------------------------------------------
8,478 USG Corp.(2)(3) 356
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 0.2%
- --------------------------------------------------------------------------------
24,265 Edwards (A.G.), Inc. 964
- --------------------------------------------------------------------------------
CHEMICALS -- 0.2%
- --------------------------------------------------------------------------------
1,365 Eastman Chemical Company 74
- --------------------------------------------------------------------------------
27,640 Georgia Gulf Corporation(3) 1,020
- --------------------------------------------------------------------------------
1,094
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 3.6%
- --------------------------------------------------------------------------------
137,474 Bank of America Corp.(4) 6,192
- --------------------------------------------------------------------------------
52,051 Comerica Inc. 2,980
- --------------------------------------------------------------------------------
137,362 Wachovia Corp. 7,029
- --------------------------------------------------------------------------------
109,202 Wells Fargo & Co. 6,546
- --------------------------------------------------------------------------------
22,747
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 1.2%
- --------------------------------------------------------------------------------
11,354 Deluxe Corp. 453
- --------------------------------------------------------------------------------
123,973 Equifax Inc. 4,172
- --------------------------------------------------------------------------------
67,981 John H. Harland Company 2,447
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
20,715 Republic Services, Inc. Cl A $ 717
- --------------------------------------------------------------------------------
7,789
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 1.2%
- --------------------------------------------------------------------------------
40,095 Cisco Systems Inc.(2) 693
- --------------------------------------------------------------------------------
49,633 Harris Corp. 1,400
- --------------------------------------------------------------------------------
349,236 Motorola, Inc. 5,357
- --------------------------------------------------------------------------------
7,450
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 1.3%
- --------------------------------------------------------------------------------
78,203 Apple Computer, Inc.(2) 2,820
- --------------------------------------------------------------------------------
11,954 Dell Inc.(2) 416
- --------------------------------------------------------------------------------
64,420 International Business Machines
Corp. 4,921
- --------------------------------------------------------------------------------
10,382 Western Digital Corp.(2) 132
- --------------------------------------------------------------------------------
8,289
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 2.2%
- --------------------------------------------------------------------------------
134,065 American Express Co. 7,065
- --------------------------------------------------------------------------------
73,950 Capital One Financial Corp. 5,242
- --------------------------------------------------------------------------------
30,642 CompuCredit Corp.(2)(3) 812
- --------------------------------------------------------------------------------
3,973 Nelnet Inc. Cl A(2) 127
- --------------------------------------------------------------------------------
15,679 WFS Financial Inc.(2)(3) 705
- --------------------------------------------------------------------------------
13,951
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING -- 0.3%
- --------------------------------------------------------------------------------
10,171 Greif, Inc. Cl A(3) 706
- --------------------------------------------------------------------------------
16,676 Silgan Holdings Inc. 1,020
- --------------------------------------------------------------------------------
1,726
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.4%
- --------------------------------------------------------------------------------
10,089 ALLTEL Corp. 575
- --------------------------------------------------------------------------------
28,999 AT&T Corp. 555
- --------------------------------------------------------------------------------
53,383 BellSouth Corp. 1,414
- --------------------------------------------------------------------------------
4,795 CenturyTel Inc. 147
- --------------------------------------------------------------------------------
12,729 Commonwealth Telephone
Enterprise Inc.(2)(3) 591
- --------------------------------------------------------------------------------
54,102 SBC Communications Inc. 1,288
- --------------------------------------------------------------------------------
37,917 Sprint Corp. 844
- --------------------------------------------------------------------------------
89,169 Verizon Communications 3,192
- --------------------------------------------------------------------------------
8,606
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 1.3%
- --------------------------------------------------------------------------------
9,581 Entergy Corp. 702
- --------------------------------------------------------------------------------
60,774 Exelon Corporation 3,008
- --------------------------------------------------------------------------------
94,445 FirstEnergy Corp. 4,111
- --------------------------------------------------------------------------------
15,068 FPL Group, Inc. 615
- --------------------------------------------------------------------------------
8,436
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 0.2%
- --------------------------------------------------------------------------------
66,234 Ingram Micro Inc. Cl A(2) 1,103
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 0.5%
- --------------------------------------------------------------------------------
67,748 Cal Dive International Inc.(2) 3,013
- --------------------------------------------------------------------------------
6,530 Global Industries Ltd.(2)(3) 63
- --------------------------------------------------------------------------------
3,076
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
8
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 0.6%
- --------------------------------------------------------------------------------
22,390 7-Eleven, Inc.(2) $ 524
- --------------------------------------------------------------------------------
27,741 BJ's Wholesale Club Inc.(2) 739
- --------------------------------------------------------------------------------
76,240 Supervalu Inc. 2,406
- --------------------------------------------------------------------------------
3,669
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.7%
- --------------------------------------------------------------------------------
175,539 Archer-Daniels-Midland Co. 3,158
- --------------------------------------------------------------------------------
28,642 General Mills, Inc. 1,415
- --------------------------------------------------------------------------------
6,818 Hormel Foods Corp.(3) 212
- --------------------------------------------------------------------------------
159,058 Pilgrim's Pride Corp.(3) 5,740
- --------------------------------------------------------------------------------
30 Seaboard Corp. 26
- --------------------------------------------------------------------------------
10,551
- --------------------------------------------------------------------------------
GAS UTILITIES(1)
- --------------------------------------------------------------------------------
3,594 UGI Corp. 181
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.1%
- --------------------------------------------------------------------------------
102,918 Becton Dickinson & Co. 6,022
- --------------------------------------------------------------------------------
7,853 Haemonetics Corporation(2) 336
- --------------------------------------------------------------------------------
8,131 Mettler-Toledo International, Inc.(2) 373
- --------------------------------------------------------------------------------
6,731
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 3.2%
- --------------------------------------------------------------------------------
30,798 Aetna Inc. 2,260
- --------------------------------------------------------------------------------
53,767 AmerisourceBergen Corp. 3,295
- --------------------------------------------------------------------------------
32,552 Cardinal Health, Inc. 1,809
- --------------------------------------------------------------------------------
76,587 CIGNA Corp. 7,044
- --------------------------------------------------------------------------------
10,694 Kindred Healthcare Inc.(2) 352
- --------------------------------------------------------------------------------
145,222 McKesson Corp. 5,373
- --------------------------------------------------------------------------------
20,133
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 1.5%
- --------------------------------------------------------------------------------
102,054 Darden Restaurants, Inc. 3,062
- --------------------------------------------------------------------------------
208,750 McDonald's Corporation 6,118
- --------------------------------------------------------------------------------
9,180
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 1.0%
- --------------------------------------------------------------------------------
40,120 Black & Decker Corporation 3,355
- --------------------------------------------------------------------------------
4,058 NVR, Inc.(2)(3) 2,915
- --------------------------------------------------------------------------------
6,270
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.4%
- --------------------------------------------------------------------------------
18,537 Clorox Company 1,173
- --------------------------------------------------------------------------------
23,562 Energizer Holdings Inc.(2) 1,343
- --------------------------------------------------------------------------------
2,516
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 0.5%
- --------------------------------------------------------------------------------
91,300 Tyco International Ltd. 2,859
- --------------------------------------------------------------------------------
INSURANCE -- 2.9%
- --------------------------------------------------------------------------------
11,338 AmerUs Group Co.(3) 533
- --------------------------------------------------------------------------------
3,553 Arch Capital Group Ltd.(2) 142
- --------------------------------------------------------------------------------
21,577 Axis Capital Holdings Limited 574
- --------------------------------------------------------------------------------
147,261 Berkley (W.R.) Corp. 4,787
- --------------------------------------------------------------------------------
46,781 Chubb Corp. 3,826
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
30,943 Endurance Specialty Holdings Ltd.(2) $ 1,120
- --------------------------------------------------------------------------------
61,163 First American Financial Corp.
(The) 2,190
- --------------------------------------------------------------------------------
13,559 HCC Insurance Holdings, Inc. 482
- --------------------------------------------------------------------------------
11,033 LandAmerica Financial Group Inc.(3) 547
- --------------------------------------------------------------------------------
21,216 Loews Corp. 1,504
- --------------------------------------------------------------------------------
20,008 Protective Life Corporation 765
- --------------------------------------------------------------------------------
3,770 Selective Insurance Group(3) 166
- --------------------------------------------------------------------------------
9,738 Stancorp Financial Group Inc. 745
- --------------------------------------------------------------------------------
11,285 Zenith National Insurance Corp. 649
- --------------------------------------------------------------------------------
18,030
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 0.4%
- --------------------------------------------------------------------------------
289,244 Earthlink Inc.(2) 2,655
- --------------------------------------------------------------------------------
IT SERVICES -- 0.9%
- --------------------------------------------------------------------------------
49,793 Acxiom Corp.(3) 946
- --------------------------------------------------------------------------------
104,628 Computer Sciences Corp.(2) 4,549
- --------------------------------------------------------------------------------
5,495
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS -- 0.5%
- --------------------------------------------------------------------------------
135,246 Eastman Kodak Co. 3,381
- --------------------------------------------------------------------------------
MACHINERY -- 0.6%
- --------------------------------------------------------------------------------
46,668 Cummins Inc.(3) 3,174
- --------------------------------------------------------------------------------
10,601 Kennametal Inc. 480
- --------------------------------------------------------------------------------
3,654
- --------------------------------------------------------------------------------
MEDIA -- 3.3%
- --------------------------------------------------------------------------------
2,083 Catalina Marketing Corp.(3) 48
- --------------------------------------------------------------------------------
269,309 Disney (Walt) Co. 7,110
- --------------------------------------------------------------------------------
5,398 DreamWorks Animation SKG Inc.(2) 202
- --------------------------------------------------------------------------------
5,356 John Wiley & Sons Inc. 194
- --------------------------------------------------------------------------------
20,330 Pixar(2)(3) 930
- --------------------------------------------------------------------------------
39,403 Regal Entertainment Group(3) 799
- --------------------------------------------------------------------------------
394,275 Time Warner Inc.(2) 6,628
- --------------------------------------------------------------------------------
139,634 Viacom, Inc. Cl B 4,834
- --------------------------------------------------------------------------------
20,745
- --------------------------------------------------------------------------------
METALS & MINING -- 1.0%
- --------------------------------------------------------------------------------
4,071 AK Steel Holding Corp.(2)(3) 30
- --------------------------------------------------------------------------------
10,374 Nucor Corp. 530
- --------------------------------------------------------------------------------
36,798 Phelps Dodge Corp. 3,159
- --------------------------------------------------------------------------------
54,978 United States Steel Corp. 2,351
- --------------------------------------------------------------------------------
6,070
- --------------------------------------------------------------------------------
MULTI-UTILITIES -- 0.4%
- --------------------------------------------------------------------------------
26,081 AES Corporation (The)(2) 419
- --------------------------------------------------------------------------------
43,060 Constellation Energy Group Inc. 2,264
- --------------------------------------------------------------------------------
2,683
- --------------------------------------------------------------------------------
MULTILINE RETAIL -- 0.9%
- --------------------------------------------------------------------------------
26,329 Dillard's Inc.(3) 613
- --------------------------------------------------------------------------------
77,514 Federated Department Stores, Inc. 4,457
- --------------------------------------------------------------------------------
4,644 Sears Holdings Corp.(2) 628
- --------------------------------------------------------------------------------
5,698
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
9
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
OFFICE ELECTRONICS -- 0.3%
- --------------------------------------------------------------------------------
127,991 Xerox Corp.(2) $ 1,696
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 4.8%
- --------------------------------------------------------------------------------
160,111 ChevronTexaco Corp. 8,326
- --------------------------------------------------------------------------------
21,039 ConocoPhillips 2,206
- --------------------------------------------------------------------------------
196,918 Exxon Mobil Corp. 11,229
- --------------------------------------------------------------------------------
9,395 Marathon Oil Corp. 438
- --------------------------------------------------------------------------------
13,106 Premcor Inc. 867
- --------------------------------------------------------------------------------
68,399 Sunoco, Inc. 6,789
- --------------------------------------------------------------------------------
938 Valero Energy Corp. 64
- --------------------------------------------------------------------------------
29,919
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 1.0%
- --------------------------------------------------------------------------------
127,197 Louisiana-Pacific Corp. 3,129
- --------------------------------------------------------------------------------
15,610 Potlatch Corp.(3) 737
- --------------------------------------------------------------------------------
38,020 Weyerhaeuser Co. 2,609
- --------------------------------------------------------------------------------
6,475
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 4.0%
- --------------------------------------------------------------------------------
183,734 Johnson & Johnson 12,609
- --------------------------------------------------------------------------------
26,072 Kos Pharmaceuticals, Inc.(2)(3) 1,256
- --------------------------------------------------------------------------------
176,177 Merck & Co., Inc. 5,972
- --------------------------------------------------------------------------------
197,715 Pfizer, Inc. 5,372
- --------------------------------------------------------------------------------
25,209
- --------------------------------------------------------------------------------
REAL ESTATE -- 0.3%
- --------------------------------------------------------------------------------
9,851 Jones Lang LaSalle Inc.(2) 369
- --------------------------------------------------------------------------------
42,659 Taubman Centers Inc.(3) 1,263
- --------------------------------------------------------------------------------
1,890 Trizec Properties Inc. 38
- --------------------------------------------------------------------------------
1,670
- --------------------------------------------------------------------------------
ROAD & RAIL -- 0.1%
- --------------------------------------------------------------------------------
1,200 Burlington Northern Santa Fe Corp. 58
- --------------------------------------------------------------------------------
8,667 Union Pacific Corp. 554
- --------------------------------------------------------------------------------
612
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 1.8%
- --------------------------------------------------------------------------------
442,785 Intel Corp. 10,415
- --------------------------------------------------------------------------------
22,458 MEMC Electronic Materials Inc.(2) 263
- --------------------------------------------------------------------------------
37,305 OmniVision Technologies, Inc.(2)(3) 522
- --------------------------------------------------------------------------------
11,200
- --------------------------------------------------------------------------------
SOFTWARE -- 0.9%
- --------------------------------------------------------------------------------
13,363 Autodesk, Inc. 425
- --------------------------------------------------------------------------------
15,191 Intuit Inc.(2) 612
- --------------------------------------------------------------------------------
77,979 Microsoft Corporation 1,973
- --------------------------------------------------------------------------------
131,282 Oracle Corp.(2) 1,518
- --------------------------------------------------------------------------------
145,015 Parametric Technology Corp.(2) 771
- --------------------------------------------------------------------------------
16,591 Symantec Corp.(2) 312
- --------------------------------------------------------------------------------
5,611
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 2.1%
- --------------------------------------------------------------------------------
93,116 American Eagle Outfitters, Inc. 2,442
- --------------------------------------------------------------------------------
17,303 Barnes & Noble Inc.(2) 616
- --------------------------------------------------------------------------------
Shares/Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
99,081 Home Depot, Inc. $ 3,503
- --------------------------------------------------------------------------------
83,661 Michaels Stores, Inc. 2,778
- --------------------------------------------------------------------------------
36,718 Petco Animal Supplies Inc.(2) 1,149
- --------------------------------------------------------------------------------
109,804 Rent-A-Center Inc.(2) 2,640
- --------------------------------------------------------------------------------
13,128
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 2.5%
- --------------------------------------------------------------------------------
179,386 Countrywide Financial Corporation 6,491
- --------------------------------------------------------------------------------
10,562 Downey Financial Corp.(3) 684
- --------------------------------------------------------------------------------
75,221 Fremont General Corp.(3) 1,632
- --------------------------------------------------------------------------------
91,523 Golden West Financial Corp. 5,705
- --------------------------------------------------------------------------------
29,561 Washington Mutual, Inc. 1,221
- --------------------------------------------------------------------------------
15,733
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS -- 0.4%
- --------------------------------------------------------------------------------
40,283 Grainger (W.W.), Inc. 2,227
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.1%
- --------------------------------------------------------------------------------
31,852 Nextel Communications, Inc.(2) 892
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $304,985) 348,878
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES(5) -- 14.0%
$ 4,750 FHLMC, 5.00%, settlement date
5/17/05(6) 4,786
- --------------------------------------------------------------------------------
373 FHLMC, 7.00%, 10/1/12 393
- --------------------------------------------------------------------------------
3,420 FHLMC, 4.50%, 1/1/19(4) 3,393
- --------------------------------------------------------------------------------
260 FHLMC, 6.50%, 1/1/28 271
- --------------------------------------------------------------------------------
1,759 FHLMC, 5.50%, 12/1/33(4) 1,780
- --------------------------------------------------------------------------------
10,725 FNMA, 6.50%, settlement date
5/12/05(6) 11,155
- --------------------------------------------------------------------------------
8,440 FNMA, 5.00%, settlement date
5/17/05(6) 8,501
- --------------------------------------------------------------------------------
4,700 FNMA, 5.50%, settlement date
5/17/05(6) 4,810
- --------------------------------------------------------------------------------
11,163 FNMA, 6.00%, settlement date
6/13/05(6) 11,441
- --------------------------------------------------------------------------------
8,700 FNMA, 5.00%, settlement date
7/14/05(6) 8,574
- --------------------------------------------------------------------------------
631 FNMA, 6.00%, 2/1/09 654
- --------------------------------------------------------------------------------
55 FNMA, 6.50%, 5/1/11 58
- --------------------------------------------------------------------------------
534 FNMA, 7.50%, 11/1/11 563
- --------------------------------------------------------------------------------
6 FNMA, 6.50%, 10/1/12 7
- --------------------------------------------------------------------------------
35 FNMA, 6.50%, 5/1/13 37
- --------------------------------------------------------------------------------
15 FNMA, 6.50%, 5/1/13 15
- --------------------------------------------------------------------------------
86 FNMA, 6.50%, 6/1/13 90
- --------------------------------------------------------------------------------
13 FNMA, 6.50%, 6/1/13 14
- --------------------------------------------------------------------------------
35 FNMA, 6.50%, 6/1/13 37
- --------------------------------------------------------------------------------
111 FNMA, 6.50%, 6/1/13 116
- --------------------------------------------------------------------------------
19 FNMA, 6.50%, 6/1/13 19
- --------------------------------------------------------------------------------
250 FNMA, 6.00%, 1/1/14 260
- --------------------------------------------------------------------------------
870 FNMA, 6.00%, 4/1/14 902
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
10
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 1,326 FNMA, 4.50%, 5/1/19 $ 1,313
- --------------------------------------------------------------------------------
812 FNMA, 4.50%, 5/1/19 804
- --------------------------------------------------------------------------------
1,595 FNMA, 4.50%, 6/1/19 1,579
- --------------------------------------------------------------------------------
30 FNMA, 6.50%, 1/1/28 31
- --------------------------------------------------------------------------------
319 FNMA, 7.00%, 1/1/28 338
- --------------------------------------------------------------------------------
313 FNMA, 6.50%, 1/1/29 326
- --------------------------------------------------------------------------------
255 FNMA, 7.50%, 7/1/29 274
- --------------------------------------------------------------------------------
150 FNMA, 7.00%, 5/1/30 159
- --------------------------------------------------------------------------------
201 FNMA, 7.50%, 9/1/30 215
- --------------------------------------------------------------------------------
256 FNMA, 6.50%, 9/1/31 267
- --------------------------------------------------------------------------------
142 FNMA, 7.00%, 9/1/31 150
- --------------------------------------------------------------------------------
565 FNMA, 6.50%, 1/1/32 589
- --------------------------------------------------------------------------------
1,090 FNMA, 7.00%, 6/1/32 1,152
- --------------------------------------------------------------------------------
515 FNMA, 6.50%, 8/1/32 536
- --------------------------------------------------------------------------------
2,263 FNMA, 5.50%, 6/1/33(4) 2,287
- --------------------------------------------------------------------------------
2,887 FNMA, 5.50%, 8/1/33(4) 2,918
- --------------------------------------------------------------------------------
1,554 FNMA, 5.50%, 9/1/33(4) 1,571
- --------------------------------------------------------------------------------
9,977 FNMA, 5.50%, 1/1/34(4) 10,084
- --------------------------------------------------------------------------------
460 GNMA, 7.00%, 4/20/26 487
- --------------------------------------------------------------------------------
253 GNMA, 7.50%, 8/15/26 272
- --------------------------------------------------------------------------------
113 GNMA, 7.00%, 2/15/28 120
- --------------------------------------------------------------------------------
226 GNMA, 7.50%, 2/15/28 243
- --------------------------------------------------------------------------------
223 GNMA, 7.00%, 12/15/28 237
- --------------------------------------------------------------------------------
79 GNMA, 8.00%, 12/15/29 86
- --------------------------------------------------------------------------------
595 GNMA, 7.00%, 5/15/31 631
- --------------------------------------------------------------------------------
2,980 GNMA, 5.50%, 11/15/32(4) 3,036
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES
(Cost $87,133) 87,581
- --------------------------------------------------------------------------------
CORPORATE BONDS -- 10.6%
AEROSPACE & DEFENSE -- 0.2%
- --------------------------------------------------------------------------------
900 United Technologies Corp.,
4.375%, 5/1/10 899
- --------------------------------------------------------------------------------
450 United Technologies Corp.,
5.40%, 5/1/35 452
- --------------------------------------------------------------------------------
1,351
- --------------------------------------------------------------------------------
BEVERAGES -- 0.2%
- --------------------------------------------------------------------------------
300 Diageo Capital plc, 4.375%,
5/3/10 299
- --------------------------------------------------------------------------------
750 Miller Brewing Co., 4.25%,
8/15/08 (Acquired 1/6/04,
Cost $762)(7) 743
- --------------------------------------------------------------------------------
1,042
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 0.3%
- --------------------------------------------------------------------------------
750 Goldman Sachs Group, Inc., 5.70%,
9/1/12 787
- --------------------------------------------------------------------------------
750 Goldman Sachs Group, Inc., 5.25%,
10/15/13 762
- --------------------------------------------------------------------------------
350 Morgan Stanley, 4.25%, 5/15/10 344
- --------------------------------------------------------------------------------
1,893
- --------------------------------------------------------------------------------
Principal Amount/Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 0.7%
- --------------------------------------------------------------------------------
$ 290 AmSouth Bancorp., 5.20%, 4/1/15 $ 296
- --------------------------------------------------------------------------------
1,600 Bank of America Corp., 4.375%,
12/1/10(4) 1,597
- --------------------------------------------------------------------------------
500 SouthTrust Corp., 5.80%, 6/15/14 531
- --------------------------------------------------------------------------------
660 Wachovia Bank N.A., 4.80%,
11/1/14 655
- --------------------------------------------------------------------------------
1,020 Wachovia Bank N.A., 4.875%,
2/1/15 1,020
- --------------------------------------------------------------------------------
420 Wells Fargo Bank N.A., 4.75%,
2/9/15 417
- --------------------------------------------------------------------------------
4,516
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 0.2%
- --------------------------------------------------------------------------------
350 R.R. Donnelley & Sons Company,
3.75%, 4/1/09 340
- --------------------------------------------------------------------------------
540 Waste Management, Inc., 7.00%,
7/15/28 617
- --------------------------------------------------------------------------------
957
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 0.2%
- --------------------------------------------------------------------------------
500 American Express Centurion Bank,
4.375%, 7/30/09 501
- --------------------------------------------------------------------------------
660 Capital One Financial Corp.,
4.80%, 2/21/12(3) 650
- --------------------------------------------------------------------------------
1,151
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING -- 0.2%
- --------------------------------------------------------------------------------
1,000 Ball Corp., 7.75%, 8/1/06(3) 1,033
- --------------------------------------------------------------------------------
DIVERSIFIED -- 1.8%
- --------------------------------------------------------------------------------
72,450 iShares GS $ InvesTop Corporate
Bond Fund(3)(8) 8,043
- --------------------------------------------------------------------------------
3,045 Morgan Stanley TRACERS(SM), 7.72%,
3/1/32 (Acquired 3/15/02-
8/28/02, Cost $3,203)(7) 3,705
- --------------------------------------------------------------------------------
11,748
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 1.6%
- --------------------------------------------------------------------------------
1,500 American General Finance Corp.,
Series 2002 H, 4.50%, 11/15/07(4) 1,506
- --------------------------------------------------------------------------------
580 CIT Group Inc., 4.25%, 2/1/10 571
- --------------------------------------------------------------------------------
640 CIT Group Inc., 5.125%, 9/30/14(3) 642
- --------------------------------------------------------------------------------
2,300 Citigroup Inc., 4.125%, 6/30/05(4) 2,304
- --------------------------------------------------------------------------------
1,000 Citigroup Inc., 5.00%, 9/15/14 1,008
- --------------------------------------------------------------------------------
320 Ford Motor Credit Co., 6.50%,
1/25/07 320
- --------------------------------------------------------------------------------
750 Ford Motor Credit Co., 7.375%,
10/28/09 722
- --------------------------------------------------------------------------------
620 General Electric Capital Corp.,
4.25%, 12/1/10(3) 615
- --------------------------------------------------------------------------------
580 General Motors Acceptance Corp.,
6.125%, 8/28/07(3) 565
- --------------------------------------------------------------------------------
530 General Motors Acceptance Corp.,
6.875%, 9/15/11 465
- --------------------------------------------------------------------------------
200 General Motors Acceptance Corp.,
6.75%, 12/1/14 168
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
11
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 425 HSBC Finance Corp., 4.75%,
4/15/10 $ 428
- --------------------------------------------------------------------------------
800 J.P. Morgan Chase & Co., 6.75%,
2/1/11 885
- --------------------------------------------------------------------------------
10,199
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.8%
- --------------------------------------------------------------------------------
532 AT&T Corp., 9.05%, 11/15/11 610
- --------------------------------------------------------------------------------
540 BellSouth Corp., 5.20%, 12/15/16 542
- --------------------------------------------------------------------------------
690 British Telecommunications plc,
7.00%, 5/23/07 727
- --------------------------------------------------------------------------------
800 Deutsche Telekom International
Finance BV, 8.50%, 6/15/10 928
- --------------------------------------------------------------------------------
300 Deutsche Telekom International
Finance BV, 5.25%, 7/22/13 307
- --------------------------------------------------------------------------------
300 France Telecom, 8.00%, 3/12/11 346
- --------------------------------------------------------------------------------
690 Sprint Capital Corp., 8.375%,
3/15/12 818
- --------------------------------------------------------------------------------
240 Sprint Capital Corp., 8.75%,
3/15/32 324
- --------------------------------------------------------------------------------
420 Verizon Virginia Inc., 4.625%,
3/15/13 408
- --------------------------------------------------------------------------------
5,010
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 0.6%
- --------------------------------------------------------------------------------
420 Carolina Power & Light Co.,
5.15%, 4/1/15 426
- --------------------------------------------------------------------------------
939 CenterPoint Energy Resources
Corp., 6.50%, 2/1/08 987
- --------------------------------------------------------------------------------
800 FirstEnergy Corp., 6.45%,
11/15/11 860
- --------------------------------------------------------------------------------
430 Pacific Gas & Electric Co., 6.05%,
3/1/34 461
- --------------------------------------------------------------------------------
300 Tampa Electric Co., 6.375%,
8/15/12 328
- --------------------------------------------------------------------------------
750 Virginia Electric and Power Co.,
5.25%, 12/15/15(3) 764
- --------------------------------------------------------------------------------
3,826
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 0.2%
- --------------------------------------------------------------------------------
410 CVS Corp., 4.00%, 9/15/09 404
- --------------------------------------------------------------------------------
900 Safeway Inc., 6.50%, 3/1/11(3) 957
- --------------------------------------------------------------------------------
1,361
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 0.1%
- --------------------------------------------------------------------------------
710 Beckman Coulter Inc., 7.45%,
3/4/08 769
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 0.6%
- --------------------------------------------------------------------------------
600 Mandalay Resort Group, 6.45%,
2/1/06(3) 610
- --------------------------------------------------------------------------------
1,250 MGM Mirage, 6.00%, 10/1/09 1,239
- --------------------------------------------------------------------------------
400 Starwood Hotels & Resorts
Worldwide Inc., 7.375%, 11/15/15 431
- --------------------------------------------------------------------------------
1,050 Yum! Brands Inc., 8.875%,
4/15/11 1,269
- --------------------------------------------------------------------------------
3,549
- --------------------------------------------------------------------------------
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 0.2%
- --------------------------------------------------------------------------------
$ 550 D.R. Horton Inc., 7.875%, 8/15/11 $ 612
- --------------------------------------------------------------------------------
370 KB Home, 6.375%, 8/15/11 383
- --------------------------------------------------------------------------------
995
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 0.3%
- --------------------------------------------------------------------------------
1,590 General Electric Co., 5.00%,
2/1/13(4) 1,620
- --------------------------------------------------------------------------------
INSURANCE -- 0.4%
- --------------------------------------------------------------------------------
750 Allstate Financial Global Funding,
4.25%, 9/10/08 (Acquired 9/3/03,
Cost $749)(7) 747
- --------------------------------------------------------------------------------
260 American International Group, Inc.,
4.25%, 5/15/13 247
- --------------------------------------------------------------------------------
750 Genworth Financial Inc., 5.75%,
6/15/14(3) 793
- --------------------------------------------------------------------------------
750 Monumental Global Funding II,
3.85%, 3/3/08 (Acquired 2/5/03,
Cost $750)(7) 747
- --------------------------------------------------------------------------------
2,534
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL(1)
- --------------------------------------------------------------------------------
200 IAC/InterActiveCorp, 7.00%,
1/15/13(3) 213
- --------------------------------------------------------------------------------
MEDIA -- 0.5%
- --------------------------------------------------------------------------------
131 Comcast Cable Communications
Holdings Inc., 8.375%, 3/15/13 159
- --------------------------------------------------------------------------------
1,500 Comcast Corp., 5.50%, 3/15/11(3) 1,556
- --------------------------------------------------------------------------------
1,065 Cox Communications, Inc.,
4.625%, 1/15/10 (Acquired
1/13/05, Cost $1,060)(7) 1,050
- --------------------------------------------------------------------------------
550 News America Holdings, 7.75%,
1/20/24(3) 653
- --------------------------------------------------------------------------------
3,418
- --------------------------------------------------------------------------------
MULTI-UTILITIES -- 0.1%
- --------------------------------------------------------------------------------
750 Dominion Resources Inc., 4.125%,
2/15/08 746
- --------------------------------------------------------------------------------
MULTILINE RETAIL -- 0.2%
- --------------------------------------------------------------------------------
350 May Department Stores Co.,
3.95%, 7/15/07 347
- --------------------------------------------------------------------------------
850 May Department Stores Co.,
4.80%, 7/15/09 851
- --------------------------------------------------------------------------------
1,198
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 0.6%
- --------------------------------------------------------------------------------
300 Anadarko Petroleum Corp., 7.95%,
4/15/29 392
- --------------------------------------------------------------------------------
800 Devon Energy Corp., 2.75%,
8/1/06 783
- --------------------------------------------------------------------------------
1,120 Enterprise Products Operating L.P.,
4.625%, 10/15/09 1,104
- --------------------------------------------------------------------------------
180 Magellan Midstream Partners,
5.65%, 10/15/16 183
- --------------------------------------------------------------------------------
660 Nexen Inc., 5.875%, 3/10/35 638
- --------------------------------------------------------------------------------
580 XTO Energy Inc., 5.30%, 6/30/15(3) 587
- --------------------------------------------------------------------------------
3,687
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
12
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 0.1%
- --------------------------------------------------------------------------------
$ 400 Schering-Plough Corp., 5.30%,
12/1/13 $ 416
- --------------------------------------------------------------------------------
ROAD & RAIL -- 0.3%
- --------------------------------------------------------------------------------
800 Canadian National Railway Co.,
6.25%, 8/1/34 900
- --------------------------------------------------------------------------------
600 Norfolk Southern Corp., 7.80%,
5/15/27 773
- --------------------------------------------------------------------------------
1,673
- --------------------------------------------------------------------------------
SOFTWARE -- 0.1%
- --------------------------------------------------------------------------------
620 Computer Associates International
Inc., 4.75%, 12/1/09 (Acquired
12/9/04, Cost $629)(7) 612
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.1%
- --------------------------------------------------------------------------------
700 Nextel Communications Inc.,
5.95%, 3/15/14(3) 712
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $65,552) 66,229
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES(5) -- 7.0%
157 ABSC Non-Improvement Trust,
Series 2004 HE5, Class A1, 5.00%,
8/27/34 (Acquired 6/22/04,
Cost $157)(7) 157
- --------------------------------------------------------------------------------
1,600 Accredited Mortgage Loan Trust,
Series 2004-4, Class A2A, VRN,
3.17%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.15% with no caps(4) 1,601
- --------------------------------------------------------------------------------
93 Ameriquest Mortgage Securities
Inc., Series 2004 R8, Class A2,
VRN, 3.18%, 5/25/05, resets
monthly off the 1-month LIBOR
plus 0.16% with no caps 93
- --------------------------------------------------------------------------------
23 AQ Finance Non-Improvement
Trust, Series 2003 N11A, 7.14%,
11/25/33 23
- --------------------------------------------------------------------------------
151 AQ Finance Non-Improvement
Trust, Series 2004 RN4, Class A,
4.60%, 7/25/34 (Acquired
6/9/04, Cost $151)(7) 150
- --------------------------------------------------------------------------------
113 AQ Finance Non-Improvement
Trust, Series 2004 RN5, Class A,
5.19%, 6/29/34 (Acquired
6/24/04, Cost $113)(7) 113
- --------------------------------------------------------------------------------
47 Argent Non-Improvement Trust,
Series 2004 WN2, Class A, 4.55%,
4/25/34 47
- --------------------------------------------------------------------------------
130 Argent Non-Improvement Trust,
Series 2004 WN8, Class A, 4.70%,
7/25/34 130
- --------------------------------------------------------------------------------
93 Argent Non-Improvement Trust,
Series 2004 WN9, Class A, 5.19%,
10/25/34 (Acquired 9/9/04,
Cost $93)(7) 93
- --------------------------------------------------------------------------------
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 147 Argent Non-Improvement Trust,
Series 2004 WN10, Class A,
4.21%, 11/25/34 (Acquired
10/19/04, Cost $147)(7) $ 147
- --------------------------------------------------------------------------------
18 Asset Backed Funding Corp.
Non-Improvement Trust, Series
2003-1, Class N1, 6.90%, 7/26/33 18
- --------------------------------------------------------------------------------
100 Asset Backed Funding Corp.
Non-Improvement Trust, Series
2004 OPT4, Class N1, 4.45%,
5/26/34 99
- --------------------------------------------------------------------------------
2,000 Capital One Prime Auto
Receivables Trust, Series 2004-2,
Class A4, VRN, 3.01%, 5/15/05,
resets monthly off the 1-month
LIBOR plus 0.06% with no caps(4) 2,002
- --------------------------------------------------------------------------------
821 Centex Home Equity, Series
2004 C, Class AF1, VRN, 2.82%,
5/1/05 817
- --------------------------------------------------------------------------------
1,825 CNH Equipment Trust, Series
2004 A, Class A3A, VRN, 3.02%,
5/16/05, resets monthly off the
1-month LIBOR plus 0.07% and
no caps(4) 1,827
- --------------------------------------------------------------------------------
128 Countrywide Asset-Backed
Certificates, Series 2004-5N,
Class N1, 5.50%, 10/25/35 127
- --------------------------------------------------------------------------------
829 Countrywide Asset-Backed
Certificates, Series 2004-11,
Class A1, VRN, 3.21%, 5/25/05,
resets monthly off the 1-month
LIBOR plus 0.19% with no caps 829
- --------------------------------------------------------------------------------
102 Countrywide Asset-Backed
Certificates, Series 2004-11N,
Class N, 5.25%, 4/25/36
(Acquired 10/27/04, Cost $102)(7) 102
- --------------------------------------------------------------------------------
2,691 Countrywide Asset-Backed
Certificates, Series 2004-13,
Class AV1, VRN, 3.16%, 5/25/05,
resets monthly off the 1-month
LIBOR plus 0.14% with no caps(4) 2,694
- --------------------------------------------------------------------------------
1,129 Countrywide Partnership Trust,
Series 2004 EC1, Class 2A1, VRN,
3.19%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.17% with no caps 1,130
- --------------------------------------------------------------------------------
742 Equifirst Mortgage Loan Trust,
Series 2004-3, Class A1, VRN,
3.18%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.16% with no caps 742
- --------------------------------------------------------------------------------
92 Finance America Non-Improvement
Trust, Series 2004-1, Class A,
5.25%, 6/27/34 92
- --------------------------------------------------------------------------------
2,101 First Franklin Mortgage Loan
Asset Backed Certificates, Series
2004 FF11, Class 2A1, VRN,
3.17%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.15% with no caps(4) 2,102
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
13
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 1,725 First Franklin Mortgage Loan
Asset Backed Certificates, Series
2005 FF4, Class 2A1, VRN, 2.93%,
5/25/05, resets monthly off the
1-month LIBOR plus 0.08% with
no caps(4) $ 1,725
- --------------------------------------------------------------------------------
72 First Franklin Non-Improvement
Trust, Series 2004 FF1, Class N1,
4.50%, 9/25/05 72
- --------------------------------------------------------------------------------
1,000 Ford Credit Auto Owner Trust,
Series 2002 A, Class B, 4.79%,
11/15/06 1,004
- --------------------------------------------------------------------------------
4,500 Ford Credit Floorplan Master
Owner Trust, Series 2004-1,
Class A, VRN, 2.99%, 5/15/05,
resets monthly off the 1-month
LIBOR plus 0.04% with no caps(4) 4,505
- --------------------------------------------------------------------------------
91 Fremont Non-Improvement Trust,
Series 2004 B, 4.70%, 5/25/34
(Acquired 5/20/04, Cost $91)(7) 90
- --------------------------------------------------------------------------------
3,594 GE Corporate Aircraft Financing
LLC, Series 2004-1A, Class A1,
VRN, 3.11%, 5/25/05, resets
monthly off the 1-month LIBOR
plus 0.09% with no caps
(Acquired 10/5/04, Cost
$3,594)(4)(7) 3,596
- --------------------------------------------------------------------------------
149 GSAMP Non-Improvement Trust,
Series 2004, Class N1, 5.50%,
9/25/34 (Acquired 9/20/04,
Cost $149)(7) 149
- --------------------------------------------------------------------------------
122 Long Beach Asset Holdings Corp.,
Series 2004-5, Class C and P,
5.00%, 9/25/34 (Acquired
9/15/04, Cost $122)(7) 121
- --------------------------------------------------------------------------------
444 Long Beach Asset Holdings Corp.,
Series 2005-1, Class N1, 4.12%,
2/25/35 (Acquired 1/19/05,
Cost $444)(7) 444
- --------------------------------------------------------------------------------
30 MASTR Non-Improvement Trust,
Series 2004 CI3, Class N1, 4.45%,
2/26/34 (Acquired 5/18/04,
Cost $30)(7) 30
- --------------------------------------------------------------------------------
38 Merrill Lynch Mortgage Investors
Inc., Series 2003 OP1N, Class N1,
7.25%, 7/25/34 38
- --------------------------------------------------------------------------------
13 Morgan Stanley ABS Capital I,
Series 2004 NC2N, Class X and P,
6.25%, 12/25/33 (Acquired
3/16/04, Cost $13)(7) 13
- --------------------------------------------------------------------------------
2,349 NovaStar Home Equity Loan,
Series 2004-4, Class A2A, VRN,
3.21%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.19% with a cap of 11.00%(4) 2,350
- --------------------------------------------------------------------------------
3,325 NovaStar Home Equity Loan,
Series 2005-1, Class A2A, VRN,
3.14%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.12% with a cap of 11.00%(4) 3,328
- --------------------------------------------------------------------------------
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 146 NovaStar Non-Improvement Trust,
Series 2004 N2, Class X, O and P,
4.46%, 6/26/34 (Acquired
7/20/04, Cost $146)(7) $ 146
- --------------------------------------------------------------------------------
2,831 Park Place Securities Inc., Series
2004 WHQ2, Class A3B, VRN,
3.18%, 5/25/05, resets monthly
off the 1-month LIBOR plus
0.16% with no caps(4) 2,833
- --------------------------------------------------------------------------------
1,520 Residential Asset Mortgage
Products Inc., Series 2004 RS10,
Class AII1, VRN, 3.19%, 5/25/05,
resets monthly off the 1-month
LIBOR plus 0.17% with a cap of
14.00%(4) 1,521
- --------------------------------------------------------------------------------
300 Residential Asset Securities Corp.,
Series 2004 KS2, Class MI1,
4.71%, 3/25/34 293
- --------------------------------------------------------------------------------
2,045 Residential Asset Securities Corp.,
Series 2004 KS7, Class A2B1,
VRN, 3.16%, 5/25/05, resets
monthly off the 1-month LIBOR
plus 0.14% with no caps(4) 2,047
- --------------------------------------------------------------------------------
72 Sail Net Interest Margin Notes,
Series 2004 BNCA, Class A,
5.00%, 9/27/34 (Acquired 8/5/04,
Cost $72)(7) 72
- --------------------------------------------------------------------------------
174 Sail Net Interest Margin Notes,
Series 2004-8A, Class A, 5.00%,
9/27/34 (Acquired 9/13/04,
Cost $174)(7) 173
- --------------------------------------------------------------------------------
140 Sharps SP I LLC Net Interest
Margin Trust, Series 2004 OP1N,
Class NA, 5.19%, 4/25/34
(Acquired 6/9/04, Cost $140)(7) 141
- --------------------------------------------------------------------------------
99 SLM Student Loan Trust, Series
2004-8, Class A1, VRN, 3.15%,
7/25/05, resets quarterly off the
3-month LIBOR minus 0.01%
with no caps 99
- --------------------------------------------------------------------------------
3,732 SLM Student Loan Trust, Series
2005-2, Class A1, VRN, 3.14%,
7/25/05, resets quarterly off the
3-month LIBOR minus 0.02%
with no caps(4) 3,734
- --------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $43,644) 43,659
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
SECURITIES -- 6.7%
5,000 FHLB, 3.375%, 9/14/07(3) 4,947
- --------------------------------------------------------------------------------
2,300 FHLMC, 2.875%, 5/15/07(3) 2,257
- --------------------------------------------------------------------------------
10,000 FHLMC, 7.00%, 3/15/10(3) 11,217
- --------------------------------------------------------------------------------
2,600 FHLMC, 5.625%, 3/15/11(4) 2,774
- --------------------------------------------------------------------------------
8,100 FNMA, 5.25%, 4/15/07(4) 8,309
- --------------------------------------------------------------------------------
5,170 FNMA, 3.00%, 8/15/07(3) 5,067
- --------------------------------------------------------------------------------
2,000 FNMA, 6.625%, 10/15/07(4) 2,125
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
14
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 2,050 FNMA, 5.75%, 2/15/08 $ 2,145
- --------------------------------------------------------------------------------
2,600 FNMA, 6.125%, 3/15/12(4) 2,864
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES
(Cost $41,907) 41,705
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES -- 6.4%
2,400 U.S. Treasury Bonds, 8.00%,
11/15/21(3) 3,354
- --------------------------------------------------------------------------------
9,600 U.S. Treasury Bonds, 6.25%,
8/15/23(3) 11,541
- --------------------------------------------------------------------------------
2,850 U.S. Treasury Bonds, 6.125%,
11/15/27(3) 3,450
- --------------------------------------------------------------------------------
800 U.S. Treasury Bonds, 5.50%,
8/15/28(3) 901
- --------------------------------------------------------------------------------
3,425 U.S. Treasury Bonds, 5.375%,
2/15/31(3) 3,869
- --------------------------------------------------------------------------------
8,434 U.S. Treasury Inflation Indexed
Notes, 1.625%, 1/15/15(3) 8,461
- --------------------------------------------------------------------------------
6,680 U.S. Treasury Notes, 4.00%,
6/15/09(3) 6,723
- --------------------------------------------------------------------------------
2,000 U.S. Treasury Notes, 4.75%,
5/15/14(3) 2,085
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY SECURITIES
(Cost $39,391) 40,384
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS(5) -- 5.2%
17,192 Bank of America Commercial
Mortgage Inc. STRIPS - COUPON,
Series 2004-1, Class XP, VRN,
0.80%, 5/1/05 480
- --------------------------------------------------------------------------------
1,000 Bank of America Large Loan,
Series 2005 BOCA, Class A1, VRN,
3.07%, 5/15/05, resets monthly
off the 1-month LIBOR plus
0.12% with no caps (Acquired
3/4/05, Cost $1,000)(7) 1,000
- --------------------------------------------------------------------------------
3,950 Bank of America Mortgage
Securities, Series 2004 F,
Class 2A5, VRN, 4.17%, 5/1/05(4) 3,903
- --------------------------------------------------------------------------------
19,000 Bear Stearns Commercial
Mortgage Securities STRIPS -
COUPON, Series 2004 T16,
Class X2, VRN, 0.81%, 5/1/05 790
- --------------------------------------------------------------------------------
3,766 Bear Stearns Commercial
Mortgage Securities, Series
2004 BA5A, Class A1, VRN, 3.08%,
5/15/05, resets monthly off the
1-month LIBOR plus 0.13% with
no caps (Acquired 12/15/04,
Cost $3,766)(4)(7) 3,768
- --------------------------------------------------------------------------------
3,067 Citigroup Commercial Mortgage
Trust, Series 2004 FL1, Class A1,
VRN, 3.08%, 5/16/05, resets
monthly off the 1-month LIBOR
plus 0.13% with no caps(4) 3,071
- --------------------------------------------------------------------------------
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
$ 1,037 Commercial Mortgage
Pass-Through Certificates, Series
2004 HTL1, Class A1, VRN, 3.19%,
5/15/05, resets monthly off the
1-month LIBOR plus 0.24% with
no caps $ 1,038
- --------------------------------------------------------------------------------
2,500 Commercial Mortgage
Pass-Through Certificates, Series
2005 F10A, Class A1, VRN, 3.05%,
5/15/05, resets monthly off the
1-month LIBOR plus 0.10% with
no caps (Acquired 3/18/05,
Cost $2,500)(4)(7) 2,500
- --------------------------------------------------------------------------------
522 FHLMC REMIC, Series 77, Class H,
8.50%, 9/15/20 522
- --------------------------------------------------------------------------------
2,500 FHLMC, Series 2005-2937,
Class KA, 4.50%, 12/15/14 2,514
- --------------------------------------------------------------------------------
1,216 GMAC Commercial Mortgage
Securities Inc., Series 2002 C2,
Class A1 SEQ, 4.32%, 10/15/38(4) 1,221
- --------------------------------------------------------------------------------
2,700 LB-UBS Commercial Mortgage
Trust, Series 2003 C5, Class A2
SEQ, 3.48%, 7/15/27(4) 2,641
- --------------------------------------------------------------------------------
607 MASTR Alternative Loans Trust,
Series 2003-8, Class 4A1, 7.00%,
12/25/33 619
- --------------------------------------------------------------------------------
2,350 Wachovia Bank Commercial
Mortgage Trust, Series
2005 WL5A, Class A1, VRN, 3.05%,
5/16/05, resets monthly off the
1-month LIBOR plus 0.10% with
no caps (Acquired 3/24/05,
Cost $2,350)(4)(7) 2,350
- --------------------------------------------------------------------------------
2,150 Washington Mutual, Series 2004
AR4, Class A6, 3.81%, 6/25/34(4) 2,102
- --------------------------------------------------------------------------------
1,800 Washington Mutual, Series 2004
AR9, Class A6, 4.28%, 8/25/34(4) 1,782
- --------------------------------------------------------------------------------
2,600 Washington Mutual, Series 2004
AR9, Class A7, VRN, 4.22%,
5/1/05(4) 2,581
- --------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $32,989) 32,882
- --------------------------------------------------------------------------------
SOVEREIGN GOVERNMENTS
& AGENCIES -- 0.3%
910 Republic of Italy, 4.00%, 6/16/08(6) 909
- --------------------------------------------------------------------------------
710 United Mexican States, 5.875%,
1/15/14(3) 719
- --------------------------------------------------------------------------------
180 United Mexican States, 6.75%,
9/27/34(3) 180
- --------------------------------------------------------------------------------
TOTAL SOVEREIGN GOVERNMENTS
& AGENCIES
(Cost $1,828) 1,808
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
15
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 0.1%
$ 800 Illinois GO, (Taxable Pension),
5.10%, 6/1/33
(Cost $804) $ 795
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 2.2%
Repurchase Agreement, Deutsche Bank Securities,
Inc., (collateralized by various U.S. Treasury
obligations, 3.375%, 4/15/32, valued at $14,392),
in a joint trading account at 2.78%, dated
4/29/05, due 5/2/05 (Delivery value $14,103)(4)
(Cost $14,100) 14,100
- --------------------------------------------------------------------------------
COLLATERAL RECEIVED FOR
SECURITIES LENDING(9) -- 11.3%
REPURCHASE AGREEMENTS -- 11.0%
- --------------------------------------------------------------------------------
Repurchase Agreement, Barclays Bank plc,
(collateralized by various U.S. Government Agency
obligations in a pooled account at the lending
agent), 2.95%, dated 4/29/05, due 5/2/05
(Delivery value $23,485) 23,479
- --------------------------------------------------------------------------------
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
Repurchase Agreement, UBS AG, (collateralized
by various U.S. Government Agency obligations
in a pooled account at the lending agent),
3.00%, dated 4/29/05, due 5/2/05 (Delivery
value $45,011) $ 45,000
- --------------------------------------------------------------------------------
68,479
- --------------------------------------------------------------------------------
SHORT-TERM DEBT -- 0.3%
- --------------------------------------------------------------------------------
$ 2,000 Bear Stearns Companies, Inc.
Master Note, VRN, 3.18%, 5/2/05 2,000
- --------------------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED FOR
SECURITIES LENDING
(Cost $70,479) 70,479
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 119.6%
(Cost $702,812) 748,500
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (19.6)% (122,652)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $ 625,848
================================================================================
FUTURES CONTRACTS*
($ IN THOUSANDS)
Expiration Underlying Face Unrealized
Contracts Purchased Date Amount at Value Gain (Loss)
- --------------------------------------------------------------------------------
12 S&P 500 Index June 2005 $ 3,476 $(80)
- --------------------------------------------------------------------------------
111 U.S. Treasury
10-Year Notes June 2005 12,368 144
- --------------------------------------------------------------------------------
$15,844 $ 64
======================================
($ IN THOUSANDS)
Expiration Underlying Face Unrealized
Contracts Sold Date Amount at Value Gain (Loss)
- --------------------------------------------------------------------------------
178 U.S. Treasury
2-Year Notes June 2005 $36,971 $(44)
- --------------------------------------------------------------------------------
100 U.S. Treasury
5-Year Notes June 2005 10,845 (33)
- --------------------------------------------------------------------------------
$47,816 $(77)
======================================
*FUTURES CONTRACTS typically are based on an index or specific securities and
tend to track the performance of the index or specific securities while
remaining very liquid (easy to buy and sell). By investing its cash assets in
futures, the fund has increased exposure to certain markets while maintaining
easy access to cash. By selling futures, the fund hedges its investments
against price fluctuations.
See Notes to Financial Statements. (continued)
- ------
16
Balanced - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
ABSC = Asset-Backed Securities Corp.
FHLB = Federal Home Loan Bank
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
GMAC = General Motors Acceptance Corporation
GNMA = Government National Mortgage Association
GO = General Obligation
GSAMP = Goldman Sachs Mortgage Pass-through
LB-UBS = Lehman Brothers Inc. -- UBS AG
LIBOR = London Interbank Offered Rate
MASTR = Mortgage Asset Securitization Transactions, Inc.
REMIC = Real Estate Mortgage Investment Conduit
resets = The frequency with which a security's coupon changes, based on current
market conditions or an underlying index. The more frequently a
security resets, the less risk the investor is taking that the coupon
will vary significantly from current market rates.
SEQ = Sequential Payer
STRIPS = Separate Trading of Registered Interest and Principal of Securities
TRACERS(SM) = Traded Custody Receipts(SM). Rate indicated is the
weighted-average coupon of the underlying securities held.
VRN = Variable Rate Note. Interest reset date is indicated, unless otherwise
noted. Rate shown is effective April 30, 2005.
(1) Category is less than 0.05% of total net assets.
(2) Non-income producing.
(3) Security, or a portion thereof, was on loan as of April 30, 2005.
(4) Security, or a portion thereof, has been segregated for a when-issued
security, forward commitment and/or futures contract.
(5) Final maturity indicated, unless otherwise noted.
(6) When-issued security or forward commitment.
(7) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at April 30, 2005, was $22,959 (in
thousands), which represented 3.7% of total net assets.
(8) Security is an exchange-traded bond fund. Quantity indicated reflects the
number of shares owned.
(9) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions. (See Note 5 in
Notes to Financial Statements.)
See Notes to Financial Statements.
- ------
17
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value (cost of $632,333) --
including $94,865 of securities on loan $678,021
- -----------------------------------------------------------
Investments made with cash collateral received for
securities on loan, at value (cost of $70,479) 70,479
- --------------------------------------------------------------------------------
Total investment securities, at value (cost of $702,812) 748,500
- -----------------------------------------------------------
Receivable for investments sold 796
- -----------------------------------------------------------
Receivable for capital shares sold 43
- -----------------------------------------------------------
Receivable for variation margin on futures contracts 88
- -----------------------------------------------------------
Dividends and interest receivable 2,163
- --------------------------------------------------------------------------------
751,590
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for collateral received for securities on loan 70,479
- -----------------------------------------------------------
Disbursements in excess of demand deposit cash 2,699
- -----------------------------------------------------------
Payable for investments purchased 52,092
- -----------------------------------------------------------
Accrued management fees 466
- -----------------------------------------------------------
Distribution fees payable 3
- -----------------------------------------------------------
Service fees payable 3
- --------------------------------------------------------------------------------
125,742
- --------------------------------------------------------------------------------
NET ASSETS $625,848
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $570,023
- -----------------------------------------------------------
Undistributed net investment income 996
- -----------------------------------------------------------
Undistributed net realized gain on investment transactions 9,154
- -----------------------------------------------------------
Net unrealized appreciation on investments 45,675
- --------------------------------------------------------------------------------
$625,848
================================================================================
INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $608,776,320
- -----------------------------------------------------------
Shares outstanding 37,721,357
- -----------------------------------------------------------
Net asset value per share $16.14
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $594,649
- -----------------------------------------------------------
Shares outstanding 36,844
- -----------------------------------------------------------
Net asset value per share $16.14
- --------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $16,476,550
- -----------------------------------------------------------
Shares outstanding 1,021,488
- -----------------------------------------------------------
Net asset value per share $16.13
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
18
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
INCOME:
- -----------------------------------------------------------
Interest $ 5,226
- -----------------------------------------------------------
Dividends 3,600
- -----------------------------------------------------------
Securities lending 61
- --------------------------------------------------------------------------------
8,887
- --------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------
Management fees 2,820
- -----------------------------------------------------------
Distribution fees -- Advisor Class 20
- -----------------------------------------------------------
Service fees -- Advisor Class 20
- -----------------------------------------------------------
Directors' fees and expenses 4
- -----------------------------------------------------------
Other expenses 1
- --------------------------------------------------------------------------------
2,865
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 6,022
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on investment transactions 21,838
- -----------------------------------------------------------
Change in net unrealized appreciation on investments (6,275)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 15,563
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $21,585
================================================================================
See Notes to Financial Statements.
- ------
19
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income $ 6,022 $ 10,026
- ---------------------------------------------------
Net realized gain 21,838 55,859
- ---------------------------------------------------
Change in net unrealized appreciation (6,275) (16,885)
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 21,585 49,000
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
From net investment income:
- ---------------------------------------------------
Investor Class (5,673) (10,813)
- ---------------------------------------------------
Institutional Class (2) (3)
- ---------------------------------------------------
Advisor Class (130) (262)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (5,805) (11,078)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net decrease in net assets from
capital share transactions (1,775) (26,486)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 14,005 11,436
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 611,843 600,407
- --------------------------------------------------------------------------------
End of period $625,848 $611,843
================================================================================
Undistributed net investment income $996 $761
================================================================================
See Notes to Financial Statements.
- ------
20
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Balanced Fund (the fund) is one fund in
a series issued by the corporation. The fund is diversified under the 1940 Act.
The fund's investment objective is to seek long-term capital growth and current
income. The fund pursues its objective by investing approximately 60% of its
assets in equity securities and the remainder in bonds and other fixed-income
securities. The following is a summary of the fund's significant accounting
policies.
MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the
Institutional Class and the Advisor Class. The share classes differ principally
in their respective shareholder servicing and distribution expenses and
arrangements. All shares of the fund represent an equal pro rata interest in the
assets of the class to which such shares belong, and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
for class specific expenses and exclusive rights to vote on matters affecting
only individual classes. Income, non-class specific expenses, and realized and
unrealized capital gains and losses of the fund are allocated to each class of
shares based on their relative net assets.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the fund determines that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes paydown gain (loss) and accretion of discounts and
amortization of premiums.
SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending
agent to certain approved borrowers in order to earn additional income. The fund
continues to recognize any gain or loss in the market price of the securities
loaned and records any interest earned or dividends declared.
FUTURES CONTRACTS -- The fund may enter into futures contracts in order to
manage the fund's exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the fund is required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the fund. The variation margin is equal to
the daily change in the contract value and is recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is closed
or expires. Net realized and unrealized gains or losses occurring during the
holding period of futures contracts are a component of realized gain (loss) on
investment transactions and unrealized appreciation (depreciation) on
investments, respectively.
WHEN-ISSUED AND FORWARD COMMITMENTS -- The fund may engage in securities
transactions on a when-issued or forward commitment basis. In these
transactions, the securities' prices and yields are fixed on the date of the
commitment. In a when-issued transaction, the payment and delivery are scheduled
for a future date and during this period, securities are subject to market
fluctuations. In a forward commitment transaction, the fund may sell a security
and at the same time make a commitment to purchase the same security at a future
date at a specified price. Conversely, the fund may purchase a security and at
the same time make a commit-
(continued)
- ------
21
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ment to sell the same security at a future date at a specified price. These
types of transactions are executed simultaneously in what are known as "roll"
transactions. The fund will segregate cash, cash equivalents or other
appropriate liquid securities on its records in amounts sufficient to meet the
purchase price. The fund accounts for "roll" transactions as purchases and
sales; as such these transactions may increase portfolio turnover.
SWAP AGREEMENTS -- The fund may enter into a swap agreement in order to attempt
to obtain or preserve a particular return or spread at a lower cost than
obtaining a return or spread through purchases and/or sales of instruments in
other markets; protect against currency fluctuations; attempt to manage duration
to protect against any increase in the price of securities the fund anticipates
purchasing at a later date; or gain exposure to certain markets in the most
economical way possible. A swap agreement is a contract in which two parties
agree to exchange the returns earned or realized on predetermined investments or
instruments. The fund will segregate cash, cash equivalents or other appropriate
liquid securities on its records in amounts sufficient to meet requirements.
Unrealized gains are reported as an asset and unrealized losses are reported as
a liability on the Statement of Assets and Liabilities. Swap agreements are
valued daily and changes in value, including the periodic amounts of interest to
be paid or received on swaps are recorded as unrealized appreciation
(depreciation) on investments. Realized gain or loss is recorded upon receipt or
payment of a periodic settlement or termination of swap agreements. The risks of
entering into swap agreements include the possible lack of liquidity, failure of
the counterparty to meets its obligations, and that there may be unfavorable
changes in the underlying investments and instruments.
TRACERS(SM)/TRAINS(SM) -- The fund may invest in TRACERS and TRAINS which
represent ownership of a specified percentage of each security in an underlying
pool of securities. Owners are entitled to receive a pro rata share of
distributions from the underlying securities. In the event an underlying
security is downgraded by a rating agency, that portion of the investment
product will be redeemed and the underlying security will be distributed to the
owner pro rata or the owner may receive cash proceeds. The risk of owning these
products are the same as owning the individual securities, but enable the fund
to be more diversified by owning a single security.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. The
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable the fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to the
fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, the fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income are declared and
paid quarterly. Distributions from net realized gains, if any, are generally
declared and paid annually.
INDEMNIFICATIONS -- Under the corporation's organizational documents, its
officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the fund. In addition, in the normal
course of business, the fund enters into contracts that provide general
indemnifications. The fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the fund.
The risk of material loss from such claims is considered by management to be
remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
(continued)
- ------
22
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee (the fee) per class.
The Agreement provides that all expenses of the fund, except brokerage
commissions, taxes, interest, fees and expenses of those directors who are not
considered "interested persons" as defined in the 1940 Act (including counsel
fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and
accrued daily based on the daily net assets of the specific class of shares of
the fund and paid monthly in arrears. For funds with a stepped fee schedule, the
rate of the fee is determined by applying a fee rate calculation formula. This
formula takes into account all of the investment advisor's assets under
management in the fund's investment strategy (strategy assets) to calculate the
appropriate fee rate for the fund. The strategy assets include the fund's assets
and the assets of other clients of the investment advisor that are not in the
American Century family of funds, but that have the same investment team and
investment strategy.
The annual management fee schedule for each class of the fund is as follows:
- --------------------------------------------------------------------------------
INVESTOR INSTITUTIONAL ADVISOR
- --------------------------------------------------------------------------------
STRATEGY ASSETS
- --------------------------------------------------------------------------------
First $1 billion 0.90% 0.70% 0.65%
- --------------------------------------------------------------------------------
Over $1 billion 0.80% 0.60% 0.55%
- --------------------------------------------------------------------------------
The effective annual management fee for the six months ended April 30, 2005 was
0.90%, 0.70%, and 0.65%, for the Investor Class, Institutional Class and Advisor
Class, respectively.
DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master
Distribution and Shareholder Services Plan (the plan) for the Advisor Class,
pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class
will pay American Century Investment Services, Inc. (ACIS) an annual
distribution fee equal to 0.25% and an annual service fee equal to 0.25%. The
fees are computed and accrued daily based on the Advisor Class's daily net
assets and paid monthly in arrears. The distribution fee provides compensation
for expenses incurred by financial intermediaries in connection with
distributing shares of the Advisor Class including, but not limited to, payments
to brokers, dealers, and financial institutions that have entered into sales
agreements with respect to shares of the fund. The service fee provides
compensation for shareholder and administrative services rendered by ACIS, its
affiliates or independent third party providers. Fees incurred under the plan
during the six months ended April 30, 2005, are detailed in the Statement of
Operations.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's
transfer agent, American Century Services, LLC (formerly American Century
Services Corporation).
The fund has a bank line of credit agreement and securities lending agreement
with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly
owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in
ACC.
3. INVESTMENT TRANSACTIONS
Purchases of investment securities, excluding short-term investments, for the
six months ended April 30, 2005, totaled $628,329, of which $420,324 represented
U.S. Treasury and Agency obligations. Sales of investment securities excluding
short-term investments, for the six months ended April 30, 2005, totaled
$658,784, of which $424,156 represented U.S. Treasury and Agency obligations.
(continued)
- ------
23
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the fund were as follows:
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 200,000
================================================================================
Sold 2,728 $ 44,638
- -------------------------------------------------
Issued in reinvestment of distributions 334 5,499
- -------------------------------------------------
Redeemed (3,178) (51,893)
- --------------------------------------------------------------------------------
Net decrease (116) $ (1,756)
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 150,000
================================================================================
Sold 3,895 $ 60,116
- -------------------------------------------------
Issued in reinvestment of distributions 678 10,467
- -------------------------------------------------
Redeemed (6,182) (95,049)
- --------------------------------------------------------------------------------
Net decrease (1,609) $(24,466)
================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 15,000
================================================================================
Sold 23 $373
- -------------------------------------------------
Issued in reinvestment of distributions -- 2
- -------------------------------------------------
Redeemed -- (7)
- --------------------------------------------------------------------------------
Net increase 23 $368
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 15,000
================================================================================
Sold 4 $66
- -------------------------------------------------
Issued in reinvestment of distributions -- 3
- -------------------------------------------------
Redeemed -- (9)
- --------------------------------------------------------------------------------
Net increase 4 $60
================================================================================
ADVISOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 50,000
================================================================================
Sold 153 $ 2,510
- -------------------------------------------------
Issued in reinvestment of distributions 7 115
- -------------------------------------------------
Redeemed (185) (3,012)
- --------------------------------------------------------------------------------
Net decrease (25) $ (387)
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 50,000
================================================================================
Sold 386 $ 5,954
- -------------------------------------------------
Issued in reinvestment of distributions 15 234
- -------------------------------------------------
Redeemed (539) (8,268)
- --------------------------------------------------------------------------------
Net decrease (138) $(2,080)
================================================================================
(continued)
- ------
24
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS)
5. SECURITIES LENDING
As of April 30, 2005, securities in the fund valued at $94,865 were on loan
through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives
and maintains collateral in the form of cash, and/or acceptable securities as
approved by ACIM. Cash collateral is invested in authorized investments by the
lending agent in a pooled account. The value of cash collateral received at
period end is disclosed in the Statement of Assets and Liabilities and
investments made with the cash by the lending agent are listed in the Schedule
of Investments. Any deficiencies or excess of collateral must be delivered or
transferred by the member firms no later than the close of business on the next
business day. The total value of all collateral received, at this date, was
$96,598. The fund's risks in securities lending are that the borrower may not
provide additional collateral when required or return the securities when due.
If the borrower defaults, receipt of the collateral by the fund may be delayed
or limited.
6. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $575 million
unsecured bank line of credit agreement with JPMCB, which was renewed from $650
million effective December 15, 2004. The fund may borrow money for temporary or
emergency purposes to fund shareholder redemptions. Borrowings under the
agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not
borrow from the line during the six months ended April 30, 2005.
7. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $705,643
================================================================================
Gross tax appreciation of investments $ 53,298
- --------------------------------------------------------------
Gross tax depreciation of investments (10,441)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $ 42,857
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
As of October 31, 2004, the fund had accumulated capital losses of $9,298, which
represent net capital loss carryovers that may be used to offset future realized
gains for federal income tax purposes. Capital loss carryovers of $7,975 and
$1,323 expire in 2010 and 2011, respectively.
- ------
25
Balanced - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ------------------------------------------------------------------------------------------
INVESTOR CLASS
- ------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------
PER-SHARE DATA
- ------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $15.73 $14.77 $12.98 $14.28 $17.01 $18.95
- ------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Income(2) 0.15 0.26 0.27 0.35 0.38 0.42
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.41 0.98 1.77 (1.30) (2.10) 0.61
- ------------------------------------------------------------------------------------------
Total From
Investment Operations 0.56 1.24 2.04 (0.95) (1.72) 1.03
- ------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.15) (0.28) (0.25) (0.35) (0.40) (0.43)
- --------------------------
From Net
Realized Gains -- -- -- -- (0.61) (2.54)
- ------------------------------------------------------------------------------------------
Total Distributions (0.15) (0.28) (0.25) (0.35) (1.01) (2.97)
- ------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $16.14 $15.73 $14.77 $12.98 $14.28 $17.01
==========================================================================================
TOTAL RETURN(3) 3.54% 8.46% 15.92% (6.80)% (10.46)% 5.90%
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.90%(4) 0.90% 0.90% 0.90% 0.90% 0.97%
- --------------------------
Ratio of Net Investment
Income to Average
Net Assets 1.91%(4) 1.65% 1.96% 2.46% 2.46% 2.40%
- --------------------------
Portfolio Turnover Rate 102% 204% 133% 108% 107% 85%
- --------------------------
Net Assets, End of Period
(in millions) $609 $595 $583 $541 $663 $835
- ------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
26
Balanced - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000(2)
- ------------------------------------------------------------------------------------------
PER-SHARE DATA
- ------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $15.73 $14.78 $12.99 $14.28 $17.01 $17.34
- ------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Income(3) 0.16 0.28 0.41 0.37 0.41 0.23
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.42 0.98 1.66 (1.29) (2.10) (0.34)
- ------------------------------------------------------------------------------------------
Total From
Investment Operations 0.58 1.26 2.07 (0.92) (1.69) (0.11)
- ------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.17) (0.31) (0.28) (0.37) (0.43) (0.22)
- --------------------------
From Net
Realized Gains -- -- -- -- (0.61) --
- ------------------------------------------------------------------------------------------
Total Distributions (0.17) (0.31) (0.28) (0.37) (1.04) (0.22)
- ------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $16.14 $15.73 $14.78 $12.99 $14.28 $17.01
==========================================================================================
TOTAL RETURN(4) 3.64% 8.61% 16.13% (6.54)% (10.27)% (0.63)%
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.70%(5) 0.70% 0.70% 0.70% 0.70% 0.75%(5)
- --------------------------
Ratio of Net Investment
Income to Average
Net Assets 2.11%(5) 1.85% 2.16% 2.66% 2.66% 2.66%(5)
- --------------------------
Portfolio Turnover Rate 102% 204% 133% 108% 107% 85%(6)
- --------------------------
Net Assets, End of Period
(in thousands) $595 $225 $155 $16,245 $20,474 $23,214
- ------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) May 1, 2000 (commencement of sale) through October 31, 2000.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended October 31, 2000.
See Notes to Financial Statements.
- ------
27
Balanced - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ------------------------------------------------------------------------------------------
ADVISOR CLASS
- ------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------
PER-SHARE DATA
- ------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $15.72 $14.77 $12.97 $14.27 $17.00 $18.94
- ------------------------------------------------------------------------------------------
Income From
Investment Operations
- -----------------------------
Net Investment Income(2) 0.14 0.22 0.22 0.31 0.34 0.37
- -----------------------------
Net Realized and
Unrealized Gain (Loss) 0.40 0.97 1.80 (1.30) (2.10) 0.62
- ------------------------------------------------------------------------------------------
Total From
Investment Operations 0.54 1.19 2.02 (0.99) (1.76) 0.99
- ------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.13) (0.24) (0.22) (0.31) (0.36) (0.39)
- -----------------------------
From Net
Realized Gains -- -- -- -- (0.61) (2.54)
- ------------------------------------------------------------------------------------------
Total Distributions (0.13) (0.24) (0.22) (0.31) (0.97) (2.93)
- ------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $16.13 $15.72 $14.77 $12.97 $14.27 $17.00
==========================================================================================
TOTAL RETURN(3) 3.41% 8.11% 15.74% (7.04)% (10.69)% 5.63%
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.15%(4) 1.15% 1.15% 1.15% 1.15% 1.22%
- -----------------------------
Ratio of Net Investment
Income to Average
Net Assets 1.66%(4) 1.40% 1.71% 2.21% 2.21% 2.15%
- -----------------------------
Portfolio Turnover Rate 102% 204% 133% 108% 107% 85%
- -----------------------------
Net Assets, End of Period
(in thousands) $16,477 $16,439 $17,482 $13,985 $16,990 $17,046
- ------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
28
Share Class Information
Three classes of shares are authorized for sale by the fund: Investor Class,
Institutional Class, and Advisor Class. The total expense ratio of Institutional
Class shares is lower than that of Investor Class shares. The total expense
ratio of Advisor Class shares is higher than that of Investor Class shares.
INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through a
broker-dealer, which may require payment of a transaction fee to the broker.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and
distribution fee. The total expense ratio of Advisor Class shares is 0.25%
higher than the total expense ratio of Investor Class shares.
All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.
- ------
29
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
(continued)
- ------
30
Additional Information
QUARTERLY PORTFOLIO DISCLOSURE
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-Q. The fund's Form N-Q is available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of
portfolio holdings for the most recent quarter of its fiscal year available on
its Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
31
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The BLENDED INDEX is considered the benchmark for Balanced. It combines two
widely known indices in proportion to the asset mix of the fund. Accordingly,
60% of the index is represented by the S&P 500 Index, which reflects the
approximately 60% of the fund's assets invested in stocks. The remaining 40% of
the index is represented by the Lehman Brothers U.S. Aggregate Index, which
reflects the roughly 40% of the fund's assets invested in fixed-income
securities.
The LEHMAN BROTHERS U.S. AGGREGATE INDEX represents securities that are taxable,
registered with the Securities and Exchange Commission, and U.S.
dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond
market, with index components for government and corporate securities, mortgage
pass-through securities, and asset-backed securities.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
- ------
32
[inside back cover - blank]
[back cover]
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
COMPANIES
The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.
American Century Investment Services, Inc., Distributor
0506 (c)2005 American Century Proprietary Holdings, Inc.
SH-SAN-43968S All rights reserved.
[front cover]
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Veedot(reg.tm) Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
VEEDOT
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . . . 5
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 13
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .15
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 16
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
OTHER INFORMATION
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Veedot fund for
the six months ended April 30, 2005.
The report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings, and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
Your next shareholder report for this fund will be the annual report dated
October 31, 2005, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
- ------
1
Veedot - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
----------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 11/30/99
Before redemption fee 0.20% -5.81% 0.04%
Net of redemption fee(1) -1.80% -5.81% 0.04%
- --------------------------------------------------------------------------------
DOW JONES WILSHIRE
5000 TOTAL MARKET INDEX(2) 6.99% -2.03% -0.84% --
- --------------------------------------------------------------------------------
Institutional Class 8/1/00
Before redemption fee 0.40% -- -3.93%
Net of redemption fee(1) -1.61% -- -4.34%
- --------------------------------------------------------------------------------
(1) Returns reflect the deduction of a 2.00% redemption fee, incurred if shares
were redeemed within the first five years after purchase.
(2) In May 2004, the Wilshire 5000 Total Market Index, the fund's benchmark
since inception, became known as the Dow Jones Wilshire 5000 Total Market
Index.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The Veedot Fund's investment process may involve high
portfolio turnover and high capital gains distributions. In addition, its
investment approach may involve higher volatility and risk.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
- ------
2
Veedot - Performance
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made November 30, 1999
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended April 30
- --------------------------------------------------------------------------------
2000* 2001 2002 2003 2004 2005
- --------------------------------------------------------------------------------
Investor Class (before
redemption fee) 35.20% -26.18% -4.21% -20.92% 32.28% 0.20%
- --------------------------------------------------------------------------------
Dow Jones Wilshire 5000
Total Market Index 5.88% -14.10% -9.88% -13.58% 26.08% 6.99%
- --------------------------------------------------------------------------------
*From 11/30/99, the Investor Class's inception date. Not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The Veedot Fund's investment process may involve high
portfolio turnover and high capital gains distributions. In addition, its
investment approach may involve higher volatility and risk.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
- ------
3
Veedot - Portfolio Commentary
[photo John Small, Jr. and Stephen Pool]
THE VEEDOT INVESTMENT TEAM: PORTFOLIO MANAGER JOHN SMALL, JR. AND INVESTMENT
TEAM ANALYST STEPHEN POOL.
Veedot fell 0.99%* during the six months ended April 30, 2005, lagging the 3.49%
return of its benchmark, the Dow Jones Wilshire 5000 Total Market Index.
EQUITY ROTATION
The U.S. economy grew at a 3.5% annualized rate in the first quarter of 2005,
down marginally from the 3.8% annualized rate in the fourth quarter of 2004,
despite record-high oil prices, rising interest rates and a modest increase of
underlying inflation.
Rising interest rates as the period progressed also hampered markets,
disproportionately affecting small-cap stocks. In the last half of the six-month
period, the Dow Jones Industrial Average and the S&P 500 Index, two indices
consisting primarily of large-cap stocks, fell just 2.28% and 1.61%,
respectively. But the Russell 2000 and S&P SmallCap 600 indices, comprising
small-cap stocks, plunged 6.87% and 5.39%, respectively.
Veedot's systematic investment process produced solid results in the energy,
materials and industrials sectors in the six-month period. But stakes in two
sectors experiencing weakening demand--information technology and consumer
discretionary--diminished the portfolio's overall return.
COMMODITY CONTRIBUTORS
Almost a quarter of Veedot's average holdings in the period consisted of stakes
in two commodity-oriented sectors: energy and materials. Shares in the
portfolio's largest average holding, AK Steel Holding, almost doubled in the
first four months of the period before tumbling as the period closed. We sold
the portfolio's stake in the company before its share price collapsed along with
steel prices.
Several oil and gas producers, meanwhile, helped make that industry the biggest
contributor to Veedot's return in the six-month period. Quicksilver Resources, a
Texas-based oil and natural gas exploration firm, led the way as its stock
surged 62% in the period. Quick-
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Duke Energy Corp. 0.9% 0.2%
- --------------------------------------------------------------------------------
Allstate Corp. 0.7% --
- --------------------------------------------------------------------------------
General Electric Co. 0.6% --
- --------------------------------------------------------------------------------
Itron Inc. 0.6% 0.2%
- --------------------------------------------------------------------------------
Downey Financial Corp. 0.6% --
- --------------------------------------------------------------------------------
Coca-Cola Company
(The) 0.6% --
- --------------------------------------------------------------------------------
Johnson & Johnson 0.5% --
- --------------------------------------------------------------------------------
Simon Property
Group, Inc. 0.5% --
- --------------------------------------------------------------------------------
Boyd Gaming Corp. 0.5% 0.2%
- --------------------------------------------------------------------------------
Lehman Brothers
Holdings Inc. 0.5% --
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares
and are not reduced by any redemption fees. Had redemption fees been applied,
returns would have been lower. Returns for periods less than one year are not
annualized.
(continued)
- ------
4
Veedot - Portfolio Commentary
silver joined myriad oil and gas producers whose shares followed crude oil
prices higher after the first of the year.
PacifiCare Health Systems, a managed care provider, shared the top spot among
all Veedot contributors in the period as its shares rose 68%. During the last
week of the period, the company reported a 28% increase in first-quarter 2005
profits while boosting its earnings outlook for the remainder of the year.
Itron, a maker of technology used to collect data on electricity, water and
natural gas usage, tied PacifiCare as the leading portfolio contributor. As with
PacificCare, Itron also revealed surging profits in the first quarter of 2005
and raised its full-year 2005 earnings guidance in the last week of the
six-month period.
DEMAND DRAGS
The information technology sector experienced declining demand after the
holidays for computers and related equipment, and that sluggishness affected the
sector's stocks. IT detracted from Veedot's six-month performance more than any
other sector, with weak results spread across software, computers and
peripherals and semiconductors and semiconductor equipment.
Merix Corp., which makes circuit boards for sophisticated electrical equipment,
led the portfolio's IT detractors. Merix's shares plunged in mid-April after the
company announced plans to buy a Hong Kong-based circuit board supplier for $120
million in cash. For the entire period, the company's stock fell 24%.
Only First Horizon Pharmaceuticals exceeded Merix's detrimental impact on the
portfolio during the period. After doubling in price in 2004, shares in the
manufacturer of cardiology and women's health drugs fell in early 2005 as the
company increased spending on its sales force and acquisitions. We have
liquidated our positions in First Horizon and Merix.
Consumer discretionary stocks also hurt the portfolio's performance in the
period, particularly in the specialty retail industry, in which several holdings
suffered as cautious consumers tightened their pocketbooks.
INVESTMENT PHILOSOPHY
Using our systematic investment process, we will continue focusing on finding
companies whose fundamental characteristics meet strict requirements for
accelerating earnings and revenue growth. Such companies also must have
historical stock price performance that suggests impending share price
appreciation.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Health Care Providers
& Services 6.2% 3.2%
- --------------------------------------------------------------------------------
Oil, Gas &
Consumable Fuels 5.9% 10.2%
- --------------------------------------------------------------------------------
Energy Equipment
& Services 5.8% 2.7%
- --------------------------------------------------------------------------------
Real Estate 5.8% 2.1%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 4.9% 2.3%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 99.4% 97.3%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 0.6% 2.7%
- --------------------------------------------------------------------------------
- ------
5
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
- ------
6
Shareholder Fee Example (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
- --------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO*
- --------------------------------------------------------------------------------
VEEDOT SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $990.10 $7.40 1.50%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $992.20 $6.42 1.30%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,017.36 $7.50 1.50%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $1,018.35 $6.51 1.30%
- --------------------------------------------------------------------------------
*Expenses are equal to the class's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
181, the number of days in the most recent fiscal half-year, divided by 365, to
reflect the one-half year period.
- ------
7
Veedot - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.8%
AEROSPACE & DEFENSE -- 2.0%
- --------------------------------------------------------------------------------
30,000 AAR Corp.(1) $ 441,900
- --------------------------------------------------------------------------------
10,000 Alliant Techsystems Inc.(1) 691,800
- --------------------------------------------------------------------------------
14,500 Boeing Co. 863,040
- --------------------------------------------------------------------------------
6,000 General Dynamics Corp. 630,300
- --------------------------------------------------------------------------------
8,000 Precision Castparts Corp. 589,280
- --------------------------------------------------------------------------------
20,500 Teledyne Technologies Inc.(1) 623,610
- --------------------------------------------------------------------------------
3,839,930
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS -- 0.2%
- --------------------------------------------------------------------------------
20,500 Pacer International Inc.(1) 424,965
- --------------------------------------------------------------------------------
BEVERAGES -- 1.2%
- --------------------------------------------------------------------------------
25,000 Coca-Cola Company (The) 1,086,000
- --------------------------------------------------------------------------------
14,000 Constellation Brands Inc.(1) 737,940
- --------------------------------------------------------------------------------
11,000 PepsiCo, Inc. 612,040
- --------------------------------------------------------------------------------
2,435,980
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 1.7%
- --------------------------------------------------------------------------------
256,000 AVI BioPharma, Inc.(1) 683,520
- --------------------------------------------------------------------------------
7,000 Genentech, Inc.(1) 496,580
- --------------------------------------------------------------------------------
19,500 Gilead Sciences, Inc.(1) 723,450
- --------------------------------------------------------------------------------
209,000 Savient Pharmaceuticals Inc.(1) 576,840
- --------------------------------------------------------------------------------
19,000 Techne Corp.(1) 793,820
- --------------------------------------------------------------------------------
3,274,210
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 2.1%
- --------------------------------------------------------------------------------
4,000 Bear Stearns Companies Inc.
(The) 378,640
- --------------------------------------------------------------------------------
8,000 Blackrock Inc. 599,680
- --------------------------------------------------------------------------------
15,000 Greenhill & Co. Inc. 472,500
- --------------------------------------------------------------------------------
28,500 Investment Technology Group
Inc.(1) 541,785
- --------------------------------------------------------------------------------
11,500 Lehman Brothers Holdings Inc. 1,054,780
- --------------------------------------------------------------------------------
9,000 Northern Trust Corp. 405,270
- --------------------------------------------------------------------------------
13,000 State Street Corp. 600,990
- --------------------------------------------------------------------------------
4,053,645
- --------------------------------------------------------------------------------
CHEMICALS -- 1.8%
- --------------------------------------------------------------------------------
28,500 Crompton Corp. 400,425
- --------------------------------------------------------------------------------
22,500 H.B. Fuller Company 682,200
- --------------------------------------------------------------------------------
17,500 Monsanto Co. 1,025,850
- --------------------------------------------------------------------------------
12,000 PPG Industries, Inc. 810,600
- --------------------------------------------------------------------------------
11,000 Praxair, Inc. 515,130
- --------------------------------------------------------------------------------
3,434,205
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 3.3%
- --------------------------------------------------------------------------------
18,000 Bank of America Corp. 810,720
- --------------------------------------------------------------------------------
10,500 Capitol Bancorp Ltd. 321,615
- --------------------------------------------------------------------------------
21,000 Colonial BancGroup Inc. (The) 463,260
- --------------------------------------------------------------------------------
19,000 First Community Bancorp Inc. 785,650
- --------------------------------------------------------------------------------
11,500 First State Bancorporation 201,250
- --------------------------------------------------------------------------------
22,500 KeyCorp 746,100
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
4,000 M&T Bank Corp. $ 413,800
- --------------------------------------------------------------------------------
6,500 Macatawa Bank Corp. 240,565
- --------------------------------------------------------------------------------
20,000 Marshall & Ilsley Corp. 852,800
- --------------------------------------------------------------------------------
9,500 PrivateBancorp Inc. 296,875
- --------------------------------------------------------------------------------
5,500 SunTrust Banks, Inc. 400,565
- --------------------------------------------------------------------------------
9,000 Whitney Holding Corp. 407,430
- --------------------------------------------------------------------------------
6,000 Zions Bancorporation 420,180
- --------------------------------------------------------------------------------
6,360,810
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 3.4%
- --------------------------------------------------------------------------------
57,000 Administaff, Inc. 779,190
- --------------------------------------------------------------------------------
8,500 Consolidated Graphics Inc.(1) 390,150
- --------------------------------------------------------------------------------
17,500 Equifax Inc. 588,875
- --------------------------------------------------------------------------------
25,000 Herman Miller Inc. 715,000
- --------------------------------------------------------------------------------
11,000 HNI Corp. 557,260
- --------------------------------------------------------------------------------
12,500 John H. Harland Company 450,000
- --------------------------------------------------------------------------------
22,500 Labor Ready Inc.(1) 375,525
- --------------------------------------------------------------------------------
41,500 LECG Corp.(1) 860,295
- --------------------------------------------------------------------------------
18,500 Portfolio Recovery Associates
Inc.(1) 665,075
- --------------------------------------------------------------------------------
11,500 Rollins Inc. 227,010
- --------------------------------------------------------------------------------
29,500 Steelcase Inc. Cl A 387,630
- --------------------------------------------------------------------------------
19,500 Waste Connections, Inc.(1) 686,790
- --------------------------------------------------------------------------------
6,682,800
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 0.8%
- --------------------------------------------------------------------------------
89,908 Arris Group Inc.(1) 682,402
- --------------------------------------------------------------------------------
40,000 Comverse Technology, Inc.(1) 911,600
- --------------------------------------------------------------------------------
1,594,002
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 2.6%
- --------------------------------------------------------------------------------
60,000 Emulex Corp.(1) 931,800
- --------------------------------------------------------------------------------
5,500 Hutchinson Technology Inc.(1) 203,720
- --------------------------------------------------------------------------------
22,000 Komag, Inc.(1) 517,440
- --------------------------------------------------------------------------------
7,000 Logitech International SA ADR(1) 405,650
- --------------------------------------------------------------------------------
84,000 Maxtor Corp.(1) 407,400
- --------------------------------------------------------------------------------
50,000 Neoware Systems Inc.(1) 483,550
- --------------------------------------------------------------------------------
14,000 Rimage Corp.(1) 280,700
- --------------------------------------------------------------------------------
55,000 Seagate Technology 966,900
- --------------------------------------------------------------------------------
63,000 Western Digital Corp.(1) 799,470
- --------------------------------------------------------------------------------
4,996,630
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING -- 0.2%
- --------------------------------------------------------------------------------
8,000 Jacobs Engineering Group Inc.(1) 389,680
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS -- 1.1%
- --------------------------------------------------------------------------------
7,500 Eagle Materials Inc. 564,375
- --------------------------------------------------------------------------------
12,000 Florida Rock Industries, Inc. 696,960
- --------------------------------------------------------------------------------
15,000 Martin Marietta Materials, Inc. 824,850
- --------------------------------------------------------------------------------
2,086,185
- --------------------------------------------------------------------------------
CONSUMER FINANCE -- 0.5%
- --------------------------------------------------------------------------------
23,000 CompuCredit Corp.(1) 609,270
- --------------------------------------------------------------------------------
33,500 Metris Companies Inc.(1) 406,020
- --------------------------------------------------------------------------------
1,015,290
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
8
Veedot - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING -- 0.3%
- --------------------------------------------------------------------------------
24,500 Owens-Illinois Inc.(1) $ 600,740
- --------------------------------------------------------------------------------
DISTRIBUTORS -- 0.1%
- --------------------------------------------------------------------------------
32,000 Yokohama Reito Co. Ltd. ORD 267,277
- --------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES -- 0.9%
- --------------------------------------------------------------------------------
12,000 Block (H & R), Inc. 597,720
- --------------------------------------------------------------------------------
35,500 DeVry Inc.(1) 809,400
- --------------------------------------------------------------------------------
9,500 Laureate Education Inc.(1) 421,990
- --------------------------------------------------------------------------------
1,829,110
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 1.0%
- --------------------------------------------------------------------------------
17,500 Financial Federal Corp. 617,750
- --------------------------------------------------------------------------------
8,500 McGraw-Hill Companies, Inc.
(The) 740,180
- --------------------------------------------------------------------------------
6,000 Moody's Corp. 492,840
- --------------------------------------------------------------------------------
1,850,770
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 2.9%
- --------------------------------------------------------------------------------
19,000 Black Hills Corp. 651,320
- --------------------------------------------------------------------------------
27,000 CenterPoint Energy, Inc. 319,680
- --------------------------------------------------------------------------------
18,500 Consolidated Edison, Inc. 800,680
- --------------------------------------------------------------------------------
9,500 DTE Energy Company 436,525
- --------------------------------------------------------------------------------
18,500 Edison International 671,550
- --------------------------------------------------------------------------------
12,500 Exelon Corporation 618,750
- --------------------------------------------------------------------------------
8,000 NSTAR 433,120
- --------------------------------------------------------------------------------
48,000 Sierra Pacific Resources(1) 519,360
- --------------------------------------------------------------------------------
30,000 TECO Energy, Inc. 498,300
- --------------------------------------------------------------------------------
8,000 TXU Corp. 686,320
- --------------------------------------------------------------------------------
5,635,605
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 0.7%
- --------------------------------------------------------------------------------
35,000 American Power Conversion
Corp. 849,100
- --------------------------------------------------------------------------------
22,000 Energy Conversion Devices Inc.(1) 495,880
- --------------------------------------------------------------------------------
1,344,980
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 1.5%
- --------------------------------------------------------------------------------
36,000 Brightpoint Inc.(1) 760,320
- --------------------------------------------------------------------------------
31,000 Itron Inc.(1) 1,118,170
- --------------------------------------------------------------------------------
11,500 Landauer Inc. 521,525
- --------------------------------------------------------------------------------
18,000 Trimble Navigation Ltd.(1) 619,560
- --------------------------------------------------------------------------------
3,019,575
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES -- 5.8%
- --------------------------------------------------------------------------------
18,500 Baker Hughes Inc. 816,220
- --------------------------------------------------------------------------------
7,500 BJ Services Co. 365,625
- --------------------------------------------------------------------------------
14,000 Cal Dive International Inc.(1) 622,720
- --------------------------------------------------------------------------------
9,000 Diamond Offshore Drilling, Inc. 396,990
- --------------------------------------------------------------------------------
7,000 Dril-Quip Inc.(1) 204,050
- --------------------------------------------------------------------------------
21,000 ENSCO International Inc. 684,600
- --------------------------------------------------------------------------------
50,500 Global Industries Ltd.(1) 486,820
- --------------------------------------------------------------------------------
11,500 Global SantaFe Corp. 386,400
- --------------------------------------------------------------------------------
31,500 Grant Prideco Inc.(1) 698,670
- --------------------------------------------------------------------------------
80,000 Grey Wolf Inc.(1) 480,000
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
9,000 Gulf Island Fabrication Inc. $ 189,360
- --------------------------------------------------------------------------------
5,500 Helmerich & Payne, Inc. 211,420
- --------------------------------------------------------------------------------
12,500 Hydril Co.(1) 657,500
- --------------------------------------------------------------------------------
15,000 Lufkin Industries Inc. 441,300
- --------------------------------------------------------------------------------
9,000 National Oilwell Varco, Inc.(1) 357,660
- --------------------------------------------------------------------------------
11,500 Noble Corp. 585,350
- --------------------------------------------------------------------------------
93,500 Parker Drilling Co.(1) 499,290
- --------------------------------------------------------------------------------
38,500 Pioneer Drilling Co.(1) 507,815
- --------------------------------------------------------------------------------
5,500 Schlumberger Ltd. 376,255
- --------------------------------------------------------------------------------
10,500 Smith International, Inc. 610,890
- --------------------------------------------------------------------------------
61,000 Stolt Offshore SA ADR(1) 445,300
- --------------------------------------------------------------------------------
10,000 Tenaris SA ADR 571,500
- --------------------------------------------------------------------------------
8,500 Tidewater Inc. 292,995
- --------------------------------------------------------------------------------
18,000 Veritas DGC Inc.(1) 460,800
- --------------------------------------------------------------------------------
11,349,530
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 0.8%
- --------------------------------------------------------------------------------
50,500 Great Atlantic & Pacific
Tea Co.(1) 791,840
- --------------------------------------------------------------------------------
10,500 Weis Markets Inc. 397,950
- --------------------------------------------------------------------------------
46,500 Wild Oats Markets, Inc.(1) 469,650
- --------------------------------------------------------------------------------
1,659,440
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.5%
- --------------------------------------------------------------------------------
16,500 Fresh Del Monte Produce Inc.(1) 476,850
- --------------------------------------------------------------------------------
17,000 JM Smucker Co. (The) 843,540
- --------------------------------------------------------------------------------
13,500 Kellogg Co. 606,825
- --------------------------------------------------------------------------------
15,000 Peet's Coffee & Tea Inc.(1) 379,500
- --------------------------------------------------------------------------------
17,500 Wimm-Bill-Dann Foods OJSC
ADR(1) 303,275
- --------------------------------------------------------------------------------
6,000 Wrigley (Wm.) Jr. Company 414,780
- --------------------------------------------------------------------------------
3,024,770
- --------------------------------------------------------------------------------
GAS UTILITIES -- 0.7%
- --------------------------------------------------------------------------------
20,000 New Jersey Resources Corp. 867,200
- --------------------------------------------------------------------------------
13,000 Northwest Natural Gas Co. 461,500
- --------------------------------------------------------------------------------
1,328,700
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 4.9%
- --------------------------------------------------------------------------------
26,500 Aspect Medical Systems Inc.(1) 663,295
- --------------------------------------------------------------------------------
22,000 Baxter International, Inc. 816,200
- --------------------------------------------------------------------------------
57,000 Cerus Corp.(1) 205,764
- --------------------------------------------------------------------------------
28,000 Cholestech Corp.(1) 287,840
- --------------------------------------------------------------------------------
14,000 Conmed Corp.(1) 416,080
- --------------------------------------------------------------------------------
9,000 Edwards Lifesciences
Corporation(1) 396,360
- --------------------------------------------------------------------------------
10,500 Haemonetics Corporation(1) 449,085
- --------------------------------------------------------------------------------
14,000 Hologic, Inc.(1) 498,120
- --------------------------------------------------------------------------------
11,500 ICU Medical Inc.(1) 407,445
- --------------------------------------------------------------------------------
7,500 Idexx Laboratories, Inc.(1) 425,550
- --------------------------------------------------------------------------------
84,000 Illumina, Inc.(1) 824,880
- --------------------------------------------------------------------------------
20,000 Immucor, Inc.(1) 596,800
- --------------------------------------------------------------------------------
7,500 ResMed Inc.(1) 465,750
- --------------------------------------------------------------------------------
6,500 Respironics, Inc.(1) 410,735
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
9
Veedot - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
11,000 St. Jude Medical, Inc.(1) $ 429,330
- --------------------------------------------------------------------------------
10,000 Stryker Corp. 485,500
- --------------------------------------------------------------------------------
19,500 SurModics Inc.(1) 703,365
- --------------------------------------------------------------------------------
14,000 Sybron Dental Specialties Inc.(1) 521,500
- --------------------------------------------------------------------------------
47,000 Thoratec Corp.(1) 608,650
- --------------------------------------------------------------------------------
9,612,249
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 6.2%
- --------------------------------------------------------------------------------
12,500 Aetna Inc. 917,125
- --------------------------------------------------------------------------------
33,000 American Retirement Corp.(1) 489,720
- --------------------------------------------------------------------------------
11,500 Cardinal Health, Inc. 639,055
- --------------------------------------------------------------------------------
18,000 Community Health Systems
Inc.(1) 656,100
- --------------------------------------------------------------------------------
30,000 Computer Programs &
Systems Inc. 947,700
- --------------------------------------------------------------------------------
11,500 Covance Inc.(1) 524,860
- --------------------------------------------------------------------------------
75,000 Digital Angel Corp.(1) 328,500
- --------------------------------------------------------------------------------
40,500 HealthTronics Inc.(1) 502,200
- --------------------------------------------------------------------------------
26,500 Henry Schein, Inc.(1) 994,015
- --------------------------------------------------------------------------------
14,000 IMS Health Inc. 335,720
- --------------------------------------------------------------------------------
10,500 Laboratory Corporation of
America Holdings(1) 519,750
- --------------------------------------------------------------------------------
18,500 Lifeline Systems Inc.(1) 630,850
- --------------------------------------------------------------------------------
8,500 McKesson Corp. 314,500
- --------------------------------------------------------------------------------
13,000 Medcath Corp.(1) 359,450
- --------------------------------------------------------------------------------
14,500 PacifiCare Health Systems, Inc.(1) 866,520
- --------------------------------------------------------------------------------
42,500 Per-Se Technologies Inc.(1) 661,300
- --------------------------------------------------------------------------------
13,500 Pharmaceutical Product
Development, Inc.(1) 612,630
- --------------------------------------------------------------------------------
22,000 Radiation Therapy Services Inc.(1) 510,620
- --------------------------------------------------------------------------------
23,000 RehabCare Group, Inc.(1) 690,460
- --------------------------------------------------------------------------------
47,000 TriZetto Group, Inc. (The)(1) 489,270
- --------------------------------------------------------------------------------
11,990,345
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 3.7%
- --------------------------------------------------------------------------------
20,000 Boyd Gaming Corp. 1,055,600
- --------------------------------------------------------------------------------
11,500 Brinker International, Inc.(1) 388,700
- --------------------------------------------------------------------------------
15,500 CBRL Group Inc. 597,215
- --------------------------------------------------------------------------------
14,000 Darden Restaurants, Inc. 420,000
- --------------------------------------------------------------------------------
9,000 Harrah's Entertainment, Inc. 590,580
- --------------------------------------------------------------------------------
8,000 International Speedway Corp. 425,600
- --------------------------------------------------------------------------------
36,500 Luby's Inc.(1) 275,575
- --------------------------------------------------------------------------------
13,500 Marriott International, Inc. 847,125
- --------------------------------------------------------------------------------
20,000 McDonald's Corporation 586,200
- --------------------------------------------------------------------------------
20,000 Panera Bread Co.(1) 1,000,400
- --------------------------------------------------------------------------------
11,000 Station Casinos Inc. 709,830
- --------------------------------------------------------------------------------
25,500 Sunterra Corp.(1) 396,525
- --------------------------------------------------------------------------------
7,293,350
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 2.4%
- --------------------------------------------------------------------------------
10,500 Black & Decker Corporation 878,115
- --------------------------------------------------------------------------------
7,000 Centex Corp. 404,040
- --------------------------------------------------------------------------------
26,500 D.R. Horton, Inc. 808,250
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
10,500 Standard-Pacific Corporation $ 751,905
- --------------------------------------------------------------------------------
26,500 Technical Olympic USA Inc. 557,825
- --------------------------------------------------------------------------------
26,000 Tempur-Pedic International Inc.(1) 496,340
- --------------------------------------------------------------------------------
10,500 Toll Brothers Inc.(1) 795,900
- --------------------------------------------------------------------------------
4,692,375
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.2%
- --------------------------------------------------------------------------------
7,500 Clorox Company 474,750
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 1.5%
- --------------------------------------------------------------------------------
11,000 Carlisle Companies Inc. 790,020
- --------------------------------------------------------------------------------
33,000 General Electric Co. 1,194,600
- --------------------------------------------------------------------------------
25,000 Raven Industries Inc. 476,375
- --------------------------------------------------------------------------------
7,500 Teleflex Inc. 401,025
- --------------------------------------------------------------------------------
2,862,020
- --------------------------------------------------------------------------------
INSURANCE -- 2.2%
- --------------------------------------------------------------------------------
23,000 Allstate Corp. 1,291,680
- --------------------------------------------------------------------------------
10,000 Brown & Brown Inc. 437,500
- --------------------------------------------------------------------------------
11,500 FBL Financial Group Inc. Cl A 301,300
- --------------------------------------------------------------------------------
15,500 First American Financial Corp.
(The) 554,900
- --------------------------------------------------------------------------------
6,500 Navigators Group Inc.(1) 208,000
- --------------------------------------------------------------------------------
32,000 Universal American Financial
Corp.(1) 536,000
- --------------------------------------------------------------------------------
1,500 White Mountains Insurance
Group Ltd.(1) 940,515
- --------------------------------------------------------------------------------
4,269,895
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 0.5%
- --------------------------------------------------------------------------------
15,500 VeriSign, Inc.(1) 410,130
- --------------------------------------------------------------------------------
12,000 Websense Inc.(1) 636,600
- --------------------------------------------------------------------------------
1,046,730
- --------------------------------------------------------------------------------
IT SERVICES -- 2.2%
- --------------------------------------------------------------------------------
16,500 Alliance Data Systems Corp.(1) 666,600
- --------------------------------------------------------------------------------
18,500 Automatic Data Processing, Inc. 803,640
- --------------------------------------------------------------------------------
20,000 Infocrossing Inc.(1) 329,000
- --------------------------------------------------------------------------------
17,500 infoUSA Inc. 192,150
- --------------------------------------------------------------------------------
18,500 MAXIMUS, Inc. 567,950
- --------------------------------------------------------------------------------
30,000 Talx Corp. 741,600
- --------------------------------------------------------------------------------
35,000 Titan Corp.(1) 628,250
- --------------------------------------------------------------------------------
16,500 Total System Services Inc. 405,570
- --------------------------------------------------------------------------------
4,334,760
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS -- 1.1%
- --------------------------------------------------------------------------------
26,500 Nautilus Inc. 658,790
- --------------------------------------------------------------------------------
28,500 RC2 Corp.(1) 987,810
- --------------------------------------------------------------------------------
12,500 SCP Pool Corp. 407,250
- --------------------------------------------------------------------------------
2,053,850
- --------------------------------------------------------------------------------
MACHINERY -- 2.5%
- --------------------------------------------------------------------------------
20,000 CIRCOR International Inc. 476,200
- --------------------------------------------------------------------------------
12,500 Greenbrier Companies Inc. 365,000
- --------------------------------------------------------------------------------
5,000 Ingersoll-Rand Company 384,350
- --------------------------------------------------------------------------------
9,000 ITT Industries, Inc. 814,140
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
10
Veedot - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
30,000 JLG Industries Inc. $ 611,400
- --------------------------------------------------------------------------------
19,000 Joy Global Inc. 643,530
- --------------------------------------------------------------------------------
12,500 Manitowoc Co. 500,000
- --------------------------------------------------------------------------------
42,500 Stewart & Stevenson Services
Inc. 1,020,000
- --------------------------------------------------------------------------------
4,814,620
- --------------------------------------------------------------------------------
MEDIA -- 1.2%
- --------------------------------------------------------------------------------
8,500 EW Scripps Co. Cl A 432,905
- --------------------------------------------------------------------------------
14,000 Pixar(1) 640,360
- --------------------------------------------------------------------------------
40,000 Reader's Digest Association
Inc. (The) 680,000
- --------------------------------------------------------------------------------
21,500 Thomas Nelson Inc. 515,570
- --------------------------------------------------------------------------------
2,268,835
- --------------------------------------------------------------------------------
METALS & MINING -- 1.1%
- --------------------------------------------------------------------------------
24,000 Allegheny Technologies Inc. 537,600
- --------------------------------------------------------------------------------
13,000 Barrick Gold Corp. 290,160
- --------------------------------------------------------------------------------
12,000 Carpenter Technology 663,600
- --------------------------------------------------------------------------------
13,500 Compass Minerals
International Inc. 326,025
- --------------------------------------------------------------------------------
26,000 Mesabi Trust 380,380
- --------------------------------------------------------------------------------
2,197,765
- --------------------------------------------------------------------------------
MULTI-UTILITIES -- 2.3%
- --------------------------------------------------------------------------------
20,000 AES Corporation (The)(1) 321,600
- --------------------------------------------------------------------------------
50,500 CMS Energy Corp.(1) 652,460
- --------------------------------------------------------------------------------
6,500 Dominion Resources Inc. 490,100
- --------------------------------------------------------------------------------
61,000 Duke Energy Corp. 1,780,590
- --------------------------------------------------------------------------------
8,500 Sempra Energy 343,230
- --------------------------------------------------------------------------------
16,000 Vectren Corp. 432,160
- --------------------------------------------------------------------------------
16,000 Wisconsin Energy Corp. 564,160
- --------------------------------------------------------------------------------
4,584,300
- --------------------------------------------------------------------------------
MULTILINE RETAIL -- 0.8%
- --------------------------------------------------------------------------------
17,500 Dillard's Inc. 407,225
- --------------------------------------------------------------------------------
24,000 Dollar General Corp. 488,400
- --------------------------------------------------------------------------------
12,000 Kohl's Corp.(1) 571,200
- --------------------------------------------------------------------------------
1,466,825
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 5.9%
- --------------------------------------------------------------------------------
43,000 Arena Resources Inc.(1) 473,000
- --------------------------------------------------------------------------------
9,500 Atlas Pipeline Partners L.P. 425,695
- --------------------------------------------------------------------------------
30,500 Carrizo Oil & Gas Inc.(1) 504,165
- --------------------------------------------------------------------------------
30,500 Chesapeake Energy Corp. 586,820
- --------------------------------------------------------------------------------
13,500 Consol Energy Inc. 583,740
- --------------------------------------------------------------------------------
17,000 Dominion RES Black Warrior 701,760
- --------------------------------------------------------------------------------
10,500 Forest Oil Corporation(1) 404,565
- --------------------------------------------------------------------------------
11,000 Frontier Oil Corp. 462,880
- --------------------------------------------------------------------------------
11,000 Hugoton Royalty Trust 296,450
- --------------------------------------------------------------------------------
9,000 Kerr-McGee Corp. 698,400
- --------------------------------------------------------------------------------
8,000 Magellan Midstream
Partners L.P. 261,760
- --------------------------------------------------------------------------------
6,000 Newfield Exploration Company(1) 426,180
- --------------------------------------------------------------------------------
8,000 Noble Energy Inc. 512,960
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
11,500 Overseas Shipholding Group $ 648,945
- --------------------------------------------------------------------------------
14,500 Peabody Energy Corp. 634,665
- --------------------------------------------------------------------------------
51,500 PetroHawk Energy Corp.(1) 446,505
- --------------------------------------------------------------------------------
10,500 Pioneer Natural Resources Co. 426,930
- --------------------------------------------------------------------------------
10,000 Quicksilver Resources Inc.(1) 513,300
- --------------------------------------------------------------------------------
16,000 San Juan Basin Royalty TR 587,520
- --------------------------------------------------------------------------------
11,000 Southwestern Energy
Company(1) 646,250
- --------------------------------------------------------------------------------
4,000 Sunoco, Inc. 397,040
- --------------------------------------------------------------------------------
16,000 Swift Energy Co.(1) 421,280
- --------------------------------------------------------------------------------
18,000 XTO Energy Inc. 543,060
- --------------------------------------------------------------------------------
11,603,870
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 0.5%
- --------------------------------------------------------------------------------
321,500 Revlon Inc. Cl A(1) 945,210
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 4.7%
- --------------------------------------------------------------------------------
18,000 Abbott Laboratories 884,880
- --------------------------------------------------------------------------------
29,000 Able Laboratories Inc.(1) 691,360
- --------------------------------------------------------------------------------
8,000 American Pharmaceutical
Partners Inc.(1) 416,960
- --------------------------------------------------------------------------------
48,000 CNS Inc. 901,920
- --------------------------------------------------------------------------------
40,500 Hi-Tech Pharmacal Co., Inc.(1) 945,675
- --------------------------------------------------------------------------------
15,500 Johnson & Johnson 1,063,765
- --------------------------------------------------------------------------------
20,000 K-V Pharmaceutical Co. Cl A(1) 468,000
- --------------------------------------------------------------------------------
25,000 Merck & Co., Inc. 847,500
- --------------------------------------------------------------------------------
45,000 Nastech Pharmaceutical Co.,
Inc.(1) 468,900
- --------------------------------------------------------------------------------
43,000 Schering-Plough Corp. 897,410
- --------------------------------------------------------------------------------
10,000 Sepracor Inc.(1) 599,200
- --------------------------------------------------------------------------------
20,000 Wyeth 898,800
- --------------------------------------------------------------------------------
9,084,370
- --------------------------------------------------------------------------------
REAL ESTATE -- 5.8%
- --------------------------------------------------------------------------------
15,500 American Home Mortgage
Investment Corp. 506,850
- --------------------------------------------------------------------------------
12,500 Camden Property Trust 637,500
- --------------------------------------------------------------------------------
13,500 Capital Trust Inc. Cl A 454,680
- --------------------------------------------------------------------------------
6,000 CBL & Associates Properties,
Inc. 464,220
- --------------------------------------------------------------------------------
6,500 Consolidated-Tomoka Land Co. 396,825
- --------------------------------------------------------------------------------
17,500 CRT Properties Inc. 404,075
- --------------------------------------------------------------------------------
16,000 Eastgroup Properties 600,000
- --------------------------------------------------------------------------------
11,000 Equity Lifestyle Properties, Inc. 402,600
- --------------------------------------------------------------------------------
14,500 Equity Residential 498,075
- --------------------------------------------------------------------------------
23,500 General Growth Properties, Inc. 919,085
- --------------------------------------------------------------------------------
21,000 Government Properties Trust
Inc. 207,060
- --------------------------------------------------------------------------------
14,500 Lexington Corporate Properties
Trust 333,210
- --------------------------------------------------------------------------------
16,500 Mills Corp. (The) 942,810
- --------------------------------------------------------------------------------
24,500 MortgageIT Holdings, Inc. 416,500
- --------------------------------------------------------------------------------
7,500 Public Storage Inc. 440,250
- --------------------------------------------------------------------------------
14,500 Reckson Associates Realty Corp. 467,625
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
11
Veedot - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
16,000 Simon Property Group, Inc. $ 1,057,120
- --------------------------------------------------------------------------------
8,500 SL Green Realty Corp. 518,500
- --------------------------------------------------------------------------------
14,000 Thornburg Mortgage Inc.(1) 419,440
- --------------------------------------------------------------------------------
32,500 Trammell Crow Co.(1) 692,250
- --------------------------------------------------------------------------------
6,500 Vornado Realty Trust 496,925
- --------------------------------------------------------------------------------
11,275,600
- --------------------------------------------------------------------------------
ROAD & RAIL -- 0.7%
- --------------------------------------------------------------------------------
18,500 Burlington Northern Santa Fe
Corp. 892,625
- --------------------------------------------------------------------------------
11,000 CSX Corporation 441,430
- --------------------------------------------------------------------------------
1,334,055
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 1.0%
- --------------------------------------------------------------------------------
8,000 DSP Group Inc.(1) 192,800
- --------------------------------------------------------------------------------
26,000 Intel Corp. 611,520
- --------------------------------------------------------------------------------
45,500 National Semiconductor Corp. 868,140
- --------------------------------------------------------------------------------
31,000 Netlogic Microsystems Inc.(1) 364,560
- --------------------------------------------------------------------------------
2,037,020
- --------------------------------------------------------------------------------
SOFTWARE -- 1.3%
- --------------------------------------------------------------------------------
22,000 Blackboard Inc.(1) 399,080
- --------------------------------------------------------------------------------
24,500 Captiva Software Corp.(1) 302,575
- --------------------------------------------------------------------------------
104,000 Intellisync Corp.(1) 280,800
- --------------------------------------------------------------------------------
63,000 Secure Computing Corp.(1) 557,550
- --------------------------------------------------------------------------------
16,500 THQ Inc.(1) 416,130
- --------------------------------------------------------------------------------
27,500 Ultimate Software Group Inc.(1) 426,250
- --------------------------------------------------------------------------------
113,500 Viewpoint Corp.(1) 244,025
- --------------------------------------------------------------------------------
2,626,410
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 3.6%
- --------------------------------------------------------------------------------
17,000 Bebe Stores Inc. 549,440
- --------------------------------------------------------------------------------
17,500 Burlington Coat Factory
Warehouse Corp. 482,125
- --------------------------------------------------------------------------------
13,500 Carmax, Inc.(1) 368,280
- --------------------------------------------------------------------------------
120,000 Casual Male Retail Group Inc.(1) 793,200
- --------------------------------------------------------------------------------
15,000 Children's Place Retail Stores,
Inc. (The)(1) 558,150
- --------------------------------------------------------------------------------
26,000 Circuit City Stores-Circuit City
Group 410,800
- --------------------------------------------------------------------------------
17,500 Hibbett Sporting Goods Inc.(1) 471,975
- --------------------------------------------------------------------------------
13,500 Michaels Stores, Inc. 448,200
- --------------------------------------------------------------------------------
30,000 Select Comfort Corp.(1) 663,600
- --------------------------------------------------------------------------------
16,500 Shoe Carnival Inc.(1) 314,655
- --------------------------------------------------------------------------------
18,500 Sports Authority Inc. (The)(1) 492,100
- --------------------------------------------------------------------------------
22,000 Tiffany & Co. 663,300
- --------------------------------------------------------------------------------
200,000 Wet Seal, Inc. (The) Cl A(1) 748,000
- --------------------------------------------------------------------------------
6,963,825
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS -- 1.3%
- --------------------------------------------------------------------------------
15,000 Brown Shoe Co Inc. 463,500
- --------------------------------------------------------------------------------
15,500 Cherokee Inc. 504,680
- --------------------------------------------------------------------------------
75,500 Hartmarx Corp.(1) 651,565
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
20,000 Kenneth Cole Productions Inc. $ 599,600
- --------------------------------------------------------------------------------
18,000 Warnaco Group Inc. (The)(1) 404,280
- --------------------------------------------------------------------------------
2,623,625
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 2.4%
- --------------------------------------------------------------------------------
23,000 Astoria Financial Corp. 609,730
- --------------------------------------------------------------------------------
8,000 Corus Bankshares Inc. 390,640
- --------------------------------------------------------------------------------
17,000 Countrywide Financial
Corporation 615,230
- --------------------------------------------------------------------------------
17,000 Downey Financial Corp. 1,100,410
- --------------------------------------------------------------------------------
10,000 Golden West Financial Corp. 623,300
- --------------------------------------------------------------------------------
6,000 Harbor Florida Bancshares Inc. 207,600
- --------------------------------------------------------------------------------
16,000 IndyMac Bancorp, Inc. 615,680
- --------------------------------------------------------------------------------
14,500 Washington Mutual, Inc. 599,140
- --------------------------------------------------------------------------------
4,761,730
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS -- 1.0%
- --------------------------------------------------------------------------------
23,000 Applied Industrial
Technologies Inc. 641,700
- --------------------------------------------------------------------------------
26,500 GATX Corp. 867,080
- --------------------------------------------------------------------------------
10,500 Watsco Inc. 455,595
- --------------------------------------------------------------------------------
1,964,375
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES -- 1.7%
- --------------------------------------------------------------------------------
50,000 Alamosa Holdings Inc.(1) 649,500
- --------------------------------------------------------------------------------
39,000 Nextel Partners, Inc. Cl A(1) 917,280
- --------------------------------------------------------------------------------
15,000 NII Holdings Inc.(1) 751,050
- --------------------------------------------------------------------------------
50,000 SBA Communications
Corp. Cl A(1) 424,000
- --------------------------------------------------------------------------------
36,000 Telesystem International
Wireless Inc.(1) 552,600
- --------------------------------------------------------------------------------
3,294,430
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $191,712,885) 194,976,018
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.6%
Repurchase Agreement, Credit Suisse First
Boston, Inc., (collateralized by various U.S.
Treasury obligations, 8.125%, 8/15/21, valued
at $1,121,266), in a joint trading account at
2.81%, dated 4/29/05, due 5/2/05 (Delivery
value $1,100,258)
(Cost $1,100,000) 1,100,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENT
SECURITIES -- 100.4%
(Cost $192,812,885) 196,076,018
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.4)% (767,338)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $195,308,680
================================================================================
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
ORD = Foreign Ordinary Share
(1) Non-income producing.
See Notes to Financial Statements.
- ------
12
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value (cost of $192,812,885) $196,076,018
- --------------------------------------------------------------
Receivable for investments sold 21,286,594
- --------------------------------------------------------------
Dividends and interest receivable 109,411
- --------------------------------------------------------------------------------
217,472,023
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Disbursements in excess of demand deposit cash 64,521
- --------------------------------------------------------------
Payable for investments purchased 21,847,935
- --------------------------------------------------------------
Accrued management fees 250,887
- --------------------------------------------------------------------------------
22,163,343
- --------------------------------------------------------------------------------
NET ASSETS $195,308,680
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $ 293,142,573
- --------------------------------------------------------------
Accumulated net investment loss (425,086)
- --------------------------------------------------------------
Accumulated net realized loss on investment transactions (100,672,093)
- --------------------------------------------------------------
Net unrealized appreciation on investments 3,263,286
- --------------------------------------------------------------------------------
$ 195,308,680
================================================================================
INVESTOR CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $183,840,849
- --------------------------------------------------------------
Shares outstanding 36,675,136
- --------------------------------------------------------------
Net asset value per share $5.01
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $11,467,831
- --------------------------------------------------------------
Shares outstanding 2,267,150
- --------------------------------------------------------------
Net asset value per share $5.06
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
13
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT LOSS
- --------------------------------------------------------------------------------
INCOME:
- --------------------------------------------------------------
Dividends (net of foreign taxes withheld of $4,431) $ 1,197,486
- --------------------------------------------------------------
Interest 66,894
- --------------------------------------------------------------------------------
1,264,380
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------
Management fees 1,686,121
- --------------------------------------------------------------
Directors' fees and expenses 1,487
- --------------------------------------------------------------
Other expenses 994
- --------------------------------------------------------------------------------
1,688,602
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (424,222)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on investment and
foreign currency transactions 17,321,000
- --------------------------------------------------------------
Change in net unrealized appreciation on investments and
translation of assets and liabilities in foreign currencies (17,020,382)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 300,618
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (123,604)
================================================================================
See Notes to Financial Statements.
- ------
14
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment loss $ (424,222) $ (1,362,889)
- --------------------------------------------
Net realized gain 17,321,000 17,531,407
- --------------------------------------------
Change in net unrealized appreciation (17,020,382) (13,543,653)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (123,604) 2,624,865
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net decrease in net assets from
capital share transactions (36,586,000) (11,788,635)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (36,709,604) (9,163,770)
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 232,018,284 241,182,054
- --------------------------------------------------------------------------------
End of period $195,308,680 $232,018,284
================================================================================
Accumulated net investment loss $(425,086) --
================================================================================
See Notes to Financial Statements.
- ------
15
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Veedot Fund (the fund) is one fund in a
series issued by the corporation. The fund is non-diversified under the 1940
Act. The fund's investment objective is to seek long-term capital growth. The
fund pursues its objective by investing primarily in common stocks that
management believes to have better than average prospects for appreciation. The
fund uses an approach to common stock investing developed by American Century.
This approach relies heavily on quantitative tools to identify attractive
investment opportunities, regardless of company size, industry type or
geographic location, on a disciplined, consistent basis. The following is a
summary of the fund's significant accounting policies.
MULTIPLE CLASS -- The fund is authorized to issue the Investor Class and the
Institutional Class. The share classes differ principally in their respective
shareholder servicing and distribution expenses and arrangements. All shares of
the fund represent an equal pro rata interest in the assets of the class to
which such shares belong, and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except for class specific
expenses and exclusive rights to vote on matters affecting only individual
classes. Income, non-class specific expenses, and realized and unrealized
capital gains and losses of the fund are allocated to each class of shares based
on their relative net assets.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the fund determines that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
FUTURES CONTRACTS -- The fund may enter into futures contracts in order to
manage the fund's exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the fund is required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the fund. The variation margin is equal to
the daily change in the contract value and is recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is closed
or expires. Net realized and unrealized gains or losses occurring during the
holding period of futures contracts are a component of realized gain (loss) on
investment transactions and unrealized appreciation (depreciation) on
investments, respectively.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. For assets and
liabilities, other than investments in securities, net realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
(continued)
- ------
16
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose taxes
on the contract amount of purchases and sales of foreign currency contracts in
their currency. The fund records the foreign tax expense, if any, as a reduction
to the net realized gain (loss) on foreign currency transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to hedge the fund's exposure to foreign
currency exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The fund bears the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. The
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable the fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to the
fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, the fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
REDEMPTION -- The fund may impose a 2% redemption fee on shares held less than
five years. The redemption fee is recorded as a reduction in the cost of shares
redeemed. The redemption fee is retained by the fund and helps cover transaction
costs that long-term investors may bear when a fund sells securities to meet
investor redemptions.
INDEMNIFICATIONS -- Under the corporation organizational documents, its officers
and directors are indemnified against certain liabilities arising out of the
performance of their duties to the fund. In addition, in the normal course of
business, the fund enters into contracts that provide general indemnifications.
The fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the fund. The risk of material
loss from such claims is considered by management to be remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
(continued)
- ------
17
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee (the fee) per class.
The Agreement provides that all expenses of the fund, except brokerage
commissions, taxes, interest, fees and expenses of those directors who are not
considered "interested persons" as defined in the 1940 Act (including counsel
fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and
accrued daily based on the daily net assets of the specific class of shares of
the fund and paid monthly in arrears. For funds with a stepped fee schedule, the
rate of the fee is determined by applying a fee rate calculation formula. This
formula takes into account all of the investment advisor's assets under
management in the fund's investment strategy (strategy assets) to calculate the
appropriate fee rate for the fund. The strategy assets include the fund's assets
and the assets of other clients of the investment advisor that are not in the
American Century family of funds, but that have the same investment team and
investment strategy.
The annual management fee schedule for each fund is as follows:
- --------------------------------------------------------------------------------
INVESTOR INSTITUTIONAL
- --------------------------------------------------------------------------------
STRATEGY ASSETS
- --------------------------------------------------------------------------------
First $500 million 1.50% 1.30%
- --------------------------------------------------------------------------------
Next $500 million 1.30% 1.10%
- --------------------------------------------------------------------------------
Over $1 billion 1.10% 0.90%
- --------------------------------------------------------------------------------
The effective annual management fee for the six months ended April 30, 2005 was
1.50% and 1.30% for the Investor Class and Institutional Class, respectively.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation investment advisor,
ACIM, the distributor of the corporation, ACIS, and the corporation's transfer
agent, American Century Services, LLC (formerly American Century Services
Corporation).
The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB).
JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan
Chase & Co. (JPM). JPM is an equity investor in ACC.
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended April 30, 2005, were as follows:
- --------------------------------------------------------------------------------
Purchases $536,778,678
- --------------------------------------------------------------------------------
Proceeds from sales $568,906,317
- --------------------------------------------------------------------------------
(continued)
- ------
18
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the fund were as follows:
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 200,000,000
================================================================================
Sold 573,805 $ 3,022,810
- -----------------------------------------
Redeemed (7,305,537) (38,749,354)(1)
- --------------------------------------------------------------------------------
Net decrease (6,731,732) $(35,726,544)
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 200,000,000
================================================================================
Sold 2,323,446 $ 12,087,754
- -----------------------------------------
Redeemed (4,744,882) (23,667,811)(2)
- --------------------------------------------------------------------------------
Net decrease (2,421,436) $(11,580,057)
================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 50,000,000
================================================================================
Sold 134,770 $ 735,987
- -----------------------------------------
Redeemed (298,749) (1,595,443)
- --------------------------------------------------------------------------------
Net decrease (163,979) $ (859,456)
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 50,000,000
================================================================================
Sold 311,248 $ 1,665,622
- -----------------------------------------
Redeemed (361,238) (1,874,200)(3)
- --------------------------------------------------------------------------------
Net decrease (49,990) $ (208,578)
================================================================================
(1) Net of redemption fees of $252,016.
(2) Net of redemption fees of $410,553.
(3) Net of redemption fees of $22,885.
5. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $575,000,000
unsecured bank line of credit agreement with JPMCB, which was renewed from
$650,000,000 effective December 15, 2004. The fund may borrow money for
temporary or emergency purposes to fund shareholder redemptions. Borrowings
under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund
did not borrow from the line during the six months ended April 30, 2005.
(continued)
- ------
19
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
6. RISK FACTORS
The fund's investment process may involve high portfolio turnover and high
capital gains distributions. In addition, its investment approach may involve
higher volatility and risk.
7. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $193,316,906
================================================================================
Gross tax appreciation of investments $ 7,699,830
- --------------------------------------------------------------
Gross tax depreciation of investments (4,940,718)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $ 2,759,112
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
As of October 31, 2004, the fund had accumulated capital losses of $115,776,093,
which represent net capital loss carryovers that may be used to offset future
realized capital gains for federal income tax purposes. Capital loss carryovers
of $23,525,786, $59,932,855 and $32,317,452 expire in 2008, 2009, and 2010,
respectively.
- ------
20
Veedot - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ----------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000(2)
- ----------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $5.06 $4.99 $3.77 $4.32 $5.92 $5.00
- ----------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment Loss(3) (0.01) (0.03) (0.03) (0.01) --(4) (0.06)
- --------------------------
Net Realized and
Unrealized Gain (Loss) (0.05) 0.09 1.24 (0.55) (1.60) 0.98
- ----------------------------------------------------------------------------------------------------
Total From
Investment Operations (0.06) 0.06 1.21 (0.56) (1.60) 0.92
- ----------------------------------------------------------------------------------------------------
Redemption Fees(5) 0.01 0.01 0.01 0.01 -- --
- ----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $5.01 $5.06 $4.99 $3.77 $4.32 $5.92
====================================================================================================
TOTAL RETURN(6) (0.99)% 1.40% 32.36% (12.73)% (27.03)% 18.40%
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.50%(7) 1.50% 1.50% 1.50% 1.50% 1.50%(7)
- --------------------------
Ratio of Net Investment
Loss to Average
Net Assets (0.38)%(7) (0.57)% (0.68)% (0.31)% (0.09)% (0.92)%(7)
- --------------------------
Portfolio Turnover Rate 240% 344% 415% 330% 410% 250%
- --------------------------
Net Assets, End of Period
(in thousands) $183,841 $219,618 $228,724 $187,451 $231,108 $352,130
- ----------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) November 30, 1999 (inception) through October 31, 2000.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to November 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(6) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not reflect applicable redemption fees.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(7) Annualized.
See Notes to Financial Statements.
- ------
21
Veedot - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
- ----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- ----------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000(2)
- ----------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $5.10 $5.02 $3.79 $4.33 $5.92 $6.12
- ----------------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss)(3) --(4) (0.02) (0.02) --(4) 0.01 (0.01)
- --------------------------
Net Realized and
Unrealized Gain (Loss) (0.05) 0.09 1.24 (0.55) (1.60) (0.19)
- ----------------------------------------------------------------------------------------------------
Total From
Investment Operations (0.05) 0.07 1.22 (0.55) (1.59) (0.20)
- ----------------------------------------------------------------------------------------------------
Redemption Fees(5) 0.01 0.01 0.01 0.01 -- --
- ----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $5.06 $5.10 $5.02 $3.79 $4.33 $5.92
====================================================================================================
TOTAL RETURN(6) (0.78)% 1.59% 32.45% (12.47)% (26.86)% (3.27)%
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.30%(7) 1.30% 1.30% 1.30% 1.30% 1.30%(7)
- --------------------------
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.18)%(7) (0.37)% (0.48)% (0.11)% 0.11% (0.52)%(7)
- --------------------------
Portfolio Turnover Rate 240% 344% 415% 330% 410% 250%(8)
- --------------------------
Net Assets, End of Period
(in thousands) $11,468 $12,400 $12,458 $8,709 $9,659 $12,218
- ----------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) August 1, 2000 (commencement of sale) through October 31, 2000.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to November 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(6) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not reflect applicable redemption fees.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the period November 30, 1999 (fund inception) through
October 31, 2000.
See Notes to Financial Statements.
- ------
22
Share Class Information
Two classes of shares are authorized for sale by the fund: Investor Class and
Institutional Class. The total expense ratio for Institutional Class shares is
lower than that of Investor Class shares.
INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through a
broker-dealer, which may require payment of a transaction fee to the broker.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.
- ------
23
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
(continued)
- ------
24
Additional Information
QUARTERLY PORTFOLIO DISCLOSURE
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-Q. The fund's Form N-Q is available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of
portfolio holdings for the most recent quarter of its fiscal year available on
its Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
25
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials but including
service-oriented firms. Prepared and published by Dow Jones & Co., it is the
oldest and most widely quoted of all the market indicators.
The DOW JONES WILSHIRE 5000 TOTAL MARKET INDEX measures the performance of all
U.S. headquartered equity securities with readily available price data.
The RUSSELL 2000 INDEX is a market-capitalization weighted index created by
Frank Russell Company to measure the performance of the 2,000 smallest of the
3,000 largest publicly traded U.S. companies, based on total market
capitalization.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
The S&P SMALLCAP 600 INDEX, a capitalization-weighted index consisting of 600
domestic stocks, measures the small company segment of the U.S. market.
- ------
26
Notes
- ------
27
Notes
- ------
28
[inside back cover - blank]
[back cover]
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
COMPANIES
The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.
American Century Investment Services, Inc., Distributor
0506 (c)2005 American Century Proprietary Holdings, Inc.
SH-SAN-43966S All rights reserved.
American Century Investments
SEMIANNUAL REPORT
[photo of man and woman]
APRIL 30, 2005
Capital Value Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CAPITAL VALUE
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 5
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . 10
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 11
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . 12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 13
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 17
OTHER INFORMATION
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . 20
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . 21
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III
WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the Capital Value
fund for the six months ended April 30, 2005.
The report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings, and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
Your next shareholder report for this fund will be the annual report dated
October 31, 2005, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
- ------
1
Capital Value - Performance
TOTAL RETURNS AS OF APRIL 30, 2005
----------------------
AVERAGE ANNUAL RETURNS
- ----------------------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------------------
INVESTOR CLASS 10.31% 7.55% 6.65% 3/31/99
Return After-Tax on Distributions(1) 10.14% 7.16% 6.26%
Return After-Tax on Distributions and Sale of Shares(1) 6.93% 6.31% 5.54%
- ----------------------------------------------------------------------------------------------------
RUSSELL 1000 VALUE INDEX(2) 13.92% 5.06% 4.99% --
- ----------------------------------------------------------------------------------------------------
Institutional Class 10.36% -- 6.56% 3/1/02
Return After-Tax on Distributions(1) 10.15% -- 6.24%
Return After-Tax on Distributions and Sale of Shares(1) 7.01% -- 5.48%
- ----------------------------------------------------------------------------------------------------
Advisor Class 9.88% -- 16.54% 5/14/03
Return After-Tax on Distributions(1) 9.75% -- 16.36%
Return After-Tax on Distributions and Sale of Shares(1) 6.60% -- 14.17%
- ----------------------------------------------------------------------------------------------------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates, and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After-tax returns shown are not
relevant to investors who hold their fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
(2) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for
any actions taken in reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper Inc. -- A Reuters Company and may be incomplete. No offer or
solicitations to buy or sell any of the securities herein is being made by
Lipper.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For more information about other share classes available, please
consult the prospectus. Data assumes reinvestment of dividends and capital
gains. Returns for the index are provided for comparison. The fund's total
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the total returns of the index do not.
(continued)
- ------
2
Capital Value - Performance
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made March 31, 1999
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended April 30
- --------------------------------------------------------------------------------
1999* 2000 2001 2002 2003 2004 2005
- --------------------------------------------------------------------------------
Investor
Class 10.20% -6.71% 16.92% 0.21% -12.11% 26.67% 10.31%
- --------------------------------------------------------------------------------
Russell 1000
Value Index 9.34% -3.88% 6.43% -3.91% -13.01% 26.26% 13.92%
- --------------------------------------------------------------------------------
* From 3/31/99, the Investor Class's inception date. Not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For more information about other share classes available, please
consult the prospectus. Data assumes reinvestment of dividends and capital
gains, and none of the charts reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Returns for
the index are provided for comparison. The fund's total returns include
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index do not.
- ------
3
Capital Value - Portfolio Commentary
[photo of Brendan Healy, Chuck Ritter, and Mark Mallon]
PORTFOLIO MANAGERS ON THE CAPITAL VALUE INVESTMENT TEAM: BRENDAN HEALY, CHUCK
RITTER, AND MARK MALLON.
For the six months ended April 30, 2005, Capital Value gained 5.47%*,
underperforming the 6.72% return posted by its benchmark, the Russell 1000 Value
Index but well ahead of the 3.28% gain of the S&P 500 Index**, the broad-market
proxy.
Capital Value's long-term performance relative to its benchmark has been solid.
Since the portfolio's March 31, 1999, inception, it has posted an average annual
return of 6.65%, outperforming both the 4.99% return posted by the Russell 1000
Value Index and the 0.24% decline of the S&P 500 for the same period.
EQUITIES MANAGE GAINS
During the six-month period covered by this report, U.S. economic growth
moderated as oil prices flared to record levels, inflation increased and
short-term interest rates rose. The pace of economic growth slowed from an
annualized rate of 3.8% in the fourth quarter of 2004 to an annualized rate of
3.5% in the first quarter of 2005 as the price of crude oil averaged $49 a
barrel.
Volatility prevailed as concern grew about the effects of interest rates and oil
prices on the economy and corporate profit growth. Still, equities ultimately
booked modest gains for the period, and Capital Value received positive absolute
contributions from every sector in which it was invested.
HEALTH CARE: THE BIGGEST CONTRIBUTORS
Our stake in the health care sector made the greatest contribution to
performance during the six-month period, and health care providers and service
companies emerged as clear market leaders. Hospital giant HCA Inc. and health
insurer Cigna Corp. both ranked among the portfolio's top-contributing stocks.
Major pharmaceutical companies also bolstered returns, and the search for value
led us to diversified health care firm Johnson & Johnson, a standout performer
that was represented in the portfolio but not the index. Early in 2005, the
company announced record fourth-quarter sales driven by strength
TOP TEN HOLDINGS
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Citigroup Inc. 4.7% 4.5%
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 4.0% 4.1%
- --------------------------------------------------------------------------------
Freddie Mac 3.4% 3.8%
- --------------------------------------------------------------------------------
Bank of America Corp. 3.3% 3.2%
- --------------------------------------------------------------------------------
Royal Dutch Petroleum
Co. New York Shares 2.5% 2.7%
- --------------------------------------------------------------------------------
Wells Fargo & Co. 2.1% 2.1%
- --------------------------------------------------------------------------------
J.P. Morgan Chase & Co. 2.1% 1.7%
- --------------------------------------------------------------------------------
Hewlett-Packard Co. 1.9% 1.9%
- --------------------------------------------------------------------------------
ChevronTexaco Corp. 1.7% 1.8%
- --------------------------------------------------------------------------------
Microsoft Corporation 1.6% 1.5%
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
**The S&P 500 Index returned 6.34% and (2.94)% for the 1- and 5-year periods
ended April 30, 2005, respectively.
Returns for periods less than one year are not annualized. (continued)
- ------
4
Capital Value - Portfolio Commentary
in each of its business segments, with especially robust sales growth in the
pharmaceutical division, news that helped support the stock's climb.
SUCCESS IN ENERGY
Investments in the energy sector, comprised of major oil and gas companies,
provided significant lift. Soaring oil prices, which reached a series of record
highs during the period, underpinned gains for firms across this industry, and
each of our holdings advanced. Exxon Mobil, the portfolio's top-contributing
stock, and Royal Dutch Petroleum were notable names. During the period, Exxon
Mobil reported record-breaking 2004 performance, while Royal Dutch Petroleum, a
holding that was not included in the index, registered record-level 2004
results--developments for which investors rewarded both stocks. Still, based on
our value criteria, many companies in this area did not merit inclusion in the
portfolio, and our underweight accounted for most of the shortfall versus our
benchmark.
FINANCIALS LEND STRENGTH
Capital Value's holdings in the financials sector were additional sources of
strength. After overcoming some difficulty, Citigroup finished among the top
contributors. The stock declined in March after the Federal Reserve warned
Citigroup to observe more careful regulatory compliance and to curtail major
acquisition activity until those matters are resolved. Citigroup's willingness
to cooperate restored investors' confidence, and the share price began to
recover.
INDIVIDUAL SETBACKS
Elsewhere in the portfolio, we suffered some individual setbacks in this
otherwise positive environment. Lear Corp., a leading automotive interior
systems supplier, was the portfolio's top-detracting stock. On March 1, the
company lowered its earnings forecast, citing diminished production for light
trucks and SUVs, news that sent the stock sharply lower. Mortgage finance firm
Freddie Mac also struggled following calls for increased regulation of
government-sponsored housing firms.
OUR COMMITMENT
We remain committed to following our strategy of searching for larger,
fundamentally sound businesses that, because of transitory issues, are selling
at prices we believe are below fair market value.
TOP FIVE INDUSTRIES
AS OF APRIL 30, 2005
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Commercial Banks 9.9% 11.1%
- --------------------------------------------------------------------------------
Oil, Gas, &
Consumable Fuels 9.8% 10.0%
- --------------------------------------------------------------------------------
Diversified
Financial Services 6.8% 6.2%
- --------------------------------------------------------------------------------
Insurance 6.1% 5.8%
- --------------------------------------------------------------------------------
Thrifts &
Mortgage Finance 5.3% 5.7%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
4/30/05 10/31/04
- --------------------------------------------------------------------------------
Common Stocks 95.1% 95.1%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 4.9% 4.9%
- --------------------------------------------------------------------------------
- ------
5
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
- ------
6
Shareholder Fee Example (Unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
- ---------------------------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 11/1/04 - EXPENSE
11/1/04 4/30/05 4/30/05 RATIO*
- ---------------------------------------------------------------------------------------------------
CAPITAL VALUE SHAREHOLDER FEE EXAMPLE
- ---------------------------------------------------------------------------------------------------
ACTUAL
- ---------------------------------------------------------------------------------------------------
Investor Class $1,000 $1,054.70 $5.60 1.10%
- ---------------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,055.20 $4.59 0.90%
- ---------------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,052.20 $6.87 1.35%
- ---------------------------------------------------------------------------------------------------
HYPOTHETICAL
- ---------------------------------------------------------------------------------------------------
Investor Class $1,000 $1,019.34 $5.51 1.10%
- ---------------------------------------------------------------------------------------------------
Institutional Class $1,000 $1,020.33 $4.51 0.90%
- ---------------------------------------------------------------------------------------------------
Advisor Class $1,000 $1,018.10 $6.76 1.35%
- ---------------------------------------------------------------------------------------------------
*Expenses are equal to the class's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
181, the number of days in the most recent fiscal half-year, divided by 365,
to reflect the one-half year period.
- ------
7
Capital Value - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 94.9%
AEROSPACE & DEFENSE -- 0.5%
- --------------------------------------------------------------------------------
42,000 Northrop Grumman Corp. $ 2,303,280
- --------------------------------------------------------------------------------
AUTO COMPONENTS -- 0.7%
- --------------------------------------------------------------------------------
94,400 Lear Corporation 3,199,216
- --------------------------------------------------------------------------------
AUTOMOBILES -- 1.1%
- --------------------------------------------------------------------------------
49,400 General Motors Corp. 1,317,992
- --------------------------------------------------------------------------------
47,500 Toyota Motor Corp. ADR 3,453,725
- --------------------------------------------------------------------------------
4,771,717
- --------------------------------------------------------------------------------
BEVERAGES -- 2.3%
- --------------------------------------------------------------------------------
97,300 Coca-Cola Company (The) 4,226,712
- --------------------------------------------------------------------------------
44,400 Molson Coors Brewing Co. 2,741,700
- --------------------------------------------------------------------------------
114,400 Pepsi Bottling Group Inc. 3,279,848
- --------------------------------------------------------------------------------
10,248,260
- --------------------------------------------------------------------------------
CAPITAL MARKETS -- 3.6%
- --------------------------------------------------------------------------------
129,900 Bank of New York Co., Inc. (The) 3,629,406
- --------------------------------------------------------------------------------
115,200 Merrill Lynch & Co., Inc. 6,212,736
- --------------------------------------------------------------------------------
120,000 Morgan Stanley 6,314,400
- --------------------------------------------------------------------------------
16,156,542
- --------------------------------------------------------------------------------
CHEMICALS -- 1.1%
- --------------------------------------------------------------------------------
75,600 PPG Industries, Inc. 5,106,780
- --------------------------------------------------------------------------------
COMMERCIAL BANKS -- 9.9%
- --------------------------------------------------------------------------------
335,100 Bank of America Corp. 15,092,904
- --------------------------------------------------------------------------------
70,100 National City Corp. 2,380,596
- --------------------------------------------------------------------------------
91,800 PNC Financial Services Group 4,886,514
- --------------------------------------------------------------------------------
212,500 U.S. Bancorp 5,928,750
- --------------------------------------------------------------------------------
136,800 Wachovia Corp. 7,001,424
- --------------------------------------------------------------------------------
159,200 Wells Fargo & Co. 9,542,448
- --------------------------------------------------------------------------------
44,832,636
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 1.4%
- --------------------------------------------------------------------------------
92,500 R.R. Donnelley & Sons Company 3,044,175
- --------------------------------------------------------------------------------
107,600 Waste Management, Inc. 3,065,524
- --------------------------------------------------------------------------------
6,109,699
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 2.9%
- --------------------------------------------------------------------------------
411,900 Hewlett-Packard Co. 8,431,593
- --------------------------------------------------------------------------------
63,500 International Business
Machines Corp. 4,850,130
- --------------------------------------------------------------------------------
13,281,723
- --------------------------------------------------------------------------------
DIVERSIFIED -- 1.7%
- --------------------------------------------------------------------------------
64,400 Standard and Poor's
500 Depositary Receipt 7,458,164
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 6.8%
- --------------------------------------------------------------------------------
449,400 Citigroup Inc. 21,103,824
- --------------------------------------------------------------------------------
268,200 J.P. Morgan Chase & Co. 9,518,418
- --------------------------------------------------------------------------------
30,622,242
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 4.7%
- --------------------------------------------------------------------------------
62,200 ALLTEL Corp. $ 3,542,912
- --------------------------------------------------------------------------------
119,800 AT&T Corp. 2,291,774
- --------------------------------------------------------------------------------
186,300 BellSouth Corp. 4,935,087
- --------------------------------------------------------------------------------
184,400 SBC Communications Inc. 4,388,720
- --------------------------------------------------------------------------------
153,900 Sprint Corp. 3,425,814
- --------------------------------------------------------------------------------
79,500 Verizon Communications 2,846,100
- --------------------------------------------------------------------------------
21,430,407
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 2.7%
- --------------------------------------------------------------------------------
139,000 Exelon Corporation 6,880,500
- --------------------------------------------------------------------------------
99,100 PPL Corporation 5,377,166
- --------------------------------------------------------------------------------
12,257,666
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 1.5%
- --------------------------------------------------------------------------------
62,600 CVS Corp. 3,228,908
- --------------------------------------------------------------------------------
234,700 Kroger Co. (The)(1) 3,701,219
- --------------------------------------------------------------------------------
6,930,127
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 2.4%
- --------------------------------------------------------------------------------
103,100 H.J. Heinz Company 3,799,235
- --------------------------------------------------------------------------------
136,300 Sara Lee Corp. 2,915,457
- --------------------------------------------------------------------------------
62,100 Unilever N.V. New York Shares 4,001,103
- --------------------------------------------------------------------------------
10,715,795
- --------------------------------------------------------------------------------
GAS UTILITIES -- 0.7%
- --------------------------------------------------------------------------------
127,500 NiSource Inc. 2,963,100
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 0.9%
- --------------------------------------------------------------------------------
111,100 Baxter International, Inc. 4,121,810
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 1.3%
- --------------------------------------------------------------------------------
29,800 CIGNA Corp. 2,741,004
- --------------------------------------------------------------------------------
56,400 HCA Inc. 3,149,376
- --------------------------------------------------------------------------------
5,890,380
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 1.4%
- --------------------------------------------------------------------------------
212,500 McDonald's Corporation 6,228,375
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES -- 1.2%
- --------------------------------------------------------------------------------
140,100 Newell Rubbermaid Inc. 3,044,373
- --------------------------------------------------------------------------------
39,900 Whirlpool Corp. 2,476,194
- --------------------------------------------------------------------------------
5,520,567
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 2.2%
- --------------------------------------------------------------------------------
152,000 General Electric Co. 5,502,400
- --------------------------------------------------------------------------------
143,800 Tyco International Ltd. 4,502,378
- --------------------------------------------------------------------------------
10,004,778
- --------------------------------------------------------------------------------
INSURANCE -- 6.1%
- --------------------------------------------------------------------------------
116,300 Allstate Corp. 6,531,408
- --------------------------------------------------------------------------------
98,300 American International
Group, Inc. 4,998,555
- --------------------------------------------------------------------------------
75,500 Hartford Financial Services
Group Inc. (The) 5,463,935
- --------------------------------------------------------------------------------
72,700 Loews Corp. 5,152,976
- --------------------------------------------------------------------------------
71,600 Marsh & McLennan
Companies, Inc. 2,006,948
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
8
Capital Value - Schedule of Investments
APRIL 30, 2005 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
64,300 Torchmark Corp. $ 3,435,549
- --------------------------------------------------------------------------------
27,589,371
- --------------------------------------------------------------------------------
IT SERVICES -- 1.5%
- --------------------------------------------------------------------------------
83,200 Computer Sciences Corp.(1) 3,617,536
- --------------------------------------------------------------------------------
73,600 Fiserv, Inc.(1) 3,113,280
- --------------------------------------------------------------------------------
6,730,816
- --------------------------------------------------------------------------------
MACHINERY -- 2.7%
- --------------------------------------------------------------------------------
37,800 Deere & Co. 2,364,012
- --------------------------------------------------------------------------------
84,900 Dover Corp. 3,086,964
- --------------------------------------------------------------------------------
50,400 Ingersoll-Rand Company 3,874,248
- --------------------------------------------------------------------------------
49,400 Parker-Hannifin Corp. 2,961,036
- --------------------------------------------------------------------------------
12,286,260
- --------------------------------------------------------------------------------
MEDIA -- 2.8%
- --------------------------------------------------------------------------------
68,400 Gannett Co., Inc. 5,266,800
- --------------------------------------------------------------------------------
434,300 Time Warner Inc.(1) 7,300,583
- --------------------------------------------------------------------------------
12,567,383
- --------------------------------------------------------------------------------
METALS & MINING -- 1.0%
- --------------------------------------------------------------------------------
119,100 Alcoa Inc. 3,456,282
- --------------------------------------------------------------------------------
23,000 Nucor Corp. 1,175,300
- --------------------------------------------------------------------------------
4,631,582
- --------------------------------------------------------------------------------
MULTILINE RETAIL -- 1.7%
- --------------------------------------------------------------------------------
131,700 Dollar General Corp. 2,680,095
- --------------------------------------------------------------------------------
146,700 May Department Stores
Co. (The) 5,146,236
- --------------------------------------------------------------------------------
7,826,331
- --------------------------------------------------------------------------------
OFFICE ELECTRONICS -- 0.5%
- --------------------------------------------------------------------------------
174,900 Xerox Corp.(1) 2,317,425
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 9.8%
- --------------------------------------------------------------------------------
149,000 ChevronTexaco Corp. 7,748,000
- --------------------------------------------------------------------------------
69,100 ConocoPhillips 7,245,135
- --------------------------------------------------------------------------------
320,100 Exxon Mobil Corp. 18,255,303
- --------------------------------------------------------------------------------
191,100 Royal Dutch Petroleum
Co. New York Shares 11,131,575
- --------------------------------------------------------------------------------
44,380,013
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 1.4%
- --------------------------------------------------------------------------------
92,400 Weyerhaeuser Co. 6,339,564
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 4.3%
- --------------------------------------------------------------------------------
114,900 Abbott Laboratories 5,648,484
- --------------------------------------------------------------------------------
120,800 Bristol-Myers Squibb Co. 3,140,800
- --------------------------------------------------------------------------------
79,100 Johnson & Johnson 5,428,633
- --------------------------------------------------------------------------------
55,700 Merck & Co., Inc. 1,888,230
- --------------------------------------------------------------------------------
72,000 Wyeth 3,235,680
- --------------------------------------------------------------------------------
19,341,827
- --------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 0.7%
- --------------------------------------------------------------------------------
140,300 Intel Corp. 3,299,856
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SOFTWARE -- 1.7%
- --------------------------------------------------------------------------------
295,900 Microsoft Corporation $ 7,486,270
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 1.2%
- --------------------------------------------------------------------------------
51,800 Advance Auto Parts, Inc.(1) 2,763,530
- --------------------------------------------------------------------------------
127,800 Gap, Inc. (The) 2,728,530
- --------------------------------------------------------------------------------
5,492,060
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS -- 1.9%
- --------------------------------------------------------------------------------
77,700 Liz Claiborne, Inc. 2,752,911
- --------------------------------------------------------------------------------
60,300 Reebok International Ltd. 2,448,783
- --------------------------------------------------------------------------------
55,900 VF Corp. 3,163,381
- --------------------------------------------------------------------------------
8,365,075
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE -- 5.3%
- --------------------------------------------------------------------------------
249,200 Freddie Mac 15,330,784
- --------------------------------------------------------------------------------
40,300 MGIC Investment Corp. 2,377,700
- --------------------------------------------------------------------------------
154,600 Washington Mutual, Inc. 6,388,072
- --------------------------------------------------------------------------------
24,096,556
- --------------------------------------------------------------------------------
TOBACCO -- 1.3%
- --------------------------------------------------------------------------------
88,800 Altria Group Inc. 5,771,112
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $392,648,155) 428,674,765
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS - 4.9%
Repurchase Agreement, Bank of
America Securities, LLC, (collateralized
by various U.S. Treasury obligations,
4.17% - 8.875%, 2/15/13 - 2/15/19,
valued at $4,285,294), in a joint trading
account at 2.78%, dated 4/29/05,
due 5/2/05 (Delivery value $4,200,973) 4,200,000
- --------------------------------------------------------------------------------
Repurchase Agreement, Deutsche
Bank Securities, Inc., (collateralized
by various U.S. Treasury obligations,
3.375%, 4/15/32, valued at $18,067,083),
in a joint trading account at 2.78%,
dated 4/29/05, due 5/2/05
(Delivery value $17,704,101) 17,700,000
- --------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $21,900,000) 21,900,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 99.8%
(Cost $414,548,155) 450,574,765
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES - 0.2% 986,959
- --------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $451,561,724
================================================================================
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
(1) Non-income producing.
See Notes to Financial Statements.
- ------
9
Statement of Assets and Liabilities
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value (cost of $414,548,155) $450,574,765
- ------------------------------------------------------------
Cash 678,186
- ------------------------------------------------------------
Receivable for capital shares sold 1,125,383
- ------------------------------------------------------------
Dividends and interest receivable 841,075
- --------------------------------------------------------------------------------
453,219,409
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for investments purchased 1,259,464
- ------------------------------------------------------------
Accrued management fees 393,083
- ------------------------------------------------------------
Distribution fees payable 2,569
- ------------------------------------------------------------
Service fees payable 2,569
- --------------------------------------------------------------------------------
1,657,685
- --------------------------------------------------------------------------------
NET ASSETS $451,561,724
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $411,673,982
- ------------------------------------------------------------
Undistributed net investment income 1,848,254
- ------------------------------------------------------------
Undistributed net realized gain on investment transactions 2,012,878
- ------------------------------------------------------------
Net unrealized appreciation on investments 36,026,610
- --------------------------------------------------------------------------------
$451,561,724
================================================================================
INVESTOR CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $410,077,237
- ------------------------------------------------------------
Shares outstanding 59,419,667
- ------------------------------------------------------------
Net asset value per share $6.90
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $28,744,160
- ------------------------------------------------------------
Shares outstanding 4,163,275
- ------------------------------------------------------------
Net asset value per share $6.90
- --------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $12,740,327
- ------------------------------------------------------------
Shares outstanding 1,847,837
- ------------------------------------------------------------
Net asset value per share $6.89
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
10
Statement of Operations
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
INCOME:
- ---------------------------------------------------------
Dividends (net of foreign taxes withheld of $55,551) $ 5,054,400
- ---------------------------------------------------------
Interest 240,265
- --------------------------------------------------------------------------------
5,294,665
- --------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------
Management fees 2,067,242
- ---------------------------------------------------------
Distribution fees - Advisor Class 13,626
- ---------------------------------------------------------
Service fees - Advisor Class 13,626
- ---------------------------------------------------------
Directors' fees and expenses 2,406
- ---------------------------------------------------------
Other expenses 1,203
- --------------------------------------------------------------------------------
2,098,103
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 3,196,562
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investment transactions 3,895,502
- ---------------------------------------------------------
Change in net unrealized appreciation on investments 7,519,886
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 11,415,388
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,611,950
================================================================================
See Notes to Financial Statements.
- ------
11
Statement of Changes in Net Assets
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2004
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income $ 3,196,562 $ 2,601,569
- ----------------------------------------------
Net realized gain 3,895,502 1,571,934
- ----------------------------------------------
Change in net unrealized appreciation 7,519,886 15,422,276
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 14,611,950 19,595,779
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
From net investment income:
- ----------------------------------------------
Investor Class (3,184,838) (1,108,582)
- ----------------------------------------------
Institutional Class (335,120) (149,309)
- ----------------------------------------------
Advisor Class (80,961) (4,126)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (3,600,919) (1,262,017)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 153,574,158 165,237,330
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 164,585,189 183,571,092
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 286,976,535 103,405,443
- --------------------------------------------------------------------------------
End of period $451,561,724 $286,976,535
================================================================================
Undistributed net investment income $1,848,254 $2,252,611
================================================================================
See Notes to Financial Statements.
- ------
12
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Capital Value Fund (the fund) is one
fund in a series issued by the corporation. The fund is diversified under the
1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund pursues its objective by investing primarily in common stocks that
management believes to be undervalued at the time of purchase. The fund also
seeks to minimize the impact of federal taxes on shareholder returns by
attempting to minimize taxable distributions to shareholders. The following is a
summary of the fund's significant accounting policies.
MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the
Institutional Class and the Advisor Class. The share classes differ principally
in their respective shareholder servicing and distribution expenses and
arrangements. All shares of the fund represent an equal pro rata interest in the
assets of the class to which such shares belong, and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
for class specific expenses and exclusive rights to vote on matters affecting
only individual classes. Income, non-class specific expenses, and realized and
unrealized capital gains and losses of the fund are allocated to each class of
shares based on their relative net assets.
SECURITY VALUATIONS -- Securities traded primarily on a principal securities
exchange are valued at the last reported sales price, or at the mean of the
latest bid and asked prices where no last sales price is available. Depending on
local convention or regulation, securities traded over-the-counter are valued at
the mean of the latest bid and asked prices, the last sales price, or the
official close price. Debt securities not traded on a principal securities
exchange are valued through a commercial pricing service or at the mean of the
most recent bid and asked prices. Discount notes may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
If the fund determines that the market price of a portfolio security is not
readily available, or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Directors or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria adopted
by the Board of Directors. Each repurchase agreement is recorded at cost. The
fund requires that the collateral, represented by securities, received in a
repurchase transaction be transferred to the custodian in a manner sufficient to
enable the fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to the
fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission, the fund, along with other registered investment
companies having management agreements with ACIM, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains, if any, are generally declared and paid annually.
(continued)
- ------
13
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INDEMNIFICATIONS -- Under the corporation's organizational documents, its
officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the fund. In addition, in the normal
course of business, the fund enters into contracts that provide general
indemnifications. The fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the fund.
The risk of material loss from such claims is considered by management to be
remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee (the fee) per class.
The Agreement provides that all expenses of the fund, except brokerage
commissions, taxes, interest, fees and expenses of those directors who are not
considered "interested persons" as defined in the 1940 Act (including counsel
fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and
accrued on the daily net assets of the specific class of shares of the fund and
paid monthly in arrears. For funds with a stepped fee schedule, the rate of the
fee is determined by applying a fee rate calculation formula. This formula takes
into account all of the investment advisor's assets under management in the
fund's investment strategy (strategy assets) to calculate the appropriate fee
rate for the fund. The strategy assets include the fund's assets and the assets
of other clients of the investment advisor that are not in the American Century
family of funds, but that have the same investment team and investment strategy.
The annual management fee schedule for each class is as follows:
INVESTOR INSTITUTIONAL ADVISOR
- -----------------------------------------------------------------------------
STRATEGY ASSETS
- -----------------------------------------------------------------------------
First $500 million 1.10% 0.90% 0.85%
- -----------------------------------------------------------------------------
Next $500 million 1.00% 0.80% 0.75%
- -----------------------------------------------------------------------------
Over $1 billion 0.90% 0.70% 0.65%
- -----------------------------------------------------------------------------
The effective annual management fee for the fund for the six months ended April
30, 2005, was 1.10%, 0.90%, and 0.85%, for the Investor Class, Institutional
Class and Advisor Class, respectively.
DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master
Distribution and Shareholder Services Plan (the plan) for the Advisor Class,
pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class
will pay American Century Investment Services, Inc. (ACIS) an annual
distribution fee equal to 0.25% and an annual service fee equal to 0.25%. The
fees are computed and accrued daily based on the Advisor Class's daily net
assets and paid monthly in arrears. The distribution fee provides compensation
for expenses incurred by financial intermediaries in connection with
distributing shares of the Advisor Class including, but not limited to, payments
to brokers, dealers, and financial institutions that have entered into sales
agreements with respect to shares of the fund. The service fee provides
compensation for shareholder and administrative services rendered by ACIS, its
affiliates or independent third party providers. Fees incurred under the plan
during the six months ended April 30, 2005, are detailed in the Statement of
Operations.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation investment advisor,
ACIM, the distributor of the corporation, ACIS, and the corporation's transfer
agent, American Century Services, LLC (formerly American Century Services
Corporation).
The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB).
JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan
Chase & Co. (JPM). JPM is an equity investor in ACC.
(continued)
- ------
14
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term investments,
for the six months ended April 30, 2005, were $176,425,182 and $33,172,085,
respectively.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the fund were as follows:
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 200,000,000
================================================================================
Sold 23,797,777 $165,987,535
- -------------------------------------------
Issued in reinvestment of distributions 398,002 2,778,051
- -------------------------------------------
Redeemed (3,421,787) (23,903,577)
- --------------------------------------------------------------------------------
Net increase 20,773,992 $144,862,009
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 150,000,000
================================================================================
Sold 26,313,159 $168,670,638
- -------------------------------------------
Issued in reinvestment of distributions 176,012 1,077,190
- -------------------------------------------
Redeemed (3,525,710) (22,477,617)
- --------------------------------------------------------------------------------
Net increase 22,963,461 $147,270,211
================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 15,000,000
================================================================================
Sold 945,650 $6,600,180
- -------------------------------------------
Issued in reinvestment of distributions 46,241 322,765
- -------------------------------------------
Redeemed (370,412) (2,596,841)
- --------------------------------------------------------------------------------
Net increase 621,479 $4,326,104
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 15,000,000
================================================================================
Sold 1,955,252 $12,475,027
- -------------------------------------------
Issued in reinvestment of distributions 24,242 148,362
- -------------------------------------------
Redeemed (352,410) (2,239,342)
- --------------------------------------------------------------------------------
Net increase 1,627,084 $10,384,047
================================================================================
(continued)
- ------
15
Notes to Financial Statements
APRIL 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2005
SHARES AUTHORIZED 50,000,000
================================================================================
Sold 707,984 $4,926,458
- -------------------------------------------
Issued in reinvestment of distributions 11,580 80,832
- -------------------------------------------
Redeemed (87,924) (621,245)
- --------------------------------------------------------------------------------
Net increase 631,640 $4,386,045
================================================================================
YEAR ENDED OCTOBER 31, 2004
SHARES AUTHORIZED 50,000,000
================================================================================
Sold 1,354,281 $8,693,206
- -------------------------------------------
Issued in reinvestment of distributions 674 4,126
- -------------------------------------------
Redeemed (173,090) (1,114,260)
- --------------------------------------------------------------------------------
Net increase 1,181,865 $7,583,072
================================================================================
5. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $575,000,000
unsecured bank line of credit agreement with JPMCB, which was renewed from
$650,000,000 effective December 15, 2004. The fund may borrow money for
temporary or emergency purposes to fund shareholder redemptions. Borrowings
under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund
did not borrow from the line during the six months ended April 30, 2005.
6. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
As of April 30, 2005, the components of investments for federal income tax
purposes were as follows:
Federal tax cost of investments $415,053,100
================================================================================
Gross tax appreciation of investments $41,736,700
- --------------------------------------------------------------
Gross tax depreciation of investments (6,215,035)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $35,521,665
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
As of October 31, 2004, the fund had accumulated capital losses of $1,054,855
which represent net capital loss carryovers that may be used to offset future
realized capital gains for federal income tax purposes. The capital loss
carryovers of $520,483 and $534,372 expire in 2009 and 2011, respectively.
- ------
16
Capital Value - Financial Highlights
For a Share Outstanding Throughout the Years Ended October 31 (except as noted)
- ----------------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.61 $5.86 $4.88 $5.39 $5.50 $5.18
- ----------------------------------------------------------------------------------------------
Income From
Investment Operations
- ----------------------------
Net Investment Income 0.06(2) 0.09(2) 0.08(2) 0.07(2) 0.06 0.08
- ----------------------------
Net Realized and
Unrealized Gain (Loss) 0.30 0.72 0.97 (0.52) (0.09) 0.29
- ----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.36 0.81 1.05 (0.45) (0.03) 0.37
- ----------------------------------------------------------------------------------------------
Distributions
- ----------------------------
From Net Investment Income (0.07) (0.06) (0.07) (0.06) (0.08) (0.05)
- ----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $6.90 $6.61 $5.86 $4.88 $5.39 $5.50
==============================================================================================
TOTAL RETURN(3) 5.47% 13.94% 21.67% (8.49)% (0.47)% 7.23%
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.10%(4) 1.10% 1.10% 1.10% 1.10% 1.10%
- ----------------------------
Ratio of Net Investment
Income to Average Net Assets 1.66%(4) 1.44% 1.54% 1.32% 1.18% 1.56%
- ----------------------------
Portfolio Turnover Rate 9% 15% 22% 42% 56% 73%
- ----------------------------
Net Assets, End of Period
(in thousands) $410,077 $255,504 $91,960 $50,425 $47,542 $39,135
- ----------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
17
Capital Value - Financial Highlights
For a Share Outstanding Throughout the Years Ended October 31 (except as noted)
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
2005(1) 2004 2003 2002(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.62 $5.87 $4.88 $5.87
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------
Net Investment Income(3) 0.07 0.10 0.09 0.06
- ----------------------------------
Net Realized and
Unrealized Gain (Loss) 0.30 0.72 0.97 (1.05)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.37 0.82 1.06 (0.99)
- --------------------------------------------------------------------------------
Distributions
- ----------------------------------
From Net Investment Income (0.09) (0.07) (0.07) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $6.90 $6.62 $5.87 $4.88
================================================================================
TOTAL RETURN(4) 5.52% 14.15% 22.07% (16.87)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 0.90%(5) 0.90% 0.90% 0.90%(5)
- ----------------------------------
Ratio of Net Investment
Income to Average Net Assets 1.86%(5) 1.64% 1.74% 1.56%(5)
- ----------------------------------
Portfolio Turnover Rate 9% 15% 22% 42%(6)
- ----------------------------------
Net Assets, End of Period
(in thousands) $28,744 $23,449 $11,244 $3,779
- --------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) March 1, 2002 (commencement of sale) through October 31, 2002.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2002.
See Notes to Financial Statements.
- ------
18
Capital Value - Financial Highlights
For a Share Outstanding Throughout the Years Ended October 31 (except as noted)
- -------------------------------------------------------------------------------
ADVISOR CLASS
- -------------------------------------------------------------------------------
2005(1) 2004 2003(2)
- -------------------------------------------------------------------------------
PER-SHARE DATA
- -------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.60 $5.86 $5.19
- -------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------
Net Investment Income(3) 0.05 0.08 0.03
- -------------------------------------
Net Realized and Unrealized Gain 0.30 0.71 0.64
- -------------------------------------------------------------------------------
Total From Investment Operations 0.35 0.79 0.67
- -------------------------------------------------------------------------------
Distributions
- -------------------------------------
From Net Investment Income (0.06) (0.05) --
- -------------------------------------------------------------------------------
Net Asset Value, End of Period $6.89 $6.60 $5.86
===============================================================================
TOTAL RETURN(4) 5.22% 13.60% 12.91%
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.35%(5) 1.35% 1.35%(5)
- -------------------------------------
Ratio of Net Investment
Income to Average Net Assets 1.41%(5) 1.19% 1.03%(5)
- -------------------------------------
Portfolio Turnover Rate 9% 15% 22%(6)
- -------------------------------------
Net Assets, End of Period
(in thousands) $12,740 $8,023 $201
- -------------------------------------------------------------------------------
(1) Six months ended April 30, 2005 (unaudited).
(2) May 14, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
- ------
19
Share Class Information
Three classes of shares are authorized for sale by the fund: Investor Class,
Institutional Class and Advisor Class. The total expense ratio of Institutional
Class shares is lower than that of Investor Class shares. The total expense
ratio of Advisor Class shares is higher than that of Investor Class shares.
INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through a
broker-dealer, which may require payment of a transaction fee to the broker.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and
distribution fee. The total expense ratio of Advisor Class shares is 0.25%
higher than the total expense ratio of Investor Class shares.
All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.
- ------
20
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
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-Q. The fund's Form N-Q is available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of
portfolio holdings for the most recent quarter of its fiscal year available on
its Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
21
Index Definitions
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not an
investment products available for purchase.
The RUSSELL 1000 VALUE INDEX measures the performance of those Russell 1000
companies (the 1,000 largest of the 3,000 largest publicly traded U.S.
companies, based on total market capitalization) with lower price-to-book ratios
and lower forecasted growth rates.
The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly
traded U.S. companies chosen for market size, liquidity, and industry group
representation that are considered to be leading firms in dominant industries.
Each stock's weight in the index is proportionate to its market value. Created
by Standard & Poor's, it is considered to be a broad measure of U.S. stock
market performance.
- ------
22
Notes
- ------
23
Notes
- ------
24
[inside back cover blank]
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.
American Century Investment Services, Inc., Distributor
(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
0506
SH-SAN-43967N
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The schedule of investments is included as part of the report to stockholders
filed under Item 1 of this Form.
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
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant's board has adopted procedures by which shareholders may
recommend nominees to the board.
The Governance Committee of the board is responsible for identifying, evaluating
and recommending qualified candidates for election to the board. While the
Governance Committee largely considers nominees from searches that it conducts,
the Committee will consider candidates submitted by shareholders. Any
shareholder wishing to submit a candidate for consideration should send the
following information to the Corporate Secretary, American Century Funds, P. O.
Box 41041, Kansas City, Missouri 64141:
Shareholder's name, the fund name and number of fund shares owned and length of
period held;
Name, age and address of the candidate;
A detailed resume describing among other things the candidate's educational
background, occupation, employment history, financial knowledge and expertise
and material outside commitments (e.g., memberships on other boards and
committees, charitable foundations, etc.);
Any other information relating to the candidate that is required to be disclosed
in solicitations of proxies for election of directors in an election contest
pursuant to Regulation 14A under the Securities Exchange Act of 1934;
Number of fund shares owned by the candidate and length of time held;
A supporting statement which (i) describes the candidate's reasons for seeking
election to the Board of Directors and (ii) documents his/her ability to satisfy
the director qualifications described in the board's policy;
A signed statement from the candidate confirming his/her willingness to serve on
the Board of Directors.
The Corporate Secretary will promptly forward such materials to the Governance
Committee chairman. The Corporate Secretary also will maintain copies of such
materials for future reference by the Governance Committee when filling board
positions.
Shareholders may submit potential director candidates at any time pursuant to
these procedures. The Governance Committee will consider such candidates if a
vacancy arises or if the board decides to expand its membership, and at such
other times as the Governance Committee deems necessary or appropriate.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) are effective based on their evaluation of these controls
and procedures as of a date within 90 days of the filing date of this
report.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) that occurred during the registrant's 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. EXHIBITS.
(a)(1) Not applicable for semiannual report filings.
(a)(2) Separate certifications by the registrant's principal executive
officer and principal financial officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are filed and attached hereto as Exhibit
99.302CERT.
(a)(3) Not applicable.
(b) A certification by the registrant's chief executive officer and chief
financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
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.
Registrant: AMERICAN CENTURY MUTUAL FUNDS, INC.
By: /s/ William M. Lyons
-------------------------------------------
Name: William M. Lyons
Title: President
Date: June 27, 2005
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/ William M. Lyons
-------------------------------------------
Name: William M. Lyons
Title: President
(principal executive officer)
Date: June 27, 2005
By: /s/ Maryanne L. Roepke
-------------------------------------------
Name: Maryanne L. Roepke
Title: Sr. Vice President, Treasurer, and
Chief Accounting Officer
(principal financial officer)
Date: June 27, 2005
