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 | 811-00816 | |||||
AMERICAN CENTURY MUTUAL FUNDS, INC. | ||||||
(Exact name of registrant as specified in charter) | ||||||
4500 MAIN STREET, KANSAS CITY, MISSOURI | 64111 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
CHARLES A. ETHERINGTON 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 | ||||||
(Name and address of agent for service) | ||||||
Registrant’s telephone number, including area code: | 816-531-5575 | |||||
Date of fiscal year end: | 10-31 | |||||
Date of reporting period: | 4-30-2014 |
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMIANNUAL REPORT | APRIL 30, 2014 |
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All Cap Growth Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWGTX | 1.29% | 16.64% | 17.47% | 10.98% | 11.46% | 11/25/83 |
Russell 3000 Growth Index | — | 6.49% | 20.72% | 19.53% | 8.06% | 9.86%(2) | — |
Institutional Class | ACAJX | 1.38% | 16.91% | — | — | 19.36% | 9/30/11 |
A Class | ACAQX | 9/30/11 | |||||
No sales charge* | 1.14% | 16.37% | — | — | 18.84% | ||
With sales charge* | -4.66% | 9.68% | — | — | 16.15% | ||
C Class | ACAHX | 9/30/11 | |||||
No sales charge* | 0.78% | 15.48% | — | — | 17.94% | ||
With sales charge* | -0.10% | 15.48% | — | — | 17.94% | ||
R Class | ACAWX | 1.02% | 16.09% | — | — | 18.54% | 9/30/11 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 11/30/83, the date nearest the Investor Class’s inception for which data are available. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.00% | 0.80% | 1.25% | 2.00% | 1.50% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Google, Inc.* | 5.1% |
Gilead Sciences, Inc. | 3.4% |
Comcast Corp., Class A | 3.2% |
Apple, Inc. | 2.7% |
Twenty-First Century Fox, Inc. | 2.6% |
Facebook, Inc., Class A | 2.5% |
Canadian Pacific Railway Ltd. New York Shares | 2.4% |
Electronic Arts, Inc. | 2.4% |
Costco Wholesale Corp. | 2.3% |
Schlumberger Ltd. | 2.2% |
* Includes all classes of the issuer. | |
Top Five Industries | % of net assets |
Internet Software and Services | 9.0% |
Media | 7.5% |
Biotechnology | 6.2% |
Software | 5.5% |
Specialty Retail | 5.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.2% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.5% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,012.90 | $4.99 | 1.00% |
Institutional Class | $1,000 | $1,013.80 | $3.99 | 0.80% |
A Class | $1,000 | $1,011.40 | $6.23 | 1.25% |
C Class | $1,000 | $1,007.80 | $9.96 | 2.00% |
R Class | $1,000 | $1,010.20 | $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% |
A 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% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||||||||||||
COMMON STOCKS — 99.2% | |||||||||||||||||||||
AEROSPACE AND DEFENSE — 1.4% | |||||||||||||||||||||
Precision Castparts Corp. | 57,203 | $ | 14,477,507 | ||||||||||||||||||
AIRLINES — 0.5% | |||||||||||||||||||||
Spirit Airlines, Inc.(1) | 101,000 | 5,740,840 | |||||||||||||||||||
AUTOMOBILES — 0.7% | |||||||||||||||||||||
Harley-Davidson, Inc. | 101,977 | 7,540,179 | |||||||||||||||||||
BANKS — 2.1% | |||||||||||||||||||||
Bank of America Corp. | 636,100 | 9,630,554 | |||||||||||||||||||
East West Bancorp., Inc. | 121,527 | 4,193,897 | |||||||||||||||||||
SVB Financial Group(1) | 79,649 | 8,497,752 | |||||||||||||||||||
22,322,203 | |||||||||||||||||||||
BEVERAGES — 2.7% | |||||||||||||||||||||
Brown-Forman Corp., Class B | 95,198 | 8,541,165 | |||||||||||||||||||
Constellation Brands, Inc., Class A(1) | 213,800 | 17,069,792 | |||||||||||||||||||
Monster Beverage Corp.(1) | 50,100 | 3,354,696 | |||||||||||||||||||
28,965,653 | |||||||||||||||||||||
BIOTECHNOLOGY — 6.2% | |||||||||||||||||||||
Alexion Pharmaceuticals, Inc.(1) | 56,400 | 8,922,480 | |||||||||||||||||||
Biogen Idec, Inc.(1) | 42,100 | 12,087,752 | |||||||||||||||||||
Gilead Sciences, Inc.(1) | 455,191 | 35,727,942 | |||||||||||||||||||
Regeneron Pharmaceuticals, Inc.(1) | 30,409 | 9,028,128 | |||||||||||||||||||
65,766,302 | |||||||||||||||||||||
BUILDING PRODUCTS — 1.6% | |||||||||||||||||||||
Allegion plc | 108,900 | 5,374,215 | |||||||||||||||||||
Fortune Brands Home & Security, Inc. | 155,100 | 6,180,735 | |||||||||||||||||||
Lennox International, Inc. | 61,685 | 5,171,054 | |||||||||||||||||||
16,726,004 | |||||||||||||||||||||
CAPITAL MARKETS — 2.0% | |||||||||||||||||||||
Charles Schwab Corp. (The) | 354,400 | 9,409,320 | |||||||||||||||||||
Lazard Ltd., Class A | 23,259 | 1,094,336 | |||||||||||||||||||
Morgan Stanley | 344,700 | 10,661,571 | |||||||||||||||||||
21,165,227 | |||||||||||||||||||||
CHEMICALS — 3.5% | |||||||||||||||||||||
FMC Corp. | 124,747 | 9,605,519 | |||||||||||||||||||
Monsanto Co. | 198,062 | 21,925,463 | |||||||||||||||||||
Sherwin-Williams Co. (The) | 26,066 | 5,209,030 | |||||||||||||||||||
36,740,012 | |||||||||||||||||||||
COMMUNICATIONS EQUIPMENT — 1.3% | |||||||||||||||||||||
QUALCOMM, Inc. | 172,158 | 13,550,556 | |||||||||||||||||||
CONSTRUCTION AND ENGINEERING — 1.4% | |||||||||||||||||||||
MasTec, Inc.(1) | 193,491 | 7,658,374 | |||||||||||||||||||
Quanta Services, Inc.(1) | 217,784 | 7,683,419 | |||||||||||||||||||
15,341,793 |
7
Shares | Value | ||||||||||||||||||||
CONSUMER FINANCE — 1.3% | |||||||||||||||||||||
Discover Financial Services | 153,880 | $ | 8,601,892 | ||||||||||||||||||
Santander Consumer USA Holdings, Inc.(1) | 225,833 | 5,135,442 | |||||||||||||||||||
13,737,334 | |||||||||||||||||||||
DISTRIBUTORS — 1.2% | |||||||||||||||||||||
LKQ Corp.(1) | 428,063 | 12,465,195 | |||||||||||||||||||
ELECTRICAL EQUIPMENT — 1.4% | |||||||||||||||||||||
Acuity Brands, Inc. | 123,000 | 15,322,110 | |||||||||||||||||||
ENERGY EQUIPMENT AND SERVICES — 4.1% | |||||||||||||||||||||
Halliburton Co. | 305,500 | 19,267,885 | |||||||||||||||||||
Schlumberger Ltd. | 234,900 | 23,854,095 | |||||||||||||||||||
43,121,980 | |||||||||||||||||||||
FOOD AND STAPLES RETAILING — 3.8% | |||||||||||||||||||||
Costco Wholesale Corp. | 214,401 | 24,801,908 | |||||||||||||||||||
Natural Grocers by Vitamin Cottage, Inc.(1) | 89,626 | 3,190,686 | |||||||||||||||||||
Sprouts Farmers Market, Inc.(1) | 226,126 | 7,229,248 | |||||||||||||||||||
United Natural Foods, Inc.(1) | 80,500 | 5,556,915 | |||||||||||||||||||
40,778,757 | |||||||||||||||||||||
FOOD PRODUCTS — 2.0% | |||||||||||||||||||||
Hain Celestial Group, Inc. (The)(1) | 91,166 | 7,842,099 | |||||||||||||||||||
Mondelez International, Inc., Class A | 374,500 | 13,350,925 | |||||||||||||||||||
21,193,024 | |||||||||||||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.0% | |||||||||||||||||||||
Teleflex, Inc. | 212,337 | 21,677,484 | |||||||||||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.9% | |||||||||||||||||||||
AmerisourceBergen Corp. | 123,000 | 8,017,140 | |||||||||||||||||||
McKesson Corp. | 69,400 | 11,741,786 | |||||||||||||||||||
19,758,926 | |||||||||||||||||||||
HOTELS, RESTAURANTS AND LEISURE — 2.0% | |||||||||||||||||||||
Chipotle Mexican Grill, Inc.(1) | 10,800 | 5,383,800 | |||||||||||||||||||
Noodles & Co.(1) | 165,431 | 5,424,482 | |||||||||||||||||||
Starbucks Corp. | 147,569 | 10,421,323 | |||||||||||||||||||
21,229,605 | |||||||||||||||||||||
HOUSEHOLD DURABLES — 1.0% | |||||||||||||||||||||
Harman International Industries, Inc. | 14,400 | 1,578,384 | |||||||||||||||||||
Mohawk Industries, Inc.(1) | 66,900 | 8,858,229 | |||||||||||||||||||
10,436,613 | |||||||||||||||||||||
INTERNET AND CATALOG RETAIL — 2.4% | |||||||||||||||||||||
Priceline Group, Inc. (The)(1) | 16,291 | 18,860,905 | |||||||||||||||||||
TripAdvisor, Inc.(1) | 86,200 | 6,959,788 | |||||||||||||||||||
25,820,693 | |||||||||||||||||||||
INTERNET SOFTWARE AND SERVICES — 9.0% | |||||||||||||||||||||
CoStar Group, Inc.(1) | 69,627 | 11,202,288 | |||||||||||||||||||
Facebook, Inc., Class A(1) | 451,702 | 27,002,746 | |||||||||||||||||||
Google, Inc., Class A(1) | 51,387 | 27,485,879 | |||||||||||||||||||
Google, Inc., Class C(1) | 51,387 | 27,063,477 | |||||||||||||||||||
LinkedIn Corp., Class A(1) | 22,024 | 3,380,023 | |||||||||||||||||||
96,134,413 |
8
Shares | Value | ||||||||||||||||||||
IT SERVICES — 3.7% | |||||||||||||||||||||
Alliance Data Systems Corp.(1) | 86,521 | $ | 20,929,430 | ||||||||||||||||||
MasterCard, Inc., Class A | 254,530 | 18,720,681 | |||||||||||||||||||
39,650,111 | |||||||||||||||||||||
LEISURE PRODUCTS — 0.6% | |||||||||||||||||||||
Polaris Industries, Inc. | 43,400 | 5,829,922 | |||||||||||||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.8% | |||||||||||||||||||||
Covance, Inc.(1) | 97,718 | 8,626,545 | |||||||||||||||||||
MACHINERY — 3.8% | |||||||||||||||||||||
Flowserve Corp. | 174,098 | 12,717,859 | |||||||||||||||||||
Middleby Corp.(1) | 39,200 | 9,897,216 | |||||||||||||||||||
Pentair Ltd. | 161,729 | 12,014,847 | |||||||||||||||||||
WABCO Holdings, Inc.(1) | 55,200 | 5,906,952 | |||||||||||||||||||
40,536,874 | |||||||||||||||||||||
MEDIA — 7.5% | |||||||||||||||||||||
Comcast Corp., Class A | 667,100 | 34,529,096 | |||||||||||||||||||
Time Warner, Inc. | 165,257 | 10,982,980 | |||||||||||||||||||
Tribune Co.(1) | 85,200 | 6,624,300 | |||||||||||||||||||
Twenty-First Century Fox, Inc. | 866,700 | 27,751,734 | |||||||||||||||||||
79,888,110 | |||||||||||||||||||||
OIL, GAS AND CONSUMABLE FUELS — 0.7% | |||||||||||||||||||||
Antero Resources Corp.(1) | 110,511 | 7,257,257 | |||||||||||||||||||
PHARMACEUTICALS — 3.9% | |||||||||||||||||||||
Actavis plc(1) | 71,900 | 14,691,327 | |||||||||||||||||||
Johnson & Johnson | 170,100 | 17,229,429 | |||||||||||||||||||
Zoetis, Inc. | 316,815 | 9,586,822 | |||||||||||||||||||
41,507,578 | |||||||||||||||||||||
ROAD AND RAIL — 3.9% | |||||||||||||||||||||
Canadian Pacific Railway Ltd. New York Shares | 163,913 | 25,565,511 | |||||||||||||||||||
Kansas City Southern | 118,882 | 11,992,816 | |||||||||||||||||||
Norfolk Southern Corp. | 44,700 | 4,225,491 | |||||||||||||||||||
41,783,818 | |||||||||||||||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.2% | |||||||||||||||||||||
ARM Holdings plc | 202,096 | 3,041,965 | |||||||||||||||||||
Avago Technologies Ltd. | 82,700 | 5,251,450 | |||||||||||||||||||
NXP Semiconductor NV(1) | 67,600 | 4,030,312 | |||||||||||||||||||
12,323,727 | |||||||||||||||||||||
SOFTWARE — 5.5% | |||||||||||||||||||||
Electronic Arts, Inc.(1) | 896,300 | 25,365,290 | |||||||||||||||||||
NetSuite, Inc.(1) | 51,903 | 4,012,621 | |||||||||||||||||||
Oracle Corp. | 453,600 | 18,543,168 | |||||||||||||||||||
Splunk, Inc.(1) | 40,933 | 2,233,714 | |||||||||||||||||||
VMware, Inc., Class A(1) | 94,500 | 8,742,195 | |||||||||||||||||||
58,896,988 | |||||||||||||||||||||
SPECIALTY RETAIL — 5.3% | |||||||||||||||||||||
Home Depot, Inc. (The) | 153,369 | 12,194,369 | |||||||||||||||||||
Lowe's Cos., Inc. | 466,122 | 21,399,661 | |||||||||||||||||||
Lumber Liquidators Holdings, Inc.(1) | 90,800 | 7,914,128 |
9
Shares | Value | ||||||||||||||||||||
TJX Cos., Inc. (The) | 252,254 | $ | 14,676,138 | ||||||||||||||||||
56,184,296 | |||||||||||||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 2.7% | |||||||||||||||||||||
Apple, Inc. | 48,160 | 28,418,734 | |||||||||||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.2% | |||||||||||||||||||||
Kate Spade & Co.(1) | 128,300 | 4,460,991 | |||||||||||||||||||
Michael Kors Holdings Ltd.(1) | 91,268 | 8,323,642 | |||||||||||||||||||
12,784,633 | |||||||||||||||||||||
TOBACCO — 2.0% | |||||||||||||||||||||
Philip Morris International, Inc. | 249,602 | 21,323,499 | |||||||||||||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.9% | |||||||||||||||||||||
SBA Communications Corp., Class A(1) | 109,872 | 9,862,111 | |||||||||||||||||||
TOTAL COMMON STOCKS (Cost $788,503,089) | 1,054,886,613 | ||||||||||||||||||||
TEMPORARY CASH INVESTMENTS — 0.3% | |||||||||||||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $1,098,525), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $1,075,893) | 1,075,892 | ||||||||||||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $880,631), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $860,713) | 860,713 | ||||||||||||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $878,215), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $860,713) | 860,713 | ||||||||||||||||||||
SSgA U.S. Government Money Market Fund | 752,743 | 752,743 | |||||||||||||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,550,061) | 3,550,061 | ||||||||||||||||||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $792,053,150) | 1,058,436,674 | ||||||||||||||||||||
OTHER ASSETS AND LIABILITIES — 0.5% | 5,091,823 | ||||||||||||||||||||
TOTAL NET ASSETS — 100.0% | $ | 1,063,528,497 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | |||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | |||||||||||||||||
GBP | 81,849 | USD | 137,714 | Credit Suisse AG | 5/30/14 | $ | 450 | ||||||||||||||
USD | 2,938,318 | GBP | 1,746,109 | Credit Suisse AG | 5/30/14 | (9,165 | ) | ||||||||||||||
$ | (8,715 | ) |
Notes to Schedule of Investments | ||
GBP | - | British Pound |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $792,053,150) | $ | 1,058,436,674 | ||||
Foreign currency holdings, at value (cost of $56,844) | 60,072 | |||||
Receivable for investments sold | 7,262,304 | |||||
Receivable for capital shares sold | 27,977 | |||||
Unrealized appreciation on forward foreign currency exchange contracts | 450 | |||||
Dividends and interest receivable | 283,900 | |||||
1,066,071,377 | ||||||
Liabilities | ||||||
Payable for investments purchased | 1,289,663 | |||||
Payable for capital shares redeemed | 355,444 | |||||
Unrealized depreciation on forward foreign currency exchange contracts | 9,165 | |||||
Accrued management fees | 880,740 | |||||
Distribution and service fees payable | 7,868 | |||||
2,542,880 | ||||||
Net Assets | $ | 1,063,528,497 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 687,857,687 | ||||
Accumulated net investment loss | (1,039,627 | ) | ||||
Undistributed net realized gain | 110,332,333 | |||||
Net unrealized appreciation | 266,378,104 | |||||
$ | 1,063,528,497 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $1,043,441,698 | 33,092,359 | $31.53 | |
Institutional Class, $0.01 Par Value | $143,992 | 4,544 | $31.69 | |
A Class, $0.01 Par Value | $8,852,412 | 282,618 | $31.32* | |
C Class, $0.01 Par Value | $3,548,929 | 115,618 | $30.70 | |
R Class, $0.01 Par Value | $7,541,466 | 242,394 | $31.11 |
* Maximum offering price $33.23 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $20,791) | $ | 4,552,567 | ||
Interest | 408 | |||
4,552,975 | ||||
Expenses: | ||||
Management fees | 5,431,689 | |||
Distribution and service fees: | ||||
A Class | 11,375 | |||
C Class | 17,895 | |||
R Class | 17,251 | |||
Directors' fees and expenses | 16,842 | |||
5,495,052 | ||||
Net investment income (loss) | (942,077 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 109,902,206 | |||
Foreign currency transactions | (121,890 | ) | ||
109,780,316 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (94,162,379 | ) | ||
Translation of assets and liabilities in foreign currencies | (104,511 | ) | ||
(94,266,890 | ) | |||
Net realized and unrealized gain (loss) | 15,513,426 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 14,571,349 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | (942,077 | ) | $ | 3,764,116 | |
Net realized gain (loss) | 109,780,316 | 146,001,955 | ||||
Change in net unrealized appreciation (depreciation) | (94,266,890 | ) | 86,441,524 | |||
Net increase (decrease) in net assets resulting from operations | 14,571,349 | 236,207,595 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | — | (2,987,737 | ) | |||
Institutional Class | — | (460 | ) | |||
A Class | — | (23,405 | ) | |||
C Class | — | (653 | ) | |||
R Class | — | (2,856 | ) | |||
From net realized gains: | ||||||
Investor Class | (135,254,248 | ) | (64,330,394 | ) | ||
Institutional Class | (13,915 | ) | (8,390 | ) | ||
A Class | (1,123,968 | ) | (650,947 | ) | ||
C Class | (454,606 | ) | (145,569 | ) | ||
R Class | (827,562 | ) | (112,134 | ) | ||
Decrease in net assets from distributions | (137,674,299 | ) | (68,262,545 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 87,256,761 | (44,384,524 | ) | |||
Net increase (decrease) in net assets | (35,846,189 | ) | 123,560,526 | |||
Net Assets | ||||||
Beginning of period | 1,099,374,686 | 975,814,160 | ||||
End of period | $ | 1,063,528,497 | $ | 1,099,374,686 | ||
Accumulated net investment loss | $ | (1,039,627 | ) | $ | (97,550 | ) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. All Cap Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the
14
fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
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. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
15
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The annual management fee is 1.00% for the Investor Class, A Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $364,805,026 and $420,711,277, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 728,228 | $ | 23,924,229 | 1,333,460 | $ | 41,078,263 | ||||
Issued in reinvestment of distributions | 4,246,173 | 132,055,972 | 2,273,872 | 65,874,089 | ||||||
Redeemed | (2,235,609 | ) | (73,283,456 | ) | (4,842,756 | ) | (151,874,064 | ) | ||
2,738,792 | 82,696,745 | (1,235,424 | ) | (44,921,712 | ) | |||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 1,030 | 33,240 | 3,302 | 101,354 | ||||||
Issued in reinvestment of distributions | 446 | 13,915 | 305 | 8,850 | ||||||
Redeemed | (4 | ) | (137 | ) | (2,550 | ) | (81,844 | ) | ||
1,472 | 47,018 | 1,057 | 28,360 | |||||||
A Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 86,471 | 2,854,743 | 150,961 | 4,648,002 | ||||||
Issued in reinvestment of distributions | 36,351 | 1,123,968 | 22,308 | 644,487 | ||||||
Redeemed | (80,341 | ) | (2,605,965 | ) | (306,496 | ) | (10,032,622 | ) | ||
42,481 | 1,372,746 | (133,227 | ) | (4,740,133 | ) | |||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 24,317 | 788,846 | 38,907 | 1,224,286 | ||||||
Issued in reinvestment of distributions | 14,564 | 442,613 | 4,234 | 121,389 | ||||||
Redeemed | (18,240 | ) | (582,435 | ) | (14,351 | ) | (451,908 | ) | ||
20,641 | 649,024 | 28,790 | 893,767 | |||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 80,876 | 2,637,195 | 156,475 | 4,980,335 | ||||||
Issued in reinvestment of distributions | 26,921 | 827,562 | 3,990 | 114,990 | ||||||
Redeemed | (30,529 | ) | (973,529 | ) | (23,884 | ) | (740,131 | ) | ||
77,268 | 2,491,228 | 136,581 | 4,355,194 | |||||||
Net increase (decrease) | 2,880,654 | $ | 87,256,761 | (1,202,223 | ) | $ | (44,384,524 | ) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
17
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,051,844,648 | $ | 3,041,965 | — | |||
Temporary Cash Investments | 752,743 | 2,797,318 | — | |||||
$ | 1,052,597,391 | $ | 5,839,283 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 450 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | (9,165 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund's typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2014, is disclosed on the Statement of Assets and Liabilities as an asset of $450 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $9,165 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(114,317) in net realized gain (loss) on foreign currency transactions and $(106,265) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 792,168,948 | |
Gross tax appreciation of investments | $ | 274,495,280 | |
Gross tax depreciation of investments | (8,227,554 | ) | |
Net tax appreciation (depreciation) of investments | $ | 266,267,726 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
18
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $35.63 | (0.03) | 0.43 | 0.40 | – | (4.50) | (4.50) | $31.53 | 1.29% | 1.00%(4) | (0.16)%(4) | 33% | $1,043,442 | ||
2013 | $30.44 | 0.12 | 7.22 | 7.34 | (0.10) | (2.05) | (2.15) | $35.63 | 25.72% | 1.00% | 0.38% | 60% | $1,081,599 | ||
2012 | $28.06 | 0.01 | 3.08 | 3.09 | – | (0.71) | (0.71) | $30.44 | 11.40% | 1.00% | 0.04% | 55% | $961,562 | ||
2011 | $26.07 | (0.02) | 2.01 | 1.99 | – | – | – | $28.06 | 7.63% | 1.00% | (0.08)% | 75% | $935,751 | ||
2010 | $20.86 | (0.05) | 5.26 | 5.21 | – | – | – | $26.07 | 24.98% | 1.01% | (0.22)% | 88% | $959,447 | ||
2009 | $19.08 | 0.03 | 1.81 | 1.84 | (0.06) | – | (0.06) | $20.86 | 9.72% | 1.00% | 0.19% | 167% | $837,839 | ||
Institutional Class | |||||||||||||||
2014(3) | $35.76 | –(5) | 0.43 | 0.43 | – | (4.50) | (4.50) | $31.69 | 1.38% | 0.80%(4) | 0.04%(4) | 33% | $144 | ||
2013 | $30.50 | 0.16 | 7.26 | 7.42 | (0.11) | (2.05) | (2.16) | $35.76 | 25.98% | 0.80% | 0.58% | 60% | $110 | ||
2012 | $28.06 | 0.09 | 3.06 | 3.15 | – | (0.71) | (0.71) | $30.50 | 11.62% | 0.80% | 0.24% | 55% | $61 | ||
2011(6) | $25.32 | (0.01) | 2.75 | 2.74 | – | – | – | $28.06 | 10.82% | 0.80%(4) | (0.28)%(4) | 75%(7) | $28 | ||
A Class | |||||||||||||||
2014(3) | $35.47 | (0.07) | 0.42 | 0.35 | – | (4.50) | (4.50) | $31.32 | 1.14% | 1.25%(4) | (0.41)%(4) | 33% | $8,852 | ||
2013 | $30.36 | 0.04 | 7.19 | 7.23 | (0.07) | (2.05) | (2.12) | $35.47 | 25.42% | 1.25% | 0.13% | 60% | $8,517 | ||
2012 | $28.05 | (0.02) | 3.04 | 3.02 | – | (0.71) | (0.71) | $30.36 | 11.15% | 1.25% | (0.21)% | 55% | $11,334 | ||
2011(6) | $25.32 | (0.02) | 2.75 | 2.73 | – | – | – | $28.05 | 10.78% | 1.25%(4) | (0.73)%(4) | 75%(7) | $28 |
19
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
C Class | |||||||||||||||
2014(3) | $34.96 | (0.19) | 0.43 | 0.24 | – | (4.50) | (4.50) | $30.70 | 0.78% | 2.00%(4) | (1.16)%(4) | 33% | $3,549 | ||
2013 | $30.11 | (0.20) | 7.11 | 6.91 | (0.01) | (2.05) | (2.06) | $34.96 | 24.45% | 2.00% | (0.62)% | 60% | $3,321 | ||
2012 | $28.03 | (0.25) | 3.04 | 2.79 | – | (0.71) | (0.71) | $30.11 | 10.32% | 2.00% | (0.96)% | 55% | $1,993 | ||
2011(6) | $25.32 | (0.03) | 2.74 | 2.71 | – | – | – | $28.03 | 10.70% | 2.00%(4) | (1.48)%(4) | 75%(7) | $28 | ||
R Class | |||||||||||||||
2014(3) | $35.30 | (0.11) | 0.42 | 0.31 | – | (4.50) | (4.50) | $31.11 | 1.02% | 1.50%(4) | (0.66)%(4) | 33% | $7,541 | ||
2013 | $30.27 | (0.09) | 7.22 | 7.13 | (0.05) | (2.05) | (2.10) | $35.30 | 25.12% | 1.50% | (0.12)% | 60% | $5,828 | ||
2012 | $28.04 | (0.08) | 3.02 | 2.94 | – | (0.71) | (0.71) | $30.27 | 10.86% | 1.50% | (0.46)% | 55% | $864 | ||
2011(6) | $25.32 | (0.02) | 2.74 | 2.72 | – | – | – | $28.04 | 10.74% | 1.50%(4) | (0.98)%(4) | 75%(7) | $28 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | September 30, 2011 (commencement of sale) through October 31, 2011. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2011. |
See Notes to Financial Statements.
20
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
21
Notes |
22
Notes |
23
Notes |
24
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82268 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Balanced Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWBIX | 5.92% | 12.21% | 13.46% | 6.81% | 8.23% | 10/20/88 |
Blended index(2) | — | 5.74% | 11.86% | 13.51% | 6.81% | 9.10%(3) | — |
S&P 500 Index | — | 8.36% | 20.44% | 19.13% | 7.66% | 10.18%(3) | — |
Barclays U.S. Aggregate Bond Index | — | 1.74% | -0.26% | 4.87% | 4.82% | 6.75%(3) | — |
Institutional Class | ABINX | 6.02% | 12.43% | 13.70% | 7.03% | 5.07% | 5/1/00 |
(1) | Total returns for periods less than one year are not annualized. |
(2) | The blended index combines monthly returns of two widely known indices in proportion to the asset mix of the fund. The S&P 500 Index represents 60% of the index and the remaining 40% is represented by the Barclays U.S. Aggregate Bond Index. |
(3) | Since 10/31/88, the date nearest the Investor Class’s inception for which data are available. |
Total Annual Fund Operating Expenses | |
Investor Class | Institutional Class |
0.91% | 0.71% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Common Stocks | % of net assets |
Apple, Inc. | 2.3% |
Johnson & Johnson | 1.5% |
Microsoft Corp. | 1.2% |
Pfizer, Inc. | 1.2% |
AT&T, Inc. | 1.2% |
Verizon Communications, Inc. | 1.1% |
Exxon Mobil Corp. | 1.1% |
Merck & Co., Inc. | 1.0% |
Oracle Corp. | 1.0% |
Intel Corp. | 0.9% |
Top Five Common Stocks Industries | % of net assets |
Pharmaceuticals | 5.2% |
Technology Hardware, Storage and Peripherals | 4.0% |
Oil, Gas and Consumable Fuels | 3.6% |
Insurance | 3.3% |
Aerospace and Defense | 3.1% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 59.6% |
U.S. Government Agency Mortgage-Backed Securities | 11.6% |
U.S. Treasury Securities | 11.2% |
Corporate Bonds | 10.9% |
Collateralized Mortgage Obligations | 2.2% |
Commercial Mortgage-Backed Securities | 1.7% |
Asset-Backed Securities | 0.9% |
Sovereign Governments and Agencies | 0.6% |
Municipal Securities | 0.4% |
Temporary Cash Investments | 1.0% |
Other Assets and Liabilities | (0.1)% |
Key Fixed-Income Portfolio Statistics | |
Weighted Average Life | 6.6 years |
Average Duration (effective) | 4.9 years |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,059.20 | $4.60 | 0.90% |
Institutional Class | $1,000 | $1,060.20 | $3.58 | 0.70% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.33 | $4.51 | 0.90% |
Institutional Class | $1,000 | $1,021.32 | $3.51 | 0.70% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares/ Principal Amount | Value | |||||||||||||||||
COMMON STOCKS — 59.6% | ||||||||||||||||||
AEROSPACE AND DEFENSE — 3.1% | ||||||||||||||||||
Boeing Co. (The) | 48,548 | $ | 6,263,663 | |||||||||||||||
General Dynamics Corp. | 30,975 | 3,390,214 | ||||||||||||||||
Honeywell International, Inc. | 62,755 | 5,829,940 | ||||||||||||||||
Lockheed Martin Corp. | 10,016 | 1,644,026 | ||||||||||||||||
Northrop Grumman Corp. | 24,385 | 2,963,021 | ||||||||||||||||
Raytheon Co. | 56,913 | 5,434,053 | ||||||||||||||||
25,524,917 | ||||||||||||||||||
AIR FREIGHT AND LOGISTICS — 0.4% | ||||||||||||||||||
United Parcel Service, Inc., Class B | 32,316 | 3,183,126 | ||||||||||||||||
AIRLINES — 1.0% | ||||||||||||||||||
Delta Air Lines, Inc. | 107,269 | 3,950,717 | ||||||||||||||||
Southwest Airlines Co. | 182,286 | 4,405,853 | ||||||||||||||||
8,356,570 | ||||||||||||||||||
AUTO COMPONENTS — 1.1% | ||||||||||||||||||
Delphi Automotive plc | 60,742 | 4,059,995 | ||||||||||||||||
Gentex Corp. | 6,606 | 189,394 | ||||||||||||||||
Johnson Controls, Inc. | 46,681 | 2,107,181 | ||||||||||||||||
Magna International, Inc. | 30,890 | 3,026,911 | ||||||||||||||||
9,383,481 | ||||||||||||||||||
BANKS — 2.2% | ||||||||||||||||||
Bank of America Corp. | 320,075 | 4,845,936 | ||||||||||||||||
Citigroup, Inc. | 149,469 | 7,161,060 | ||||||||||||||||
JPMorgan Chase & Co. | 52,995 | 2,966,660 | ||||||||||||||||
Wells Fargo & Co. | 59,091 | 2,933,277 | ||||||||||||||||
17,906,933 | ||||||||||||||||||
BEVERAGES — 0.9% | ||||||||||||||||||
Coca-Cola Co. (The) | 9,727 | 396,764 | ||||||||||||||||
Dr Pepper Snapple Group, Inc. | 73,411 | 4,068,438 | ||||||||||||||||
PepsiCo, Inc. | 31,356 | 2,693,167 | ||||||||||||||||
7,158,369 | ||||||||||||||||||
BIOTECHNOLOGY — 1.8% | ||||||||||||||||||
Amgen, Inc. | 52,419 | 5,857,823 | ||||||||||||||||
Biogen Idec, Inc.(1) | 19,818 | 5,690,144 | ||||||||||||||||
Myriad Genetics, Inc.(1) | 15,927 | 672,279 | ||||||||||||||||
United Therapeutics Corp.(1) | 25,968 | 2,597,060 | ||||||||||||||||
14,817,306 | ||||||||||||||||||
CAPITAL MARKETS — 0.8% | ||||||||||||||||||
Affiliated Managers Group, Inc.(1) | 8,828 | 1,749,710 | ||||||||||||||||
Financial Engines, Inc. | 9,077 | 401,657 | ||||||||||||||||
Franklin Resources, Inc. | 78,581 | 4,113,715 |
7
Shares/ Principal Amount | Value | |||||||||||||||||
Stifel Financial Corp.(1) | 7,734 | $ | 361,719 | |||||||||||||||
6,626,801 | ||||||||||||||||||
CHEMICALS — 2.5% | ||||||||||||||||||
Dow Chemical Co. (The) | 125,296 | 6,252,270 | ||||||||||||||||
Eastman Chemical Co. | 45,718 | 3,985,238 | ||||||||||||||||
NewMarket Corp. | 2,175 | 809,796 | ||||||||||||||||
Olin Corp. | 25,092 | 705,085 | ||||||||||||||||
PPG Industries, Inc. | 13,592 | 2,631,683 | ||||||||||||||||
Scotts Miracle-Gro Co. (The), Class A | 27,247 | 1,667,789 | ||||||||||||||||
Sigma-Aldrich Corp. | 23,436 | 2,254,778 | ||||||||||||||||
W.R. Grace & Co.(1) | 23,829 | 2,194,651 | ||||||||||||||||
20,501,290 | ||||||||||||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.1% | ||||||||||||||||||
Deluxe Corp. | 11,882 | 652,916 | ||||||||||||||||
COMMUNICATIONS EQUIPMENT — 1.8% | ||||||||||||||||||
Cisco Systems, Inc. | 315,978 | 7,302,252 | ||||||||||||||||
QUALCOMM, Inc. | 97,726 | 7,692,013 | ||||||||||||||||
14,994,265 | ||||||||||||||||||
CONSUMER FINANCE — 0.7% | ||||||||||||||||||
Cash America International, Inc. | 82,474 | 3,591,743 | ||||||||||||||||
Portfolio Recovery Associates, Inc.(1) | 29,863 | 1,706,670 | ||||||||||||||||
5,298,413 | ||||||||||||||||||
CONTAINERS AND PACKAGING — 0.6% | ||||||||||||||||||
Packaging Corp. of America | 41,382 | 2,757,283 | ||||||||||||||||
Silgan Holdings, Inc. | 5,796 | 288,351 | ||||||||||||||||
Sonoco Products Co. | 49,861 | 2,098,151 | ||||||||||||||||
5,143,785 | ||||||||||||||||||
DIVERSIFIED CONSUMER SERVICES† | ||||||||||||||||||
Graham Holdings Co., Class B | 318 | 213,451 | ||||||||||||||||
DIVERSIFIED FINANCIAL SERVICES — 1.1% | ||||||||||||||||||
Berkshire Hathaway, Inc., Class B(1) | 20,838 | 2,684,976 | ||||||||||||||||
Moody's Corp. | 51,893 | 4,073,601 | ||||||||||||||||
MSCI, Inc., Class A(1) | 60,313 | 2,445,089 | ||||||||||||||||
9,203,666 | ||||||||||||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.3% | ||||||||||||||||||
AT&T, Inc. | 263,883 | 9,420,623 | ||||||||||||||||
Verizon Communications, Inc. | 194,761 | 9,101,182 | ||||||||||||||||
18,521,805 | ||||||||||||||||||
ELECTRICAL EQUIPMENT — 1.0% | ||||||||||||||||||
Emerson Electric Co. | 77,903 | 5,311,426 | ||||||||||||||||
Rockwell Automation, Inc. | 23,299 | 2,776,775 | ||||||||||||||||
8,088,201 | ||||||||||||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.4% | ||||||||||||||||||
TE Connectivity Ltd. | 56,012 | 3,303,588 | ||||||||||||||||
ENERGY EQUIPMENT AND SERVICES — 1.2% | ||||||||||||||||||
Baker Hughes, Inc. | 80,232 | 5,608,217 |
8
Shares/ Principal Amount | Value | |||||||||||||||||
Nabors Industries Ltd. | 17,444 | $ | 445,171 | |||||||||||||||
RPC, Inc. | 51,397 | 1,142,555 | ||||||||||||||||
Schlumberger Ltd. | 26,557 | 2,696,863 | ||||||||||||||||
9,892,806 | ||||||||||||||||||
FOOD AND STAPLES RETAILING — 0.1% | ||||||||||||||||||
Walgreen Co. | 15,202 | 1,032,216 | ||||||||||||||||
FOOD PRODUCTS — 1.9% | ||||||||||||||||||
Archer-Daniels-Midland Co. | 117,812 | 5,151,919 | ||||||||||||||||
Kellogg Co. | 67,391 | 4,503,740 | ||||||||||||||||
Pilgrim's Pride Corp.(1) | 64,263 | 1,404,789 | ||||||||||||||||
Tyson Foods, Inc., Class A | 101,749 | 4,270,406 | ||||||||||||||||
15,330,854 | ||||||||||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.3% | ||||||||||||||||||
Becton Dickinson and Co. | 24,847 | 2,808,456 | ||||||||||||||||
C.R. Bard, Inc. | 15,814 | 2,171,737 | ||||||||||||||||
Hill-Rom Holdings, Inc. | 11,514 | 430,163 | ||||||||||||||||
Medtronic, Inc. | 95,411 | 5,612,075 | ||||||||||||||||
St. Jude Medical, Inc. | 61,806 | 3,922,827 | ||||||||||||||||
Stryker Corp. | 53,188 | 4,135,367 | ||||||||||||||||
19,080,625 | ||||||||||||||||||
HOTELS, RESTAURANTS AND LEISURE — 0.4% | ||||||||||||||||||
Bally Technologies, Inc.(1) | 25,777 | 1,678,340 | ||||||||||||||||
Cracker Barrel Old Country Store, Inc. | 2,517 | 238,461 | ||||||||||||||||
International Game Technology | 119,775 | 1,503,176 | ||||||||||||||||
3,419,977 | ||||||||||||||||||
HOUSEHOLD DURABLES — 0.7% | ||||||||||||||||||
Newell Rubbermaid, Inc. | 64,025 | 1,927,793 | ||||||||||||||||
Whirlpool Corp. | 25,901 | 3,972,695 | ||||||||||||||||
5,900,488 | ||||||||||||||||||
HOUSEHOLD PRODUCTS — 1.4% | ||||||||||||||||||
Energizer Holdings, Inc. | 38,148 | 4,260,750 | ||||||||||||||||
Kimberly-Clark Corp. | 45,432 | 5,099,742 | ||||||||||||||||
Procter & Gamble Co. (The) | 30,380 | 2,507,869 | ||||||||||||||||
11,868,361 | ||||||||||||||||||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS — 0.2% | ||||||||||||||||||
AES Corp. (The) | 101,833 | 1,471,487 | ||||||||||||||||
INDUSTRIAL CONGLOMERATES — 0.8% | ||||||||||||||||||
Danaher Corp. | 36,689 | 2,692,239 | ||||||||||||||||
General Electric Co. | 147,467 | 3,965,387 | ||||||||||||||||
6,657,626 | ||||||||||||||||||
INSURANCE — 3.3% | ||||||||||||||||||
Aflac, Inc. | 9,674 | 606,753 | ||||||||||||||||
American International Group, Inc. | 115,033 | 6,111,703 | ||||||||||||||||
Amtrust Financial Services, Inc. | 69,276 | 2,678,903 | ||||||||||||||||
Aspen Insurance Holdings Ltd. | 91,000 | 4,165,980 | ||||||||||||||||
Everest Re Group Ltd. | 10,783 | 1,704,037 |
9
Shares/ Principal Amount | Value | |||||||||||||||||
Hanover Insurance Group, Inc. (The) | 7,297 | $ | 426,510 | |||||||||||||||
MetLife, Inc. | 21,725 | 1,137,304 | ||||||||||||||||
Old Republic International Corp. | 174,882 | 2,896,046 | ||||||||||||||||
RenaissanceRe Holdings Ltd. | 39,552 | 4,003,058 | ||||||||||||||||
Travelers Cos., Inc. (The) | 33,422 | 3,027,365 | ||||||||||||||||
26,757,659 | ||||||||||||||||||
INTERNET AND CATALOG RETAIL† | ||||||||||||||||||
HSN, Inc. | 3,776 | 219,159 | ||||||||||||||||
INTERNET SOFTWARE AND SERVICES — 1.2% | ||||||||||||||||||
eBay, Inc.(1) | 85,508 | 4,431,879 | ||||||||||||||||
Google, Inc., Class A(1) | 1,651 | 883,087 | ||||||||||||||||
Google, Inc., Class C(1) | 8,148 | 4,291,226 | ||||||||||||||||
9,606,192 | ||||||||||||||||||
IT SERVICES — 1.0% | �� | |||||||||||||||||
Amdocs Ltd. | 17,527 | 815,531 | ||||||||||||||||
International Business Machines Corp. | 38,642 | 7,591,994 | ||||||||||||||||
8,407,525 | ||||||||||||||||||
LEISURE PRODUCTS — 0.5% | ||||||||||||||||||
Hasbro, Inc. | 73,160 | 4,042,822 | ||||||||||||||||
MACHINERY — 1.4% | ||||||||||||||||||
Caterpillar, Inc. | 51,472 | 5,425,149 | ||||||||||||||||
Dover Corp. | 30,792 | 2,660,429 | ||||||||||||||||
Snap-On, Inc. | 26,020 | 3,018,320 | ||||||||||||||||
11,103,898 | ||||||||||||||||||
MEDIA — 0.6% | ||||||||||||||||||
John Wiley & Sons, Inc., Class A | 6,301 | 362,055 | ||||||||||||||||
Walt Disney Co. (The) | 55,594 | 4,410,828 | ||||||||||||||||
4,772,883 | ||||||||||||||||||
MULTI-UTILITIES — 0.2% | ||||||||||||||||||
Wisconsin Energy Corp. | 27,263 | 1,321,710 | ||||||||||||||||
MULTILINE RETAIL — 1.4% | ||||||||||||||||||
Dillard's, Inc., Class A | 30,775 | 3,013,796 | ||||||||||||||||
Macy's, Inc. | 73,372 | 4,213,754 | ||||||||||||||||
Target Corp. | 75,056 | 4,634,708 | ||||||||||||||||
11,862,258 | ||||||||||||||||||
OIL, GAS AND CONSUMABLE FUELS — 3.6% | ||||||||||||||||||
Chevron Corp. | 23,458 | 2,944,448 | ||||||||||||||||
EOG Resources, Inc. | 17,049 | 1,670,802 | ||||||||||||||||
Exxon Mobil Corp. | 86,996 | 8,909,260 | ||||||||||||||||
Gran Tierra Energy, Inc.(1) | 198,175 | 1,416,951 | ||||||||||||||||
Marathon Petroleum Corp. | 38,738 | 3,600,697 | ||||||||||||||||
Occidental Petroleum Corp. | 59,862 | 5,731,787 | ||||||||||||||||
Phillips 66 | 7,929 | 659,851 | ||||||||||||||||
Valero Energy Corp. | 83,950 | 4,799,422 | ||||||||||||||||
29,733,218 |
10
Shares/ Principal Amount | Value | |||||||||||||||||
PERSONAL PRODUCTS — 0.3% | ||||||||||||||||||
Avon Products, Inc. | 72,390 | $ | 1,106,119 | |||||||||||||||
Herbalife Ltd. | 25,135 | 1,507,597 | ||||||||||||||||
2,613,716 | ||||||||||||||||||
PHARMACEUTICALS — 5.2% | ||||||||||||||||||
AbbVie, Inc. | 119,019 | 6,198,509 | ||||||||||||||||
Eli Lilly & Co. | 96,917 | 5,727,795 | ||||||||||||||||
Johnson & Johnson | 120,934 | 12,249,405 | ||||||||||||||||
Merck & Co., Inc. | 147,240 | 8,622,374 | ||||||||||||||||
Pfizer, Inc. | 318,643 | 9,967,153 | ||||||||||||||||
42,765,236 | ||||||||||||||||||
PROFESSIONAL SERVICES — 0.1% | ||||||||||||||||||
Manpowergroup, Inc. | 14,183 | 1,153,645 | ||||||||||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.6% | ||||||||||||||||||
Broadcom Corp., Class A | 122,659 | 3,779,124 | ||||||||||||||||
Intel Corp. | 290,007 | 7,740,287 | ||||||||||||||||
Texas Instruments, Inc. | 34,816 | 1,582,387 | ||||||||||||||||
13,101,798 | ||||||||||||||||||
SOFTWARE — 2.6% | ||||||||||||||||||
CA, Inc. | 47,294 | 1,425,441 | ||||||||||||||||
Microsoft Corp. | 251,269 | 10,151,268 | ||||||||||||||||
Oracle Corp. | 208,221 | 8,512,074 | ||||||||||||||||
Synopsys, Inc.(1) | 41,988 | 1,579,589 | ||||||||||||||||
21,668,372 | ||||||||||||||||||
SPECIALTY RETAIL — 1.0% | ||||||||||||||||||
GameStop Corp., Class A | 91,492 | 3,630,403 | ||||||||||||||||
Guess?, Inc. | 19,029 | 512,070 | ||||||||||||||||
Home Depot, Inc. (The) | 32,060 | 2,549,091 | ||||||||||||||||
PetSmart, Inc. | 19,450 | 1,316,376 | ||||||||||||||||
8,007,940 | ||||||||||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 4.0% | ||||||||||||||||||
Apple, Inc. | 32,690 | 19,290,042 | ||||||||||||||||
EMC Corp. | 205,085 | 5,291,193 | ||||||||||||||||
Hewlett-Packard Co. | 175,870 | 5,814,262 | ||||||||||||||||
Seagate Technology plc | 21,235 | 1,116,536 | ||||||||||||||||
Western Digital Corp. | 14,581 | 1,285,024 | ||||||||||||||||
32,797,057 | ||||||||||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.6% | ||||||||||||||||||
Deckers Outdoor Corp.(1) | 2,878 | 227,218 | ||||||||||||||||
Hanesbrands, Inc. | 54,982 | 4,513,472 | ||||||||||||||||
4,740,690 | ||||||||||||||||||
THRIFTS AND MORTGAGE FINANCE — 0.1% | ||||||||||||||||||
EverBank Financial Corp. | 29,237 | 547,317 | ||||||||||||||||
TOBACCO — 0.1% | ||||||||||||||||||
Altria Group, Inc. | 22,775 | 913,505 | ||||||||||||||||
Philip Morris International, Inc. | 2,199 | 187,861 | ||||||||||||||||
1,101,366 | ||||||||||||||||||
TOTAL COMMON STOCKS (Cost $379,079,459) | 489,857,784 |
11
Shares/ Principal Amount | Value | |||||||||||||||||
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES(2) — 11.6% | ||||||||||||||||||
ADJUSTABLE-RATE U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES — 2.0% | ||||||||||||||||||
FHLMC, VRN, 1.75%, 5/15/14 | $ | 220,109 | $ | 222,152 | ||||||||||||||
FHLMC, VRN, 1.85%, 5/15/14 | 552,508 | 560,021 | ||||||||||||||||
FHLMC, VRN, 1.97%, 5/15/14 | 330,340 | 336,964 | ||||||||||||||||
FHLMC, VRN, 1.98%, 5/15/14 | 432,046 | 439,589 | ||||||||||||||||
FHLMC, VRN, 2.07%, 5/15/14 | 733,375 | 739,260 | ||||||||||||||||
FHLMC, VRN, 2.26%, 5/15/14 | 446,836 | 476,078 | ||||||||||||||||
FHLMC, VRN, 2.36%, 5/15/14 | 909,889 | 903,225 | ||||||||||||||||
FHLMC, VRN, 2.37%, 5/15/14 | 958,140 | 949,115 | ||||||||||||||||
FHLMC, VRN, 2.375%, 5/15/14 | 1,285,521 | 1,370,020 | ||||||||||||||||
FHLMC, VRN, 2.40%, 5/15/14 | 198,681 | 211,926 | ||||||||||||||||
FHLMC, VRN, 2.56%, 5/15/14 | 131,580 | 140,739 | ||||||||||||||||
FHLMC, VRN, 2.57%, 5/15/14 | 135,500 | 141,796 | ||||||||||||||||
FHLMC, VRN, 2.88%, 5/15/14 | 208,331 | 212,910 | ||||||||||||||||
FHLMC, VRN, 3.23%, 5/15/14 | 120,810 | 128,931 | ||||||||||||||||
FHLMC, VRN, 3.30%, 5/15/14 | 457,259 | 475,707 | ||||||||||||||||
FHLMC, VRN, 3.81%, 5/15/14 | 228,160 | 240,460 | ||||||||||||||||
FHLMC, VRN, 4.05%, 5/15/14 | 196,257 | 208,208 | ||||||||||||||||
FHLMC, VRN, 4.35%, 5/15/14 | 571,068 | 589,016 | ||||||||||||||||
FHLMC, VRN, 4.56%, 5/15/14 | 541,942 | 581,224 | ||||||||||||||||
FHLMC, VRN, 5.125%, 5/15/14 | 100,677 | 104,042 | ||||||||||||||||
FHLMC, VRN, 5.37%, 5/15/14 | 176,757 | 183,505 | ||||||||||||||||
FHLMC, VRN, 5.77%, 5/15/14 | 346,413 | 354,852 | ||||||||||||||||
FHLMC, VRN, 5.94%, 5/15/14 | 379,980 | 396,872 | ||||||||||||||||
FHLMC, VRN, 6.12%, 5/15/14 | 182,827 | 190,729 | ||||||||||||||||
FNMA, VRN, 1.90%, 5/25/14 | 445,536 | 474,852 | ||||||||||||||||
FNMA, VRN, 1.94%, 5/25/14 | 667,639 | 712,057 | ||||||||||||||||
FNMA, VRN, 1.94%, 5/25/14 | 1,132,916 | 1,209,364 | ||||||||||||||||
FNMA, VRN, 1.94%, 5/25/14 | 878,001 | 926,312 | ||||||||||||||||
FNMA, VRN, 1.94%, 5/25/14 | 504,191 | 539,451 | ||||||||||||||||
FNMA, VRN, 2.31%, 5/25/14 | 58,208 | 61,893 | ||||||||||||||||
FNMA, VRN, 2.32%, 5/25/14 | 413,056 | 440,098 | ||||||||||||||||
FNMA, VRN, 2.70%, 5/25/14 | 422,162 | 427,389 | ||||||||||||||||
FNMA, VRN, 3.32%, 5/25/14 | 209,695 | 217,046 | ||||||||||||||||
FNMA, VRN, 3.35%, 5/25/14 | 148,747 | 159,992 | ||||||||||||||||
FNMA, VRN, 3.77%, 5/25/14 | 317,394 | 335,438 | ||||||||||||||||
FNMA, VRN, 3.92%, 5/25/14 | 269,580 | 284,790 | ||||||||||||||||
FNMA, VRN, 3.93%, 5/25/14 | 97,537 | 103,736 | ||||||||||||||||
FNMA, VRN, 5.30%, 5/25/14 | 225,985 | 244,192 | ||||||||||||||||
16,293,951 | ||||||||||||||||||
FIXED-RATE U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES — 9.6% | ||||||||||||||||||
FHLMC, 4.50%, 1/1/19 | 288,108 | 305,429 | ||||||||||||||||
FHLMC, 6.50%, 1/1/28 | 31,004 | 35,342 | ||||||||||||||||
FHLMC, 5.50%, 12/1/33 | 283,318 | 316,812 | ||||||||||||||||
FHLMC, 5.00%, 7/1/35 | 2,477,013 | 2,724,372 |
12
Shares/ Principal Amount | Value | |||||||||||||||||
FHLMC, 5.50%, 1/1/38 | $ | 350,242 | $ | 385,848 | ||||||||||||||
FHLMC, 6.00%, 8/1/38 | 80,623 | 90,101 | ||||||||||||||||
FHLMC, 4.00%, 4/1/41 | 1,121,732 | 1,179,738 | ||||||||||||||||
FHLMC, 6.50%, 7/1/47 | 22,718 | 24,753 | ||||||||||||||||
FNMA, 3.00%, 5/12/14(3) | 1,750,000 | 1,705,156 | ||||||||||||||||
FNMA, 4.50%, 5/1/19 | 97,745 | 103,993 | ||||||||||||||||
FNMA, 4.50%, 5/1/19 | 258,867 | 275,292 | ||||||||||||||||
FNMA, 5.00%, 9/1/20 | 478,702 | 509,242 | ||||||||||||||||
FNMA, 6.50%, 1/1/28 | 20,504 | 23,094 | ||||||||||||||||
FNMA, 6.50%, 1/1/29 | 42,343 | 48,137 | ||||||||||||||||
FNMA, 7.50%, 7/1/29 | 111,170 | 126,352 | ||||||||||||||||
FNMA, 7.50%, 9/1/30 | 25,184 | 30,246 | ||||||||||||||||
FNMA, 6.625%, 11/15/30 | 2,290,000 | 3,181,199 | ||||||||||||||||
FNMA, 5.00%, 7/1/31 | 1,347,003 | 1,493,287 | ||||||||||||||||
FNMA, 6.50%, 9/1/31 | 28,623 | 32,240 | ||||||||||||||||
FNMA, 7.00%, 9/1/31 | 13,898 | 15,596 | ||||||||||||||||
FNMA, 6.50%, 1/1/32 | 68,218 | 76,882 | ||||||||||||||||
FNMA, 6.50%, 8/1/32 | 47,162 | 53,281 | ||||||||||||||||
FNMA, 5.50%, 6/1/33 | 159,037 | 177,342 | ||||||||||||||||
FNMA, 5.50%, 7/1/33 | 264,110 | 294,654 | ||||||||||||||||
FNMA, 5.50%, 8/1/33 | 456,560 | 508,558 | ||||||||||||||||
FNMA, 5.50%, 9/1/33 | 280,998 | 313,857 | ||||||||||||||||
FNMA, 5.00%, 11/1/33 | 852,827 | 941,945 | ||||||||||||||||
FNMA, 5.00%, 4/1/35 | 1,245,189 | 1,371,991 | ||||||||||||||||
FNMA, 4.50%, 9/1/35 | 601,195 | 646,846 | ||||||||||||||||
FNMA, 5.00%, 2/1/36 | 808,458 | 890,032 | ||||||||||||||||
FNMA, 5.50%, 4/1/36 | 314,375 | 349,522 | ||||||||||||||||
FNMA, 5.50%, 5/1/36 | 606,540 | 673,967 | ||||||||||||||||
FNMA, 5.00%, 11/1/36 | 2,104,027 | 2,313,104 | ||||||||||||||||
FNMA, 5.50%, 2/1/37 | 162,702 | 180,079 | ||||||||||||||||
FNMA, 6.00%, 7/1/37 | 1,264,113 | 1,410,161 | ||||||||||||||||
FNMA, 6.50%, 8/1/37 | 225,143 | 245,597 | ||||||||||||||||
FNMA, 5.50%, 7/1/39 | 1,046,621 | 1,163,537 | ||||||||||||||||
FNMA, 5.00%, 4/1/40 | 2,152,255 | 2,369,443 | ||||||||||||||||
FNMA, 5.00%, 6/1/40 | 1,887,109 | 2,073,480 | ||||||||||||||||
FNMA, 4.50%, 8/1/40 | 2,760,469 | 2,969,145 | ||||||||||||||||
FNMA, 4.50%, 9/1/40 | 4,329,140 | 4,673,849 | ||||||||||||||||
FNMA, 3.50%, 1/1/41 | 2,305,249 | 2,342,353 | ||||||||||||||||
FNMA, 4.00%, 1/1/41 | 1,757,307 | 1,850,197 | ||||||||||||||||
FNMA, 4.50%, 1/1/41 | 1,468,435 | 1,580,949 | ||||||||||||||||
FNMA, 4.50%, 2/1/41 | 1,038,127 | 1,117,049 | ||||||||||||||||
FNMA, 4.00%, 5/1/41 | 2,316,517 | 2,432,595 | ||||||||||||||||
FNMA, 4.50%, 7/1/41 | 793,889 | 857,150 | ||||||||||||||||
FNMA, 4.50%, 9/1/41 | 889,083 | 956,060 | ||||||||||||||||
FNMA, 4.50%, 9/1/41 | 3,527,432 | 3,791,436 | ||||||||||||||||
FNMA, 4.00%, 12/1/41 | 1,911,861 | 2,009,587 |
13
Shares/ Principal Amount | Value | |||||||||||||||||
FNMA, 4.00%, 1/1/42 | $ | 1,633,039 | $ | 1,714,864 | ||||||||||||||
FNMA, 4.00%, 1/1/42 | 1,131,596 | 1,186,815 | ||||||||||||||||
FNMA, 4.00%, 3/1/42 | 1,555,085 | 1,633,072 | ||||||||||||||||
FNMA, 3.50%, 5/1/42 | 2,904,405 | 2,951,886 | ||||||||||||||||
FNMA, 3.50%, 6/1/42 | 910,439 | 926,036 | ||||||||||||||||
FNMA, 3.50%, 9/1/42 | 2,916,891 | 2,968,691 | ||||||||||||||||
FNMA, 3.00%, 11/1/42 | 2,077,287 | 2,029,410 | ||||||||||||||||
FNMA, 6.50%, 8/1/47 | 38,285 | 41,948 | ||||||||||||||||
FNMA, 6.50%, 8/1/47 | 43,445 | 47,645 | ||||||||||||||||
FNMA, 6.50%, 9/1/47 | 128,639 | 140,791 | ||||||||||||||||
FNMA, 6.50%, 9/1/47 | 4,900 | 5,366 | ||||||||||||||||
FNMA, 6.50%, 9/1/47 | 16,566 | 18,143 | ||||||||||||||||
FNMA, 6.50%, 9/1/47 | 50,965 | 55,759 | ||||||||||||||||
FNMA, 6.50%, 9/1/47 | 6,431 | 7,029 | ||||||||||||||||
GNMA, 7.00%, 4/20/26 | 73,689 | 86,192 | ||||||||||||||||
GNMA, 7.50%, 8/15/26 | 41,413 | 48,285 | ||||||||||||||||
GNMA, 7.00%, 2/15/28 | 13,537 | 13,848 | ||||||||||||||||
GNMA, 7.50%, 2/15/28 | 16,936 | 17,457 | ||||||||||||||||
GNMA, 7.00%, 12/15/28 | 22,781 | 23,873 | ||||||||||||||||
GNMA, 7.00%, 5/15/31 | 84,456 | 99,937 | ||||||||||||||||
GNMA, 5.50%, 11/15/32 | 300,354 | 334,384 | ||||||||||||||||
GNMA, 4.00%, 1/20/41 | 1,922,835 | 2,039,061 | ||||||||||||||||
GNMA, 4.50%, 5/20/41 | 1,159,697 | 1,259,440 | ||||||||||||||||
GNMA, 4.50%, 6/15/41 | 937,036 | 1,020,635 | ||||||||||||||||
GNMA, 4.00%, 12/15/41 | 1,862,007 | 1,977,088 | ||||||||||||||||
GNMA, 3.50%, 6/20/42 | 2,041,228 | 2,103,196 | ||||||||||||||||
GNMA, 3.50%, 7/20/42 | 994,829 | 1,025,030 | ||||||||||||||||
GNMA, 4.50%, 11/20/43 | 1,922,517 | 2,086,934 | ||||||||||||||||
79,103,692 | ||||||||||||||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $94,066,010) | 95,397,643 | |||||||||||||||||
U.S. TREASURY SECURITIES — 11.2% | ||||||||||||||||||
U.S. Treasury Bonds, 5.50%, 8/15/28 | 420,000 | 541,997 | ||||||||||||||||
U.S. Treasury Bonds, 5.25%, 2/15/29 | 489,000 | 617,515 | ||||||||||||||||
U.S. Treasury Bonds, 5.375%, 2/15/31 | 2,900,000 | 3,746,664 | ||||||||||||||||
U.S. Treasury Bonds, 4.375%, 11/15/39 | 2,000,000 | 2,345,624 | ||||||||||||||||
U.S. Treasury Bonds, 4.375%, 5/15/41 | 1,850,000 | 2,174,906 | ||||||||||||||||
U.S. Treasury Bonds, 3.125%, 11/15/41 | 1,500,000 | 1,417,968 | ||||||||||||||||
U.S. Treasury Bonds, 2.75%, 11/15/42 | 2,180,000 | 1,896,430 | ||||||||||||||||
U.S. Treasury Bonds, 2.875%, 5/15/43 | 300,000 | 267,094 | ||||||||||||||||
U.S. Treasury Notes, 0.50%, 8/15/14 | 3,000,000 | 3,003,927 | ||||||||||||||||
U.S. Treasury Notes, 0.50%, 10/15/14 | 2,000,000 | 2,004,062 | ||||||||||||||||
U.S. Treasury Notes, 0.25%, 5/31/15 | 5,000,000 | 5,007,325 | ||||||||||||||||
U.S. Treasury Notes, 0.375%, 11/15/15(4) | 1,200,000 | 1,202,672 | ||||||||||||||||
U.S. Treasury Notes, 1.375%, 11/30/15 | 1,750,000 | 1,781,378 | ||||||||||||||||
U.S. Treasury Notes, 2.125%, 12/31/15 | 8,750,000 | 9,018,651 | ||||||||||||||||
U.S. Treasury Notes, 0.375%, 1/15/16 | 6,200,000 | 6,208,475 |
14
Shares/ Principal Amount | Value | |||||||||||||||||
U.S. Treasury Notes, 0.50%, 6/15/16 | $ | 3,000,000 | $ | 3,002,226 | ||||||||||||||
U.S. Treasury Notes, 0.625%, 12/15/16 | 7,300,000 | 7,284,604 | ||||||||||||||||
U.S. Treasury Notes, 0.50%, 7/31/17 | 500,000 | 491,953 | ||||||||||||||||
U.S. Treasury Notes, 0.75%, 10/31/17 | 1,500,000 | 1,480,899 | ||||||||||||||||
U.S. Treasury Notes, 1.875%, 10/31/17 | 3,300,000 | 3,386,368 | ||||||||||||||||
U.S. Treasury Notes, 0.875%, 1/31/18 | 4,500,000 | 4,441,639 | ||||||||||||||||
U.S. Treasury Notes, 2.625%, 4/30/18 | 875,000 | 919,433 | ||||||||||||||||
U.S. Treasury Notes, 1.375%, 7/31/18 | 14,430,000 | 14,395,613 | ||||||||||||||||
U.S. Treasury Notes, 1.375%, 9/30/18 | 2,500,000 | 2,486,425 | ||||||||||||||||
U.S. Treasury Notes, 1.25%, 10/31/18 | 7,400,000 | 7,309,232 | ||||||||||||||||
U.S. Treasury Notes, 1.25%, 11/30/18 | 3,100,000 | 3,056,529 | ||||||||||||||||
U.S. Treasury Notes, 1.375%, 11/30/18 | 200,000 | 198,516 | ||||||||||||||||
U.S. Treasury Notes, 1.75%, 5/15/23 | 2,300,000 | 2,145,019 | ||||||||||||||||
TOTAL U.S. TREASURY SECURITIES (Cost $91,821,242) | 91,833,144 | |||||||||||||||||
CORPORATE BONDS — 10.9% | ||||||||||||||||||
AEROSPACE AND DEFENSE — 0.2% | ||||||||||||||||||
L-3 Communications Corp., 4.75%, 7/15/20 | 220,000 | 236,977 | ||||||||||||||||
Lockheed Martin Corp., 4.25%, 11/15/19 | 250,000 | 275,593 | ||||||||||||||||
Raytheon Co., 2.50%, 12/15/22 | 210,000 | 198,884 | ||||||||||||||||
United Technologies Corp., 6.05%, 6/1/36 | 250,000 | 316,756 | ||||||||||||||||
United Technologies Corp., 5.70%, 4/15/40 | 120,000 | 146,654 | ||||||||||||||||
United Technologies Corp., 4.50%, 6/1/42 | 30,000 | 31,299 | ||||||||||||||||
1,206,163 | ||||||||||||||||||
AUTOMOBILES — 0.2% | ||||||||||||||||||
American Honda Finance Corp., 1.50%, 9/11/17(5) | 70,000 | 70,277 | ||||||||||||||||
American Honda Finance Corp., 2.125%, 10/10/18 | 150,000 | 151,817 | ||||||||||||||||
Daimler Finance North America LLC, 1.30%, 7/31/15(5) | 200,000 | 201,946 | ||||||||||||||||
Daimler Finance North America LLC, 2.625%, 9/15/16(5) | 210,000 | 217,595 | ||||||||||||||||
Ford Motor Co., 4.75%, 1/15/43 | 70,000 | 69,295 | ||||||||||||||||
Ford Motor Credit Co. LLC, 5.00%, 5/15/18 | 250,000 | 277,768 | ||||||||||||||||
Ford Motor Credit Co. LLC, 8.125%, 1/15/20 | 150,000 | 190,958 | ||||||||||||||||
Ford Motor Credit Co. LLC, 5.875%, 8/2/21 | 440,000 | 510,639 | ||||||||||||||||
Jaguar Land Rover Automotive plc, 4.125%, 12/15/18(5) | 150,000 | 155,625 | ||||||||||||||||
1,845,920 | ||||||||||||||||||
BANKS — 1.3% | ||||||||||||||||||
Bank of America Corp., 4.50%, 4/1/15 | 260,000 | 269,168 | ||||||||||||||||
Bank of America Corp., 3.75%, 7/12/16 | 400,000 | 422,568 | ||||||||||||||||
Bank of America Corp., 6.50%, 8/1/16 | 480,000 | 535,802 | ||||||||||||||||
Bank of America Corp., 5.75%, 12/1/17 | 360,000 | 407,663 | ||||||||||||||||
Bank of America Corp., 5.625%, 7/1/20 | 110,000 | 125,856 | ||||||||||||||||
Bank of America Corp., 5.70%, 1/24/22 | 220,000 | 252,189 | ||||||||||||||||
Bank of America Corp., 4.10%, 7/24/23 | 70,000 | 71,627 | ||||||||||||||||
Bank of America Corp., MTN, 4.00%, 4/1/24 | 90,000 | 90,597 | ||||||||||||||||
Bank of America Corp., MTN, 5.00%, 1/21/44 | 60,000 | 62,228 | ||||||||||||||||
Bank of America N.A., 5.30%, 3/15/17 | 870,000 | 958,921 |
15
Shares/ Principal Amount | Value | |||||||||||||||||
Bank of Nova Scotia, 2.55%, 1/12/17 | $ | 150,000 | $ | 156,030 | ||||||||||||||
Barclays Bank plc, 5.14%, 10/14/20 | 200,000 | 215,668 | ||||||||||||||||
BB&T Corp., MTN, 3.20%, 3/15/16 | 170,000 | 177,262 | ||||||||||||||||
BB&T Corp., MTN, 2.05%, 6/19/18 | 100,000 | 100,506 | ||||||||||||||||
Capital One Financial Corp., 1.00%, 11/6/15 | 90,000 | 90,242 | ||||||||||||||||
Citigroup, Inc., 4.45%, 1/10/17 | 100,000 | 108,082 | ||||||||||||||||
Citigroup, Inc., 5.50%, 2/15/17 | 90,000 | 99,397 | ||||||||||||||||
Citigroup, Inc., 1.75%, 5/1/18 | 710,000 | 701,641 | ||||||||||||||||
Citigroup, Inc., 4.50%, 1/14/22 | 560,000 | 599,474 | ||||||||||||||||
Citigroup, Inc., 4.05%, 7/30/22 | 70,000 | 70,838 | ||||||||||||||||
Citigroup, Inc., 3.875%, 10/25/23 | 210,000 | 210,276 | ||||||||||||||||
Citigroup, Inc., 6.68%, 9/13/43 | 80,000 | 96,079 | ||||||||||||||||
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 3.875%, 2/8/22 | 430,000 | 450,443 | ||||||||||||||||
Fifth Third Bancorp, 4.30%, 1/16/24 | 110,000 | 113,240 | ||||||||||||||||
HBOS plc, MTN, 6.75%, 5/21/18(5) | 100,000 | 114,083 | ||||||||||||||||
JPMorgan Chase & Co., 6.00%, 1/15/18 | 520,000 | 596,524 | ||||||||||||||||
JPMorgan Chase & Co., 4.625%, 5/10/21 | 460,000 | 504,579 | ||||||||||||||||
JPMorgan Chase & Co., 3.25%, 9/23/22 | 220,000 | 217,684 | ||||||||||||||||
JPMorgan Chase & Co., 3.875%, 2/1/24 | 150,000 | 152,392 | ||||||||||||||||
JPMorgan Chase Bank N.A., 5.875%, 6/13/16 | 250,000 | 275,442 | ||||||||||||||||
KeyCorp, MTN, 2.30%, 12/13/18 | 220,000 | 221,140 | ||||||||||||||||
KFW, 2.00%, 6/1/16 | 260,000 | 267,914 | ||||||||||||||||
KFW, 2.00%, 10/4/22 | 300,000 | 283,991 | ||||||||||||||||
Royal Bank of Scotland Group plc, 6.125%, 12/15/22 | 230,000 | 245,537 | ||||||||||||||||
Royal Bank of Scotland plc (The), 4.375%, 3/16/16 | 250,000 | 266,119 | ||||||||||||||||
SunTrust Banks, Inc., 3.60%, 4/15/16 | 50,000 | 52,557 | ||||||||||||||||
U.S. Bancorp, 3.44%, 2/1/16 | 120,000 | 125,061 | ||||||||||||||||
U.S. Bancorp, MTN, 3.00%, 3/15/22 | 110,000 | 109,782 | ||||||||||||||||
U.S. Bancorp, MTN, 2.95%, 7/15/22 | 60,000 | 58,173 | ||||||||||||||||
Wells Fargo & Co., 3.68%, 6/15/16 | 140,000 | 148,414 | ||||||||||||||||
Wells Fargo & Co., 5.625%, 12/11/17 | 20,000 | 22,851 | ||||||||||||||||
Wells Fargo & Co., 4.125%, 8/15/23 | 200,000 | 204,276 | ||||||||||||||||
Wells Fargo & Co., MTN, 2.10%, 5/8/17 | 20,000 | 20,519 | ||||||||||||||||
Wells Fargo & Co., MTN, 4.60%, 4/1/21 | 450,000 | 499,092 | ||||||||||||||||
10,771,927 | ||||||||||||||||||
BEVERAGES — 0.2% | ||||||||||||||||||
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/19 | 510,000 | 633,531 | ||||||||||||||||
Anheuser-Busch InBev Worldwide, Inc., 2.50%, 7/15/22 | 460,000 | 436,999 | ||||||||||||||||
Coca-Cola Co. (The), 1.80%, 9/1/16 | 180,000 | 184,597 | ||||||||||||||||
Dr Pepper Snapple Group, Inc., 2.90%, 1/15/16 | 60,000 | 62,127 | ||||||||||||||||
Pernod-Ricard SA, 2.95%, 1/15/17(5) | 180,000 | 187,454 | ||||||||||||||||
SABMiller Holdings, Inc., 3.75%, 1/15/22(5) | 400,000 | 413,556 | ||||||||||||||||
1,918,264 | ||||||||||||||||||
BIOTECHNOLOGY — 0.1% | ||||||||||||||||||
Amgen, Inc., 2.125%, 5/15/17 | 180,000 | 184,565 | ||||||||||||||||
Amgen, Inc., 4.10%, 6/15/21 | 100,000 | 106,916 |
16
Shares/ Principal Amount | Value | |||||||||||||||||
Amgen, Inc., 5.375%, 5/15/43 | $ | 250,000 | $ | 273,248 | ||||||||||||||
Celgene Corp., 3.25%, 8/15/22 | 110,000 | 108,594 | ||||||||||||||||
Gilead Sciences, Inc., 4.40%, 12/1/21 | 220,000 | 240,446 | ||||||||||||||||
913,769 | ||||||||||||||||||
CAPITAL MARKETS — 0.1% | ||||||||||||||||||
Ameriprise Financial, Inc., 4.00%, 10/15/23 | 140,000 | 145,836 | ||||||||||||||||
Bear Stearns Cos. LLC (The), 6.40%, 10/2/17 | 370,000 | 428,295 | ||||||||||||||||
Jefferies Group, Inc., 5.125%, 4/13/18 | 110,000 | 120,489 | ||||||||||||||||
694,620 | ||||||||||||||||||
CHEMICALS — 0.2% | ||||||||||||||||||
Ashland, Inc., 4.75%, 8/15/22 | 210,000 | 208,425 | ||||||||||||||||
Dow Chemical Co. (The), 2.50%, 2/15/16 | 110,000 | 113,226 | ||||||||||||||||
Dow Chemical Co. (The), 4.25%, 11/15/20 | 100,000 | 107,213 | ||||||||||||||||
Eastman Chemical Co., 2.40%, 6/1/17 | 50,000 | 51,151 | ||||||||||||||||
Eastman Chemical Co., 3.60%, 8/15/22 | 198,000 | 199,814 | ||||||||||||||||
Ecolab, Inc., 4.35%, 12/8/21 | 250,000 | 272,434 | ||||||||||||||||
LyondellBasell Industries NV, 5.00%, 4/15/19 | 200,000 | 224,414 | ||||||||||||||||
Mosaic Co. (The), 4.25%, 11/15/23 | 140,000 | 145,129 | ||||||||||||||||
Mosaic Co. (The), 5.625%, 11/15/43 | 120,000 | 132,805 | ||||||||||||||||
1,454,611 | ||||||||||||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.1% | ||||||||||||||||||
Clean Harbors, Inc., 5.25%, 8/1/20 | 180,000 | 185,400 | ||||||||||||||||
Covanta Holding Corp., 5.875%, 3/1/24 | 150,000 | 153,768 | ||||||||||||||||
Pitney Bowes, Inc., 4.625%, 3/15/24 | 160,000 | 161,194 | ||||||||||||||||
Republic Services, Inc., 3.55%, 6/1/22 | 220,000 | 222,803 | ||||||||||||||||
723,165 | ||||||||||||||||||
COMMUNICATIONS EQUIPMENT — 0.1% | ||||||||||||||||||
Apple, Inc., 1.00%, 5/3/18 | 160,000 | 156,367 | ||||||||||||||||
Apple, Inc., 2.85%, 5/6/21(6) | 180,000 | 181,032 | ||||||||||||||||
Apple, Inc., 2.40%, 5/3/23 | 240,000 | 224,591 | ||||||||||||||||
CC Holdings GS V LLC / Crown Castle GS III Corp., 3.85%, 4/15/23 | 260,000 | 255,567 | ||||||||||||||||
Cisco Systems, Inc., 5.90%, 2/15/39 | 130,000 | 158,010 | ||||||||||||||||
975,567 | ||||||||||||||||||
CONSTRUCTION MATERIALS† | ||||||||||||||||||
Owens Corning, 4.20%, 12/15/22 | 160,000 | 159,786 | ||||||||||||||||
CONSUMER FINANCE — 0.4% | ||||||||||||||||||
American Express Centurion Bank, MTN, 6.00%, 9/13/17 | 250,000 | 287,044 | ||||||||||||||||
American Express Co., 1.55%, 5/22/18 | 220,000 | 218,382 | ||||||||||||||||
American Express Credit Corp., 1.30%, 7/29/16 | 180,000 | 181,750 | ||||||||||||||||
Capital One Bank USA N.A., 3.375%, 2/15/23 | 250,000 | 247,308 | ||||||||||||||||
CIT Group, Inc., 4.25%, 8/15/17 | 470,000 | 493,500 | ||||||||||||||||
CIT Group, Inc., 5.00%, 8/15/22 | 90,000 | 92,363 | ||||||||||||||||
Discover Bank, 2.00%, 2/21/18 | 250,000 | 250,371 | ||||||||||||||||
Equifax, Inc., 3.30%, 12/15/22 | 140,000 | 135,918 | ||||||||||||||||
GLP Capital LP / GLP Financing II, Inc., 4.875%, 11/1/20(5) | 420,000 | 434,700 |
17
Shares/ Principal Amount | Value | |||||||||||||||||
John Deere Capital Corp., MTN, 3.15%, 10/15/21 | $ | 100,000 | $ | 101,607 | ||||||||||||||
PNC Bank N.A., 6.00%, 12/7/17 | 290,000 | 332,484 | ||||||||||||||||
2,775,427 | ||||||||||||||||||
CONTAINERS AND PACKAGING — 0.1% | ||||||||||||||||||
Ball Corp., 6.75%, 9/15/20 | 120,000 | 129,300 | ||||||||||||||||
Ball Corp., 4.00%, 11/15/23 | 180,000 | 167,850 | ||||||||||||||||
Rock-Tenn Co., 3.50%, 3/1/20 | 140,000 | 143,643 | ||||||||||||||||
Rock-Tenn Co., 4.00%, 3/1/23 | 240,000 | 244,394 | ||||||||||||||||
685,187 | ||||||||||||||||||
DIVERSIFIED CONSUMER SERVICES† | ||||||||||||||||||
Catholic Health Initiatives, 1.60%, 11/1/17 | 45,000 | 44,175 | ||||||||||||||||
Catholic Health Initiatives, 2.95%, 11/1/22 | 110,000 | 104,436 | ||||||||||||||||
Johns Hopkins University, 4.08%, 7/1/53 | 45,000 | 42,872 | ||||||||||||||||
191,483 | ||||||||||||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.9% | ||||||||||||||||||
Ally Financial, Inc., 2.75%, 1/30/17 | 240,000 | 243,600 | ||||||||||||||||
Deutsche Bank AG, VRN, 4.30%, 5/24/23 | 200,000 | 191,988 | ||||||||||||||||
General Electric Capital Corp., 5.30%, 2/11/21 | 40,000 | 45,311 | ||||||||||||||||
General Electric Capital Corp., MTN, 2.30%, 4/27/17 | 420,000 | 433,492 | ||||||||||||||||
General Electric Capital Corp., MTN, 5.625%, 9/15/17 | 490,000 | 556,372 | ||||||||||||||||
General Electric Capital Corp., MTN, 6.00%, 8/7/19 | 870,000 | 1,027,565 | ||||||||||||||||
General Electric Capital Corp., MTN, 4.65%, 10/17/21 | 120,000 | 132,976 | ||||||||||||||||
Goldman Sachs Group, Inc. (The), 2.375%, 1/22/18 | 330,000 | 334,061 | ||||||||||||||||
Goldman Sachs Group, Inc. (The), 2.90%, 7/19/18 | 530,000 | 542,905 | ||||||||||||||||
Goldman Sachs Group, Inc. (The), 5.75%, 1/24/22 | 460,000 | 525,506 | ||||||||||||||||
Goldman Sachs Group, Inc. (The), 4.00%, 3/3/24 | 300,000 | 301,487 | ||||||||||||||||
Goldman Sachs Group, Inc. (The), 6.75%, 10/1/37 | 130,000 | 149,831 | ||||||||||||||||
Goldman Sachs Group, Inc. (The), MTN, 5.375%, 3/15/20 | 110,000 | 123,571 | ||||||||||||||||
HSBC Holdings plc, 5.10%, 4/5/21 | 230,000 | 259,072 | ||||||||||||||||
HSBC Holdings plc, 4.00%, 3/30/22 | 90,000 | 94,745 | ||||||||||||||||
Icahn Enterprises LP / Icahn Enterprises Finance Corp., 3.50%, 3/15/17(5) | 150,000 | 151,500 | ||||||||||||||||
Morgan Stanley, 5.75%, 1/25/21 | 100,000 | 114,864 | ||||||||||||||||
Morgan Stanley, 5.00%, 11/24/25 | 540,000 | 561,231 | ||||||||||||||||
Morgan Stanley, MTN, 6.625%, 4/1/18 | 690,000 | 805,654 | ||||||||||||||||
Morgan Stanley, MTN, 5.625%, 9/23/19 | 280,000 | 319,581 | ||||||||||||||||
Societe Generale SA, 5.00%, 1/17/24(5) | 200,000 | 202,314 | ||||||||||||||||
UBS AG (Stamford Branch), 5.875%, 12/20/17 | 321,000 | 367,445 | ||||||||||||||||
7,485,071 | ||||||||||||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.6% | ||||||||||||||||||
AT&T, Inc., 2.625%, 12/1/22 | 290,000 | 274,272 | ||||||||||||||||
AT&T, Inc., 6.55%, 2/15/39 | 287,000 | 345,843 | ||||||||||||||||
AT&T, Inc., 4.30%, 12/15/42 | 130,000 | 117,603 | ||||||||||||||||
British Telecommunications plc, 5.95%, 1/15/18 | 270,000 | 309,095 | ||||||||||||||||
CenturyLink, Inc., Series Q, 6.15%, 9/15/19 | 140,000 | 152,250 | ||||||||||||||||
Deutsche Telekom International Finance BV, 2.25%, 3/6/17(5) | 250,000 | 256,742 | ||||||||||||||||
Deutsche Telekom International Finance BV, 6.75%, 8/20/18 | 210,000 | 249,497 |
18
Shares/ Principal Amount | Value | |||||||||||||||||
Frontier Communications Corp., 8.25%, 4/15/17 | $ | 160,000 | $ | 187,000 | ||||||||||||||
Orange SA, 4.125%, 9/14/21 | 210,000 | 221,256 | ||||||||||||||||
Telecom Italia Capital SA, 7.00%, 6/4/18 | 240,000 | 275,700 | ||||||||||||||||
Telecom Italia Capital SA, 6.00%, 9/30/34 | 120,000 | 116,400 | ||||||||||||||||
Telefonica Emisiones SAU, 5.88%, 7/15/19 | 160,000 | 183,941 | ||||||||||||||||
Telefonica Emisiones SAU, 5.46%, 2/16/21 | 100,000 | 112,884 | ||||||||||||||||
Verizon Communications, Inc., 3.65%, 9/14/18 | 480,000 | 512,913 | ||||||||||||||||
Verizon Communications, Inc., 4.50%, 9/15/20 | 130,000 | 141,850 | ||||||||||||||||
Verizon Communications, Inc., 5.15%, 9/15/23 | 350,000 | 386,384 | ||||||||||||||||
Verizon Communications, Inc., 6.40%, 9/15/33 | 290,000 | 350,342 | ||||||||||||||||
Verizon Communications, Inc., 5.05%, 3/15/34 | 280,000 | 294,230 | ||||||||||||||||
Verizon Communications, Inc., 7.35%, 4/1/39 | 140,000 | 184,262 | ||||||||||||||||
Verizon Communications, Inc., 4.75%, 11/1/41 | 150,000 | 148,303 | ||||||||||||||||
Verizon Communications, Inc., 6.55%, 9/15/43 | 250,000 | 309,091 | ||||||||||||||||
Windstream Corp., 7.875%, 11/1/17 | 60,000 | 69,225 | ||||||||||||||||
5,199,083 | ||||||||||||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS† | ||||||||||||||||||
Jabil Circuit, Inc., 7.75%, 7/15/16 | 200,000 | 228,000 | ||||||||||||||||
Jabil Circuit, Inc., 5.625%, 12/15/20 | 50,000 | 53,125 | ||||||||||||||||
281,125 | ||||||||||||||||||
ENERGY EQUIPMENT AND SERVICES — 0.1% | ||||||||||||||||||
Ensco plc, 3.25%, 3/15/16 | 120,000 | 125,421 | ||||||||||||||||
Ensco plc, 4.70%, 3/15/21 | 270,000 | 292,027 | ||||||||||||||||
Schlumberger Investment SA, 3.65%, 12/1/23 | 170,000 | 174,030 | ||||||||||||||||
Transocean, Inc., 5.05%, 12/15/16 | 40,000 | 43,548 | ||||||||||||||||
Transocean, Inc., 2.50%, 10/15/17 | 140,000 | 142,512 | ||||||||||||||||
Transocean, Inc., 6.50%, 11/15/20 | 100,000 | 113,140 | ||||||||||||||||
Transocean, Inc., 6.375%, 12/15/21 | 50,000 | 56,574 | ||||||||||||||||
Weatherford International Ltd., 4.50%, 4/15/22 | 130,000 | 137,284 | ||||||||||||||||
1,084,536 | ||||||||||||||||||
FOOD AND STAPLES RETAILING — 0.2% | ||||||||||||||||||
CVS Caremark Corp., 2.75%, 12/1/22 | 170,000 | 162,720 | ||||||||||||||||
Delhaize Group SA, 4.125%, 4/10/19 | 125,000 | 129,892 | ||||||||||||||||
Delhaize Group SA, 5.70%, 10/1/40 | 90,000 | 93,322 | ||||||||||||||||
Kroger Co. (The), 6.40%, 8/15/17 | 200,000 | 230,333 | ||||||||||||||||
Kroger Co. (The), 3.30%, 1/15/21 | 190,000 | 192,445 | ||||||||||||||||
Wal-Mart Stores, Inc., 2.55%, 4/11/23 | 50,000 | 47,686 | ||||||||||||||||
Wal-Mart Stores, Inc., 5.875%, 4/5/27 | 468,000 | 573,481 | ||||||||||||||||
Wal-Mart Stores, Inc., 5.625%, 4/15/41 | 110,000 | 131,639 | ||||||||||||||||
Walgreen Co., 1.80%, 9/15/17 | 90,000 | 91,034 | ||||||||||||||||
Walgreen Co., 3.10%, 9/15/22 | 240,000 | 233,458 | ||||||||||||||||
1,886,010 | ||||||||||||||||||
FOOD PRODUCTS — 0.1% | ||||||||||||||||||
Kellogg Co., 4.45%, 5/30/16 | 200,000 | 214,270 | ||||||||||||||||
Kraft Foods Group, Inc., 6.125%, 8/23/18 | 81,000 | 94,848 | ||||||||||||||||
Kraft Foods Group, Inc., 5.00%, 6/4/42 | 220,000 | 234,340 |
19
Shares/ Principal Amount | Value | |||||||||||||||||
Mondelez International, Inc., 4.00%, 2/1/24 | $ | 140,000 | $ | 143,578 | ||||||||||||||
Mondelez International, Inc., 6.50%, 2/9/40 | 97,000 | 123,866 | ||||||||||||||||
Tyson Foods, Inc., 4.50%, 6/15/22 | 170,000 | 180,178 | ||||||||||||||||
991,080 | ||||||||||||||||||
GAS UTILITIES — 0.6% | ||||||||||||||||||
Access Midstream Partners LP / ACMP Finance Corp., 5.875%, 4/15/21 | 330,000 | 353,100 | ||||||||||||||||
El Paso Corp., 7.25%, 6/1/18 | 150,000 | 171,714 | ||||||||||||||||
El Paso Pipeline Partners Operating Co. LLC, 6.50%, 4/1/20 | 210,000 | 245,194 | ||||||||||||||||
Enbridge Energy Partners LP, 6.50%, 4/15/18 | 130,000 | 150,959 | ||||||||||||||||
Enbridge Energy Partners LP, 5.20%, 3/15/20 | 100,000 | 109,439 | ||||||||||||||||
Energy Transfer Equity LP, 7.50%, 10/15/20 | 150,000 | 173,625 | ||||||||||||||||
Energy Transfer Partners LP, 4.15%, 10/1/20 | 200,000 | 209,184 | ||||||||||||||||
Energy Transfer Partners LP, 3.60%, 2/1/23 | 160,000 | 155,794 | ||||||||||||||||
Energy Transfer Partners LP, 6.50%, 2/1/42 | 180,000 | 209,354 | ||||||||||||||||
Enterprise Products Operating LLC, 3.70%, 6/1/15 | 150,000 | 154,930 | ||||||||||||||||
Enterprise Products Operating LLC, 6.30%, 9/15/17 | 300,000 | 347,465 | ||||||||||||||||
Enterprise Products Operating LLC, 4.85%, 3/15/44 | 150,000 | 153,684 | ||||||||||||||||
Enterprise Products Operating LLC, 5.10%, 2/15/45 | 120,000 | 127,004 | ||||||||||||||||
Enterprise Products Operating LLC, VRN, 7.03%, 1/15/18 | 140,000 | 158,681 | ||||||||||||||||
Kinder Morgan Energy Partners LP, 3.95%, 9/1/22 | 170,000 | 171,190 | ||||||||||||||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39 | 170,000 | 197,853 | ||||||||||||||||
Magellan Midstream Partners LP, 6.55%, 7/15/19 | 150,000 | 178,700 | ||||||||||||||||
Magellan Midstream Partners LP, 5.15%, 10/15/43 | 190,000 | 204,559 | ||||||||||||||||
MarkWest Energy Partners LP/MarkWest Energy Finance Corp., 6.75%, 11/1/20 | 60,000 | 65,400 | ||||||||||||||||
MarkWest Energy Partners LP/MarkWest Energy Finance Corp., 6.50%, 8/15/21 | 90,000 | 97,650 | ||||||||||||||||
MarkWest Energy Partners LP/MarkWest Energy Finance Corp., 4.50%, 7/15/23 | 150,000 | 147,000 | ||||||||||||||||
Plains All American Pipeline LP/PAA Finance Corp., 3.65%, 6/1/22 | 310,000 | 317,254 | ||||||||||||||||
Sunoco Logistics Partners Operations LP, 3.45%, 1/15/23 | 230,000 | 222,286 | ||||||||||||||||
Targa Resources Partners LP / Targa Resources Partners Finance Corp., 4.25%, 11/15/23(5) | 210,000 | 197,400 | ||||||||||||||||
TransCanada PipeLines Ltd., 2.50%, 8/1/22 | 200,000 | 189,673 | ||||||||||||||||
Williams Cos., Inc. (The), 3.70%, 1/15/23 | 50,000 | 46,232 | ||||||||||||||||
Williams Partners LP, 4.125%, 11/15/20 | 200,000 | 209,870 | ||||||||||||||||
Williams Partners LP, 5.40%, 3/4/44 | 240,000 | 253,445 | ||||||||||||||||
5,218,639 | ||||||||||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES† | ||||||||||||||||||
Baxter International, Inc., 3.20%, 6/15/23 | 80,000 | 78,396 | ||||||||||||||||
Medtronic, Inc., 2.75%, 4/1/23 | 200,000 | 192,045 | ||||||||||||||||
270,441 | ||||||||||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 0.3% | ||||||||||||||||||
Aetna, Inc., 2.75%, 11/15/22 | 130,000 | 125,021 | ||||||||||||||||
CHS/Community Health Systems, Inc., 5.125%, 8/15/18 | 150,000 | 158,063 | ||||||||||||||||
Express Scripts Holding Co., 2.65%, 2/15/17 | 510,000 | 529,449 |
20
Shares/ Principal Amount | Value | |||||||||||||||||
Express Scripts Holding Co., 7.25%, 6/15/19 | $ | 170,000 | $ | 206,609 | ||||||||||||||
HCA, Inc., 3.75%, 3/15/19 | 310,000 | 313,100 | ||||||||||||||||
HCA, Inc., 7.25%, 9/15/20 | 150,000 | 162,188 | ||||||||||||||||
NYU Hospitals Center, 4.43%, 7/1/42 | 90,000 | 83,730 | ||||||||||||||||
UnitedHealth Group, Inc., 2.875%, 3/15/23 | 130,000 | 125,217 | ||||||||||||||||
UnitedHealth Group, Inc., 4.25%, 3/15/43 | 120,000 | 116,597 | ||||||||||||||||
Universal Health Services, Inc., 7.125%, 6/30/16 | 160,000 | 180,000 | ||||||||||||||||
WellPoint, Inc., 3.125%, 5/15/22 | 100,000 | 98,025 | ||||||||||||||||
WellPoint, Inc., 3.30%, 1/15/23 | 70,000 | 68,554 | ||||||||||||||||
2,166,553 | ||||||||||||||||||
HOTELS, RESTAURANTS AND LEISURE† | ||||||||||||||||||
Royal Caribbean Cruises Ltd., 5.25%, 11/15/22 | 160,000 | 164,000 | ||||||||||||||||
Wyndham Worldwide Corp., 2.95%, 3/1/17 | 110,000 | 113,998 | ||||||||||||||||
277,998 | ||||||||||||||||||
HOUSEHOLD DURABLES — 0.1% | ||||||||||||||||||
D.R. Horton, Inc., 3.625%, 2/15/18 | 270,000 | 275,062 | ||||||||||||||||
D.R. Horton, Inc., 5.75%, 8/15/23 | 110,000 | 117,150 | ||||||||||||||||
Lennar Corp., 4.75%, 12/15/17 | 210,000 | 223,125 | ||||||||||||||||
Lennar Corp., 4.50%, 6/15/19 | 160,000 | 162,200 | ||||||||||||||||
MDC Holdings, Inc., 5.50%, 1/15/24 | 140,000 | 144,465 | ||||||||||||||||
Toll Brothers Finance Corp., 6.75%, 11/1/19 | 100,000 | 114,500 | ||||||||||||||||
1,036,502 | ||||||||||||||||||
INDUSTRIAL CONGLOMERATES — 0.1% | ||||||||||||||||||
Bombardier, Inc., 5.75%, 3/15/22(5) | 80,000 | 81,800 | ||||||||||||||||
General Electric Co., 5.25%, 12/6/17 | 230,000 | 260,358 | ||||||||||||||||
General Electric Co., 2.70%, 10/9/22 | 210,000 | 205,518 | ||||||||||||||||
General Electric Co., 4.125%, 10/9/42 | 130,000 | 127,442 | ||||||||||||||||
675,118 | ||||||||||||||||||
INSURANCE — 0.5% | ||||||||||||||||||
Allstate Corp. (The), 4.50%, 6/15/43 | 80,000 | 81,905 | ||||||||||||||||
Allstate Corp. (The), VRN, 5.75%, 8/15/23 | 90,000 | 96,469 | ||||||||||||||||
American International Group, Inc., 6.40%, 12/15/20 | 220,000 | 265,881 | ||||||||||||||||
American International Group, Inc., 4.875%, 6/1/22 | 330,000 | 367,597 | ||||||||||||||||
American International Group, Inc., MTN, 5.85%, 1/16/18 | 210,000 | 239,887 | ||||||||||||||||
American International Group, Inc., VRN, 8.18%, 5/15/38 | 80,000 | 107,400 | ||||||||||||||||
Berkshire Hathaway Finance Corp., 4.25%, 1/15/21 | 140,000 | 153,670 | ||||||||||||||||
Berkshire Hathaway Finance Corp., 3.00%, 5/15/22 | 90,000 | 89,947 | ||||||||||||||||
Berkshire Hathaway, Inc., 4.50%, 2/11/43 | 220,000 | 221,952 | ||||||||||||||||
Genworth Holdings, Inc., 7.20%, 2/15/21 | 70,000 | 85,228 | ||||||||||||||||
Hartford Financial Services Group, Inc., 5.125%, 4/15/22 | 220,000 | 247,393 | ||||||||||||||||
Hartford Financial Services Group, Inc., 5.95%, 10/15/36 | 50,000 | 59,231 | ||||||||||||||||
Liberty Mutual Group, Inc., 4.95%, 5/1/22(5) | 60,000 | 64,809 | ||||||||||||||||
Liberty Mutual Group, Inc., 6.50%, 5/1/42(5) | 70,000 | 85,307 | ||||||||||||||||
Lincoln National Corp., 6.25%, 2/15/20 | 160,000 | 188,233 | ||||||||||||||||
Markel Corp., 4.90%, 7/1/22 | 190,000 | 206,081 | ||||||||||||||||
Markel Corp., 3.625%, 3/30/23 | 100,000 | 98,998 |
21
Shares/ Principal Amount | Value | |||||||||||||||||
MetLife, Inc., 1.76%, 12/15/17 | $ | 90,000 | $ | 90,845 | ||||||||||||||
MetLife, Inc., 4.125%, 8/13/42 | 110,000 | 105,390 | ||||||||||||||||
MetLife, Inc., 4.875%, 11/13/43 | 50,000 | 53,176 | ||||||||||||||||
Metropolitan Life Global Funding I, 3.00%, 1/10/23(5) | 200,000 | 194,278 | ||||||||||||||||
Principal Financial Group, Inc., 3.30%, 9/15/22 | 70,000 | 69,150 | ||||||||||||||||
Prudential Financial, Inc., MTN, 7.375%, 6/15/19 | 120,000 | 148,493 | ||||||||||||||||
Prudential Financial, Inc., MTN, 5.375%, 6/21/20 | 70,000 | 79,999 | ||||||||||||||||
Prudential Financial, Inc., MTN, 5.625%, 5/12/41 | 220,000 | 254,873 | ||||||||||||||||
Travelers Cos., Inc. (The), 4.60%, 8/1/43 | 100,000 | 104,368 | ||||||||||||||||
Voya Financial, Inc., 5.50%, 7/15/22 | 180,000 | 204,235 | ||||||||||||||||
Voya Financial, Inc., 5.70%, 7/15/43 | 160,000 | 185,692 | ||||||||||||||||
WR Berkley Corp., 4.625%, 3/15/22 | 130,000 | 137,422 | ||||||||||||||||
4,287,909 | ||||||||||||||||||
INTERNET SOFTWARE AND SERVICES† | ||||||||||||||||||
Netflix, Inc., 5.375%, 2/1/21 | 90,000 | 94,050 | ||||||||||||||||
Netflix, Inc., 5.75%, 3/1/24(5) | 40,000 | 41,600 | ||||||||||||||||
135,650 | ||||||||||||||||||
IT SERVICES — 0.1% | ||||||||||||||||||
Fidelity National Information Services, Inc., 5.00%, 3/15/22 | 100,000 | 104,939 | ||||||||||||||||
Fidelity National Information Services, Inc., 3.50%, 4/15/23 | 110,000 | 106,475 | ||||||||||||||||
International Business Machines Corp., 1.95%, 7/22/16 | 410,000 | 421,518 | ||||||||||||||||
Xerox Corp., 2.95%, 3/15/17 | 80,000 | 83,537 | ||||||||||||||||
716,469 | ||||||||||||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.1% | ||||||||||||||||||
Thermo Fisher Scientific, Inc., 3.60%, 8/15/21 | 150,000 | 155,163 | ||||||||||||||||
Thermo Fisher Scientific, Inc., 4.15%, 2/1/24 | 180,000 | 188,083 | ||||||||||||||||
343,246 | ||||||||||||||||||
MACHINERY — 0.1% | ||||||||||||||||||
Caterpillar Financial Services Corp., MTN, 2.85%, 6/1/22 | 220,000 | 216,279 | ||||||||||||||||
Deere & Co., 5.375%, 10/16/29 | 200,000 | 234,540 | ||||||||||||||||
Oshkosh Corp., 5.375%, 3/1/22(5) | 290,000 | 297,975 | ||||||||||||||||
748,794 | ||||||||||||||||||
MEDIA — 0.6% | ||||||||||||||||||
21st Century Fox America, Inc., 3.00%, 9/15/22 | 140,000 | 136,368 | ||||||||||||||||
21st Century Fox America, Inc., 6.90%, 8/15/39 | 150,000 | 191,787 | ||||||||||||||||
CBS Corp., 4.85%, 7/1/42 | 60,000 | 59,408 | ||||||||||||||||
Comcast Corp., 5.90%, 3/15/16 | 339,000 | 371,340 | ||||||||||||||||
Comcast Corp., 6.40%, 5/15/38 | 310,000 | 388,278 | ||||||||||||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 5.00%, 3/1/21 | 250,000 | 271,179 | ||||||||||||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 4.45%, 4/1/24 | 200,000 | 203,225 | ||||||||||||||||
Discovery Communications LLC, 5.625%, 8/15/19 | 90,000 | 103,299 | ||||||||||||||||
Discovery Communications LLC, 3.25%, 4/1/23 | 100,000 | 97,439 | ||||||||||||||||
DISH DBS Corp., 7.125%, 2/1/16 | 50,000 | 54,750 | ||||||||||||||||
Gannett Co., Inc., 5.125%, 7/15/20(5) | 210,000 | 218,400 |
22
Shares/ Principal Amount | Value | |||||||||||||||||
Interpublic Group of Cos., Inc. (The), 4.00%, 3/15/22 | $ | 160,000 | $ | 162,607 | ||||||||||||||
Lamar Media Corp., 5.375%, 1/15/24(5) | 180,000 | 187,425 | ||||||||||||||||
NBCUniversal Media LLC, 5.15%, 4/30/20 | 90,000 | 102,866 | ||||||||||||||||
NBCUniversal Media LLC, 4.375%, 4/1/21 | 380,000 | 415,383 | ||||||||||||||||
NBCUniversal Media LLC, 2.875%, 1/15/23 | 120,000 | 117,074 | ||||||||||||||||
Omnicom Group, Inc., 3.625%, 5/1/22 | 50,000 | 50,265 | ||||||||||||||||
Qwest Corp., 7.50%, 10/1/14 | 200,000 | 205,168 | ||||||||||||||||
SBA Telecommunications, Inc., 8.25%, 8/15/19 | 78,000 | 82,709 | ||||||||||||||||
Time Warner Cable, Inc., 6.75%, 7/1/18 | 130,000 | 154,165 | ||||||||||||||||
Time Warner Cable, Inc., 5.50%, 9/1/41 | 70,000 | 77,470 | ||||||||||||||||
Time Warner Cable, Inc., 4.50%, 9/15/42 | 160,000 | 155,136 | ||||||||||||||||
Time Warner, Inc., 4.70%, 1/15/21 | 140,000 | 153,725 | ||||||||||||||||
Time Warner, Inc., 7.70%, 5/1/32 | 200,000 | 275,770 | ||||||||||||||||
Time Warner, Inc., 5.375%, 10/15/41 | 100,000 | 108,964 | ||||||||||||||||
Time Warner, Inc., 5.35%, 12/15/43 | 120,000 | 131,687 | ||||||||||||||||
Viacom, Inc., 4.50%, 3/1/21 | 110,000 | 119,061 | ||||||||||||||||
Viacom, Inc., 3.125%, 6/15/22 | 190,000 | 185,420 | ||||||||||||||||
Virgin Media Secured Finance plc, 6.50%, 1/15/18 | 200,000 | 207,130 | ||||||||||||||||
Walt Disney Co. (The), MTN, 2.35%, 12/1/22 | 130,000 | 122,537 | ||||||||||||||||
5,110,035 | ||||||||||||||||||
METALS AND MINING — 0.2% | ||||||||||||||||||
ArcelorMittal, 5.75%, 8/5/20 | 120,000 | 127,800 | ||||||||||||||||
Barrick Gold Corp., 4.10%, 5/1/23 | 140,000 | 136,521 | ||||||||||||||||
Barrick North America Finance LLC, 4.40%, 5/30/21 | 230,000 | 233,794 | ||||||||||||||||
Barrick North America Finance LLC, 5.75%, 5/1/43 | 70,000 | 71,045 | ||||||||||||||||
Newmont Mining Corp., 6.25%, 10/1/39 | 120,000 | 121,297 | ||||||||||||||||
Southern Copper Corp., 5.25%, 11/8/42 | 60,000 | 53,968 | ||||||||||||||||
Steel Dynamics, Inc., 6.125%, 8/15/19 | 157,000 | 172,307 | ||||||||||||||||
Steel Dynamics, Inc., 7.625%, 3/15/20 | 140,000 | 152,250 | ||||||||||||||||
Teck Resources Ltd., 3.15%, 1/15/17 | 110,000 | 114,689 | ||||||||||||||||
Vale Overseas Ltd., 5.625%, 9/15/19 | 310,000 | 348,077 | ||||||||||||||||
Vale Overseas Ltd., 4.625%, 9/15/20 | 260,000 | 275,505 | ||||||||||||||||
Xstrata Canada Financial Corp., 4.95%, 11/15/21(5) | 110,000 | 115,579 | ||||||||||||||||
1,922,832 | ||||||||||||||||||
MULTI-UTILITIES — 0.7% | ||||||||||||||||||
Calpine Corp., 7.875%, 7/31/20(5) | 270,000 | 297,338 | ||||||||||||||||
CenterPoint Energy Houston Electric LLC, 3.55%, 8/1/42 | 70,000 | 62,677 | ||||||||||||||||
CMS Energy Corp., 4.25%, 9/30/15 | 160,000 | 167,593 | ||||||||||||||||
CMS Energy Corp., 8.75%, 6/15/19 | 180,000 | 230,973 | ||||||||||||||||
Consolidated Edison Co. of New York, Inc., 3.95%, 3/1/43 | 150,000 | 141,019 | ||||||||||||||||
Constellation Energy Group, Inc., 5.15%, 12/1/20 | 80,000 | 88,634 | ||||||||||||||||
Consumers Energy Co., 2.85%, 5/15/22 | 50,000 | 49,439 | ||||||||||||||||
Consumers Energy Co., 3.375%, 8/15/23 | 50,000 | 50,583 | ||||||||||||||||
Dominion Resources, Inc., 6.40%, 6/15/18 | 190,000 | 223,005 | ||||||||||||||||
Dominion Resources, Inc., 2.75%, 9/15/22 | 210,000 | 202,389 | ||||||||||||||||
Dominion Resources, Inc., 4.90%, 8/1/41 | 130,000 | 136,331 |
23
Shares/ Principal Amount | Value | |||||||||||||||||
Dominion Resources, Inc., VRN, 7.50%, 6/30/16 | $ | 120,000 | $ | 130,500 | ||||||||||||||
DPL, Inc., 6.50%, 10/15/16 | 250,000 | 271,250 | ||||||||||||||||
Duke Energy Corp., 1.625%, 8/15/17 | 150,000 | 151,469 | ||||||||||||||||
Duke Energy Corp., 3.55%, 9/15/21 | 90,000 | 93,377 | ||||||||||||||||
Duke Energy Florida, Inc., 6.35%, 9/15/37 | 110,000 | 143,515 | ||||||||||||||||
Edison International, 3.75%, 9/15/17 | 130,000 | 138,763 | ||||||||||||||||
Exelon Generation Co. LLC, 5.20%, 10/1/19 | 150,000 | 168,267 | ||||||||||||||||
Exelon Generation Co. LLC, 4.25%, 6/15/22 | 120,000 | 123,076 | ||||||||||||||||
Exelon Generation Co. LLC, 5.60%, 6/15/42 | 70,000 | 75,581 | ||||||||||||||||
FirstEnergy Corp., 2.75%, 3/15/18 | 135,000 | 135,990 | ||||||||||||||||
FirstEnergy Corp., 4.25%, 3/15/23 | 260,000 | 255,875 | ||||||||||||||||
Florida Power Corp., 3.85%, 11/15/42 | 220,000 | 206,754 | ||||||||||||||||
Georgia Power Co., 4.30%, 3/15/42 | 70,000 | 69,606 | ||||||||||||||||
Ipalco Enterprises, Inc., 5.00%, 5/1/18 | 230,000 | 246,100 | ||||||||||||||||
NextEra Energy Capital Holdings, Inc., 2.70%, 9/15/19 | 100,000 | 100,751 | ||||||||||||||||
NextEra Energy Capital Holdings, Inc., VRN, 7.30%, 9/1/17 | 210,000 | 232,222 | ||||||||||||||||
Nisource Finance Corp., 4.45%, 12/1/21 | 70,000 | 74,598 | ||||||||||||||||
Nisource Finance Corp., 5.65%, 2/1/45 | 100,000 | 110,662 | ||||||||||||||||
PacifiCorp, 6.00%, 1/15/39 | 110,000 | 138,375 | ||||||||||||||||
Potomac Electric Power Co., 3.60%, 3/15/24 | 120,000 | 122,720 | ||||||||||||||||
Progress Energy, Inc., 3.15%, 4/1/22 | 90,000 | 89,635 | ||||||||||||||||
Public Service Company of Colorado, 4.75%, 8/15/41 | 50,000 | 54,569 | ||||||||||||||||
Sempra Energy, 6.50%, 6/1/16 | 200,000 | 221,893 | ||||||||||||||||
Sempra Energy, 2.875%, 10/1/22 | 200,000 | 193,398 | ||||||||||||||||
Southern Power Co., 5.15%, 9/15/41 | 40,000 | 43,306 | ||||||||||||||||
Virginia Electric and Power Co., 3.45%, 2/15/24 | 160,000 | 161,876 | ||||||||||||||||
Xcel Energy, Inc., 4.80%, 9/15/41 | 50,000 | 52,876 | ||||||||||||||||
5,456,985 | ||||||||||||||||||
MULTILINE RETAIL — 0.1% | ||||||||||||||||||
Macy's Retail Holdings, Inc., 3.875%, 1/15/22 | 180,000 | 187,166 | ||||||||||||||||
Macy's Retail Holdings, Inc., 4.375%, 9/1/23 | 110,000 | 115,433 | ||||||||||||||||
Target Corp., 4.00%, 7/1/42 | 220,000 | 207,740 | ||||||||||||||||
510,339 | ||||||||||||||||||
OIL, GAS AND CONSUMABLE FUELS — 0.9% | ||||||||||||||||||
AmeriGas Partners LP/AmeriGas Finance Corp., 6.25%, 8/20/19 | 90,000 | 96,750 | ||||||||||||||||
Anadarko Petroleum Corp., 5.95%, 9/15/16 | 80,000 | 89,218 | ||||||||||||||||
Anadarko Petroleum Corp., 6.45%, 9/15/36 | 110,000 | 136,198 | ||||||||||||||||
Apache Corp., 4.75%, 4/15/43 | 90,000 | 93,224 | ||||||||||||||||
BP Capital Markets plc, 4.50%, 10/1/20 | 100,000 | 110,404 | ||||||||||||||||
BP Capital Markets plc, 2.75%, 5/10/23 | 100,000 | 95,003 | ||||||||||||||||
Chesapeake Energy Corp., 4.875%, 4/15/22 | 220,000 | 220,550 | ||||||||||||||||
Chevron Corp., 2.43%, 6/24/20 | 80,000 | 80,485 | ||||||||||||||||
CNOOC Nexen Finance 2014 ULC, 4.25%, 4/30/24 | 290,000 | 290,510 | ||||||||||||||||
Concho Resources, Inc., 7.00%, 1/15/21 | 330,000 | 367,950 | ||||||||||||||||
ConocoPhillips Holding Co., 6.95%, 4/15/29 | 40,000 | 53,782 | ||||||||||||||||
Continental Resources, Inc., 5.00%, 9/15/22 | 240,000 | 254,100 |
24
Shares/ Principal Amount | Value | |||||||||||||||||
Denbury Resources, Inc., 4.625%, 7/15/23 | $ | 210,000 | $ | 200,813 | ||||||||||||||
Devon Energy Corp., 1.875%, 5/15/17 | 60,000 | 61,014 | ||||||||||||||||
Devon Energy Corp., 5.60%, 7/15/41 | 140,000 | 158,239 | ||||||||||||||||
EOG Resources, Inc., 5.625%, 6/1/19 | 150,000 | 173,755 | ||||||||||||||||
EOG Resources, Inc., 4.10%, 2/1/21 | 130,000 | 140,656 | ||||||||||||||||
Hess Corp., 6.00%, 1/15/40 | 90,000 | 104,450 | ||||||||||||||||
Marathon Petroleum Corp., 3.50%, 3/1/16 | 210,000 | 219,691 | ||||||||||||||||
Newfield Exploration Co., 6.875%, 2/1/20 | 200,000 | 214,000 | ||||||||||||||||
Noble Energy, Inc., 4.15%, 12/15/21 | 290,000 | 309,924 | ||||||||||||||||
Peabody Energy Corp., 7.375%, 11/1/16 | 40,000 | 45,100 | ||||||||||||||||
Pemex Project Funding Master Trust, 6.625%, 6/15/35 | 50,000 | 56,250 | ||||||||||||||||
Petro-Canada, 6.80%, 5/15/38 | 200,000 | 261,663 | ||||||||||||||||
Petrobras Global Finance BV, 5.625%, 5/20/43 | 130,000 | 114,812 | ||||||||||||||||
Petrobras International Finance Co. - Pifco, 5.75%, 1/20/20 | 200,000 | 212,171 | ||||||||||||||||
Petrobras International Finance Co. - Pifco, 5.375%, 1/27/21 | 310,000 | 318,930 | ||||||||||||||||
Petroleos Mexicanos, 3.125%, 1/23/19(5) | 70,000 | 71,838 | ||||||||||||||||
Petroleos Mexicanos, 6.00%, 3/5/20 | 120,000 | 135,750 | ||||||||||||||||
Petroleos Mexicanos, 4.875%, 1/24/22 | 120,000 | 126,270 | ||||||||||||||||
Petroleos Mexicanos, 3.50%, 1/30/23 | 60,000 | 57,000 | ||||||||||||||||
Petroleos Mexicanos, 5.50%, 6/27/44 | 50,000 | 49,250 | ||||||||||||||||
Phillips 66, 4.30%, 4/1/22 | 250,000 | 267,657 | ||||||||||||||||
Pioneer Natural Resources Co., 3.95%, 7/15/22 | 90,000 | 92,925 | ||||||||||||||||
Plains Exploration & Production Co., 6.875%, 2/15/23 | 150,000 | 168,750 | ||||||||||||||||
Range Resources Corp., 6.75%, 8/1/20 | 150,000 | 162,375 | ||||||||||||||||
Shell International Finance BV, 2.375%, 8/21/22 | 130,000 | 123,902 | ||||||||||||||||
Shell International Finance BV, 3.625%, 8/21/42 | 140,000 | 126,854 | ||||||||||||||||
Shell International Finance BV, 4.55%, 8/12/43 | 130,000 | 135,937 | ||||||||||||||||
Statoil ASA, 2.45%, 1/17/23 | 190,000 | 179,969 | ||||||||||||||||
Statoil ASA, 3.95%, 5/15/43 | 50,000 | 47,314 | ||||||||||||||||
Statoil ASA, 4.80%, 11/8/43 | 100,000 | 108,938 | ||||||||||||||||
Suburban Propane Partners LP/Suburban Energy Finance Corp., 7.375%, 3/15/20 | 110,000 | 117,975 | ||||||||||||||||
Suburban Propane Partners LP/Suburban Energy Finance Corp., 7.375%, 8/1/21 | 150,000 | 165,750 | ||||||||||||||||
Talisman Energy, Inc., 7.75%, 6/1/19 | 95,000 | 116,188 | ||||||||||||||||
Tesoro Corp., 5.375%, 10/1/22 | 100,000 | 104,250 | ||||||||||||||||
Total Capital Canada Ltd., 2.75%, 7/15/23 | 120,000 | 114,816 | ||||||||||||||||
Total Capital SA, 2.125%, 8/10/18 | 140,000 | 142,384 | ||||||||||||||||
7,095,734 | ||||||||||||||||||
PAPER AND FOREST PRODUCTS — 0.1% | ||||||||||||||||||
Domtar Corp., 4.40%, 4/1/22 | 120,000 | 120,558 | ||||||||||||||||
Georgia-Pacific LLC, 5.40%, 11/1/20(5) | 350,000 | 398,997 | ||||||||||||||||
International Paper Co., 6.00%, 11/15/41 | 130,000 | 152,716 | ||||||||||||||||
672,271 | ||||||||||||||||||
PHARMACEUTICALS — 0.3% | ||||||||||||||||||
AbbVie, Inc., 1.75%, 11/6/17 | 300,000 | 302,053 | ||||||||||||||||
AbbVie, Inc., 2.90%, 11/6/22 | 100,000 | 97,577 |
25
Shares/ Principal Amount | Value | |||||||||||||||||
Actavis, Inc., 1.875%, 10/1/17 | $ | 220,000 | $ | 222,080 | ||||||||||||||
Actavis, Inc., 3.25%, 10/1/22 | 200,000 | 194,134 | ||||||||||||||||
Actavis, Inc., 4.625%, 10/1/42 | 60,000 | 58,518 | ||||||||||||||||
Bristol-Myers Squibb Co., 3.25%, 8/1/42 | 80,000 | 65,828 | ||||||||||||||||
Forest Laboratories, Inc., 4.875%, 2/15/21(5) | 270,000 | 288,225 | ||||||||||||||||
GlaxoSmithKline Capital plc, 2.85%, 5/8/22 | 250,000 | 245,804 | ||||||||||||||||
Merck & Co., Inc., 2.40%, 9/15/22 | 100,000 | 94,748 | ||||||||||||||||
Merck & Co., Inc., 3.60%, 9/15/42 | 140,000 | 125,405 | ||||||||||||||||
Mylan, Inc., 5.40%, 11/29/43 | 50,000 | 53,813 | ||||||||||||||||
Roche Holdings, Inc., 6.00%, 3/1/19(5) | 317,000 | 373,742 | ||||||||||||||||
Roche Holdings, Inc., 7.00%, 3/1/39(5) | 70,000 | 98,190 | ||||||||||||||||
Sanofi, 4.00%, 3/29/21 | 95,000 | 102,550 | ||||||||||||||||
2,322,667 | ||||||||||||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.3% | ||||||||||||||||||
American Tower Corp., 5.05%, 9/1/20 | 130,000 | 140,347 | ||||||||||||||||
American Tower Corp., 4.70%, 3/15/22 | 120,000 | 126,124 | ||||||||||||||||
DDR Corp., 4.75%, 4/15/18 | 230,000 | 250,142 | ||||||||||||||||
Essex Portfolio LP, 3.625%, 8/15/22 | 150,000 | 148,900 | ||||||||||||||||
Essex Portfolio LP, 3.375%, 1/15/23(5) | 60,000 | 57,745 | ||||||||||||||||
Essex Portfolio LP, 3.25%, 5/1/23 | 50,000 | 48,003 | ||||||||||||||||
HCP, Inc., 3.75%, 2/1/16 | 200,000 | 210,169 | ||||||||||||||||
Health Care REIT, Inc., 2.25%, 3/15/18 | 50,000 | 50,631 | ||||||||||||||||
Health Care REIT, Inc., 3.75%, 3/15/23 | 130,000 | 130,013 | ||||||||||||||||
Hospitality Properties Trust, 4.65%, 3/15/24 | 350,000 | 352,700 | ||||||||||||||||
Host Hotels & Resorts LP, 3.75%, 10/15/23 | 100,000 | 98,449 | ||||||||||||||||
Kilroy Realty LP, 3.80%, 1/15/23 | 190,000 | 187,937 | ||||||||||||||||
Reckson Operating Partnership LP, 6.00%, 3/31/16 | 125,000 | 135,187 | ||||||||||||||||
Senior Housing Properties Trust, 4.75%, 5/1/24 | 180,000 | 180,568 | ||||||||||||||||
Simon Property Group LP, 5.75%, 12/1/15 | 160,000 | 170,927 | ||||||||||||||||
Ventas Realty LP/Ventas Capital Corp., 3.125%, 11/30/15 | 95,000 | 98,530 | ||||||||||||||||
Ventas Realty LP/Ventas Capital Corp., 4.00%, 4/30/19 | 100,000 | 106,899 | ||||||||||||||||
Ventas Realty LP/Ventas Capital Corp., 4.75%, 6/1/21 | 120,000 | 130,568 | ||||||||||||||||
2,623,839 | ||||||||||||||||||
ROAD AND RAIL — 0.2% | ||||||||||||||||||
Burlington Northern Santa Fe LLC, 3.60%, 9/1/20 | 176,000 | 184,217 | ||||||||||||||||
Burlington Northern Santa Fe LLC, 5.05%, 3/1/41 | 60,000 | 64,474 | ||||||||||||||||
Burlington Northern Santa Fe LLC, 4.45%, 3/15/43 | 220,000 | 216,659 | ||||||||||||||||
CSX Corp., 4.25%, 6/1/21 | 150,000 | 162,182 | ||||||||||||||||
CSX Corp., 3.70%, 11/1/23 | 180,000 | 182,567 | ||||||||||||||||
Norfolk Southern Corp., 5.75%, 4/1/18 | 40,000 | 45,593 | ||||||||||||||||
Norfolk Southern Corp., 3.25%, 12/1/21 | 200,000 | 202,633 | ||||||||||||||||
Penske Truck Leasing Co. LP / PTL Finance Corp., 2.875%, 7/17/18(5) | 40,000 | 40,740 | ||||||||||||||||
Union Pacific Corp., 4.00%, 2/1/21 | 100,000 | 108,097 | ||||||||||||||||
Union Pacific Corp., 4.75%, 9/15/41 | 150,000 | 158,837 | ||||||||||||||||
1,365,999 |
26
Shares/ Principal Amount | Value | |||||||||||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT† | ||||||||||||||||||
Intel Corp., 1.35%, 12/15/17 | $ | 140,000 | $ | 139,908 | ||||||||||||||
SOFTWARE — 0.1% | ||||||||||||||||||
Activision Blizzard, Inc., 5.625%, 9/15/21(5) | 150,000 | 160,312 | ||||||||||||||||
Intuit, Inc., 5.75%, 3/15/17 | 254,000 | 284,660 | ||||||||||||||||
Oracle Corp., 2.50%, 10/15/22 | 260,000 | 248,520 | ||||||||||||||||
Oracle Corp., 3.625%, 7/15/23 | 280,000 | 286,750 | ||||||||||||||||
980,242 | ||||||||||||||||||
SPECIALTY RETAIL — 0.1% | ||||||||||||||||||
Home Depot, Inc. (The), 5.95%, 4/1/41 | 360,000 | 443,892 | ||||||||||||||||
Sally Holdings LLC / Sally Capital, Inc., 6.875%, 11/15/19 | 227,000 | 249,417 | ||||||||||||||||
United Rentals North America, Inc., 5.75%, 7/15/18 | 310,000 | 333,250 | ||||||||||||||||
1,026,559 | ||||||||||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 0.1% | ||||||||||||||||||
Dell, Inc., 2.30%, 9/10/15 | 90,000 | 91,013 | ||||||||||||||||
Dell, Inc., 3.10%, 4/1/16 | 40,000 | 41,000 | ||||||||||||||||
Hewlett-Packard Co., 4.30%, 6/1/21 | 290,000 | 305,566 | ||||||||||||||||
Seagate HDD Cayman, 4.75%, 6/1/23(5) | 270,000 | 271,687 | ||||||||||||||||
709,266 | ||||||||||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.1% | ||||||||||||||||||
Hanesbrands, Inc., 6.375%, 12/15/20 | 280,000 | 306,600 | ||||||||||||||||
L Brands, Inc., 6.90%, 7/15/17 | 100,000 | 114,250 | ||||||||||||||||
PVH Corp., 4.50%, 12/15/22 | 210,000 | 207,638 | ||||||||||||||||
628,488 | ||||||||||||||||||
TOBACCO — 0.1% | ||||||||||||||||||
Altria Group, Inc., 2.85%, 8/9/22 | 270,000 | 257,343 | ||||||||||||||||
Philip Morris International, Inc., 4.125%, 5/17/21 | 180,000 | 195,390 | ||||||||||||||||
452,733 | ||||||||||||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.2% | ||||||||||||||||||
Alltel Corp., 7.875%, 7/1/32 | 50,000 | 68,453 | ||||||||||||||||
America Movil SAB de CV, 5.00%, 3/30/20 | 110,000 | 122,783 | ||||||||||||||||
America Movil SAB de CV, 3.125%, 7/16/22 | 310,000 | 300,324 | ||||||||||||||||
Sprint Communications, 6.00%, 12/1/16 | 150,000 | 164,625 | ||||||||||||||||
Sprint Communications, 9.00%, 11/15/18(5) | 180,000 | 219,825 | ||||||||||||||||
T-Mobile USA, Inc., 6.46%, 4/28/19 | 210,000 | 223,125 | ||||||||||||||||
Vodafone Group plc, 5.625%, 2/27/17 | 110,000 | 123,288 | ||||||||||||||||
1,222,423 | ||||||||||||||||||
TOTAL CORPORATE BONDS (Cost $86,159,116) | 89,360,433 | |||||||||||||||||
COLLATERALIZED MORTGAGE OBLIGATIONS(2) — 2.2% | ||||||||||||||||||
PRIVATE SPONSOR COLLATERALIZED MORTGAGE OBLIGATIONS — 1.9% | ||||||||||||||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 52,922 | 55,817 | ||||||||||||||||
Banc of America Alternative Loan Trust, Series 2007-2, Class 2A4, 5.75%, 6/25/37 | 464,016 | 358,435 | ||||||||||||||||
Banc of America Mortgage Securities, Inc., Series 2003-G, Class 2A1, VRN, 2.73%, 5/1/14 | 300,678 | 304,897 |
27
Shares/ Principal Amount | Value | |||||||||||||||||
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7A1, 5.00%, 8/25/19 | $ | 53,312 | $ | 54,707 | ||||||||||||||
Banc of America Mortgage Securities, Inc., Series 2004-E, Class 2A6 SEQ, VRN, 2.83%, 5/1/14 | 495,857 | 497,412 | ||||||||||||||||
Banc of America Mortgage Securities, Inc., Series 2005-1, Class 1A15, 5.50%, 2/25/35 | 233,309 | 245,552 | ||||||||||||||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A4, VRN, 2.24%, 5/1/14 | 941,070 | 938,165 | ||||||||||||||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 5.24%, 5/1/14 | 251,555 | 249,135 | ||||||||||||||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35 | 15,240 | 15,022 | ||||||||||||||||
Credit Suisse First Boston Mortgage Securities Corp., Series 2003-AR28, Class 2A1, VRN, 2.52%, 5/1/14 | 301,326 | 299,635 | ||||||||||||||||
First Horizon Mortgage Pass-Through Trust, Series 2005-AR3, Class 4A1, VRN, 5.17%, 5/1/14 | 162,521 | 159,877 | ||||||||||||||||
GSR Mortgage Loan Trust, Series 2004-AR5, Class 3A3, VRN, 2.68%, 5/1/14 | 443,063 | 440,670 | ||||||||||||||||
GSR Mortgage Loan Trust, Series 2005-AR1, Class 3A1, VRN, 2.60%, 5/1/14 | 192,398 | 191,434 | ||||||||||||||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 2A1, VRN, 2.65%, 5/1/14 | 432,775 | 438,740 | ||||||||||||||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 1A1, VRN, 5.21%, 5/1/14 | 203,255 | 209,062 | ||||||||||||||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 2A1, VRN, 2.73%, 5/1/14 | 112,059 | 113,571 | ||||||||||||||||
JPMorgan Mortgage Trust, Series 2006-A3, Class 7A1, VRN, 2.63%, 5/1/14 | 481,690 | 490,619 | ||||||||||||||||
JPMorgan Mortgage Trust, Series 2013-1, Class 2A2 SEQ, VRN, 2.50%, 5/1/14(5) | 228,482 | 224,461 | ||||||||||||||||
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 3A7, VRN, 2.63%, 5/1/14 | 828,205 | 849,025 | ||||||||||||||||
MASTR Asset Securitization Trust, Series 2003-10, Class 3A1, 5.50%, 11/25/33 | 106,472 | 112,486 | ||||||||||||||||
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 2A, VRN, 2.14%, 5/25/14 | 383,331 | 378,425 | ||||||||||||||||
Merrill Lynch Mortgage Investors Trust, Series 2005-A2, Class A1, VRN, 2.48%, 5/1/14 | 580,479 | 570,336 | ||||||||||||||||
PHHMC Mortgage Pass-Through Certificates, Series 2007-6, Class A1, VRN, 5.64%, 5/1/14 | 121,635 | 123,689 | ||||||||||||||||
Sequoia Mortgage Trust, Series 2012-1, Class 1A1, VRN, 2.87%, 5/1/14 | 146,817 | 148,482 | ||||||||||||||||
Sequoia Mortgage Trust, Series 2013-12, Class A1 SEQ, VRN, 4.00%, 5/1/14(5) | 460,289 | 472,450 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-4, Class A9, 5.50%, 5/25/34 | 107,826 | 111,585 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-K, Class 2A6, VRN, 4.72%, 5/1/14 | 160,698 | 162,761 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-S, Class A1, VRN, 2.62%, 5/1/14 | 302,675 | 311,240 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-Z, Class 2A2, VRN, 2.61%, 5/1/14 | 324,815 | 332,249 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-17, Class 1A1, 5.50%, 1/25/36 | 212,845 | 219,932 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-3, Class A12, 5.50%, 5/25/35 | 433,002 | 447,009 |
28
Shares/ Principal Amount | Value | |||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-9, Class 2A6, 5.25%, 10/25/35 | $ | 563,586 | $ | 596,025 | ||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 1A1, VRN, 2.61%, 5/1/14 | 923,848 | 945,196 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 2A17, VRN, 2.61%, 5/1/14 | 695,070 | 705,707 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR14, Class A1, VRN, 5.35%, 5/1/14 | 198,700 | 206,396 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR16, Class 1A1, VRN, 2.63%, 5/1/14 | 195,119 | 200,701 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR16, Class 3A2, VRN, 2.62%, 5/1/14 | 222,007 | 225,403 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR2, Class 3A1, VRN, 2.61%, 5/1/14 | 164,589 | 169,630 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR7, Class 1A1, VRN, 5.06%, 5/1/14 | 660,183 | 672,056 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-10, Class A4 SEQ, 6.00%, 8/25/36 | 270,888 | 287,773 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-13, Class A5, 6.00%, 10/25/36 | 309,538 | 324,588 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-13, Class A1, 6.00%, 9/25/37 | 175,533 | 180,461 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-14, Class 2A2, 5.50%, 10/25/22 | 256,346 | 266,643 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-16, Class 1A1, 6.00%, 12/28/37 | 151,670 | 157,590 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-9, Class 1A8, 5.50%, 7/25/37 | 104,937 | 108,034 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-AR10, Class 1A1, VRN, 6.08%, 5/1/14 | 164,572 | 166,290 | ||||||||||||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2008-1, Class 4A1, 5.75%, 2/25/38 | 559,925 | 592,093 | ||||||||||||||||
15,331,466 | ||||||||||||||||||
U.S. GOVERNMENT AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS — 0.3% | ||||||||||||||||||
FHLMC, Series 2926, Class EW SEQ, 5.00%, 1/15/25 | 488,068 | 530,930 | ||||||||||||||||
FHLMC, Series 77, Class H, 8.50%, 9/15/20 | 40,144 | 43,245 | ||||||||||||||||
FNMA, Series 2014-M3, Class ASQ2, 0.56%, 3/25/16 | 1,775,000 | 1,776,764 | ||||||||||||||||
2,350,939 | ||||||||||||||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $17,608,546) | 17,682,405 | |||||||||||||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES(2) — 1.7% | ||||||||||||||||||
Banc of America Commercial Mortgage, Inc., Series 2005-5, Class A4, VRN, 5.12%, 5/1/14 | 350,000 | 366,636 | ||||||||||||||||
Banc of America Commercial Mortgage, Inc., Series 2005-5, Class AM, VRN, 5.18%, 5/1/14 | 300,000 | 318,599 | ||||||||||||||||
Bank of America Merrill Lynch Commercial Mortgage Securities Trust, Series 2012-PARK, Class A SEQ, 2.96%, 12/10/30(5) | 800,000 | 781,390 | ||||||||||||||||
BB-UBS Trust, Series 2012-SHOW, Class A SEQ, 3.43%, 11/5/36(5) | 950,000 | 920,586 | ||||||||||||||||
Commercial Mortgage Pass-Through Certificates, Series 2014-BBG, Class A, VRN, 0.95%, 5/15/14(5) | 750,000 | 751,469 | ||||||||||||||||
Commercial Mortgage Pass-Through Certificates, Series 2014-CR15, Class AM SEQ, 4.43%, 2/10/47 | 675,000 | 713,555 |
29
Shares/ Principal Amount | Value | |||||||||||||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG3, Class A4, VRN, 4.80%, 5/1/14 | $ | 480,000 | $ | 487,018 | ||||||||||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG3, Class AJ, VRN, 4.86%, 5/1/14 | 158,000 | 161,645 | ||||||||||||||||
GS Mortgage Securities Corp. II, Series 2004-GG2, Class A6 SEQ, VRN, 5.40%, 5/1/14 | 232,037 | 232,199 | ||||||||||||||||
GS Mortgage Securities Corp. II, Series 2005-GG4, Class A4 SEQ, 4.76%, 7/10/39 | 330,640 | 339,557 | ||||||||||||||||
GS Mortgage Securities Corp. II, Series 2005-GG4, Class A4A SEQ, 4.75%, 7/10/39 | 952,430 | 977,552 | ||||||||||||||||
GS Mortgage Securities Corp. II, Series 2012-ALOH, Class A SEQ, 3.55%, 4/10/34(5) | 1,125,000 | 1,146,296 | ||||||||||||||||
Irvine Core Office Trust, Series 2013-IRV, Class A2 SEQ, VRN, 3.28%, 5/10/14(5) | 950,000 | 935,579 | ||||||||||||||||
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2013-C16, Class A4, 4.17%, 12/15/46 | 275,000 | 290,796 | ||||||||||||||||
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2013-C16, Class AS, 4.52%, 12/15/46 | 450,000 | 479,876 | ||||||||||||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C1, Class A4 SEQ, 4.57%, 1/15/31 | 49,569 | 51,433 | ||||||||||||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C4, Class A4, VRN, 6.32%, 5/11/14 | 8,220 | 8,227 | ||||||||||||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C8, Class AJ, VRN, 4.86%, 5/11/14 | 125,000 | 127,839 | ||||||||||||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C5, Class A4 SEQ, 4.95%, 9/15/30 | 623,436 | 647,022 | ||||||||||||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C5, Class AM, VRN, 5.02%, 5/11/14 | 400,000 | 419,241 | ||||||||||||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class AM, VRN, 5.26%, 5/11/14 | 425,000 | 451,753 | ||||||||||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2012-C6, Class A4 SEQ, 2.86%, 11/15/45 | 500,000 | 484,420 | ||||||||||||||||
Morgan Stanley Capital I, Series 2005-T17, Class A5 SEQ, 4.78%, 12/13/41 | 1,475,316 | 1,497,701 | ||||||||||||||||
VNDO Mortgage Trust, Series 2013-PENN, Class C, VRN, 4.08%, 5/1/14(5) | 300,000 | 308,013 | ||||||||||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2004-C15, Class A3 SEQ, 4.50%, 10/15/41 | 12,139 | 12,191 | ||||||||||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2004-C15, Class A4 SEQ, 4.80%, 10/15/41 | 1,100,000 | 1,113,280 | ||||||||||||||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES(Cost $14,103,108) | 14,023,873 | |||||||||||||||||
ASSET-BACKED SECURITIES(2) — 0.9% | ||||||||||||||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2012-1A, Class A SEQ, 2.05%, 8/20/16(5) | 675,000 | 685,251 | ||||||||||||||||
CenterPoint Energy Transition Bond Co. LLC, Series 2012-1, Class A2 SEQ, 2.16%, 10/15/21 | 240,000 | 240,922 | ||||||||||||||||
Chesapeake Funding LLC, Series 2014-1A, Class A, VRN, 0.57%, 5/7/14(5) | 950,000 | 950,342 | ||||||||||||||||
Dryrock Issuance Trust, Series 2014-1, Class A, VRN, 0.51%, 5/15/14 | 775,000 | 775,937 | ||||||||||||||||
Enterprise Fleet Financing LLC, Series 2014-1, Class A2 SEQ, 0.87%, 9/20/19(5) | 475,000 | 475,160 | ||||||||||||||||
Harley-Davidson Motorcycle Trust, Series 2014-1, Class A2B, VRN, 0.32%, 5/15/14 | 1,312,500 | 1,312,816 |
30
Shares/ Principal Amount | Value | |||||||||||||||||
John Deere Owner Trust, Series 2014-A, Class A2 SEQ, 0.45%, 9/15/16 | $ | 1,375,000 | $ | 1,375,622 | ||||||||||||||
John Deere Owner Trust, Series 2014-A, Class A3 SEQ, 0.92%, 4/16/18 | 675,000 | 676,294 | ||||||||||||||||
TAL Advantage LLC, Series 2014-1A, Class A, 3.51%, 2/22/39(5) | 590,000 | 593,709 | ||||||||||||||||
US Airways 2013-1 Class A Pass-Through Trust, 3.95%, 5/15/27 | 170,000 | 170,425 | ||||||||||||||||
TOTAL ASSET-BACKED SECURITIES (Cost $7,249,147) | 7,256,478 | |||||||||||||||||
SOVEREIGN GOVERNMENTS AND AGENCIES — 0.6% | ||||||||||||||||||
BRAZIL — 0.1% | ||||||||||||||||||
Brazilian Government International Bond, 5.875%, 1/15/19 | 530,000 | 605,525 | ||||||||||||||||
Brazilian Government International Bond, 4.875%, 1/22/21 | 20,000 | 21,700 | ||||||||||||||||
Brazilian Government International Bond, 2.625%, 1/5/23 | 260,000 | 236,600 | ||||||||||||||||
863,825 | ||||||||||||||||||
CANADA† | ||||||||||||||||||
Province of Ontario Canada, 1.00%, 7/22/16 | 150,000 | 151,161 | ||||||||||||||||
CHILE† | ||||||||||||||||||
Chile Government International Bond, 3.25%, 9/14/21 | 100,000 | 102,000 | ||||||||||||||||
Chile Government International Bond, 3.625%, 10/30/42 | 100,000 | 84,875 | ||||||||||||||||
186,875 | ||||||||||||||||||
COLOMBIA — 0.1% | ||||||||||||||||||
Colombia Government International Bond, 4.375%, 7/12/21 | 310,000 | 328,755 | ||||||||||||||||
ITALY† | ||||||||||||||||||
Italy Government International Bond, 6.875%, 9/27/23 | 220,000 | 273,982 | ||||||||||||||||
MEXICO — 0.2% | ||||||||||||||||||
Mexico Government International Bond, 5.625%, 1/15/17 | 70,000 | 78,050 | ||||||||||||||||
Mexico Government International Bond, MTN, 5.95%, 3/19/19 | 420,000 | 488,775 | ||||||||||||||||
Mexico Government International Bond, 5.125%, 1/15/20 | 330,000 | 370,013 | ||||||||||||||||
Mexico Government International Bond, 4.00%, 10/2/23 | 100,000 | 102,625 | ||||||||||||||||
Mexico Government International Bond, 6.05%, 1/11/40 | 50,000 | 57,950 | ||||||||||||||||
Mexico Government International Bond, MTN, 4.75%, 3/8/44 | 400,000 | 388,000 | ||||||||||||||||
1,485,413 | ||||||||||||||||||
PERU† | ||||||||||||||||||
Peruvian Government International Bond, 6.55%, 3/14/37 | 70,000 | 86,625 | ||||||||||||||||
Peruvian Government International Bond, 5.625%, 11/18/50 | 120,000 | 131,250 | ||||||||||||||||
217,875 | ||||||||||||||||||
PHILIPPINES — 0.1% | ||||||||||||||||||
Philippine Government International Bond, 4.00%, 1/15/21 | 300,000 | 316,500 | ||||||||||||||||
Philippine Government International Bond, 6.375%, 10/23/34 | 100,000 | 125,500 | ||||||||||||||||
442,000 | ||||||||||||||||||
POLAND† | ||||||||||||||||||
Poland Government International Bond, 5.125%, 4/21/21 | 140,000 | 155,575 | ||||||||||||||||
Poland Government International Bond, 3.00%, 3/17/23 | 140,000 | 131,670 | ||||||||||||||||
287,245 |
31
Shares/ Principal Amount | Value | |||||||||||||||||
SOUTH AFRICA† | ||||||||||||||||||
South Africa Government International Bond, 4.67%, 1/17/24 | $ | 110,000 | $ | 112,090 | ||||||||||||||
SOUTH KOREA — 0.1% | ||||||||||||||||||
Export-Import Bank of Korea, 3.75%, 10/20/16 | 160,000 | 170,397 | ||||||||||||||||
Korea Development Bank (The), 3.25%, 3/9/16 | 130,000 | 135,655 | ||||||||||||||||
Korea Development Bank (The), 4.00%, 9/9/16 | 110,000 | 117,140 | ||||||||||||||||
423,192 | ||||||||||||||||||
TURKEY† | ||||||||||||||||||
Turkey Government International Bond, 3.25%, 3/23/23 | 200,000 | 181,050 | ||||||||||||||||
URUGUAY† | ||||||||||||||||||
Uruguay Government International Bond, 4.125%, 11/20/45 | 70,000 | 58,625 | ||||||||||||||||
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES (Cost $4,807,032) | 5,012,088 | |||||||||||||||||
MUNICIPAL SECURITIES — 0.4% | ||||||||||||||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 5.94%, 2/15/47 | 50,000 | 57,021 | ||||||||||||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 7.50%, 2/15/50 | 75,000 | 101,846 | ||||||||||||||||
Bay Area Toll Authority Toll Bridge Rev., Series 2010 S1, (Building Bonds), 6.92%, 4/1/40 | 135,000 | 180,411 | ||||||||||||||||
California GO, (Building Bonds), 7.55%, 4/1/39 | 100,000 | 142,808 | ||||||||||||||||
California GO, (Building Bonds), 7.30%, 10/1/39 | 170,000 | 232,796 | ||||||||||||||||
California GO, (Building Bonds), 7.60%, 11/1/40 | 80,000 | 115,188 | ||||||||||||||||
Illinois GO, (Taxable Pension), 5.10%, 6/1/33 | 245,000 | 245,345 | ||||||||||||||||
Los Angeles Community College District GO, Series 2010 D, (Election of 2008), 6.68%, 8/1/36 | 100,000 | 129,635 | ||||||||||||||||
Los Angeles Department of Water & Power Rev., (Building Bonds), 5.72%, 7/1/39 | 60,000 | 72,230 | ||||||||||||||||
Metropolitan Transportation Authority Rev., Series 2010 C1, (Building Bonds), 6.69%, 11/15/40 | 105,000 | 136,663 | ||||||||||||||||
Metropolitan Transportation Authority Rev., Series 2010 E, (Building Bonds), 6.81%, 11/15/40 | 60,000 | 79,077 | ||||||||||||||||
Missouri Highways & Transportation Commission Rev., (Building Bonds), 5.45%, 5/1/33 | 130,000 | 149,543 | ||||||||||||||||
New Jersey State Turnpike Authority Rev., Series 2009 F, (Building Bonds), 7.41%, 1/1/40 | 200,000 | 285,502 | ||||||||||||||||
New Jersey State Turnpike Authority Rev., Series 2010 A, (Building Bonds), 7.10%, 1/1/41 | 95,000 | 131,299 | ||||||||||||||||
New York GO, Series 2010 F1, (Building Bonds), 6.27%, 12/1/37 | 95,000 | 118,893 | ||||||||||||||||
Ohio Water Development Authority Pollution Control Rev., Series 2010 B2, (Building Bonds), 4.88%, 12/1/34 | 110,000 | 120,301 | ||||||||||||||||
Oregon State Department of Transportation Highway User Tax Rev., Series 2010 A, (Building Bonds), 5.83%, 11/15/34 | 70,000 | 86,575 | ||||||||||||||||
Port Authority of New York & New Jersey Rev., 4.93%, 10/1/51 | 50,000 | 52,729 | ||||||||||||||||
Port Authority of New York & New Jersey Rev., 4.46%, 10/1/62 | 245,000 | 238,498 | ||||||||||||||||
Rutgers State University Rev., Series 2010 H, (Building Bonds), 5.67%, 5/1/40 | 205,000 | 245,649 | ||||||||||||||||
Sacramento Municipal Utility District Electric Rev., Series 2010 W, (Building Bonds), 6.16%, 5/15/36 | 210,000 | 249,971 | ||||||||||||||||
Salt River Agricultural Improvement & Power District Electric Rev., Series 2010 A, (Building Bonds), 4.84%, 1/1/41 | 95,000 | 105,084 |
32
Shares/ Principal Amount | Value | |||||||||||||||||
San Francisco City & County Public Utilities Water Commission Rev., Series 2010 B, (Building Bonds), 6.00%, 11/1/40 | $ | 105,000 | $ | 127,254 | ||||||||||||||
Santa Clara Valley Transportation Authority Sales Tax Rev., Series 2010 A, (Building Bonds), 5.88%, 4/1/32 | 120,000 | 141,383 | ||||||||||||||||
Texas GO, (Building Bonds), 5.52%, 4/1/39 | 50,000 | 61,306 | ||||||||||||||||
Washington GO, Series 2010 F, (Building Bonds), 5.14%, 8/1/40 | 20,000 | 22,216 | ||||||||||||||||
TOTAL MUNICIPAL SECURITIES (Cost $3,111,809) | 3,629,223 | |||||||||||||||||
TEMPORARY CASH INVESTMENTS — 1.0% | ||||||||||||||||||
SSgA U.S. Government Money Market Fund (Cost $8,322,301) | 8,322,301 | 8,322,301 | ||||||||||||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $706,327,770) | 822,375,372 | |||||||||||||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (533,113) | |||||||||||||||||
TOTAL NET ASSETS — 100.0% | $ | 821,842,259 |
FUTURES CONTRACTS | |||||||||||||||||||
Contracts Sold | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||
13 | U.S. Treasury 10-Year Notes | June 2014 | $ | 1,617,484 | $ | (461 | ) | ||||||||||||
18 | U.S. Treasury Ultra Long Bonds | June 2014 | 2,651,063 | (78,102 | ) | ||||||||||||||
$ | 4,268,547 | $ | (78,563 | ) |
Notes to Schedule of Investments | ||
FHLMC | - | Federal Home Loan Mortgage Corporation |
FNMA | - | Federal National Mortgage Association |
GNMA | - | Government National Mortgage Association |
GO | - | General Obligation |
MTN | - | Medium Term Note |
SEQ | - | Sequential Payer |
VRN | - | Variable Rate Note. Interest reset date is indicated. Rate shown is effective at the period end. |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
(2) | Final maturity date indicated, unless otherwise noted. |
(3) | Forward commitment. Settlement date is indicated. |
(4) | Security, or a portion thereof, has been pledged at the custodian bank or with a broker for margin requirements on futures contracts. At the period end, the aggregate value of securities pledged was $95,212. |
(5) | Restricted security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be sold without restriction to qualified institutional investors and have been deemed liquid under policies approved by the Board of Directors. The aggregate value of these securities at the period end was $14,413,710, which represented 1.8% of total net assets. |
(6) | When-issued security. The issue price and yield are fixed on the date of the commitment, but payment and delivery are scheduled for a future date. |
See Notes to Financial Statements.
33
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $706,327,770) | $ | 822,375,372 | ||||
Cash | 1,710 | |||||
Receivable for investments sold | 200,097 | |||||
Receivable for capital shares sold | 272,059 | |||||
Dividends and interest receivable | 2,390,243 | |||||
825,239,481 | ||||||
Liabilities | ||||||
Payable for investments purchased | 2,428,390 | |||||
Payable for capital shares redeemed | 353,806 | |||||
Payable for variation margin on futures contracts | 21,234 | |||||
Accrued management fees | 593,792 | |||||
3,397,222 | ||||||
Net Assets | $ | 821,842,259 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 678,001,920 | ||||
Undistributed net investment income | 990,322 | |||||
Undistributed net realized gain | 26,880,978 | |||||
Net unrealized appreciation | 115,969,039 | |||||
$ | 821,842,259 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $773,621,335 | 41,442,239 | $18.67 | |
Institutional Class, $0.01 Par Value | $48,220,924 | 2,581,869 | $18.68 |
See Notes to Financial Statements.
34
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $202) | $ | 4,816,601 | ||
Interest | 4,198,915 | |||
9,015,516 | ||||
Expenses: | ||||
Management fees | 3,481,167 | |||
Directors' fees and expenses | 11,963 | |||
Other expenses | 1,785 | |||
3,494,915 | ||||
Net investment income (loss) | 5,520,601 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 29,946,888 | |||
Futures contract transactions | (206,243 | ) | ||
29,740,645 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 10,368,060 | |||
Futures contracts | 10,391 | |||
10,378,451 | ||||
Net realized and unrealized gain (loss) | 40,119,096 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 45,639,697 |
See Notes to Financial Statements.
35
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,520,601 | $ | 11,602,232 | ||
Net realized gain (loss) | 29,740,645 | 60,523,784 | ||||
Change in net unrealized appreciation (depreciation) | 10,378,451 | 26,804,162 | ||||
Net increase (decrease) in net assets resulting from operations | 45,639,697 | 98,930,178 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (5,495,861 | ) | (11,454,141 | ) | ||
Institutional Class | (403,411 | ) | (788,061 | ) | ||
From net realized gains: | ||||||
Investor Class | (54,389,209 | ) | (16,097,790 | ) | ||
Institutional Class | (3,584,868 | ) | (533,588 | ) | ||
Decrease in net assets from distributions | (63,873,349 | ) | (28,873,580 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 71,549,266 | 69,327,289 | ||||
Net increase (decrease) in net assets | 53,315,614 | 139,383,887 | ||||
Net Assets | ||||||
Beginning of period | 768,526,645 | 629,142,758 | ||||
End of period | $ | 821,842,259 | $ | 768,526,645 | ||
Undistributed net investment income | $ | 990,322 | $ | 1,368,993 |
See Notes to Financial Statements.
36
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Balanced Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth and current income by investing approximately 60% of its assets in equity securities and the remainder in bonds and other fixed-income securities.
The fund offers the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Fixed income securities maturing in greater than 60 days at the time of purchase are valued at the evaluated mean as provided by independent pricing services or at the mean of the most recent bid and asked prices as provided by investment dealers. Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a
37
security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Inflation adjustments related to inflation-linked debt securities are reflected as interest income.
Forward Commitments — The fund may engage in securities transactions on a forward commitment basis. In these transactions, the securities’ prices and yields are fixed on the date of the commitment. The fund may sell a to-be-announced (TBA) 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 TBA security and at the same time make a commitment to sell the same security at a future date at a specified price. These types of transactions are known as “TBA roll” transactions and are accounted for as purchases and sales. The fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet the purchase price.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investments, including, but not limited to, futures contracts, forward commitments, when-issued securities, swap agreements and certain forward foreign currency exchange contracts. American Century Investment Management, Inc. (ACIM) (the investment advisor) monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on futures contracts, forward commitments and swap agreements.
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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
38
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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 0.900% for the Investor Class. The annual management fee schedule ranges from 0.600% to 0.700% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 0.90% for the Investor Class and 0.70% for the Institutional Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the six months ended April 30, 2014 totaled $271,616,206, of which $39,050,254 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 totaled $244,511,751, of which $28,744,633 represented U.S. Treasury and Government Agency obligations.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 250,000,000 | 250,000,000 | ||||||||
Sold | 3,466,856 | $ | 64,185,961 | 7,246,923 | $ | 130,710,357 | ||||
Issued in reinvestment of distributions | 3,263,492 | 58,477,863 | 1,539,480 | 26,889,632 | ||||||
Redeemed | (2,887,723 | ) | (53,503,384 | ) | (6,197,053 | ) | (111,531,308 | ) | ||
3,842,625 | 69,160,440 | 2,589,350 | 46,068,681 | |||||||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 244,255 | 4,568,754 | 2,962,875 | 53,420,395 | ||||||
Issued in reinvestment of distributions | 222,426 | 3,988,279 | 74,578 | 1,321,649 | ||||||
Redeemed | (333,127 | ) | (6,168,207 | ) | (1,718,592 | ) | (31,483,436 | ) | ||
133,554 | 2,388,826 | 1,318,861 | 23,258,608 | |||||||
Net increase (decrease) | 3,976,179 | $ | 71,549,266 | 3,908,211 | $ | 69,327,289 |
39
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 489,857,784 | — | — | ||||
U.S. Government Agency Mortgage-Backed Securities | — | $ | 95,397,643 | — | ||||
U.S. Treasury Securities | — | 91,833,144 | — | |||||
Corporate Bonds | — | 89,360,433 | — | |||||
Collateralized Mortgage Obligations | — | 17,682,405 | — | |||||
Commercial Mortgage-Backed Securities | — | 14,023,873 | — | |||||
Asset-Backed Securities | — | 7,256,478 | — | |||||
Sovereign Governments and Agencies | — | 5,012,088 | — | |||||
Municipal Securities | — | 3,629,223 | — | |||||
Temporary Cash Investments | 8,322,301 | — | — | |||||
$ | 498,180,085 | $ | 324,195,287 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | (78,563 | ) | — | — |
7. Derivative Instruments
Interest Rate Risk — The fund is subject to interest rate risk in the normal course of pursuing its investment objectives. The value of bonds generally declines as interest rates rise. A fund may enter into futures contracts based on a bond index or a specific underlying security. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the futures contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. 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. The fund sold interest rate risk derivative instruments throughout the reporting period, and the instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume.
40
The value of interest rate risk derivative instruments as of April 30, 2014, is disclosed on the Statement of Assets and Liabilities as a liability of $21,234 in payable for variation margin on futures contracts.* For the six months ended April 30, 2014, the effect of interest rate risk derivative instruments on the Statement of Operations was $(206,243) in net realized gain (loss) on futures contract transactions and $10,391 in change in net unrealized appreciation (depreciation) on futures contracts.
* | Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. |
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 709,102,360 | |
Gross tax appreciation of investments | $ | 119,485,147 | |
Gross tax depreciation of investments | (6,212,135 | ) | |
Net tax appreciation (depreciation) of investments | $ | 113,273,012 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
41
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $19.19 | 0.13 | 0.92 | 1.05 | (0.13) | (1.44) | (1.57) | $18.67 | 5.92% | 0.90%(4) | 1.39%(4) | 31% | $773,621 | ||
2013 | $17.41 | 0.30 | 2.25 | 2.55 | (0.31) | (0.46) | (0.77) | $19.19 | 15.21% | 0.90% | 1.64% | 81% | $721,523 | ||
2012 | $15.96 | 0.29 | 1.47 | 1.76 | (0.31) | – | (0.31) | $17.41 | 11.12% | 0.90% | 1.75% | 82% | $609,476 | ||
2011 | $15.02 | 0.29 | 0.94 | 1.23 | (0.29) | – | (0.29) | $15.96 | 8.26% | 0.90% | 1.84% | 87% | $511,829 | ||
2010 | $13.58 | 0.27 | 1.44 | 1.71 | (0.27) | – | (0.27) | $15.02 | 12.70% | 0.91% | 1.85% | 69% | $487,066 | ||
2009 | $12.66 | 0.28 | 0.93 | 1.21 | (0.29) | – | (0.29) | $13.58 | 9.81% | 0.90% | 2.21% | 110% | $459,183 | ||
Institutional Class | |||||||||||||||
2014(3) | $19.20 | 0.15 | 0.92 | 1.07 | (0.15) | (1.44) | (1.59) | $18.68 | 6.02% | 0.70%(4) | 1.59%(4) | 31% | $48,221 | ||
2013 | $17.41 | 0.32 | 2.28 | 2.60 | (0.35) | (0.46) | (0.81) | $19.20 | 15.49% | 0.70% | 1.84% | 81% | $47,004 | ||
2012 | $15.96 | 0.32 | 1.47 | 1.79 | (0.34) | – | (0.34) | $17.41 | 11.34% | 0.70% | 1.95% | 82% | $19,667 | ||
2011 | $15.02 | 0.32 | 0.94 | 1.26 | (0.32) | – | (0.32) | $15.96 | 8.48% | 0.70% | 2.04% | 87% | $9,736 | ||
2010 | $13.59 | 0.29 | 1.44 | 1.73 | (0.30) | – | (0.30) | $15.02 | 12.84% | 0.71% | 2.05% | 69% | $6,538 | ||
2009 | $12.66 | 0.30 | 0.94 | 1.24 | (0.31) | – | (0.31) | $13.59 | 10.11% | 0.70% | 2.41% | 110% | $6,249 |
42
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
See Notes to Financial Statements.
43
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
44
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82262 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Capital Value Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ACTIX | 8.53%(2) | 19.64%(2) | 17.61%(2) | 6.28%(2) | 6.16% | 3/31/99 |
Russell 1000 Value Index | — | 9.61% | 20.90% | 19.51% | 7.95% | 6.32% | — |
Institutional Class(2) | ACPIX | 8.60% | 19.83% | 17.87% | 6.48% | 6.19% | 3/1/02 |
A Class(2)(3) | ACCVX | 5/14/03 | |||||
No sales charge* | 8.41% | 19.39% | 17.31% | 6.01% | 7.46% | ||
With sales charge* | 2.14% | 12.52% | 15.93% | 5.38% | 6.88% |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Returns would have been lower if a portion of the management fee had not been waived. |
(3) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | ||
Investor Class | Institutional Class | A Class |
1.10% | 0.90% | 1.35% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Chevron Corp. | 4.1% |
Exxon Mobil Corp. | 4.1% |
JPMorgan Chase & Co. | 3.6% |
Johnson & Johnson | 3.4% |
Wells Fargo & Co. | 3.2% |
Merck & Co., Inc. | 2.7% |
Pfizer, Inc. | 2.6% |
General Electric Co. | 2.5% |
Procter & Gamble Co. (The) | 2.3% |
Citigroup, Inc. | 2.1% |
Top Five Industries | % of net assets |
Banks | 14.1% |
Oil, Gas and Consumable Fuels | 13.3% |
Pharmaceuticals | 8.7% |
Insurance | 6.3% |
Capital Markets | 4.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.4% |
Temporary Cash Investments | 0.7% |
Other Assets and Liabilities | (0.1)% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,085.30 | $5.17 | 1.00% |
Investor Class (before waiver) | $1,000 | $1,085.30(2) | $5.69 | 1.10% |
Institutional Class (after waiver) | $1,000 | $1,086.00 | $4.14 | 0.80% |
Institutional Class (before waiver) | $1,000 | $1,086.00(2) | $4.65 | 0.90% |
A Class (after waiver) | $1,000 | $1,084.10 | $6.46 | 1.25% |
A Class (before waiver) | $1,000 | $1,084.10(2) | $6.98 | 1.35% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.84 | $5.01 | 1.00% |
Investor Class (before waiver) | $1,000 | $1,019.34 | $5.51 | 1.10% |
Institutional Class (after waiver) | $1,000 | $1,020.83 | $4.01 | 0.80% |
Institutional Class (before waiver) | $1,000 | $1,020.33 | $4.51 | 0.90% |
A Class (after waiver) | $1,000 | $1,018.60 | $6.26 | 1.25% |
A Class (before waiver) | $1,000 | $1,018.10 | $6.76 | 1.35% |
(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 assumes the return earned after waiver and would have been lower if a portion of the management fee had not been waived. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||||||||||||
COMMON STOCKS — 99.4% | |||||||||||||||||||||
AEROSPACE AND DEFENSE — 2.9% | |||||||||||||||||||||
General Dynamics Corp. | 13,890 | $ | 1,520,260 | ||||||||||||||||||
Honeywell International, Inc. | 10,560 | 981,024 | |||||||||||||||||||
Raytheon Co. | 8,570 | 818,264 | |||||||||||||||||||
Textron, Inc. | 25,940 | 1,060,946 | |||||||||||||||||||
4,380,494 | |||||||||||||||||||||
AIRLINES — 0.4% | |||||||||||||||||||||
Southwest Airlines Co. | 27,850 | 673,135 | |||||||||||||||||||
AUTOMOBILES — 1.2% | |||||||||||||||||||||
Ford Motor Co. | 112,840 | 1,822,366 | |||||||||||||||||||
BANKS — 14.1% | |||||||||||||||||||||
Bank of America Corp. | 136,840 | 2,071,758 | |||||||||||||||||||
Citigroup, Inc. | 68,210 | 3,267,941 | |||||||||||||||||||
JPMorgan Chase & Co. | 96,880 | 5,423,343 | |||||||||||||||||||
KeyCorp | 42,960 | 585,974 | |||||||||||||||||||
PNC Financial Services Group, Inc. (The) | 29,580 | 2,485,903 | |||||||||||||||||||
U.S. Bancorp | 69,640 | 2,839,919 | |||||||||||||||||||
Wells Fargo & Co. | 98,260 | 4,877,626 | |||||||||||||||||||
21,552,464 | |||||||||||||||||||||
BEVERAGES — 0.7% | |||||||||||||||||||||
PepsiCo, Inc. | 11,710 | 1,005,772 | |||||||||||||||||||
BIOTECHNOLOGY — 0.5% | |||||||||||||||||||||
Amgen, Inc. | 4,450 | 497,287 | |||||||||||||||||||
Gilead Sciences, Inc.(1) | 3,950 | 310,036 | |||||||||||||||||||
807,323 | |||||||||||||||||||||
BUILDING PRODUCTS — 0.4% | |||||||||||||||||||||
Masco Corp. | 27,910 | 560,712 | |||||||||||||||||||
CAPITAL MARKETS — 4.3% | |||||||||||||||||||||
Ameriprise Financial, Inc. | 14,100 | 1,573,983 | |||||||||||||||||||
Bank of New York Mellon Corp. (The) | 28,530 | 966,311 | |||||||||||||||||||
BlackRock, Inc. | 4,250 | 1,279,250 | |||||||||||||||||||
Goldman Sachs Group, Inc. (The) | 12,350 | 1,973,777 | |||||||||||||||||||
Morgan Stanley | 24,380 | 754,074 | |||||||||||||||||||
6,547,395 | |||||||||||||||||||||
CHEMICALS — 1.2% | |||||||||||||||||||||
E.I. du Pont de Nemours & Co. | 9,720 | 654,350 | |||||||||||||||||||
LyondellBasell Industries NV, Class A | 13,190 | 1,220,075 | |||||||||||||||||||
1,874,425 | |||||||||||||||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.4% | |||||||||||||||||||||
ADT Corp. (The) | 9,227 | 279,024 | |||||||||||||||||||
Tyco International Ltd. | 10,040 | 410,636 | |||||||||||||||||||
689,660 |
7
Shares | Value | ||||||||||||||||||||
COMMUNICATIONS EQUIPMENT — 2.6% | |||||||||||||||||||||
Cisco Systems, Inc. | 96,130 | $ | 2,221,564 | ||||||||||||||||||
QUALCOMM, Inc. | 23,160 | 1,822,924 | |||||||||||||||||||
4,044,488 | |||||||||||||||||||||
CONSUMER FINANCE — 0.9% | |||||||||||||||||||||
Capital One Financial Corp. | 18,810 | 1,390,059 | |||||||||||||||||||
DIVERSIFIED FINANCIAL SERVICES — 2.1% | |||||||||||||||||||||
Berkshire Hathaway, Inc., Class B(1) | 24,430 | 3,147,806 | |||||||||||||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.9% | |||||||||||||||||||||
AT&T, Inc. | 40,860 | 1,458,702 | |||||||||||||||||||
CenturyLink, Inc. | 27,960 | 976,083 | |||||||||||||||||||
Verizon Communications, Inc. | 9,460 | 442,066 | |||||||||||||||||||
2,876,851 | |||||||||||||||||||||
ELECTRIC UTILITIES — 3.3% | |||||||||||||||||||||
American Electric Power Co., Inc. | 19,550 | 1,051,985 | |||||||||||||||||||
Pinnacle West Capital Corp. | 15,730 | 880,094 | |||||||||||||||||||
PPL Corp. | 32,080 | 1,069,547 | |||||||||||||||||||
Westar Energy, Inc. | 25,630 | 919,604 | |||||||||||||||||||
Xcel Energy, Inc. | 36,040 | 1,148,595 | |||||||||||||||||||
5,069,825 | |||||||||||||||||||||
ELECTRICAL EQUIPMENT — 1.0% | |||||||||||||||||||||
Eaton Corp. plc | 20,800 | 1,510,912 | |||||||||||||||||||
ENERGY EQUIPMENT AND SERVICES — 3.1% | |||||||||||||||||||||
Halliburton Co. | 24,080 | 1,518,726 | |||||||||||||||||||
National Oilwell Varco, Inc. | 20,830 | 1,635,780 | |||||||||||||||||||
Schlumberger Ltd. | 14,960 | 1,519,188 | |||||||||||||||||||
4,673,694 | |||||||||||||||||||||
FOOD AND STAPLES RETAILING — 1.9% | |||||||||||||||||||||
CVS Caremark Corp. | 28,810 | 2,095,063 | |||||||||||||||||||
Kroger Co. (The) | 18,900 | 870,156 | |||||||||||||||||||
2,965,219 | |||||||||||||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 3.1% | |||||||||||||||||||||
Abbott Laboratories | 55,730 | 2,158,980 | |||||||||||||||||||
Medtronic, Inc. | 43,670 | 2,568,670 | |||||||||||||||||||
4,727,650 | |||||||||||||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.8% | |||||||||||||||||||||
Aetna, Inc. | 16,530 | 1,181,068 | |||||||||||||||||||
Quest Diagnostics, Inc. | 7,650 | 427,865 | |||||||||||||||||||
WellPoint, Inc. | 12,100 | 1,218,228 | |||||||||||||||||||
2,827,161 | |||||||||||||||||||||
HOTELS, RESTAURANTS AND LEISURE — 0.8% | |||||||||||||||||||||
Carnival Corp. | 16,010 | 629,353 | |||||||||||||||||||
Marriott International, Inc., Class A | 9,730 | 563,659 | |||||||||||||||||||
1,193,012 | |||||||||||||||||||||
HOUSEHOLD PRODUCTS — 2.3% | |||||||||||||||||||||
Procter & Gamble Co. (The) | 41,940 | 3,462,147 | |||||||||||||||||||
INDUSTRIAL CONGLOMERATES — 2.5% | |||||||||||||||||||||
General Electric Co. | 141,250 | 3,798,213 |
8
Shares | Value | ||||||||||||||||||||
INSURANCE — 6.3% | |||||||||||||||||||||
Allstate Corp. (The) | 30,410 | $ | 1,731,850 | ||||||||||||||||||
American International Group, Inc. | 29,880 | 1,587,524 | |||||||||||||||||||
Chubb Corp. (The) | 7,780 | 716,382 | |||||||||||||||||||
MetLife, Inc. | 36,650 | 1,918,628 | |||||||||||||||||||
Principal Financial Group, Inc. | 13,730 | 643,113 | |||||||||||||||||||
Prudential Financial, Inc. | 16,510 | 1,332,027 | |||||||||||||||||||
Travelers Cos., Inc. (The) | 18,360 | 1,663,049 | |||||||||||||||||||
9,592,573 | |||||||||||||||||||||
IT SERVICES — 0.3% | |||||||||||||||||||||
Sabre Corp.(1) | 26,890 | 442,878 | |||||||||||||||||||
MACHINERY — 1.7% | |||||||||||||||||||||
Ingersoll-Rand plc | 14,920 | 892,216 | |||||||||||||||||||
PACCAR, Inc. | 20,150 | 1,289,197 | |||||||||||||||||||
Stanley Black & Decker, Inc. | 4,570 | 392,517 | |||||||||||||||||||
2,573,930 | |||||||||||||||||||||
MEDIA — 3.1% | |||||||||||||||||||||
CBS Corp., Class B | 8,010 | 462,658 | |||||||||||||||||||
CBS Outdoor Americas, Inc.(1) | 2,386 | 69,910 | |||||||||||||||||||
Comcast Corp., Class A | 28,110 | 1,454,973 | |||||||||||||||||||
Time Warner Cable, Inc. | 5,850 | 827,541 | |||||||||||||||||||
Time Warner, Inc. | 28,180 | 1,872,843 | |||||||||||||||||||
4,687,925 | |||||||||||||||||||||
METALS AND MINING — 1.0% | |||||||||||||||||||||
Freeport-McMoRan Copper & Gold, Inc. | 42,860 | 1,473,098 | |||||||||||||||||||
MULTILINE RETAIL — 2.2% | |||||||||||||||||||||
Macy's, Inc. | 26,820 | 1,540,272 | |||||||||||||||||||
Nordstrom, Inc. | 6,260 | 383,613 | |||||||||||||||||||
Target Corp. | 23,220 | 1,433,835 | |||||||||||||||||||
3,357,720 | |||||||||||||||||||||
OIL, GAS AND CONSUMABLE FUELS — 13.3% | |||||||||||||||||||||
Apache Corp. | 10,910 | 946,988 | |||||||||||||||||||
Chevron Corp. | 50,420 | 6,328,718 | |||||||||||||||||||
Exxon Mobil Corp. | 60,770 | 6,223,456 | |||||||||||||||||||
Imperial Oil Ltd. | 9,780 | 477,556 | |||||||||||||||||||
Marathon Petroleum Corp. | 9,550 | 887,673 | |||||||||||||||||||
Oasis Petroleum, Inc.(1) | 17,040 | 792,530 | |||||||||||||||||||
Occidental Petroleum Corp. | 29,460 | 2,820,795 | |||||||||||||||||||
Total SA ADR | 25,620 | 1,825,169 | |||||||||||||||||||
20,302,885 | |||||||||||||||||||||
PAPER AND FOREST PRODUCTS — 0.7% | |||||||||||||||||||||
International Paper Co. | 21,540 | 1,004,841 |
9
Shares | Value | ||||||||||||||||||||
PHARMACEUTICALS — 8.7% | |||||||||||||||||||||
Johnson & Johnson | 51,850 | $ | 5,251,886 | ||||||||||||||||||
Merck & Co., Inc. | 70,120 | 4,106,227 | |||||||||||||||||||
Pfizer, Inc. | 124,910 | 3,907,185 | |||||||||||||||||||
13,265,298 | |||||||||||||||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.7% | |||||||||||||||||||||
Brixmor Property Group, Inc. | 25,570 | 561,517 | |||||||||||||||||||
Camden Property Trust | 7,850 | 537,647 | |||||||||||||||||||
1,099,164 | |||||||||||||||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.4% | |||||||||||||||||||||
Applied Materials, Inc. | 80,450 | 1,533,377 | |||||||||||||||||||
Intel Corp. | 33,810 | 902,389 | |||||||||||||||||||
Microchip Technology, Inc. | 27,460 | 1,305,448 | |||||||||||||||||||
3,741,214 | |||||||||||||||||||||
SOFTWARE — 3.2% | |||||||||||||||||||||
Electronic Arts, Inc.(1) | 39,410 | 1,115,303 | |||||||||||||||||||
Microsoft Corp. | 42,730 | 1,726,292 | |||||||||||||||||||
Oracle Corp. | 49,680 | 2,030,918 | |||||||||||||||||||
4,872,513 | |||||||||||||||||||||
SPECIALTY RETAIL — 0.4% | |||||||||||||||||||||
Lowe's Cos., Inc. | 14,170 | 650,545 | |||||||||||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 1.2% | |||||||||||||||||||||
Apple, Inc. | 2,560 | 1,510,631 | |||||||||||||||||||
NetApp, Inc. | 10,620 | 378,178 | |||||||||||||||||||
1,888,809 | |||||||||||||||||||||
TOBACCO — 0.6% | |||||||||||||||||||||
Altria Group, Inc. | 21,300 | 854,343 | |||||||||||||||||||
TRADING COMPANIES AND DISTRIBUTORS — 0.2% | |||||||||||||||||||||
United Rentals, Inc.(1) | 4,000 | 375,320 | |||||||||||||||||||
TOTAL COMMON STOCKS (Cost $97,135,372) | 151,783,839 | ||||||||||||||||||||
TEMPORARY CASH INVESTMENTS — 0.7% | |||||||||||||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $306,804), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $300,483) | 300,483 | ||||||||||||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $245,949), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $240,386) | 240,386 | ||||||||||||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $245,274), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $240,386) | 240,386 | ||||||||||||||||||||
SSgA U.S. Government Money Market Fund | 210,257 | 210,257 | |||||||||||||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $991,512) | 991,512 | ||||||||||||||||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $98,126,884) | 152,775,351 | ||||||||||||||||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (86,925) | ||||||||||||||||||||
TOTAL NET ASSETS — 100.0% | $ | 152,688,426 |
10
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | |||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | |||||||||||||||||
USD | 376,696 | CAD | 415,454 | JPMorgan Chase Bank N.A. | 5/30/14 | $ | (2,094 | ) | |||||||||||||
USD | 1,583,319 | EUR | 1,142,436 | UBS AG | 5/30/14 | (1,547 | ) | ||||||||||||||
USD | 44,324 | EUR | 31,960 | UBS AG | 5/30/14 | (13 | ) | ||||||||||||||
$ | (3,654 | ) |
Notes to Schedule of Investments | ||
ADR | - | American Depositary Receipt |
CAD | - | Canadian Dollar |
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $98,126,884) | $ | 152,775,351 | ||||
Foreign currency holdings, at value (cost of $22,469) | 22,617 | |||||
Receivable for investments sold | 597,465 | |||||
Receivable for capital shares sold | 14,416 | |||||
Dividends and interest receivable | 155,490 | |||||
153,565,339 | ||||||
Liabilities | ||||||
Payable for investments purchased | 681,956 | |||||
Payable for capital shares redeemed | 66,768 | |||||
Unrealized depreciation on forward foreign currency exchange contracts | 3,654 | |||||
Accrued management fees | 123,789 | |||||
Distribution and service fees payable | 746 | |||||
876,913 | ||||||
Net Assets | $ | 152,688,426 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 96,116,166 | ||||
Undistributed net investment income | 593,219 | |||||
Undistributed net realized gain | 1,334,080 | |||||
Net unrealized appreciation | 54,644,961 | |||||
$ | 152,688,426 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||
Investor Class, $0.01 Par Value | $145,748,214 | 15,995,889 | $9.11 | ||
Institutional Class, $0.01 Par Value | $3,180,233 | 348,356 | $9.13 | ||
A Class, $0.01 Par Value | $3,759,979 | 413,747 | $9.09* |
* Maximum offering price $9.64 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $7,732) | $ | 1,767,062 | ||
Interest | 82 | |||
1,767,144 | ||||
Expenses: | ||||
Management fees | 808,780 | |||
Distribution and service fees - A Class | 4,302 | |||
Directors' fees and expenses | 2,288 | |||
815,370 | ||||
Fees waived | (74,093) | |||
741,277 | ||||
Net investment income (loss) | 1,025,867 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 4,438,968 | |||
Foreign currency transactions | 3,518 | |||
4,442,486 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 6,716,384 | |||
Translation of assets and liabilities in foreign currencies | (35,716) | |||
6,680,668 | ||||
Net realized and unrealized gain (loss) | 11,123,154 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 12,149,021 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,025,867 | $ | 2,240,364 | ||
Net realized gain (loss) | 4,442,486 | 8,717,281 | ||||
Change in net unrealized appreciation (depreciation) | 6,680,668 | 19,768,371 | ||||
Net increase (decrease) in net assets resulting from operations | 12,149,021 | 30,726,016 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (1,920,651 | ) | (2,047,246 | ) | ||
Institutional Class | (51,046 | ) | (67,677 | ) | ||
A Class | (36,557 | ) | (47,388 | ) | ||
Decrease in net assets from distributions | (2,008,254 | ) | (2,162,311 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | (2,781,175 | ) | (7,183,934 | ) | ||
Net increase (decrease) in net assets | 7,359,592 | 21,379,771 | ||||
Net Assets | ||||||
Beginning of period | 145,328,834 | 123,949,063 | ||||
End of period | $ | 152,688,426 | $ | 145,328,834 | ||
Undistributed net investment income | $ | 593,219 | $ | 1,575,606 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Capital Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class and the A Class. The A Class may incur an initial sales charge. The A Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the
15
fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
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. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
16
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.900% to 1.100% for the Investor Class and A Class. The annual management fee ranges from 0.700% to 0.900% for the Institutional Class. During the six months ended April 30, 2014, the investment advisor voluntarily agreed to waive 0.100% of its management fee. The investment advisor expects the fee waiver to continue through July 31, 2014, and cannot terminate it without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2014 was $70,748, $1,624 and $1,721 for the Investor Class, Institutional Class and A Class, respectively. The effective annual management fee before waiver for each class for the six months ended April 30, 2014 was 1.10% for the Investor Class and A Class and 0.90% for the Institutional Class. The effective annual management fee after waiver for each class for the six months ended April 30, 2014 was 1.00% for the Investor Class and A Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a Master Distribution and Individual Shareholder Services Plan (the plan) for the A Class, pursuant to Rule 12b-1 of the 1940 Act. The plan provides 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 the A Class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plan during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $21,673,443 and $25,408,243, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 623,910 | $ | 5,481,208 | 2,309,072 | $ | 17,554,839 | ||||
Issued in reinvestment of distributions | 216,834 | 1,847,429 | 281,184 | 1,954,229 | ||||||
Redeemed | (1,156,977 | ) | (10,137,210 | ) | (3,292,554 | ) | (25,061,231 | ) | ||
(316,233 | ) | (2,808,573 | ) | (702,298 | ) | (5,552,163 | ) | |||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 8,905 | 77,865 | 5,270 | 43,183 | ||||||
Issued in reinvestment of distributions | 5,746 | 49,014 | 9,357 | 65,127 | ||||||
Redeemed | (51,470 | ) | (454,631 | ) | (201,020 | ) | (1,492,099 | ) | ||
(36,819 | ) | (327,752 | ) | (186,393 | ) | (1,383,789 | ) | |||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 108,975 | 951,798 | 159,663 | 1,241,709 | ||||||
Issued in reinvestment of distributions | 4,248 | 36,111 | 6,716 | 46,609 | ||||||
Redeemed | (71,505 | ) | (632,759 | ) | (201,014 | ) | (1,536,300 | ) | ||
41,718 | 355,150 | (34,635 | ) | (247,982 | ) | |||||
Net increase (decrease) | (311,334 | ) | $ | (2,781,175 | ) | (923,326 | ) | $ | (7,183,934 | ) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 151,306,283 | $ | 477,556 | — | |||
Temporary Cash Investments | 210,257 | 781,255 | — | |||||
$ | 151,516,540 | $ | 1,258,811 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | (3,654 | ) | — |
18
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund's typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2014, is disclosed on the Statement of Assets and Liabilities as a liability of $3,654 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $2,875 in net realized gain (loss) on foreign currency transactions and $(35,813) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 100,086,923 | |
Gross tax appreciation of investments | $ | 52,777,228 | |
Gross tax depreciation of investments | (88,800 | ) | |
Net tax appreciation (depreciation) of investments | $ | 52,688,428 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2013, the fund had accumulated short-term capital losses of $(929,693), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $8.51 | 0.06 | 0.66 | 0.72 | (0.12) | $9.11 | 8.53% | 1.00%(4) | 1.10%(4) | 1.38%(4) | 1.28%(4) | 15% | $145,748 | ||
2013 | $6.89 | 0.13 | 1.61 | 1.74 | (0.12) | $8.51 | 25.67% | 1.00% | 1.10% | 1.66% | 1.56% | 26% | $138,884 | ||
2012 | $5.96 | 0.11 | 0.93 | 1.04 | (0.11) | $6.89 | 17.80% | 1.00% | 1.10% | 1.76% | 1.66% | 32% | $117,210 | ||
2011 | $5.73 | 0.09 | 0.23 | 0.32 | (0.09) | $5.96 | 5.67% | 1.00% | 1.10% | 1.53% | 1.43% | 37% | $111,188 | ||
2010 | $5.32 | 0.09 | 0.42 | 0.51 | (0.10) | $5.73 | 9.69% | 1.09% | 1.11% | 1.56% | 1.54% | 27% | $137,037 | ||
2009 | $5.17 | 0.11 | 0.21 | 0.32 | (0.17) | $5.32 | 6.85% | 1.10% | 1.10% | 2.33% | 2.33% | 19% | $158,431 | ||
Institutional Class | |||||||||||||||
2014(3) | $8.54 | 0.07 | 0.66 | 0.73 | (0.14) | $9.13 | 8.60% | 0.80%(4) | 0.90%(4) | 1.58%(4) | 1.48%(4) | 15% | $3,180 | ||
2013 | $6.90 | 0.15 | 1.62 | 1.77 | (0.13) | $8.54 | 26.00% | 0.80% | 0.90% | 1.86% | 1.76% | 26% | $3,289 | ||
2012 | $5.97 | 0.12 | 0.93 | 1.05 | (0.12) | $6.90 | 18.00% | 0.80% | 0.90% | 1.96% | 1.86% | 32% | $3,943 | ||
2011 | $5.74 | 0.10 | 0.24 | 0.34 | (0.11) | $5.97 | 5.87% | 0.80% | 0.90% | 1.73% | 1.63% | 37% | $3,618 | ||
2010 | $5.32 | 0.10 | 0.43 | 0.53 | (0.11) | $5.74 | 10.11% | 0.89% | 0.91% | 1.76% | 1.74% | 27% | $3,980 | ||
2009 | $5.17 | 0.12 | 0.21 | 0.33 | (0.18) | $5.32 | 7.07% | 0.90% | 0.90% | 2.53% | 2.53% | 19% | $8,035 |
20
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class(5) | |||||||||||||||
2014(3) | $8.48 | 0.05 | 0.66 | 0.71 | (0.10) | $9.09 | 8.41% | 1.25%(4) | 1.35%(4) | 1.13%(4) | 1.03%(4) | 15% | $3,760 | ||
2013 | $6.87 | 0.11 | 1.62 | 1.73 | (0.12) | $8.48 | 25.51% | 1.25% | 1.35% | 1.41% | 1.31% | 26% | $3,155 | ||
2012 | $5.95 | 0.10 | 0.92 | 1.02 | (0.10) | $6.87 | 17.37% | 1.25% | 1.35% | 1.51% | 1.41% | 32% | $2,796 | ||
2011 | $5.72 | 0.08 | 0.23 | 0.31 | (0.08) | $5.95 | 5.41% | 1.25% | 1.35% | 1.28% | 1.18% | 37% | $3,326 | ||
2010 | $5.30 | 0.07 | 0.44 | 0.51 | (0.09) | $5.72 | 9.64% | 1.34% | 1.36% | 1.31% | 1.29% | 27% | $4,130 | ||
2009 | $5.15 | 0.10 | 0.21 | 0.31 | (0.16) | $5.30 | 6.59% | 1.35% | 1.35% | 2.08% | 2.08% | 19% | $4,881 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
See Notes to Financial Statements.
21
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
22
Notes |
23
Notes |
24
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82267 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Focused Growth Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Investor Class | AFSIX | 6.20% | 19.08% | 16.56% | 7.21% | 2/28/05 |
Russell 1000 Growth Index | — | 6.95% | 20.66% | 19.45% | 8.25% | — |
Institutional Class | AFGNX | 6.28% | 19.24% | 16.79% | 6.12% | 9/28/07 |
A Class | AFGAX | 9/28/07 | ||||
No sales charge* | 6.08% | 18.72% | 16.29% | 5.66% | ||
With sales charge* | -0.05% | 11.89% | 14.91% | 4.71% | ||
C Class | AFGCX | 9/28/07 | ||||
No sales charge* | 5.68% | 17.90% | 15.43% | 4.86% | ||
With sales charge* | 4.74% | 17.90% | 15.43% | 4.86% | ||
R Class | AFGRX | 5.93% | 18.43% | 16.01% | 5.38% | 9/28/07 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.01% | 0.81% | 1.26% | 2.01% | 1.51% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Schlumberger Ltd. | 4.3% |
PepsiCo, Inc. | 4.2% |
Oracle Corp. | 4.1% |
Google, Inc.* | 4.0% |
Comcast Corp., Class A | 3.8% |
Honeywell International, Inc. | 3.4% |
MasterCard, Inc., Class A | 3.3% |
General Mills, Inc. | 3.2% |
Monsanto Co. | 3.2% |
Mead Johnson Nutrition Co. | 2.9% |
* Includes all classes of the issuer. | |
Top Five Industries | % of net assets |
Food Products | 7.0% |
Software | 6.7% |
Aerospace and Defense | 5.9% |
IT Services | 5.9% |
Media | 5.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.7% |
Exchange-Traded Funds | 0.7% |
Total Equity Exposure | 98.4% |
Temporary Cash Investments | 1.8% |
Other Assets and Liabilities | (0.2)% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,062.00 | $5.11 | 1.00% |
Institutional Class | $1,000 | $1,062.80 | $4.09 | 0.80% |
A Class | $1,000 | $1,060.80 | $6.39 | 1.25% |
C Class | $1,000 | $1,056.80 | $10.20 | 2.00% |
R Class | $1,000 | $1,059.30 | $7.66 | 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% |
A 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% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||
COMMON STOCKS — 97.7% | |||||||||
AEROSPACE AND DEFENSE — 5.9% | |||||||||
Boeing Co. (The) | 2,936 | $ | 378,803 | ||||||
Honeywell International, Inc. | 6,297 | 584,991 | |||||||
United Technologies Corp. | 441 | 52,184 | |||||||
1,015,978 | |||||||||
AIRLINES — 0.1% | |||||||||
Alaska Air Group, Inc. | 166 | 15,617 | |||||||
AUTO COMPONENTS — 0.1% | |||||||||
BorgWarner, Inc. | 390 | 24,235 | |||||||
AUTOMOBILES — 1.6% | |||||||||
Harley-Davidson, Inc. | 3,599 | 266,110 | |||||||
BANKS — 2.6% | |||||||||
SunTrust Banks, Inc. | 11,390 | 435,781 | |||||||
BEVERAGES — 4.2% | |||||||||
PepsiCo, Inc. | 8,447 | 725,513 | |||||||
BIOTECHNOLOGY — 4.6% | |||||||||
Alexion Pharmaceuticals, Inc.(1) | 1,899 | 300,422 | |||||||
Incyte Corp. Ltd.(1) | 563 | 27,339 | |||||||
Regeneron Pharmaceuticals, Inc.(1) | 1,560 | 463,149 | |||||||
790,910 | |||||||||
CAPITAL MARKETS — 1.1% | |||||||||
Franklin Resources, Inc. | 3,416 | 178,827 | |||||||
State Street Corp. | 114 | 7,360 | |||||||
186,187 | |||||||||
CHEMICALS — 5.1% | |||||||||
Dow Chemical Co. (The) | 3,990 | 199,101 | |||||||
LyondellBasell Industries NV, Class A | 1,398 | 129,315 | |||||||
Monsanto Co. | 4,927 | 545,419 | |||||||
873,835 | |||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.8% | |||||||||
Tyco International Ltd. | 3,376 | 138,078 | |||||||
COMMUNICATIONS EQUIPMENT — 2.9% | |||||||||
QUALCOMM, Inc. | 6,192 | 487,372 | |||||||
ELECTRICAL EQUIPMENT — 2.4% | |||||||||
Rockwell Automation, Inc. | 3,388 | 403,782 | |||||||
ENERGY EQUIPMENT AND SERVICES — 4.3% | |||||||||
Schlumberger Ltd. | 7,184 | 729,535 | |||||||
FOOD PRODUCTS — 7.0% | |||||||||
General Mills, Inc. | 10,302 | 546,212 | |||||||
Hershey Co. (The) | 1,587 | 152,733 | |||||||
Mead Johnson Nutrition Co. | 5,582 | 492,667 | |||||||
1,191,612 |
7
Shares | Value | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 1.7% | |||||||||
C.R. Bard, Inc. | 2,174 | $ | 298,555 | ||||||
HEALTH CARE PROVIDERS AND SERVICES — 5.0% | |||||||||
Cardinal Health, Inc. | 6,072 | 422,065 | |||||||
Express Scripts Holding Co.(1) | 6,468 | 430,639 | |||||||
852,704 | |||||||||
HOTELS, RESTAURANTS AND LEISURE — 2.8% | |||||||||
Las Vegas Sands Corp. | 4,219 | 333,849 | |||||||
Marriott International, Inc., Class A | 2,593 | 150,213 | |||||||
484,062 | |||||||||
INTERNET SOFTWARE AND SERVICES — 5.7% | |||||||||
Facebook, Inc., Class A(1) | 4,664 | 278,814 | |||||||
Google, Inc., Class A(1) | 656 | 350,881 | |||||||
Google, Inc., Class C(1) | 647 | 340,749 | |||||||
970,444 | |||||||||
IT SERVICES — 5.9% | |||||||||
MasterCard, Inc., Class A | 7,623 | 560,672 | |||||||
Visa, Inc., Class A | 2,191 | 443,918 | |||||||
1,004,590 | |||||||||
MACHINERY — 2.9% | |||||||||
Parker-Hannifin Corp. | 2,593 | 329,000 | |||||||
WABCO Holdings, Inc.(1) | 1,609 | 172,179 | |||||||
501,179 | |||||||||
MEDIA — 5.8% | |||||||||
CBS Corp., Class B | 5,830 | 336,741 | |||||||
Comcast Corp., Class A | 12,480 | 645,965 | |||||||
982,706 | |||||||||
OIL, GAS AND CONSUMABLE FUELS — 0.8% | |||||||||
EOG Resources, Inc. | 508 | 49,784 | |||||||
Noble Energy, Inc. | 1,257 | 90,228 | |||||||
140,012 | |||||||||
PHARMACEUTICALS — 1.9% | |||||||||
Johnson & Johnson | 3,197 | 323,824 | |||||||
ROAD AND RAIL — 2.1% | |||||||||
Union Pacific Corp. | 1,910 | 363,721 | |||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.3% | |||||||||
Linear Technology Corp. | 8,710 | 387,595 | |||||||
SOFTWARE — 6.7% | |||||||||
Electronic Arts, Inc.(1) | 7,143 | 202,147 | |||||||
Oracle Corp. | 17,326 | 708,287 | |||||||
VMware, Inc., Class A(1) | 2,583 | 238,953 | |||||||
1,149,387 | |||||||||
SPECIALTY RETAIL — 5.4% | |||||||||
AutoZone, Inc.(1) | 816 | 435,654 | |||||||
Home Depot, Inc. (The) | 6,164 | 490,100 | |||||||
925,754 |
8
Shares | Value | ||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 4.5% | |||||||||
Apple, Inc. | 32 | $ | 18,883 | ||||||
Hewlett-Packard Co. | 11,228 | 371,198 | |||||||
SanDisk Corp. | 4,389 | 372,933 | |||||||
763,014 | |||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.5% | |||||||||
Hanesbrands, Inc. | 3,216 | 264,002 | |||||||
TOTAL COMMON STOCKS (Cost $12,801,402) | 16,696,094 | ||||||||
EXCHANGE-TRADED FUNDS — 0.7% | |||||||||
iShares Russell 1000 Growth Index Fund (Cost $119,245) | 1,413 | 122,366 | |||||||
TEMPORARY CASH INVESTMENTS — 1.8% | |||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $93,813), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $91,881) | 91,881 | ||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $75,205), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $73,504) | 73,504 | ||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $74,999), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $73,504) | 73,504 | ||||||||
SSgA U.S. Government Money Market Fund | 64,292 | 64,292 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $303,181) | 303,181 | ||||||||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $13,223,828) | 17,121,641 | ||||||||
OTHER ASSETS AND LIABILITIES — (0.2)% | (28,578) | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 17,093,063 |
Notes to Schedule of Investments |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $13,223,828) | $ | 17,121,641 | ||||
Receivable for capital shares sold | 1,837 | |||||
Dividends and interest receivable | 7,231 | |||||
17,130,709 | ||||||
Liabilities | ||||||
Payable for capital shares redeemed | 22,924 | |||||
Accrued management fees | 14,097 | |||||
Distribution and service fees payable | 625 | |||||
37,646 | ||||||
Net Assets | $ | 17,093,063 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 11,354,827 | ||||
Undistributed net investment income | �� | 22,999 | ||||
Undistributed net realized gain | 1,817,424 | |||||
Net unrealized appreciation | 3,897,813 | |||||
$ | 17,093,063 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $15,450,974 | 1,098,350 | $14.07 | |
Institutional Class, $0.01 Par Value | $36,983 | 2,628 | $14.07 | |
A Class, $0.01 Par Value | $1,065,511 | 75,902 | $14.04* | |
C Class, $0.01 Par Value | $427,366 | 31,383 | $13.62 | |
R Class, $0.01 Par Value | $112,229 | 8,034 | $13.97 |
* Maximum offering price $14.90 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends | $ | 124,966 | ||
Interest | 18 | |||
124,984 | ||||
Expenses: | ||||
Management fees | 85,377 | |||
Distribution and service fees: | ||||
A Class | 1,055 | |||
C Class | 2,229 | |||
R Class | 541 | |||
Directors' fees and expenses | 277 | |||
Other expenses | 63 | |||
89,542 | ||||
Net investment income (loss) | 35,442 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 1,869,487 | |||
Change in net unrealized appreciation (depreciation) on investments | (860,213 | ) | ||
Net realized and unrealized gain (loss) | 1,009,274 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,044,716 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 35,442 | $ | 99,163 | ||
Net realized gain (loss) | 1,869,487 | 2,560,514 | ||||
Change in net unrealized appreciation (depreciation) | (860,213 | ) | 1,112,666 | |||
Net increase (decrease) in net assets resulting from operations | 1,044,716 | 3,772,343 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (64,380 | ) | (98,934 | ) | ||
Institutional Class | (216 | ) | (210 | ) | ||
A Class | (1,153 | ) | (5,216 | ) | ||
C Class | — | (1,351 | ) | |||
R Class | — | (3,125 | ) | |||
From net realized gains: | ||||||
Investor Class | (1,657,959 | ) | — | |||
Institutional Class | (3,744 | ) | — | |||
A Class | (75,832 | ) | — | |||
C Class | (48,564 | ) | — | |||
R Class | (11,461 | ) | — | |||
Decrease in net assets from distributions | (1,863,309 | ) | (108,836 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 277,307 | (2,130,667 | ) | |||
Net increase (decrease) in net assets | (541,286 | ) | 1,532,840 | |||
Net Assets | ||||||
Beginning of period | 17,634,349 | 16,101,509 | ||||
End of period | $ | 17,093,063 | $ | 17,634,349 | ||
Undistributed net investment income | $ | 22,999 | $ | 53,306 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Focused Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
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The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. 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. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
14
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.800% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 1.00% for the Investor Class, A Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $7,231,835 and $8,790,184, respectively.
15
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 29,483 | $ | 414,518 | 106,961 | $ | 1,348,320 | ||||
Issued in reinvestment of distributions | 126,729 | 1,704,510 | 7,954 | 97,837 | ||||||
Redeemed | (109,817 | ) | (1,564,759 | ) | (214,810 | ) | (2,875,301 | ) | ||
46,395 | 554,269 | (99,895 | ) | (1,429,144 | ) | |||||
Institutional Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Issued in reinvestment of distributions | 295 | 3,960 | 17 | 210 | ||||||
A Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 28,689 | 403,086 | 1,156 | 14,867 | ||||||
Issued in reinvestment of distributions | 5,575 | 74,867 | 414 | 5,093 | ||||||
Redeemed | (10,263 | ) | (149,003 | ) | (64,494 | ) | (794,634 | ) | ||
24,001 | 328,950 | (62,924 | ) | (774,674 | ) | |||||
C Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 2,234 | 31,587 | 19,412 | 246,001 | ||||||
Issued in reinvestment of distributions | 3,058 | 39,961 | 86 | 1,041 | ||||||
Redeemed | (3,896 | ) | (53,100 | ) | (15,979 | ) | (211,475 | ) | ||
1,396 | 18,448 | 3,519 | 35,567 | |||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 222 | 3,281 | 2,708 | 36,786 | ||||||
Issued in reinvestment of distributions | 856 | 11,461 | 255 | 3,125 | ||||||
Redeemed | (42,542 | ) | (643,062 | ) | (198 | ) | (2,537 | ) | ||
(41,464 | ) | (628,320 | ) | 2,765 | 37,374 | |||||
Net increase (decrease) | 30,623 | $ | 277,307 | (156,518 | ) | $ | (2,130,667 | ) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
16
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 16,696,094 | — | — | ||||
Exchange-Traded Funds | 122,366 | — | — | |||||
Temporary Cash Investments | 64,292 | $ | 238,889 | — | ||||
$ | 16,882,752 | $ | 238,889 | — |
7. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 13,264,773 | |
Gross tax appreciation of investments | $ | 3,912,172 | |
Gross tax depreciation of investments | (55,304 | ) | |
Net tax appreciation (depreciation) of investments | $ | 3,856,868 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
17
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $14.89 | 0.03 | 0.81 | 0.84 | (0.06) | (1.60) | (1.66) | $14.07 | 6.20% | 1.00%(4) | 0.46%(4) | 42% | $15,451 | ||
2013 | $12.00 | 0.08 | 2.89 | 2.97 | (0.08) | – | (0.08) | $14.89 | 24.93% | 1.00% | 0.64% | 73% | $15,664 | ||
2012 | $10.70 | 0.08 | 1.28 | 1.36 | (0.06) | – | (0.06) | $12.00 | 12.78% | 1.01% | 0.70% | 59% | $13,828 | ||
2011 | $10.17 | 0.06 | 0.53 | 0.59 | (0.06) | – | (0.06) | $10.70 | 5.76% | 1.00% | 0.54% | 91% | $14,335 | ||
2010 | $8.73 | 0.04 | 1.40 | 1.44 | –(5) | – | –(5) | $10.17 | 16.54% | 1.02% | 0.38% | 66% | $12,739 | ||
2009 | $7.73 | 0.04 | 1.01 | 1.05 | (0.05) | – | (0.05) | $8.73 | 13.77% | 1.00% | 0.50% | 125% | $12,541 | ||
Institutional Class | |||||||||||||||
2014(3) | $14.91 | 0.05 | 0.80 | 0.85 | (0.09) | (1.60) | (1.69) | $14.07 | 6.28% | 0.80%(4) | 0.66%(4) | 42% | $37 | ||
2013 | $12.01 | 0.11 | 2.88 | 2.99 | (0.09) | – | (0.09) | $14.91 | 25.06% | 0.80% | 0.84% | 73% | $35 | ||
2012 | $10.70 | 0.10 | 1.29 | 1.39 | (0.08) | – | (0.08) | $12.01 | 13.09% | 0.81% | 0.90% | 59% | $28 | ||
2011 | $10.17 | 0.08 | 0.53 | 0.61 | (0.08) | – | (0.08) | $10.70 | 5.98% | 0.80% | 0.74% | 91% | $25 | ||
2010 | $8.73 | 0.05 | 1.41 | 1.46 | (0.02) | – | (0.02) | $10.17 | 16.77% | 0.82% | 0.58% | 66% | $23 | ||
2009 | $7.73 | 0.05 | 1.01 | 1.06 | (0.06) | – | (0.06) | $8.73 | 14.00% | 0.80% | 0.70% | 125% | $20 |
18
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||
2014(3) | $14.84 | 0.01 | 0.81 | 0.82 | (0.02) | (1.60) | (1.62) | $14.04 | 6.08% | 1.25%(4) | 0.21%(4) | 42% | $1,066 | ||
2013 | $11.99 | 0.05 | 2.88 | 2.93 | (0.08) | – | (0.08) | $14.84 | 24.53% | 1.25% | 0.39% | 73% | $770 | ||
2012 | $10.68 | 0.05 | 1.29 | 1.34 | (0.03) | – | (0.03) | $11.99 | 12.62% | 1.26% | 0.45% | 59% | $1,376 | ||
2011 | $10.15 | 0.04 | 0.52 | 0.56 | (0.03) | – | (0.03) | $10.68 | 5.51% | 1.25% | 0.29% | 91% | $1,040 | ||
2010 | $8.74 | 0.01 | 1.40 | 1.41 | – | – | – | $10.15 | 16.27% | 1.27% | 0.13% | 66% | $501 | ||
2009 | $7.73 | 0.02 | 1.02 | 1.04 | (0.03) | – | (0.03) | $8.74 | 13.48% | 1.25% | 0.25% | 125% | $373 | ||
C Class | |||||||||||||||
2014(3) | $14.47 | (0.04) | 0.79 | 0.75 | – | (1.60) | (1.60) | $13.62 | 5.68% | 2.00%(4) | (0.54)%(4) | 42% | $427 | ||
2013 | $11.75 | (0.05) | 2.82 | 2.77 | (0.05) | – | (0.05) | $14.47 | 23.65% | 2.00% | (0.36)% | 73% | $434 | ||
2012 | $10.52 | (0.03) | 1.26 | 1.23 | – | – | – | $11.75 | 11.69% | 2.01% | (0.30)% | 59% | $311 | ||
2011 | $10.05 | (0.05) | 0.52 | 0.47 | – | – | – | $10.52 | 4.68% | 2.00% | (0.46)% | 91% | $346 | ||
2010 | $8.71 | (0.06) | 1.40 | 1.34 | – | – | – | $10.05 | 15.38% | 2.02% | (0.62)% | 66% | $131 | ||
2009 | $7.73 | (0.04) | 1.02 | 0.98 | – | – | – | $8.71 | 12.68% | 2.00% | (0.50)% | 125% | $90 |
19
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||
2014(3) | $14.77 | 0.02 | 0.78 | 0.80 | – | (1.60) | (1.60) | $13.97 | 5.93% | 1.50%(4) | (0.04)%(4) | 42% | $112 | ||
2013 | $11.95 | 0.02 | 2.87 | 2.89 | (0.07) | – | (0.07) | $14.77 | 24.27% | 1.50% | 0.14% | 73% | $731 | ||
2012 | $10.65 | 0.02 | 1.29 | 1.31 | (0.01) | – | (0.01) | $11.95 | 12.29% | 1.51% | 0.20% | 59% | $558 | ||
2011 | $10.12 | 0.01 | 0.52 | 0.53 | –(5) | – | –(5) | $10.65 | 5.26% | 1.50% | 0.04% | 91% | $480 | ||
2010 | $8.73 | (0.01) | 1.40 | 1.39 | – | – | – | $10.12 | 15.92% | 1.52% | (0.12)% | 66% | $24 | ||
2009 | $7.73 | –(5) | 1.02 | 1.02 | (0.02) | – | (0.02) | $8.73 | 13.19% | 1.50% | 0.00%(6) | 125% | $20 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | Ratio was less than 0.005%. |
See Notes to Financial Statements.
20
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
21
Notes |
22
Notes |
23
Notes |
24
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82266 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Fundamental Equity Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
A Class | AFDAX | 11/30/04 | ||||
No sales charge* | 7.69% | 18.90% | 18.23% | 9.01% | ||
With sales charge* | 1.49% | 12.09% | 16.85% | 8.33% | ||
S&P 500 Index | — | 8.36% | 20.44% | 19.13% | 7.37% | — |
Investor Class | AFDIX | 7.88% | 19.21% | 18.54% | 8.94% | 7/29/05 |
Institutional Class | AFEIX | 7.96% | 19.48% | 18.76% | 9.15% | 7/29/05 |
B Class | AFDBX | 11/30/04 | ||||
No sales charge* | 7.34% | 18.03% | 17.34% | 8.19% | ||
With sales charge* | 2.34% | 14.03% | 17.24% | 8.19% | ||
C Class | AFDCX | 11/30/04 | ||||
No sales charge* | 7.28% | 18.03% | 17.34% | 8.19% | ||
With sales charge* | 6.28% | 18.03% | 17.34% | 8.19% | ||
R Class | AFDRX | 7.57% | 18.62% | 17.94% | 8.38% | 7/29/05 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge 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 to 0.00% after the sixth year. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.01% | 0.81% | 1.26% | 2.01% | 2.01% | 1.51% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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.
3
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Exxon Mobil Corp. | 4.2% |
Apple, Inc. | 3.4% |
JPMorgan Chase & Co. | 2.7% |
Wells Fargo & Co. | 2.6% |
Johnson & Johnson | 2.2% |
Citigroup, Inc. | 2.1% |
Home Depot, Inc. (The) | 2.1% |
PepsiCo, Inc. | 2.0% |
Pfizer, Inc. | 2.0% |
Comcast Corp., Class A | 2.0% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 8.3% |
Banks | 7.6% |
Pharmaceuticals | 5.9% |
Technology Hardware, Storage and Peripherals | 5.5% |
Aerospace and Defense | 5.0% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.2% |
Exchange-Traded Funds | 0.4% |
Total Equity Exposure | 99.6% |
Temporary Cash Investments | 0.5% |
Other Assets and Liabilities | (0.1)% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,078.80 | $5.15 | 1.00% |
Institutional Class | $1,000 | $1,079.60 | $4.13 | 0.80% |
A Class | $1,000 | $1,076.90 | $6.44 | 1.25% |
B Class | $1,000 | $1,073.40 | $10.28 | 2.00% |
C Class | $1,000 | $1,072.80 | $10.28 | 2.00% |
R Class | $1,000 | $1,075.70 | $7.72 | 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% |
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% |
R Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||
COMMON STOCKS — 99.2% | |||||||||
AEROSPACE AND DEFENSE — 5.0% | |||||||||
Boeing Co. (The) | 30,520 | $ | 3,937,690 | ||||||
General Dynamics Corp. | 18,242 | 1,996,587 | |||||||
Honeywell International, Inc. | 38,423 | 3,569,497 | |||||||
Lockheed Martin Corp. | 6,125 | 1,005,358 | |||||||
Northrop Grumman Corp. | 7,781 | 945,469 | |||||||
11,454,601 | |||||||||
AIR FREIGHT AND LOGISTICS† | |||||||||
United Parcel Service, Inc., Class B | 950 | 93,575 | |||||||
AIRLINES — 0.7% | |||||||||
Allegiant Travel Co. | 3,696 | 434,095 | |||||||
Delta Air Lines, Inc. | 31,367 | 1,155,247 | |||||||
1,589,342 | |||||||||
BANKS — 7.6% | |||||||||
Bank of America Corp. | 4,280 | 64,799 | |||||||
Bank of Hawaii Corp. | 5,843 | 322,358 | |||||||
Citigroup, Inc. | 101,169 | 4,847,007 | |||||||
JPMorgan Chase & Co. | 110,695 | 6,196,706 | |||||||
Wells Fargo & Co. | 122,128 | 6,062,434 | |||||||
17,493,304 | |||||||||
BEVERAGES — 3.0% | |||||||||
Coca-Cola Enterprises, Inc. | 11,368 | 516,562 | |||||||
Dr Pepper Snapple Group, Inc. | 31,699 | 1,756,759 | |||||||
PepsiCo, Inc. | 54,136 | 4,649,741 | |||||||
6,923,062 | |||||||||
BIOTECHNOLOGY — 2.3% | |||||||||
Alexion Pharmaceuticals, Inc.(1) | 850 | 134,470 | |||||||
Amgen, Inc. | 28,976 | 3,238,068 | |||||||
Biogen Idec, Inc.(1) | 2,190 | 628,793 | |||||||
Gilead Sciences, Inc.(1) | 6,913 | 542,601 | |||||||
Regeneron Pharmaceuticals, Inc.(1) | 2,178 | 646,627 | |||||||
5,190,559 | |||||||||
CAPITAL MARKETS — 1.1% | |||||||||
Ameriprise Financial, Inc. | 9,052 | 1,010,475 | |||||||
Franklin Resources, Inc. | 5,070 | 265,414 | |||||||
Goldman Sachs Group, Inc. (The) | 2,055 | 328,430 | |||||||
Legg Mason, Inc. | 18,431 | 864,230 | |||||||
2,468,549 | |||||||||
CHEMICALS — 2.3% | |||||||||
Ashland, Inc. | 1,336 | 129,058 | |||||||
CF Industries Holdings, Inc. | 7,090 | 1,738,255 | |||||||
Dow Chemical Co. (The) | 20,238 | 1,009,876 |
7
Shares | Value | ||||||||
Eastman Chemical Co. | 1,735 | $ | 151,240 | ||||||
LyondellBasell Industries NV, Class A | 20,407 | 1,887,648 | |||||||
PPG Industries, Inc. | 2,408 | 466,237 | |||||||
5,382,314 | |||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.1% | |||||||||
Knoll, Inc. | 9,160 | 166,620 | |||||||
COMMUNICATIONS EQUIPMENT — 3.1% | |||||||||
Cisco Systems, Inc. | 158,250 | 3,657,158 | |||||||
Motorola Solutions, Inc. | 3,380 | 214,900 | |||||||
QUALCOMM, Inc. | 41,420 | 3,260,168 | |||||||
7,132,226 | |||||||||
CONSTRUCTION AND ENGINEERING — 0.3% | |||||||||
EMCOR Group, Inc. | 7,762 | 356,974 | |||||||
Fluor Corp. | 3,784 | 286,449 | |||||||
643,423 | |||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.2% | |||||||||
McGraw-Hill Cos., Inc. (The) | 2,111 | 156,066 | |||||||
Moody's Corp. | 4,131 | 324,284 | |||||||
480,350 | |||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.9% | |||||||||
AT&T, Inc. | 49,157 | 1,754,905 | |||||||
CenturyLink, Inc. | 12,298 | 429,323 | |||||||
Verizon Communications, Inc. | 45,128 | 2,108,832 | |||||||
4,293,060 | |||||||||
ELECTRIC UTILITIES — 1.2% | |||||||||
Entergy Corp. | 9,985 | 723,913 | |||||||
Northeast Utilities | 12,565 | 593,822 | |||||||
Xcel Energy, Inc. | 44,881 | 1,430,357 | |||||||
2,748,092 | |||||||||
ELECTRICAL EQUIPMENT — 1.0% | |||||||||
Emerson Electric Co. | 32,271 | 2,200,237 | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.5% | |||||||||
Belden, Inc. | 8,898 | 656,761 | |||||||
Jabil Circuit, Inc. | 5,296 | 91,409 | |||||||
Knowles Corp.(1) | 13,242 | 369,849 | |||||||
1,118,019 | |||||||||
ENERGY EQUIPMENT AND SERVICES — 1.8% | |||||||||
Cameron International Corp.(1) | 5,507 | 357,735 | |||||||
National Oilwell Varco, Inc. | 7,476 | 587,090 | |||||||
Patterson-UTI Energy, Inc. | 20,809 | 676,917 | |||||||
Schlumberger Ltd. | 25,951 | 2,635,324 | |||||||
4,257,066 | |||||||||
FOOD AND STAPLES RETAILING — 2.1% | |||||||||
Kroger Co. (The) | 45,473 | 2,093,577 | |||||||
Safeway, Inc. | 11,052 | 376,431 | |||||||
Sysco Corp. | 1,597 | 58,179 | |||||||
Wal-Mart Stores, Inc. | 27,639 | 2,203,104 | |||||||
4,731,291 |
8
Shares | Value | ||||||||
FOOD PRODUCTS — 1.9% | |||||||||
Archer-Daniels-Midland Co. | 6,089 | $ | 266,272 | ||||||
ConAgra Foods, Inc. | 17,591 | 536,701 | |||||||
General Mills, Inc. | 25,496 | 1,351,798 | |||||||
Keurig Green Mountain, Inc. | 3,788 | 354,860 | |||||||
Tyson Foods, Inc., Class A | 43,164 | 1,811,593 | |||||||
4,321,224 | |||||||||
GAS UTILITIES — 0.1% | |||||||||
Questar Corp. | 7,324 | 177,827 | |||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.2% | |||||||||
Abbott Laboratories | 25,155 | 974,505 | |||||||
Boston Scientific Corp.(1) | 14,676 | 185,064 | |||||||
C.R. Bard, Inc. | 1,466 | 201,326 | |||||||
Covidien plc | 1,399 | 99,679 | |||||||
Medtronic, Inc. | 45,746 | 2,690,780 | |||||||
ResMed, Inc. | 9,989 | 497,951 | |||||||
Stryker Corp. | 5,187 | 403,289 | |||||||
5,052,594 | |||||||||
HEALTH CARE PROVIDERS AND SERVICES — 3.5% | |||||||||
Aetna, Inc. | 18,578 | 1,327,398 | |||||||
AmerisourceBergen Corp. | 41,903 | 2,731,238 | |||||||
Cardinal Health, Inc. | 41,583 | 2,890,434 | |||||||
Express Scripts Holding Co.(1) | 11,969 | 796,896 | |||||||
UnitedHealth Group, Inc. | 4,037 | 302,936 | |||||||
8,048,902 | |||||||||
HOTELS, RESTAURANTS AND LEISURE — 1.3% | |||||||||
Bally Technologies, Inc.(1) | 3,861 | 251,390 | |||||||
Brinker International, Inc. | 1,457 | 71,597 | |||||||
Cheesecake Factory, Inc. (The) | 2,863 | 128,520 | |||||||
Las Vegas Sands Corp. | 543 | 42,967 | |||||||
Wendy's Co. (The) | 27,217 | 226,173 | |||||||
Wyndham Worldwide Corp. | 17,564 | 1,253,016 | |||||||
Wynn Resorts Ltd. | 4,773 | 973,167 | |||||||
2,946,830 | |||||||||
HOUSEHOLD DURABLES — 0.1% | |||||||||
Tupperware Brands Corp. | 3,922 | 333,017 | |||||||
HOUSEHOLD PRODUCTS — 0.9% | |||||||||
Kimberly-Clark Corp. | 18,850 | 2,115,912 | |||||||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS — 0.1% | |||||||||
AES Corp. (The) | 22,048 | 318,594 | |||||||
INDUSTRIAL CONGLOMERATES — 0.1% | |||||||||
General Electric Co. | 9,438 | 253,788 | |||||||
INSURANCE — 4.5% | |||||||||
ACE Ltd. | 8,567 | 876,576 | |||||||
Aflac, Inc. | 8,831 | 553,880 | |||||||
American Financial Group, Inc. | 5,326 | 311,198 | |||||||
American International Group, Inc. | 30,820 | 1,637,467 | |||||||
Assurant, Inc. | 10,519 | 709,086 |
9
Shares | Value | ||||||||
Chubb Corp. (The) | 5,295 | $ | 487,564 | ||||||
MetLife, Inc. | 9,078 | 475,233 | |||||||
Principal Financial Group, Inc. | 14,223 | 666,205 | |||||||
Travelers Cos., Inc. (The) | 29,586 | 2,679,900 | |||||||
Unum Group | 60,988 | 2,026,021 | |||||||
10,423,130 | |||||||||
INTERNET AND CATALOG RETAIL — 0.7% | |||||||||
Expedia, Inc. | 15,982 | 1,134,562 | |||||||
Priceline Group, Inc. (The)(1) | 194 | 224,603 | |||||||
TripAdvisor, Inc.(1) | 3,171 | 256,027 | |||||||
1,615,192 | |||||||||
INTERNET SOFTWARE AND SERVICES — 2.5% | |||||||||
AOL, Inc.(1) | 4,528 | 193,844 | |||||||
Facebook, Inc., Class A(1) | 27,541 | 1,646,401 | |||||||
Google, Inc., Class A(1) | 2,650 | 1,417,432 | |||||||
Google, Inc., Class C(1) | 2,650 | 1,395,649 | |||||||
IAC/InterActiveCorp | 1,924 | 127,523 | |||||||
VeriSign, Inc.(1) | 20,037 | 945,345 | |||||||
5,726,194 | |||||||||
IT SERVICES — 3.7% | |||||||||
Accenture plc, Class A | 18,042 | 1,447,329 | |||||||
Alliance Data Systems Corp.(1) | 3,190 | 771,661 | |||||||
Blackhawk Network Holdings, Inc., Class B(1) | 1,815 | 41,799 | |||||||
Cognizant Technology Solutions Corp., Class A(1) | 4,721 | 226,160 | |||||||
Computer Sciences Corp. | 4,298 | 254,356 | |||||||
MasterCard, Inc., Class A | 21,140 | 1,554,847 | |||||||
Visa, Inc., Class A | 15,651 | 3,171,049 | |||||||
Western Union Co. (The) | 61,393 | 974,307 | |||||||
8,441,508 | |||||||||
LEISURE PRODUCTS — 0.3% | |||||||||
Hasbro, Inc. | 13,915 | 768,943 | |||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.3% | |||||||||
Agilent Technologies, Inc. | 9,145 | 494,196 | |||||||
Thermo Fisher Scientific, Inc. | 2,165 | 246,810 | |||||||
741,006 | |||||||||
MACHINERY — 2.7% | |||||||||
AGCO Corp. | 3,221 | 179,410 | |||||||
Caterpillar, Inc. | 15,272 | 1,609,669 | |||||||
Cummins, Inc. | 5,862 | 884,283 | |||||||
Dover Corp. | 29,448 | 2,544,307 | |||||||
Oshkosh Corp. | 1,569 | 87,095 | |||||||
Parker-Hannifin Corp. | 1,356 | 172,049 | |||||||
Wabtec Corp. | 8,841 | 659,096 | |||||||
6,135,909 | |||||||||
MEDIA — 4.8% | |||||||||
CBS Corp., Class B | 7,531 | 434,991 | |||||||
Comcast Corp., Class A | 86,677 | 4,486,402 | |||||||
Omnicom Group, Inc. | 4,959 | 335,625 |
10
Shares | Value | ||||||||
Time Warner Cable, Inc. | 7,922 | $ | 1,120,646 | ||||||
Time Warner, Inc. | 47,005 | 3,123,952 | |||||||
Viacom, Inc., Class B | 11,511 | 978,205 | |||||||
Walt Disney Co. (The) | 6,160 | 488,734 | |||||||
10,968,555 | |||||||||
METALS AND MINING — 0.1% | |||||||||
Reliance Steel & Aluminum Co. | 3,145 | 222,729 | |||||||
MULTI-UTILITIES — 1.5% | |||||||||
Ameren Corp. | 17,511 | 723,379 | |||||||
CenterPoint Energy, Inc. | 57,016 | 1,411,716 | |||||||
DTE Energy Co. | 15,262 | 1,192,573 | |||||||
Public Service Enterprise Group, Inc. | 2,196 | 89,970 | |||||||
3,417,638 | |||||||||
MULTILINE RETAIL — 1.2% | |||||||||
Dillard's, Inc., Class A | 2,769 | 271,168 | |||||||
Kohl's Corp. | 6,637 | 363,641 | |||||||
Macy's, Inc. | 18,024 | 1,035,119 | |||||||
Target Corp. | 16,616 | 1,026,038 | |||||||
2,695,966 | |||||||||
OIL, GAS AND CONSUMABLE FUELS — 8.3% | |||||||||
Apache Corp. | 3,190 | 276,892 | |||||||
Chesapeake Energy Corp. | 7,606 | 218,672 | |||||||
Chevron Corp. | 10,092 | 1,266,748 | |||||||
ConocoPhillips | 37,347 | 2,775,256 | |||||||
EOG Resources, Inc. | 2,818 | 276,164 | |||||||
Exxon Mobil Corp. | 94,398 | 9,667,299 | |||||||
HollyFrontier Corp. | 22,941 | 1,206,467 | |||||||
Murphy Oil Corp. | 7,223 | 458,155 | |||||||
Occidental Petroleum Corp. | 25,549 | 2,446,317 | |||||||
Peabody Energy Corp. | 3,212 | 61,060 | |||||||
Valero Energy Corp. | 8,056 | 460,562 | |||||||
19,113,592 | |||||||||
PAPER AND FOREST PRODUCTS — 0.8% | |||||||||
International Paper Co. | 42,178 | 1,967,604 | |||||||
PHARMACEUTICALS — 5.9% | |||||||||
AbbVie, Inc. | 32,639 | 1,699,839 | |||||||
Eli Lilly & Co. | 23,862 | 1,410,244 | |||||||
Hospira, Inc.(1) | 7,174 | 328,569 | |||||||
Johnson & Johnson | 50,333 | 5,098,230 | |||||||
Mylan, Inc.(1) | 8,291 | 421,017 | |||||||
Pfizer, Inc. | 144,085 | 4,506,979 | |||||||
13,464,878 | |||||||||
PROFESSIONAL SERVICES — 0.1% | |||||||||
Equifax, Inc. | 2,335 | 165,341 | |||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.0% | |||||||||
American Tower Corp. | 3,561 | 297,415 | |||||||
Host Hotels & Resorts, Inc. | 14,548 | 312,054 | |||||||
Omega Healthcare Investors, Inc. | 3,988 | 138,703 |
11
Shares | Value | ||||||||
Prologis, Inc. | 2,830 | $ | 114,983 | ||||||
Public Storage | 6,190 | 1,086,407 | |||||||
Simon Property Group, Inc. | 1,335 | 231,222 | |||||||
Weyerhaeuser Co. | 2,919 | 87,132 | |||||||
2,267,916 | |||||||||
ROAD AND RAIL — 1.4% | |||||||||
CSX Corp. | 6,126 | 172,876 | |||||||
Ryder System, Inc. | 15,357 | 1,262,038 | |||||||
Union Pacific Corp. | 9,389 | 1,787,947 | |||||||
3,222,861 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.8% | |||||||||
Altera Corp. | 3,381 | 109,950 | |||||||
First Solar, Inc.(1) | 7,836 | 528,852 | |||||||
Intel Corp. | 21,730 | 579,974 | |||||||
KLA-Tencor Corp. | 5,945 | 380,421 | |||||||
Marvell Technology Group Ltd. | 24,099 | 382,210 | |||||||
Micron Technology, Inc.(1) | 20,514 | 535,826 | |||||||
NVIDIA Corp. | 22,954 | 423,960 | |||||||
SunPower Corp.(1) | 3,606 | 120,512 | |||||||
Texas Instruments, Inc. | 18,154 | 825,099 | |||||||
Xilinx, Inc. | 3,144 | 148,365 | |||||||
4,035,169 | |||||||||
SOFTWARE — 3.0% | |||||||||
Microsoft Corp. | 74,249 | 2,999,659 | |||||||
Oracle Corp. | 75,894 | 3,102,547 | |||||||
Red Hat, Inc.(1) | 792 | 38,531 | |||||||
Symantec Corp. | 37,619 | 762,913 | |||||||
6,903,650 | |||||||||
SPECIALTY RETAIL — 3.7% | |||||||||
AutoZone, Inc.(1) | 789 | 421,239 | |||||||
Best Buy Co., Inc. | 2,903 | 75,275 | |||||||
Chico's FAS, Inc. | 8,118 | 128,914 | |||||||
Gap, Inc. (The) | 28,812 | 1,132,312 | |||||||
Home Depot, Inc. (The) | 60,952 | 4,846,294 | |||||||
L Brands, Inc. | 1,877 | 101,733 | |||||||
Lowe's Cos., Inc. | 18,108 | 831,338 | |||||||
Murphy USA, Inc.(1) | 2,179 | 92,607 | |||||||
Pier 1 Imports, Inc. | 49,102 | 896,603 | |||||||
8,526,315 | |||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 5.5% | |||||||||
Apple, Inc. | 13,370 | 7,889,503 | |||||||
EMC Corp. | 44,230 | 1,141,134 | |||||||
Hewlett-Packard Co. | 91,393 | 3,021,453 | |||||||
Seagate Technology plc | 6,907 | 363,170 | |||||||
Western Digital Corp. | 1,861 | 164,010 | |||||||
12,579,270 | |||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.1% | |||||||||
Coach, Inc. | 4,071 | 181,770 |
12
Shares | Value | ||||||||
TOBACCO — 0.9% | |||||||||
Altria Group, Inc. | 45,563 | $ | 1,827,532 | ||||||
Lorillard, Inc. | 5,545 | 329,484 | |||||||
2,157,016 | |||||||||
TOTAL COMMON STOCKS (Cost $145,748,611) | 227,676,530 | ||||||||
EXCHANGE-TRADED FUNDS — 0.4% | |||||||||
SPDR S&P 500 ETF Trust (Cost $866,135) | 5,110 | 962,877 | |||||||
TEMPORARY CASH INVESTMENTS — 0.5% | |||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $379,778), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $371,953) | 371,953 | ||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $304,448), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $297,562) | 297,562 | ||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $303,613), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $297,563) | 297,563 | ||||||||
SSgA U.S. Government Money Market Fund | 260,271 | 260,271 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,227,349) | 1,227,349 | ||||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $147,842,095) | 229,866,756 | ||||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (327,845) | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 229,538,911 |
Notes to Schedule of Investments |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $147,842,095) | $ | 229,866,756 | ||||
Receivable for capital shares sold | 142,287 | |||||
Dividends and interest receivable | 167,046 | |||||
230,176,089 | ||||||
Liabilities | ||||||
Payable for capital shares redeemed | 409,007 | |||||
Accrued management fees | 185,732 | |||||
Distribution and service fees payable | 42,439 | |||||
637,178 | ||||||
Net Assets | $ | 229,538,911 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 226,025,715 | ||||
Undistributed net investment income | 671,249 | |||||
Accumulated net realized loss | (79,182,714 | ) | ||||
Net unrealized appreciation | 82,024,661 | |||||
$ | 229,538,911 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $76,112,243 | 3,877,690 | $19.63 | |
Institutional Class, $0.01 Par Value | $10,689,044 | 543,501 | $19.67 | |
A Class, $0.01 Par Value | $117,924,292 | 6,022,103 | $19.58* | |
B Class, $0.01 Par Value | $3,071,083 | 159,223 | $19.29 | |
C Class, $0.01 Par Value | $16,972,853 | 879,679 | $19.29 | |
R Class, $0.01 Par Value | $4,769,396 | 244,567 | $19.50 |
* Maximum offering price $20.77 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends | $ | 2,626,975 | ||
Interest | 108 | |||
2,627,083 | ||||
Expenses: | ||||
Management fees | 1,124,675 | |||
Distribution and service fees: | ||||
A Class | 148,441 | |||
B Class | 15,945 | |||
C Class | 84,495 | |||
R Class | 12,129 | |||
Directors' fees and expenses | 4,718 | |||
Other expenses | 59 | |||
1,390,462 | ||||
Net investment income (loss) | 1,236,621 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 14,121,552 | |||
Change in net unrealized appreciation (depreciation) on investments | 1,731,969 | |||
Net realized and unrealized gain (loss) | 15,853,521 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 17,090,142 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,236,621 | $ | 2,359,078 | ||
Net realized gain (loss) | 14,121,552 | 15,335,223 | ||||
Change in net unrealized appreciation (depreciation) | 1,731,969 | 26,660,396 | ||||
Net increase (decrease) in net assets resulting from operations | 17,090,142 | 44,354,697 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (884,103 | ) | (505,892 | ) | ||
Institutional Class | (143,856 | ) | (124,491 | ) | ||
A Class | (1,093,090 | ) | (1,279,655 | ) | ||
B Class | (5,373 | ) | (32,227 | ) | ||
C Class | (27,587 | ) | (153,858 | ) | ||
R Class | (32,137 | ) | (34,693 | ) | ||
Decrease in net assets from distributions | (2,186,146 | ) | (2,130,816 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | (8,594,498 | ) | 6,863,937 | |||
Net increase (decrease) in net assets | 6,309,498 | 49,087,818 | ||||
Net Assets | ||||||
Beginning of period | 223,229,413 | 174,141,595 | ||||
End of period | $ | 229,538,911 | $ | 223,229,413 | ||
Undistributed net investment income | $ | 671,249 | $ | 1,620,774 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Fundamental Equity Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective.
The fund offers the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R 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 distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
17
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. 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. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
18
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, B Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.800% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 1.00% for the Investor Class, A Class, B Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $40,893,376 and $49,248,801, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 849,303 | $ | 16,053,475 | 2,105,291 | $ | 35,157,597 | ||||
Issued in reinvestment of distributions | 45,454 | 843,629 | 31,320 | 469,801 | ||||||
Redeemed | (732,427 | ) | (13,950,240 | ) | (1,001,523 | ) | (16,616,170 | ) | ||
162,330 | 2,946,864 | 1,135,088 | 19,011,228 | |||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 19,408 | 369,271 | 97,765 | 1,637,665 | ||||||
Issued in reinvestment of distributions | 7,739 | 143,856 | 8,288 | 124,491 | ||||||
Redeemed | (49,494 | ) | (942,009 | ) | (161,547 | ) | (2,718,059 | ) | ||
(22,347 | ) | (428,882 | ) | (55,494 | ) | (955,903 | ) | |||
A Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||
Sold | 381,509 | 7,250,589 | 1,060,036 | 17,404,481 | ||||||
Issued in reinvestment of distributions | 54,286 | 1,006,471 | 77,769 | 1,164,981 | ||||||
Redeemed | (918,849 | ) | (17,465,001 | ) | (1,777,030 | ) | (28,895,340 | ) | ||
(483,054 | ) | (9,207,941 | ) | (639,225 | ) | (10,325,878 | ) | |||
B Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 4,388 | 82,081 | 10,530 | 172,424 | ||||||
Issued in reinvestment of distributions | 269 | 4,937 | 1,991 | 29,471 | ||||||
Redeemed | (30,170 | ) | (564,446 | ) | (44,575 | ) | (708,772 | ) | ||
(25,513 | ) | (477,428 | ) | (32,054 | ) | (506,877 | ) | |||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 48,810 | 914,044 | 141,577 | 2,300,680 | ||||||
Issued in reinvestment of distributions | 1,079 | 19,765 | 6,759 | 100,029 | ||||||
Redeemed | (96,316 | ) | (1,799,745 | ) | (246,977 | ) | (4,014,231 | ) | ||
(46,427 | ) | (865,936 | ) | (98,641 | ) | (1,613,522 | ) | |||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 17,705 | 335,749 | 145,612 | 2,270,986 | ||||||
Issued in reinvestment of distributions | 1,739 | 32,137 | 2,324 | 34,693 | ||||||
Redeemed | (48,848 | ) | (929,061 | ) | (65,001 | ) | (1,050,790 | ) | ||
(29,404 | ) | (561,175 | ) | 82,935 | 1,254,889 | |||||
Net increase (decrease) | (444,415 | ) | $ | (8,594,498 | ) | 392,609 | $ | 6,863,937 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
20
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 227,676,530 | — | — | ||||
Exchange-Traded Funds | 962,877 | — | ||||||
Temporary Cash Investments | 260,271 | $ | 967,078 | — | ||||
$ | 228,899,678 | $ | 967,078 | — |
7. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 150,543,176 | |
Gross tax appreciation of investments | $ | 80,462,418 | |
Gross tax depreciation of investments | (1,138,838 | ) | |
Net tax appreciation (depreciation) of investments | $ | 79,323,580 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2013, the fund had accumulated short-term capital losses of $(89,924,845), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(16,293,618) and $(73,631,227) expire in 2016 and 2017, respectively.
21
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2014(3) | $18.41 | 0.12 | 1.32 | 1.44 | (0.22) | $19.63 | 7.88% | 1.00%(4) | 1.30%(4) | 18% | $76,112 | ||
2013 | $14.82 | 0.23 | 3.55 | 3.78 | (0.19) | $18.41 | 25.83% | 1.01% | 1.44% | 36% | $68,416 | ||
2012 | $12.97 | 0.20 | 1.81 | 2.01 | (0.16) | $14.82 | 15.65% | 1.01% | 1.39% | 18% | $38,250 | ||
2011 | $11.95 | 0.14 | 1.02 | 1.16 | (0.14) | $12.97 | 9.72% | 1.01% | 1.11% | 18% | $45,991 | ||
2010 | $10.57 | 0.12 | 1.40 | 1.52 | (0.14) | $11.95 | 14.47% | 1.02% | 1.06% | 29% | $41,698 | ||
2009 | $9.93 | 0.12 | 0.66 | 0.78 | (0.14) | $10.57 | 8.16% | 1.01% | 1.37% | 64% | $37,918 | ||
Institutional Class | |||||||||||||
2014(3) | $18.47 | 0.14 | 1.32 | 1.46 | (0.26) | $19.67 | 7.96% | 0.80%(4) | 1.50%(4) | 18% | $10,689 | ||
2013 | $14.85 | 0.27 | 3.55 | 3.82 | (0.20) | $18.47 | 26.06% | 0.81% | 1.64% | 36% | $10,451 | ||
2012 | $12.99 | 0.21 | 1.83 | 2.04 | (0.18) | $14.85 | 15.93% | 0.81% | 1.59% | 18% | $9,225 | ||
2011 | $11.96 | 0.17 | 1.02 | 1.19 | (0.16) | $12.99 | 10.02% | 0.81% | 1.31% | 18% | $103 | ||
2010 | $10.59 | 0.15 | 1.38 | 1.53 | (0.16) | $11.96 | 14.57% | 0.82% | 1.26% | 29% | $120 | ||
2009 | $9.94 | 0.16 | 0.65 | 0.81 | (0.16) | $10.59 | 8.47% | 0.81% | 1.57% | 64% | $274 |
22
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||
2014(3) | $18.35 | 0.10 | 1.30 | 1.40 | (0.17) | $19.58 | 7.69% | 1.25%(4) | 1.05%(4) | 18% | $117,924 | ||
2013 | $14.80 | 0.20 | 3.53 | 3.73 | (0.18) | $18.35 | 25.51% | 1.26% | 1.19% | 36% | $119,358 | ||
2012 | $12.94 | 0.16 | 1.82 | 1.98 | (0.12) | $14.80 | 15.48% | 1.26% | 1.14% | 18% | $105,718 | ||
2011 | $11.93 | 0.11 | 1.01 | 1.12 | (0.11) | $12.94 | 9.38% | 1.26% | 0.86% | 18% | $106,159 | ||
2010 | $10.56 | 0.09 | 1.39 | 1.48 | (0.11) | $11.93 | 14.10% | 1.27% | 0.81% | 29% | $129,960 | ||
2009 | $9.91 | 0.11 | 0.66 | 0.77 | (0.12) | $10.56 | 8.00% | 1.26% | 1.12% | 64% | $159,959 | ||
B Class | |||||||||||||
2014(3) | $18.00 | 0.03 | 1.29 | 1.32 | (0.03) | $19.29 | 7.34% | 2.00%(4) | 0.30%(4) | 18% | $3,071 | ||
2013 | $14.60 | 0.08 | 3.47 | 3.55 | (0.15) | $18.00 | 24.56% | 2.01% | 0.44% | 36% | $3,326 | ||
2012 | $12.77 | 0.06 | 1.80 | 1.86 | (0.03) | $14.60 | 14.60% | 2.01% | 0.39% | 18% | $3,165 | ||
2011 | $11.77 | 0.01 | 1.00 | 1.01 | (0.01) | $12.77 | 8.59% | 2.01% | 0.11% | 18% | $3,133 | ||
2010 | $10.42 | 0.01 | 1.37 | 1.38 | (0.03) | $11.77 | 13.23% | 2.02% | 0.06% | 29% | $3,838 | ||
2009 | $9.78 | 0.03 | 0.66 | 0.69 | (0.05) | $10.42 | 7.17% | 2.01% | 0.37% | 64% | $4,043 | ||
C Class | |||||||||||||
2014(3) | $18.01 | 0.03 | 1.28 | 1.31 | (0.03) | $19.29 | 7.28% | 2.00%(4) | 0.30%(4) | 18% | $16,973 | ||
2013 | $14.61 | 0.07 | 3.48 | 3.55 | (0.15) | $18.01 | 24.54% | 2.01% | 0.44% | 36% | $16,679 | ||
2012 | $12.78 | 0.05 | 1.81 | 1.86 | (0.03) | $14.61 | 14.59% | 2.01% | 0.39% | 18% | $14,967 | ||
2011 | $11.77 | 0.01 | 1.01 | 1.02 | (0.01) | $12.78 | 8.68% | 2.01% | 0.11% | 18% | $13,990 | ||
2010 | $10.42 | 0.01 | 1.37 | 1.38 | (0.03) | $11.77 | 13.23% | 2.02% | 0.06% | 29% | $14,816 | ||
2009 | $9.79 | 0.03 | 0.65 | 0.68 | (0.05) | $10.42 | 7.06% | 2.01% | 0.37% | 64% | $15,311 |
23
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||
2014(3) | $18.25 | 0.08 | 1.29 | 1.37 | (0.12) | $19.50 | 7.57% | 1.50%(4) | 0.80%(4) | 18% | $4,769 | ||
2013 | $14.74 | 0.15 | 3.53 | 3.68 | (0.17) | $18.25 | 25.25% | 1.51% | 0.94% | 36% | $5,000 | ||
2012 | $12.90 | 0.13 | 1.80 | 1.93 | (0.09) | $14.74 | 15.09% | 1.51% | 0.89% | 18% | $2,817 | ||
2011 | $11.89 | 0.08 | 1.00 | 1.08 | (0.07) | $12.90 | 9.14% | 1.51% | 0.61% | 18% | $2,456 | ||
2010 | $10.52 | 0.06 | 1.39 | 1.45 | (0.08) | $11.89 | 13.86% | 1.52% | 0.56% | 29% | $2,624 | ||
2009 | $9.88 | 0.06 | 0.68 | 0.74 | (0.10) | $10.52 | 7.64% | 1.51% | 0.87% | 64% | $2,650 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
See Notes to Financial Statements.
24
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
25
Notes |
26
Notes |
27
Notes |
28
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82265 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Growth Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCGX | 5.89% | 18.98% | 17.33% | 8.08% | 13.46% | 6/30/71(2) |
Russell 1000 Growth Index | — | 6.95% | 20.66% | 19.45% | 7.98% | N/A(3) | — |
Institutional Class | TWGIX | 6.01% | 19.22% | 17.57% | 8.30% | 6.47% | 6/16/97 |
A Class(4) | TCRAX | 6/4/97 | |||||
No sales charge* | 5.77% | 18.68% | 17.05% | 7.82% | 6.32% | ||
With sales charge* | -0.32% | 11.87% | 15.68% | 7.18% | 5.94% | ||
C Class | TWRCX | 3/1/10 | |||||
No sales charge* | 5.39% | 17.81% | — | — | 12.89% | ||
With sales charge* | 4.40% | 17.81% | — | — | 12.89% | ||
R Class | AGWRX | 5.63% | 18.37% | 16.75% | 7.54% | 7.74% | 8/29/03 |
R6 Class | AGRDX | 6.08% | — | — | — | 13.86%(1) | 7/26/13 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Although the fund’s actual inception date was 10/31/58, this inception date corresponds with the investment advisor’s implementation of its current investment philosophy and practices. |
(3) | Benchmark data first available December 1978. |
(4) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | C Class | R Class | R6 Class |
0.97% | 0.77% | 1.22% | 1.97% | 1.47% | 0.62% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Google, Inc.* | 4.8% |
Oracle Corp. | 3.6% |
PepsiCo, Inc. | 3.5% |
Comcast Corp., Class A | 3.4% |
Schlumberger Ltd. | 2.7% |
Visa, Inc., Class A | 2.7% |
QUALCOMM, Inc. | 2.6% |
Apple, Inc. | 2.6% |
United Technologies Corp. | 2.3% |
Honeywell International, Inc. | 2.3% |
* Includes all classes of the issuer. | |
Top Five Industries | % of net assets |
Aerospace and Defense | 7.3% |
Media | 6.3% |
Software | 6.2% |
Internet Software and Services | 6.1% |
Technology Hardware, Storage and Peripherals | 5.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.4% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.3% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,058.90 | $4.95 | 0.97% |
Institutional Class | $1,000 | $1,060.10 | $3.93 | 0.77% |
A Class | $1,000 | $1,057.70 | $6.22 | 1.22% |
C Class | $1,000 | $1,053.90 | $10.03 | 1.97% |
R Class | $1,000 | $1,056.30 | $7.49 | 1.47% |
R6 Class | $1,000 | $1,060.80 | $3.17 | 0.62% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.98 | $4.86 | 0.97% |
Institutional Class | $1,000 | $1,020.98 | $3.86 | 0.77% |
A Class | $1,000 | $1,018.75 | $6.11 | 1.22% |
C Class | $1,000 | $1,015.03 | $9.84 | 1.97% |
R Class | $1,000 | $1,017.51 | $7.35 | 1.47% |
R6 Class | $1,000 | $1,021.72 | $3.11 | 0.62% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||
COMMON STOCKS — 99.4% | |||||||||||
AEROSPACE AND DEFENSE — 7.3% | |||||||||||
Boeing Co. (The) | 1,244,500 | $ | 160,565,390 | ||||||||
Honeywell International, Inc. | 2,511,700 | 233,336,930 | |||||||||
Precision Castparts Corp. | 464,000 | 117,433,760 | |||||||||
United Technologies Corp. | 2,017,500 | 238,730,775 | |||||||||
750,066,855 | |||||||||||
AIRLINES — 0.7% | |||||||||||
Alaska Air Group, Inc. | 811,400 | 76,336,512 | |||||||||
AUTO COMPONENTS — 1.6% | |||||||||||
BorgWarner, Inc. | 2,698,300 | 167,672,362 | |||||||||
AUTOMOBILES — 1.2% | |||||||||||
Harley-Davidson, Inc. | 1,602,300 | 118,474,062 | |||||||||
BANKS — 1.5% | |||||||||||
SunTrust Banks, Inc. | 3,891,600 | 148,892,616 | |||||||||
BEVERAGES — 3.9% | |||||||||||
Brown-Forman Corp., Class B | 501,800 | 45,021,496 | |||||||||
PepsiCo, Inc. | 4,142,100 | 355,764,969 | |||||||||
400,786,465 | |||||||||||
BIOTECHNOLOGY — 3.3% | |||||||||||
Alexion Pharmaceuticals, Inc.(1) | 710,000 | 112,322,000 | |||||||||
Biogen Idec, Inc.(1) | 239,700 | 68,822,664 | |||||||||
Gilead Sciences, Inc.(1) | 997,100 | 78,262,379 | |||||||||
Incyte Corp. Ltd.(1) | 540,700 | 26,256,392 | |||||||||
Regeneron Pharmaceuticals, Inc.(1) | 157,000 | 46,611,730 | |||||||||
332,275,165 | |||||||||||
CAPITAL MARKETS — 2.0% | |||||||||||
Franklin Resources, Inc. | 3,024,000 | 158,306,400 | |||||||||
State Street Corp. | 697,700 | 45,043,512 | |||||||||
203,349,912 | |||||||||||
CHEMICALS — 3.7% | |||||||||||
Dow Chemical Co. (The) | 865,000 | 43,163,500 | |||||||||
LyondellBasell Industries NV, Class A | 1,835,200 | 169,756,000 | |||||||||
Monsanto Co. | 1,535,800 | 170,013,060 | |||||||||
382,932,560 | |||||||||||
COMMERCIAL SERVICES AND SUPPLIES — 1.2% | |||||||||||
Tyco International Ltd. | 3,025,800 | 123,755,220 | |||||||||
COMMUNICATIONS EQUIPMENT — 2.9% | |||||||||||
Ciena Corp.(1) | 1,678,600 | 33,185,922 | |||||||||
QUALCOMM, Inc. | 3,389,000 | 266,748,190 | |||||||||
299,934,112 |
7
Shares | Value | ||||||||||
CONSUMER FINANCE — 1.8% | |||||||||||
American Express Co. | 2,055,900 | $ | 179,747,337 | ||||||||
ELECTRICAL EQUIPMENT — 1.5% | |||||||||||
Rockwell Automation, Inc. | 1,304,600 | 155,482,228 | |||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.5% | |||||||||||
Trimble Navigation Ltd.(1) | 1,311,100 | 50,385,573 | |||||||||
ENERGY EQUIPMENT AND SERVICES — 3.8% | |||||||||||
Core Laboratories NV | 221,500 | 41,571,120 | |||||||||
Oceaneering International, Inc. | 966,000 | 70,788,480 | |||||||||
Schlumberger Ltd. | 2,726,000 | 276,825,300 | |||||||||
389,184,900 | |||||||||||
FOOD PRODUCTS — 4.3% | |||||||||||
General Mills, Inc. | 3,955,800 | 209,736,516 | |||||||||
Hershey Co. (The) | 731,000 | 70,351,440 | |||||||||
Mead Johnson Nutrition Co. | 1,850,866 | 163,357,433 | |||||||||
443,445,389 | |||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.7% | |||||||||||
C.R. Bard, Inc. | 1,040,900 | 142,946,797 | |||||||||
DENTSPLY International, Inc. | 1,431,539 | 63,889,585 | |||||||||
DexCom, Inc.(1) | 543,100 | 17,618,164 | |||||||||
IDEXX Laboratories, Inc.(1) | 416,600 | 52,674,904 | |||||||||
277,129,450 | |||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.6% | |||||||||||
Cardinal Health, Inc. | 1,226,500 | 85,254,015 | |||||||||
Express Scripts Holding Co.(1) | 1,216,000 | 80,961,280 | |||||||||
166,215,295 | |||||||||||
HOTELS, RESTAURANTS AND LEISURE — 3.9% | |||||||||||
Chipotle Mexican Grill, Inc.(1) | 203,900 | 101,644,150 | |||||||||
Las Vegas Sands Corp. | 1,575,400 | 124,661,402 | |||||||||
Marriott International, Inc., Class A | 2,923,800 | 169,375,734 | |||||||||
395,681,286 | |||||||||||
HOUSEHOLD PRODUCTS — 0.9% | |||||||||||
Church & Dwight Co., Inc. | 1,265,000 | 87,297,650 | |||||||||
INTERNET AND CATALOG RETAIL — 1.4% | |||||||||||
Priceline Group, Inc. (The)(1) | 124,100 | 143,676,775 | |||||||||
INTERNET SOFTWARE AND SERVICES — 6.1% | |||||||||||
Facebook, Inc., Class A(1) | 2,223,600 | 132,926,808 | |||||||||
Google, Inc., Class A(1) | 462,200 | 247,221,536 | |||||||||
Google, Inc., Class C(1) | 462,200 | 243,422,252 | |||||||||
623,570,596 | |||||||||||
IT SERVICES — 4.0% | |||||||||||
MasterCard, Inc., Class A | 1,817,200 | 133,655,060 | |||||||||
Visa, Inc., Class A | 1,359,400 | 275,428,034 | |||||||||
409,083,094 | |||||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.8% | |||||||||||
Waters Corp.(1) | 804,800 | 79,304,992 |
8
Shares | Value | ||||||||||
MACHINERY — 2.7% | |||||||||||
Parker-Hannifin Corp. | 1,226,500 | $ | 155,618,320 | ||||||||
WABCO Holdings, Inc.(1) | 633,500 | 67,790,835 | |||||||||
Wabtec Corp. | 745,900 | 55,606,845 | |||||||||
279,016,000 | |||||||||||
MEDIA — 6.3% | |||||||||||
CBS Corp., Class B | 1,425,200 | 82,319,552 | |||||||||
Comcast Corp., Class A | 6,647,652 | 344,082,468 | |||||||||
Scripps Networks Interactive, Inc. Class A | 1,132,345 | 85,005,139 | |||||||||
Viacom, Inc., Class B | 1,533,900 | 130,350,822 | |||||||||
641,757,981 | |||||||||||
OIL, GAS AND CONSUMABLE FUELS — 2.7% | |||||||||||
EOG Resources, Inc. | 1,657,200 | 162,405,600 | |||||||||
Noble Energy, Inc. | 1,643,200 | 117,948,896 | |||||||||
280,354,496 | |||||||||||
PERSONAL PRODUCTS — 0.7% | |||||||||||
Estee Lauder Cos., Inc. (The), Class A | 944,100 | 68,513,337 | |||||||||
PHARMACEUTICALS — 5.1% | |||||||||||
Bristol-Myers Squibb Co. | 3,320,300 | 166,313,827 | |||||||||
Johnson & Johnson | 1,914,600 | 193,929,834 | |||||||||
Perrigo Co. plc | 573,200 | 83,033,752 | |||||||||
Teva Pharmaceutical Industries Ltd. ADR | 411,200 | 20,091,232 | |||||||||
Zoetis, Inc. | 2,015,200 | 60,979,952 | |||||||||
524,348,597 | |||||||||||
ROAD AND RAIL — 1.9% | |||||||||||
Union Pacific Corp. | 1,001,200 | 190,658,516 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.6% | |||||||||||
Linear Technology Corp. | 2,490,500 | 110,827,250 | |||||||||
Microchip Technology, Inc. | 1,185,500 | 56,358,670 | |||||||||
167,185,920 | |||||||||||
SOFTWARE — 6.2% | |||||||||||
Check Point Software Technologies Ltd.(1) | 822,900 | 52,714,974 | |||||||||
Electronic Arts, Inc.(1) | 3,272,100 | 92,600,430 | |||||||||
Microsoft Corp. | 1,902,600 | 76,865,040 | |||||||||
Oracle Corp. | 8,948,900 | 365,831,032 | |||||||||
Varonis Systems, Inc.(1) | 344,400 | 8,702,988 | |||||||||
VMware, Inc., Class A(1) | 368,100 | 34,052,931 | |||||||||
630,767,395 | |||||||||||
SPECIALTY RETAIL — 3.4% | |||||||||||
AutoZone, Inc.(1) | 230,500 | 123,061,645 | |||||||||
Home Depot, Inc. (The) | 2,866,400 | 227,907,464 | |||||||||
350,969,109 | |||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 5.5% | |||||||||||
Apple, Inc. | 443,300 | 261,586,897 | |||||||||
Hewlett-Packard Co. | 3,170,000 | 104,800,200 | |||||||||
SanDisk Corp. | 1,369,100 | 116,332,427 | |||||||||
Western Digital Corp. | 942,300 | 83,044,899 | |||||||||
565,764,423 |
9
Shares | Value | ||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.7% | |||||||||||
Hanesbrands, Inc. | 837,700 | $ | 68,766,793 | ||||||||
TOTAL COMMON STOCKS (Cost $7,960,923,979) | 10,172,782,973 | ||||||||||
TEMPORARY CASH INVESTMENTS — 0.3% | |||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $10,558,920), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $10,341,380) | 10,341,371 | ||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $8,464,543), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $8,273,096) | 8,273,096 | ||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $8,441,319), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $8,273,101) | 8,273,096 | ||||||||||
SSgA U.S. Government Money Market Fund | 7,236,191 | 7,236,191 | |||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $34,123,754) | 34,123,754 | ||||||||||
TOTAL INVESTMENT SECURITIES — 99.7% (Cost $7,995,047,733) | 10,206,906,727 | ||||||||||
OTHER ASSETS AND LIABILITIES — 0.3% | 25,629,902 | ||||||||||
TOTAL NET ASSETS — 100.0% | $ | 10,232,536,629 |
Notes to Schedule of Investments | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $7,995,047,733) | $ | 10,206,906,727 | ||||
Receivable for investments sold | 100,314,341 | |||||
Receivable for capital shares sold | 3,812,263 | |||||
Dividends and interest receivable | 6,244,143 | |||||
10,317,277,474 | ||||||
Liabilities | ||||||
Payable for investments purchased | 69,252,706 | |||||
Payable for capital shares redeemed | 7,600,576 | |||||
Accrued management fees | 7,653,009 | |||||
Distribution and service fees payable | 234,554 | |||||
84,740,845 | ||||||
Net Assets | $ | 10,232,536,629 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 7,033,522,153 | ||||
Undistributed net investment income | 22,524,833 | |||||
Undistributed net realized gain | 964,630,536 | |||||
Net unrealized appreciation | 2,211,859,107 | |||||
$ | 10,232,536,629 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $6,465,727,054 | 196,397,546 | $32.92 | |
Institutional Class, $0.01 Par Value | $2,355,576,011 | 70,747,550 | $33.30 | |
A Class, $0.01 Par Value | $788,865,158 | 24,440,494 | $32.28* | |
C Class, $0.01 Par Value | $12,611,025 | 394,386 | $31.98 | |
R Class, $0.01 Par Value | $147,806,860 | 4,623,196 | $31.97 | |
R6 Class, $0.01 Par Value | $461,950,521 | 13,877,865 | $33.29 |
* Maximum offering price $34.25 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $31,965) | $ | 70,405,814 | ||
Interest | 5,895 | |||
70,411,709 | ||||
Expenses: | ||||
Management fees | 46,260,463 | |||
Distribution and service fees: | ||||
A Class | 999,811 | |||
C Class | 70,865 | |||
R Class | 370,886 | |||
Directors' fees and expenses | 163,672 | |||
Other expenses | 85 | |||
47,865,782 | ||||
Net investment income (loss) | 22,545,927 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 980,113,012 | |||
Futures contract transactions | 600,581 | |||
980,713,593 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (413,949,583 | ) | ||
Translation of assets and liabilities in foreign currencies | 31 | |||
(413,949,552 | ) | |||
Net realized and unrealized gain (loss) | 566,764,041 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 589,309,968 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 22,545,927 | $ | 69,228,240 | ||
Net realized gain (loss) | 980,713,593 | 588,359,957 | ||||
Change in net unrealized appreciation (depreciation) | (413,949,552 | ) | 1,482,465,638 | |||
Net increase (decrease) in net assets resulting from operations | 589,309,968 | 2,140,053,835 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (22,778,518 | ) | (50,120,015 | ) | ||
Institutional Class | (15,873,908 | ) | (20,798,230 | ) | ||
A Class | (888,505 | ) | (5,972,503 | ) | ||
C Class | — | (86,748 | ) | |||
R Class | — | (890,390 | ) | |||
R6 Class | (106,884 | ) | — | |||
From net realized gains: | ||||||
Investor Class | (363,165,530 | ) | (177,112,333 | ) | ||
Institutional Class | (162,417,278 | ) | (69,134,932 | ) | ||
A Class | (46,907,160 | ) | (22,912,075 | ) | ||
C Class | (847,836 | ) | (448,307 | ) | ||
R Class | (8,690,601 | ) | (3,737,327 | ) | ||
R6 Class | (862,082 | ) | — | |||
Decrease in net assets from distributions | (622,538,302 | ) | (351,212,860 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 103,694,116 | (288,999,763 | ) | |||
Net increase (decrease) in net assets | 70,465,782 | 1,499,841,212 | ||||
Net Assets | ||||||
Beginning of period | 10,162,070,847 | 8,662,229,635 | ||||
End of period | $ | 10,232,536,629 | $ | 10,162,070,847 | ||
Undistributed net investment income | $ | 22,524,833 | $ | 39,626,721 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the
14
fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover futures contracts. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on futures contracts.
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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
15
Multiple Class — 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.
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The strategy assets of the fund also include the assets of NT Growth Fund, one fund in a series issued by the corporation. The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.800% for the Institutional Class and 0.450% to 0.650% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 0.97% for the Investor Class, A Class, C Class and R Class, 0.77% for the Institutional Class and 0.62% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $4,520,568,085 and $4,821,180,920, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||
Sold | 8,151,628 | $ | 267,912,685 | 15,758,673 | $ | 458,269,744 | ||||
Issued in reinvestment of distributions | 11,936,476 | 375,640,787 | 8,131,994 | 221,190,187 | ||||||
Redeemed | (14,844,054 | ) | (486,331,697 | ) | (36,318,749 | ) | (1,071,846,016 | ) | ||
5,244,050 | 157,221,775 | (12,428,082 | ) | (392,386,085 | ) | |||||
Institutional Class/Shares Authorized | 345,000,000 | 345,000,000 | ||||||||
Sold | 7,678,261 | 254,869,426 | 24,000,053 | 708,413,723 | ||||||
Issued in reinvestment of distributions | 5,462,288 | 173,755,364 | 3,154,202 | 86,645,932 | ||||||
Redeemed | (27,260,263 | ) | (902,704,480 | ) | (22,931,725 | ) | (681,198,270 | ) | ||
(14,119,714 | ) | (474,079,690 | ) | 4,222,530 | 113,861,385 | |||||
A Class/Shares Authorized | 310,000,000 | 310,000,000 | ||||||||
Sold | 1,517,296 | 48,599,762 | 4,360,740 | 123,057,542 | ||||||
Issued in reinvestment of distributions | 1,452,224 | 44,844,664 | 1,010,735 | 27,006,835 | ||||||
Redeemed | (3,711,881 | ) | (119,679,784 | ) | (6,160,662 | ) | (178,220,923 | ) | ||
(742,361 | ) | (26,235,358 | ) | (789,187 | ) | (28,156,546 | ) | |||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 14,437 | 454,196 | 38,712 | 1,107,256 | ||||||
Issued in reinvestment of distributions | 19,381 | 594,604 | 12,908 | 344,918 | ||||||
Redeemed | (88,809 | ) | (2,819,075 | ) | (124,341 | ) | (3,565,181 | ) | ||
(54,991 | ) | (1,770,275 | ) | (72,721 | ) | (2,113,007 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 338,622 | 10,822,968 | 1,135,215 | 32,171,052 | ||||||
Issued in reinvestment of distributions | 276,271 | 8,459,424 | 167,967 | 4,457,853 | ||||||
Redeemed | (510,484 | ) | (16,340,317 | ) | (1,080,129 | ) | (30,973,232 | ) | ||
104,409 | 2,942,075 | 223,053 | 5,655,673 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 14,026,841 | 465,775,114 | 466,448 | 14,535,460 | ||||||
Issued in reinvestment of distributions | 30,490 | 968,966 | — | — | ||||||
Redeemed | (633,692 | ) | (21,128,491 | ) | (12,222 | ) | (396,643 | ) | ||
13,423,639 | 445,615,589 | 454,226 | 14,138,817 | |||||||
Net increase (decrease) | 3,855,032 | $ | 103,694,116 | (8,390,181 | ) | $ | (288,999,763 | ) |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
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• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 10,172,782,973 | — | — | ||||
Temporary Cash Investments | 7,236,191 | $ | 26,887,563 | — | ||||
$ | 10,180,019,164 | $ | 26,887,563 | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a 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 a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A 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 net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. 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. During the period, the fund infrequently purchased equity price risk derivative instruments for temporary investment purposes.
At period end, the fund did not have any derivative instruments disclosed on the Statement of Assets and Liabilities. For the six months ended April 30, 2014, the effect of equity price risk derivative instruments on the Statement of Operations was $600,581 in net realized gain (loss) on futures contract transactions.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 8,002,261,043 | |
Gross tax appreciation of investments | $ | 2,254,572,264 | |
Gross tax depreciation of investments | (49,926,580 | ) | |
Net tax appreciation (depreciation) of investments | $ | 2,204,645,684 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $33.10 | 0.07 | 1.79 | 1.86 | (0.12) | (1.92) | (2.04) | $32.92 | 5.89% | 0.97%(4) | 0.41%(4) | 44% | $6,465,727 | ||
2013 | $27.48 | 0.21 | 6.53 | 6.74 | (0.25) | (0.87) | (1.12) | $33.10 | 25.42% | 0.97% | 0.71% | 67% | $6,327,674 | ||
2012 | $25.88 | 0.14 | 2.50 | 2.64 | (0.13) | (0.91) | (1.04) | $27.48 | 10.67% | 0.97% | 0.54% | 74% | $5,593,916 | ||
2011 | $24.00 | 0.16 | 1.81 | 1.97 | (0.09) | – | (0.09) | $25.88 | 8.20% | 0.98% | 0.58% | 79% | $5,377,431 | ||
2010 | $20.28 | 0.10 | 3.68 | 3.78 | (0.06) | – | (0.06) | $24.00 | 18.65% | 1.00% | 0.43% | 86% | $4,440,152 | ||
2009 | $17.69 | 0.09 | 2.58 | 2.67 | (0.08) | – | (0.08) | $20.28 | 15.25% | 1.00% | 0.50% | 114% | $3,372,274 | ||
Institutional Class | |||||||||||||||
2014(3) | $33.49 | 0.10 | 1.82 | 1.92 | (0.19) | (1.92) | (2.11) | $33.30 | 6.01% | 0.77%(4) | 0.61%(4) | 44% | $2,355,576 | ||
2013 | $27.75 | 0.27 | 6.60 | 6.87 | (0.26) | (0.87) | (1.13) | $33.49 | 25.68% | 0.77% | 0.91% | 67% | $2,842,185 | ||
2012 | $26.13 | 0.20 | 2.51 | 2.71 | (0.18) | (0.91) | (1.09) | $27.75 | 10.86% | 0.77% | 0.74% | 74% | $2,237,708 | ||
2011 | $24.23 | 0.20 | 1.84 | 2.04 | (0.14) | – | (0.14) | $26.13 | 8.42% | 0.78% | 0.78% | 79% | $2,080,463 | ||
2010 | $20.47 | 0.14 | 3.72 | 3.86 | (0.10) | – | (0.10) | $24.23 | 18.90% | 0.80% | 0.63% | 86% | $1,106,748 | ||
2009 | $17.86 | 0.12 | 2.61 | 2.73 | (0.12) | – | (0.12) | $20.47 | 15.45% | 0.80% | 0.70% | 114% | $549,496 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class(5) | |||||||||||||||
2014(3) | $32.45 | 0.03 | 1.76 | 1.79 | (0.04) | (1.92) | (1.96) | $32.28 | 5.77% | 1.22%(4) | 0.16%(4) | 44% | $788,865 | ||
2013 | $27.00 | 0.13 | 6.42 | 6.55 | (0.23) | (0.87) | (1.10) | $32.45 | 25.14% | 1.22% | 0.46% | 67% | $817,166 | ||
2012 | $25.45 | 0.07 | 2.46 | 2.53 | (0.07) | (0.91) | (0.98) | $27.00 | 10.37% | 1.22% | 0.29% | 74% | $701,313 | ||
2011 | $23.60 | 0.08 | 1.79 | 1.87 | (0.02) | – | (0.02) | $25.45 | 7.93% | 1.23% | 0.33% | 79% | $628,634 | ||
2010 | $19.94 | 0.04 | 3.62 | 3.66 | –(6) | – | –(6) | $23.60 | 18.37% | 1.25% | 0.18% | 86% | $369,142 | ||
2009 | $17.40 | 0.04 | 2.54 | 2.58 | (0.04) | – | (0.04) | $19.94 | 14.99% | 1.25% | 0.25% | 114% | $214,371 | ||
C Class | |||||||||||||||
2014(3) | $32.24 | (0.09) | 1.75 | 1.66 | – | (1.92) | (1.92) | $31.98 | 5.39% | 1.97%(4) | (0.59)%(4) | 44% | $12,611 | ||
2013 | $26.98 | (0.08) | 6.38 | 6.30 | (0.17) | (0.87) | (1.04) | $32.24 | 24.16% | 1.97% | (0.29)% | 67% | $14,489 | ||
2012 | $25.55 | (0.12) | 2.46 | 2.34 | – | (0.91) | (0.91) | $26.98 | 9.55% | 1.97% | (0.46)% | 74% | $14,084 | ||
2011 | $23.85 | (0.12) | 1.82 | 1.70 | – | – | – | $25.55 | 7.13% | 1.98% | (0.42)% | 79% | $14,730 | ||
2010(7) | $22.10 | (0.10) | 1.85 | 1.75 | – | – | – | $23.85 | 7.92% | 2.00%(4) | (0.66)%(4) | 86%(8) | $6,219 | ||
R Class | |||||||||||||||
2014(3) | $32.16 | (0.01) | 1.74 | 1.73 | – | (1.92) | (1.92) | $31.97 | 5.63% | 1.47%(4) | (0.09)%(4) | 44% | $147,807 | ||
2013 | $26.82 | 0.06 | 6.36 | 6.42 | (0.21) | (0.87) | (1.08) | $32.16 | 24.80% | 1.47% | 0.21% | 67% | $145,337 | ||
2012 | $25.28 | 0.01 | 2.44 | 2.45 | –(6) | (0.91) | (0.91) | $26.82 | 10.12% | 1.47% | 0.04% | 74% | $115,208 | ||
2011 | $23.49 | –(6) | 1.79 | 1.79 | – | – | – | $25.28 | 7.62% | 1.48% | 0.08% | 79% | $79,569 | ||
2010 | $19.90 | (0.02) | 3.61 | 3.59 | – | – | – | $23.49 | 18.10% | 1.50% | (0.07)% | 86% | $20,325 | ||
2009 | $17.35 | (0.01) | 2.56 | 2.55 | –(6) | – | –(6) | $19.90 | 14.67% | 1.50% | 0.00%(9) | 114% | $7,656 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R6 Class | |||||||||||||||
2014(3) | $33.51 | 0.05 | 1.89 | 1.94 | (0.24) | (1.92) | (2.16) | $33.29 | 6.08% | 0.62%(4) | 0.76%(4) | 44% | $461,951 | ||
2013(10) | $31.22 | 0.05 | 2.24 | 2.29 | – | – | – | $33.51 | 7.34% | 0.62%(4) | 0.64%(4) | 67%(11) | $15,219 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(6) | Per-share amount was less than $0.005. |
(7) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
(9) | Ratio was less than 0.005%. |
(10) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(11) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
22
Notes |
23
Notes |
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![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82264 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Heritage Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWHIX | 1.08% | 16.80% | 18.29% | 11.93% | 11.70% | 11/10/87 |
Russell Midcap Growth Index | — | 6.04% | 20.62% | 21.08% | 9.62% | 11.16%(2) | — |
Russell Midcap Index | — | 7.76% | 21.25% | 21.86% | 10.39% | 12.41%(2) | — |
Institutional Class | ATHIX | 1.16% | 17.04% | 18.52% | 12.15% | 9.28% | 6/16/97 |
A Class(3) | ATHAX | 7/11/97 | |||||
No sales charge* | 0.91% | 16.47% | 17.98% | 11.64% | 8.52% | ||
With sales charge* | -4.90% | 9.78% | 16.58% | 10.99% | 8.14% | ||
B Class | ATHBX | 9/28/07 | |||||
No sales charge* | 0.56% | 15.62% | 17.11% | — | 4.73% | ||
With sales charge* | -4.44% | 11.62% | 17.00% | — | 4.73% | ||
C Class | AHGCX | 6/26/01 | |||||
No sales charge* | 0.56% | 15.64% | 17.11% | 10.81% | 6.94% | ||
With sales charge* | -0.30% | 15.64% | 17.11% | 10.81% | 6.94% | ||
R Class | ATHWX | 0.83% | 16.21% | 17.68% | — | 5.25% | 9/28/07 |
R6 Class | ATHDX | 1.23% | — | — | — | 8.78%(1) | 7/26/13 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge 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 to 0.00% after the sixth year. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 10/31/87, the date nearest the Investor Class’s inception for which data are available. |
(3) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this 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. Historically, small company stocks have been more volatile than the stocks of larger, more established companies.
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
Total Annual Fund Operating Expenses | ||||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class | R6 Class |
1.00% | 0.80% | 1.25% | 2.00% | 2.00% | 1.50% | 0.65% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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. Historically, small company stocks have been more volatile than the stocks of larger, more established companies.
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.
4
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Actavis plc | 3.3% |
SBA Communications Corp., Class A | 2.8% |
Electronic Arts, Inc. | 2.6% |
Canadian Pacific Railway Ltd. New York Shares | 2.5% |
Alliance Data Systems Corp. | 2.3% |
Constellation Brands, Inc., Class A | 2.1% |
Teleflex, Inc. | 2.0% |
Affiliated Managers Group, Inc. | 2.0% |
Concho Resources, Inc. | 1.8% |
BorgWarner, Inc. | 1.8% |
Top Five Industries | % of net assets |
Pharmaceuticals | 6.6% |
Machinery | 5.3% |
Specialty Retail | 5.2% |
Oil, Gas and Consumable Fuels | 4.8% |
Textiles, Apparel and Luxury Goods | 4.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.3% |
Temporary Cash Investments | 0.6% |
Other Assets and Liabilities | 0.1% |
5
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
6
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,010.80 | $4.99 | 1.00% |
Institutional Class | $1,000 | $1,011.60 | $3.99 | 0.80% |
A Class | $1,000 | $1,009.10 | $6.23 | 1.25% |
B Class | $1,000 | $1,005.60 | $9.95 | 2.00% |
C Class | $1,000 | $1,005.60 | $9.95 | 2.00% |
R Class | $1,000 | $1,008.30 | $7.47 | 1.50% |
R6 Class | $1,000 | $1,012.30 | $3.24 | 0.65% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
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% |
R Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
R6 Class | $1,000 | $1,021.57 | $3.26 | 0.65% |
(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. |
7
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||
COMMON STOCKS — 99.3% | |||||||||
AEROSPACE AND DEFENSE — 1.5% | |||||||||
Alliant Techsystems, Inc. | 241,931 | $ | 34,891,289 | ||||||
B/E Aerospace, Inc.(1) | 609,800 | 53,522,146 | |||||||
88,413,435 | |||||||||
AIRLINES — 1.0% | |||||||||
Spirit Airlines, Inc.(1) | 1,061,600 | 60,341,344 | |||||||
AUTO COMPONENTS — 1.8% | |||||||||
BorgWarner, Inc. | 1,666,318 | 103,545,001 | |||||||
AUTOMOBILES — 2.0% | |||||||||
Harley-Davidson, Inc. | 942,128 | 69,660,944 | |||||||
Tesla Motors, Inc.(1) | 67,100 | 13,949,419 | |||||||
Thor Industries, Inc. | 577,400 | 35,146,338 | |||||||
118,756,701 | |||||||||
BANKS — 2.5% | |||||||||
East West Bancorp., Inc. | 1,253,199 | 43,247,898 | |||||||
Signature Bank(1) | 327,353 | 38,896,083 | |||||||
SVB Financial Group(1) | 634,687 | 67,714,756 | |||||||
149,858,737 | |||||||||
BEVERAGES — 3.9% | |||||||||
Brown-Forman Corp., Class B | 792,170 | 71,073,492 | |||||||
Constellation Brands, Inc., Class A(1) | 1,585,200 | 126,562,368 | |||||||
Monster Beverage Corp.(1) | 463,100 | 31,009,176 | |||||||
228,645,036 | |||||||||
BIOTECHNOLOGY — 1.8% | |||||||||
Alexion Pharmaceuticals, Inc.(1) | 243,100 | 38,458,420 | |||||||
BioMarin Pharmaceutical, Inc.(1) | 692,177 | 40,305,467 | |||||||
Regeneron Pharmaceuticals, Inc.(1) | 98,498 | 29,243,071 | |||||||
108,006,958 | |||||||||
BUILDING PRODUCTS — 3.3% | |||||||||
Allegion plc | 1,169,100 | 57,695,085 | |||||||
Fortune Brands Home & Security, Inc. | 1,793,548 | 71,472,888 | |||||||
Lennox International, Inc. | 782,067 | 65,560,676 | |||||||
194,728,649 | |||||||||
CAPITAL MARKETS — 2.7% | |||||||||
Affiliated Managers Group, Inc.(1) | 604,900 | 119,891,180 | |||||||
KKR & Co. LP | 1,241,575 | 28,196,168 | |||||||
Lazard Ltd. Class A | 267,259 | 12,574,536 | |||||||
160,661,884 | |||||||||
CHEMICALS — 3.1% | |||||||||
FMC Corp. | 1,158,123 | 89,175,471 | |||||||
Sherwin-Williams Co. (The) | 287,489 | 57,451,802 | |||||||
Westlake Chemical Corp. | 514,126 | 36,605,771 | |||||||
183,233,044 |
8
Shares | Value | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 1.5% | |||||||||
KAR Auction Services, Inc. | 1,116,600 | $ | 33,252,348 | ||||||
Stericycle, Inc.(1) | 486,493 | 56,647,245 | |||||||
89,899,593 | |||||||||
CONSTRUCTION AND ENGINEERING — 2.0% | |||||||||
MasTec, Inc.(1) | 1,615,840 | 63,954,947 | |||||||
Quanta Services, Inc.(1) | 1,570,561 | 55,409,392 | |||||||
119,364,339 | |||||||||
CONSUMER FINANCE — 1.5% | |||||||||
Discover Financial Services | 1,087,699 | 60,802,374 | |||||||
Santander Consumer USA Holdings, Inc.(1) | 1,269,047 | 28,858,129 | |||||||
89,660,503 | |||||||||
CONTAINERS AND PACKAGING — 0.4% | |||||||||
Ball Corp. | 401,321 | 22,550,227 | |||||||
DISTRIBUTORS — 1.4% | |||||||||
LKQ Corp.(1) | 2,737,600 | 79,718,912 | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.0% | |||||||||
tw telecom, inc., Class A(1) | 1,921,358 | 58,966,477 | |||||||
ELECTRICAL EQUIPMENT — 1.6% | |||||||||
Acuity Brands, Inc. | 767,300 | 95,582,561 | |||||||
ENERGY EQUIPMENT AND SERVICES — 1.6% | |||||||||
Dril-Quip, Inc.(1) | 436,205 | 49,343,509 | |||||||
Frank's International NV | 1,185,267 | 32,511,874 | |||||||
Patterson-UTI Energy, Inc. | 454,200 | 14,775,126 | |||||||
96,630,509 | |||||||||
FOOD AND STAPLES RETAILING — 2.8% | |||||||||
Costco Wholesale Corp. | 811,708 | 93,898,381 | |||||||
Sprouts Farmers Market, Inc.(1) | 1,251,700 | 40,016,849 | |||||||
United Natural Foods, Inc.(1) | 488,600 | 33,728,058 | |||||||
167,643,288 | |||||||||
FOOD PRODUCTS — 0.9% | |||||||||
Hain Celestial Group, Inc. (The)(1) | 641,408 | 55,173,916 | |||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.6% | |||||||||
Cooper Cos., Inc. (The) | 234,988 | 30,997,267 | |||||||
Teleflex, Inc. | 1,181,284 | 120,597,284 | |||||||
151,594,551 | |||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.6% | |||||||||
AmerisourceBergen Corp. | 1,473,200 | 96,023,176 | |||||||
HEALTH CARE TECHNOLOGY — 0.6% | |||||||||
Cerner Corp.(1) | 712,828 | 36,568,076 | |||||||
HOTELS, RESTAURANTS AND LEISURE — 2.3% | |||||||||
Chipotle Mexican Grill, Inc.(1) | 120,000 | 59,820,000 | |||||||
Dunkin' Brands Group, Inc. | 940,500 | 42,802,155 | |||||||
Noodles & Co.(1) | 963,385 | 31,589,394 | |||||||
134,211,549 | |||||||||
HOUSEHOLD DURABLES — 1.2% | |||||||||
Harman International Industries, Inc. | 142,700 | 15,641,347 |
9
Shares | Value | ||||||||
Mohawk Industries, Inc.(1) | 434,100 | $ | 57,479,181 | ||||||
73,120,528 | |||||||||
HOUSEHOLD PRODUCTS — 0.5% | |||||||||
Church & Dwight Co., Inc. | 424,811 | 29,316,207 | |||||||
INTERNET AND CATALOG RETAIL — 1.7% | |||||||||
Netflix, Inc.(1) | 59,100 | 19,032,564 | |||||||
TripAdvisor, Inc.(1) | 1,000,800 | 80,804,592 | |||||||
99,837,156 | |||||||||
INTERNET SOFTWARE AND SERVICES — 2.4% | |||||||||
CoStar Group, Inc.(1) | 520,311 | 83,712,837 | |||||||
LinkedIn Corp., Class A(1) | 371,070 | 56,948,113 | |||||||
140,660,950 | |||||||||
IT SERVICES — 2.3% | |||||||||
Alliance Data Systems Corp.(1) | 569,124 | 137,671,096 | |||||||
LEISURE PRODUCTS — 0.9% | |||||||||
Polaris Industries, Inc. | 399,000 | 53,597,670 | |||||||
LIFE SCIENCES TOOLS AND SERVICES — 1.1% | |||||||||
Covance, Inc.(1) | 747,410 | 65,981,355 | |||||||
MACHINERY — 5.3% | |||||||||
Flowserve Corp. | 1,238,094 | 90,442,767 | |||||||
Middleby Corp.(1) | 307,400 | 77,612,352 | |||||||
Pentair Ltd. | 1,019,400 | 75,731,226 | |||||||
WABCO Holdings, Inc.(1) | 645,500 | 69,074,955 | |||||||
312,861,300 | |||||||||
MEDIA — 2.8% | |||||||||
AMC Networks, Inc.(1) | 347,489 | 22,819,603 | |||||||
Discovery Communications, Inc., Class A(1) | 1,048,998 | 79,618,948 | |||||||
Tribune Co.(1) | 806,600 | 62,713,150 | |||||||
165,151,701 | |||||||||
OIL, GAS AND CONSUMABLE FUELS — 4.8% | |||||||||
Antero Resources Corp.(1) | 758,030 | 49,779,830 | |||||||
Cabot Oil & Gas Corp. | 1,032,516 | 40,557,229 | |||||||
Concho Resources, Inc.(1) | 808,800 | 105,507,960 | |||||||
Gulfport Energy Corp.(1) | 414,000 | 30,499,380 | |||||||
Oasis Petroleum, Inc.(1) | 1,204,300 | 56,011,993 | |||||||
282,356,392 | |||||||||
PHARMACEUTICALS — 6.6% | |||||||||
Actavis plc(1) | 948,400 | 193,786,572 | |||||||
Endo International plc(1) | 443,500 | 27,916,108 | |||||||
Perrigo Co. plc | 293,454 | 42,509,746 | |||||||
Salix Pharmaceuticals Ltd.(1) | 512,800 | 56,408,000 | |||||||
Zoetis, Inc. | 2,197,368 | 66,492,356 | |||||||
387,112,782 | |||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.6% | |||||||||
Jones Lang LaSalle, Inc. | 300,600 | 34,836,534 | |||||||
ROAD AND RAIL — 3.9% | |||||||||
Canadian Pacific Railway Ltd. New York Shares | 936,946 | 146,135,467 |
10
Shares | Value | ||||||||
Kansas City Southern | 805,128 | $ | 81,221,313 | ||||||
227,356,780 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 3.5% | |||||||||
Avago Technologies Ltd. | 1,365,300 | 86,696,550 | |||||||
NXP Semiconductor NV(1) | 1,167,184 | 69,587,510 | |||||||
Xilinx, Inc. | 1,103,925 | 52,094,221 | |||||||
208,378,281 | |||||||||
SOFTWARE — 3.8% | |||||||||
Electronic Arts, Inc.(1) | 5,388,900 | 152,505,870 | |||||||
NetSuite, Inc.(1) | 475,727 | 36,778,454 | |||||||
Splunk, Inc.(1) | 635,712 | 34,690,804 | |||||||
223,975,128 | |||||||||
SPECIALTY RETAIL — 5.2% | |||||||||
Lumber Liquidators Holdings, Inc.(1) | 646,524 | 56,351,032 | |||||||
O'Reilly Automotive, Inc.(1) | 553,507 | 82,356,306 | |||||||
Restoration Hardware Holdings, Inc.(1) | 398,203 | 24,843,885 | |||||||
Ross Stores, Inc. | 972,074 | 66,178,798 | |||||||
Tractor Supply Co. | 1,137,594 | 76,491,821 | |||||||
306,221,842 | |||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 4.5% | |||||||||
Hanesbrands, Inc. | 979,796 | 80,431,454 | |||||||
Kate Spade & Co.(1) | 1,195,632 | 41,572,125 | |||||||
Michael Kors Holdings Ltd.(1) | 901,349 | 82,203,029 | |||||||
Under Armour, Inc., Class A(1) | 1,267,996 | 61,992,324 | |||||||
266,198,932 | |||||||||
WIRELESS TELECOMMUNICATION SERVICES — 2.8% | |||||||||
SBA Communications Corp., Class A(1) | 1,826,208 | 163,920,430 | |||||||
TOTAL COMMON STOCKS (Cost $4,491,016,432) | 5,868,333,530 | ||||||||
TEMPORARY CASH INVESTMENTS — 0.6% | |||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $10,575,253), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $10,357,375) | 10,357,366 | ||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $8,477,636), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $8,285,893) | 8,285,893 | ||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $8,454,376), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $8,285,898) | 8,285,893 | ||||||||
SSgA U.S. Government Money Market Fund | 7,243,223 | 7,243,223 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $34,172,375) | 34,172,375 | ||||||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $4,525,188,807) | 5,902,505,905 | ||||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 6,732,952 | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 5,909,238,857 |
Notes to Schedule of Investments |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $4,525,188,807) | $ | 5,902,505,905 | ||||
Foreign currency holdings, at value (cost of $4,294) | 4,704 | |||||
Receivable for investments sold | 67,959,803 | |||||
Receivable for capital shares sold | 16,079,772 | |||||
Dividends and interest receivable | 1,194,343 | |||||
5,987,744,527 | ||||||
Liabilities | ||||||
Payable for investments purchased | 53,000,119 | |||||
Payable for capital shares redeemed | 20,288,083 | |||||
Accrued management fees | 4,868,687 | |||||
Distribution and service fees payable | 348,781 | |||||
78,505,670 | ||||||
Net Assets | $ | 5,909,238,857 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 3,942,161,345 | ||||
Accumulated net investment loss | (17,687,013 | ) | ||||
Undistributed net realized gain | 607,394,023 | |||||
Net unrealized appreciation | 1,377,370,502 | |||||
$ | 5,909,238,857 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $4,388,398,046 | 174,920,787 | $25.09 | |
Institutional Class, $0.01 Par Value | $313,436,203 | 12,092,607 | $25.92 | |
A Class, $0.01 Par Value | $1,012,525,269 | 42,057,398 | $24.07* | |
B Class, $0.01 Par Value | $2,821,798 | 119,975 | $23.52 | |
C Class, $0.01 Par Value | $129,750,941 | 5,992,229 | $21.65 | |
R Class, $0.01 Par Value | $61,467,027 | 2,530,447 | $24.29 | |
R6 Class, $0.01 Par Value | $839,573 | 32,359 | $25.95 |
* Maximum offering price $25.54 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $133,537) | $ | 13,229,116 | ||
Interest | 5,007 | |||
13,234,123 | ||||
Expenses: | ||||
Management fees | 28,136,939 | |||
Distribution and service fees: | ||||
A Class | 1,353,719 | |||
B Class | 15,161 | |||
C Class | 679,331 | |||
R Class | 154,340 | |||
Directors' fees and expenses | 98,418 | |||
Other expenses | 391 | |||
30,438,299 | ||||
Net investment income (loss) | (17,204,176 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 669,943,517 | |||
Foreign currency transactions | (370,755 | ) | ||
669,572,762 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (589,355,910 | ) | ||
Translation of assets and liabilities in foreign currencies | (476,088 | ) | ||
(589,831,998 | ) | |||
Net realized and unrealized gain (loss) | 79,740,764 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 62,536,588 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | (17,204,176 | ) | $ | (15,794,803 | ) |
Net realized gain (loss) | 669,572,762 | 579,776,023 | ||||
Change in net unrealized appreciation (depreciation) | (589,831,998 | ) | 504,740,345 | |||
Net increase (decrease) in net assets resulting from operations | 62,536,588 | 1,068,721,565 | ||||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (377,357,294 | ) | (51,872,462 | ) | ||
Institutional Class | (30,282,537 | ) | (4,009,776 | ) | ||
A Class | (140,744,405 | ) | (20,688,083 | ) | ||
B Class | (416,601 | ) | (62,664 | ) | ||
C Class | (19,841,840 | ) | (2,690,270 | ) | ||
R Class | (7,088,192 | ) | (839,874 | ) | ||
R6 Class | (9,153 | ) | — | |||
Decrease in net assets from distributions | (575,740,022 | ) | (80,163,129 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 1,872,934,237 | (258,823,703 | ) | |||
Net increase (decrease) in net assets | 1,359,730,803 | 729,734,733 | ||||
Net Assets | ||||||
Beginning of period | 4,549,508,054 | 3,819,773,321 | ||||
End of period | $ | 5,909,238,857 | $ | 4,549,508,054 | ||
Accumulated net investment loss | $ | (17,687,013 | ) | $ | (482,837 | ) |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Heritage Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the B Class, the C Class, the R Class and the R6 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 distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation
15
with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
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Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. and American Century Strategic Asset Allocations, Inc. own, in aggregate, 6% of the shares of the fund.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The annual management fee is 1.00% for the Investor Class, A Class, B Class, C Class and R Class, 0.80% for the Institutional Class and 0.65% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $2,353,148,512 and $2,544,173,470, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 1,150,000,000 | 400,000,000 | ||||||||
Sold | 12,247,173 | $ | 319,403,888 | 16,795,955 | $ | 412,396,030 | ||||
Issued in connection with reorganization (Note 10) | 57,086,650 | 1,417,578,208 | – | – | ||||||
Issued in reinvestment of distributions | 14,781,545 | 364,365,078 | 2,209,352 | 49,666,229 | ||||||
Redeemed | (15,244,871 | ) | (395,817,954 | ) | (24,326,674 | ) | (597,491,711 | ) | ||
68,870,497 | 1,705,529,220 | (5,321,367 | ) | (135,429,452 | ) | |||||
Institutional Class/Shares Authorized | 120,000,000 | 40,000,000 | ||||||||
Sold | 1,543,923 | 41,731,542 | 2,587,620 | 64,421,636 | ||||||
Issued in connection with reorganization (Note 10) | 2,456,543 | 62,960,928 | – | – | ||||||
Issued in reinvestment of distributions | 1,186,665 | 30,200,632 | 173,645 | 4,005,998 | ||||||
Redeemed | (1,421,997 | ) | (37,750,533 | ) | (2,603,496 | ) | (66,934,941 | ) | ||
3,765,134 | 97,142,569 | 157,769 | 1,492,693 | |||||||
A Class/Shares Authorized | 510,000,000 | 200,000,000 | ||||||||
Sold | 4,583,322 | 114,490,475 | 8,850,144 | 211,406,392 | ||||||
Issued in connection with reorganization (Note 10) | 2,306,433 | 55,013,464 | – | – | ||||||
Issued in reinvestment of distributions | 5,786,878 | 137,033,276 | 915,571 | 19,922,827 | ||||||
Redeemed | (10,383,048 | ) | (260,530,861 | ) | (14,746,186 | ) | (352,236,250 | ) | ||
2,293,585 | 46,006,354 | (4,980,471 | ) | (120,907,031 | ) | |||||
B Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||
Sold | 3,196 | 81,810 | 2,503 | 57,164 | ||||||
Issued in reinvestment of distributions | 16,762 | 388,880 | 2,775 | 59,744 | ||||||
Redeemed | (18,029 | ) | (444,235 | ) | (28,873 | ) | (669,324 | ) | ||
1,929 | 26,455 | (23,595 | ) | (552,416 | ) | |||||
C Class/Shares Authorized | 85,000,000 | 35,000,000 | ||||||||
Sold | 513,287 | 11,439,329 | 1,063,202 | 23,407,917 | ||||||
Issued in connection with reorganization (Note 10) | 5,312 | 114,258 | – | – | ||||||
Issued in reinvestment of distributions | 767,435 | 16,392,408 | 106,299 | 2,131,290 | ||||||
Redeemed | (820,772 | ) | (18,376,539 | ) | (1,493,875 | ) | (32,586,225 | ) | ||
465,262 | 9,569,456 | (324,374 | ) | (7,047,018 | ) | |||||
R Class/Shares Authorized | 40,000,000 | 30,000,000 | ||||||||
Sold | 306,130 | 7,737,571 | 732,975 | 17,538,607 | ||||||
Issued in connection with reorganization (Note 10) | 568,103 | 13,685,676 | – | – | ||||||
Issued in reinvestment of distributions | 296,453 | 7,088,192 | 38,176 | 839,874 | ||||||
Redeemed | (592,799 | ) | (14,635,556 | ) | (606,808 | ) | (14,830,736 | ) | ||
577,887 | 13,875,883 | 164,343 | 3,547,745 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 31,421 | 825,903 | 2,514 | 71,776 | ||||||
Issued in reinvestment of distributions | 359 | 9,153 | – | – | ||||||
Redeemed | (1,935 | ) | (50,756 | ) | – | – | ||||
29,845 | 784,300 | 2,514 | 71,776 | |||||||
Net increase (decrease) | 76,004,139 | $ | 1,872,934,237 | (10,325,181 | ) | $ | (258,823,703 | ) |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 5,868,333,530 | — | — | ||||
Temporary Cash Investments | 7,243,223 | $ | 26,929,152 | — | ||||
$ | 5,875,576,753 | $ | 26,929,152 | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund participated in foreign currency risk derivative instruments during the period consistent with its exposure to foreign denominated securities.
At period end, the fund did not have any derivative instruments disclosed on the Statement of Assets and Liabilities. For the six months ended April 30, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(341,630) in net realized gain (loss) on foreign currency transactions and $(482,668) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
The fund invests in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
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9. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 4,530,663,677 | |
Gross tax appreciation of investments | $ | 1,433,234,168 | |
Gross tax depreciation of investments | (61,391,940 | ) | |
Net tax appreciation (depreciation) of investments | $ | 1,371,842,228 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
10. Reorganization
On September 12, 2013, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of Vista Fund (Vista), one fund in a series issued by the corporation, were transferred to Heritage Fund (Heritage) in exchange for shares of Heritage. The financial statements and performance history of Heritage survived after the reorganization. The reorganization was effective at the close of the NYSE on December 6, 2013.
The reorganization was accomplished by a tax-free exchange of shares. On December 6, 2013, Vista exchanged its shares for shares of Heritage as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received |
Vista – Investor Class | 66,205,582 | Heritage – Investor Class | 57,086,650 |
Vista – Institutional Class | 2,836,089 | Heritage – Institutional Class | 2,456,543 |
Vista – A Class | 2,682,028 | Heritage – A Class | 2,306,433 |
Vista – C Class | 5,555 | Heritage – C Class | 5,312 |
Vista – R Class | 668,896 | Heritage – R Class | 568,103 |
The net assets of Vista and Heritage immediately before the reorganization were $1,549,352,534 and $4,468,145,045, respectively. Vista’s unrealized appreciation of $520,936,072 was combined with that of Heritage. Immediately after the reorganization, the combined net assets were $6,017,497,579.
Assuming the reorganization had been completed on November 1, 2013, the beginning of the annual reporting period, the pro forma results of operations for the six months ended April 30, 2014 are as follows:
Net investment income (loss) | $ | (17,672,775 | ) |
Net realized and unrealized gain (loss) | 97,915,390 | ||
Net increase (decrease) in net assets resulting from operations | $ | 80,242,615 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of Vista that have been included in the fund’s Statement of Operations since December 6, 2013.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $28.45 | (0.07) | 0.31 | 0.24 | – | (3.60) | (3.60) | $25.09 | 1.08% | 1.00%(4) | (0.54)%(4) | 42% | $4,388,398 | ||
2013 | $22.44 | (0.07) | 6.55 | 6.48 | – | (0.47) | (0.47) | $28.45 | 29.43% | 1.00% | (0.29)% | 70% | $3,016,930 | ||
2012 | $20.51 | (0.06) | 1.99 | 1.93 | – | – | – | $22.44 | 9.41% | 1.01% | (0.28)% | 72% | $2,499,048 | ||
2011 | $19.21 | (0.07) | 1.37 | 1.30 | – | – | – | $20.51 | 6.77% | 1.01% | (0.35)% | 95% | $2,395,881 | ||
2010 | $14.32 | (0.07) | 4.96 | 4.89 | – | – | – | $19.21 | 34.15% | 1.01% | (0.45)% | 114% | $1,886,729 | ||
2009 | $13.15 | (0.02) | 1.32 | 1.30 | (0.13) | – | (0.13) | $14.32 | 10.16% | 1.01% | (0.19)% | 155% | $1,342,418 | ||
Institutional Class | |||||||||||||||
2014(3) | $29.25 | (0.04) | 0.31 | 0.27 | – | (3.60) | (3.60) | $25.92 | 1.16% | 0.80%(4) | (0.34)%(4) | 42% | $313,436 | ||
2013 | $23.01 | (0.02) | 6.73 | 6.71 | – | (0.47) | (0.47) | $29.25 | 29.70% | 0.80% | (0.09)% | 70% | $243,548 | ||
2012 | $20.99 | (0.01) | 2.03 | 2.02 | – | – | – | $23.01 | 9.62% | 0.81% | (0.08)% | 72% | $187,984 | ||
2011 | $19.62 | (0.03) | 1.40 | 1.37 | – | – | – | $20.99 | 6.98% | 0.81% | (0.15)% | 95% | $156,681 | ||
2010 | $14.60 | (0.04) | 5.07 | 5.03 | (0.01) | – | (0.01) | $19.62 | 34.44% | 0.81% | (0.25)% | 114% | $115,261 | ||
2009 | $13.41 | –(5) | 1.34 | 1.34 | (0.15) | – | (0.15) | $14.60 | 10.33% | 0.81% | 0.01% | 155% | $92,343 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||
2014(3) | $27.48 | (0.10) | 0.29 | 0.19 | – | (3.60) | (3.60) | $24.07 | 0.91% | 1.25%(4) | (0.79)%(4) | 42% | $1,012,525 | ||
2013 | $21.74 | (0.13) | 6.34 | 6.21 | – | (0.47) | (0.47) | $27.48 | 29.13% | 1.25% | (0.54)% | 70% | $1,092,574 | ||
2012 | $19.92 | (0.11) | 1.93 | 1.82 | – | – | – | $21.74 | 9.08% | 1.26% | (0.53)% | 72% | $972,795 | ||
2011 | $18.70 | (0.12) | 1.34 | 1.22 | – | – | – | $19.92 | 6.58% | 1.26% | (0.60)% | 95% | $973,051 | ||
2010 | $13.98 | (0.11) | 4.83 | 4.72 | – | – | – | $18.70 | 33.76% | 1.26% | (0.70)% | 114% | $803,692 | ||
2009 | $12.84 | (0.06) | 1.30 | 1.24 | (0.10) | – | (0.10) | $13.98 | 9.89% | 1.26% | (0.44)% | 155% | $518,768 | ||
B Class | |||||||||||||||
2014(3) | $27.02 | (0.19) | 0.29 | 0.10 | – | (3.60) | (3.60) | $23.52 | 0.56% | 2.00%(4) | (1.54)%(4) | 42% | $2,822 | ||
2013 | $21.54 | (0.30) | 6.25 | 5.95 | – | (0.47) | (0.47) | $27.02 | 28.17% | 2.00% | (1.29)% | 70% | $3,189 | ||
2012 | $19.89 | (0.27) | 1.92 | 1.65 | – | – | – | $21.54 | 8.30% | 2.01% | (1.28)% | 72% | $3,051 | ||
2011 | $18.81 | (0.28) | 1.36 | 1.08 | – | – | – | $19.89 | 5.74% | 2.01% | (1.35)% | 95% | $3,574 | ||
2010 | $14.16 | (0.24) | 4.89 | 4.65 | – | – | – | $18.81 | 32.84% | 2.01% | (1.45)% | 114% | $3,997 | ||
2009 | $13.01 | (0.16) | 1.33 | 1.17 | (0.02) | – | (0.02) | $14.16 | 8.99% | 2.01% | (1.19)% | 155% | $3,425 | ||
C Class | |||||||||||||||
2014(3) | $25.16 | (0.17) | 0.26 | 0.09 | – | (3.60) | (3.60) | $21.65 | 0.56% | 2.00%(4) | (1.54)%(4) | 42% | $129,751 | ||
2013 | $20.09 | (0.28) | 5.82 | 5.54 | – | (0.47) | (0.47) | $25.16 | 28.10% | 2.00% | (1.29)% | 70% | $139,064 | ||
2012 | $18.55 | (0.25) | 1.79 | 1.54 | – | – | – | $20.09 | 8.30% | 2.01% | (1.28)% | 72% | $117,580 | ||
2011 | $17.55 | (0.26) | 1.26 | 1.00 | – | – | – | $18.55 | 5.75% | 2.01% | (1.35)% | 95% | $115,641 | ||
2010 | $13.21 | (0.22) | 4.56 | 4.34 | – | – | – | $17.55 | 32.85% | 2.01% | (1.45)% | 114% | $85,381 | ||
2009 | $12.13 | (0.14) | 1.24 | 1.10 | (0.02) | – | (0.02) | $13.21 | 9.07% | 2.01% | (1.19)% | 155% | $51,745 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||
2014(3) | $27.72 | (0.13) | 0.30 | 0.17 | – | (3.60) | (3.60) | $24.29 | 0.83% | 1.50%(4) | (1.04)%(4) | 42% | $61,467 | ||
2013 | $21.99 | (0.20) | 6.40 | 6.20 | – | (0.47) | (0.47) | $27.72 | 28.74% | 1.50% | (0.79)% | 70% | $54,129 | ||
2012 | $20.20 | (0.16) | 1.95 | 1.79 | – | – | – | $21.99 | 8.86% | 1.51% | (0.78)% | 72% | $39,314 | ||
2011 | $19.01 | (0.18) | 1.37 | 1.19 | – | – | – | $20.20 | 6.26% | 1.51% | (0.85)% | 95% | $32,023 | ||
2010 | $14.24 | (0.16) | 4.93 | 4.77 | – | – | – | $19.01 | 33.50% | 1.51% | (0.95)% | 114% | $17,544 | ||
2009 | $13.08 | (0.11) | 1.34 | 1.23 | (0.07) | – | (0.07) | $14.24 | 9.58% | 1.51% | (0.69)% | 155% | $4,775 | ||
R6 Class | |||||||||||||||
2014(3) | $29.25 | (0.03) | 0.33 | 0.30 | – | (3.60) | (3.60) | $25.95 | 1.23% | 0.65%(4) | (0.19)%(4) | 42% | $840 | ||
2013(6) | $27.22 | –(5) | 2.03 | 2.03 | – | – | – | $29.25 | 7.46% | 0.65%(4) | (0.07)%(4) | 70%(7) | $74 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
23
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
24
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82272 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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New Opportunities Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWNOX | 2.01% | 18.87% | 19.67% | 8.15% | 7.67% | 12/26/96 |
Russell 2500 Growth Index | — | 3.35% | 21.77% | 21.49% | 9.71% | 7.84% | — |
Institutional Class | TWNIX | 2.09% | 19.07% | — | — | 15.93% | 3/1/10 |
A Class | TWNAX | 3/1/10 | |||||
No sales charge* | 1.85% | 18.60% | — | — | 15.41% | ||
With sales charge* | -4.00% | 11.75% | — | — | 13.78% | ||
C Class | TWNCX | 3/1/10 | |||||
No sales charge* | 1.52% | 17.73% | — | — | 14.55% | ||
With sales charge* | 0.52% | 17.73% | — | — | 14.55% | ||
R Class | TWNRX | 1.77% | 18.20% | — | — | 15.11% | 3/1/10 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.54% | 1.34% | 1.79% | 2.54% | 2.04% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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. Historically, small company stocks have been more volatile than the stocks of larger, more established companies.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
LKQ Corp. | 3.7% |
FleetCor Technologies, Inc. | 2.4% |
Middleby Corp. | 2.0% |
CoStar Group, Inc. | 1.6% |
Goodyear Tire & Rubber Co. (The) | 1.4% |
Gulfport Energy Corp. | 1.4% |
United Rentals, Inc. | 1.2% |
Ubiquiti Networks, Inc. | 1.2% |
Aspen Technology, Inc. | 1.1% |
Hanesbrands, Inc. | 1.0% |
Top Five Industries | % of net assets |
Health Care Equipment and Supplies | 5.2% |
Biotechnology | 4.9% |
IT Services | 4.6% |
Machinery | 4.4% |
Distributors | 4.2% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.6% |
Temporary Cash Investments | 2.0% |
Other Assets and Liabilities | 0.4% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,020.10 | $7.51 | 1.50% |
Institutional Class | $1,000 | $1,020.90 | $6.51 | 1.30% |
A Class | $1,000 | $1,018.50 | $8.76 | 1.75% |
C Class | $1,000 | $1,015.20 | $12.49 | 2.50% |
R Class | $1,000 | $1,017.70 | $10.01 | 2.00% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
Institutional Class | $1,000 | $1,018.35 | $6.51 | 1.30% |
A Class | $1,000 | $1,016.12 | $8.75 | 1.75% |
C Class | $1,000 | $1,012.40 | $12.47 | 2.50% |
R 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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||
COMMON STOCKS — 97.6% | |||||||||
AEROSPACE AND DEFENSE — 1.8% | |||||||||
B/E Aerospace, Inc.(1) | 19,096 | $ | 1,676,056 | ||||||
TransDigm Group, Inc. | 9,193 | 1,635,159 | |||||||
3,311,215 | |||||||||
AIRLINES — 0.9% | |||||||||
Copa Holdings SA Class A | 3,600 | 487,008 | |||||||
Spirit Airlines, Inc.(1) | 19,766 | �� | 1,123,499 | ||||||
1,610,507 | |||||||||
AUTO COMPONENTS — 2.2% | |||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 81,520 | 1,438,828 | |||||||
Goodyear Tire & Rubber Co. (The) | 106,154 | 2,675,081 | |||||||
4,113,909 | |||||||||
BANKS — 2.7% | |||||||||
Cathay General Bancorp. | 45,518 | 1,074,225 | |||||||
Central Pacific Financial Corp. | 24,790 | 465,308 | |||||||
Home Bancshares, Inc. | 30,072 | 953,583 | |||||||
IBERIABANK Corp. | 16,560 | 1,041,624 | |||||||
Renasant Corp. | 16,070 | 437,425 | |||||||
Signature Bank(1) | 8,424 | 1,000,940 | |||||||
4,973,105 | |||||||||
BIOTECHNOLOGY — 4.9% | |||||||||
Aegerion Pharmaceuticals, Inc.(1) | 4,720 | 208,907 | |||||||
Alkermes plc(1) | 17,168 | 794,192 | |||||||
Alnylam Pharmaceuticals, Inc.(1) | 9,300 | 460,629 | |||||||
Celldex Therapeutics, Inc.(1) | 14,030 | 210,450 | |||||||
Cepheid, Inc.(1) | 9,769 | 424,756 | |||||||
Clovis Oncology, Inc.(1) | 3,700 | 200,059 | |||||||
Cubist Pharmaceuticals, Inc.(1) | 8,894 | 623,114 | |||||||
Incyte Corp. Ltd.(1) | 15,581 | 756,613 | |||||||
Insmed, Inc.(1) | 4,030 | 56,178 | |||||||
Intercept Pharmaceuticals, Inc.(1) | 1,190 | 314,303 | |||||||
InterMune, Inc.(1) | 16,330 | 523,866 | |||||||
Isis Pharmaceuticals, Inc.(1) | 12,631 | 336,111 | |||||||
Medivation, Inc.(1) | 10,358 | 623,655 | |||||||
Merrimack Pharmaceuticals, Inc.(1) | 11,260 | 49,431 | |||||||
Neurocrine Biosciences, Inc.(1) | 12,240 | 171,605 | |||||||
NPS Pharmaceuticals, Inc.(1) | 12,730 | 338,873 | |||||||
Opko Health, Inc.(1) | 38,380 | 317,403 | |||||||
Orexigen Therapeutics, Inc.(1) | 10,040 | 56,425 | |||||||
Pharmacyclics, Inc.(1) | 7,744 | 732,428 | |||||||
Puma Biotechnology, Inc.(1) | 2,530 | 191,116 | |||||||
Sarepta Therapeutics, Inc.(1) | 5,040 | 187,135 |
7
Shares | Value | ||||||||
Seattle Genetics, Inc.(1) | 14,685 | $ | 565,079 | ||||||
Theravance, Inc.(1) | 11,070 | 298,004 | |||||||
United Therapeutics Corp.(1) | 6,643 | 664,366 | |||||||
9,104,698 | |||||||||
BUILDING PRODUCTS — 2.5% | |||||||||
Apogee Enterprises, Inc. | 29,351 | 932,482 | |||||||
Fortune Brands Home & Security, Inc. | 46,359 | 1,847,406 | |||||||
Insteel Industries, Inc. | 31,750 | 653,415 | |||||||
Lennox International, Inc. | 14,676 | 1,230,289 | |||||||
4,663,592 | |||||||||
CAPITAL MARKETS — 1.7% | |||||||||
Evercore Partners, Inc., Class A | 16,210 | 866,100 | |||||||
HFF, Inc. Class A | 22,460 | 763,640 | |||||||
Lazard Ltd. Class A | 31,003 | 1,458,691 | |||||||
3,088,431 | |||||||||
CHEMICALS — 2.2% | |||||||||
Cabot Corp. | 31,350 | 1,812,030 | |||||||
Chemtura Corp.(1) | 46,120 | 1,028,476 | |||||||
International Flavors & Fragrances, Inc. | 8,927 | 879,488 | |||||||
PolyOne Corp. | 9,150 | 342,851 | |||||||
4,062,845 | |||||||||
COMMUNICATIONS EQUIPMENT — 1.2% | |||||||||
Ubiquiti Networks, Inc.(1) | 56,496 | 2,188,090 | |||||||
CONSTRUCTION AND ENGINEERING — 1.3% | |||||||||
Chicago Bridge & Iron Co. NV New York Shares | 12,930 | 1,035,305 | |||||||
MasTec, Inc.(1) | 35,763 | 1,415,500 | |||||||
2,450,805 | |||||||||
CONSTRUCTION MATERIALS — 1.4% | |||||||||
Caesarstone Sdot-Yam Ltd. | 19,180 | 1,000,813 | |||||||
Headwaters, Inc.(1) | 74,032 | 923,919 | |||||||
Martin Marietta Materials, Inc. | 5,440 | 676,355 | |||||||
2,601,087 | |||||||||
CONTAINERS AND PACKAGING — 2.0% | |||||||||
Ball Corp. | 15,740 | 884,430 | |||||||
Crown Holdings, Inc.(1) | 23,700 | 1,117,929 | |||||||
Graphic Packaging Holding Co.(1) | 110,991 | 1,138,768 | |||||||
Rock Tenn Co., Class A | 5,780 | 552,626 | |||||||
3,693,753 | |||||||||
DISTRIBUTORS — 4.2% | |||||||||
Core-Mark Holding Co., Inc. | 12,380 | 997,085 | |||||||
LKQ Corp.(1) | 235,629 | 6,861,517 | |||||||
7,858,602 | |||||||||
DIVERSIFIED CONSUMER SERVICES — 1.2% | |||||||||
LifeLock, Inc.(1) | 56,123 | 881,131 | |||||||
Nord Anglia Education, Inc.(1) | 72,141 | 1,431,999 | |||||||
2,313,130 | |||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.9% | |||||||||
CBOE Holdings, Inc. | 15,970 | 852,159 |
8
Shares | Value | ||||||||
MarketAxess Holdings, Inc. | 16,325 | $ | 879,591 | ||||||
1,731,750 | |||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.3% | |||||||||
tw telecom, inc., Class A(1) | 17,356 | 532,656 | |||||||
ELECTRICAL EQUIPMENT — 1.2% | |||||||||
Acuity Brands, Inc. | 7,640 | 951,715 | |||||||
EnerSys | 17,930 | 1,211,709 | |||||||
2,163,424 | |||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 3.3% | |||||||||
Belden, Inc. | 10,776 | 795,377 | |||||||
FEI Co. | 5,900 | 469,168 | |||||||
Littelfuse, Inc. | 17,593 | 1,593,046 | |||||||
Measurement Specialties, Inc.(1) | 14,090 | 906,691 | |||||||
Methode Electronics, Inc. | 16,090 | 446,337 | |||||||
Trimble Navigation Ltd.(1) | 48,184 | 1,851,711 | |||||||
6,062,330 | |||||||||
ENERGY EQUIPMENT AND SERVICES — 1.5% | |||||||||
Dril-Quip, Inc.(1) | 11,613 | 1,313,662 | |||||||
Matrix Service Co.(1) | 15,465 | 478,951 | |||||||
Oceaneering International, Inc. | 12,771 | 935,859 | |||||||
2,728,472 | |||||||||
FOOD AND STAPLES RETAILING — 1.4% | |||||||||
Rite Aid Corp.(1) | 184,010 | 1,343,273 | |||||||
United Natural Foods, Inc.(1) | 19,191 | 1,324,755 | |||||||
2,668,028 | |||||||||
FOOD PRODUCTS — 1.7% | |||||||||
Hain Celestial Group, Inc. (The)(1) | 15,208 | 1,308,192 | |||||||
J&J Snack Foods Corp. | 8,085 | 756,756 | |||||||
TreeHouse Foods, Inc.(1) | 14,852 | 1,111,524 | |||||||
3,176,472 | |||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 5.2% | |||||||||
Align Technology, Inc.(1) | 15,630 | 787,596 | |||||||
Cooper Cos., Inc. (The) | 4,204 | 554,550 | |||||||
Cyberonics, Inc.(1) | 5,173 | 306,035 | |||||||
DexCom, Inc.(1) | 11,270 | 365,599 | |||||||
HeartWare International, Inc.(1) | 2,898 | 246,214 | |||||||
IDEXX Laboratories, Inc.(1) | 6,934 | 876,735 | |||||||
Insulet Corp.(1) | 9,160 | 344,691 | |||||||
Mettler-Toledo International, Inc.(1) | 5,645 | 1,315,962 | |||||||
ResMed, Inc. | 17,342 | 864,499 | |||||||
Sirona Dental Systems, Inc.(1) | 7,820 | 588,220 | |||||||
STERIS Corp. | 20,562 | 988,004 | |||||||
Teleflex, Inc. | 16,270 | 1,661,004 | |||||||
Thoratec Corp.(1) | 9,857 | 323,112 | |||||||
West Pharmaceutical Services, Inc. | 10,560 | 458,093 | |||||||
9,680,314 | |||||||||
HEALTH CARE PROVIDERS AND SERVICES — 2.4% | |||||||||
Brookdale Senior Living, Inc.(1) | 15,340 | 488,426 |
9
Shares | Value | ||||||||
Centene Corp.(1) | 8,074 | $ | 536,113 | ||||||
HealthSouth Corp. | 11,127 | 385,439 | |||||||
Mednax, Inc.(1) | 9,680 | 573,540 | |||||||
MWI Veterinary Supply, Inc.(1) | 2,120 | 332,077 | |||||||
Patterson Cos., Inc. | 11,230 | 457,061 | |||||||
Team Health Holdings, Inc.(1) | 10,910 | 528,917 | |||||||
Tenet Healthcare Corp.(1) | 12,830 | 578,376 | |||||||
Universal Health Services, Inc., Class B | 8,330 | 681,311 | |||||||
4,561,260 | |||||||||
HEALTH CARE TECHNOLOGY — 0.7% | |||||||||
athenahealth, Inc.(1) | 4,056 | 501,484 | |||||||
HMS Holdings Corp.(1) | 13,446 | 217,422 | |||||||
Medidata Solutions, Inc.(1) | 15,762 | 572,318 | |||||||
1,291,224 | |||||||||
HOTELS, RESTAURANTS AND LEISURE — 2.3% | |||||||||
Dunkin' Brands Group, Inc. | 24,960 | 1,135,929 | |||||||
Papa John's International, Inc. | 41,094 | 1,802,383 | |||||||
Six Flags Entertainment Corp. | 31,748 | 1,274,365 | |||||||
4,212,677 | |||||||||
HOUSEHOLD DURABLES — 1.6% | |||||||||
Jarden Corp.(1) | 28,690 | 1,639,634 | |||||||
Standard Pacific Corp.(1) | 165,060 | 1,318,829 | |||||||
2,958,463 | |||||||||
INSURANCE — 0.9% | |||||||||
Allied World Assurance Co. Holdings Ltd. | 8,670 | 933,672 | |||||||
AMERISAFE, Inc. | 18,949 | 808,175 | |||||||
1,741,847 | |||||||||
INTERNET SOFTWARE AND SERVICES — 4.2% | |||||||||
Amber Road, Inc.(1) | 40,402 | 538,155 | |||||||
comScore, Inc.(1) | 28,830 | 903,244 | |||||||
CoStar Group, Inc.(1) | 18,538 | 2,982,579 | |||||||
Envestnet, Inc.(1) | 16,830 | 620,185 | |||||||
Q2 Holdings, Inc.(1) | 26,316 | 323,160 | |||||||
Shutterstock, Inc.(1) | 25,413 | 1,842,697 | |||||||
Web.com Group, Inc.(1) | 20,746 | 637,110 | |||||||
7,847,130 | |||||||||
IT SERVICES — 4.6% | |||||||||
Alliance Data Systems Corp.(1) | 5,330 | 1,289,327 | |||||||
FleetCor Technologies, Inc.(1) | 38,421 | 4,384,989 | |||||||
iGATE Corp.(1) | 22,680 | 830,088 | |||||||
MAXIMUS, Inc. | 26,120 | 1,111,928 | |||||||
Virtusa Corp.(1) | 28,712 | 946,635 | |||||||
8,562,967 | |||||||||
LEISURE PRODUCTS — 1.3% | |||||||||
Brunswick Corp. | 32,131 | 1,291,345 | |||||||
Polaris Industries, Inc. | 8,499 | 1,141,671 | |||||||
2,433,016 |
10
Shares | Value | ||||||||
LIFE SCIENCES TOOLS AND SERVICES — 1.5% | |||||||||
Bruker Corp.(1) | 17,328 | $ | 357,996 | ||||||
Covance, Inc.(1) | 17,210 | 1,519,299 | |||||||
PAREXEL International Corp.(1) | 7,802 | 353,821 | |||||||
PerkinElmer, Inc. | 13,420 | 563,237 | |||||||
2,794,353 | |||||||||
MACHINERY — 4.4% | |||||||||
ITT Corp. | 41,825 | 1,804,331 | |||||||
Middleby Corp.(1) | 14,644 | 3,697,317 | |||||||
Mueller Water Products, Inc., Class A | 128,057 | 1,167,880 | |||||||
RBC Bearings, Inc.(1) | 13,070 | 813,738 | |||||||
WABCO Holdings, Inc.(1) | 7,117 | 761,590 | |||||||
8,244,856 | |||||||||
MEDIA — 0.8% | |||||||||
AMC Networks, Inc.(1) | 17,040 | 1,119,017 | |||||||
Sinclair Broadcast Group, Inc., Class A | 11,746 | 313,970 | |||||||
1,432,987 | |||||||||
METALS AND MINING — 1.3% | |||||||||
Horsehead Holding Corp.(1) | 81,900 | 1,276,821 | |||||||
Reliance Steel & Aluminum Co. | 15,720 | 1,113,290 | |||||||
2,390,111 | |||||||||
OIL, GAS AND CONSUMABLE FUELS — 2.9% | |||||||||
Athlon Energy, Inc.(1) | 44,340 | 1,791,779 | |||||||
Gulfport Energy Corp.(1) | 34,594 | 2,548,540 | |||||||
Kodiak Oil & Gas Corp.(1) | 41,467 | 527,046 | |||||||
Rosetta Resources, Inc.(1) | 11,285 | 534,232 | |||||||
5,401,597 | |||||||||
PERSONAL PRODUCTS — 0.6% | |||||||||
Herbalife Ltd. | 8,834 | 529,863 | |||||||
Nu Skin Enterprises, Inc., Class A | 6,403 | 557,061 | |||||||
1,086,924 | |||||||||
PHARMACEUTICALS — 2.2% | |||||||||
Endo International plc(1) | 14,927 | 939,580 | |||||||
Jazz Pharmaceuticals plc(1) | 7,271 | 980,858 | |||||||
Medicines Co. (The)(1) | 10,439 | 277,677 | |||||||
Questcor Pharmaceuticals, Inc. | 8,070 | 663,193 | |||||||
Salix Pharmaceuticals Ltd.(1) | 10,558 | 1,161,380 | |||||||
4,022,688 | |||||||||
PROFESSIONAL SERVICES — 2.2% | |||||||||
Huron Consulting Group, Inc.(1) | 14,415 | 1,026,348 | |||||||
Korn/Ferry International(1) | 52,330 | 1,520,186 | |||||||
On Assignment, Inc.(1) | 32,463 | 1,136,205 | |||||||
WageWorks, Inc.(1) | 8,880 | 376,246 | |||||||
4,058,985 | |||||||||
ROAD AND RAIL — 2.5% | |||||||||
Roadrunner Transportation Systems, Inc.(1) | 46,030 | 1,133,719 | |||||||
Saia, Inc.(1) | 43,753 | 1,801,311 |
11
Shares | Value | ||||||||
Swift Transportation Co.(1) | 72,044 | $ | 1,732,658 | ||||||
4,667,688 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.5% | |||||||||
Cavium, Inc.(1) | 11,376 | 482,001 | |||||||
Cree, Inc.(1) | 11,110 | 524,059 | |||||||
Freescale Semiconductor Ltd.(1) | 47,160 | 1,036,105 | |||||||
Photronics, Inc.(1) | 85,043 | 738,173 | |||||||
Skyworks Solutions, Inc.(1) | 30,313 | 1,244,349 | |||||||
SunEdison, Inc.(1) | 29,120 | 559,978 | |||||||
4,584,665 | |||||||||
SOFTWARE — 3.8% | |||||||||
Aspen Technology, Inc.(1) | 46,545 | 2,000,970 | |||||||
Bottomline Technologies, Inc.(1) | 24,746 | 782,963 | |||||||
Interactive Intelligence, Inc.(1) | 7,861 | 491,863 | |||||||
Manhattan Associates, Inc.(1) | 21,430 | 675,688 | |||||||
Monotype Imaging Holdings, Inc. | 28,762 | 759,604 | |||||||
ServiceNow, Inc.(1) | 10,600 | 527,032 | |||||||
Solera Holdings, Inc. | 19,850 | 1,285,883 | |||||||
Splunk, Inc.(1) | 11,840 | 646,109 | |||||||
7,170,112 | |||||||||
SPECIALTY RETAIL — 3.6% | |||||||||
Brown Shoe Co., Inc. | 43,910 | 1,035,837 | |||||||
Cabela's, Inc.(1) | 13,234 | 868,283 | |||||||
Foot Locker, Inc. | 32,510 | 1,512,690 | |||||||
Lithia Motors, Inc. Class A | 19,723 | 1,465,024 | |||||||
Restoration Hardware Holdings, Inc.(1) | 29,890 | 1,864,837 | |||||||
6,746,671 | |||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 0.4% | |||||||||
Stratasys Ltd.(1) | 7,860 | 761,398 | |||||||
TEXTILES, APPAREL AND LUXURY GOODS — 2.7% | |||||||||
Fossil Group, Inc.(1) | 5,445 | 580,709 | |||||||
Hanesbrands, Inc. | 23,570 | 1,934,862 | |||||||
Kate Spade & Co.(1) | 43,090 | 1,498,239 | |||||||
Under Armour, Inc., Class A(1) | 19,484 | 952,573 | |||||||
4,966,383 | |||||||||
TRADING COMPANIES AND DISTRIBUTORS — 2.2% | |||||||||
DXP Enterprises, Inc.(1) | 7,155 | 810,018 | |||||||
H&E Equipment Services, Inc.(1) | 28,728 | 1,107,464 | |||||||
United Rentals, Inc.(1) | 23,949 | 2,247,135 | |||||||
4,164,617 | |||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.3% | |||||||||
RingCentral, Inc., Class A(1) | 41,114 | 623,288 | |||||||
TOTAL COMMON STOCKS (Cost $143,899,769) | 181,503,122 |
12
Shares | Value | ||||||||
TEMPORARY CASH INVESTMENTS — 2.0% | |||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $1,150,155), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $1,126,459) | $ | 1,126,458 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $922,020), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $901,166) | 901,166 | ||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $919,491), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $901,168) | 901,167 | ||||||||
SSgA U.S. Government Money Market Fund | 788,219 | 788,219 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,717,010) | 3,717,010 | ||||||||
TOTAL INVESTMENT SECURITIES — 99.6% (Cost $147,616,779) | 185,220,132 | ||||||||
OTHER ASSETS AND LIABILITIES — 0.4% | 810,149 | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 186,030,281 |
Notes to Schedule of Investments |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $147,616,779) | $ | 185,220,132 | ||||
Receivable for investments sold | 3,457,956 | |||||
Receivable for capital shares sold | 4,029 | |||||
Dividends and interest receivable | 14,966 | |||||
188,697,083 | ||||||
Liabilities | ||||||
Payable for investments purchased | 2,297,451 | |||||
Payable for capital shares redeemed | 134,899 | |||||
Accrued management fees | 234,280 | |||||
Distribution and service fees payable | 172 | |||||
2,666,802 | ||||||
Net Assets | $ | 186,030,281 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 147,814,747 | ||||
Accumulated net investment loss | (2,407,192 | ) | ||||
Undistributed net realized gain | 3,019,373 | |||||
Net unrealized appreciation | 37,603,353 | |||||
$ | 186,030,281 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $185,471,084 | 16,642,295 | $11.14 | |
Institutional Class, $0.01 Par Value | $46,277 | 4,119 | $11.24 | |
A Class, $0.01 Par Value | $344,362 | 31,229 | $11.03* | |
C Class, $0.01 Par Value | $71,751 | 6,714 | $10.69 | |
R Class, $0.01 Par Value | $96,807 | 8,872 | $10.91 |
* Maximum offering price $11.70 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $2,571) | $ | 527,410 | ||
Interest | 204 | |||
527,614 | ||||
Expenses: | ||||
Management fees | 1,447,059 | |||
Distribution and service fees: | ||||
A Class | 424 | |||
C Class | 457 | |||
R Class | 242 | |||
Directors' fees and expenses | 2,969 | |||
1,451,151 | ||||
Net investment income (loss) | (923,537 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 12,796,261 | |||
Change in net unrealized appreciation (depreciation) on investments | (7,921,868 | ) | ||
Net realized and unrealized gain (loss) | 4,874,393 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 3,950,856 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | (923,537 | ) | $ | (1,056,726 | ) |
Net realized gain (loss) | 12,796,261 | 26,351,491 | ||||
Change in net unrealized appreciation (depreciation) | (7,921,868 | ) | 24,716,488 | |||
Net increase (decrease) in net assets resulting from operations | 3,950,856 | 50,011,253 | ||||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | (8,995,640 | ) | (13,879,798 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 7,120 | 5,437 | ||||
Net increase (decrease) in net assets | (5,037,664 | ) | 36,136,892 | |||
Net Assets | ||||||
Beginning of period | 191,067,945 | 154,931,053 | ||||
End of period | $ | 186,030,281 | $ | 191,067,945 | ||
Accumulated net investment loss | $ | (2,407,192 | ) | $ | (1,483,655 | ) |
See Notes to Financial Statements.
16
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. New Opportunities Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
17
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. 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. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption — The fund may impose a 2.00% redemption fee on shares held less than 60 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
18
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.100% to 1.500% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.900% to 1.300% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 1.50% for the Investor Class, A Class, C Class and R Class and 1.30% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund's assets but are reflected in the return realized by the fund on its investment in the acquired funds.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $70,151,202 and $79,710,913, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 494,044 | $ | 5,647,174 | 1,105,428 | $ | 10,646,772 | ||||
Redeemed | (1,283,008 | ) | (14,612,719 | ) | (2,680,109 | ) | (24,543,220 | ) | ||
(788,964 | ) | (8,965,545 | ) | (1,574,681 | ) | (13,896,448 | ) | |||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
A Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 1,938 | 21,799 | 13,453 | 127,738 | ||||||
Redeemed | (440 | ) | (4,827 | ) | (13,318 | ) | (125,925 | ) | ||
1,498 | 16,972 | 135 | 1,813 | |||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 580 | 6,205 | 5,823 | 51,750 | ||||||
Redeemed | (5,020 | ) | (55,583 | ) | (4,720 | ) | (46,089 | ) | ||
(4,440 | ) | (49,378 | ) | 1,103 | 5,661 | |||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 523 | 5,868 | 999 | 9,337 | ||||||
Redeemed | (319 | ) | (3,557 | ) | (15 | ) | (161 | ) | ||
204 | 2,311 | 984 | 9,176 | |||||||
Net increase (decrease) | (791,702 | ) | $ | (8,995,640 | ) | (1,572,459 | ) | $ | (13,879,798 | ) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 181,503,122 | — | — | ||||
Temporary Cash Investments | 788,219 | $ | 2,928,791 | — | ||||
$ | 182,291,341 | $ | 2,928,791 | — |
20
7. Risk Factors
The fund invests in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 147,727,154 | |
Gross tax appreciation of investments | $ | 40,874,018 | |
Gross tax depreciation of investments | (3,381,040 | ) | |
Net tax appreciation (depreciation) of investments | $ | 37,492,978 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2013, the fund had accumulated short-term capital losses of $(9,856,981), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
As of October 31, 2013, the fund had late-year ordinary loss deferrals of $(1,483,655), which represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
21
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | ||||||||||||
2014(4) | $10.93 | (0.05) | 0.26 | 0.21 | $11.14 | 2.01% | 1.50%(5) | (0.95)%(5) | 37% | $185,471 | ||
2013 | $8.13 | (0.06) | 2.86 | 2.80 | $10.93 | 34.44% | 1.50% | (0.62)% | 79% | $190,490 | ||
2012 | $7.47 | (0.02) | 0.68 | 0.66 | $8.13 | 8.84% | 1.50% | (0.22)% | 63% | $154,517 | ||
2011 | $6.86 | (0.07) | 0.68 | 0.61 | $7.47 | 8.89% | 1.50% | (0.95)% | 107% | $158,117 | ||
2010 | $5.06 | (0.04) | 1.84 | 1.80 | $6.86 | 33.57% | 1.51% | (0.59)% | 181% | $146,747 | ||
2009 | $5.12 | (0.02) | (0.04) | (0.06) | $5.06 | (1.17)% | 1.50% | (0.51)% | 206% | $119,287 | ||
Institutional Class | ||||||||||||
2014(4) | $11.01 | (0.04) | 0.27 | 0.23 | $11.24 | 2.09% | 1.30%(5) | (0.75)%(5) | 37% | $46 | ||
2013 | $8.17 | (0.04) | 2.88 | 2.84 | $11.01 | 34.76% | 1.30% | (0.42)% | 79% | $45 | ||
2012 | $7.49 | –(6) | 0.68 | 0.68 | $8.17 | 9.08% | 1.30% | (0.02)% | 63% | $34 | ||
2011 | $6.87 | (0.06) | 0.68 | 0.62 | $7.49 | 9.02% | 1.30% | (0.75)% | 107% | $31 | ||
2010(7) | $6.07 | (0.01) | 0.81 | 0.80 | $6.87 | 13.18% | 1.31%(5) | (0.29)%(5) | 181%(8) | $28 | ||
A Class | ||||||||||||
2014(4) | $10.83 | (0.07) | 0.27 | 0.20 | $11.03 | 1.85% | 1.75%(5) | (1.20)%(5) | 37% | $344 | ||
2013 | $8.08 | (0.08) | 2.83 | 2.75 | $10.83 | 34.03% | 1.75% | (0.87)% | 79% | $322 | ||
2012 | $7.44 | (0.04) | 0.68 | 0.64 | $8.08 | 8.60% | 1.75% | (0.47)% | 63% | $239 | ||
2011 | $6.85 | (0.09) | 0.68 | 0.59 | $7.44 | 8.61% | 1.75% | (1.20)% | 107% | $282 | ||
2010(7) | $6.07 | (0.03) | 0.81 | 0.78 | $6.85 | 12.85% | 1.76%(5) | (0.67)%(5) | 181%(8) | $121 |
22
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
C Class | ||||||||||||
2014(4) | $10.53 | (0.11) | 0.27 | 0.16 | $10.69 | 1.52% | 2.50%(5) | (1.95)%(5) | 37% | $72 | ||
2013 | $7.91 | (0.15) | 2.77 | 2.62 | $10.53 | 33.12% | 2.50% | (1.62)% | 79% | $117 | ||
2012 | $7.34 | (0.09) | 0.66 | 0.57 | $7.91 | 7.77% | 2.50% | (1.22)% | 63% | $80 | ||
2011 | $6.81 | (0.15) | 0.68 | 0.53 | $7.34 | 7.78% | 2.50% | (1.95)% | 107% | $57 | ||
2010(7) | $6.07 | (0.06) | 0.80 | 0.74 | $6.81 | 12.19% | 2.51%(5) | (1.46)%(5) | 181%(8) | $40 | ||
R Class | ||||||||||||
2014(4) | $10.73 | (0.08) | 0.26 | 0.18 | $10.91 | 1.77% | 2.00%(5) | (1.45)%(5) | 37% | $97 | ||
2013 | $8.02 | (0.11) | 2.82 | 2.71 | $10.73 | 33.67% | 2.00% | (1.12)% | 79% | $93 | ||
2012 | $7.40 | (0.06) | 0.68 | 0.62 | $8.02 | 8.38% | 2.00% | (0.72)% | 63% | $62 | ||
2011 | $6.84 | (0.11) | 0.67 | 0.56 | $7.40 | 8.19% | 2.00% | (1.45)% | 107% | $48 | ||
2010(7) | $6.07 | (0.04) | 0.81 | 0.77 | $6.84 | 12.69% | 2.01%(5) | (0.99)%(5) | 181%(8) | $29 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2014 (unaudited). |
(5) | Annualized. |
(6) | Per-share amount was less than $0.005. |
(7) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
23
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
24
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82269 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/copy7ofcopy3ofamcentlogo.jpg)
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NT Growth Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Institutional Class | ACLTX | 6.16% | 19.58% | 17.59% | 8.31% | 5/12/06 |
Russell 1000 Growth Index | — | 6.95% | 20.66% | 19.45% | 8.36% | — |
R6 Class | ACDTX | 6.19% | — | — | 13.94%(1) | 7/26/13 |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |
Institutional Class | R6 Class |
0.77% | 0.62% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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 Institutional 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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Google, Inc.* | 4.8% |
Oracle Corp. | 3.6% |
PepsiCo, Inc. | 3.5% |
Comcast Corp., Class A | 3.3% |
Schlumberger Ltd. | 2.7% |
Visa, Inc., Class A | 2.7% |
QUALCOMM, Inc. | 2.6% |
Apple, Inc. | 2.5% |
United Technologies Corp. | 2.3% |
Honeywell International, Inc. | 2.3% |
* Includes all classes of the issuer. | |
Top Five Industries | % of net assets |
Aerospace and Defense | 7.3% |
Media | 6.2% |
Software | 6.1% |
Internet Software and Services | 6.1% |
Technology Hardware, Storage and Peripherals | 5.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.7% |
Exchange-Traded Funds | 0.4% |
Total Equity Exposure | 99.1% |
Temporary Cash Investments | 0.7% |
Other Assets and Liabilities | 0.2% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $1,061.60 | $3.94 | 0.77% |
R6 Class | $1,000 | $1,061.90 | $3.17 | 0.62% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.98 | $3.86 | 0.77% |
R6 Class | $1,000 | $1,021.72 | $3.11 | 0.62% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||
COMMON STOCKS — 98.7% | |||||||||||
AEROSPACE AND DEFENSE — 7.3% | |||||||||||
Boeing Co. (The) | 140,413 | $ | 18,116,085 | ||||||||
Honeywell International, Inc. | 285,564 | 26,528,896 | |||||||||
Precision Castparts Corp. | 53,262 | 13,480,080 | |||||||||
United Technologies Corp. | 229,377 | 27,142,180 | |||||||||
85,267,241 | |||||||||||
AIRLINES — 0.7% | |||||||||||
Alaska Air Group, Inc. | 92,023 | 8,657,524 | |||||||||
AUTO COMPONENTS — 1.6% | |||||||||||
BorgWarner, Inc. | 306,089 | 19,020,370 | |||||||||
AUTOMOBILES — 1.1% | |||||||||||
Harley-Davidson, Inc. | 181,035 | 13,385,728 | |||||||||
BANKS — 1.4% | |||||||||||
SunTrust Banks, Inc. | 440,997 | 16,872,545 | |||||||||
BEVERAGES — 3.9% | |||||||||||
Brown-Forman Corp., Class B | 57,702 | 5,177,023 | |||||||||
PepsiCo, Inc. | 470,930 | 40,448,178 | |||||||||
45,625,201 | |||||||||||
BIOTECHNOLOGY — 3.2% | |||||||||||
Alexion Pharmaceuticals, Inc.(1) | 80,135 | 12,677,357 | |||||||||
Biogen Idec, Inc.(1) | 27,191 | 7,807,080 | |||||||||
Gilead Sciences, Inc.(1) | 112,702 | 8,845,980 | |||||||||
Incyte Corp. Ltd.(1) | 66,077 | 3,208,699 | |||||||||
Regeneron Pharmaceuticals, Inc.(1) | 17,796 | 5,283,454 | |||||||||
37,822,570 | |||||||||||
CAPITAL MARKETS — 2.0% | |||||||||||
Franklin Resources, Inc. | 341,663 | 17,886,058 | |||||||||
State Street Corp. | 79,086 | 5,105,792 | |||||||||
22,991,850 | |||||||||||
CHEMICALS — 3.7% | |||||||||||
Dow Chemical Co. (The) | 94,310 | 4,706,069 | |||||||||
LyondellBasell Industries NV, Class A | 208,832 | 19,316,960 | |||||||||
Monsanto Co. | 172,907 | 19,140,805 | |||||||||
43,163,834 | |||||||||||
COMMERCIAL SERVICES AND SUPPLIES — 1.2% | |||||||||||
Tyco International Ltd. | 346,553 | 14,174,018 | |||||||||
COMMUNICATIONS EQUIPMENT — 2.9% | |||||||||||
Ciena Corp.(1) | 184,667 | 3,650,866 | |||||||||
QUALCOMM, Inc. | 384,246 | 30,244,003 | |||||||||
33,894,869 |
7
Shares | Value | ||||||||||
CONSUMER FINANCE — 1.8% | |||||||||||
American Express Co. | 233,946 | $ | 20,453,899 | ||||||||
ELECTRICAL EQUIPMENT — 1.5% | |||||||||||
Rockwell Automation, Inc. | 146,878 | 17,504,920 | |||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.5% | |||||||||||
Trimble Navigation Ltd.(1) | 146,412 | 5,626,613 | |||||||||
ENERGY EQUIPMENT AND SERVICES — 3.8% | |||||||||||
Core Laboratories NV | 24,436 | 4,586,149 | |||||||||
Oceaneering International, Inc. | 109,525 | 8,025,992 | |||||||||
Schlumberger Ltd. | 309,075 | 31,386,566 | |||||||||
43,998,707 | |||||||||||
FOOD PRODUCTS — 4.3% | |||||||||||
General Mills, Inc. | 451,473 | 23,937,099 | |||||||||
Hershey Co. (The) | 83,130 | 8,000,431 | |||||||||
Mead Johnson Nutrition Co. | 208,900 | 18,437,514 | |||||||||
50,375,044 | |||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.7% | |||||||||||
C.R. Bard, Inc. | 117,606 | 16,150,832 | |||||||||
DENTSPLY International, Inc. | 162,253 | 7,241,351 | |||||||||
DexCom, Inc.(1) | 56,357 | 1,828,221 | |||||||||
IDEXX Laboratories, Inc.(1) | 45,911 | 5,804,987 | |||||||||
31,025,391 | |||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.6% | |||||||||||
Cardinal Health, Inc. | 139,061 | 9,666,130 | |||||||||
Express Scripts Holding Co.(1) | 138,251 | 9,204,752 | |||||||||
18,870,882 | |||||||||||
HOTELS, RESTAURANTS AND LEISURE — 3.8% | |||||||||||
Chipotle Mexican Grill, Inc.(1) | 23,112 | 11,521,332 | |||||||||
Las Vegas Sands Corp. | 178,679 | 14,138,869 | |||||||||
Marriott International, Inc., Class A | 330,345 | 19,136,886 | |||||||||
44,797,087 | |||||||||||
HOUSEHOLD PRODUCTS — 0.8% | |||||||||||
Church & Dwight Co., Inc. | 143,948 | 9,933,852 | |||||||||
INTERNET AND CATALOG RETAIL — 1.4% | |||||||||||
Priceline Group, Inc. (The)(1) | 14,067 | 16,286,069 | |||||||||
INTERNET SOFTWARE AND SERVICES — 6.1% | |||||||||||
Facebook, Inc., Class A(1) | 252,050 | 15,067,549 | |||||||||
Google, Inc., Class A(1) | 52,549 | 28,107,409 | |||||||||
Google, Inc., Class C(1) | 52,549 | 27,675,456 | |||||||||
70,850,414 | |||||||||||
IT SERVICES — 4.0% | |||||||||||
MasterCard, Inc., Class A | 205,101 | 15,085,178 | |||||||||
Visa, Inc., Class A | 154,690 | 31,341,741 | |||||||||
46,426,919 | |||||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.8% | |||||||||||
Waters Corp.(1) | 90,340 | 8,902,104 |
8
Shares | Value | ||||||||||
MACHINERY — 2.7% | |||||||||||
Parker-Hannifin Corp. | 138,616 | $ | 17,587,598 | ||||||||
WABCO Holdings, Inc.(1) | 71,826 | 7,686,100 | |||||||||
Wabtec Corp. | 84,157 | 6,273,905 | |||||||||
31,547,603 | |||||||||||
MEDIA — 6.2% | |||||||||||
CBS Corp., Class B | 160,857 | 9,291,100 | |||||||||
Comcast Corp., Class A | 753,713 | 39,012,185 | |||||||||
Scripps Networks Interactive, Inc. Class A | 128,386 | 9,637,937 | |||||||||
Viacom, Inc., Class B | 172,693 | 14,675,451 | |||||||||
72,616,673 | |||||||||||
OIL, GAS AND CONSUMABLE FUELS — 2.7% | |||||||||||
EOG Resources, Inc. | 186,575 | 18,284,350 | |||||||||
Noble Energy, Inc. | 185,462 | 13,312,462 | |||||||||
31,596,812 | |||||||||||
PERSONAL PRODUCTS — 0.7% | |||||||||||
Estee Lauder Cos., Inc. (The), Class A | 107,042 | 7,768,038 | |||||||||
PHARMACEUTICALS — 5.1% | |||||||||||
Bristol-Myers Squibb Co. | 376,363 | 18,852,023 | |||||||||
Johnson & Johnson | 217,730 | 22,053,872 | |||||||||
Perrigo Co. plc | 65,185 | 9,442,699 | |||||||||
Teva Pharmaceutical Industries Ltd. ADR | 46,762 | 2,284,791 | |||||||||
Zoetis, Inc. | 224,209 | 6,784,564 | |||||||||
59,417,949 | |||||||||||
ROAD AND RAIL — 1.9% | |||||||||||
Union Pacific Corp. | 113,548 | 21,622,946 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.6% | |||||||||||
Linear Technology Corp. | 281,386 | 12,521,677 | |||||||||
Microchip Technology, Inc. | 130,788 | 6,217,662 | |||||||||
18,739,339 | |||||||||||
SOFTWARE — 6.1% | |||||||||||
Check Point Software Technologies Ltd.(1) | 91,316 | 5,849,703 | |||||||||
Electronic Arts, Inc.(1) | 370,992 | 10,499,073 | |||||||||
Microsoft Corp. | 214,965 | 8,684,586 | |||||||||
Oracle Corp. | 1,014,377 | 41,467,732 | |||||||||
Varonis Systems, Inc.(1) | 34,675 | 876,237 | |||||||||
VMware, Inc., Class A(1) | 41,725 | 3,859,980 | |||||||||
71,237,311 | |||||||||||
SPECIALTY RETAIL — 3.4% | |||||||||||
AutoZone, Inc.(1) | 26,043 | 13,904,098 | |||||||||
Home Depot, Inc. (The) | 326,175 | 25,934,174 | |||||||||
39,838,272 | |||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 5.5% | |||||||||||
Apple, Inc. | 50,278 | 29,668,545 | |||||||||
Hewlett-Packard Co. | 359,535 | 11,886,227 | |||||||||
SanDisk Corp. | 155,229 | 13,189,808 | |||||||||
Western Digital Corp. | 107,227 | 9,449,916 | |||||||||
64,194,496 |
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Shares | Value | ||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.7% | |||||||||||
Hanesbrands, Inc. | 94,979 | $ | 7,796,826 | ||||||||
TOTAL COMMON STOCKS (Cost $924,816,919) | 1,152,303,916 | ||||||||||
EXCHANGE-TRADED FUNDS — 0.4% | |||||||||||
iShares Russell 1000 Growth Index Fund (Cost $4,844,143) | 56,657 | 4,906,496 | |||||||||
TEMPORARY CASH INVESTMENTS — 0.7% | |||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $2,551,032), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $2,498,474) | 2,498,472 | ||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $2,045,031), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $1,998,777) | 1,998,777 | ||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $2,039,420), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $1,998,778) | 1,998,777 | ||||||||||
SSgA U.S. Government Money Market Fund | 1,748,261 | 1,748,261 | |||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $8,244,287) | 8,244,287 | ||||||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $937,905,349) | 1,165,454,699 | ||||||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 2,043,864 | ||||||||||
TOTAL NET ASSETS — 100.0% | $ | 1,167,498,563 |
Notes to Schedule of Investments | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $937,905,349) | $ | 1,165,454,699 | ||||
Receivable for investments sold | 10,473,747 | |||||
Receivable for capital shares sold | 2,743,162 | |||||
Dividends and interest receivable | 693,171 | |||||
1,179,364,779 | ||||||
Liabilities | ||||||
Payable for investments purchased | 11,143,356 | |||||
Accrued management fees | 722,860 | |||||
11,866,216 | ||||||
Net Assets | $ | 1,167,498,563 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 868,935,682 | ||||
Undistributed net investment income | 1,859,029 | |||||
Undistributed net realized gain | 69,154,502 | |||||
Net unrealized appreciation | 227,549,350 | |||||
$ | 1,167,498,563 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Institutional Class, $0.01 Par Value | $1,141,923,856 | 73,032,981 | $15.64 | |
R6 Class, $0.01 Par Value | $25,574,707 | 1,636,282 | $15.63 |
See Notes to Financial Statements.
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Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $3,440) | $ | 7,384,364 | ||
Interest | 1,100 | |||
7,385,464 | ||||
Expenses: | ||||
Management fees | 4,112,601 | |||
Directors' fees and expenses | 16,390 | |||
Other expenses | 244 | |||
4,129,235 | ||||
Net investment income (loss) | 3,256,229 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 76,981,685 | |||
Foreign currency transactions | 1,120 | |||
76,982,805 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (16,768,876 | ) | ||
Translation of assets and liabilities in foreign currencies | (1,072 | ) | ||
(16,769,948 | ) | |||
Net realized and unrealized gain (loss) | 60,212,857 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 63,469,086 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 3,256,229 | $ | 7,019,981 | ||
Net realized gain (loss) | 76,982,805 | 40,309,020 | ||||
Change in net unrealized appreciation (depreciation) | (16,769,948 | ) | 145,709,726 | |||
Net increase (decrease) in net assets resulting from operations | 63,469,086 | 193,038,727 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Institutional Class | (5,994,161 | ) | (5,233,236 | ) | ||
R6 Class | (63,884 | ) | — | |||
From net realized gains: | ||||||
Institutional Class | (39,897,401 | ) | (21,042,732 | ) | ||
R6 Class | (337,944 | ) | — | |||
Decrease in net assets from distributions | (46,293,390 | ) | (26,275,968 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 146,422,880 | 201,230,763 | ||||
Net increase (decrease) in net assets | 163,598,576 | 367,993,522 | ||||
Net Assets | ||||||
Beginning of period | 1,003,899,987 | 635,906,465 | ||||
End of period | $ | 1,167,498,563 | $ | 1,003,899,987 | ||
Undistributed net investment income | $ | 1,859,029 | $ | 4,660,845 |
See Notes to Financial Statements.
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Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry.
The fund offers the Institutional Class and the R6 Class, which have different fees and expenses. The difference in the fee structures between the classes is not the result of any difference in advisory or custodial fees or other expenses related to management of the fund’s assets, which do not vary by class. The fund’s R6 Class shares are available for purchase exclusively by certain American Century Investments funds of funds that are offered only through employer-sponsored retirement plans where a financial intermediary provides retirement recordkeeping services to plan participants. Because financial intermediaries do not receive any service, distribution or administrative fees for offering such funds of funds, American Century Investment Management, Inc. (ACIM) (the investment advisor) is able to charge the R6 Class a lower unified management fee. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation
14
with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
15
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The strategy assets of the fund also include the assets of Growth Fund, one fund in a series issued by the corporation. The annual management fee schedule ranges from 0.600% to 0.800% for the Institutional Class and 0.450% to 0.650% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 0.77% for the Institutional Class and 0.62% for the R6 Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $628,829,300 and $511,706,187, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||
Sold | 7,256,020 | $ | 112,434,080 | 14,965,867 | $ | 201,231,386 | ||||
Issued in reinvestment of distributions | 3,073,782 | 45,891,562 | 2,082,089 | 26,275,968 | ||||||
Redeemed | (1,851,585 | ) | (28,923,925 | ) | (2,473,143 | ) | (34,535,500 | ) | ||
8,478,217 | 129,401,717 | 14,574,813 | 192,971,854 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 1,209,330 | 18,782,177 | 542,537 | 8,303,599 | ||||||
Issued in reinvestment of distributions | 26,932 | 401,828 | — | — | ||||||
Redeemed | (139,550 | ) | (2,162,842 | ) | (2,967 | ) | (44,690 | ) | ||
1,096,712 | 17,021,163 | 539,570 | 8,258,909 | |||||||
Net increase (decrease) | 9,574,929 | $ | 146,422,880 | 15,114,383 | $ | 201,230,763 |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,152,303,916 | — | — | ||||
Exchange-Traded Funds | 4,906,496 | — | — | |||||
Temporary Cash Investments | 1,748,261 | $ | 6,496,026 | — | ||||
$ | 1,158,958,673 | $ | 6,496,026 | — |
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7. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 942,654,231 | |
Gross tax appreciation of investments | $ | 228,667,294 | |
Gross tax depreciation of investments | (5,866,826 | ) | |
Net tax appreciation (depreciation) of investments | $ | 222,800,468 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
18
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Institutional Class | |||||||||||||||
2014(3) | $15.42 | 0.05 | 0.87 | 0.92 | (0.09) | (0.61) | (0.70) | $15.64 | 6.16% | 0.77%(4) | 0.60%(4) | 47% | $1,141,924 | ||
2013 | $12.72 | 0.12 | 3.08 | 3.20 | (0.10) | (0.40) | (0.50) | $15.42 | 26.05% | 0.77% | 0.85% | 77% | $995,575 | ||
2012 | $11.92 | 0.09 | 1.09 | 1.18 | (0.08) | (0.30) | (0.38) | $12.72 | 10.33% | 0.77% | 0.71% | 87% | $635,906 | ||
2011 | $11.06 | 0.09 | 0.85 | 0.94 | (0.08) | – | (0.08) | $11.92 | 8.48% | 0.78% | 0.78% | 95% | $461,845 | ||
2010 | $9.34 | 0.06 | 1.71 | 1.77 | (0.05) | – | (0.05) | $11.06 | 18.94% | 0.79% | 0.63% | 95% | $340,417 | ||
2009 | $8.13 | 0.06 | 1.21 | 1.27 | (0.06) | – | (0.06) | $9.34 | 15.88% | 0.80% | 0.67% | 132% | $208,337 | ||
R6 Class | |||||||||||||||
2014(3) | $15.43 | 0.06 | 0.86 | 0.92 | (0.11) | (0.61) | (0.72) | $15.63 | 6.19% | 0.62%(4) | 0.75%(4) | 47% | $25,575 | ||
2013(5) | $14.38 | –(6) | 1.05 | 1.05 | – | – | – | $15.43 | 7.30% | 0.62%(4) | 0.09%(4) | 77%(7) | $8,325 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(6) | Per-share amount was less than $0.005. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
19
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
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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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82276 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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NT Heritage Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of April 30, 2014 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Institutional Class | ACLWX | 1.14% | 16.30% | 15.50% | 4.55% | 5/12/06 |
Russell Midcap Growth Index | — | 6.04% | 20.62% | 21.08% | 8.03% | — |
R6 Class | ACDUX | 1.22% | — | — | 8.27%(1) | 7/26/13 |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |
Institutional Class | R6 Class |
0.80% | 0.65% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
Unless otherwise indicated, performance reflects Institutional 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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Actavis plc | 3.3% |
SBA Communications Corp., Class A | 2.8% |
Electronic Arts, Inc. | 2.6% |
Canadian Pacific Railway Ltd. New York Shares | 2.5% |
Alliance Data Systems Corp. | 2.3% |
Constellation Brands, Inc., Class A | 2.1% |
Teleflex, Inc. | 2.0% |
Affiliated Managers Group, Inc. | 2.0% |
Concho Resources, Inc. | 1.8% |
BorgWarner, Inc. | 1.8% |
Top Five Industries | % of net assets |
Pharmaceuticals | 6.6% |
Machinery | 5.3% |
Specialty Retail | 5.2% |
Oil, Gas and Consumable Fuels | 4.7% |
Textiles, Apparel and Luxury Goods | 4.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.2% |
Temporary Cash Investments | 2.2% |
Other Assets and Liabilities | (1.4)% |
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Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $1,011.40 | $3.99 | 0.80% |
R6 Class | $1,000 | $1,012.20 | $3.24 | 0.65% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
R6 Class | $1,000 | $1,021.57 | $3.26 | 0.65% |
(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. |
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Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||
COMMON STOCKS — 99.2% | |||||||||
AEROSPACE AND DEFENSE — 1.5% | |||||||||
Alliant Techsystems, Inc. | 21,722 | $ | 3,132,747 | ||||||
B/E Aerospace, Inc.(1) | 54,706 | 4,801,545 | |||||||
7,934,292 | |||||||||
AIRLINES — 1.0% | |||||||||
Spirit Airlines, Inc.(1) | 96,900 | 5,507,796 | |||||||
AUTO COMPONENTS — 1.8% | |||||||||
BorgWarner, Inc. | 153,640 | 9,547,190 | |||||||
AUTOMOBILES — 2.0% | |||||||||
Harley-Davidson, Inc. | 86,800 | 6,417,992 | |||||||
Tesla Motors, Inc.(1) | 5,750 | 1,195,368 | |||||||
Thor Industries, Inc. | 53,890 | 3,280,284 | |||||||
10,893,644 | |||||||||
BANKS — 2.5% | |||||||||
East West Bancorp., Inc. | 112,620 | 3,886,516 | |||||||
Signature Bank(1) | 30,263 | 3,595,850 | |||||||
SVB Financial Group(1) | 58,170 | 6,206,157 | |||||||
13,688,523 | |||||||||
BEVERAGES — 3.9% | |||||||||
Brown-Forman Corp., Class B | 72,950 | 6,545,074 | |||||||
Constellation Brands, Inc., Class A(1) | 145,300 | 11,600,752 | |||||||
Monster Beverage Corp.(1) | 42,740 | 2,861,870 | |||||||
21,007,696 | |||||||||
BIOTECHNOLOGY — 1.8% | |||||||||
Alexion Pharmaceuticals, Inc.(1) | 22,670 | 3,586,394 | |||||||
BioMarin Pharmaceutical, Inc.(1) | 62,690 | 3,650,439 | |||||||
Regeneron Pharmaceuticals, Inc.(1) | 8,840 | 2,624,507 | |||||||
9,861,340 | |||||||||
BUILDING PRODUCTS — 3.3% | |||||||||
Allegion plc | 105,750 | 5,218,763 | |||||||
Fortune Brands Home & Security, Inc. | 165,030 | 6,576,445 | |||||||
Lennox International, Inc. | 71,555 | 5,998,456 | |||||||
17,793,664 | |||||||||
CAPITAL MARKETS — 2.7% | |||||||||
Affiliated Managers Group, Inc.(1) | 55,010 | 10,902,982 | |||||||
KKR & Co. LP | 114,436 | 2,598,842 | |||||||
Lazard Ltd. Class A | 23,710 | 1,115,555 | |||||||
14,617,379 | |||||||||
CHEMICALS — 3.1% | |||||||||
FMC Corp. | 106,910 | 8,232,070 | |||||||
Sherwin-Williams Co. (The) | 26,370 | 5,269,781 | |||||||
Westlake Chemical Corp. | 47,166 | 3,358,219 | |||||||
16,860,070 |
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Shares | Value | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 1.5% | |||||||||
KAR Auction Services, Inc. | 99,960 | $ | 2,976,809 | ||||||
Stericycle, Inc.(1) | 44,270 | 5,154,799 | |||||||
8,131,608 | |||||||||
CONSTRUCTION AND ENGINEERING — 2.0% | |||||||||
MasTec, Inc.(1) | 148,110 | 5,862,194 | |||||||
Quanta Services, Inc.(1) | 144,250 | 5,089,140 | |||||||
10,951,334 | |||||||||
CONSUMER FINANCE — 1.5% | |||||||||
Discover Financial Services | 98,660 | 5,515,094 | |||||||
Santander Consumer USA Holdings, Inc.(1) | 114,305 | 2,599,296 | |||||||
8,114,390 | |||||||||
CONTAINERS AND PACKAGING — 0.4% | |||||||||
Ball Corp. | 36,083 | 2,027,504 | |||||||
DISTRIBUTORS — 1.4% | |||||||||
LKQ Corp.(1) | 251,610 | 7,326,883 | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.0% | |||||||||
tw telecom, inc., Class A(1) | 176,220 | 5,408,192 | |||||||
ELECTRICAL EQUIPMENT — 1.6% | |||||||||
Acuity Brands, Inc. | 70,330 | 8,761,008 | |||||||
ENERGY EQUIPMENT AND SERVICES — 1.6% | |||||||||
Dril-Quip, Inc.(1) | 40,530 | 4,584,753 | |||||||
Frank's International NV | 105,490 | 2,893,591 | |||||||
Patterson-UTI Energy, Inc. | 41,630 | 1,354,224 | |||||||
8,832,568 | |||||||||
FOOD AND STAPLES RETAILING — 2.8% | |||||||||
Costco Wholesale Corp. | 74,450 | 8,612,376 | |||||||
Sprouts Farmers Market, Inc.(1) | 113,690 | 3,634,669 | |||||||
United Natural Foods, Inc.(1) | 45,640 | 3,150,529 | |||||||
15,397,574 | |||||||||
FOOD PRODUCTS — 0.9% | |||||||||
Hain Celestial Group, Inc. (The)(1) | 57,835 | 4,974,967 | |||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.6% | |||||||||
Cooper Cos., Inc. (The) | 21,560 | 2,843,980 | |||||||
Teleflex, Inc. | 108,270 | 11,053,284 | |||||||
13,897,264 | |||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.6% | |||||||||
AmerisourceBergen Corp. | 135,140 | 8,808,425 | |||||||
HEALTH CARE TECHNOLOGY — 0.6% | |||||||||
Cerner Corp.(1) | 64,300 | 3,298,590 | |||||||
HOTELS, RESTAURANTS AND LEISURE — 2.3% | |||||||||
Chipotle Mexican Grill, Inc.(1) | 11,110 | 5,538,335 | |||||||
Dunkin' Brands Group, Inc. | 84,890 | 3,863,344 | |||||||
Noodles & Co.(1) | 86,308 | 2,830,039 | |||||||
12,231,718 | |||||||||
HOUSEHOLD DURABLES — 1.3% | |||||||||
Harman International Industries, Inc. | 12,910 | 1,415,065 |
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Shares | Value | ||||||||
Mohawk Industries, Inc.(1) | 40,930 | $ | 5,419,541 | ||||||
6,834,606 | |||||||||
HOUSEHOLD PRODUCTS — 0.5% | |||||||||
Church & Dwight Co., Inc. | 40,760 | 2,812,848 | |||||||
INTERNET AND CATALOG RETAIL — 1.7% | |||||||||
Netflix, Inc.(1) | 5,350 | 1,722,914 | |||||||
TripAdvisor, Inc.(1) | 90,700 | 7,323,118 | |||||||
9,046,032 | |||||||||
INTERNET SOFTWARE AND SERVICES — 2.4% | |||||||||
CoStar Group, Inc.(1) | 48,072 | 7,734,304 | |||||||
LinkedIn Corp., Class A(1) | 33,560 | 5,150,453 | |||||||
12,884,757 | |||||||||
IT SERVICES — 2.3% | |||||||||
Alliance Data Systems Corp.(1) | 52,000 | 12,578,800 | |||||||
LEISURE PRODUCTS — 0.9% | |||||||||
Polaris Industries, Inc. | 36,750 | 4,936,628 | |||||||
LIFE SCIENCES TOOLS AND SERVICES — 1.1% | |||||||||
Covance, Inc.(1) | 69,360 | 6,123,101 | |||||||
MACHINERY — 5.3% | |||||||||
Flowserve Corp. | 113,700 | 8,305,785 | |||||||
Middleby Corp.(1) | 27,840 | 7,029,043 | |||||||
Pentair Ltd. | 93,180 | 6,922,342 | |||||||
WABCO Holdings, Inc.(1) | 59,780 | 6,397,058 | |||||||
28,654,228 | |||||||||
MEDIA — 2.8% | |||||||||
AMC Networks, Inc.(1) | 31,850 | 2,091,590 | |||||||
Discovery Communications, Inc., Class A(1) | 96,970 | 7,360,023 | |||||||
Tribune Co.(1) | 73,180 | 5,689,745 | |||||||
15,141,358 | |||||||||
OIL, GAS AND CONSUMABLE FUELS — 4.7% | |||||||||
Antero Resources Corp.(1) | 68,166 | 4,476,461 | |||||||
Cabot Oil & Gas Corp. | 94,880 | 3,726,886 | |||||||
Concho Resources, Inc.(1) | 73,980 | 9,650,691 | |||||||
Gulfport Energy Corp.(1) | 37,450 | 2,758,942 | |||||||
Oasis Petroleum, Inc.(1) | 108,920 | 5,065,869 | |||||||
25,678,849 | |||||||||
PHARMACEUTICALS — 6.6% | |||||||||
Actavis plc(1) | 86,930 | 17,762,407 | |||||||
Endo International plc(1) | 40,120 | 2,525,353 | |||||||
Perrigo Co. plc | 26,720 | 3,870,659 | |||||||
Salix Pharmaceuticals Ltd.(1) | 47,540 | 5,229,400 | |||||||
Zoetis, Inc. | 201,590 | 6,100,114 | |||||||
35,487,933 | |||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.6% | |||||||||
Jones Lang LaSalle, Inc. | 27,550 | 3,192,770 | |||||||
ROAD AND RAIL — 3.8% | |||||||||
Canadian Pacific Railway Ltd. New York Shares | 85,880 | 13,394,704 |
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Shares | Value | ||||||||
Kansas City Southern | 73,290 | $ | 7,393,495 | ||||||
20,788,199 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 3.5% | |||||||||
Avago Technologies Ltd. | 126,060 | 8,004,810 | |||||||
NXP Semiconductor NV(1) | 105,580 | 6,294,679 | |||||||
Xilinx, Inc. | 102,120 | 4,819,043 | |||||||
19,118,532 | |||||||||
SOFTWARE — 3.8% | |||||||||
Electronic Arts, Inc.(1) | 491,760 | 13,916,808 | |||||||
NetSuite, Inc.(1) | 43,030 | 3,326,649 | |||||||
Splunk, Inc.(1) | 59,644 | 3,254,773 | |||||||
20,498,230 | |||||||||
SPECIALTY RETAIL — 5.2% | |||||||||
Lumber Liquidators Holdings, Inc.(1) | 59,260 | 5,165,102 | |||||||
O'Reilly Automotive, Inc.(1) | 51,380 | 7,644,830 | |||||||
Restoration Hardware Holdings, Inc.(1) | 36,020 | 2,247,288 | |||||||
Ross Stores, Inc. | 89,880 | 6,119,030 | |||||||
Tractor Supply Co. | 105,280 | 7,079,027 | |||||||
28,255,277 | |||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 4.5% | |||||||||
Hanesbrands, Inc. | 90,593 | 7,436,779 | |||||||
Kate Spade & Co.(1) | 111,580 | 3,879,637 | |||||||
Michael Kors Holdings Ltd.(1) | 82,740 | 7,545,888 | |||||||
Under Armour, Inc., Class A(1) | 115,410 | 5,642,395 | |||||||
24,504,699 | |||||||||
WIRELESS TELECOMMUNICATION SERVICES — 2.8% | |||||||||
SBA Communications Corp., Class A(1) | 167,992 | 15,078,962 | |||||||
TOTAL COMMON STOCKS (Cost $454,271,252) | 537,489,428 | ||||||||
TEMPORARY CASH INVESTMENTS — 2.2% | |||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $3,680,097), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $3,604,277) | 3,604,274 | ||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $2,950,144), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $2,883,420) | 2,883,420 | ||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $2,942,050), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $2,883,421) | 2,883,419 | ||||||||
SSgA U.S. Government Money Market Fund | 2,522,026 | 2,522,026 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $11,893,139) | 11,893,139 | ||||||||
TOTAL INVESTMENT SECURITIES — 101.4% (Cost $466,164,391) | 549,382,567 | ||||||||
OTHER ASSETS AND LIABILITIES — (1.4)% | (7,708,930) | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 541,673,637 |
Notes to Schedule of Investments |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $466,164,391) | $ | 549,382,567 | ||||
Receivable for investments sold | 4,935,265 | |||||
Receivable for capital shares sold | 1,084,346 | |||||
Dividends and interest receivable | 84,822 | |||||
555,487,000 | ||||||
Liabilities | ||||||
Payable for investments purchased | 13,328,239 | |||||
Payable for capital shares redeemed | 140,006 | |||||
Accrued management fees | 345,118 | |||||
13,813,363 | ||||||
Net Assets | $ | 541,673,637 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 436,882,979 | ||||
Accumulated net investment loss | (899,308 | ) | ||||
Undistributed net realized gain | 22,471,790 | |||||
Net unrealized appreciation | 83,218,176 | |||||
$ | 541,673,637 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Institutional Class, $0.01 Par Value | $529,747,503 | 42,496,316 | $12.47 | |
R6 Class, $0.01 Par Value | $11,926,134 | 955,629 | $12.48 |
See Notes to Financial Statements.
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Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $11,204) | $ | 1,146,306 | ||
Interest | 704 | |||
1,147,010 | ||||
Expenses: | ||||
Management fees | 1,988,396 | |||
Directors' fees and expenses | 7,578 | |||
Other expenses | 51 | |||
1,996,025 | ||||
Net investment income (loss) | (849,015 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 23,014,254 | |||
Foreign currency transactions | (38,994 | ) | ||
22,975,260 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (16,710,269 | ) | ||
Translation of assets and liabilities in foreign currencies | (50,293 | ) | ||
(16,760,562 | ) | |||
Net realized and unrealized gain (loss) | 6,214,698 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 5,365,683 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | (849,015 | ) | $ | (396,623 | ) |
Net realized gain (loss) | 22,975,260 | 56,759,936 | ||||
Change in net unrealized appreciation (depreciation) | (16,760,562 | ) | 46,370,878 | |||
Net increase (decrease) in net assets resulting from operations | 5,365,683 | 102,734,191 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Institutional Class | — | (530,477 | ) | |||
From net realized gains: | ||||||
Institutional Class | (51,250,181 | ) | — | |||
R6 Class | (433,893 | ) | — | |||
Decrease in net assets from distributions | (51,684,074 | ) | (530,477 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 124,247,298 | 64,111,641 | ||||
Net increase (decrease) in net assets | 77,928,907 | 166,315,355 | ||||
Net Assets | ||||||
Beginning of period | 463,744,730 | 297,429,375 | ||||
End of period | $ | 541,673,637 | $ | 463,744,730 | ||
Accumulated net investment loss | $ | (899,308 | ) | $ | (50,293 | ) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Heritage Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry.
The fund offers the Institutional Class and the R6 Class, which have different fees and expenses. The difference in the fee structures between the classes is not the result of any difference in advisory or custodial fees or other expenses related to management of the fund’s assets, which do not vary by class. The fund’s R6 Class shares are available for purchase exclusively by certain American Century Investments funds of funds that are offered only through employer-sponsored retirement plans where a financial intermediary provides retirement recordkeeping services to plan participants. Because financial intermediaries do not receive any service, distribution or administrative fees for offering such funds of funds, American Century Investment Management, Inc. (ACIM) (the investment advisor) is able to charge the R6 Class a lower unified management fee. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the
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Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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
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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.
Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The annual management fee is 0.80% for the Institutional Class and 0.65% for the R6 Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $267,167,176 and $188,584,193, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||
Sold | 5,764,165 | $ | 74,583,065 | 6,738,647 | $ | 79,054,475 | ||||
Issued in reinvestment of distributions | 4,197,394 | 51,250,181 | 48,534 | 530,477 | ||||||
Redeemed | (757,515 | ) | (10,090,209 | ) | (1,529,071 | ) | (19,331,015 | ) | ||
9,204,044 | 115,743,037 | 5,258,110 | 60,253,937 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 717,509 | 9,069,010 | 281,120 | 3,874,593 | ||||||
Issued in reinvestment of distributions | 35,507 | 433,893 | – | – | ||||||
Redeemed | (77,253 | ) | (998,642 | ) | (1,254 | ) | (16,889 | ) | ||
675,763 | 8,504,261 | 279,866 | 3,857,704 | |||||||
Net increase (decrease) | 9,879,807 | $ | 124,247,298 | 5,537,976 | $ | 64,111,641 |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 537,489,428 | — | — | ||||
Temporary Cash Investments | 2,522,026 | $ | 9,371,113 | — | ||||
$ | 540,011,454 | $ | 9,371,113 | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund participated in foreign currency risk derivative instruments during the period consistent with its exposure to foreign denominated securities.
At period end, the fund did not have any derivative instruments disclosed on the Statement of Assets and Liabilities. For the six months ended April 30, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(36,402) in net realized gain (loss) on foreign currency transactions and $(50,293) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
The fund invests in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
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9. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 467,416,823 | |
Gross tax appreciation of investments | $ | 88,346,264 | |
Gross tax depreciation of investments | (6,380,520 | ) | |
Net tax appreciation (depreciation) of investments | $ | 81,965,744 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Institutional Class | |||||||||||||||
2014(3) | $13.81 | (0.02) | 0.16 | 0.14 | – | (1.48) | (1.48) | $12.47 | 1.14% | 0.80%(4) | (0.34)%(4) | 38% | $529,748 | ||
2013 | $10.61 | (0.01) | 3.23 | 3.22 | (0.02) | – | (0.02) | $13.81 | 30.38% | 0.80% | (0.10)% | 113% | $459,877 | ||
2012 | $10.03 | –(5) | 0.74 | 0.74 | – | (0.16) | (0.16) | $10.61 | 7.59% | 0.81% | (0.02)% | 92% | $297,429 | ||
2011 | $9.44 | (0.03) | 0.62 | 0.59 | – | – | – | $10.03 | 6.25% | 0.80% | (0.27)% | 115% | $215,060 | ||
2010 | $7.50 | (0.02) | 1.96 | 1.94 | –(5) | – | –(5) | $9.44 | 26.05% | 0.80% | (0.26)% | 152% | $161,304 | ||
2009 | $7.62 | (0.02) | (0.10) | (0.12) | – | – | – | $7.50 | (1.71)% | 0.80% | (0.35)% | 190% | $91,237 | ||
R6 Class | |||||||||||||||
2014(3) | $13.82 | (0.01) | 0.15 | 0.14 | – | (1.48) | (1.48) | $12.48 | 1.22% | 0.65%(4) | (0.19)%(4) | 38% | $11,926 | ||
2013(6) | $12.92 | –(5) | 0.90 | 0.90 | – | – | – | $13.82 | 6.97% | 0.65%(4) | 0.03%(4) | 113%(7) | $3,867 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
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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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82277 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCIX | 5.63% | 18.90% | 17.41% | 6.06% | 12.26% | 6/30/71(2) |
Russell 1000 Growth Index | — | 6.95% | 20.66% | 19.45% | 7.98% | N/A(3) | — |
Institutional Class | TWSIX | 5.73% | 19.10% | 17.64% | 6.27% | 6.19% | 3/13/97 |
A Class(4) | TWCAX | 8/8/97 | |||||
No sales charge* | 5.50% | 18.57% | 17.11% | 5.79% | 4.62% | ||
With sales charge* | -0.56% | 11.76% | 15.73% | 5.16% | 4.25% | ||
C Class | ACSLX | 1/31/03 | |||||
No sales charge* | 5.12% | 17.72% | 16.24% | 5.00% | 6.68% | ||
With sales charge* | 4.12% | 17.72% | 16.24% | 5.00% | 6.68% | ||
R Class | ASERX | 5.39% | 18.29% | 16.82% | — | 5.51% | 7/29/05 |
R6 Class | ASDEX | 5.83% | — | — | — | 14.01%(1) | 7/26/13 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Although the fund’s actual inception date was 10/31/58, this inception date corresponds with the investment advisor’s implementation of its current investment philosophy and practices. |
(3) | Benchmark data first available December 1978. |
(4) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | C Class | R Class | R6 Class |
1.00% | 0.80% | 1.25% | 2.00% | 1.50% | 0.65% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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.
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Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 7.1% |
Google, Inc.* | 4.3% |
Gilead Sciences, Inc. | 3.3% |
Monsanto Co. | 2.7% |
QUALCOMM, Inc. | 2.5% |
MasterCard, Inc., Class A | 2.5% |
Walt Disney Co. (The) | 2.5% |
Oracle Corp. | 2.3% |
United Technologies Corp. | 2.3% |
UnitedHealth Group, Inc. | 2.2% |
* Includes all classes of the issuer. | |
Top Five Industries | % of net assets |
Technology Hardware, Storage and Peripherals | 8.9% |
Internet Software and Services | 7.7% |
Media | 6.0% |
Biotechnology | 5.7% |
Specialty Retail | 5.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.5% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.2% |
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Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,056.30 | $5.10 | 1.00% |
Institutional Class | $1,000 | $1,057.30 | $4.08 | 0.80% |
A Class | $1,000 | $1,055.00 | $6.37 | 1.25% |
C Class | $1,000 | $1,051.20 | $10.17 | 2.00% |
R Class | $1,000 | $1,053.90 | $7.64 | 1.50% |
R6 Class | $1,000 | $1,058.30 | $3.32 | 0.65% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
A 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% |
R6 Class | $1,000 | $1,021.57 | $3.26 | 0.65% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||||||||||||
COMMON STOCKS — 99.5% | |||||||||||||||||||||
AEROSPACE AND DEFENSE — 5.1% | |||||||||||||||||||||
Boeing Co. (The) | 352,300 | $ | 45,453,746 | ||||||||||||||||||
Rockwell Collins, Inc. | 233,700 | 18,146,805 | |||||||||||||||||||
United Technologies Corp. | 435,100 | 51,485,383 | |||||||||||||||||||
115,085,934 | |||||||||||||||||||||
AUTO COMPONENTS — 1.7% | |||||||||||||||||||||
Delphi Automotive plc | 257,200 | 17,191,248 | |||||||||||||||||||
Gentex Corp. | 695,900 | 19,951,453 | |||||||||||||||||||
37,142,701 | |||||||||||||||||||||
BANKS — 1.3% | |||||||||||||||||||||
JPMorgan Chase & Co. | 541,300 | 30,301,974 | |||||||||||||||||||
BEVERAGES — 3.2% | |||||||||||||||||||||
Constellation Brands, Inc., Class A(1) | 393,500 | 31,417,040 | |||||||||||||||||||
Diageo plc | 1,324,700 | 40,650,612 | |||||||||||||||||||
72,067,652 | |||||||||||||||||||||
BIOTECHNOLOGY — 5.7% | |||||||||||||||||||||
Biogen Idec, Inc.(1) | 155,500 | 44,647,160 | |||||||||||||||||||
Gilead Sciences, Inc.(1) | 946,400 | 74,282,936 | |||||||||||||||||||
Vertex Pharmaceuticals, Inc.(1) | 139,400 | 9,437,380 | |||||||||||||||||||
128,367,476 | |||||||||||||||||||||
BUILDING PRODUCTS — 0.2% | |||||||||||||||||||||
Allegion plc | 88,800 | 4,382,280 | |||||||||||||||||||
CAPITAL MARKETS — 2.0% | |||||||||||||||||||||
Franklin Resources, Inc. | 839,400 | 43,942,590 | |||||||||||||||||||
CHEMICALS — 3.6% | |||||||||||||||||||||
Monsanto Co. | 548,000 | 60,663,600 | |||||||||||||||||||
Sigma-Aldrich Corp. | 221,900 | 21,348,999 | |||||||||||||||||||
82,012,599 | |||||||||||||||||||||
COMMUNICATIONS EQUIPMENT — 2.5% | |||||||||||||||||||||
QUALCOMM, Inc. | 723,800 | 56,970,298 | |||||||||||||||||||
DIVERSIFIED FINANCIAL SERVICES — 1.0% | |||||||||||||||||||||
CBOE Holdings, Inc. | 437,100 | 23,323,656 | |||||||||||||||||||
ELECTRICAL EQUIPMENT — 1.8% | |||||||||||||||||||||
Emerson Electric Co. | 589,900 | 40,219,382 | |||||||||||||||||||
ENERGY EQUIPMENT AND SERVICES — 2.7% | |||||||||||||||||||||
Halliburton Co. | 39,200 | 2,472,344 | |||||||||||||||||||
National Oilwell Varco, Inc. | 163,200 | 12,816,096 | |||||||||||||||||||
Schlumberger Ltd. | 436,800 | 44,357,040 | |||||||||||||||||||
59,645,480 | |||||||||||||||||||||
FOOD AND STAPLES RETAILING — 1.5% | |||||||||||||||||||||
Costco Wholesale Corp. | 292,300 | 33,813,264 |
7
Shares | Value | ||||||||||||||||||||
FOOD PRODUCTS — 2.6% | |||||||||||||||||||||
Mead Johnson Nutrition Co. | 413,600 | $ | 36,504,336 | ||||||||||||||||||
Mondelez International, Inc., Class A | 617,800 | 22,024,570 | |||||||||||||||||||
58,528,906 | |||||||||||||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 3.4% | |||||||||||||||||||||
Express Scripts Holding Co.(1) | 388,000 | 25,833,040 | |||||||||||||||||||
UnitedHealth Group, Inc. | 670,100 | 50,284,304 | |||||||||||||||||||
76,117,344 | |||||||||||||||||||||
HOTELS, RESTAURANTS AND LEISURE — 1.8% | |||||||||||||||||||||
Wynn Resorts Ltd. | 196,300 | 40,023,607 | |||||||||||||||||||
HOUSEHOLD PRODUCTS — 1.2% | |||||||||||||||||||||
Procter & Gamble Co. (The) | 325,300 | 26,853,515 | |||||||||||||||||||
INDUSTRIAL CONGLOMERATES — 1.2% | |||||||||||||||||||||
Roper Industries, Inc. | 201,000 | 27,928,950 | |||||||||||||||||||
INSURANCE — 2.9% | |||||||||||||||||||||
MetLife, Inc. | 663,300 | 34,723,755 | |||||||||||||||||||
Travelers Cos., Inc. (The) | 348,200 | 31,539,956 | |||||||||||||||||||
66,263,711 | |||||||||||||||||||||
INTERNET AND CATALOG RETAIL — 2.4% | |||||||||||||||||||||
Amazon.com, Inc.(1) | 123,700 | 37,620,881 | |||||||||||||||||||
TripAdvisor, Inc.(1) | 188,200 | 15,195,268 | |||||||||||||||||||
52,816,149 | |||||||||||||||||||||
INTERNET SOFTWARE AND SERVICES — 7.7% | |||||||||||||||||||||
Baidu, Inc. ADR(1) | 111,200 | 17,108,120 | |||||||||||||||||||
Facebook, Inc., Class A(1) | 736,500 | 44,027,970 | |||||||||||||||||||
Google, Inc., Class A(1) | 91,200 | 48,781,056 | |||||||||||||||||||
Google, Inc., Class C(1) | 91,600 | 48,242,056 | |||||||||||||||||||
LinkedIn Corp., Class A(1) | 90,800 | 13,935,076 | |||||||||||||||||||
172,094,278 | |||||||||||||||||||||
IT SERVICES — 3.8% | |||||||||||||||||||||
MasterCard, Inc., Class A | 762,500 | 56,081,875 | |||||||||||||||||||
Teradata Corp.(1) | 661,700 | 30,080,882 | |||||||||||||||||||
86,162,757 | |||||||||||||||||||||
LEISURE PRODUCTS — 0.8% | |||||||||||||||||||||
Hasbro, Inc. | 311,300 | 17,202,438 | |||||||||||||||||||
MACHINERY — 2.6% | |||||||||||||||||||||
FANUC Corp. | 101,500 | 18,267,717 | |||||||||||||||||||
Graco, Inc. | 268,800 | 19,488,000 | |||||||||||||||||||
Middleby Corp.(1) | 81,400 | 20,551,872 | |||||||||||||||||||
58,307,589 | |||||||||||||||||||||
MEDIA — 6.0% | |||||||||||||||||||||
AMC Networks, Inc.(1) | 214,400 | 14,079,648 | |||||||||||||||||||
Comcast Corp., Class A | 940,400 | 48,675,104 | |||||||||||||||||||
Twenty-First Century Fox, Inc. | 527,300 | 16,884,146 | |||||||||||||||||||
Walt Disney Co. (The) | 705,500 | 55,974,370 | |||||||||||||||||||
135,613,268 |
8
Shares | Value | ||||||||||||||||||||
OIL, GAS AND CONSUMABLE FUELS — 2.1% | |||||||||||||||||||||
Noble Energy, Inc. | 420,600 | $ | 30,190,668 | ||||||||||||||||||
Occidental Petroleum Corp. | 174,000 | 16,660,500 | |||||||||||||||||||
46,851,168 | |||||||||||||||||||||
PERSONAL PRODUCTS — 1.0% | |||||||||||||||||||||
Estee Lauder Cos., Inc. (The), Class A | 300,000 | 21,771,000 | |||||||||||||||||||
PHARMACEUTICALS — 4.2% | |||||||||||||||||||||
Allergan, Inc. | 290,400 | 48,159,936 | |||||||||||||||||||
Bristol-Myers Squibb Co. | 928,900 | 46,528,601 | |||||||||||||||||||
94,688,537 | |||||||||||||||||||||
PROFESSIONAL SERVICES — 0.5% | |||||||||||||||||||||
Verisk Analytics, Inc. Class A(1) | 175,300 | 10,533,777 | |||||||||||||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.0% | |||||||||||||||||||||
Linear Technology Corp. | 498,800 | 22,196,600 | |||||||||||||||||||
SOFTWARE — 4.0% | |||||||||||||||||||||
Electronic Arts, Inc.(1) | 210,800 | 5,965,640 | |||||||||||||||||||
Microsoft Corp. | 429,200 | 17,339,680 | |||||||||||||||||||
Oracle Corp. | 1,274,900 | 52,117,912 | |||||||||||||||||||
Splunk, Inc.(1) | 251,800 | 13,740,726 | |||||||||||||||||||
89,163,958 | |||||||||||||||||||||
SPECIALTY RETAIL — 5.6% | |||||||||||||||||||||
AutoZone, Inc.(1) | 75,900 | 40,522,251 | |||||||||||||||||||
Home Depot, Inc. (The) | 513,900 | 40,860,189 | |||||||||||||||||||
TJX Cos., Inc. (The) | 758,500 | 44,129,530 | |||||||||||||||||||
125,511,970 | |||||||||||||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 8.9% | |||||||||||||||||||||
Apple, Inc. | 271,600 | 160,268,444 | |||||||||||||||||||
EMC Corp. | 1,577,300 | 40,694,340 | |||||||||||||||||||
200,962,784 | |||||||||||||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.6% | |||||||||||||||||||||
Ralph Lauren Corp. | 88,300 | 13,365,971 | |||||||||||||||||||
TOBACCO — 2.1% | |||||||||||||||||||||
Philip Morris International, Inc. | 553,500 | 47,285,505 | |||||||||||||||||||
TRADING COMPANIES AND DISTRIBUTORS — 0.8% | |||||||||||||||||||||
W.W. Grainger, Inc. | 67,300 | 17,121,120 | |||||||||||||||||||
TOTAL COMMON STOCKS (Cost $1,324,848,123) | 2,234,640,188 | ||||||||||||||||||||
TEMPORARY CASH INVESTMENTS — 0.3% | |||||||||||||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $2,425,816), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $2,375,838) | 2,375,836 | ||||||||||||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $1,944,652), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $1,900,668) | 1,900,668 | ||||||||||||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $1,939,316), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $1,900,670) | 1,900,669 |
9
Shares | Value | ||||||||||||||||||||
SSgA U.S. Government Money Market Fund | 1,662,413 | $ | 1,662,413 | ||||||||||||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $7,839,586) | 7,839,586 | ||||||||||||||||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $1,332,687,709) | 2,242,479,774 | ||||||||||||||||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 3,372,625 | ||||||||||||||||||||
TOTAL NET ASSETS — 100.0% | $ | 2,245,852,399 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | |||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | |||||||||||||||||
USD | 34,826,458 | GBP | 20,695,788 | Credit Suisse AG | 5/30/14 | $ | (108,629 | ) | |||||||||||||
USD | 15,383,515 | JPY | 1,574,087,375 | Credit Suisse AG | 5/30/14 | (15,861 | ) | ||||||||||||||
$ | (124,490 | ) |
Notes to Schedule of Investments | ||
ADR | - | American Depositary Receipt |
GBP | - | British Pound |
JPY | - | Japanese Yen |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $1,332,687,709) | $ | 2,242,479,774 | ||||
Foreign currency holdings, at value (cost of $803,346) | 816,877 | |||||
Receivable for investments sold | 5,106,560 | |||||
Receivable for capital shares sold | 191,521 | |||||
Dividends and interest receivable | 918,755 | |||||
2,249,513,487 | ||||||
Liabilities | ||||||
Payable for investments purchased | 1,117,310 | |||||
Payable for capital shares redeemed | 572,925 | |||||
Unrealized depreciation on forward foreign currency exchange contracts | 124,490 | |||||
Accrued management fees | 1,830,792 | |||||
Distribution and service fees payable | 15,571 | |||||
3,661,088 | ||||||
Net Assets | $ | 2,245,852,399 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 1,204,142,231 | ||||
Undistributed net investment income | 4,002,700 | |||||
Undistributed net realized gain | 128,026,419 | |||||
Net unrealized appreciation | 909,681,049 | |||||
$ | 2,245,852,399 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $2,155,392,204 | 38,773,128 | $55.59 | |
Institutional Class, $0.01 Par Value | $40,705,612 | 723,090 | $56.29 | |
A Class, $0.01 Par Value | $39,162,049 | 716,023 | $54.69* | |
C Class, $0.01 Par Value | $7,672,338 | 148,643 | $51.62 | |
R Class, $0.01 Par Value | $2,891,716 | 52,917 | $54.65 | |
R6 Class, $0.01 Par Value | $28,480 | 506 | $56.28 |
* Maximum offering price $58.03 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $9,265) | $ | 15,741,843 | ||
Interest | 1,004 | |||
15,742,847 | ||||
Expenses: | ||||
Management fees | 11,175,131 | |||
Distribution and service fees: | ||||
A Class | 52,218 | |||
C Class | 39,704 | |||
R Class | 8,340 | |||
Directors' fees and expenses | 34,916 | |||
11,310,309 | ||||
Net investment income (loss) | 4,432,538 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 132,370,914 | |||
Foreign currency transactions | (800,042 | ) | ||
131,570,872 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (11,608,512 | ) | ||
Translation of assets and liabilities in foreign currencies | (530,333 | ) | ||
(12,138,845 | ) | |||
Net realized and unrealized gain (loss) | 119,432,027 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 123,864,565 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 4,432,538 | $ | 15,006,298 | ||
Net realized gain (loss) | 131,570,872 | 130,624,128 | ||||
Change in net unrealized appreciation (depreciation) | (12,138,845 | ) | 277,007,733 | |||
Net increase (decrease) in net assets resulting from operations | 123,864,565 | 422,638,159 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (9,365,559 | ) | (13,028,356 | ) | ||
Institutional Class | (245,709 | ) | (140,890 | ) | ||
A Class | (82,331 | ) | (295,191 | ) | ||
C Class | — | (26,359 | ) | |||
R Class | — | (12,375 | ) | |||
R6 Class | (214 | ) | — | |||
From net realized gains: | ||||||
Investor Class | (8,633,144 | ) | — | |||
Institutional Class | (155,106 | ) | — | |||
A Class | (178,850 | ) | — | |||
C Class | (34,463 | ) | — | |||
R Class | (14,057 | ) | — | |||
R6 Class | (109 | ) | — | |||
Decrease in net assets from distributions | (18,709,542 | ) | (13,503,171 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | (72,763,295 | ) | (126,523,858 | ) | ||
Net increase (decrease) in net assets | 32,391,728 | 282,611,130 | ||||
Net Assets | ||||||
Beginning of period | 2,213,460,671 | 1,930,849,541 | ||||
End of period | $ | 2,245,852,399 | $ | 2,213,460,671 | ||
Undistributed net investment income | $ | 4,002,700 | $ | 9,263,975 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Select Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation
14
with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
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Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.800% for the Institutional Class and 0.450% to 0.650% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 1.00% for the Investor Class, A Class, C Class and R Class, 0.80% for the Institutional Class and 0.65% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $282,274,694 and $372,191,213, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||
Sold | 538,838 | $ | 29,721,883 | 1,670,785 | $ | 78,033,446 | ||||
Issued in reinvestment of distributions | 318,599 | 17,156,523 | 281,233 | 12,430,501 | ||||||
Redeemed | (2,024,193 | ) | (111,692,037 | ) | (4,785,724 | ) | (224,053,202 | ) | ||
(1,166,756 | ) | (64,813,631 | ) | (2,833,706 | ) | (133,589,255 | ) | |||
Institutional Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 97,137 | 5,452,153 | 522,243 | 23,886,199 | ||||||
Issued in reinvestment of distributions | 6,433 | 350,521 | 2,051 | 91,713 | ||||||
Redeemed | (110,443 | ) | (6,172,786 | ) | (176,427 | ) | (8,601,099 | ) | ||
(6,873 | ) | (370,112 | ) | 347,867 | 15,376,813 | |||||
A Class/Shares Authorized | 75,000,000 | 75,000,000 | ||||||||
Sold | 50,459 | 2,741,516 | 272,763 | 12,295,204 | ||||||
Issued in reinvestment of distributions | 4,668 | 247,529 | 6,596 | 287,136 | ||||||
Redeemed | (169,713 | ) | (9,257,263 | ) | (507,187 | ) | (23,202,894 | ) | ||
(114,586 | ) | (6,268,218 | ) | (227,828 | ) | (10,620,554 | ) | |||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 10,350 | 530,688 | 52,007 | 2,251,547 | ||||||
Issued in reinvestment of distributions | 379 | 19,014 | 337 | 13,997 | ||||||
Redeemed | (25,401 | ) | (1,303,669 | ) | (28,064 | ) | (1,256,210 | ) | ||
(14,672 | ) | (753,967 | ) | 24,280 | 1,009,334 | |||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 5,489 | 300,379 | 35,684 | 1,579,863 | ||||||
Issued in reinvestment of distributions | 265 | 14,057 | 284 | 12,375 | ||||||
Redeemed | (15,741 | ) | (872,126 | ) | (7,025 | ) | (317,434 | ) | ||
(9,987 | ) | (557,690 | ) | 28,943 | 1,274,804 | |||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | — | — | 500 | 25,000 | ||||||
Issued in reinvestment of distributions | 6 | 323 | — | — | ||||||
6 | 323 | 500 | 25,000 | |||||||
Net increase (decrease) | (1,312,868 | ) | $ | (72,763,295 | ) | (2,659,944 | ) | $ | (126,523,858 | ) |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
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• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 2,175,721,859 | $ | 58,918,329 | — | |||
Temporary Cash Investments | 1,662,413 | 6,177,173 | — | |||||
$ | 2,177,384,272 | $ | 65,095,502 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | (124,490 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund's typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2014, is disclosed on the Statement of Assets and Liabilities as a liability of $124,490 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(806,943) in net realized gain (loss) on foreign currency transactions and $(550,997) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,335,816,841 | |
Gross tax appreciation of investments | $ | 919,314,225 | |
Gross tax depreciation of investments | (12,651,292 | ) | |
Net tax appreciation (depreciation) of investments | $ | 906,662,933 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2014(3) | $53.07 | 0.11 | 2.87 | 2.98 | (0.24) | (0.22) | (0.46) | $55.59 | 5.63% | 1.00%(4) | 0.40%(4) | 13% | $2,155,392 | ||
2013 | $43.52 | 0.35 | 9.51 | 9.86 | (0.31) | – | (0.31) | $53.07 | 22.80% | 1.00% | 0.74% | 31% | $2,119,523 | ||
2012 | $39.14 | 0.17 | 4.31 | 4.48 | (0.10) | – | (0.10) | $43.52 | 11.50% | 1.00% | 0.41% | 17% | $1,861,545 | ||
2011 | $35.54 | 0.10 | 3.62 | 3.72 | (0.12) | – | (0.12) | $39.14 | 10.49% | 1.00% | 0.26% | 17% | $1,765,718 | ||
2010 | $30.58 | 0.11 | 5.01 | 5.12 | (0.16) | – | (0.16) | $35.54 | 16.78% | 1.01% | 0.34% | 35% | $1,722,138 | ||
2009 | $26.25 | 0.19 | 4.40 | 4.59 | (0.26) | – | (0.26) | $30.58 | 17.77% | 1.00% | 0.75% | 31% | $1,591,621 | ||
Institutional Class | |||||||||||||||
2014(3) | $53.79 | 0.17 | 2.90 | 3.07 | (0.35) | (0.22) | (0.57) | $56.29 | 5.73% | 0.80%(4) | 0.60%(4) | 13% | $40,706 | ||
2013 | $44.04 | 0.36 | 9.72 | 10.08 | (0.33) | – | (0.33) | $53.79 | 23.05% | 0.80% | 0.94% | 31% | $39,263 | ||
2012 | $39.60 | 0.24 | 4.38 | 4.62 | (0.18) | – | (0.18) | $44.04 | 11.73% | 0.80% | 0.61% | 17% | $16,828 | ||
2011 | $35.95 | 0.18 | 3.67 | 3.85 | (0.20) | – | (0.20) | $39.60 | 10.73% | 0.80% | 0.46% | 17% | $5,133 | ||
2010 | $30.94 | 0.18 | 5.06 | 5.24 | (0.23) | – | (0.23) | $35.95 | 17.02% | 0.81% | 0.54% | 35% | $4,563 | ||
2009 | $26.56 | 0.28 | 4.41 | 4.69 | (0.31) | – | (0.31) | $30.94 | 18.00% | 0.80% | 0.95% | 31% | $3,950 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||
2014(3) | $52.15 | 0.04 | 2.82 | 2.86 | (0.10) | (0.22) | (0.32) | $54.69 | 5.50% | 1.25%(4) | 0.15%(4) | 13% | $39,162 | ||
2013 | $42.85 | 0.25 | 9.33 | 9.58 | (0.28) | – | (0.28) | $52.15 | 22.48% | 1.25% | 0.49% | 31% | $43,318 | ||
2012 | $38.54 | 0.06 | 4.26 | 4.32 | (0.01) | – | (0.01) | $42.85 | 11.22% | 1.25% | 0.16% | 17% | $45,355 | ||
2011 | $34.99 | –(5) | 3.58 | 3.58 | (0.03) | – | (0.03) | $38.54 | 10.23% | 1.25% | 0.01% | 17% | $24,573 | ||
2010 | $30.11 | 0.03 | 4.93 | 4.96 | (0.08) | – | (0.08) | $34.99 | 16.48% | 1.26% | 0.09% | 35% | $20,666 | ||
2009 | $25.85 | 0.13 | 4.33 | 4.46 | (0.20) | – | (0.20) | $30.11 | 17.47% | 1.25% | 0.50% | 31% | $19,824 | ||
C Class | |||||||||||||||
2014(3) | $49.32 | (0.15) | 2.67 | 2.52 | – | (0.22) | (0.22) | $51.62 | 5.12% | 2.00%(4) | (0.60)%(4) | 13% | $7,672 | ||
2013 | $40.75 | (0.14) | 8.90 | 8.76 | (0.19) | – | (0.19) | $49.32 | 21.57% | 2.00% | (0.26)% | 31% | $8,054 | ||
2012 | $36.92 | (0.25) | 4.08 | 3.83 | – | – | – | $40.75 | 10.37% | 2.00% | (0.59)% | 17% | $5,666 | ||
2011 | $33.74 | (0.28) | 3.46 | 3.18 | – | – | – | $36.92 | 9.43% | 2.00% | (0.74)% | 17% | $571 | ||
2010 | $29.19 | (0.20) | 4.75 | 4.55 | – | – | – | $33.74 | 15.63% | 2.01% | (0.66)% | 35% | $390 | ||
2009 | $25.05 | (0.06) | 4.22 | 4.16 | (0.02) | – | (0.02) | $29.19 | 16.58% | 2.00% | (0.25)% | 31% | $314 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||
2014(3) | $52.07 | (0.02) | 2.82 | 2.80 | – | (0.22) | (0.22) | $54.65 | 5.39% | 1.50%(4) | (0.10)%(4) | 13% | $2,892 | ||
2013 | $42.86 | 0.03 | 9.43 | 9.46 | (0.25) | – | (0.25) | $52.07 | 22.18% | 1.50% | 0.24% | 31% | $3,275 | ||
2012 | $38.64 | (0.06) | 4.28 | 4.22 | – | – | – | $42.86 | 10.92% | 1.50% | (0.09)% | 17% | $1,456 | ||
2011 | $35.14 | (0.08) | 3.58 | 3.50 | – | – | – | $38.64 | 9.96% | 1.50% | (0.24)% | 17% | $59 | ||
2010 | $30.24 | (0.05) | 4.95 | 4.90 | – | – | – | $35.14 | 16.20% | 1.51% | (0.16)% | 35% | $29 | ||
2009 | $25.96 | 0.06 | 4.36 | 4.42 | (0.14) | – | (0.14) | $30.24 | 17.17% | 1.50% | 0.25% | 31% | $43 | ||
R6 Class | |||||||||||||||
2014(3) | $53.81 | 0.21 | 2.91 | 3.12 | (0.43) | (0.22) | (0.65) | $56.28 | 5.83% | 0.65%(4) | 0.75%(4) | 13% | $28 | ||
2013(6) | $49.95 | 0.10 | 3.76 | 3.86 | – | – | – | $53.81 | 7.73% | 0.65%(4) | 0.72%(4) | 31%(7) | $27 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Notes |
23
Notes |
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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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82263 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Small Cap Growth Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ANOIX | 0.17% | 18.40% | 19.26% | 8.50% | 8.31% | 6/1/01 |
Russell 2000 Growth Index | — | 1.27% | 21.46% | 20.49% | 8.85% | 6.52% | — |
Institutional Class | ANONX | 0.25% | 18.69% | 19.49% | — | 5.84% | 5/18/07 |
A Class | ANOAX | 1/31/03 | |||||
No sales charge* | 0.00% | 18.03% | 18.98% | 8.23% | 11.15% | ||
With sales charge* | -5.79% | 11.20% | 17.58% | 7.59% | 10.57% | ||
B Class | ANOBX | 1/31/03 | |||||
No sales charge* | -0.36% | 17.20% | 18.07% | 7.42% | 10.33% | ||
With sales charge* | -5.36% | 13.20% | 17.96% | 7.42% | 10.33% | ||
C Class | ANOCX | 1/31/03 | |||||
No sales charge* | -0.36% | 17.25% | 18.05% | 7.42% | 10.36%(2) | ||
With sales charge* | -1.36% | 17.25% | 18.05% | 7.42% | 10.36%(2) | ||
R Class | ANORX | -0.09% | 17.89% | 18.67% | — | 4.04% | 9/28/07 |
R6 Class | ANODX | 0.33% | — | — | — | 7.15%(1) | 7/26/13 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge 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 to 0.00% after the sixth year. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Returns would have been lower if a portion of the distribution and service fees had not been waived. |
Total Annual Fund Operating Expenses | ||||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class | R6 Class |
1.47% | 1.27% | 1.72% | 2.47% | 2.47% | 1.97% | 1.12% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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. Historically, small company stocks have been more volatile than the stocks of larger, more established companies.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Middleby Corp. | 2.4% |
CoStar Group, Inc. | 2.0% |
Aspen Technology, Inc. | 1.5% |
Ubiquiti Networks, Inc. | 1.4% |
FleetCor Technologies, Inc. | 1.3% |
Littelfuse, Inc. | 1.3% |
Shutterstock, Inc. | 1.2% |
Gulfport Energy Corp. | 1.2% |
Lithia Motors, Inc. Class A | 1.2% |
Restoration Hardware Holdings, Inc. | 1.2% |
Top Five Industries | % of net assets |
Biotechnology | 6.7% |
Internet Software and Services | 6.0% |
Health Care Equipment and Supplies | 5.9% |
Software | 5.1% |
Machinery | 4.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.6% |
Temporary Cash Investments | 1.6% |
Other Assets and Liabilities | 0.8% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,001.70 | $6.90 | 1.39% |
Institutional Class | $1,000 | $1,002.50 | $5.91 | 1.19% |
A Class | $1,000 | $1,000.00 | $8.13 | 1.64% |
B Class | $1,000 | $996.40 | $11.83 | 2.39% |
C Class | $1,000 | $996.40 | $11.83 | 2.39% |
R Class | $1,000 | $999.10 | $9.37 | 1.89% |
R6 Class | $1,000 | $1,003.30 | $5.17 | 1.04% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.90 | $6.95 | 1.39% |
Institutional Class | $1,000 | $1,018.89 | $5.96 | 1.19% |
A Class | $1,000 | $1,016.66 | $8.20 | 1.64% |
B Class | $1,000 | $1,012.94 | $11.93 | 2.39% |
C Class | $1,000 | $1,012.94 | $11.93 | 2.39% |
R Class | $1,000 | $1,015.42 | $9.44 | 1.89% |
R6 Class | $1,000 | $1,019.64 | $5.21 | 1.04% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||
COMMON STOCKS — 97.6% | |||||||||
AIRLINES — 0.8% | |||||||||
Spirit Airlines, Inc.(1) | 59,337 | $ | 3,372,715 | ||||||
AUTO COMPONENTS — 2.1% | |||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 216,601 | 3,823,008 | |||||||
Goodyear Tire & Rubber Co. (The) | 182,510 | 4,599,252 | |||||||
8,422,260 | |||||||||
BANKS — 3.0% | |||||||||
Cathay General Bancorp. | 133,368 | 3,147,485 | |||||||
Central Pacific Financial Corp. | 60,110 | 1,128,265 | |||||||
Home Bancshares, Inc. | 72,654 | 2,303,858 | |||||||
IBERIABANK Corp. | 36,870 | 2,319,123 | |||||||
Renasant Corp. | 39,690 | 1,080,362 | |||||||
Signature Bank(1) | 19,638 | 2,333,387 | |||||||
12,312,480 | |||||||||
BEVERAGES — 0.2% | |||||||||
Boston Beer Co., Inc., Class A(1) | 4,163 | 1,024,265 | |||||||
BIOTECHNOLOGY — 6.7% | |||||||||
ACADIA Pharmaceuticals, Inc.(1) | 52,780 | 1,062,461 | |||||||
Acorda Therapeutics, Inc.(1) | 30,812 | 1,092,285 | |||||||
Aegerion Pharmaceuticals, Inc.(1) | 19,302 | 854,307 | |||||||
Alnylam Pharmaceuticals, Inc.(1) | 35,585 | 1,762,525 | |||||||
Arena Pharmaceuticals, Inc.(1) | 129,203 | 826,899 | |||||||
Celldex Therapeutics, Inc.(1) | 54,950 | 824,250 | |||||||
Cepheid, Inc.(1) | 40,617 | 1,766,027 | |||||||
Clovis Oncology, Inc.(1) | 12,770 | 690,474 | |||||||
Dyax Corp.(1) | 85,740 | 566,741 | |||||||
Exact Sciences Corp.(1) | 52,046 | 624,552 | |||||||
Exelixis, Inc.(1) | 151,621 | 536,738 | |||||||
Halozyme Therapeutics, Inc.(1) | 67,290 | 501,310 | |||||||
ImmunoGen, Inc.(1) | 48,671 | 629,803 | |||||||
Insmed, Inc.(1) | 17,900 | 249,526 | |||||||
Intercept Pharmaceuticals, Inc.(1) | 4,540 | 1,199,105 | |||||||
InterMune, Inc.(1) | 60,220 | 1,931,858 | |||||||
Ironwood Pharmaceuticals, Inc.(1) | 76,906 | 847,504 | |||||||
Isis Pharmaceuticals, Inc.(1) | 58,792 | 1,564,455 | |||||||
Keryx Biopharmaceuticals, Inc.(1) | 65,481 | 967,154 | |||||||
MannKind Corp.(1) | 131,180 | 859,229 | |||||||
Merrimack Pharmaceuticals, Inc.(1) | 49,960 | 219,324 | |||||||
Momenta Pharmaceuticals, Inc.(1) | 24,790 | 283,102 | |||||||
Neurocrine Biosciences, Inc.(1) | 46,580 | 653,052 | |||||||
NPS Pharmaceuticals, Inc.(1) | 49,790 | 1,325,410 | |||||||
Opko Health, Inc.(1) | 116,696 | 965,076 |
7
Shares | Value | ||||||||
Orexigen Therapeutics, Inc.(1) | 52,000 | $ | 292,240 | ||||||
PDL BioPharma, Inc. | 108,328 | 919,705 | |||||||
Puma Biotechnology, Inc.(1) | 15,190 | 1,147,453 | |||||||
Sarepta Therapeutics, Inc.(1) | 22,220 | 825,029 | |||||||
Synageva BioPharma Corp.(1) | 15,510 | 1,339,599 | |||||||
Synergy Pharmaceuticals, Inc.(1) | 54,950 | 246,725 | |||||||
27,573,918 | |||||||||
BUILDING PRODUCTS — 1.5% | |||||||||
Apogee Enterprises, Inc. | 74,638 | 2,371,249 | |||||||
Insteel Industries, Inc. | 72,810 | 1,498,430 | |||||||
Lennox International, Inc. | 28,957 | 2,427,465 | |||||||
6,297,144 | |||||||||
CAPITAL MARKETS — 1.4% | |||||||||
Evercore Partners, Inc., Class A | 59,070 | 3,156,110 | |||||||
HFF, Inc. Class A | 72,440 | 2,462,960 | |||||||
5,619,070 | |||||||||
CHEMICALS — 2.7% | |||||||||
Cabot Corp. | 65,120 | 3,763,936 | |||||||
Chemtura Corp.(1) | 122,930 | 2,741,339 | |||||||
Flotek Industries, Inc.(1) | 95,609 | 2,678,008 | |||||||
PolyOne Corp. | 51,890 | 1,944,318 | |||||||
11,127,601 | |||||||||
COMMUNICATIONS EQUIPMENT — 1.4% | |||||||||
Ubiquiti Networks, Inc.(1) | 146,992 | 5,693,000 | |||||||
CONSTRUCTION AND ENGINEERING — 0.9% | |||||||||
MasTec, Inc.(1) | 91,870 | 3,636,215 | |||||||
CONSTRUCTION MATERIALS — 1.4% | |||||||||
Caesarstone Sdot-Yam Ltd. | 48,610 | 2,536,470 | |||||||
Headwaters, Inc.(1) | 242,566 | 3,027,223 | |||||||
5,563,693 | |||||||||
CONTAINERS AND PACKAGING — 0.8% | |||||||||
Graphic Packaging Holding Co.(1) | 308,977 | 3,170,104 | |||||||
DISTRIBUTORS — 1.4% | |||||||||
Core-Mark Holding Co., Inc. | 28,540 | 2,298,612 | |||||||
Pool Corp. | 60,107 | 3,547,515 | |||||||
5,846,127 | |||||||||
DIVERSIFIED CONSUMER SERVICES — 1.4% | |||||||||
LifeLock, Inc.(1) | 148,442 | 2,330,539 | |||||||
Nord Anglia Education, Inc.(1) | 164,206 | 3,259,489 | |||||||
5,590,028 | |||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.6% | |||||||||
MarketAxess Holdings, Inc. | 45,629 | 2,458,491 | |||||||
ELECTRICAL EQUIPMENT — 1.7% | |||||||||
Acuity Brands, Inc. | 29,870 | 3,720,906 | |||||||
EnerSys | 47,250 | 3,193,155 | |||||||
6,914,061 |
8
Shares | Value | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 4.2% | |||||||||
Belden, Inc. | 40,432 | $ | 2,984,286 | ||||||
Cognex Corp.(1) | 43,336 | 1,492,059 | |||||||
FEI Co. | 29,600 | 2,353,792 | |||||||
Littelfuse, Inc. | 59,904 | 5,424,307 | |||||||
Measurement Specialties, Inc.(1) | 47,660 | 3,066,921 | |||||||
Methode Electronics, Inc. | 71,430 | 1,981,468 | |||||||
17,302,833 | |||||||||
ENERGY EQUIPMENT AND SERVICES — 1.2% | |||||||||
Dril-Quip, Inc.(1) | 21,128 | 2,389,999 | |||||||
Matrix Service Co.(1) | 47,171 | 1,460,886 | |||||||
Natural Gas Services Group, Inc.(1) | 41,230 | 1,265,349 | |||||||
5,116,234 | |||||||||
FOOD AND STAPLES RETAILING — 2.2% | |||||||||
Casey's General Stores, Inc. | 15,760 | 1,082,082 | |||||||
Rite Aid Corp.(1) | 545,340 | 3,980,982 | |||||||
United Natural Foods, Inc.(1) | 59,617 | 4,115,361 | |||||||
9,178,425 | |||||||||
FOOD PRODUCTS — 2.4% | |||||||||
Hain Celestial Group, Inc. (The)(1) | 44,131 | 3,796,149 | |||||||
J&J Snack Foods Corp. | 28,379 | 2,656,274 | |||||||
TreeHouse Foods, Inc.(1) | 42,853 | 3,207,119 | |||||||
9,659,542 | |||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 5.9% | |||||||||
Abaxis, Inc.(1) | 16,149 | 655,811 | |||||||
Align Technology, Inc.(1) | 55,841 | 2,813,828 | |||||||
Arthrocare Corp.(1) | 18,566 | 901,008 | |||||||
Cyberonics, Inc.(1) | 19,324 | 1,143,208 | |||||||
DexCom, Inc.(1) | 48,716 | 1,580,347 | |||||||
Endologix, Inc.(1) | 53,789 | 682,045 | |||||||
Globus Medical, Inc.(1) | 42,410 | 1,035,652 | |||||||
HeartWare International, Inc.(1) | 10,847 | 921,561 | |||||||
ICU Medical, Inc.(1) | 9,425 | 525,727 | |||||||
Insulet Corp.(1) | 41,761 | 1,571,466 | |||||||
Masimo Corp.(1) | 37,299 | 998,121 | |||||||
Meridian Bioscience, Inc. | 33,994 | 678,860 | |||||||
Neogen Corp.(1) | 24,546 | 1,025,409 | |||||||
STERIS Corp. | 63,172 | 3,035,415 | |||||||
Teleflex, Inc. | 33,300 | 3,399,597 | |||||||
Thoratec Corp.(1) | 40,590 | 1,330,540 | |||||||
West Pharmaceutical Services, Inc. | 42,156 | 1,828,727 | |||||||
24,127,322 | |||||||||
HEALTH CARE PROVIDERS AND SERVICES — 3.4% | |||||||||
Acadia Healthcare Co., Inc.(1) | 24,786 | 1,041,508 | |||||||
Air Methods Corp.(1) | 20,797 | 1,157,769 | |||||||
Centene Corp.(1) | 33,361 | 2,215,170 | |||||||
Chemed Corp. | 13,302 | 1,107,657 |
9
Shares | Value | ||||||||
Emeritus Corp.(1) | 32,648 | $ | 973,890 | ||||||
Ensign Group, Inc. (The) | 17,160 | 729,300 | |||||||
HealthSouth Corp. | 46,126 | 1,597,805 | |||||||
IPC The Hospitalist Co., Inc.(1) | 14,125 | 572,062 | |||||||
Molina Healthcare, Inc.(1) | 22,280 | 833,272 | |||||||
MWI Veterinary Supply, Inc.(1) | 8,820 | 1,381,565 | |||||||
Team Health Holdings, Inc.(1) | 43,460 | 2,106,941 | |||||||
13,716,939 | |||||||||
HEALTH CARE TECHNOLOGY — 1.7% | |||||||||
athenahealth, Inc.(1) | 19,778 | 2,445,352 | |||||||
HMS Holdings Corp.(1) | 56,817 | 918,731 | |||||||
MedAssets, Inc.(1) | 47,300 | 1,079,859 | |||||||
Medidata Solutions, Inc.(1) | 51,084 | 1,854,860 | |||||||
Quality Systems, Inc. | 32,769 | 483,998 | |||||||
6,782,800 | |||||||||
HOTELS, RESTAURANTS AND LEISURE — 3.3% | |||||||||
Buffalo Wild Wings, Inc.(1) | 9,430 | 1,377,912 | |||||||
Cedar Fair LP | 38,881 | 2,017,146 | |||||||
Papa John's International, Inc. | 102,286 | 4,486,264 | |||||||
Ruth's Hospitality Group, Inc. | 165,080 | 2,078,357 | |||||||
Six Flags Entertainment Corp. | 84,120 | 3,376,577 | |||||||
13,336,256 | |||||||||
HOUSEHOLD DURABLES — 1.0% | |||||||||
Ryland Group, Inc. (The) | 23,460 | 900,629 | |||||||
Standard Pacific Corp.(1) | 395,695 | 3,161,603 | |||||||
4,062,232 | |||||||||
INSURANCE — 1.0% | |||||||||
Allied World Assurance Co. Holdings Ltd. | 19,580 | 2,108,570 | |||||||
AMERISAFE, Inc. | 47,067 | 2,007,408 | |||||||
4,115,978 | |||||||||
INTERNET SOFTWARE AND SERVICES — 6.0% | |||||||||
Amber Road, Inc.(1) | 99,102 | 1,320,039 | |||||||
comScore, Inc.(1) | 90,410 | 2,832,545 | |||||||
CoStar Group, Inc.(1) | 50,728 | 8,161,628 | |||||||
Envestnet, Inc.(1) | 62,180 | 2,291,333 | |||||||
Global Eagle Entertainment, Inc.(1) | 29,420 | 324,503 | |||||||
Q2 Holdings, Inc.(1) | 97,265 | 1,194,414 | |||||||
Shutterstock, Inc.(1) | 66,030 | 4,787,835 | |||||||
Web.com Group, Inc.(1) | 82,019 | 2,518,803 | |||||||
Yelp, Inc.(1) | 15,780 | 920,290 | |||||||
24,351,390 | |||||||||
IT SERVICES — 3.5% | |||||||||
FleetCor Technologies, Inc.(1) | 47,923 | 5,469,452 | |||||||
iGATE Corp.(1) | 72,160 | 2,641,056 | |||||||
MAXIMUS, Inc. | 83,902 | 3,571,708 | |||||||
Virtusa Corp.(1) | 85,071 | 2,804,791 | |||||||
14,487,007 |
10
Shares | Value | ||||||||
LEISURE PRODUCTS — 1.1% | |||||||||
Brunswick Corp. | 114,013 | $ | 4,582,182 | ||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.9% | |||||||||
Luminex Corp.(1) | 31,631 | 607,631 | |||||||
PAREXEL International Corp.(1) | 36,949 | 1,675,637 | |||||||
PerkinElmer, Inc. | 30,780 | 1,291,837 | |||||||
3,575,105 | |||||||||
MACHINERY — 4.8% | |||||||||
Graham Corp. | 37,670 | 1,124,073 | |||||||
ITT Corp. | 79,056 | 3,410,476 | |||||||
Middleby Corp.(1) | 39,415 | 9,951,499 | |||||||
Mueller Water Products, Inc., Class A | 306,896 | 2,798,891 | |||||||
RBC Bearings, Inc.(1) | 34,350 | 2,138,631 | |||||||
19,423,570 | |||||||||
MEDIA — 0.3% | |||||||||
Sinclair Broadcast Group, Inc., Class A | 51,150 | 1,367,240 | |||||||
METALS AND MINING — 0.8% | |||||||||
Horsehead Holding Corp.(1) | 200,420 | 3,124,548 | |||||||
OIL, GAS AND CONSUMABLE FUELS — 3.1% | |||||||||
Athlon Energy, Inc.(1) | 103,970 | 4,201,428 | |||||||
Gulfport Energy Corp.(1) | 64,529 | 4,753,851 | |||||||
Kodiak Oil & Gas Corp.(1) | 147,825 | 1,878,856 | |||||||
Rosetta Resources, Inc.(1) | 40,743 | 1,928,773 | |||||||
12,762,908 | |||||||||
PAPER AND FOREST PRODUCTS — 0.5% | |||||||||
KapStone Paper and Packaging Corp.(1) | 71,066 | 1,874,721 | |||||||
PHARMACEUTICALS — 2.6% | |||||||||
Akorn, Inc.(1) | 52,235 | 1,317,367 | |||||||
Auxilium Pharmaceuticals, Inc.(1) | 43,272 | 974,053 | |||||||
Endocyte, Inc.(1) | 23,060 | 417,617 | |||||||
Medicines Co. (The)(1) | 39,363 | 1,047,056 | |||||||
Nektar Therapeutics(1) | 72,525 | 853,619 | |||||||
Pacira Pharmaceuticals, Inc.(1) | 25,160 | 1,723,208 | |||||||
Prestige Brands Holdings, Inc.(1) | 51,576 | 1,728,828 | |||||||
Questcor Pharmaceuticals, Inc. | 25,536 | 2,098,548 | |||||||
VIVUS, Inc.(1) | 62,426 | 324,615 | |||||||
10,484,911 | |||||||||
PROFESSIONAL SERVICES — 2.9% | |||||||||
Barrett Business Services, Inc. | 9,288 | 468,208 | |||||||
Huron Consulting Group, Inc.(1) | 39,121 | 2,785,415 | |||||||
Korn/Ferry International(1) | 121,810 | 3,538,581 | |||||||
On Assignment, Inc.(1) | 97,341 | 3,406,935 | |||||||
WageWorks, Inc.(1) | 39,200 | 1,660,904 | |||||||
11,860,043 | |||||||||
ROAD AND RAIL — 2.7% | |||||||||
Roadrunner Transportation Systems, Inc.(1) | 105,230 | 2,591,815 | |||||||
Saia, Inc.(1) | 98,085 | 4,038,160 | |||||||
Swift Transportation Co.(1) | 185,887 | 4,470,582 | |||||||
11,100,557 |
11
Shares | Value | ||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.8% | |||||||||
Cavium, Inc.(1) | 47,532 | $ | 2,013,931 | ||||||
Photronics, Inc.(1) | 298,156 | 2,587,994 | |||||||
SunEdison, Inc.(1) | 147,430 | 2,835,079 | |||||||
7,437,004 | |||||||||
SOFTWARE — 5.1% | |||||||||
Aspen Technology, Inc.(1) | 139,219 | 5,985,025 | |||||||
Bottomline Technologies, Inc.(1) | 73,932 | 2,339,208 | |||||||
CommVault Systems, Inc.(1) | 43,709 | 2,115,516 | |||||||
Interactive Intelligence, Inc.(1) | 27,231 | 1,703,844 | |||||||
Manhattan Associates, Inc.(1) | 87,720 | 2,765,812 | |||||||
Monotype Imaging Holdings, Inc. | 88,635 | 2,340,850 | |||||||
Solera Holdings, Inc. | 33,880 | 2,194,746 | |||||||
Ultimate Software Group, Inc.(1) | 11,351 | 1,357,920 | |||||||
20,802,921 | |||||||||
SPECIALTY RETAIL — 3.4% | |||||||||
Brown Shoe Co., Inc. | 121,780 | 2,872,790 | |||||||
Kirkland's, Inc.(1) | 87,560 | 1,498,152 | |||||||
Lithia Motors, Inc. Class A | 63,674 | 4,729,705 | |||||||
Restoration Hardware Holdings, Inc.(1) | 75,470 | 4,708,573 | |||||||
13,809,220 | |||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.9% | |||||||||
Kate Spade & Co.(1) | 101,250 | 3,520,462 | |||||||
TRADING COMPANIES AND DISTRIBUTORS — 2.5% | |||||||||
DXP Enterprises, Inc.(1) | 31,437 | 3,558,983 | |||||||
H&E Equipment Services, Inc.(1) | 111,464 | 4,296,937 | |||||||
United Rentals, Inc.(1) | 23,338 | 2,189,805 | |||||||
10,045,725 | |||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.4% | |||||||||
RingCentral, Inc., Class A(1) | 115,814 | 1,755,740 | |||||||
TOTAL COMMON STOCKS (Cost $293,126,533) | 398,384,987 | ||||||||
TEMPORARY CASH INVESTMENTS — 1.6% | |||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $1,996,989), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $1,955,846) | 1,955,844 | ||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $1,600,883), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $1,564,675) | 1,564,675 | ||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $1,596,491), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $1,564,677) | 1,564,676 | ||||||||
SSgA U.S. Government Money Market Fund | 1,368,571 | 1,368,571 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $6,453,766) | 6,453,766 | ||||||||
TOTAL INVESTMENT SECURITIES — 99.2% (Cost $299,580,299) | 404,838,753 | ||||||||
OTHER ASSETS AND LIABILITIES — 0.8% | 3,343,544 | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 408,182,297 |
12
Notes to Schedule of Investments |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $299,580,299) | $ | 404,838,753 | ||||
Receivable for investments sold | 6,959,741 | |||||
Receivable for capital shares sold | 163,806 | |||||
Dividends and interest receivable | 22,134 | |||||
411,984,434 | ||||||
Liabilities | ||||||
Payable for investments purchased | 2,702,461 | |||||
Payable for capital shares redeemed | 595,746 | |||||
Accrued management fees | 469,054 | |||||
Distribution and service fees payable | 34,876 | |||||
3,802,137 | ||||||
Net Assets | $ | 408,182,297 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 461,996,276 | ||||
Accumulated net investment loss | (5,085,309 | ) | ||||
Accumulated net realized loss | (153,987,124 | ) | ||||
Net unrealized appreciation | 105,258,454 | |||||
$ | 408,182,297 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $190,936,726 | 15,950,041 | $11.97 | |
Institutional Class, $0.01 Par Value | $94,354,004 | 7,779,080 | $12.13 | |
A Class, $0.01 Par Value | $107,936,619 | 9,208,142 | $11.72* | |
B Class, $0.01 Par Value | $1,060,568 | 96,066 | $11.04 | |
C Class, $0.01 Par Value | $12,528,148 | 1,130,684 | $11.08 | |
R Class, $0.01 Par Value | $1,339,443 | 115,504 | $11.60 | |
R6 Class, $0.01 Par Value | $26,789 | 2,207 | $12.14 |
* Maximum offering price $12.44 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $5,285) | $ | 1,104,431 | ||
Interest | 623 | |||
1,105,054 | ||||
Expenses: | ||||
Management fees | 2,935,713 | |||
Distribution and service fees: | ||||
A Class | 143,655 | |||
B Class | 5,957 | |||
C Class | 66,067 | |||
R Class | 4,047 | |||
Directors' fees and expenses | 7,833 | |||
3,163,272 | ||||
Net investment income (loss) | (2,058,218 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 24,469,686 | |||
Change in net unrealized appreciation (depreciation) on investments | (20,885,604 | ) | ||
Net realized and unrealized gain (loss) | 3,584,082 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,525,864 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | (2,058,218 | ) | $ | (1,986,123 | ) |
Net realized gain (loss) | 24,469,686 | 65,698,476 | ||||
Change in net unrealized appreciation (depreciation) | (20,885,604 | ) | 52,908,024 | |||
Net increase (decrease) in net assets resulting from operations | 1,525,864 | 116,620,377 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | — | (290,567 | ) | |||
Institutional Class | — | (245,683 | ) | |||
A Class | — | (133,149 | ) | |||
R Class | — | (1,075 | ) | |||
Decrease in net assets from distributions | — | (670,474 | ) | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | (26,707,988 | ) | (35,896,888 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 15,792 | 33,683 | ||||
Net increase (decrease) in net assets | (25,166,332 | ) | 80,086,698 | |||
Net Assets | ||||||
Beginning of period | 433,348,629 | 353,261,931 | ||||
End of period | $ | 408,182,297 | $ | 433,348,629 | ||
Accumulated net investment loss | $ | (5,085,309 | ) | $ | (3,027,091 | ) |
See Notes to Financial Statements.
16
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Small Cap Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the B Class, the C Class, the R Class and the R6 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 distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a
17
security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. 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 ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption — The fund may impose a 2.00% redemption fee on shares held less than 60 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
18
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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.100% to 1.500% for the Investor Class, A Class, B Class, C Class and R Class. The annual management fee schedule ranges from 0.900% to 1.300% for the Institutional Class and 0.750% to 1.150% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 1.39% for the Investor Class, A Class, B Class, C Class and R Class, 1.19% for the Institutional Class and 1.04% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund's assets but are reflected in the return realized by the fund on its investment in the acquired funds.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $149,836,141 and $173,665,479, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 165,000,000 | 165,000,000 | ||||||||
Sold | 2,195,583 | $ | 27,530,624 | 4,784,271 | $ | 50,038,404 | ||||
Issued in reinvestment of distributions | – | – | 24,882 | 222,449 | ||||||
Redeemed | (2,916,978 | ) | (36,463,039 | ) | (4,525,780 | ) | (45,610,715 | ) | ||
(721,395 | ) | (8,932,415 | ) | 283,373 | 4,650,138 | |||||
Institutional Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||
Sold | 335,257 | 4,269,549 | 945,452 | 9,862,852 | ||||||
Issued in reinvestment of distributions | – | – | 15,913 | 143,690 | ||||||
Redeemed | (1,111,287 | ) | (14,101,363 | ) | (3,224,317 | ) | (32,242,668 | ) | ||
(776,030 | ) | (9,831,814 | ) | (2,262,952 | ) | (22,236,126 | ) | |||
A Class/Shares Authorized | 110,000,000 | 110,000,000 | ||||||||
Sold | 536,891 | 6,528,720 | 1,361,853 | 13,876,067 | ||||||
Issued in reinvestment of distributions | – | – | 14,402 | 126,446 | ||||||
Redeemed | (1,062,485 | ) | (12,961,094 | ) | (3,073,091 | ) | (29,790,771 | ) | ||
(525,594 | ) | (6,432,374 | ) | (1,696,836 | ) | (15,788,258 | ) | |||
B Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 8,571 | 97,098 | 2,039 | 21,056 | ||||||
Redeemed | (23,872 | ) | (278,160 | ) | (88,360 | ) | (803,639 | ) | ||
(15,301 | ) | (181,062 | ) | (86,321 | ) | (782,583 | ) | |||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 135,145 | 1,569,056 | 162,263 | 1,591,310 | ||||||
Redeemed | (188,988 | ) | (2,189,016 | ) | (348,060 | ) | (3,296,362 | ) | ||
(53,843 | ) | (619,960 | ) | (185,797 | ) | (1,705,052 | ) | |||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 20,513 | 245,350 | 43,615 | 447,754 | ||||||
Issued in reinvestment of distributions | – | – | 123 | 1,075 | ||||||
Redeemed | (79,178 | ) | (955,713 | ) | (52,854 | ) | (508,836 | ) | ||
(58,665 | ) | (710,363 | ) | (9,116 | ) | (60,007 | ) | |||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | – | – | 2,207 | 25,000 | ||||||
Net increase (decrease) | (2,150,828 | ) | $ | (26,707,988 | ) | (3,955,442 | ) | $ | (35,896,888 | ) |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
20
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 398,384,987 | — | — | ||||
Temporary Cash Investments | 1,368,571 | $ | 5,085,195 | — | ||||
$ | 399,753,558 | $ | 5,085,195 | — |
7. Risk Factors
The fund concentrates its investments in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 300,882,583 | |
Gross tax appreciation of investments | $ | 112,456,914 | |
Gross tax depreciation of investments | (8,500,744 | ) | |
Net tax appreciation (depreciation) of investments | $ | 103,956,170 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2013, the fund had accumulated short-term capital losses of $(176,885,341), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(64,516,152) and $(112,369,189) expire in 2016 and 2017, respectively.
As of October 31, 2013, the fund had late-year ordinary loss deferrals of $(3,027,091), which represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
21
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||
Investor Class | ||||||||||||||
2014(4) | $11.95 | (0.05) | 0.07 | 0.02 | – | $11.97 | 0.17% | 1.39%(5) | (0.89)%(5) | 35 | % | $190,937 | ||
2013 | $8.79 | (0.05) | 3.23 | 3.18 | (0.02) | $11.95 | 36.23% | 1.42% | (0.47)% | 80 | % | $199,294 | ||
2012 | $8.06 | (0.01) | 0.74 | 0.73 | – | $8.79 | 9.06% | 1.42% | (0.12)% | 62 | % | $144,021 | ||
2011 | $7.45 | (0.07) | 0.68 | 0.61 | – | $8.06 | 8.19% | 1.40% | (0.84)% | 108 | % | $166,243 | ||
2010 | $5.47 | (0.03) | 2.01 | 1.98 | – | $7.45 | 36.20% | 1.42% | (0.48)% | 183 | % | $142,793 | ||
2009 | $5.57 | (0.02) | (0.08) | (0.10) | – | $5.47 | (1.80)% | 1.41% | (0.40)% | 204 | % | $170,125 | ||
Institutional Class | ||||||||||||||
2014(4) | $12.10 | (0.04) | 0.07 | 0.03 | – | $12.13 | 0.25% | 1.19%(5) | (0.69)%(5) | 35 | % | $94,354 | ||
2013 | $8.88 | (0.02) | 3.26 | 3.24 | (0.02) | $12.10 | 36.61% | 1.22% | (0.27)% | 80 | % | $103,520 | ||
2012 | $8.13 | 0.01 | 0.74 | 0.75 | – | $8.88 | 9.23% | 1.22% | 0.08% | 62 | % | $96,092 | ||
2011 | $7.50 | (0.05) | 0.68 | 0.63 | – | $8.13 | 8.40% | 1.20% | (0.64)% | 108 | % | $105,520 | ||
2010 | $5.49 | (0.02) | 2.03 | 2.01 | – | $7.50 | 36.61% | 1.22% | (0.28)% | 183 | % | $114,513 | ||
2009 | $5.59 | (0.01) | (0.09) | (0.10) | – | $5.49 | (1.79)% | 1.21% | (0.20)% | 204 | % | $108,261 |
22
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||
A Class | ||||||||||||||
2014(4) | $11.72 | (0.07) | 0.07 | – | – | $11.72 | 0.00% | 1.64%(5) | (1.14)%(5) | 35 | % | $107,937 | ||
2013 | $8.63 | (0.07) | 3.17 | 3.10 | (0.01) | $11.72 | 36.00% | 1.67% | (0.72)% | 80 | % | $114,080 | ||
2012 | $7.94 | (0.03) | 0.72 | 0.69 | – | $8.63 | 8.69% | 1.67% | (0.37)% | 62 | % | $98,665 | ||
2011 | $7.35 | (0.09) | 0.68 | 0.59 | – | $7.94 | 8.03% | 1.65% | (1.09)% | 108 | % | $115,741 | ||
2010 | $5.41 | (0.05) | 1.99 | 1.94 | – | $7.35 | 35.86% | 1.67% | (0.73)% | 183 | % | $126,763 | ||
2009 | $5.53 | (0.03) | (0.09) | (0.12) | – | $5.41 | (2.17)% | 1.66% | (0.65)% | 204 | % | $114,026 | ||
B Class | ||||||||||||||
2014(4) | $11.08 | (0.11) | 0.07 | (0.04) | – | $11.04 | (0.36)% | 2.39%(5) | (1.89)%(5) | 35 | % | $1,061 | ||
2013 | $8.21 | (0.13) | 3.00 | 2.87 | – | $11.08 | 34.96% | 2.42% | (1.47)% | 80 | % | $1,234 | ||
2012 | $7.60 | (0.09) | 0.70 | 0.61 | – | $8.21 | 8.03% | 2.42% | (1.12)% | 62 | % | $1,623 | ||
2011 | $7.10 | (0.15) | 0.65 | 0.50 | – | $7.60 | 7.04% | 2.40% | (1.84)% | 108 | % | $2,197 | ||
2010 | $5.26 | (0.09) | 1.93 | 1.84 | – | $7.10 | 34.98% | 2.42% | (1.48)% | 183 | % | $3,107 | ||
2009 | $5.41 | (0.07) | (0.08) | (0.15) | – | $5.26 | (2.77)% | 2.41% | (1.40)% | 204 | % | $2,976 | ||
C Class | ||||||||||||||
2014(4) | $11.12 | (0.11) | 0.07 | (0.04) | – | $11.08 | (0.36)% | 2.39%(5) | (1.89)%(5) | 35 | % | $12,528 | ||
2013 | $8.24 | (0.14) | 3.02 | 2.88 | – | $11.12 | 34.95% | 2.42% | (1.47)% | 80 | % | $13,171 | ||
2012 | $7.63 | (0.09) | 0.70 | 0.61 | – | $8.24 | 7.99% | 2.42% | (1.12)% | 62 | % | $11,291 | ||
2011 | $7.13 | (0.15) | 0.65 | 0.50 | – | $7.63 | 7.01% | 2.40% | (1.84)% | 108 | % | $12,691 | ||
2010 | $5.28 | (0.09) | 1.94 | 1.85 | – | $7.13 | 35.04% | 2.42% | (1.48)% | 183 | % | $13,476 | ||
2009 | $5.44 | (0.07) | (0.09) | (0.16) | – | $5.28 | (2.94)% | 2.41% | (1.40)% | 204 | % | $11,608 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||
R Class | ||||||||||||||
2014(4) | $11.61 | (0.08) | 0.07 | (0.01) | – | $11.60 | (0.09)% | 1.89%(5) | (1.39)%(5) | 35 | % | $1,339 | ||
2013 | $8.56 | (0.10) | 3.16 | 3.06 | (0.01) | $11.61 | 35.73% | 1.92% | (0.97)% | 80 | % | $2,022 | ||
2012 | $7.89 | (0.04) | 0.71 | 0.67 | – | $8.56 | 8.49% | 1.92% | (0.62)% | 62 | % | $1,570 | ||
2011 | $7.33 | (0.11) | 0.67 | 0.56 | – | $7.89 | 7.64% | 1.90% | (1.34)% | 108 | % | $1,266 | ||
2010 | $5.41 | (0.06) | 1.98 | 1.92 | – | $7.33 | 35.49% | 1.92% | (0.98)% | 183 | % | $998 | ||
2009 | $5.54 | (0.06) | (0.07) | (0.13) | – | $5.41 | (2.35)% | 1.91% | (0.90)% | 204 | % | $545 | ||
R6 Class | ||||||||||||||
2014(4) | $12.10 | (0.03) | 0.07 | 0.04 | – | $12.14 | 0.33% | 1.04%(5) | (0.54)%(5) | 35 | % | $27 | ||
2013(6) | $11.33 | (0.02) | 0.79 | 0.77 | – | $12.10 | 6.80% | 1.05%(5) | (0.55)%(5) | 80%(7) | $27 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2014 (unaudited). |
(5) | Annualized. |
(6) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
24
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
25
Notes |
26
Notes |
27
Notes |
28
![]() | ||
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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82273 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Ultra® Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCUX | 4.34% | 23.51% | 18.65% | 6.42% | 11.47% | 11/2/81 |
Russell 1000 Growth Index | — | 6.95% | 20.66% | 19.45% | 7.98% | 10.66%(2) | — |
S&P 500 Index | — | 8.36% | 20.44% | 19.13% | 7.66% | 11.69%(2) | — |
Institutional Class | TWUIX | 4.43% | 23.77% | 18.88% | 6.63% | 6.38% | 11/14/96 |
A Class(3) | TWUAX | 10/2/96 | |||||
No sales charge* | 4.18% | 23.19% | 18.34% | 6.15% | 6.11% | ||
With sales charge* | -1.81% | 16.13% | 16.95% | 5.52% | 5.76% | ||
C Class | TWCCX | 10/29/01 | |||||
No sales charge* | 3.80% | 22.27% | 17.46% | 5.35% | 4.61% | ||
With sales charge* | 2.81% | 22.27% | 17.46% | 5.35% | 4.61% | ||
R Class | AULRX | 4.08% | 22.87% | 18.05% | 5.89% | 6.37% | 8/29/03 |
R6 Class | AULDX | 4.50% | — | — | — | 14.07%(1) | 7/26/13 |
* Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 10/31/81, the date nearest the Investor Class's inception for which data are available. |
(3) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | C Class | R Class | R6 Class |
0.99% | 0.79% | 1.24% | 1.99% | 1.49% | 0.64% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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.
3
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 6.8% |
Google, Inc.* | 4.4% |
Gilead Sciences, Inc. | 3.3% |
QUALCOMM, Inc. | 2.5% |
Monsanto Co. | 2.4% |
Starbucks Corp. | 2.3% |
United Technologies Corp. | 2.3% |
MasterCard, Inc., Class A | 2.2% |
Philip Morris International, Inc. | 2.2% |
Amazon.com, Inc. | 2.0% |
* Includes all classes of the issuer. | |
Top Five Industries | % of net assets |
Internet Software and Services | 8.3% |
Technology Hardware, Storage and Peripherals | 7.8% |
Biotechnology | 7.1% |
Software | 5.0% |
Media | 4.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.2% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.5% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,043.40 | $5.07 | 1.00% |
Investor Class (before waiver) | $1,000 | $1,043.40(2) | $5.12 | 1.01% |
Institutional Class (after waiver) | $1,000 | $1,044.30 | $4.05 | 0.80% |
Institutional Class (before waiver) | $1,000 | $1,044.30(2) | $4.11 | 0.81% |
A Class (after waiver) | $1,000 | $1,041.80 | $6.33 | 1.25% |
A Class (before waiver) | $1,000 | $1,041.80(2) | $6.38 | 1.26% |
C Class (after waiver) | $1,000 | $1,038.00 | $10.11 | 2.00% |
C Class (before waiver) | $1,000 | $1,038.00(2) | $10.16 | 2.01% |
R Class (after waiver) | $1,000 | $1,040.80 | $7.59 | 1.50% |
R Class (before waiver) | $1,000 | $1,040.80(2) | $7.64 | 1.51% |
R6 Class (after waiver) | $1,000 | $1,045.00 | $3.30 | 0.65% |
R6 Class (before waiver) | $1,000 | $1,045.00(2) | $3.35 | 0.66% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.84 | $5.01 | 1.00% |
Investor Class (before waiver) | $1,000 | $1,019.79 | $5.06 | 1.01% |
Institutional Class (after waiver) | $1,000 | $1,020.83 | $4.01 | 0.80% |
Institutional Class (before waiver) | $1,000 | $1,020.78 | $4.06 | 0.81% |
A Class (after waiver) | $1,000 | $1,018.60 | $6.26 | 1.25% |
A Class (before waiver) | $1,000 | $1,018.55 | $6.31 | 1.26% |
C Class (after waiver) | $1,000 | $1,014.88 | $9.99 | 2.00% |
C Class (before waiver) | $1,000 | $1,014.83 | $10.04 | 2.01% |
R Class (after waiver) | $1,000 | $1,017.36 | $7.50 | 1.50% |
R Class (before waiver) | $1,000 | $1,017.31 | $7.55 | 1.51% |
R6 Class (after waiver) | $1,000 | $1,021.57 | $3.26 | 0.65% |
R6 Class (before waiver) | $1,000 | $1,021.52 | $3.31 | 0.66% |
(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 assumes the return earned after waiver and would have been lower if a portion of the management fee had not been waived. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||||||||||||
COMMON STOCKS — 99.2% | |||||||||||||||||||||
AEROSPACE AND DEFENSE — 3.9% | |||||||||||||||||||||
Boeing Co. (The) | 1,000,000 | $ | 129,020,000 | ||||||||||||||||||
United Technologies Corp. | 1,491,000 | 176,430,030 | |||||||||||||||||||
305,450,030 | |||||||||||||||||||||
AUTO COMPONENTS — 0.7% | |||||||||||||||||||||
BorgWarner, Inc. | 896,000 | 55,677,440 | |||||||||||||||||||
AUTOMOBILES — 0.8% | |||||||||||||||||||||
Tesla Motors, Inc.(1) | 300,000 | 62,367,000 | |||||||||||||||||||
BANKS — 1.3% | |||||||||||||||||||||
JPMorgan Chase & Co. | 1,849,000 | 103,507,020 | |||||||||||||||||||
BEVERAGES — 1.5% | |||||||||||||||||||||
Boston Beer Co., Inc., Class A(1) | 17,000 | 4,182,680 | |||||||||||||||||||
Coca-Cola Co. (The) | 2,797,000 | 114,089,630 | |||||||||||||||||||
118,272,310 | |||||||||||||||||||||
BIOTECHNOLOGY — 7.1% | |||||||||||||||||||||
Alexion Pharmaceuticals, Inc.(1) | 500,000 | 79,100,000 | |||||||||||||||||||
Celgene Corp.(1) | 991,000 | 145,686,910 | |||||||||||||||||||
Gilead Sciences, Inc.(1) | 3,258,000 | 255,720,420 | |||||||||||||||||||
Regeneron Pharmaceuticals, Inc.(1) | 230,000 | 68,284,700 | |||||||||||||||||||
548,792,030 | |||||||||||||||||||||
BUILDING PRODUCTS — 0.5% | |||||||||||||||||||||
Lennox International, Inc. | 475,000 | 39,819,250 | |||||||||||||||||||
CAPITAL MARKETS — 1.8% | |||||||||||||||||||||
Franklin Resources, Inc. | 1,349,958 | 70,670,301 | |||||||||||||||||||
T. Rowe Price Group, Inc. | 816,000 | 67,018,080 | |||||||||||||||||||
137,688,381 | |||||||||||||||||||||
CHEMICALS — 4.1% | |||||||||||||||||||||
Ecolab, Inc. | 520,001 | 54,412,905 | |||||||||||||||||||
Monsanto Co. | 1,677,000 | 185,643,900 | |||||||||||||||||||
Valspar Corp. (The) | 1,007,000 | 73,551,280 | |||||||||||||||||||
313,608,085 | |||||||||||||||||||||
COMMUNICATIONS EQUIPMENT — 2.5% | |||||||||||||||||||||
QUALCOMM, Inc. | 2,450,000 | 192,839,500 | |||||||||||||||||||
CONSUMER FINANCE — 1.2% | |||||||||||||||||||||
American Express Co. | 1,022,000 | 89,353,460 | |||||||||||||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.6% | |||||||||||||||||||||
CME Group, Inc. | 670,000 | 47,161,300 | |||||||||||||||||||
ELECTRICAL EQUIPMENT — 3.3% | |||||||||||||||||||||
Acuity Brands, Inc. | 310,000 | 38,616,700 | |||||||||||||||||||
Eaton Corp. plc | 1,078,000 | 78,305,920 |
7
Shares | Value | ||||||||||||||||||||
Emerson Electric Co. | 2,064,000 | $ | 140,723,520 | ||||||||||||||||||
257,646,140 | |||||||||||||||||||||
ENERGY EQUIPMENT AND SERVICES — 2.3% | |||||||||||||||||||||
Core Laboratories NV | 219,000 | 41,101,920 | |||||||||||||||||||
Schlumberger Ltd. | 1,352,000 | 137,295,600 | |||||||||||||||||||
178,397,520 | |||||||||||||||||||||
FOOD AND STAPLES RETAILING — 2.1% | |||||||||||||||||||||
Costco Wholesale Corp. | 1,036,000 | 119,844,480 | |||||||||||||||||||
Whole Foods Market, Inc. | 884,000 | 43,934,800 | |||||||||||||||||||
163,779,280 | |||||||||||||||||||||
FOOD PRODUCTS — 1.7% | |||||||||||||||||||||
Mead Johnson Nutrition Co. | 743,000 | 65,577,180 | |||||||||||||||||||
Nestle SA | 809,000 | 62,460,573 | |||||||||||||||||||
128,037,753 | |||||||||||||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 1.1% | |||||||||||||||||||||
Intuitive Surgical, Inc.(1) | 53,059 | 19,191,440 | |||||||||||||||||||
St. Jude Medical, Inc. | 503,000 | 31,925,410 | |||||||||||||||||||
Varian Medical Systems, Inc.(1) | 396,000 | 31,501,800 | |||||||||||||||||||
82,618,650 | |||||||||||||||||||||
HEALTH CARE PROVIDERS AND SERVICES — 3.1% | |||||||||||||||||||||
Express Scripts Holding Co.(1) | 1,401,000 | 93,278,580 | |||||||||||||||||||
UnitedHealth Group, Inc. | 1,946,000 | 146,027,840 | |||||||||||||||||||
239,306,420 | |||||||||||||||||||||
HEALTH CARE TECHNOLOGY — 0.9% | |||||||||||||||||||||
Cerner Corp.(1) | 1,287,000 | 66,023,100 | |||||||||||||||||||
HOTELS, RESTAURANTS AND LEISURE — 3.6% | |||||||||||||||||||||
Starbucks Corp. | 2,522,000 | 178,103,640 | |||||||||||||||||||
Wynn Resorts Ltd. | 498,000 | 101,537,220 | |||||||||||||||||||
279,640,860 | |||||||||||||||||||||
HOUSEHOLD PRODUCTS — 1.2% | |||||||||||||||||||||
Colgate-Palmolive Co. | 1,414,000 | 95,162,200 | |||||||||||||||||||
INSURANCE — 1.5% | |||||||||||||||||||||
MetLife, Inc. | 2,179,000 | 114,070,650 | |||||||||||||||||||
INTERNET AND CATALOG RETAIL — 2.0% | |||||||||||||||||||||
Amazon.com, Inc.(1) | 518,000 | 157,539,340 | |||||||||||||||||||
INTERNET SOFTWARE AND SERVICES — 8.3% | |||||||||||||||||||||
Baidu, Inc. ADR(1) | 308,000 | 47,385,800 | |||||||||||||||||||
Facebook, Inc., Class A(1) | 2,217,000 | 132,532,260 | |||||||||||||||||||
Google, Inc., Class A(1) | 318,484 | 170,350,722 | |||||||||||||||||||
Google, Inc., Class C(1) | 318,000 | 167,477,880 | |||||||||||||||||||
LinkedIn Corp., Class A(1) | 374,000 | 57,397,780 | |||||||||||||||||||
Tencent Holdings Ltd. | 735,000 | 45,808,628 | |||||||||||||||||||
Yelp, Inc.(1) | 411,000 | 23,969,520 | |||||||||||||||||||
644,922,590 | |||||||||||||||||||||
IT SERVICES — 3.8% | |||||||||||||||||||||
MasterCard, Inc., Class A | 2,354,802 | 173,195,687 |
8
Shares | Value | ||||||||||||||||||||
Teradata Corp.(1) | 844,000 | $ | 38,368,240 | ||||||||||||||||||
Visa, Inc., Class A | 390,000 | 79,017,900 | |||||||||||||||||||
290,581,827 | |||||||||||||||||||||
MACHINERY — 3.7% | |||||||||||||||||||||
Cummins, Inc. | 701,000 | 105,745,850 | |||||||||||||||||||
Donaldson Co., Inc. | 779,000 | 32,788,110 | |||||||||||||||||||
WABCO Holdings, Inc.(1) | 856,000 | 91,600,560 | |||||||||||||||||||
Wabtec Corp. | 752,000 | 56,061,600 | |||||||||||||||||||
286,196,120 | |||||||||||||||||||||
MEDIA — 4.9% | |||||||||||||||||||||
Comcast Corp., Class A | 1,315,000 | 68,064,400 | |||||||||||||||||||
Time Warner, Inc. | 1,516,000 | 100,753,360 | |||||||||||||||||||
Twenty-First Century Fox, Inc. | 2,021,000 | 64,712,420 | |||||||||||||||||||
Walt Disney Co. (The) | 1,794,000 | 142,335,960 | |||||||||||||||||||
375,866,140 | |||||||||||||||||||||
OIL, GAS AND CONSUMABLE FUELS — 3.3% | |||||||||||||||||||||
Concho Resources, Inc.(1) | 360,000 | 46,962,000 | |||||||||||||||||||
EOG Resources, Inc. | 656,000 | 64,288,000 | |||||||||||||||||||
Noble Energy, Inc. | 1,253,000 | 89,940,340 | |||||||||||||||||||
Occidental Petroleum Corp. | 605,000 | 57,928,750 | |||||||||||||||||||
259,119,090 | |||||||||||||||||||||
PERSONAL PRODUCTS — 0.8% | |||||||||||||||||||||
Estee Lauder Cos., Inc. (The), Class A | 841,000 | 61,031,370 | |||||||||||||||||||
PHARMACEUTICALS — 1.5% | |||||||||||||||||||||
Pfizer, Inc. | 3,689,000 | 115,391,920 | |||||||||||||||||||
PROFESSIONAL SERVICES — 1.0% | |||||||||||||||||||||
Nielsen Holdings NV | 1,594,000 | 74,838,300 | |||||||||||||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.5% | |||||||||||||||||||||
ARM Holdings plc | 4,027,000 | 60,614,721 | |||||||||||||||||||
Linear Technology Corp. | 1,285,000 | 57,182,500 | |||||||||||||||||||
117,797,221 | |||||||||||||||||||||
SOFTWARE — 5.0% | |||||||||||||||||||||
Microsoft Corp. | 1,500,000 | 60,600,000 | |||||||||||||||||||
NetSuite, Inc.(1) | 395,000 | 30,537,450 | |||||||||||||||||||
Oracle Corp. | 3,407,000 | 139,278,160 | |||||||||||||||||||
Salesforce.com, Inc.(1) | 1,084,000 | 55,988,600 | |||||||||||||||||||
Tableau Software, Inc., Class A(1) | 483,000 | 26,695,410 | |||||||||||||||||||
VMware, Inc., Class A(1) | 531,000 | 49,122,810 | |||||||||||||||||||
Workday, Inc.(1) | 326,000 | 23,820,820 | |||||||||||||||||||
386,043,250 | |||||||||||||||||||||
SPECIALTY RETAIL — 3.8% | |||||||||||||||||||||
Home Depot, Inc. (The) | 733,000 | 58,280,830 | |||||||||||||||||||
O'Reilly Automotive, Inc.(1) | 348,000 | 51,778,920 | |||||||||||||||||||
Tiffany & Co. | 695,000 | 60,805,550 | |||||||||||||||||||
TJX Cos., Inc. (The) | 2,174,000 | 126,483,320 | |||||||||||||||||||
297,348,620 |
9
Shares | Value | ||||||||||||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 7.8% | |||||||||||||||||||||
Apple, Inc. | 898,045 | $ | 529,927,374 | ||||||||||||||||||
EMC Corp. | 2,818,000 | 72,704,400 | |||||||||||||||||||
602,631,774 | |||||||||||||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 2.8% | |||||||||||||||||||||
Burberry Group plc | 1,729,000 | 43,350,746 | |||||||||||||||||||
NIKE, Inc., Class B | 1,498,000 | 109,279,100 | |||||||||||||||||||
Under Armour, Inc., Class A(1) | 1,316,000 | 64,339,240 | |||||||||||||||||||
216,969,086 | |||||||||||||||||||||
TOBACCO — 2.2% | |||||||||||||||||||||
Philip Morris International, Inc. | 2,016,000 | 172,226,880 | |||||||||||||||||||
TOTAL COMMON STOCKS (Cost $3,962,323,117) | 7,677,721,907 | ||||||||||||||||||||
TEMPORARY CASH INVESTMENTS — 0.3% | |||||||||||||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $6,011,383), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $5,887,533) | 5,887,528 | ||||||||||||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $4,819,016), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $4,710,022) | 4,710,022 | ||||||||||||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $4,805,795), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $4,710,026) | 4,710,023 | ||||||||||||||||||||
SSgA U.S. Government Money Market Fund | 4,001,458 | 4,001,458 | |||||||||||||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $19,309,031) | 19,309,031 | ||||||||||||||||||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $3,981,632,148) | 7,697,030,938 | ||||||||||||||||||||
OTHER ASSETS AND LIABILITIES — 0.5% | 40,766,472 | ||||||||||||||||||||
TOTAL NET ASSETS — 100.0% | $ | 7,737,797,410 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | |||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | |||||||||||||||||
USD | 52,581,364 | CHF | 46,210,080 | Credit Suisse AG | 5/30/14 | $ | 65,289 | ||||||||||||||
GBP | 2,048,373 | USD | 3,446,460 | Credit Suisse AG | 5/30/14 | 11,252 | |||||||||||||||
USD | 92,333,036 | GBP | 54,869,345 | Credit Suisse AG | 5/30/14 | (288,001 | ) | ||||||||||||||
$ | (211,460 | ) |
Notes to Schedule of Investments | ||
ADR | - | American Depositary Receipt |
CHF | - | Swiss Franc |
GBP | - | British Pound |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $3,981,632,148) | $ | 7,697,030,938 | ||||
Foreign currency holdings, at value (cost of $127,150) | 127,332 | |||||
Receivable for investments sold | 55,173,206 | |||||
Receivable for capital shares sold | 1,169,127 | |||||
Unrealized appreciation on forward foreign currency exchange contracts | 76,541 | |||||
Dividends and interest receivable | 2,866,063 | |||||
7,756,443,207 | ||||||
Liabilities | ||||||
Payable for investments purchased | 8,712,273 | |||||
Payable for capital shares redeemed | 3,428,169 | |||||
Unrealized depreciation on forward foreign currency exchange contracts | 288,001 | |||||
Accrued management fees | 6,197,509 | |||||
Distribution and service fees payable | 19,845 | |||||
18,645,797 | ||||||
Net Assets | $ | 7,737,797,410 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 3,705,952,592 | ||||
Undistributed net investment income | 13,609,396 | |||||
Undistributed net realized gain | 303,001,687 | |||||
Net unrealized appreciation | 3,715,233,735 | |||||
$ | 7,737,797,410 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $7,443,109,803 | 221,826,873 | $33.55 | |
Institutional Class, $0.01 Par Value | $213,865,654 | 6,209,746 | $34.44 | |
A Class, $0.01 Par Value | $71,447,431 | 2,201,630 | $32.45* | |
C Class, $0.01 Par Value | $2,380,696 | 81,024 | $29.38 | |
R Class, $0.01 Par Value | $6,920,072 | 215,850 | $32.06 | |
R6 Class, $0.01 Par Value | $73,754 | 2,142 | $34.43 |
* Maximum offering price $34.43 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $423,311) | $ | 54,174,622 | ||
Interest | 3,071 | |||
54,177,693 | ||||
Expenses: | ||||
Management fees | 38,216,355 | |||
Distribution and service fees: | ||||
A Class | 91,552 | |||
C Class | 11,332 | |||
R Class | 17,254 | |||
Directors' fees and expenses | 1,551,643 | |||
Other expenses | 62 | |||
39,888,198 | ||||
Fees waived | (389,512 | ) | ||
39,498,686 | ||||
Net investment income (loss) | 14,679,007 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 353,540,546 | |||
Foreign currency transactions | (2,786,483 | ) | ||
350,754,063 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (33,961,025 | ) | ||
Translation of assets and liabilities in foreign currencies | (1,273,813 | ) | ||
(35,234,838 | ) | |||
Net realized and unrealized gain (loss) | 315,519,225 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 330,198,232 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 14,679,007 | $ | 35,311,295 | ||
Net realized gain (loss) | 350,754,063 | 725,268,617 | ||||
Change in net unrealized appreciation (depreciation) | (35,234,838 | ) | 1,108,706,632 | |||
Net increase (decrease) in net assets resulting from operations | 330,198,232 | 1,869,286,544 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (22,249,493 | ) | (31,423,524 | ) | ||
Institutional Class | (1,003,895 | ) | (288,697 | ) | ||
A Class | (36,312 | ) | (284,451 | ) | ||
C Class | — | (3,847 | ) | |||
R Class | — | (22,083 | ) | |||
R6 Class | (176 | ) | — | |||
From net realized gains: | ||||||
Investor Class | (287,611,428 | ) | — | |||
Institutional Class | (7,766,552 | ) | — | |||
A Class | (2,913,158 | ) | — | |||
C Class | (96,221 | ) | — | |||
R Class | (274,425 | ) | — | |||
R6 Class | (1,048 | ) | — | |||
Decrease in net assets from distributions | (321,952,708 | ) | (32,022,602 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | 109,489,093 | (534,351,092 | ) | |||
Net increase (decrease) in net assets | 117,734,617 | 1,302,912,850 | ||||
Net Assets | ||||||
Beginning of period | 7,620,062,793 | 6,317,149,943 | ||||
End of period | $ | 7,737,797,410 | $ | 7,620,062,793 | ||
Undistributed net investment income | $ | 13,609,396 | $ | 22,220,265 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Ultra Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. Sale of the R6 Class commenced on July 26, 2013.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation
14
with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
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Distributions to Shareholders — 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.800% for the Institutional Class and 0.450% to 0.650% for the R6 Class. During the six months ended April 30, 2014, the investment advisor voluntarily agreed to waive 0.01% of its management fee. The investment advisor expects the fee waiver to continue through July 31, 2014, and cannot terminate it without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2014 was $374,894, $10,496, $3,662, $113, $345 and $2 for the Investor Class, Institutional Class, A Class, C Class, R Class and R6 Class, respectively. The effective annual management fee before waiver for each class for the six months ended April 30, 2014 was 0.99% for the Investor Class, A Class, C Class and R Class, 0.79% for the Institutional Class and 0.64% for the R6 Class. The effective annual management fee after waiver for each class for the six months ended April 30, 2014 was 0.98% for the Investor Class, A Class, C Class and R Class, 0.78% for the Institutional Class and 0.63% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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 fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2014 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The impact of directors’ fees and expenses to the ratio of operating expenses to average net assets was 0.02% for the period ended April 30, 2014. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $548,578,946 and $768,315,453, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 3,500,000,000 | 3,500,000,000 | ||||||||
Sold | 4,019,211 | $ | 136,318,820 | 7,055,804 | $ | 203,087,516 | ||||
Issued in reinvestment of distributions | 9,141,045 | 300,466,107 | 1,154,983 | 30,456,895 | ||||||
Redeemed | (10,015,973 | ) | (340,086,894 | ) | (30,708,842 | ) | (872,739,374 | ) | ||
3,144,283 | 96,698,033 | (22,498,055 | ) | (639,194,963 | ) | |||||
Institutional Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 491,485 | 17,268,234 | 4,611,587 | 136,709,282 | ||||||
Issued in reinvestment of distributions | 255,214 | 8,603,265 | 10,077 | 272,290 | ||||||
Redeemed | (405,566 | ) | (14,103,101 | ) | (742,701 | ) | (21,742,793 | ) | ||
341,133 | 11,768,398 | 3,878,963 | 115,238,779 | |||||||
A Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||
Sold | 276,926 | 9,116,859 | 327,276 | 9,115,770 | ||||||
Issued in reinvestment of distributions | 88,201 | 2,806,562 | 10,500 | 268,378 | ||||||
Redeemed | (353,042 | ) | (11,638,467 | ) | (698,036 | ) | (19,328,348 | ) | ||
12,085 | 284,954 | (360,260 | ) | (9,944,200 | ) | |||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 14,131 | 421,115 | 14,186 | 370,450 | ||||||
Issued in reinvestment of distributions | 2,224 | 64,240 | 95 | 2,235 | ||||||
Redeemed | (5,503 | ) | (164,679 | ) | (8,260 | ) | (210,230 | ) | ||
10,852 | 320,676 | 6,021 | 162,455 | |||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 31,053 | 1,007,038 | 86,097 | 2,296,500 | ||||||
Issued in reinvestment of distributions | 8,616 | 271,047 | 863 | 21,866 | ||||||
Redeemed | (28,059 | ) | (907,900 | ) | (109,589 | ) | (2,956,529 | ) | ||
11,610 | 370,185 | (22,629 | ) | (638,163 | ) | |||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 1,314 | 45,623 | 792 | 25,000 | ||||||
Issued in reinvestment of distributions | 36 | 1,224 | – | – | ||||||
1,350 | 46,847 | 792 | 25,000 | |||||||
Net increase (decrease) | 3,521,313 | $ | 109,489,093 | (18,995,168 | ) | $ | (534,351,092 | ) |
(1) | July 26, 2013 (commencement of sale) through October 31, 2013 for the R6 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
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• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 7,465,487,239 | $ | 212,234,668 | — | |||
Temporary Cash Investments | 4,001,458 | 15,307,573 | — | |||||
$ | 7,469,488,697 | $ | 227,542,241 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 76,541 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | (288,001 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund's typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2014, is disclosed on the Statement of Assets and Liabilities as an asset of $76,541 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $288,001 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(2,869,150) in net realized gain (loss) on foreign currency transactions and $(1,271,661) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Federal Tax Information
The book-basis 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.
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As of April 30, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 4,021,599,571 | |
Gross tax appreciation of investments | $ | 3,713,429,824 | |
Gross tax depreciation of investments | (37,998,457 | ) | |
Net tax appreciation (depreciation) of investments | $ | 3,675,431,367 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||||
2014(3) | $33.56 | 0.06 | 1.35 | 1.41 | (0.10) | (1.32) | (1.42) | $33.55 | 4.34% | 1.00%(4) | 1.01%(4) | 0.39%(4) | 0.38%(4) | 7% | $7,443,110 | ||
2013 | $25.68 | 0.15 | 7.86 | 8.01 | (0.13) | – | (0.13) | $33.56 | 31.34% | 0.99% | 0.99% | 0.52% | 0.52% | 26% | $7,338,222 | ||
2012 | $23.42 | 0.06 | 2.20 | 2.26 | – | – | – | $25.68 | 9.65% | 0.99% | 0.99% | 0.26% | 0.26% | 13% | $6,194,268 | ||
2011 | $21.22 | 0.04 | 2.20 | 2.24 | (0.04) | – | (0.04) | $23.42 | 10.59% | 0.99% | 0.99% | 0.16% | 0.16% | 13% | $5,984,972 | ||
2010 | $17.82 | 0.05 | 3.44 | 3.49 | (0.09) | – | (0.09) | $21.22 | 19.63% | 1.00% | 1.00% | 0.25% | 0.25% | 24% | $5,906,158 | ||
2009 | $15.67 | 0.11 | 2.12 | 2.23 | (0.08) | – | (0.08) | $17.82 | 14.35% | 1.00% | 1.00% | 0.69% | 0.69% | 53% | $5,435,051 | ||
Institutional Class | |||||||||||||||||
2014(3) | $34.44 | 0.10 | 1.39 | 1.49 | (0.17) | (1.32) | (1.49) | $34.44 | 4.43% | 0.80%(4) | 0.81%(4) | 0.59%(4) | 0.58%(4) | 7% | $213,866 | ||
2013 | $26.32 | 0.17 | 8.10 | 8.27 | (0.15) | – | (0.15) | $34.44 | 31.56% | 0.79% | 0.79% | 0.72% | 0.72% | 26% | $202,118 | ||
2012 | $23.95 | 0.12 | 2.25 | 2.37 | – | – | – | $26.32 | 9.90% | 0.79% | 0.79% | 0.46% | 0.46% | 13% | $52,362 | ||
2011 | $21.69 | 0.08 | 2.27 | 2.35 | (0.09) | – | (0.09) | $23.95 | 10.85% | 0.79% | 0.79% | 0.36% | 0.36% | 13% | $52,751 | ||
2010 | $18.22 | 0.09 | 3.51 | 3.60 | (0.13) | – | (0.13) | $21.69 | 19.81% | 0.80% | 0.80% | 0.45% | 0.45% | 24% | $45,791 | ||
2009 | $16.02 | 0.14 | 2.17 | 2.31 | (0.11) | – | (0.11) | $18.22 | 14.58% | 0.80% | 0.80% | 0.89% | 0.89% | 53% | $73,933 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||||
2014(3) | $32.46 | 0.02 | 1.31 | 1.33 | (0.02) | (1.32) | (1.34) | $32.45 | 4.18% | 1.25%(4) | 1.26%(4) | 0.14%(4) | 0.13%(4) | 7% | $71,447 | ||
2013 | $24.89 | 0.08 | 7.60 | 7.68 | (0.11) | – | (0.11) | $32.46 | 30.99% | 1.24% | 1.24% | 0.27% | 0.27% | 26% | $71,063 | ||
2012 | $22.75 | –(5) | 2.14 | 2.14 | – | – | – | $24.89 | 9.41% | 1.24% | 1.24% | 0.01% | 0.01% | 13% | $63,461 | ||
2011 | $20.62 | (0.02) | 2.15 | 2.13 | – | – | – | $22.75 | 10.33% | 1.24% | 1.24% | (0.09)% | (0.09)% | 13% | $62,304 | ||
2010 | $17.33 | –(5) | 3.33 | 3.33 | (0.04) | – | (0.04) | $20.62 | 19.24% | 1.25% | 1.25% | 0.00%(6) | 0.00%(6) | 24% | $68,109 | ||
2009 | $15.23 | 0.07 | 2.07 | 2.14 | (0.04) | – | (0.04) | $17.33 | 14.14% | 1.25% | 1.25% | 0.44% | 0.44% | 53% | $77,484 | ||
C Class | |||||||||||||||||
2014(3) | $29.60 | (0.09) | 1.19 | 1.10 | – | (1.32) | (1.32) | $29.38 | 3.80% | 2.00%(4) | 2.01%(4) | (0.61)%(4) | (0.62)%(4) | 7% | $2,381 | ||
2013 | $22.83 | (0.13) | 6.96 | 6.83 | (0.06) | – | (0.06) | $29.60 | 29.98% | 1.99% | 1.99% | (0.48)% | (0.48)% | 26% | $2,077 | ||
2012 | $21.02 | (0.17) | 1.98 | 1.81 | – | – | – | $22.83 | 8.61% | 1.99% | 1.99% | (0.74)% | (0.74)% | 13% | $1,464 | ||
2011 | $19.20 | (0.17) | 1.99 | 1.82 | – | – | – | $21.02 | 9.48% | 1.99% | 1.99% | (0.84)% | (0.84)% | 13% | $678 | ||
2010 | $16.22 | (0.13) | 3.11 | 2.98 | – | – | – | $19.20 | 18.45% | 2.00% | 2.00% | (0.75)% | (0.75)% | 24% | $789 | ||
2009 | $14.32 | (0.04) | 1.94 | 1.90 | – | – | – | $16.22 | 13.20% | 2.00% | 2.00% | (0.31)% | (0.31)% | 53% | $884 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||||
2014(3) | $32.10 | (0.02) | 1.30 | 1.28 | – | (1.32) | (1.32) | $32.06 | 4.08% | 1.50%(4) | 1.51%(4) | (0.11)%(4) | (0.12)%(4) | 7% | $6,920 | ||
2013 | $24.66 | 0.01 | 7.53 | 7.54 | (0.10) | – | (0.10) | $32.10 | 30.66% | 1.49% | 1.49% | 0.02% | 0.02% | 26% | $6,556 | ||
2012 | $22.60 | (0.06) | 2.12 | 2.06 | – | – | – | $24.66 | 9.12% | 1.49% | 1.49% | (0.24)% | (0.24)% | 13% | $5,595 | ||
2011 | $20.54 | (0.08) | 2.14 | 2.06 | – | – | – | $22.60 | 10.03% | 1.49% | 1.49% | (0.34)% | (0.34)% | 13% | $4,173 | ||
2010 | $17.26 | (0.05) | 3.33 | 3.28 | – | – | – | $20.54 | 19.00% | 1.50% | 1.50% | (0.25)% | (0.25)% | 24% | $3,260 | ||
2009 | $15.17 | 0.03 | 2.07 | 2.10 | (0.01) | – | (0.01) | $17.26 | 13.84% | 1.50% | 1.50% | 0.19% | 0.19% | 53% | $3,056 | ||
R6 Class | |||||||||||||||||
2014(3) | $34.46 | 0.10 | 1.41 | 1.51 | (0.22) | (1.32) | (1.54) | $34.43 | 4.50% | 0.65%(4) | 0.66%(4) | 0.74%(4) | 0.73%(4) | 7% | $74 | ||
2013(7) | $31.57 | 0.05 | 2.84 | 2.89 | – | – | – | $34.46 | 9.15% | 0.63%(4) | 0.64%(4) | 0.61%(4) | 0.60%(4) | 26%(8) | $27 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2014 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | Ratio was less than 0.005%. |
(7) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Notes |
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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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82270 1406 |
SEMIANNUAL REPORT | APRIL 30, 2014 |
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Veedot® Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![]() | Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2014. It provides a macroeconomic and financial market overview (below), followed by fund performance, a schedule of fund investments, and other financial information. For additional commentary and updated information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. |
Jonathan Thomas |
Economic Growth Slowed, U.S. Bonds Outperformed Stocks After December
The six-month reporting period started on an optimistic note during the last two months of 2013, when economic signs—including stronger housing and lower unemployment—seemed to point toward stronger growth in 2014. Propelled by favorable conditions and sentiment, U.S. stocks rallied to record highs as 2013 ended, and U.S. Treasury yields peaked as well.
Sentiment changed since then. A harsh winter slowed the economy, while other factors—such as the prospect of higher taxes, higher interest rates, and geo-political concerns—weighed on investors. Stock prices and Treasury yields plunged at the start of 2014. Stocks recovered sufficiently to reach new highs in April, but Treasury yields remained range-bound at lower-than-expected levels from February through the end of the reporting period. After rising at the end of 2013, falling in January 2014, then rising again from February to April, the S&P 500 Index advanced 8.36% for the period. Meanwhile, the 10-year U.S. Treasury yield edged up from 2.55% to 2.65% for the full period, according to Bloomberg, and the Barclays U.S. Aggregate Bond Index returned 1.74%, mostly on the strength of the corporate bond sector as investors sought yield.
Looking ahead, we see signs of potential economic improvement in the second half of 2014, but headwinds persist. Housing market momentum has slowed, interest rates could rise further, and economic growth and U.S. employment levels remain subpar compared with past post-recession periods. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios—as appropriate—for meeting financial goals. We appreciate your continued trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-14-000012/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of April 30, 2014 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | AMVIX | 6.84% | 23.89% | 18.72% | 7.23% | 4.96% | 11/30/99 |
Russell 3000 Index | — | 7.83% | 20.78% | 19.53% | 8.09% | 4.67% | — |
Institutional Class | AVDIX | 6.91% | 24.19% | 18.97% | 7.43% | 3.88% | 8/1/00 |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |
Investor Class | Institutional Class |
1.27% | 1.07% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
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’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
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
Fund Characteristics |
APRIL 30, 2014 | |
Top Ten Holdings | % of net assets |
WellPoint, Inc. | 1.3% |
Microsoft Corp. | 1.3% |
Wal-Mart Stores, Inc. | 1.2% |
E*Trade Financial Corp. | 1.2% |
Caterpillar, Inc. | 1.2% |
Western Digital Corp. | 1.2% |
Time Warner Cable, Inc. | 1.2% |
Magna International, Inc. | 1.2% |
Plains All American Pipeline LP | 1.2% |
Anadarko Petroleum Corp. | 1.2% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 8.2% |
Capital Markets | 5.2% |
IT Services | 4.8% |
Health Care Providers and Services | 4.4% |
Pharmaceuticals | 4.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.0% |
Temporary Cash Investments | 2.7% |
Other Assets and Liabilities | (1.7)% |
4
Shareholder Fee Example |
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, 2013 to April 30, 2014.
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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. 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.
5
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.
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Expenses Paid During Period(1)11/1/13 - 4/30/14 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,068.40 | $6.41 | 1.25% |
Institutional Class | $1,000 | $1,069.10 | $5.39 | 1.05% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.60 | $6.26 | 1.25% |
Institutional Class | $1,000 | $1,019.59 | $5.26 | 1.05% |
(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. |
6
Schedule of Investments |
APRIL 30, 2014 (UNAUDITED)
Shares | Value | ||||||||||
COMMON STOCKS — 99.0% | |||||||||||
AEROSPACE AND DEFENSE — 4.2% | |||||||||||
Boeing Co. (The) | 5,579 | $ | 719,803 | ||||||||
General Dynamics Corp. | 6,587 | 720,947 | |||||||||
Raytheon Co. | 7,749 | 739,875 | |||||||||
Teledyne Technologies, Inc.(1) | 8,811 | 818,189 | |||||||||
TransDigm Group, Inc. | 4,937 | 878,144 | |||||||||
3,876,958 | |||||||||||
AIR FREIGHT AND LOGISTICS — 1.1% | |||||||||||
United Parcel Service, Inc., Class B | 10,206 | 1,005,291 | |||||||||
AUTO COMPONENTS — 2.1% | |||||||||||
Magna International, Inc. | 11,431 | 1,120,124 | |||||||||
Tower International, Inc.(1) | 30,844 | 857,771 | |||||||||
1,977,895 | |||||||||||
AUTOMOBILES — 2.1% | |||||||||||
Ford Motor Co. | 59,667 | 963,622 | |||||||||
Toyota Motor Corp. ADR | 8,710 | 944,338 | |||||||||
1,907,960 | |||||||||||
BANKS — 1.7% | |||||||||||
Customers Bancorp, Inc.(1) | 18,773 | 413,569 | |||||||||
Hancock Holding Co. | 24,466 | 825,238 | |||||||||
National Penn Bancshares, Inc. | 37,058 | 362,057 | |||||||||
1,600,864 | |||||||||||
BEVERAGES — 1.0% | |||||||||||
Constellation Brands, Inc., Class A(1) | 11,714 | 935,246 | |||||||||
BIOTECHNOLOGY — 1.0% | |||||||||||
PDL BioPharma, Inc. | 112,711 | 956,916 | |||||||||
BUILDING PRODUCTS — 1.2% | |||||||||||
Nortek, Inc.(1) | 13,140 | 1,079,582 | |||||||||
CAPITAL MARKETS — 5.2% | |||||||||||
Blackstone Group LP | 30,231 | 892,722 | |||||||||
Carlyle Group LP (The) | 13,927 | 446,778 | |||||||||
E*Trade Financial Corp.(1) | 51,502 | 1,156,220 | |||||||||
Invesco Ltd. | 9,124 | 321,256 | |||||||||
Investment Technology Group, Inc.(1) | 45,424 | 937,551 | |||||||||
Janus Capital Group, Inc. | 87,263 | 1,058,500 | |||||||||
4,813,027 | |||||||||||
CHEMICALS — 1.2% | |||||||||||
CF Industries Holdings, Inc. | 2,298 | 563,401 | |||||||||
Sherwin-Williams Co. (The) | 2,850 | 569,544 | |||||||||
1,132,945 | |||||||||||
COMMUNICATIONS EQUIPMENT — 2.0% | |||||||||||
Cisco Systems, Inc. | 41,740 | 964,612 |
7
Shares | Value | ||||||||||
Riverbed Technology, Inc.(1) | 46,474 | $ | 903,919 | ||||||||
1,868,531 | |||||||||||
CONTAINERS AND PACKAGING — 0.9% | |||||||||||
Silgan Holdings, Inc. | 16,996 | 845,551 | |||||||||
DIVERSIFIED CONSUMER SERVICES — 0.8% | |||||||||||
ITT Educational Services, Inc.(1) | 28,680 | 774,360 | |||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.2% | |||||||||||
Fairpoint Communications, Inc.(1) | 24,796 | 338,217 | |||||||||
Telefonica SA ADR | 46,767 | 783,347 | |||||||||
Verizon Communications, Inc. | 19,857 | 927,918 | |||||||||
2,049,482 | |||||||||||
ELECTRIC UTILITIES — 2.2% | |||||||||||
Duke Energy Corp. | 6,882 | 512,640 | |||||||||
NextEra Energy, Inc. | 9,392 | 937,791 | |||||||||
PPL Corp. | 17,850 | 595,119 | |||||||||
2,045,550 | |||||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 1.2% | |||||||||||
Corning, Inc. | 52,482 | 1,097,399 | |||||||||
ENERGY EQUIPMENT AND SERVICES — 2.3% | |||||||||||
National Oilwell Varco, Inc. | 9,993 | 784,750 | |||||||||
Schlumberger Ltd. | 6,717 | 682,111 | |||||||||
Tidewater, Inc. | 13,189 | 671,716 | |||||||||
2,138,577 | |||||||||||
FOOD AND STAPLES RETAILING — 3.0% | |||||||||||
Delhaize Group SA ADR | 38,333 | 716,060 | |||||||||
Kroger Co. (The) | 20,219 | 930,883 | |||||||||
Wal-Mart Stores, Inc. | 14,562 | 1,160,737 | |||||||||
2,807,680 | |||||||||||
FOOD PRODUCTS — 2.4% | |||||||||||
General Mills, Inc. | 14,132 | 749,279 | |||||||||
Hain Celestial Group, Inc. (The)(1) | 6,905 | 593,968 | |||||||||
Kellogg Co. | 13,699 | 915,504 | |||||||||
2,258,751 | |||||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 1.1% | |||||||||||
Becton Dickinson and Co. | 8,993 | 1,016,479 | |||||||||
HEALTH CARE PROVIDERS AND SERVICES — 4.4% | |||||||||||
Aetna, Inc. | 13,070 | 933,851 | |||||||||
Cardinal Health, Inc. | 10,194 | 708,585 | |||||||||
Gentiva Health Services, Inc.(1) | 98,143 | 739,017 | |||||||||
PharMerica Corp.(1) | 18,863 | 512,885 | |||||||||
WellPoint, Inc. | 11,916 | 1,199,703 | |||||||||
4,094,041 | |||||||||||
HOTELS, RESTAURANTS AND LEISURE — 2.2% | |||||||||||
Hyatt Hotels Corp., Class A(1) | 18,982 | 1,068,307 | |||||||||
McDonald's Corp. | 9,765 | 989,976 | |||||||||
2,058,283 |
8
Shares | Value | ||||||||||
HOUSEHOLD DURABLES — 1.0% | |||||||||||
Cavco Industries, Inc.(1) | 12,003 | $ | 935,634 | ||||||||
HOUSEHOLD PRODUCTS — 1.1% | |||||||||||
Colgate-Palmolive Co. | 14,682 | 988,099 | |||||||||
INDUSTRIAL CONGLOMERATES — 2.1% | |||||||||||
3M Co. | 6,992 | 972,517 | |||||||||
Roper Industries, Inc. | 7,024 | 975,985 | |||||||||
1,948,502 | |||||||||||
INSURANCE — 3.6% | |||||||||||
ACE Ltd. | 9,219 | 943,288 | |||||||||
Aflac, Inc. | 15,089 | 946,382 | |||||||||
Hanover Insurance Group, Inc. (The) | 16,117 | 942,039 | |||||||||
MetLife, Inc. | 9,264 | 484,970 | |||||||||
3,316,679 | |||||||||||
INTERNET AND CATALOG RETAIL — 0.6% | |||||||||||
Expedia, Inc. | 8,432 | 598,588 | |||||||||
INTERNET SOFTWARE AND SERVICES — 0.9% | |||||||||||
Equinix, Inc.(1) | 4,701 | 882,895 | |||||||||
IT SERVICES — 4.8% | |||||||||||
CACI International, Inc., Class A(1) | 11,199 | 780,010 | |||||||||
Convergys Corp. | 43,967 | 947,049 | |||||||||
Fiserv, Inc.(1) | 15,186 | 923,005 | |||||||||
International Business Machines Corp. | 5,103 | 1,002,587 | |||||||||
MAXIMUS, Inc. | 19,948 | 849,186 | |||||||||
4,501,837 | |||||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.9% | |||||||||||
PerkinElmer, Inc. | 20,596 | 864,414 | |||||||||
MACHINERY — 1.8% | |||||||||||
Caterpillar, Inc. | 10,918 | 1,150,757 | |||||||||
EnPro Industries, Inc.(1) | 7,381 | 525,601 | |||||||||
1,676,358 | |||||||||||
MEDIA — 1.2% | |||||||||||
Time Warner Cable, Inc. | 7,921 | 1,120,505 | |||||||||
METALS AND MINING — 1.1% | |||||||||||
Freeport-McMoRan Copper & Gold, Inc. | 28,425 | 976,967 | |||||||||
MULTI-UTILITIES — 1.1% | |||||||||||
Dominion Resources, Inc. | 14,358 | 1,041,529 | |||||||||
MULTILINE RETAIL — 0.7% | |||||||||||
Macy's, Inc. | 10,844 | 622,771 | |||||||||
OIL, GAS AND CONSUMABLE FUELS — 8.2% | |||||||||||
Anadarko Petroleum Corp. | 11,089 | 1,098,033 | |||||||||
Chevron Corp. | 8,699 | 1,091,899 | |||||||||
Exxon Mobil Corp. | 5,572 | 570,629 | |||||||||
Kinder Morgan, Inc. | 29,518 | 964,058 | |||||||||
Marathon Oil Corp. | 23,821 | 861,129 | |||||||||
Occidental Petroleum Corp. | 9,356 | 895,837 | |||||||||
PetroQuest Energy, Inc.(1) | 75,922 | 457,050 |
9
Shares | Value | ||||||||||
Phillips 66 | 6,601 | $ | 549,335 | ||||||||
Plains All American Pipeline LP | 19,718 | 1,100,264 | |||||||||
7,588,234 | |||||||||||
PAPER AND FOREST PRODUCTS — 0.7% | |||||||||||
International Paper Co. | 14,082 | 656,925 | |||||||||
PERSONAL PRODUCTS — 0.6% | |||||||||||
Estee Lauder Cos., Inc. (The), Class A | 8,199 | 595,001 | |||||||||
PHARMACEUTICALS — 4.4% | |||||||||||
AbbVie, Inc. | 18,732 | 975,562 | |||||||||
Eli Lilly & Co. | 17,888 | 1,057,181 | |||||||||
GlaxoSmithKline plc ADR | 3,810 | 210,960 | |||||||||
Merck & Co., Inc. | 16,271 | 952,830 | |||||||||
Perrigo Co. plc | 5,913 | 856,557 | |||||||||
4,053,090 | |||||||||||
PROFESSIONAL SERVICES — 1.2% | |||||||||||
IHS, Inc., Class A(1) | 3,948 | 476,247 | |||||||||
TrueBlue, Inc.(1) | 22,770 | 609,098 | |||||||||
1,085,345 | |||||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.9% | |||||||||||
Chatham Lodging Trust | 44,560 | 905,905 | |||||||||
Simon Property Group, Inc. | 4,757 | 823,912 | |||||||||
1,729,817 | |||||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 1.0% | |||||||||||
Jones Lang LaSalle, Inc. | 7,920 | 917,849 | |||||||||
ROAD AND RAIL — 0.6% | |||||||||||
Kansas City Southern | 5,603 | 565,231 | |||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 1.1% | |||||||||||
Intel Corp. | 37,131 | 991,026 | |||||||||
SOFTWARE — 3.2% | |||||||||||
Glu Mobile, Inc.(1) | 203,380 | 813,520 | |||||||||
Microsoft Corp. | 29,438 | 1,189,295 | |||||||||
Oracle Corp. | 24,202 | 989,378 | |||||||||
2,992,193 | |||||||||||
SPECIALTY RETAIL — 2.1% | |||||||||||
Gap, Inc. (The) | 24,777 | 973,736 | |||||||||
Outerwall, Inc.(1) | 14,182 | 983,522 | |||||||||
1,957,258 | |||||||||||
TECHNOLOGY HARDWARE, STORAGE AND PERIPHERALS — 4.3% | |||||||||||
SanDisk Corp. | 11,678 | 992,280 | |||||||||
Seagate Technology plc | 17,709 | 931,139 | |||||||||
Super Micro Computer, Inc.(1) | 46,484 | 946,414 | |||||||||
Western Digital Corp. | 12,903 | 1,137,142 | |||||||||
4,006,975 | |||||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.5% | |||||||||||
Carter's, Inc. | 6,031 | 444,244 | |||||||||
THRIFTS AND MORTGAGE FINANCE — 2.8% | |||||||||||
Capitol Federal Financial, Inc. | 72,816 | 876,705 |
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Shares | Value | ||||||||||
MGIC Investment Corp.(1) | 113,243 | $ | 973,890 | ||||||||
TFS Financial Corp.(1) | 58,981 | 789,755 | |||||||||
2,640,350 | |||||||||||
TOTAL COMMON STOCKS (Cost $83,209,289) | 92,039,684 | ||||||||||
TEMPORARY CASH INVESTMENTS — 2.7% | |||||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 0.375% - 0.75%, 8/31/15 - 10/31/17, valued at $780,395), in a joint trading account at 0.03%, dated 4/30/14, due 5/1/14 (Delivery value $764,318) | 764,317 | ||||||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.75%, 8/15/26, valued at $625,603), in a joint trading account at 0.00%, dated 4/30/14, due 5/1/14 (Delivery value $611,453) | 611,453 | ||||||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 2.125%, 8/15/21, valued at $623,886), in a joint trading account at 0.02%, dated 4/30/14, due 5/1/14 (Delivery value $611,453) | 611,453 | ||||||||||
SSgA U.S. Government Money Market Fund | 534,817 | 534,817 | |||||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $2,522,040) | 2,522,040 | ||||||||||
TOTAL INVESTMENT SECURITIES — 101.7% (Cost $85,731,329) | 94,561,724 | ||||||||||
OTHER ASSETS AND LIABILITIES — (1.7)% | (1,581,694) | ||||||||||
TOTAL NET ASSETS — 100.0% | $ | 92,980,030 |
Notes to Schedule of Investments | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
APRIL 30, 2014 (UNAUDITED) | ||||||
Assets | ||||||
Investment securities, at value (cost of $85,731,329) | $ | 94,561,724 | ||||
Receivable for investments sold | 6,306,014 | |||||
Receivable for capital shares sold | 5,383 | |||||
Dividends and interest receivable | 98,869 | |||||
100,971,990 | ||||||
Liabilities | ||||||
Payable for investments purchased | 7,845,041 | |||||
Payable for capital shares redeemed | 52,580 | |||||
Accrued management fees | 94,339 | |||||
7,991,960 | ||||||
Net Assets | $ | 92,980,030 | ||||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 88,380,159 | ||||
Distributions in excess of net investment income | (122,465 | ) | ||||
Accumulated net realized loss | (4,108,059 | ) | ||||
Net unrealized appreciation | 8,830,395 | |||||
$ | 92,980,030 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $90,582,876 | 9,432,459 | $9.60 | |
Institutional Class, $0.01 Par Value | $2,397,154 | 244,760 | $9.79 |
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $4,597) | $ | 791,066 | ||
Interest | 77 | |||
791,143 | ||||
Expenses: | ||||
Management fees | 563,316 | |||
Directors' fees and expenses | 1,378 | |||
Other expenses | 121 | |||
564,815 | ||||
Net investment income (loss) | 226,328 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 9,111,958 | |||
Change in net unrealized appreciation (depreciation) on investments | (3,301,324 | ) | ||
Net realized and unrealized gain (loss) | 5,810,634 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 6,036,962 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2014 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2013 | ||||||
Increase (Decrease) in Net Assets | April 30, 2014 | October 31, 2013 | ||||
Operations | ||||||
Net investment income (loss) | $ | 226,328 | $ | 610,705 | ||
Net realized gain (loss) | 9,111,958 | 11,933,220 | ||||
Change in net unrealized appreciation (depreciation) | (3,301,324 | ) | 9,993,980 | |||
Net increase (decrease) in net assets resulting from operations | 6,036,962 | 22,537,905 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (933,951 | ) | (1,340,681 | ) | ||
Institutional Class | (1,513 | ) | (3,138 | ) | ||
Decrease in net assets from distributions | (935,464 | ) | (1,343,819 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions | (698,926 | ) | (5,094,889 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 4,428 | 4,298 | ||||
Net increase (decrease) in net assets | 4,407,000 | 16,103,495 | ||||
Net Assets | ||||||
Beginning of period | 88,573,030 | 72,469,535 | ||||
End of period | $ | 92,980,030 | $ | 88,573,030 | ||
Undistributed (distributions in excess of) net investment income | $ | (122,465 | ) | $ | 586,671 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2014 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Veedot Fund (the fund) is one fund in a series issued by the corporation. The fund is nondiversified as defined under the 1940 Act. The fund's investment objective is to seek long-term capital growth.
The fund offers the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. 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.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Fixed income securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors: trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
15
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. 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. 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 certain other funds in the American Century Investments family of funds, 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 income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — 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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption — The fund may impose a 2.00% redemption fee on shares held less than 60 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the 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 maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
16
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
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 managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.000% to 1.250% for the Investor Class. The annual management fee schedule ranges from 0.800% to 1.050% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2014 was 1.25% and 1.05% for the Investor Class and Institutional Class, respectively.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the six months ended April 30, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund's assets but are reflected in the return realized by the fund on its investment in the acquired funds.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2014 were $93,624,515 and $94,907,247, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2014 | Year ended October 31, 2013 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 511,987 | $ | 4,790,474 | 959,126 | $ | 7,928,759 | ||||
Issued in reinvestment of distributions | 99,908 | 912,160 | 189,568 | 1,313,705 | ||||||
Redeemed | (895,893 | ) | (8,443,006 | ) | (1,916,842 | ) | (14,445,066 | ) | ||
(283,998 | ) | (2,740,372 | ) | (768,148 | ) | (5,202,602 | ) | |||
Institutional Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||
Sold | 251,150 | 2,425,820 | 22,611 | 188,877 | ||||||
Issued in reinvestment of distributions | 163 | 1,513 | 444 | 3,138 | ||||||
Redeemed | (40,699 | ) | (385,887 | ) | (11,454 | ) | (84,302 | ) | ||
210,614 | 2,041,446 | 11,601 | 107,713 | |||||||
Net increase (decrease) | (73,384 | ) | $ | (698,926 | ) | (756,547 | ) | $ | (5,094,889 | ) |
17
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 92,039,684 | — | — | ||||
Temporary Cash Investments | 534,817 | $ | 1,987,223 | — | ||||
$ | 92,574,501 | $ | 1,987,223 | — |
7. Risk Factors
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The book-basis 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, 2014, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 85,734,998 | |
Gross tax appreciation of investments | $ | 10,052,821 | |
Gross tax depreciation of investments | (1,226,095 | ) | |
Net tax appreciation (depreciation) of investments | $ | 8,826,726 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2013, the fund had accumulated short-term capital losses of $(13,333,903), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2014(4) | $9.08 | 0.02 | 0.60 | 0.62 | (0.10) | $9.60 | 6.84% | 1.25%(5) | 0.50%(5) | 104% | $90,583 | ||
2013 | $6.90 | 0.06 | 2.25 | 2.31 | (0.13) | $9.08 | 34.11% | 1.25% | 0.80% | 158% | $88,256 | ||
2012 | $6.25 | 0.09 | 0.65 | 0.74 | (0.09) | $6.90 | 12.03% | 1.26% | 1.35% | 257% | $72,311 | ||
2011 | $5.68 | 0.05 | 0.53 | 0.58 | (0.01) | $6.25 | 10.16% | 1.25% | 0.82% | 280% | $72,851 | ||
2010 | $4.71 | –(6) | 0.97 | 0.97 | –(6) | $5.68 | 20.66% | 1.26% | (0.06)% | 260% | $78,441 | ||
2009 | $5.34 | –(6) | (0.63) | (0.63) | – | $4.71 | (11.80)% | 1.25% | (0.03)% | 320% | $75,603 | ||
Institutional Class | |||||||||||||
2014(4) | $9.27 | 0.03 | 0.60 | 0.63 | (0.11) | $9.79 | 6.91% | 1.05%(5) | 0.70%(5) | 104% | $2,397 | ||
2013 | $7.03 | 0.07 | 2.31 | 2.38 | (0.14) | $9.27 | 34.41% | 1.05% | 1.00% | 158% | $317 | ||
2012 | $6.37 | 0.10 | 0.66 | 0.76 | (0.10) | $7.03 | 12.18% | 1.06% | 1.55% | 257% | $158 | ||
2011 | $5.78 | 0.06 | 0.55 | 0.61 | (0.02) | $6.37 | 10.55% | 1.05% | 1.02% | 280% | $169 | ||
2010 | $4.79 | 0.01 | 0.99 | 1.00 | (0.01) | $5.78 | 20.97% | 1.06% | 0.14% | 260% | $2,981 | ||
2009 | $5.43 | 0.01 | (0.65) | (0.64) | – | $4.79 | (11.79)% | 1.05% | 0.17% | 320% | $3,089 |
19
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2014 (unaudited). |
(5) | Annualized. |
(6) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
20
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website 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 Forms N-Q are available on the SEC’s website 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
website at americancentury.com and, upon request, by calling 1-800-345-2021.
21
Notes |
22
Notes |
23
Notes |
24
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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 Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
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. | ||
©2014 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-82271 1406 |
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. INVESTMENTS.
(a) | The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. |
(b) | Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
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 EX-99.CERT. |
(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 EX- 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/ Jonathan S. Thomas | ||
Name: | Jonathan S. Thomas | ||
Title: | President | ||
Date: | June 26, 2014 |
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/ Jonathan S. Thomas | |
Name: | Jonathan S. Thomas | |
Title: | President | |
(principal executive officer) | ||
Date: | June 26, 2014 |
By: | /s/ C. Jean Wade | |
Name: | C. Jean Wade | |
Title: | Vice President, Treasurer, and | |
Chief Financial Officer | ||
(principal financial officer) | ||
Date: | June 26, 2014 |