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: | 04-30-2016 |
ITEM 1. REPORTS TO STOCKHOLDERS.
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc.* | 7.3% |
Facebook, Inc., Class A | 4.4% |
Apple, Inc. | 3.5% |
Lowe's Cos., Inc. | 3.1% |
Mondelez International, Inc., Class A | 3.1% |
Comcast Corp., Class A | 2.3% |
Amazon.com, Inc. | 2.2% |
MasterCard, Inc., Class A | 2.2% |
Constellation Brands, Inc., Class A | 2.2% |
Baxter International, Inc. | 2.1% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Internet Software and Services | 12.8% |
Software | 7.1% |
Specialty Retail | 6.6% |
Food Products | 6.0% |
Health Care Equipment and Supplies | 5.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.7% |
Temporary Cash Investments | 0.4% |
Other Assets and Liabilities | (0.1)% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $967.60 | $4.94 | 1.01% |
Institutional Class | $1,000 | $968.90 | $3.97 | 0.81% |
A Class | $1,000 | $966.60 | $6.16 | 1.26% |
C Class | $1,000 | $962.90 | $9.81 | 2.01% |
R Class | $1,000 | $965.20 | $7.38 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.07 | 1.01% |
Institutional Class | $1,000 | $1,020.84 | $4.07 | 0.81% |
A Class | $1,000 | $1,018.60 | $6.32 | 1.26% |
C Class | $1,000 | $1,014.87 | $10.07 | 2.01% |
R Class | $1,000 | $1,017.36 | $7.57 | 1.51% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.7% | |||||
Air Freight and Logistics — 1.6% | |||||
FedEx Corp. | 100,896 | $ | 16,658,939 | ||
Airlines — 1.0% | |||||
American Airlines Group, Inc. | 179,018 | 6,210,134 | |||
Spirit Airlines, Inc.(1) | 91,521 | 4,020,518 | |||
10,230,652 | |||||
Automobiles — 0.5% | |||||
Tesla Motors, Inc.(1) | 21,043 | 5,066,313 | |||
Banks — 0.5% | |||||
SVB Financial Group(1) | 48,294 | 5,036,098 | |||
Beverages — 2.5% | |||||
Constellation Brands, Inc., Class A | 147,078 | 22,952,993 | |||
Monster Beverage Corp.(1) | 20,256 | 2,921,320 | |||
25,874,313 | |||||
Biotechnology — 5.4% | |||||
Alexion Pharmaceuticals, Inc.(1) | 83,607 | 11,644,783 | |||
Biogen, Inc.(1) | 32,730 | 9,000,423 | |||
BioMarin Pharmaceutical, Inc.(1) | 49,406 | 4,183,700 | |||
Gilead Sciences, Inc. | 188,422 | 16,620,705 | |||
Regeneron Pharmaceuticals, Inc.(1) | 14,493 | 5,459,658 | |||
Vertex Pharmaceuticals, Inc.(1) | 109,001 | 9,193,144 | |||
56,102,413 | |||||
Capital Markets — 2.1% | |||||
Affiliated Managers Group, Inc.(1) | 34,464 | 5,869,908 | |||
Charles Schwab Corp. (The) | 348,817 | 9,909,891 | |||
Morgan Stanley | 115,915 | 3,136,660 | |||
SEI Investments Co. | 62,495 | 3,004,760 | |||
21,921,219 | |||||
Chemicals — 1.7% | |||||
Axalta Coating Systems Ltd.(1) | 193,586 | 5,511,393 | |||
Monsanto Co. | 88,896 | 8,327,777 | |||
Scotts Miracle-Gro Co. (The), Class A | 58,647 | 4,151,035 | |||
17,990,205 | |||||
Commercial Services and Supplies — 0.3% | |||||
KAR Auction Services, Inc. | 85,996 | 3,233,450 | |||
Communications Equipment — 0.7% | |||||
Cisco Systems, Inc. | 278,439 | 7,654,288 | |||
Consumer Finance — 1.0% | |||||
Discover Financial Services | 184,089 | 10,358,688 | |||
Containers and Packaging — 0.6% | |||||
Ball Corp. | 87,054 | 6,213,915 | |||
Distributors — 0.3% | |||||
LKQ Corp.(1) | 98,481 | 3,156,316 | |||
Diversified Financial Services — 0.6% | |||||
S&P Global, Inc. | 57,410 | 6,134,259 | |||
6
Shares | Value | ||||
Diversified Telecommunication Services — 1.2% | |||||
SBA Communications Corp., Class A(1) | 123,542 | $ | 12,729,768 | ||
Electrical Equipment — 0.7% | |||||
AMETEK, Inc. | 139,335 | 6,700,620 | |||
Food and Staples Retailing — 1.8% | |||||
Costco Wholesale Corp. | 126,098 | 18,678,897 | |||
Food Products — 6.0% | |||||
Amplify Snack Brands, Inc.(1) | 321,452 | 4,953,575 | |||
Hain Celestial Group, Inc. (The)(1) | 69,568 | 2,912,117 | |||
Kellogg Co. | 192,500 | 14,785,925 | |||
Mead Johnson Nutrition Co. | 36,916 | 3,217,229 | |||
Mondelez International, Inc., Class A | 733,118 | 31,494,749 | |||
TreeHouse Foods, Inc.(1) | 46,877 | 4,143,927 | |||
61,507,522 | |||||
Health Care Equipment and Supplies — 5.5% | |||||
Baxter International, Inc. | 496,151 | 21,939,797 | |||
DexCom, Inc.(1) | 56,163 | 3,615,774 | |||
Intuitive Surgical, Inc.(1) | 12,660 | 7,929,718 | |||
Teleflex, Inc. | 123,041 | 19,167,327 | |||
West Pharmaceutical Services, Inc. | 49,105 | 3,496,276 | |||
56,148,892 | |||||
Health Care Providers and Services — 1.2% | |||||
AmerisourceBergen Corp. | 72,588 | 6,177,239 | |||
VCA, Inc.(1) | 94,225 | 5,933,348 | |||
12,110,587 | |||||
Hotels, Restaurants and Leisure — 4.7% | |||||
Chipotle Mexican Grill, Inc.(1) | 11,442 | 4,816,739 | |||
Hilton Worldwide Holdings, Inc. | 144,019 | 3,175,619 | |||
McDonald's Corp. | 161,944 | 20,484,297 | |||
MGM Resorts International(1) | 123,058 | 2,621,135 | |||
Panera Bread Co., Class A(1) | 26,892 | 5,768,065 | |||
Starbucks Corp. | 214,437 | 12,057,792 | |||
48,923,647 | |||||
Household Durables — 1.5% | |||||
Newell Brands, Inc. | 335,364 | 15,272,477 | |||
Internet and Catalog Retail — 3.4% | |||||
Amazon.com, Inc.(1) | 34,909 | 23,025,627 | |||
Expedia, Inc. | 53,824 | 6,231,205 | |||
Priceline Group, Inc. (The)(1) | 4,605 | 6,187,554 | |||
35,444,386 | |||||
Internet Software and Services — 12.8% | |||||
Alibaba Group Holding Ltd. ADR(1) | 66,059 | 5,082,579 | |||
Alphabet, Inc., Class A(1) | 76,573 | 54,204,495 | |||
Alphabet, Inc., Class C(1) | 30,462 | 21,110,471 | |||
CoStar Group, Inc.(1) | 31,325 | 6,180,736 | |||
Facebook, Inc., Class A(1) | 385,142 | 45,284,996 | |||
131,863,277 | |||||
IT Services — 3.3% | |||||
Alliance Data Systems Corp.(1) | 51,892 | 10,550,162 | |||
MasterCard, Inc., Class A | 236,807 | 22,967,911 | |||
33,518,073 |
7
Shares | Value | ||||
Machinery — 3.3% | |||||
Ingersoll-Rand plc | 142,007 | $ | 9,307,139 | ||
Middleby Corp. (The)(1) | 116,839 | 12,810,228 | |||
Snap-on, Inc. | 52,112 | 8,300,399 | |||
Xylem, Inc. | 86,858 | 3,628,927 | |||
34,046,693 | |||||
Media — 2.8% | |||||
Comcast Corp., Class A | 391,936 | 23,814,032 | |||
Walt Disney Co. (The) | 51,574 | 5,325,531 | |||
29,139,563 | |||||
Multiline Retail — 2.1% | |||||
Dollar Tree, Inc.(1) | 146,738 | 11,696,486 | |||
Target Corp. | 127,210 | 10,113,195 | |||
21,809,681 | |||||
Oil, Gas and Consumable Fuels — 1.1% | |||||
Concho Resources, Inc.(1) | 47,707 | 5,542,122 | |||
Pioneer Natural Resources Co. | 34,138 | 5,670,322 | |||
11,212,444 | |||||
Pharmaceuticals — 3.8% | |||||
Allergan plc(1) | 84,404 | 18,278,530 | |||
Bristol-Myers Squibb Co. | 112,960 | 8,153,453 | |||
Zoetis, Inc. | 279,874 | 13,162,474 | |||
39,594,457 | |||||
Professional Services — 1.1% | |||||
Nielsen Holdings plc | 218,634 | 11,399,577 | |||
Real Estate Investment Trusts (REITs) — 0.4% | |||||
Crown Castle International Corp. | 41,647 | 3,618,291 | |||
Road and Rail — 3.5% | |||||
Canadian Pacific Railway Ltd., New York Shares | 105,664 | 15,242,032 | |||
J.B. Hunt Transport Services, Inc. | 45,467 | 3,768,305 | |||
Norfolk Southern Corp. | 121,644 | 10,961,341 | |||
Union Pacific Corp. | 67,085 | 5,851,824 | |||
35,823,502 | |||||
Semiconductors and Semiconductor Equipment — 1.3% | |||||
Applied Materials, Inc. | 310,498 | 6,355,894 | |||
Broadcom Ltd. | 50,710 | 7,390,983 | |||
13,746,877 | |||||
Software — 7.1% | |||||
Adobe Systems, Inc.(1) | 150,529 | 14,182,842 | |||
Electronic Arts, Inc.(1) | 350,568 | 21,682,631 | |||
Microsoft Corp. | 68,682 | 3,425,171 | |||
Oracle Corp. | 462,948 | 18,453,107 | |||
salesforce.com, inc.(1) | 157,955 | 11,972,989 | |||
Take-Two Interactive Software, Inc.(1) | 97,508 | 3,332,824 | |||
73,049,564 | |||||
Specialty Retail — 6.6% | |||||
AutoZone, Inc.(1) | 14,142 | 10,821,883 | |||
Burlington Stores, Inc.(1) | 62,983 | 3,588,141 | |||
Home Depot, Inc. (The) | 114,233 | 15,294,656 | |||
Lowe's Cos., Inc. | 423,201 | 32,171,740 |
8
Shares | Value | ||||
Signet Jewelers Ltd. | 58,526 | $ | 6,353,583 | ||
68,230,003 | |||||
Technology Hardware, Storage and Peripherals — 3.5% | |||||
Apple, Inc. | 380,652 | 35,682,318 | |||
Textiles, Apparel and Luxury Goods — 1.5% | |||||
Coach, Inc. | 83,484 | 3,361,901 | |||
NIKE, Inc., Class B | 166,260 | 9,799,364 | |||
Under Armour, Inc., Class A(1) | 22,289 | 979,379 | |||
Under Armour, Inc., Class C(1) | 22,289 | 909,391 | |||
15,050,035 | |||||
Tobacco — 0.5% | |||||
Philip Morris International, Inc. | 52,545 | 5,155,715 | |||
Trading Companies and Distributors — 0.2% | |||||
Fastenal Co. | 37,577 | 1,758,228 | |||
TOTAL COMMON STOCKS (Cost $740,954,615) | 1,027,846,162 | ||||
TEMPORARY CASH INVESTMENTS — 0.4% | |||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $1,717,361), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $1,683,514) | 1,683,493 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 2/15/44, valued at $2,865,013), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $2,806,019) | 2,806,000 | ||||
State Street Institutional Liquid Reserves Fund, Premier Class | 1,994 | 1,994 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $4,491,487) | 4,491,487 | ||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $745,446,102) | 1,032,337,649 | ||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (1,222,181) | ||||
TOTAL NET ASSETS — 100.0% | $ | 1,031,115,468 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 1,242,797 | USD | 964,745 | Morgan Stanley | 6/30/16 | $ | 25,776 | |
CAD | 1,326,529 | USD | 1,030,282 | Morgan Stanley | 6/30/16 | 26,975 | ||
CAD | 405,765 | USD | 320,713 | Morgan Stanley | 6/30/16 | 2,686 | ||
CAD | 815,538 | USD | 629,011 | Morgan Stanley | 6/30/16 | 20,981 | ||
CAD | 482,357 | USD | 374,550 | Morgan Stanley | 6/30/16 | 9,893 | ||
USD | 16,632,605 | CAD | 21,951,546 | Morgan Stanley | 6/30/16 | (862,988) | ||
$ | (776,677 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $745,446,102) | $ | 1,032,337,649 | |
Foreign currency holdings, at value (cost of $69,060) | 60,769 | ||
Receivable for investments sold | 3,213,006 | ||
Receivable for capital shares sold | 25,782 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 86,311 | ||
Dividends and interest receivable | 342,828 | ||
1,036,066,345 | |||
Liabilities | |||
Payable for investments purchased | 2,635,045 | ||
Payable for capital shares redeemed | 581,564 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 862,988 | ||
Accrued management fees | 859,466 | ||
Distribution and service fees payable | 11,814 | ||
4,950,877 | |||
Net Assets | $ | 1,031,115,468 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 720,724,245 | |
Accumulated net investment loss | (913,496 | ) | |
Undistributed net realized gain | 25,198,140 | ||
Net unrealized appreciation | 286,106,579 | ||
$ | 1,031,115,468 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $1,002,329,680 | 33,972,867 | $29.50 | |||
Institutional Class, $0.01 Par Value | $296,451 | 9,942 | $29.82 | |||
A Class, $0.01 Par Value | $10,411,821 | 357,826 | $29.10* | |||
C Class, $0.01 Par Value | $4,584,038 | 164,306 | $27.90 | |||
R Class, $0.01 Par Value | $13,493,478 | 470,257 | $28.69 |
*Maximum offering price $30.88 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $11,507) | $ | 4,839,244 | |
Interest | 3,047 | ||
4,842,291 | |||
Expenses: | |||
Management fees | 5,206,535 | ||
Distribution and service fees: | |||
A Class | 13,163 | ||
C Class | 23,719 | ||
R Class | 32,792 | ||
Directors' fees and expenses | 19,483 | ||
Other expenses | 1,267 | ||
5,296,959 | |||
Net investment income (loss) | (454,668 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 25,116,160 | ||
Foreign currency transactions | 103,796 | ||
25,219,956 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (60,975,180 | ) | |
Translation of assets and liabilities in foreign currencies | (507,842 | ) | |
(61,483,022 | ) | ||
Net realized and unrealized gain (loss) | (36,263,066 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (36,717,734 | ) |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | (454,668 | ) | $ | (1,779,270 | ) |
Net realized gain (loss) | 25,219,956 | 71,662,458 | ||||
Change in net unrealized appreciation (depreciation) | (61,483,022 | ) | 29,160,661 | |||
Net increase (decrease) in net assets resulting from operations | (36,717,734 | ) | 99,043,849 | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (66,713,169 | ) | (149,342,881 | ) | ||
Institutional Class | (17,255 | ) | (26,645 | ) | ||
A Class | (698,339 | ) | (1,170,337 | ) | ||
C Class | (308,984 | ) | (545,627 | ) | ||
R Class | (870,358 | ) | (1,466,459 | ) | ||
Decrease in net assets from distributions | (68,608,105 | ) | (152,551,949 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 24,886,342 | 62,410,541 | ||||
Net increase (decrease) in net assets | (80,439,497 | ) | 8,902,441 | |||
Net Assets | ||||||
Beginning of period | 1,111,554,965 | 1,102,652,524 | ||||
End of period | $ | 1,031,115,468 | $ | 1,111,554,965 | ||
Accumulated net investment loss | $ | (913,496 | ) | $ | (458,828 | ) |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2016 (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'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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
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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, 2016 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. 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, 2016 were $249,089,561 and $290,464,769, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 225,000,000 | 225,000,000 | ||||||||
Sold | 807,025 | $ | 24,228,494 | 1,942,723 | $ | 62,182,754 | ||||
Issued in reinvestment of distributions | 2,166,415 | 65,165,760 | 5,037,722 | 145,791,678 | ||||||
Redeemed | (2,274,651 | ) | (67,082,276 | ) | (4,820,064 | ) | (153,118,504 | ) | ||
698,789 | 22,311,978 | 2,160,381 | 54,855,928 | |||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 1,315 | 39,818 | 2,931 | 89,844 | ||||||
Issued in reinvestment of distributions | 568 | 17,255 | 914 | 26,645 | ||||||
Redeemed | (476 | ) | (13,730 | ) | (770 | ) | (24,765 | ) | ||
1,407 | 43,343 | 3,075 | 91,724 | |||||||
A Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 66,443 | 1,969,580 | 157,561 | 4,929,881 | ||||||
Issued in reinvestment of distributions | 23,456 | 696,394 | 40,835 | 1,170,337 | ||||||
Redeemed | (63,555 | ) | (1,832,414 | ) | (123,527 | ) | (3,893,895 | ) | ||
26,344 | 833,560 | 74,869 | 2,206,323 | |||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 32,039 | 922,061 | 53,142 | 1,594,597 | ||||||
Issued in reinvestment of distributions | 10,826 | 308,984 | 19,578 | 545,053 | ||||||
Redeemed | (28,644 | ) | (816,477 | ) | (39,580 | ) | (1,195,912 | ) | ||
14,221 | 414,568 | 33,140 | 943,738 | |||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 78,450 | 2,307,997 | 191,758 | 6,026,314 | ||||||
Issued in reinvestment of distributions | 29,705 | 870,358 | 51,654 | 1,466,459 | ||||||
Redeemed | (64,210 | ) | (1,895,462 | ) | (102,289 | ) | (3,179,945 | ) | ||
43,945 | 1,282,893 | 141,123 | 4,312,828 | |||||||
Net increase (decrease) | 784,706 | $ | 24,886,342 | 2,412,588 | $ | 62,410,541 |
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. There were no significant transfers between levels during the period.
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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 | $ | 1,027,846,162 | — | — | ||||
Temporary Cash Investments | 1,994 | $ | 4,489,493 | — | ||||
$ | 1,027,848,156 | $ | 4,489,493 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 86,311 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 862,988 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $18,761,891.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $86,311 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $862,988 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $103,763 in net realized gain (loss) on foreign currency transactions and $(508,101) 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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 745,742,952 | |
Gross tax appreciation of investments | $ | 298,119,762 | |
Gross tax depreciation of investments | (11,525,065 | ) | |
Net tax appreciation (depreciation) of investments | $ | 286,594,697 |
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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As of October 31, 2015, the fund had late-year ordinary loss deferrals of $(727,404), 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.
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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 | |||||||||||||||
2016(3) | $32.53 | (0.01) | (1.00) | (1.01) | — | (2.02) | (2.02) | $29.50 | (3.24)% | 1.01%(4) | (0.08)%(4) | 24% | $1,002,330 | ||
2015 | $34.71 | (0.05) | 2.71 | 2.66 | — | (4.84) | (4.84) | $32.53 | 9.40% | 1.00% | (0.15)% | 43% | $1,082,419 | ||
2014 | $35.63 | (0.06) | 3.64 | 3.58 | — | (4.50) | (4.50) | $34.71 | 11.50% | 1.00% | (0.18)% | 56% | $1,079,950 | ||
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 | ||
Institutional Class | |||||||||||||||
2016(3) | $32.83 | 0.02 | (1.01) | (0.99) | — | (2.02) | (2.02) | $29.82 | (3.11)% | 0.81%(4) | 0.12%(4) | 24% | $296 | ||
2015 | $34.92 | 0.01 | 2.74 | 2.75 | — | (4.84) | (4.84) | $32.83 | 9.60% | 0.80% | 0.05% | 43% | $280 | ||
2014 | $35.76 | —(5) | 3.66 | 3.66 | — | (4.50) | (4.50) | $34.92 | 11.71% | 0.80% | 0.02% | 56% | $191 | ||
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 |
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 | |||||||||||||||
2016(3) | $32.15 | (0.05) | (0.98) | (1.03) | — | (2.02) | (2.02) | $29.10 | (3.34)% | 1.26%(4) | (0.33)%(4) | 24% | $10,412 | ||
2015 | $34.44 | (0.13) | 2.68 | 2.55 | — | (4.84) | (4.84) | $32.15 | 9.12% | 1.25% | (0.40)% | 43% | $10,657 | ||
2014 | $35.47 | (0.14) | 3.61 | 3.47 | — | (4.50) | (4.50) | $34.44 | 11.22% | 1.25% | (0.43)% | 56% | $8,837 | ||
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 | ||
C Class | |||||||||||||||
2016(3) | $31.02 | (0.15) | (0.95) | (1.10) | — | (2.02) | (2.02) | $27.90 | (3.71)% | 2.01%(4) | (1.08)%(4) | 24% | $4,584 | ||
2015 | $33.62 | (0.35) | 2.59 | 2.24 | — | (4.84) | (4.84) | $31.02 | 8.32% | 2.00% | (1.15)% | 43% | $4,656 | ||
2014 | $34.96 | (0.38) | 3.54 | 3.16 | — | (4.50) | (4.50) | $33.62 | 10.40% | 2.00% | (1.18)% | 56% | $3,932 | ||
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 | |||||||||||||||
2016(3) | $31.77 | (0.08) | (0.98) | (1.06) | — | (2.02) | (2.02) | $28.69 | (3.48)% | 1.51%(4) | (0.58)%(4) | 24% | $13,493 | ||
2015 | $34.16 | (0.20) | 2.65 | 2.45 | — | (4.84) | (4.84) | $31.77 | 8.87% | 1.50% | (0.65)% | 43% | $13,544 | ||
2014 | $35.30 | (0.22) | 3.58 | 3.36 | — | (4.50) | (4.50) | $34.16 | 10.93% | 1.50% | (0.68)% | 56% | $9,743 | ||
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, 2016 (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.
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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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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89213 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Common Stocks | % of net assets |
Alphabet, Inc., Class A | 1.9% |
Microsoft Corp. | 1.7% |
Apple, Inc. | 1.5% |
Amazon.com, Inc. | 1.4% |
Exxon Mobil Corp. | 1.2% |
Procter & Gamble Co. (The) | 1.2% |
Merck & Co., Inc. | 1.0% |
Citigroup, Inc. | 1.0% |
International Business Machines Corp. | 1.0% |
PepsiCo, Inc. | 1.0% |
Top Five Common Stocks Industries | % of net assets |
Software | 3.9% |
Biotechnology | 3.4% |
Internet Software and Services | 3.0% |
Chemicals | 2.7% |
Pharmaceuticals | 2.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 59.8% |
Corporate Bonds | 13.0% |
U.S. Treasury Securities | 11.4% |
U.S. Government Agency Mortgage-Backed Securities | 9.6% |
Commercial Mortgage-Backed Securities | 1.9% |
Collateralized Mortgage Obligations | 1.9% |
Asset-Backed Securities | 1.5% |
Sovereign Governments and Agencies | 0.7% |
U.S. Government Agency Securities | 0.5% |
Municipal Securities | 0.5% |
Temporary Cash Investments | 1.7% |
Other Assets and Liabilities | (2.5)% |
Key Fixed-Income Portfolio Statistics | |
Weighted Average Life | 7.7 years |
Average Duration (effective) | 5.5 years |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,000.00 | $4.48 | 0.90% |
Institutional Class | $1,000 | $1,001.00 | $3.48 | 0.70% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.39 | $4.52 | 0.90% |
Institutional Class | $1,000 | $1,021.38 | $3.52 | 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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares/ Principal Amount | Value | ||||||
COMMON STOCKS — 59.8% | |||||||
Aerospace and Defense — 1.2% | |||||||
Boeing Co. (The) | 46,999 | $ | 6,335,465 | ||||
Spirit AeroSystems Holdings, Inc., Class A(1) | 74,699 | 3,522,058 | |||||
9,857,523 | |||||||
Air Freight and Logistics — 0.8% | |||||||
United Parcel Service, Inc., Class B | 58,288 | 6,124,320 | |||||
Airlines — 1.2% | |||||||
Alaska Air Group, Inc. | 13,659 | 962,003 | |||||
Delta Air Lines, Inc. | 22,931 | 955,535 | |||||
JetBlue Airways Corp.(1) | 108,816 | 2,153,469 | |||||
Southwest Airlines Co. | 50,277 | 2,242,857 | |||||
United Continental Holdings, Inc.(1) | 76,511 | 3,504,969 | |||||
9,818,833 | |||||||
Auto Components — 0.6% | |||||||
Goodyear Tire & Rubber Co. (The) | 126,308 | 3,659,143 | |||||
Lear Corp. | 9,885 | 1,138,060 | |||||
4,797,203 | |||||||
Banks — 1.9% | |||||||
Citigroup, Inc. | 172,014 | 7,960,808 | |||||
JPMorgan Chase & Co. | 39,582 | 2,501,582 | |||||
SunTrust Banks, Inc. | 51,891 | 2,165,930 | |||||
Wells Fargo & Co. | 48,379 | 2,417,983 | |||||
15,046,303 | |||||||
Beverages — 1.2% | |||||||
Coca-Cola Co. (The) | 11,769 | 527,251 | |||||
Dr Pepper Snapple Group, Inc. | 14,389 | 1,308,104 | |||||
PepsiCo, Inc. | 75,636 | 7,787,483 | |||||
9,622,838 | |||||||
Biotechnology — 3.4% | |||||||
AbbVie, Inc. | 118,581 | 7,233,441 | |||||
Amgen, Inc. | 47,342 | 7,494,239 | |||||
Biogen, Inc.(1) | 20,179 | 5,549,023 | |||||
Gilead Sciences, Inc. | 83,095 | 7,329,810 | |||||
27,606,513 | |||||||
Building Products — 0.7% | |||||||
Owens Corning | 85,557 | 3,941,611 | |||||
USG Corp.(1) | 51,503 | 1,391,096 | |||||
5,332,707 | |||||||
Capital Markets — 0.1% | |||||||
Eaton Vance Corp. | 14,330 | 494,815 | |||||
Chemicals — 2.7% | |||||||
Air Products & Chemicals, Inc. | 35,078 | 5,117,529 | |||||
Cabot Corp. | 83,335 | 4,065,915 | |||||
Dow Chemical Co. (The) | 120,560 | 6,342,662 | |||||
LyondellBasell Industries NV, Class A | 31,320 | 2,589,224 |
6
Shares/ Principal Amount | Value | ||||||
PPG Industries, Inc. | 34,850 | $ | 3,847,092 | ||||
21,962,422 | |||||||
Commercial Services and Supplies — 0.2% | |||||||
Pitney Bowes, Inc. | 71,764 | 1,504,891 | |||||
Communications Equipment — 0.9% | |||||||
Cisco Systems, Inc. | 272,040 | 7,478,380 | |||||
Construction and Engineering — 0.2% | |||||||
Fluor Corp. | 27,558 | 1,506,320 | |||||
Consumer Finance — 1.5% | |||||||
American Express Co. | 38,781 | 2,537,441 | |||||
Discover Financial Services | 84,303 | 4,743,729 | |||||
Synchrony Financial(1) | 147,712 | 4,515,556 | |||||
11,796,726 | |||||||
Containers and Packaging — 0.2% | |||||||
Avery Dennison Corp. | 17,994 | 1,306,544 | |||||
Diversified Financial Services — 1.0% | |||||||
Berkshire Hathaway, Inc., Class B(1) | 20,782 | 3,023,365 | |||||
MSCI, Inc., Class A | 21,130 | 1,604,612 | |||||
Nasdaq, Inc. | 59,529 | 3,673,535 | |||||
8,301,512 | |||||||
Diversified Telecommunication Services — 1.1% | |||||||
AT&T, Inc. | 56,541 | 2,194,921 | |||||
Verizon Communications, Inc. | 138,254 | 7,042,659 | |||||
9,237,580 | |||||||
Electric Utilities — 0.3% | |||||||
NextEra Energy, Inc. | 19,420 | 2,283,404 | |||||
Energy Equipment and Services — 0.7% | |||||||
Atwood Oceanics, Inc. | 115,029 | 1,111,180 | |||||
Dril-Quip, Inc.(1) | 8,285 | 537,034 | |||||
FMC Technologies, Inc.(1) | 92,619 | 2,823,953 | |||||
Rowan Cos. plc | 64,662 | 1,216,292 | |||||
5,688,459 | |||||||
Food and Staples Retailing — 1.7% | |||||||
CVS Health Corp. | 50,425 | 5,067,712 | |||||
Wal-Mart Stores, Inc. | 95,370 | 6,377,392 | |||||
Walgreens Boots Alliance, Inc. | 30,003 | 2,378,638 | |||||
13,823,742 | |||||||
Food Products — 2.2% | |||||||
Dean Foods Co. | 184,154 | 3,172,973 | |||||
General Mills, Inc. | 45,552 | 2,794,160 | |||||
Hershey Co. (The) | 4,072 | 379,144 | |||||
Hormel Foods Corp. | 96,331 | 3,713,560 | |||||
Ingredion, Inc. | 9,282 | 1,068,265 | |||||
Pilgrim's Pride Corp.(1) | 63,322 | 1,703,995 | |||||
Tyson Foods, Inc., Class A | 76,057 | 5,006,072 | |||||
17,838,169 | |||||||
Gas Utilities — 0.2% | |||||||
ONE Gas, Inc. | 9,869 | 577,040 | |||||
UGI Corp. | 23,928 | 962,863 | |||||
1,539,903 |
7
Shares/ Principal Amount | Value | ||||||
Health Care Equipment and Supplies — 2.0% | |||||||
Abbott Laboratories | 130,394 | $ | 5,072,327 | ||||
C.R. Bard, Inc. | 23,557 | 4,998,089 | |||||
Medtronic plc | 26,056 | 2,062,332 | |||||
St. Jude Medical, Inc. | 49,021 | 3,735,400 | |||||
15,868,148 | |||||||
Health Care Providers and Services — 1.5% | |||||||
Aetna, Inc. | 44,719 | 5,020,602 | |||||
AmerisourceBergen Corp. | 22,125 | 1,882,838 | |||||
Express Scripts Holding Co.(1) | 69,454 | 5,120,843 | |||||
12,024,283 | |||||||
Hotels, Restaurants and Leisure — 1.6% | |||||||
Bloomin' Brands, Inc. | 122,465 | 2,290,096 | |||||
Brinker International, Inc. | 13,438 | 622,448 | |||||
Carnival Corp. | 88,607 | 4,346,173 | |||||
Darden Restaurants, Inc. | 59,787 | 3,721,741 | |||||
Diamond Resorts International, Inc.(1) | 11,763 | 249,493 | |||||
McDonald's Corp. | 11,730 | 1,483,728 | |||||
12,713,679 | |||||||
Household Products — 1.5% | |||||||
Clorox Co. (The) | 4,421 | 553,642 | |||||
Kimberly-Clark Corp. | 18,801 | 2,353,697 | |||||
Procter & Gamble Co. (The) | 116,487 | 9,332,938 | |||||
12,240,277 | |||||||
Industrial Conglomerates — 1.0% | |||||||
Carlisle Cos., Inc. | 31,638 | 3,223,912 | |||||
Danaher Corp. | 10,975 | 1,061,831 | |||||
General Electric Co. | 128,425 | 3,949,069 | |||||
8,234,812 | |||||||
Insurance — 1.5% | |||||||
Aflac, Inc. | 8,813 | 607,833 | |||||
Aon plc | 12,608 | 1,325,353 | |||||
Aspen Insurance Holdings Ltd. | 4,821 | 223,453 | |||||
Everest Re Group Ltd. | 2,612 | 482,959 | |||||
Hanover Insurance Group, Inc. (The) | 45,547 | 3,906,111 | |||||
Primerica, Inc. | 7,831 | 388,104 | |||||
Prudential Financial, Inc. | 65,177 | 5,060,342 | |||||
11,994,155 | |||||||
Internet and Catalog Retail — 1.7% | |||||||
Amazon.com, Inc.(1) | 16,586 | 10,939,960 | |||||
Liberty Interactive Corp. QVC Group, Class A(1) | 102,544 | 2,686,653 | |||||
13,626,613 | |||||||
Internet Software and Services — 3.0% | |||||||
Alphabet, Inc., Class A(1) | 21,366 | 15,124,564 | |||||
eBay, Inc.(1) | 98,052 | 2,395,410 | |||||
Facebook, Inc., Class A(1) | 58,730 | 6,905,474 | |||||
24,425,448 | |||||||
IT Services — 1.1% | |||||||
International Business Machines Corp. | 54,374 | 7,935,341 |
8
Shares/ Principal Amount | Value | ||||||
PayPal Holdings, Inc.(1) | 31,026 | $ | 1,215,599 | ||||
9,150,940 | |||||||
Life Sciences Tools and Services — 0.7% | |||||||
Thermo Fisher Scientific, Inc. | 36,972 | 5,333,211 | |||||
Machinery — 1.3% | |||||||
PACCAR, Inc. | 87,431 | 5,150,560 | |||||
Stanley Black & Decker, Inc. | 44,844 | 5,018,941 | |||||
10,169,501 | |||||||
Media — 1.6% | |||||||
AMC Networks, Inc., Class A(1) | 6,864 | 447,739 | |||||
Time Warner, Inc. | 76,714 | 5,764,290 | |||||
Viacom, Inc., Class B | 92,644 | 3,789,140 | |||||
Walt Disney Co. (The) | 26,709 | 2,757,971 | |||||
12,759,140 | |||||||
Metals and Mining — 0.4% | |||||||
Carpenter Technology Corp. | 7,917 | 280,341 | |||||
Newmont Mining Corp. | 87,891 | 3,073,548 | |||||
3,353,889 | |||||||
Multiline Retail — 0.7% | |||||||
Target Corp. | 73,191 | 5,818,685 | |||||
Oil, Gas and Consumable Fuels — 2.2% | |||||||
Chevron Corp. | 50,230 | 5,132,501 | |||||
CVR Energy, Inc. | 20,427 | 495,968 | |||||
Exxon Mobil Corp. | 110,400 | 9,759,360 | |||||
PBF Energy, Inc., Class A | 10,898 | 350,698 | |||||
Tesoro Corp. | 2,374 | 189,184 | |||||
World Fuel Services Corp. | 35,762 | 1,671,158 | |||||
17,598,869 | |||||||
Personal Products — 0.4% | |||||||
Herbalife Ltd.(1) | 53,098 | 3,077,029 | |||||
Pharmaceuticals — 2.7% | |||||||
Johnson & Johnson | 63,314 | 7,096,233 | |||||
Merck & Co., Inc. | 151,868 | 8,328,441 | |||||
Mylan NV(1) | 26,000 | 1,084,460 | |||||
Pfizer, Inc. | 162,447 | 5,313,642 | |||||
21,822,776 | |||||||
Real Estate Investment Trusts (REITs) — 1.4% | |||||||
Lamar Advertising Co., Class A | 71,835 | 4,456,643 | |||||
Liberty Property Trust | 17,669 | 616,648 | |||||
Mid-America Apartment Communities, Inc. | 19,587 | 1,874,672 | |||||
Ryman Hospitality Properties, Inc. | 53,137 | 2,738,150 | |||||
Sunstone Hotel Investors, Inc. | 111,908 | 1,433,541 | |||||
11,119,654 | |||||||
Real Estate Management and Development — 0.4% | |||||||
Jones Lang LaSalle, Inc. | 11,608 | 1,336,893 | |||||
Realogy Holdings Corp.(1) | 61,685 | 2,204,622 | |||||
3,541,515 | |||||||
Semiconductors and Semiconductor Equipment — 2.4% | |||||||
Analog Devices, Inc. | 34,081 | 1,919,442 | |||||
Applied Materials, Inc. | 226,560 | 4,637,683 |
9
Shares/ Principal Amount | Value | ||||||
Intel Corp. | 248,224 | $ | 7,516,223 | ||||
QUALCOMM, Inc. | 108,716 | 5,492,332 | |||||
19,565,680 | |||||||
Software — 3.9% | |||||||
Activision Blizzard, Inc. | 28,352 | 977,294 | |||||
Adobe Systems, Inc.(1) | 56,067 | 5,282,633 | |||||
Electronic Arts, Inc.(1) | 25,004 | 1,546,497 | |||||
Intuit, Inc. | 26,328 | 2,656,232 | |||||
Microsoft Corp. | 278,646 | 13,896,076 | |||||
Oracle Corp. | 44,140 | 1,759,420 | |||||
Synopsys, Inc.(1) | 47,639 | 2,263,805 | |||||
VMware, Inc., Class A(1) | 56,294 | 3,203,692 | |||||
31,585,649 | |||||||
Specialty Retail — 0.1% | |||||||
Foot Locker, Inc. | 11,525 | 708,096 | |||||
Michaels Cos., Inc. (The)(1) | 10,033 | 285,238 | |||||
993,334 | |||||||
Technology Hardware, Storage and Peripherals — 1.8% | |||||||
Apple, Inc. | 127,419 | 11,944,257 | |||||
EMC Corp. | 54,933 | 1,434,301 | |||||
HP, Inc. | 45,018 | 552,371 | |||||
NetApp, Inc. | 39,399 | 931,392 | |||||
14,862,321 | |||||||
Thrifts and Mortgage Finance — 0.4% | |||||||
Essent Group Ltd.(1) | 146,190 | 2,985,200 | |||||
Tobacco — 0.5% | |||||||
Philip Morris International, Inc. | 40,778 | 4,001,137 | |||||
TOTAL COMMON STOCKS (Cost $418,703,475) | 481,835,052 | ||||||
CORPORATE BONDS — 13.0% | |||||||
Aerospace and Defense — 0.1% | |||||||
Boeing Co. (The), 2.20%, 10/30/22 | $ | 190,000 | 192,566 | ||||
Lockheed Martin Corp., 4.25%, 11/15/19 | 250,000 | 274,947 | |||||
Lockheed Martin Corp., 3.80%, 3/1/45 | 100,000 | 101,266 | |||||
United Technologies Corp., 6.05%, 6/1/36 | 250,000 | 326,063 | |||||
894,842 | |||||||
Auto Components — 0.1% | |||||||
Schaeffler Finance BV, 4.25%, 5/15/21(2) | 200,000 | 206,500 | |||||
Tenneco, Inc., 6.875%, 12/15/20 | 100,000 | 103,754 | |||||
ZF North America Capital, Inc., 4.00%, 4/29/20(2) | 150,000 | 156,562 | |||||
466,816 | |||||||
Automobiles — 0.3% | |||||||
American Honda Finance Corp., 1.50%, 9/11/17(2) | 70,000 | 70,369 | |||||
American Honda Finance Corp., 2.125%, 10/10/18 | 150,000 | 153,028 | |||||
Daimler Finance North America LLC, 2.625%, 9/15/16(2) | 210,000 | 211,332 | |||||
Ford Motor Co., 4.75%, 1/15/43 | 70,000 | 72,828 | |||||
Ford Motor Credit Co. LLC, 2.15%, 1/9/18 | 200,000 | 201,705 |
10
Shares/ Principal Amount | Value | ||||||
Ford Motor Credit Co. LLC, 5.00%, 5/15/18 | $ | 400,000 | $ | 425,342 | |||
Ford Motor Credit Co. LLC, 8.125%, 1/15/20 | 150,000 | 179,636 | |||||
Ford Motor Credit Co. LLC, 5.875%, 8/2/21 | 440,000 | 508,452 | |||||
General Motors Co., 5.00%, 4/1/35 | 210,000 | 209,763 | |||||
General Motors Financial Co., Inc., 3.25%, 5/15/18 | 350,000 | 358,256 | |||||
General Motors Financial Co., Inc., 3.10%, 1/15/19 | 110,000 | 112,837 | |||||
General Motors Financial Co., Inc., 5.25%, 3/1/26 | 60,000 | 65,911 | |||||
Jaguar Land Rover Automotive plc, 4.125%, 12/15/18(2) | 150,000 | 154,688 | |||||
2,724,147 | |||||||
Banks — 2.2% | |||||||
Bank of America Corp., 6.50%, 8/1/16 | 480,000 | 486,476 | |||||
Bank of America Corp., 5.75%, 12/1/17 | 360,000 | 382,517 | |||||
Bank of America Corp., 5.625%, 7/1/20 | 110,000 | 123,715 | |||||
Bank of America Corp., 5.70%, 1/24/22 | 220,000 | 253,058 | |||||
Bank of America Corp., 4.10%, 7/24/23 | 70,000 | 74,605 | |||||
Bank of America Corp., MTN, 4.00%, 4/1/24 | 220,000 | 231,389 | |||||
Bank of America Corp., MTN, 4.20%, 8/26/24 | 380,000 | 387,278 | |||||
Bank of America Corp., MTN, 4.00%, 1/22/25 | 300,000 | 300,698 | |||||
Bank of America Corp., MTN, 5.00%, 1/21/44 | 110,000 | 122,806 | |||||
Bank of America N.A., 5.30%, 3/15/17 | 870,000 | 899,657 | |||||
Barclays plc, 5.14%, 10/14/20 | 200,000 | 215,356 | |||||
Barclays plc, 4.375%, 1/12/26 | 200,000 | 202,215 | |||||
Barclays plc, MTN, VRN, 2.625%, 11/11/20 | EUR | 600,000 | 650,202 | ||||
BB&T Corp., MTN, 2.05%, 6/19/18 | $ | 100,000 | 101,257 | ||||
BPCE SA, 5.15%, 7/21/24(2) | 200,000 | 205,906 | |||||
BPCE SA, MTN, VRN, 2.75%, 11/30/22 | EUR | 700,000 | 824,789 | ||||
Branch Banking & Trust Co., 3.625%, 9/16/25 | $ | 113,000 | 118,609 | ||||
Branch Banking & Trust Co., 3.80%, 10/30/26 | 130,000 | 139,106 | |||||
Capital One Financial Corp., 4.20%, 10/29/25 | 445,000 | 456,420 | |||||
Capital One N.A., 2.35%, 8/17/18 | 250,000 | 253,372 | |||||
Citigroup, Inc., 1.75%, 5/1/18 | 710,000 | 711,392 | |||||
Citigroup, Inc., 4.05%, 7/30/22 | 70,000 | 73,533 | |||||
Citigroup, Inc., 4.40%, 6/10/25 | 880,000 | 910,706 | |||||
Citigroup, Inc., 4.45%, 9/29/27 | 160,000 | 163,613 | |||||
Commerzbank AG, 8.125%, 9/19/23(2) | 200,000 | 235,520 | |||||
Cooperatieve Rabobank UA, 3.875%, 2/8/22 | 430,000 | 463,202 | |||||
Cooperatieve Rabobank UA, MTN, 4.125%, 9/14/22 | EUR | 500,000 | 652,678 | ||||
Danske Bank A/S, MTN, VRN, 2.75%, 5/19/21 | EUR | 500,000 | 596,711 | ||||
Fifth Third Bancorp, 4.30%, 1/16/24 | $ | 110,000 | 116,297 | ||||
Fifth Third Bank, 2.875%, 10/1/21 | 250,000 | 254,135 | |||||
HBOS plc, MTN, 6.75%, 5/21/18(2) | 300,000 | 325,516 | |||||
ING Bank NV, MTN, VRN, 3.625%, 2/25/21 | EUR | 500,000 | 617,437 | ||||
Intesa Sanpaolo SpA, 5.02%, 6/26/24(2) | $ | 230,000 | 216,719 | ||||
JPMorgan Chase & Co., 4.625%, 5/10/21 | 460,000 | 509,129 | |||||
JPMorgan Chase & Co., 3.25%, 9/23/22 | 220,000 | 228,824 | |||||
JPMorgan Chase & Co., 3.875%, 9/10/24 | 370,000 | 382,801 |
11
Shares/ Principal Amount | Value | ||||||
JPMorgan Chase & Co., 3.125%, 1/23/25 | $ | 570,000 | $ | 572,314 | |||
JPMorgan Chase & Co., 4.95%, 6/1/45 | 100,000 | 108,524 | |||||
KeyCorp, MTN, 2.30%, 12/13/18 | 220,000 | 222,132 | |||||
KFW, 2.00%, 6/1/16 | 260,000 | 260,301 | |||||
KFW, 2.00%, 10/4/22 | 300,000 | 303,952 | |||||
Royal Bank of Scotland Group plc, 6.125%, 12/15/22 | 230,000 | 246,501 | |||||
Santander Issuances SAU, MTN, 2.50%, 3/18/25 | EUR | 600,000 | 669,378 | ||||
U.S. Bancorp, MTN, 3.00%, 3/15/22 | $ | 110,000 | 115,120 | ||||
U.S. Bancorp, MTN, 3.60%, 9/11/24 | 330,000 | 348,347 | |||||
Wells Fargo & Co., 4.125%, 8/15/23 | 200,000 | 214,123 | |||||
Wells Fargo & Co., 3.00%, 4/22/26 | 450,000 | 448,142 | |||||
Wells Fargo & Co., MTN, 2.10%, 5/8/17 | 20,000 | 20,215 | |||||
Wells Fargo & Co., MTN, 2.60%, 7/22/20 | 320,000 | 328,168 | |||||
Wells Fargo & Co., MTN, 3.55%, 9/29/25 | 160,000 | 167,751 | |||||
Wells Fargo & Co., MTN, 4.10%, 6/3/26 | 210,000 | 221,348 | |||||
Wells Fargo & Co., MTN, 4.65%, 11/4/44 | 200,000 | 207,985 | |||||
17,341,945 | |||||||
Beverages — 0.3% | |||||||
Anheuser-Busch InBev Finance, Inc., 3.30%, 2/1/23 | 310,000 | 326,185 | |||||
Anheuser-Busch InBev Finance, Inc., 3.65%, 2/1/26 | 330,000 | 348,696 | |||||
Anheuser-Busch InBev Finance, Inc., 4.90%, 2/1/46 | 370,000 | 419,124 | |||||
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/19 | 460,000 | 535,836 | |||||
Anheuser-Busch InBev Worldwide, Inc., 2.50%, 7/15/22 | 360,000 | 362,932 | |||||
Coca-Cola Co. (The), 1.80%, 9/1/16 | 180,000 | 180,788 | |||||
Pernod Ricard SA, 2.95%, 1/15/17(2) | 180,000 | 181,958 | |||||
2,355,519 | |||||||
Biotechnology — 0.4% | |||||||
AbbVie, Inc., 1.75%, 11/6/17 | 300,000 | 301,670 | |||||
AbbVie, Inc., 2.90%, 11/6/22 | 220,000 | 225,021 | |||||
AbbVie, Inc., 3.60%, 5/14/25 | 120,000 | 126,115 | |||||
AbbVie, Inc., 4.40%, 11/6/42 | 240,000 | 248,107 | |||||
Amgen, Inc., 4.10%, 6/15/21 | 100,000 | 109,645 | |||||
Amgen, Inc., 5.375%, 5/15/43 | 250,000 | 293,616 | |||||
Biogen, Inc., 3.625%, 9/15/22 | 370,000 | 392,554 | |||||
Celgene Corp., 3.25%, 8/15/22 | 190,000 | 196,915 | |||||
Celgene Corp., 3.625%, 5/15/24 | 300,000 | 312,941 | |||||
Celgene Corp., 3.875%, 8/15/25 | 190,000 | 201,110 | |||||
Gilead Sciences, Inc., 4.40%, 12/1/21 | 310,000 | 347,416 | |||||
Gilead Sciences, Inc., 3.65%, 3/1/26 | 330,000 | 353,995 | |||||
3,109,105 | |||||||
Building Products† | |||||||
Masco Corp., 4.45%, 4/1/25 | 170,000 | 178,289 | |||||
Capital Markets — 0.1% | |||||||
ABN AMRO Bank NV, MTN, 7.125%, 7/6/22 | EUR | 500,000 | 725,944 | ||||
Ameriprise Financial, Inc., 4.00%, 10/15/23 | $ | 140,000 | 149,356 | ||||
Jefferies Group LLC, 5.125%, 4/13/18 | 110,000 | 114,394 | |||||
989,694 |
12
Shares/ Principal Amount | Value | ||||||
Chemicals — 0.2% | |||||||
Ashland, Inc., 4.75%, 8/15/22 | $ | 160,000 | $ | 161,520 | |||
Dow Chemical Co. (The), 4.25%, 11/15/20 | 62,000 | 67,660 | |||||
Eastman Chemical Co., 2.70%, 1/15/20 | 210,000 | 214,738 | |||||
Eastman Chemical Co., 3.60%, 8/15/22 | 198,000 | 207,761 | |||||
Ecolab, Inc., 4.35%, 12/8/21 | 250,000 | 278,827 | |||||
LyondellBasell Industries NV, 5.00%, 4/15/19 | 200,000 | 215,962 | |||||
LyondellBasell Industries NV, 4.625%, 2/26/55 | 140,000 | 131,434 | |||||
Mosaic Co. (The), 5.625%, 11/15/43 | 120,000 | 129,397 | |||||
1,407,299 | |||||||
Commercial Services and Supplies — 0.1% | |||||||
Covanta Holding Corp., 5.875%, 3/1/24 | 150,000 | 149,250 | |||||
Pitney Bowes, Inc., 4.625%, 3/15/24 | 110,000 | 114,261 | |||||
Republic Services, Inc., 3.55%, 6/1/22 | 220,000 | 231,305 | |||||
Waste Management, Inc., 4.10%, 3/1/45 | 150,000 | 155,304 | |||||
650,120 | |||||||
Communications Equipment — 0.1% | |||||||
CC Holdings GS V LLC / Crown Castle GS III Corp., 3.85%, 4/15/23 | 260,000 | 275,512 | |||||
Cisco Systems, Inc., 5.90%, 2/15/39 | 130,000 | 172,470 | |||||
447,982 | |||||||
Construction Materials† | |||||||
Owens Corning, 4.20%, 12/15/22 | 160,000 | 164,815 | |||||
Consumer Finance — 0.4% | |||||||
American Express Centurion Bank, MTN, 6.00%, 9/13/17 | 250,000 | 265,295 | |||||
American Express Co., 1.55%, 5/22/18 | 220,000 | 220,635 | |||||
American Express Credit Corp., 1.30%, 7/29/16 | 180,000 | 180,275 | |||||
American Express Credit Corp., 2.60%, 9/14/20 | 115,000 | 117,822 | |||||
Capital One Bank USA N.A., 2.30%, 6/5/19 | 250,000 | 249,630 | |||||
Capital One Bank USA N.A., 3.375%, 2/15/23 | 250,000 | 251,843 | |||||
CIT Group, Inc., 4.25%, 8/15/17 | 470,000 | 477,931 | |||||
CIT Group, Inc., 5.00%, 8/15/22 | 90,000 | 94,500 | |||||
Discover Bank, 2.00%, 2/21/18 | 250,000 | 250,034 | |||||
Equifax, Inc., 3.30%, 12/15/22 | 140,000 | 145,510 | |||||
GLP Capital LP / GLP Financing II, Inc., 4.875%, 11/1/20 | 300,000 | 318,000 | |||||
PNC Bank N.A., 6.00%, 12/7/17 | 290,000 | 307,045 | |||||
Synchrony Financial, 2.60%, 1/15/19 | 160,000 | 161,250 | |||||
Synchrony Financial, 3.00%, 8/15/19 | 90,000 | 91,379 | |||||
3,131,149 | |||||||
Containers and Packaging — 0.1% | |||||||
Ball Corp., 4.00%, 11/15/23 | 180,000 | 178,830 | |||||
Crown Americas LLC / Crown Americas Capital Corp. IV, 4.50%, 1/15/23 | 210,000 | 215,250 | |||||
WestRock RKT Co., 3.50%, 3/1/20 | 140,000 | 141,739 | |||||
WestRock RKT Co., 4.00%, 3/1/23 | 240,000 | 246,266 | |||||
782,085 |
13
Shares/ Principal Amount | Value | ||||||
Diversified Consumer Services† | |||||||
Catholic Health Initiatives, 2.95%, 11/1/22 | $ | 110,000 | $ | 111,416 | |||
Diversified Financial Services — 1.3% | |||||||
Ally Financial, Inc., 2.75%, 1/30/17 | 340,000 | 340,193 | |||||
BNP Paribas SA, 4.375%, 9/28/25(2) | 200,000 | 203,334 | |||||
BNP Paribas SA, MTN, 2.375%, 2/17/25 | EUR | 500,000 | 575,903 | ||||
Credit Suisse Group Funding Guernsey Ltd., 3.45%, 4/16/21(2) | $ | 280,000 | 283,222 | ||||
Deutsche Bank AG, MTN, 2.75%, 2/17/25 | EUR | 600,000 | 647,845 | ||||
Deutsche Bank AG, VRN, 4.30%, 5/24/23 | $ | 200,000 | 178,807 | ||||
GE Capital International Funding Unlimited Co., 2.34%, 11/15/20(2) | 694,000 | 710,859 | |||||
Goldman Sachs Group, Inc. (The), 2.375%, 1/22/18 | 330,000 | 334,326 | |||||
Goldman Sachs Group, Inc. (The), 2.90%, 7/19/18 | 530,000 | 543,131 | |||||
Goldman Sachs Group, Inc. (The), 5.375%, 3/15/20 | 110,000 | 122,357 | |||||
Goldman Sachs Group, Inc. (The), 5.75%, 1/24/22 | 460,000 | 529,615 | |||||
Goldman Sachs Group, Inc. (The), 4.00%, 3/3/24 | 300,000 | 316,905 | |||||
Goldman Sachs Group, Inc. (The), 3.50%, 1/23/25 | 160,000 | 162,064 | |||||
Goldman Sachs Group, Inc. (The), 4.25%, 10/21/25 | 130,000 | 132,924 | |||||
Goldman Sachs Group, Inc. (The), 6.75%, 10/1/37 | 260,000 | 315,846 | |||||
Goldman Sachs Group, Inc. (The), 5.15%, 5/22/45 | 100,000 | 103,034 | |||||
Goldman Sachs Group, Inc. (The), MTN, 4.80%, 7/8/44 | 220,000 | 237,848 | |||||
HSBC Holdings plc, 5.10%, 4/5/21 | 230,000 | 255,311 | |||||
HSBC Holdings plc, 4.30%, 3/8/26 | 200,000 | 210,486 | |||||
Morgan Stanley, 2.50%, 4/21/21 | 200,000 | 200,727 | |||||
Morgan Stanley, 5.00%, 11/24/25 | 610,000 | 664,865 | |||||
Morgan Stanley, MTN, 6.625%, 4/1/18 | 690,000 | 753,074 | |||||
Morgan Stanley, MTN, 5.625%, 9/23/19 | 870,000 | 969,009 | |||||
Morgan Stanley, MTN, 3.70%, 10/23/24 | 300,000 | 309,856 | |||||
Nationwide Building Society, MTN, 6.75%, 7/22/20 | EUR | 600,000 | 813,096 | ||||
S&P Global, Inc., 3.30%, 8/14/20 | $ | 120,000 | 124,626 | ||||
UBS Group Funding Jersey Ltd., 4.125%, 9/24/25(2) | 200,000 | 205,484 | |||||
10,244,747 | |||||||
Diversified Telecommunication Services — 0.6% | |||||||
AT&T, Inc., 5.00%, 3/1/21 | 250,000 | 279,936 | |||||
AT&T, Inc., 4.45%, 4/1/24 | 120,000 | 130,892 | |||||
AT&T, Inc., 3.40%, 5/15/25 | 890,000 | 905,944 | |||||
AT&T, Inc., 6.55%, 2/15/39 | 287,000 | 349,396 | |||||
AT&T, Inc., 4.30%, 12/15/42 | 130,000 | 123,724 | |||||
British Telecommunications plc, 5.95%, 1/15/18 | 480,000 | 517,243 | |||||
CenturyLink, Inc., Series Q, 6.15%, 9/15/19 | 140,000 | 147,700 | |||||
Frontier Communications Corp., 8.25%, 4/15/17 | 80,000 | 84,370 | |||||
Frontier Communications Corp., 8.50%, 4/15/20 | 150,000 | 159,188 | |||||
Frontier Communications Corp., 11.00%, 9/15/25(2) | 70,000 | 70,963 | |||||
Orange SA, 4.125%, 9/14/21 | 210,000 | 230,918 | |||||
Orange SA, 5.50%, 2/6/44 | 80,000 | 99,902 | |||||
Telecom Italia Capital SA, 6.00%, 9/30/34 | 120,000 | 119,100 |
14
Shares/ Principal Amount | Value | ||||||
Telefonica Emisiones SAU, 5.46%, 2/16/21 | $ | 100,000 | $ | 114,029 | |||
Verizon Communications, Inc., 3.50%, 11/1/21 | 130,000 | 138,584 | |||||
Verizon Communications, Inc., 5.15%, 9/15/23 | 350,000 | 403,239 | |||||
Verizon Communications, Inc., 5.05%, 3/15/34 | 570,000 | 624,010 | |||||
Verizon Communications, Inc., 4.75%, 11/1/41 | 150,000 | 158,007 | |||||
Verizon Communications, Inc., 4.86%, 8/21/46 | 250,000 | 268,687 | |||||
Verizon Communications, Inc., 5.01%, 8/21/54 | 199,000 | 203,418 | |||||
5,129,250 | |||||||
Electrical Equipment† | |||||||
Belden, Inc., 5.25%, 7/15/24(2) | 130,000 | 127,400 | |||||
Electronic Equipment, Instruments and Components† | |||||||
Avnet, Inc., 4.625%, 4/15/26 | 50,000 | 51,578 | |||||
Jabil Circuit, Inc., 7.75%, 7/15/16 | 200,000 | 202,374 | |||||
253,952 | |||||||
Energy Equipment and Services — 0.1% | |||||||
Ensco plc, 5.20%, 3/15/25 | 100,000 | 73,000 | |||||
Halliburton Co., 3.80%, 11/15/25 | 220,000 | 225,619 | |||||
Schlumberger Investment SA, 3.65%, 12/1/23 | 170,000 | 180,017 | |||||
478,636 | |||||||
Food and Staples Retailing — 0.3% | |||||||
CVS Health Corp., 3.50%, 7/20/22 | 220,000 | 234,503 | |||||
CVS Health Corp., 2.75%, 12/1/22 | 170,000 | 174,315 | |||||
CVS Health Corp., 5.125%, 7/20/45 | 110,000 | 129,485 | |||||
Delhaize Group, 5.70%, 10/1/40 | 90,000 | 99,283 | |||||
Dollar General Corp., 3.25%, 4/15/23 | 220,000 | 221,957 | |||||
Dollar General Corp., 4.15%, 11/1/25 | 40,000 | 42,495 | |||||
Kroger Co. (The), 3.30%, 1/15/21 | 330,000 | 349,089 | |||||
Sysco Corp., 3.30%, 7/15/26 | 100,000 | 102,480 | |||||
Target Corp., 2.50%, 4/15/26 | 210,000 | 209,419 | |||||
Wal-Mart Stores, Inc., 5.625%, 4/15/41 | 110,000 | 143,479 | |||||
Wal-Mart Stores, Inc., 4.30%, 4/22/44 | 390,000 | 440,660 | |||||
2,147,165 | |||||||
Food Products — 0.1% | |||||||
Kraft Heinz Foods Co., 3.95%, 7/15/25(2) | 100,000 | 106,993 | |||||
Kraft Heinz Foods Co., 5.00%, 6/4/42 | 220,000 | 246,625 | |||||
Kraft Heinz Foods Co., 5.20%, 7/15/45(2) | 140,000 | 161,732 | |||||
Tyson Foods, Inc., 4.50%, 6/15/22 | 180,000 | 199,429 | |||||
714,779 | |||||||
Gas Utilities — 0.5% | |||||||
Columbia Pipeline Group, Inc., 4.50%, 6/1/25(2) | 200,000 | 206,510 | |||||
Enbridge Energy Partners LP, 6.50%, 4/15/18 | 130,000 | 136,543 | |||||
Enbridge Energy Partners LP, 5.20%, 3/15/20 | 100,000 | 103,228 | |||||
Enbridge, Inc., 4.50%, 6/10/44 | 120,000 | 99,434 | |||||
Energy Transfer Equity LP, 7.50%, 10/15/20 | 150,000 | 151,875 | |||||
Energy Transfer Partners LP, 4.15%, 10/1/20 | 200,000 | 197,810 | |||||
Energy Transfer Partners LP, 3.60%, 2/1/23 | 160,000 | 146,654 | |||||
Energy Transfer Partners LP, 6.50%, 2/1/42 | 180,000 | 175,064 |
15
Shares/ Principal Amount | Value | ||||||
Enterprise Products Operating LLC, 4.85%, 3/15/44 | $ | 460,000 | $ | 465,773 | |||
Enterprise Products Operating LLC, VRN, 7.03%, 1/15/18 | 140,000 | 143,850 | |||||
Kinder Morgan Energy Partners LP, 6.50%, 4/1/20 | 210,000 | 228,538 | |||||
Kinder Morgan Energy Partners LP, 5.30%, 9/15/20 | 170,000 | 179,556 | |||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39 | 210,000 | 210,519 | |||||
Kinder Morgan, Inc., 4.30%, 6/1/25 | 80,000 | 79,401 | |||||
Kinder Morgan, Inc., 5.55%, 6/1/45 | 150,000 | 140,169 | |||||
Magellan Midstream Partners LP, 6.55%, 7/15/19 | 100,000 | 112,039 | |||||
MPLX LP, 4.875%, 12/1/24(2) | 130,000 | 126,864 | |||||
MPLX LP, 4.875%, 6/1/25(2) | 150,000 | 145,132 | |||||
Plains All American Pipeline LP / PAA Finance Corp., 3.65%, 6/1/22 | 310,000 | 293,855 | |||||
Sunoco Logistics Partners Operations LP, 3.45%, 1/15/23 | 330,000 | 310,130 | |||||
Targa Resources Partners LP / Targa Resources Partners Finance Corp., 4.25%, 11/15/23 | 210,000 | 194,645 | |||||
Williams Cos., Inc. (The), 3.70%, 1/15/23 | 50,000 | 42,239 | |||||
Williams Cos., Inc. (The), 5.75%, 6/24/44 | 90,000 | 70,650 | |||||
Williams Partners LP, 4.125%, 11/15/20 | 200,000 | 188,460 | |||||
Williams Partners LP, 5.40%, 3/4/44 | 240,000 | 200,698 | |||||
4,349,636 | |||||||
Health Care Equipment and Supplies — 0.2% | |||||||
Becton Dickinson and Co., 3.73%, 12/15/24 | 360,000 | 383,723 | |||||
Medtronic, Inc., 2.50%, 3/15/20 | 130,000 | 134,394 | |||||
Medtronic, Inc., 3.50%, 3/15/25 | 230,000 | 246,844 | |||||
Medtronic, Inc., 4.375%, 3/15/35 | 360,000 | 399,496 | |||||
St. Jude Medical, Inc., 2.00%, 9/15/18 | 110,000 | 111,245 | |||||
Zimmer Biomet Holdings, Inc., 2.70%, 4/1/20 | 120,000 | 122,497 | |||||
1,398,199 | |||||||
Health Care Providers and Services — 0.2% | |||||||
Aetna, Inc., 2.75%, 11/15/22 | 130,000 | 131,489 | |||||
Ascension Health, 3.95%, 11/15/46(3) | 40,000 | 41,119 | |||||
CHS / Community Health Systems, Inc., 5.125%, 8/15/18 | 240,000 | 243,600 | |||||
Express Scripts, Inc., 7.25%, 6/15/19 | 170,000 | 196,255 | |||||
HCA, Inc., 3.75%, 3/15/19 | 310,000 | 318,525 | |||||
NYU Hospitals Center, 4.43%, 7/1/42 | 90,000 | 91,956 | |||||
UnitedHealth Group, Inc., 2.875%, 12/15/21 | 230,000 | 240,331 | |||||
UnitedHealth Group, Inc., 2.875%, 3/15/22 | 310,000 | 322,000 | |||||
UnitedHealth Group, Inc., 3.75%, 7/15/25 | 100,000 | 108,504 | |||||
Universal Health Services, Inc., 7.125%, 6/30/16 | 160,000 | 161,482 | |||||
Universal Health Services, Inc., 4.75%, 8/1/22(2) | 130,000 | 132,925 | |||||
1,988,186 | |||||||
Hotels, Restaurants and Leisure — 0.1% | |||||||
McDonald's Corp., MTN, 3.25%, 6/10/24 | 100,000 | 105,919 | |||||
McDonald's Corp., MTN, 3.375%, 5/26/25 | 80,000 | 84,055 | |||||
McDonald's Corp., MTN, 4.60%, 5/26/45 | 70,000 | 75,953 | |||||
Royal Caribbean Cruises Ltd., 5.25%, 11/15/22 | 160,000 | 172,200 |
16
Shares/ Principal Amount | Value | ||||||
Wyndham Worldwide Corp., 2.95%, 3/1/17 | $ | 110,000 | $ | 111,149 | |||
549,276 | |||||||
Household Durables — 0.1% | |||||||
D.R. Horton, Inc., 3.625%, 2/15/18 | 270,000 | 277,087 | |||||
D.R. Horton, Inc., 5.75%, 8/15/23 | 110,000 | 121,000 | |||||
Lennar Corp., 4.75%, 12/15/17 | 210,000 | 216,300 | |||||
Lennar Corp., 4.75%, 4/1/21 | 152,000 | 159,068 | |||||
Lennar Corp., 4.75%, 5/30/25 | 40,000 | 40,300 | |||||
M.D.C. Holdings, Inc., 5.50%, 1/15/24 | 140,000 | 136,500 | |||||
Toll Brothers Finance Corp., 6.75%, 11/1/19 | 100,000 | 113,250 | |||||
TRI Pointe Group, Inc. / TRI Pointe Homes, Inc., 4.375%, 6/15/19 | 100,000 | 100,750 | |||||
1,164,255 | |||||||
Industrial Conglomerates — 0.1% | |||||||
General Electric Co., 2.70%, 10/9/22 | 210,000 | 217,001 | |||||
General Electric Co., 4.125%, 10/9/42 | 180,000 | 192,513 | |||||
General Electric Co., MTN, 4.375%, 9/16/20 | 250,000 | 278,517 | |||||
General Electric Co., MTN, 4.65%, 10/17/21 | 120,000 | 136,446 | |||||
Ingersoll-Rand Luxembourg Finance SA, 3.55%, 11/1/24 | 170,000 | 176,402 | |||||
1,000,879 | |||||||
Insurance — 0.8% | |||||||
AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, 3.75%, 5/15/19 | 150,000 | 152,625 | |||||
Allianz Finance II BV, MTN, VRN, 5.75%, 7/8/21 | EUR | 600,000 | 802,638 | ||||
Allstate Corp. (The), VRN, 5.75%, 8/15/23 | $ | 90,000 | 92,756 | ||||
American International Group, Inc., 4.125%, 2/15/24 | 550,000 | 578,988 | |||||
American International Group, Inc., 4.50%, 7/16/44 | 120,000 | 116,327 | |||||
American International Group, Inc., MTN, 5.85%, 1/16/18 | 210,000 | 225,462 | |||||
Berkshire Hathaway Finance Corp., 4.25%, 1/15/21 | 140,000 | 155,929 | |||||
Berkshire Hathaway Finance Corp., 3.00%, 5/15/22 | 90,000 | 95,122 | |||||
Berkshire Hathaway, Inc., 4.50%, 2/11/43 | 220,000 | 245,276 | |||||
Chubb INA Holdings, Inc., 3.15%, 3/15/25 | 280,000 | 290,801 | |||||
Chubb INA Holdings, Inc., 3.35%, 5/3/26 | 110,000 | 116,004 | |||||
CNP Assurances, VRN, 4.00%, 11/18/24 | EUR | 500,000 | 558,039 | ||||
Hartford Financial Services Group, Inc. (The), 5.95%, 10/15/36 | $ | 50,000 | 57,546 | ||||
International Lease Finance Corp., 6.25%, 5/15/19 | 100,000 | 108,750 | |||||
Liberty Mutual Group, Inc., 4.95%, 5/1/22(2) | 60,000 | 65,308 | |||||
Liberty Mutual Group, Inc., 4.85%, 8/1/44(2) | 210,000 | 202,765 | |||||
Lincoln National Corp., 6.25%, 2/15/20 | 50,000 | 56,231 | |||||
Markel Corp., 4.90%, 7/1/22 | 190,000 | 208,297 | |||||
Markel Corp., 3.625%, 3/30/23 | 100,000 | 101,520 | |||||
MetLife, Inc., 4.125%, 8/13/42 | 110,000 | 107,404 | |||||
MetLife, Inc., 4.875%, 11/13/43 | 110,000 | 119,752 | |||||
Metropolitan Life Global Funding I, 3.00%, 1/10/23(2) | 200,000 | 201,673 | |||||
Principal Financial Group, Inc., 3.30%, 9/15/22 | 70,000 | 72,291 | |||||
Prudential Financial, Inc., MTN, 5.375%, 6/21/20 | 70,000 | 78,318 | |||||
Prudential Financial, Inc., MTN, 5.625%, 5/12/41 | 370,000 | 414,718 |
17
Shares/ Principal Amount | Value | ||||||
TIAA Asset Management Finance Co. LLC, 4.125%, 11/1/24(2) | $ | 120,000 | $ | 124,128 | |||
Travelers Cos., Inc. (The), 4.60%, 8/1/43 | 100,000 | 113,597 | |||||
Travelers Cos., Inc. (The), 4.30%, 8/25/45 | 60,000 | 66,000 | |||||
Voya Financial, Inc., 5.50%, 7/15/22 | 100,000 | 112,384 | |||||
Voya Financial, Inc., 5.70%, 7/15/43 | 160,000 | 183,950 | |||||
WR Berkley Corp., 4.625%, 3/15/22 | 130,000 | 139,930 | |||||
WR Berkley Corp., 4.75%, 8/1/44 | 90,000 | 89,442 | |||||
XLIT Ltd., 4.45%, 3/31/25 | 50,000 | 50,311 | |||||
6,104,282 | |||||||
Internet Software and Services† | |||||||
Netflix, Inc., 5.375%, 2/1/21 | 200,000 | 212,500 | |||||
IT Services — 0.1% | |||||||
Fidelity National Information Services, Inc., 1.45%, 6/5/17 | 150,000 | 149,689 | |||||
Fidelity National Information Services, Inc., 5.00%, 3/15/22 | 100,000 | 104,457 | |||||
Fidelity National Information Services, Inc., 4.50%, 10/15/22 | 180,000 | 194,298 | |||||
Fidelity National Information Services, Inc., 3.50%, 4/15/23 | 110,000 | 111,593 | |||||
Xerox Corp., 2.95%, 3/15/17 | 80,000 | 80,817 | |||||
640,854 | |||||||
Life Sciences Tools and Services — 0.1% | |||||||
Thermo Fisher Scientific, Inc., 3.60%, 8/15/21 | 150,000 | 157,247 | |||||
Thermo Fisher Scientific, Inc., 3.30%, 2/15/22 | 148,000 | 152,648 | |||||
Thermo Fisher Scientific, Inc., 5.30%, 2/1/44 | 150,000 | 171,437 | |||||
481,332 | |||||||
Machinery† | |||||||
Oshkosh Corp., 5.375%, 3/1/22 | 290,000 | 297,250 | |||||
Media — 0.8% | |||||||
21st Century Fox America, Inc., 3.70%, 10/15/25 | 220,000 | 235,913 | |||||
21st Century Fox America, Inc., 6.90%, 8/15/39 | 150,000 | 196,254 | |||||
21st Century Fox America, Inc., 4.75%, 9/15/44 | 190,000 | 203,650 | |||||
CBS Corp., 3.50%, 1/15/25 | 170,000 | 175,643 | |||||
CBS Corp., 4.85%, 7/1/42 | 60,000 | 60,161 | |||||
CCO Safari II LLC, 4.91%, 7/23/25(2) | 790,000 | 852,451 | |||||
Comcast Corp., 6.40%, 5/15/38 | 310,000 | 417,331 | |||||
Comcast Corp., 4.75%, 3/1/44 | 260,000 | 301,531 | |||||
Discovery Communications LLC, 5.625%, 8/15/19 | 90,000 | 99,281 | |||||
Discovery Communications LLC, 3.25%, 4/1/23 | 100,000 | 97,247 | |||||
Embarq Corp., 8.00%, 6/1/36 | 120,000 | 120,300 | |||||
Interpublic Group of Cos., Inc. (The), 4.00%, 3/15/22 | 160,000 | 167,386 | |||||
Lamar Media Corp., 5.375%, 1/15/24 | 180,000 | 190,800 | |||||
NBCUniversal Media LLC, 4.375%, 4/1/21 | 380,000 | 425,372 | |||||
NBCUniversal Media LLC, 2.875%, 1/15/23 | 120,000 | 124,820 | |||||
Nielsen Finance LLC / Nielsen Finance Co., 5.00%, 4/15/22(2) | 160,000 | 163,800 | |||||
Omnicom Group, Inc., 3.625%, 5/1/22 | 50,000 | 53,119 | |||||
Omnicom Group, Inc., 3.60%, 4/15/26 | 210,000 | 219,280 | |||||
TEGNA, Inc., 5.125%, 7/15/20 | 330,000 | 344,025 |
18
Shares/ Principal Amount | Value | ||||||
Time Warner Cable, Inc., 6.75%, 7/1/18 | $ | 130,000 | $ | 144,050 | |||
Time Warner Cable, Inc., 5.50%, 9/1/41 | 70,000 | 73,067 | |||||
Time Warner Cable, Inc., 4.50%, 9/15/42 | 100,000 | 93,982 | |||||
Time Warner, Inc., 4.70%, 1/15/21 | 140,000 | 155,566 | |||||
Time Warner, Inc., 3.60%, 7/15/25 | 400,000 | 418,405 | |||||
Time Warner, Inc., 7.70%, 5/1/32 | 200,000 | 260,417 | |||||
Time Warner, Inc., 5.35%, 12/15/43 | 120,000 | 134,849 | |||||
Viacom, Inc., 3.125%, 6/15/22 | 190,000 | 187,138 | |||||
Viacom, Inc., 4.25%, 9/1/23 | 160,000 | 164,940 | |||||
Virgin Media Secured Finance plc, 5.25%, 1/15/26(2) | 200,000 | 202,000 | |||||
Walt Disney Co. (The), MTN, 2.35%, 12/1/22 | 30,000 | 30,718 | |||||
Walt Disney Co. (The), MTN, 4.125%, 6/1/44 | 230,000 | 250,374 | |||||
6,563,870 | |||||||
Metals and Mining — 0.1% | |||||||
Barrick North America Finance LLC, 4.40%, 5/30/21 | 111,000 | 118,223 | |||||
Barrick North America Finance LLC, 5.75%, 5/1/43 | 70,000 | 72,845 | |||||
Glencore Finance Canada Ltd., 4.95%, 11/15/21(2) | 110,000 | 107,378 | |||||
Southern Copper Corp., 5.25%, 11/8/42 | 100,000 | 86,569 | |||||
Steel Dynamics, Inc., 6.125%, 8/15/19 | 157,000 | 163,476 | |||||
Teck Resources Ltd., 3.15%, 1/15/17 | 70,000 | 69,650 | |||||
Vale Overseas Ltd., 5.625%, 9/15/19 | 90,000 | 90,675 | |||||
708,816 | |||||||
Multi-Utilities — 0.7% | |||||||
Berkshire Hathaway Energy Co., 3.50%, 2/1/25 | 160,000 | 170,043 | |||||
CenterPoint Energy Houston Electric LLC, 3.55%, 8/1/42 | 70,000 | 67,506 | |||||
CMS Energy Corp., 8.75%, 6/15/19 | 180,000 | 217,714 | |||||
Consolidated Edison Co. of New York, Inc., 3.95%, 3/1/43 | 150,000 | 153,098 | |||||
Constellation Energy Group, Inc., 5.15%, 12/1/20 | 220,000 | 246,315 | |||||
Consumers Energy Co., 2.85%, 5/15/22 | 50,000 | 51,557 | |||||
Consumers Energy Co., 3.375%, 8/15/23 | 50,000 | 52,969 | |||||
Dominion Resources, Inc., 6.40%, 6/15/18 | 190,000 | 207,683 | |||||
Dominion Resources, Inc., 2.75%, 9/15/22 | 210,000 | 210,472 | |||||
Dominion Resources, Inc., 3.625%, 12/1/24 | 160,000 | 165,110 | |||||
Dominion Resources, Inc., 4.90%, 8/1/41 | 50,000 | 53,082 | |||||
Dominion Resources, Inc., VRN, 7.50%, 6/30/16 | 120,000 | 101,100 | |||||
DPL, Inc., 6.50%, 10/15/16 | 19,000 | 19,404 | |||||
Duke Energy Corp., 1.625%, 8/15/17 | 150,000 | 150,416 | |||||
Duke Energy Corp., 3.55%, 9/15/21 | 90,000 | 94,688 | |||||
Duke Energy Florida LLC, 6.35%, 9/15/37 | 110,000 | 149,314 | |||||
Duke Energy Florida LLC, 3.85%, 11/15/42 | 220,000 | 226,422 | |||||
Duke Energy Progress, LLC, 4.15%, 12/1/44 | 130,000 | 141,135 | |||||
Edison International, 3.75%, 9/15/17 | 130,000 | 134,045 | |||||
Exelon Corp., 4.45%, 4/15/46 | 110,000 | 113,964 | |||||
Exelon Generation Co. LLC, 4.25%, 6/15/22 | 120,000 | 126,588 | |||||
Exelon Generation Co. LLC, 5.60%, 6/15/42 | 70,000 | 70,263 | |||||
FirstEnergy Corp., 2.75%, 3/15/18 | 135,000 | 136,497 | |||||
FirstEnergy Corp., 4.25%, 3/15/23 | 260,000 | 272,297 |
19
Shares/ Principal Amount | Value | ||||||
Florida Power & Light Co., 4.125%, 2/1/42 | $ | 140,000 | $ | 153,587 | |||
Georgia Power Co., 4.30%, 3/15/42 | 70,000 | 75,466 | |||||
IPALCO Enterprises, Inc., 5.00%, 5/1/18 | 230,000 | 242,362 | |||||
MidAmerican Energy Co., 4.40%, 10/15/44 | 150,000 | 167,500 | |||||
NextEra Energy Capital Holdings, Inc., VRN, 7.30%, 9/1/17 | 210,000 | 197,925 | |||||
Nisource Finance Corp., 5.65%, 2/1/45 | 100,000 | 120,382 | |||||
Potomac Electric Power Co., 3.60%, 3/15/24 | 120,000 | 129,322 | |||||
Progress Energy, Inc., 3.15%, 4/1/22 | 90,000 | 92,539 | |||||
Sempra Energy, 6.50%, 6/1/16 | 200,000 | 200,830 | |||||
Sempra Energy, 2.875%, 10/1/22 | 200,000 | 202,321 | |||||
Southern Power Co., 5.15%, 9/15/41 | 40,000 | 41,724 | |||||
Virginia Electric and Power Co., 3.45%, 2/15/24 | 160,000 | 170,475 | |||||
Virginia Electric and Power Co., 4.45%, 2/15/44 | 80,000 | 88,492 | |||||
Xcel Energy, Inc., 4.80%, 9/15/41 | 50,000 | 55,564 | |||||
5,270,171 | |||||||
Multiline Retail† | |||||||
Macy's Retail Holdings, Inc., 2.875%, 2/15/23 | 190,000 | 181,073 | |||||
Oil, Gas and Consumable Fuels — 0.7% | |||||||
AmeriGas Finance LLC / AmeriGas Finance Corp., 6.75%, 5/20/20 | 50,000 | 51,889 | |||||
AmeriGas Partners LP / AmeriGas Finance Corp., 6.25%, 8/20/19 | 90,000 | 92,475 | |||||
Anadarko Petroleum Corp., 5.95%, 9/15/16 | 30,000 | 30,585 | |||||
Anadarko Petroleum Corp., 5.55%, 3/15/26 | 110,000 | 117,861 | |||||
Anadarko Petroleum Corp., 6.45%, 9/15/36 | 110,000 | 118,969 | |||||
Apache Corp., 4.75%, 4/15/43 | 90,000 | 88,691 | |||||
BP Capital Markets plc, 4.50%, 10/1/20 | 100,000 | 110,311 | |||||
BP Capital Markets plc, 2.75%, 5/10/23 | 200,000 | 199,898 | |||||
Chevron Corp., 2.43%, 6/24/20 | 80,000 | 82,239 | |||||
Cimarex Energy Co., 4.375%, 6/1/24 | 220,000 | 224,393 | |||||
CNOOC Nexen Finance 2014 ULC, 4.25%, 4/30/24 | 140,000 | 145,731 | |||||
Concho Resources, Inc., 7.00%, 1/15/21 | 330,000 | 343,819 | |||||
Concho Resources, Inc., 6.50%, 1/15/22 | 90,000 | 94,050 | |||||
ConocoPhillips Holding Co., 6.95%, 4/15/29 | 40,000 | 47,924 | |||||
Continental Resources, Inc., 5.00%, 9/15/22 | 110,000 | 102,575 | |||||
Ecopetrol SA, 4.125%, 1/16/25 | 90,000 | 78,975 | |||||
EOG Resources, Inc., 5.625%, 6/1/19 | 150,000 | 165,447 | |||||
EOG Resources, Inc., 4.10%, 2/1/21 | 130,000 | 139,486 | |||||
Exxon Mobil Corp., 2.71%, 3/6/25 | 280,000 | 285,820 | |||||
Exxon Mobil Corp., 3.04%, 3/1/26 | 100,000 | 103,384 | |||||
Hess Corp., 6.00%, 1/15/40 | 190,000 | 189,108 | |||||
Newfield Exploration Co., 5.75%, 1/30/22 | 220,000 | 224,675 | |||||
Noble Energy, Inc., 4.15%, 12/15/21 | 290,000 | 296,262 | |||||
Petroleos Mexicanos, 6.00%, 3/5/20 | 120,000 | 127,950 | |||||
Petroleos Mexicanos, 4.875%, 1/24/22 | 240,000 | 242,400 | |||||
Petroleos Mexicanos, 3.50%, 1/30/23 | 60,000 | 55,875 | |||||
Petroleos Mexicanos, 6.625%, 6/15/35 | 50,000 | 51,000 |
20
Shares/ Principal Amount | Value | ||||||
Petroleos Mexicanos, 5.50%, 6/27/44 | $ | 230,000 | $ | 203,550 | |||
Phillips 66, 4.30%, 4/1/22 | 250,000 | 271,102 | |||||
Shell International Finance BV, 2.375%, 8/21/22 | 130,000 | 130,698 | |||||
Shell International Finance BV, 3.25%, 5/11/25 | 200,000 | 206,990 | |||||
Shell International Finance BV, 3.625%, 8/21/42 | 140,000 | 134,597 | |||||
Statoil ASA, 2.45%, 1/17/23 | 190,000 | 188,765 | |||||
Statoil ASA, 3.95%, 5/15/43 | 150,000 | 149,148 | |||||
Suburban Propane Partners LP / Suburban Energy Finance Corp., 7.375%, 8/1/21 | 150,000 | 155,250 | |||||
Tesoro Corp., 5.375%, 10/1/22 | 100,000 | 100,625 | |||||
Total Capital Canada Ltd., 2.75%, 7/15/23 | 120,000 | 121,365 | |||||
Total Capital SA, 2.125%, 8/10/18 | 140,000 | 142,363 | |||||
5,616,245 | |||||||
Paper and Forest Products — 0.1% | |||||||
Georgia-Pacific LLC, 2.54%, 11/15/19(2) | 250,000 | 254,484 | |||||
Georgia-Pacific LLC, 5.40%, 11/1/20(2) | 350,000 | 394,774 | |||||
International Paper Co., 6.00%, 11/15/41 | 70,000 | 81,768 | |||||
731,026 | |||||||
Pharmaceuticals — 0.3% | |||||||
Actavis Funding SCS, 3.85%, 6/15/24 | 320,000 | 329,108 | |||||
Actavis Funding SCS, 4.55%, 3/15/35 | 150,000 | 149,866 | |||||
Actavis, Inc., 1.875%, 10/1/17 | 220,000 | 220,704 | |||||
Actavis, Inc., 3.25%, 10/1/22 | 200,000 | 202,718 | |||||
Actavis, Inc., 4.625%, 10/1/42 | 60,000 | 59,659 | |||||
Baxalta, Inc., 4.00%, 6/23/25(2) | 230,000 | 236,937 | |||||
Forest Laboratories LLC, 4.875%, 2/15/21(2) | 270,000 | 295,472 | |||||
GlaxoSmithKline Capital plc, 2.85%, 5/8/22 | 250,000 | 261,784 | |||||
Merck & Co., Inc., 2.40%, 9/15/22 | 100,000 | 102,168 | |||||
Merck & Co., Inc., 3.70%, 2/10/45 | 80,000 | 82,231 | |||||
Perrigo Finance Unlimited Co., 3.50%, 3/15/21 | 200,000 | 204,868 | |||||
Perrigo Finance Unlimited Co., 3.90%, 12/15/24 | 200,000 | 203,147 | |||||
Roche Holdings, Inc., 3.35%, 9/30/24(2) | 110,000 | 117,582 | |||||
2,466,244 | |||||||
Real Estate Investment Trusts (REITs) — 0.3% | |||||||
American Tower Corp., 5.05%, 9/1/20 | 130,000 | 142,408 | |||||
Boston Properties LP, 3.65%, 2/1/26 | 100,000 | 104,985 | |||||
DDR Corp., 4.75%, 4/15/18 | 230,000 | 241,410 | |||||
DDR Corp., 3.625%, 2/1/25 | 150,000 | 147,495 | |||||
Essex Portfolio LP, 3.625%, 8/15/22 | 150,000 | 155,896 | |||||
Essex Portfolio LP, 3.25%, 5/1/23 | 50,000 | 50,575 | |||||
Hospitality Properties Trust, 4.65%, 3/15/24 | 450,000 | 445,272 | |||||
Host Hotels & Resorts LP, 3.75%, 10/15/23 | 100,000 | 99,093 | |||||
Kilroy Realty LP, 3.80%, 1/15/23 | 140,000 | 143,758 | |||||
Realty Income Corp., 4.125%, 10/15/26 | 80,000 | 83,066 | |||||
Senior Housing Properties Trust, 4.75%, 5/1/24 | 180,000 | 174,712 | |||||
Simon Property Group LP, 3.30%, 1/15/26 | 180,000 | 189,362 |
21
Shares/ Principal Amount | Value | ||||||
Ventas Realty LP, 4.125%, 1/15/26 | $ | 100,000 | $ | 104,802 | |||
Ventas Realty LP / Ventas Capital Corp., 4.75%, 6/1/21 | 120,000 | 132,522 | |||||
Welltower, Inc., 2.25%, 3/15/18 | 50,000 | 50,472 | |||||
Welltower, Inc., 3.75%, 3/15/23 | 130,000 | 131,588 | |||||
2,397,416 | |||||||
Road and Rail — 0.2% | |||||||
Burlington Northern Santa Fe LLC, 3.60%, 9/1/20 | 176,000 | 190,117 | |||||
Burlington Northern Santa Fe LLC, 4.95%, 9/15/41 | 50,000 | 58,006 | |||||
Burlington Northern Santa Fe LLC, 4.45%, 3/15/43 | 220,000 | 241,344 | |||||
Burlington Northern Santa Fe LLC, 4.15%, 4/1/45 | 180,000 | 190,261 | |||||
CSX Corp., 4.25%, 6/1/21 | 150,000 | 165,169 | |||||
CSX Corp., 3.40%, 8/1/24 | 180,000 | 190,000 | |||||
Norfolk Southern Corp., 5.75%, 4/1/18 | 40,000 | 43,190 | |||||
Norfolk Southern Corp., 3.25%, 12/1/21 | 200,000 | 209,376 | |||||
Penske Truck Leasing Co. LP / PTL Finance Corp., 2.875%, 7/17/18(2) | 40,000 | 40,340 | |||||
Penske Truck Leasing Co. LP / PTL Finance Corp., 3.375%, 2/1/22(2) | 110,000 | 110,768 | |||||
Union Pacific Corp., 4.00%, 2/1/21 | 100,000 | 109,940 | |||||
Union Pacific Corp., 4.75%, 9/15/41 | 150,000 | 171,582 | |||||
1,720,093 | |||||||
Semiconductors and Semiconductor Equipment† | |||||||
KLA-Tencor Corp., 4.65%, 11/1/24 | 110,000 | 114,836 | |||||
NXP BV / NXP Funding LLC, 4.125%, 6/15/20(2) | 200,000 | 206,000 | |||||
320,836 | |||||||
Software — 0.2% | |||||||
Activision Blizzard, Inc., 5.625%, 9/15/21(2) | 210,000 | 221,550 | |||||
Intuit, Inc., 5.75%, 3/15/17 | 254,000 | 263,636 | |||||
Microsoft Corp., 2.70%, 2/12/25 | 360,000 | 370,236 | |||||
Microsoft Corp., 3.125%, 11/3/25 | 110,000 | 116,093 | |||||
Oracle Corp., 2.50%, 10/15/22 | 260,000 | 265,498 | |||||
Oracle Corp., 3.625%, 7/15/23 | 280,000 | 303,304 | |||||
Oracle Corp., 3.40%, 7/8/24 | 100,000 | 106,435 | |||||
Oracle Corp., 4.30%, 7/8/34 | 160,000 | 171,466 | |||||
1,818,218 | |||||||
Specialty Retail — 0.1% | |||||||
Home Depot, Inc. (The), 2.625%, 6/1/22 | 190,000 | 196,777 | |||||
Home Depot, Inc. (The), 3.35%, 9/15/25 | 120,000 | 130,030 | |||||
Home Depot, Inc. (The), 5.95%, 4/1/41 | 360,000 | 481,646 | |||||
United Rentals North America, Inc., 4.625%, 7/15/23 | 170,000 | 169,575 | |||||
978,028 | |||||||
Technology Hardware, Storage and Peripherals — 0.2% | |||||||
Apple, Inc., 1.00%, 5/3/18 | 160,000 | 160,018 | |||||
Apple, Inc., 2.85%, 5/6/21 | 180,000 | 189,270 | |||||
Apple, Inc., 3.45%, 5/6/24 | 240,000 | 256,450 | |||||
Apple, Inc., 4.65%, 2/23/46 | 100,000 | 110,292 | |||||
Hewlett Packard Enterprise Co., 3.60%, 10/15/20(2) | 280,000 | 290,344 |
22
Shares/ Principal Amount | Value | ||||||
Hewlett Packard Enterprise Co., 4.90%, 10/15/25(2) | $ | 200,000 | $ | 207,464 | |||
HP, Inc., 4.30%, 6/1/21 | 290,000 | 305,245 | |||||
Seagate HDD Cayman, 4.75%, 6/1/23 | 310,000 | 241,026 | |||||
1,760,109 | |||||||
Textiles, Apparel and Luxury Goods — 0.1% | |||||||
Hanesbrands, Inc., 6.375%, 12/15/20 | 280,000 | 290,150 | |||||
L Brands, Inc., 6.90%, 7/15/17 | 100,000 | 106,500 | |||||
PVH Corp., 4.50%, 12/15/22 | 210,000 | 218,137 | |||||
614,787 | |||||||
Tobacco — 0.1% | |||||||
Altria Group, Inc., 2.85%, 8/9/22 | 270,000 | 280,804 | |||||
Philip Morris International, Inc., 4.125%, 5/17/21 | 180,000 | 199,993 | |||||
Reynolds American, Inc., 4.45%, 6/12/25 | 250,000 | 278,115 | |||||
758,912 | |||||||
Wireless Telecommunication Services — 0.1% | |||||||
America Movil SAB de CV, 3.125%, 7/16/22 | 310,000 | 319,763 | |||||
Sprint Communications, Inc., 6.00%, 12/1/16 | 150,000 | 151,125 | |||||
Sprint Communications, Inc., 9.00%, 11/15/18(2) | 180,000 | 190,800 | |||||
T-Mobile USA, Inc., 6.46%, 4/28/19 | 210,000 | 214,988 | |||||
876,676 | |||||||
TOTAL CORPORATE BONDS (Cost $101,141,880) | 104,820,321 | ||||||
U.S. TREASURY SECURITIES — 11.4% | |||||||
U.S. Treasury Bonds, 3.50%, 2/15/39 | 2,850,000 | 3,366,674 | |||||
U.S. Treasury Bonds, 4.375%, 11/15/39 | 1,500,000 | 2,004,843 | |||||
U.S. Treasury Bonds, 4.375%, 5/15/41 | 1,850,000 | 2,479,398 | |||||
U.S. Treasury Bonds, 3.125%, 11/15/41 | 1,500,000 | 1,654,951 | |||||
U.S. Treasury Bonds, 2.75%, 11/15/42 | 2,180,000 | 2,231,561 | |||||
U.S. Treasury Bonds, 2.875%, 5/15/43 | 1,970,000 | 2,061,420 | |||||
U.S. Treasury Bonds, 3.125%, 8/15/44 | 1,830,000 | 2,006,888 | |||||
U.S. Treasury Bonds, 3.00%, 11/15/44 | 1,580,000 | 1,690,755 | |||||
U.S. Treasury Bonds, 2.50%, 2/15/45 | 1,500,000 | 1,448,702 | |||||
U.S. Treasury Inflation Indexed Notes, 0.125%, 7/15/24 | 3,994,920 | 4,024,854 | |||||
U.S. Treasury Notes, 0.75%, 10/31/17 | 1,500,000 | 1,501,172 | |||||
U.S. Treasury Notes, 1.875%, 10/31/17 | 2,400,000 | 2,442,142 | |||||
U.S. Treasury Notes, 0.875%, 1/31/18 | 3,400,000 | 3,407,902 | |||||
U.S. Treasury Notes, 1.00%, 3/15/18 | 7,150,000 | 7,182,261 | |||||
U.S. Treasury Notes, 0.75%, 4/15/18 | 1,200,000 | 1,199,461 | |||||
U.S. Treasury Notes, 2.625%, 4/30/18 | 875,000 | 907,283 | |||||
U.S. Treasury Notes, 1.375%, 7/31/18(4) | 1,130,000 | 1,143,993 | |||||
U.S. Treasury Notes, 1.25%, 10/31/18 | 2,350,000 | 2,372,858 | |||||
U.S. Treasury Notes, 1.25%, 11/15/18 | 3,400,000 | 3,433,204 | |||||
U.S. Treasury Notes, 1.25%, 11/30/18 | 3,100,000 | 3,130,395 | |||||
U.S. Treasury Notes, 1.375%, 11/30/18 | 200,000 | 202,613 | |||||
U.S. Treasury Notes, 1.50%, 2/28/19 | 3,000,000 | 3,050,274 | |||||
U.S. Treasury Notes, 1.625%, 7/31/19 | 2,800,000 | 2,857,641 |
23
Shares/ Principal Amount | Value | ||||||
U.S. Treasury Notes, 1.625%, 8/31/19 | $ | 8,350,000 | $ | 8,520,749 | |||
U.S. Treasury Notes, 1.50%, 10/31/19 | 5,650,000 | 5,738,835 | |||||
U.S. Treasury Notes, 1.50%, 11/30/19 | 2,600,000 | 2,640,118 | |||||
U.S. Treasury Notes, 1.625%, 12/31/19 | 950,000 | 968,554 | |||||
U.S. Treasury Notes, 1.375%, 3/31/20 | 2,950,000 | 2,976,851 | |||||
U.S. Treasury Notes, 1.375%, 4/30/20 | 1,500,000 | 1,513,008 | |||||
U.S. Treasury Notes, 1.625%, 6/30/20 | 2,350,000 | 2,391,492 | |||||
U.S. Treasury Notes, 1.75%, 12/31/20 | 600,000 | 613,219 | |||||
U.S. Treasury Notes, 2.25%, 4/30/21 | 2,150,000 | 2,247,715 | |||||
U.S. Treasury Notes, 2.00%, 10/31/21 | 3,250,000 | 3,352,768 | |||||
U.S. Treasury Notes, 1.50%, 2/28/23 | 2,800,000 | 2,782,609 | |||||
U.S. Treasury Notes, 2.25%, 11/15/25 | 2,000,000 | 2,075,390 | |||||
TOTAL U.S. TREASURY SECURITIES (Cost $88,669,010) | 91,622,553 | ||||||
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES(5) — 9.6% | |||||||
Adjustable-Rate U.S. Government Agency Mortgage-Backed Securities — 1.1% | |||||||
FHLMC, VRN, 1.78%, 5/15/16 | 114,500 | 116,587 | |||||
FHLMC, VRN, 1.93%, 5/15/16 | 225,619 | 230,402 | |||||
FHLMC, VRN, 1.97%, 5/15/16 | 153,679 | 155,938 | |||||
FHLMC, VRN, 2.31%, 5/15/16 | 715,841 | 731,780 | |||||
FHLMC, VRN, 2.40%, 5/15/16 | 329,863 | 348,985 | |||||
FHLMC, VRN, 2.55%, 5/15/16 | 55,022 | 57,744 | |||||
FHLMC, VRN, 2.62%, 5/15/16 | 829,857 | 873,980 | |||||
FHLMC, VRN, 2.64%, 5/15/16 | 145,017 | 152,961 | |||||
FHLMC, VRN, 2.66%, 5/15/16 | 85,714 | 90,446 | |||||
FHLMC, VRN, 2.79%, 5/15/16 | 313,644 | 330,282 | |||||
FHLMC, VRN, 3.24%, 5/15/16 | 190,867 | 200,816 | |||||
FHLMC, VRN, 3.66%, 5/15/16 | 124,292 | 130,275 | |||||
FHLMC, VRN, 4.06%, 5/15/16 | 124,183 | 130,765 | |||||
FHLMC, VRN, 4.22%, 5/15/16 | 347,166 | 367,247 | |||||
FHLMC, VRN, 4.66%, 5/15/16 | 87,762 | 91,876 | |||||
FHLMC, VRN, 5.15%, 5/15/16 | 31,301 | 32,834 | |||||
FHLMC, VRN, 5.77%, 5/15/16 | 201,486 | 212,339 | |||||
FHLMC, VRN, 5.94%, 5/15/16 | 145,929 | 153,488 | |||||
FNMA, VRN, 2.05%, 5/25/16 | 1,066,404 | 1,093,317 | |||||
FNMA, VRN, 2.08%, 5/25/16 | 446,595 | 465,655 | |||||
FNMA, VRN, 2.08%, 5/25/16 | 286,880 | 297,969 | |||||
FNMA, VRN, 2.09%, 5/25/16 | 749,078 | 779,677 | |||||
FNMA, VRN, 2.09%, 5/25/16 | 514,358 | 536,310 | |||||
FNMA, VRN, 2.10%, 5/25/16 | 263,982 | 276,208 | |||||
FNMA, VRN, 2.51%, 5/25/16 | 321,925 | 338,902 | |||||
FNMA, VRN, 2.52%, 5/25/16 | 47,919 | 50,404 | |||||
FNMA, VRN, 2.57%, 5/25/16 | 73,926 | 77,668 | |||||
FNMA, VRN, 2.65%, 5/25/16 | 68,994 | 72,665 | |||||
FNMA, VRN, 3.35%, 5/25/16 | 148,329 | 155,251 | |||||
FNMA, VRN, 3.61%, 5/25/16 | 207,230 | 218,815 |
24
Shares/ Principal Amount | Value | ||||||
FNMA, VRN, 3.95%, 5/25/16 | $ | 173,323 | $ | 182,813 | |||
FNMA, VRN, 4.80%, 5/25/16 | 119,646 | 126,110 | |||||
9,080,509 | |||||||
Fixed-Rate U.S. Government Agency Mortgage-Backed Securities — 8.5% | |||||||
FHLMC, 4.50%, 1/1/19 | 106,280 | 109,472 | |||||
FHLMC, 6.50%, 1/1/28 | 20,481 | 23,779 | |||||
FHLMC, 5.50%, 12/1/33 | 173,709 | 197,578 | |||||
FHLMC, 5.00%, 7/1/35 | 1,464,288 | 1,627,023 | |||||
FHLMC, 5.50%, 1/1/38 | 156,843 | 176,106 | |||||
FHLMC, 6.00%, 8/1/38 | 61,160 | 69,280 | |||||
FHLMC, 6.50%, 7/1/47 | 7,199 | 7,951 | |||||
FNMA, 3.00%, 5/12/16(6) | 1,750,000 | 1,793,763 | |||||
FNMA, 3.50%, 5/12/16(6) | 8,000,000 | 8,384,035 | |||||
FNMA, 4.00%, 5/12/16(6) | 5,450,000 | 5,822,558 | |||||
FNMA, 4.50%, 5/12/16(6) | 1,705,000 | 1,856,585 | |||||
FNMA, 4.50%, 5/1/19 | 40,082 | 41,345 | |||||
FNMA, 4.50%, 5/1/19 | 102,576 | 105,861 | |||||
FNMA, 5.00%, 9/1/20 | 250,524 | 265,401 | |||||
FNMA, 6.50%, 1/1/28 | 16,961 | 19,450 | |||||
FNMA, 6.50%, 1/1/29 | 28,743 | 33,783 | |||||
FNMA, 7.50%, 7/1/29 | 83,430 | 95,464 | |||||
FNMA, 7.50%, 9/1/30 | 16,198 | 19,708 | |||||
FNMA, 5.00%, 7/1/31 | 899,973 | 999,721 | |||||
FNMA, 6.50%, 9/1/31 | 17,297 | 19,841 | |||||
FNMA, 7.00%, 9/1/31 | 9,229 | 10,377 | |||||
FNMA, 6.50%, 1/1/32 | 24,903 | 28,570 | |||||
FNMA, 6.50%, 8/1/32 | 30,342 | 35,763 | |||||
FNMA, 5.50%, 6/1/33 | 87,789 | 99,392 | |||||
FNMA, 5.50%, 7/1/33 | 160,295 | 181,280 | |||||
FNMA, 5.50%, 8/1/33 | 270,645 | 305,147 | |||||
FNMA, 5.50%, 9/1/33 | 178,669 | 204,129 | |||||
FNMA, 5.00%, 11/1/33 | 532,422 | 592,614 | |||||
FNMA, 5.00%, 4/1/35 | 718,153 | 797,548 | |||||
FNMA, 4.50%, 9/1/35 | 339,514 | 371,353 | |||||
FNMA, 5.00%, 2/1/36 | 469,151 | 520,813 | |||||
FNMA, 5.50%, 4/1/36 | 177,344 | 199,889 | |||||
FNMA, 5.50%, 5/1/36 | 342,643 | 386,054 | |||||
FNMA, 5.00%, 11/1/36 | 1,224,800 | 1,359,442 | |||||
FNMA, 5.50%, 2/1/37 | 84,524 | 94,813 | |||||
FNMA, 6.00%, 7/1/37 | 610,519 | 701,552 | |||||
FNMA, 6.50%, 8/1/37 | 163,600 | 183,485 | |||||
FNMA, 5.50%, 7/1/39 | 573,018 | 646,101 | |||||
FNMA, 5.00%, 4/1/40 | 1,318,438 | 1,462,961 | |||||
FNMA, 5.00%, 6/1/40 | 1,148,111 | 1,273,746 | |||||
FNMA, 4.50%, 8/1/40 | 1,682,243 | 1,836,235 | |||||
FNMA, 4.50%, 9/1/40 | 2,968,618 | 3,248,339 | |||||
FNMA, 3.50%, 1/1/41 | 1,633,079 | 1,714,819 |
25
Shares/ Principal Amount | Value | ||||||
FNMA, 4.00%, 1/1/41 | $ | 1,364,136 | $ | 1,482,941 | |||
FNMA, 4.00%, 5/1/41 | 1,624,501 | 1,741,567 | |||||
FNMA, 4.50%, 7/1/41 | 551,890 | 604,873 | |||||
FNMA, 4.50%, 9/1/41 | 604,641 | 659,971 | |||||
FNMA, 4.50%, 9/1/41 | 2,419,947 | 2,641,686 | |||||
FNMA, 4.00%, 12/1/41 | 1,405,638 | 1,518,157 | |||||
FNMA, 4.00%, 1/1/42 | 853,201 | 914,837 | |||||
FNMA, 4.00%, 1/1/42 | 1,190,478 | 1,276,471 | |||||
FNMA, 3.50%, 5/1/42 | 2,278,629 | 2,398,495 | |||||
FNMA, 3.50%, 6/1/42 | 732,087 | 773,306 | |||||
FNMA, 3.00%, 11/1/42 | 1,754,584 | 1,803,078 | |||||
FNMA, 3.50%, 5/1/45 | 2,120,353 | 2,230,061 | |||||
FNMA, 6.50%, 8/1/47 | 21,044 | 23,436 | |||||
FNMA, 6.50%, 8/1/47 | 9,449 | 10,521 | |||||
FNMA, 6.50%, 9/1/47 | 43,335 | 48,286 | |||||
FNMA, 6.50%, 9/1/47 | 2,396 | 2,669 | |||||
FNMA, 6.50%, 9/1/47 | 16,284 | 18,134 | |||||
FNMA, 6.50%, 9/1/47 | 23,681 | 26,380 | |||||
FNMA, 6.50%, 9/1/47 | 6,322 | 7,038 | |||||
GNMA, 3.50%, 5/23/16(6) | 3,300,000 | 3,484,982 | |||||
GNMA, 4.00%, 5/23/16(6) | 2,000,000 | 2,134,335 | |||||
GNMA, 7.00%, 4/20/26 | 48,178 | 54,289 | |||||
GNMA, 7.50%, 8/15/26 | 30,819 | 37,198 | |||||
GNMA, 7.00%, 2/15/28 | 11,053 | 11,191 | |||||
GNMA, 7.50%, 2/15/28 | 13,800 | 14,041 | |||||
GNMA, 7.00%, 12/15/28 | 19,903 | 20,643 | |||||
GNMA, 7.00%, 5/15/31 | 58,919 | 72,339 | |||||
GNMA, 5.50%, 11/15/32 | 212,510 | 243,211 | |||||
GNMA, 4.50%, 5/20/41 | 691,793 | 752,686 | |||||
GNMA, 4.50%, 6/15/41 | 656,424 | 734,462 | |||||
GNMA, 4.00%, 12/15/41 | 1,123,742 | 1,207,864 | |||||
GNMA, 3.50%, 6/20/42 | 1,377,827 | 1,459,914 | |||||
GNMA, 3.50%, 7/20/42 | 673,685 | 713,821 | |||||
GNMA, 4.50%, 11/20/43 | 959,382 | 1,030,820 | |||||
68,076,829 | |||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $75,621,747) | 77,157,338 | ||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES(5) — 1.9% | |||||||
Bank of America Merrill Lynch Commercial Mortgage Securities Trust, Series 2012-PARK, Class A SEQ, 2.96%, 12/10/30(2) | 1,000,000 | 1,030,055 | |||||
Bank of America Merrill Lynch Commercial Mortgage Securities Trust, Series 2014-ICTS, Class A, VRN, 1.24%, 5/15/16(2) | 825,000 | 814,516 | |||||
Bank of America Merrill Lynch Commercial Mortgage Securities Trust, Series 2015-200P, Class B, 3.49%, 4/14/33(2) | 625,000 | 642,042 | |||||
BB-UBS Trust, Series 2012-SHOW, Class A SEQ, 3.43%, 11/5/36(2) | 950,000 | 992,573 |
26
Shares/ Principal Amount | Value | ||||||
BLCP Hotel Trust, Series 2014-CLRN, Class A, VRN, 1.38%, 5/15/16(2) | $ | 1,344,314 | $ | 1,324,390 | |||
Commercial Mortgage Pass-Through Certificates, Series 2014-BBG, Class A, VRN, 1.23%, 5/15/16(2) | 925,000 | 908,435 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-CR15, Class AM SEQ, 4.43%, 2/10/47 | 675,000 | 748,357 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-LC17, Class AM, VRN, 4.19%, 5/1/16 | 775,000 | 848,238 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-UBS5, Class AM, 4.19%, 9/10/47 | 900,000 | 975,045 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2015-CR22, Class AM, VRN, 3.60%, 5/1/16 | 750,000 | 782,946 | |||||
Core Industrial Trust, Series 2015-WEST, Class A SEQ, 3.29%, 2/10/37 | 1,100,000 | 1,141,771 | |||||
Irvine Core Office Trust, Series 2013-IRV, Class A2 SEQ, VRN, 3.28%, 5/10/16(2) | 1,300,000 | 1,358,458 | |||||
JPMBB Commercial Mortgage Securities Trust, Series 2014-C21, Class B, VRN, 4.34%, 5/1/16 | 475,000 | 504,741 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2013-C16, Class A4, 4.17%, 12/15/46 | 275,000 | 306,283 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2013-C16, Class AS, 4.52%, 12/15/46 | 450,000 | 500,181 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2014-CBM, Class A, VRN, 1.33%, 5/15/16(2) | 925,000 | 919,265 | |||||
Morgan Stanley Capital I Trust, Series 2014-CPT, Class A SEQ, 3.35%, 7/13/29(2) | 800,000 | 842,614 | |||||
Morgan Stanley Capital I Trust, Series 2014-CPT, Class C, VRN, 3.56%, 5/1/16(2) | 725,000 | 727,374 | |||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $14,974,925) | 15,367,284 | ||||||
COLLATERALIZED MORTGAGE OBLIGATIONS(5) — 1.9% | |||||||
Private Sponsor Collateralized Mortgage Obligations — 1.8% | |||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 26,607 | 27,662 | |||||
Adjustable Rate Mortgage Trust, Series 2004-4, Class 4A1, VRN, 2.73%, 5/1/16 | 359,713 | 356,841 | |||||
Banc of America Alternative Loan Trust, Series 2007-2, Class 2A4, 5.75%, 6/25/37 | 303,696 | 239,143 | |||||
Banc of America Mortgage Securities, Inc., Series 2003-G, Class 2A1, VRN, 2.77%, 5/1/16 | 214,848 | 212,764 | |||||
Banc of America Mortgage Securities, Inc., Series 2004-E, Class 2A6 SEQ, VRN, 2.89%, 5/1/16 | 331,498 | 327,712 | |||||
Banc of America Mortgage Securities, Inc., Series 2005-1, Class 1A15, 5.50%, 2/25/35 | 105,004 | 108,497 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A4, VRN, 2.46%, 5/1/16 | 647,850 | 618,178 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A5, VRN, 2.25%, 5/1/16 | 899,164 | 884,278 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 2.79%, 5/1/16 | 142,415 | 139,337 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-6, Class A2, VRN, 2.76%, 5/1/16 | 290,190 | 287,838 | |||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35 | 8,483 | 8,276 |
27
Shares/ Principal Amount | Value | ||||||
Credit Suisse First Boston Mortgage Securities Corp., Series 2003-AR28, Class 2A1, VRN, 2.63%, 5/1/16 | $ | 187,156 | $ | 182,204 | |||
First Horizon Alternative Mortgage Securities Trust, Series 2004-AA4, Class A1, VRN, 2.70%, 5/1/16 | 598,405 | 587,183 | |||||
First Horizon Mortgage Pass-Through Trust, Series 2005-AR3, Class 4A1, VRN, 2.59%, 5/1/16 | 107,777 | 103,498 | |||||
GSR Mortgage Loan Trust, Series 2004-7, Class 3A1, VRN, 2.31%, 5/1/16 | 222,902 | 216,155 | |||||
GSR Mortgage Loan Trust, Series 2004-AR5, Class 3A3, VRN, 3.02%, 5/1/16 | 246,815 | 245,548 | |||||
GSR Mortgage Loan Trust, Series 2005-AR1, Class 3A1, VRN, 2.74%, 5/1/16 | 376,415 | 372,264 | |||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 2A1, VRN, 3.18%, 5/1/16 | 339,067 | 341,151 | |||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 4A5, VRN, 2.80%, 5/1/16 | 545,455 | 544,506 | |||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 1A1, VRN, 2.55%, 5/1/16 | 109,884 | 108,267 | |||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 2A1, VRN, 2.72%, 5/1/16 | 74,296 | 73,663 | |||||
JPMorgan Mortgage Trust, Series 2006-A3, Class 7A1, VRN, 2.94%, 5/1/16 | 369,334 | 370,018 | |||||
JPMorgan Mortgage Trust, Series 2013-1, Class 2A2 SEQ, VRN, 2.50%, 5/1/16(2) | 147,836 | 148,866 | |||||
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 3A7, VRN, 2.78%, 5/1/16 | 494,075 | 503,580 | |||||
MASTR Asset Securitization Trust, Series 2003-10, Class 3A1, 5.50%, 11/25/33 | 67,097 | 67,051 | |||||
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 2A, VRN, 2.47%, 5/25/16 | 279,280 | 275,336 | |||||
Merrill Lynch Mortgage Investors Trust, Series 2005-A2, Class A1, VRN, 2.64%, 5/1/16 | 372,725 | 364,569 | |||||
PHHMC Mortgage Pass-Through Certificates, Series 2007-6, Class A1, VRN, 5.38%, 5/1/16 | 43,458 | 43,131 | |||||
Sequoia Mortgage Trust, Series 2012-1, Class 1A1, VRN, 2.87%, 5/1/16 | 74,726 | 75,319 | |||||
Sequoia Mortgage Trust, Series 2013-12, Class A1 SEQ, 4.00%, 12/25/43(2) | 209,445 | 217,107 | |||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-6, Class 3A2, VRN, 2.57%, 5/1/16 | 252,981 | 252,596 | |||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-8, Class 2A1, VRN, 2.55%, 5/1/16 | 223,425 | 222,155 | |||||
Thornburg Mortgage Securities Trust, Series 2004-3, Class A, VRN, 1.18%, 5/25/16 | 965,233 | 893,423 | |||||
Towd Point Mortgage Trust, Series 2016-1, Class A1, 3.50%, 2/25/55(2) | 587,730 | 603,451 | |||||
WaMu Mortgage Pass-Through Certificates, Series 2005-AR3, Class A1, VRN, 2.80%, 5/1/16 | 661,520 | 646,011 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-4, Class A9, 5.50%, 5/25/34 | 65,819 | 67,392 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-K, Class 2A6, VRN, 2.74%, 5/1/16 | 90,991 | 94,364 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-S, Class A1, VRN, 2.76%, 5/1/16 | 189,138 | 192,713 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-Z, Class 2A2, VRN, 2.85%, 5/1/16 | 191,390 | 190,614 |
28
Shares/ Principal Amount | Value | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-17, Class 1A1, 5.50%, 1/25/36 | $ | 110,694 | $ | 108,607 | |||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-3, Class A12, 5.50%, 5/25/35 | 104,246 | 105,490 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-9, Class 2A6, 5.25%, 10/25/35 | 303,654 | 312,434 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 1A1, VRN, 2.83%, 5/1/16 | 621,847 | 632,169 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 2A15, VRN, 2.82%, 5/1/16 | 63,305 | 65,781 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 2A17, VRN, 2.82%, 5/1/16 | 422,036 | 427,901 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR14, Class A1, VRN, 2.75%, 5/1/16 | 109,386 | 107,377 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR16, Class 3A2, VRN, 2.93%, 5/1/16 | 337,137 | 338,336 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR2, Class 3A1, VRN, 2.86%, 5/1/16 | 89,998 | 90,577 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR7, Class 1A1, VRN, 3.04%, 5/1/16 | 338,235 | 337,398 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-10, Class A4 SEQ, 6.00%, 8/25/36 | 154,092 | 156,300 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-13, Class A5, 6.00%, 10/25/36 | 193,301 | 196,895 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-13, Class A1, 6.00%, 9/25/37 | 104,645 | 107,146 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-14, Class 2A2, 5.50%, 10/25/22 | 96,079 | 98,801 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-16, Class 1A1, 6.00%, 12/28/37 | 71,403 | 74,069 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-AR10, Class 1A1, VRN, 6.27%, 5/1/16 | 107,527 | 105,651 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2008-1, Class 4A1, 5.75%, 2/25/38 | 269,888 | 283,206 | |||||
14,760,799 | |||||||
U.S. Government Agency Collateralized Mortgage Obligations — 0.1% | |||||||
FHLMC, Series 2926, Class EW SEQ, 5.00%, 1/15/25 | 285,069 | 309,835 | |||||
FHLMC, Series 77, Class H, 8.50%, 9/15/20 | 10,179 | 10,518 | |||||
320,353 | |||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $15,286,567) | 15,081,152 | ||||||
ASSET-BACKED SECURITIES(5) — 1.5% | |||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2012-2A, Class A SEQ, 2.80%, 5/20/18(2) | 750,000 | 756,958 | |||||
Barclays Dryrock Issuance Trust, Series 2014-1, Class A, VRN, 0.79%, 5/15/16 | 775,000 | 775,139 | |||||
BMW Floorplan Master Owner Trust, Series 2015-1A, Class A, VRN, 0.93%, 5/15/16(2) | 850,000 | 851,131 | |||||
Chesapeake Funding LLC, Series 2014-1A, Class A, VRN, 0.86%, 5/9/16(2) | 625,176 | 624,042 | |||||
Dell Equipment Finance Trust, Series 2015-2, Class A2B, VRN, 1.34%, 5/22/16(2) | 700,000 | 700,093 | |||||
Enterprise Fleet Financing LLC, Series 2014-1, Class A2 SEQ, 0.87%, 9/20/19(2) | 168,753 | 168,555 |
29
Shares/ Principal Amount | Value | ||||||
Enterprise Fleet Financing LLC, Series 2015-2, Class A2 SEQ, 1.59%, 2/22/21(2) | $ | 1,096,470 | $ | 1,096,990 | |||
Enterprise Fleet Financing LLC, Series 2016-1, Class A2 SEQ, 1.83%, 9/20/21(2) | 775,000 | 774,034 | |||||
Harley-Davidson Motorcycle Trust, Series 2014-1, Class A2B, VRN, 0.60%, 5/15/16 | 61,372 | 61,367 | |||||
Hertz Fleet Lease Funding LP, Series 2014-1, Class A, VRN, 0.84%, 5/10/16(2) | 593,815 | 592,601 | |||||
Hilton Grand Vacations Trust, Series 2013-A, Class A SEQ, 2.28%, 1/25/26(2) | 160,407 | 159,574 | |||||
Hilton Grand Vacations Trust, Series 2014-AA, Class A SEQ, 1.77%, 11/25/26(2) | 849,479 | 835,272 | |||||
Invitation Homes Trust, Series 2014-SFR1, Class A, VRN, 1.44%, 5/16/16(2) | 464,231 | 458,909 | |||||
John Deere Owner Trust, Series 2014-A, Class A3 SEQ, 0.92%, 4/16/18 | 440,669 | 440,721 | |||||
MVW Owner Trust, Series 2014-1A, Class A, 2.25%, 9/22/31(2) | 470,160 | 461,753 | |||||
MVW Owner Trust, Series 2015-1A, Class A SEQ, 2.52%, 12/20/32(2) | 579,989 | 578,596 | |||||
Sierra Timeshare Receivables Funding LLC, Series 2014-1A, Class A SEQ, 2.07%, 3/20/30(2) | 731,536 | 728,615 | |||||
Sierra Timeshare Receivables Funding LLC, Series 2015-1A, Class A, 2.40%, 3/22/32(2) | 408,817 | 403,827 | |||||
Toyota Auto Receivables Owner Trust, Series 2015-C, Class A2B, VRN, 0.76%, 5/15/16 | 795,991 | 796,465 | |||||
US Airways Pass-Through Trust, Series 2013-1, Class A, 3.95%, 5/15/27 | 153,785 | 158,591 | |||||
Volvo Financial Equipment LLC, Series 2015-1A, Class A2, 0.95%, 11/15/17(2) | 447,958 | 447,660 | |||||
TOTAL ASSET-BACKED SECURITIES (Cost $11,901,897) | 11,870,893 | ||||||
SOVEREIGN GOVERNMENTS AND AGENCIES — 0.7% | |||||||
Chile† | |||||||
Chile Government International Bond, 3.25%, 9/14/21 | 100,000 | 106,400 | |||||
Chile Government International Bond, 3.625%, 10/30/42 | 100,000 | 98,750 | |||||
205,150 | |||||||
Colombia — 0.1% | |||||||
Colombia Government International Bond, 4.375%, 7/12/21 | 310,000 | 324,725 | |||||
Colombia Government International Bond, 6.125%, 1/18/41 | 100,000 | 107,750 | |||||
432,475 | |||||||
Italy† | |||||||
Italy Government International Bond, 6.875%, 9/27/23 | 220,000 | 276,353 | |||||
Mexico — 0.2% | |||||||
Mexico Government International Bond, MTN, 5.95%, 3/19/19 | 420,000 | 469,875 | |||||
Mexico Government International Bond, 5.125%, 1/15/20 | 330,000 | 364,155 | |||||
Mexico Government International Bond, 4.00%, 10/2/23 | 100,000 | 105,000 | |||||
Mexico Government International Bond, 6.05%, 1/11/40 | 50,000 | 59,437 | |||||
Mexico Government International Bond, MTN, 4.75%, 3/8/44 | 400,000 | 405,000 | |||||
1,403,467 | |||||||
Peru† | |||||||
Peruvian Government International Bond, 6.55%, 3/14/37 | 70,000 | 90,125 |
30
Shares/ Principal Amount | Value | ||||||
Peruvian Government International Bond, 5.625%, 11/18/50 | $ | 170,000 | $ | 197,200 | |||
287,325 | |||||||
Philippines — 0.1% | |||||||
Philippine Government International Bond, 4.00%, 1/15/21 | 300,000 | 329,961 | |||||
Philippine Government International Bond, 6.375%, 10/23/34 | 150,000 | 214,121 | |||||
544,082 | |||||||
Poland — 0.1% | |||||||
Poland Government International Bond, 5.125%, 4/21/21 | 140,000 | 157,010 | |||||
Poland Government International Bond, 3.00%, 3/17/23 | 140,000 | 141,404 | |||||
298,414 | |||||||
Portugal — 0.2% | |||||||
Portugal Obrigacoes do Tesouro OT, 2.875%, 10/15/25(2) | EUR | 1,500,000 | 1,702,035 | ||||
South Africa† | |||||||
South Africa Government International Bond, 4.67%, 1/17/24 | $ | 110,000 | 110,684 | ||||
Turkey† | |||||||
Turkey Government International Bond, 3.25%, 3/23/23 | 300,000 | 286,938 | |||||
Uruguay† | |||||||
Uruguay Government International Bond, 4.125%, 11/20/45 | 120,000 | 103,800 | |||||
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES (Cost $5,418,335) | 5,650,723 | ||||||
U.S. GOVERNMENT AGENCY SECURITIES — 0.5% | |||||||
FNMA, 2.125%, 4/24/26 | 270,000 | 269,669 | |||||
FNMA, 6.625%, 11/15/30 | 2,690,000 | 3,985,221 | |||||
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $3,848,417) | 4,254,890 | ||||||
MUNICIPAL SECURITIES — 0.5% | |||||||
Bay Area Toll Authority Toll Bridge Rev., Series 2010 S-1, (Building Bonds), 6.92%, 4/1/40 | 195,000 | 271,994 | |||||
California GO, (Building Bonds), 7.55%, 4/1/39 | 100,000 | 155,425 | |||||
California GO, (Building Bonds), 7.30%, 10/1/39 | 290,000 | 430,316 | |||||
California GO, (Building Bonds), 7.60%, 11/1/40 | 80,000 | 126,616 | |||||
Illinois GO, (Taxable Pension), 5.10%, 6/1/33 | 245,000 | 237,469 | |||||
Los Angeles Community College District GO, Series 2010 D, (Election of 2008), 6.68%, 8/1/36 | 100,000 | 138,648 | |||||
Los Angeles Department of Water & Power Rev., (Building Bonds), 5.72%, 7/1/39 | 60,000 | 77,885 | |||||
Metropolitan Transportation Authority Rev., Series 2010 C-1, (Building Bonds), 6.69%, 11/15/40 | 105,000 | 145,767 | |||||
Metropolitan Transportation Authority Rev., Series 2010 E, (Building Bonds), 6.81%, 11/15/40 | 60,000 | 84,228 | |||||
Missouri Highways & Transportation Commission Rev., (Building Bonds), 5.45%, 5/1/33 | 130,000 | 162,226 | |||||
New Jersey State Turnpike Authority Rev., Series 2009 F, (Building Bonds), 7.41%, 1/1/40 | 200,000 | 304,618 | |||||
New Jersey State Turnpike Authority Rev., Series 2010 A, (Building Bonds), 7.10%, 1/1/41 | 95,000 | 140,336 | |||||
New York GO, Series 2010 F-1, (Building Bonds), 6.27%, 12/1/37 | 95,000 | 128,735 | |||||
Ohio Water Development Authority Pollution Control Rev., Series 2010 B-2, (Building Bonds), 4.88%, 12/1/34 | 110,000 | 130,266 |
31
Shares/ Principal Amount | Value | ||||||
Oregon State Department of Transportation Highway User Tax Rev., Series 2010 A, (Building Bonds), 5.83%, 11/15/34 | $ | 70,000 | $ | 93,075 | |||
Port Authority of New York & New Jersey Rev., (Consolidated Bonds), 4.93%, 10/1/51 | 50,000 | 59,290 | |||||
Port Authority of New York & New Jersey Rev., (Consolidated Bonds), 4.46%, 10/1/62 | 245,000 | 268,040 | |||||
Rutgers State University Rev., Series 2010 H, (Building Bonds), 5.67%, 5/1/40 | 205,000 | 254,555 | |||||
Sacramento Municipal Utility District Electric Rev., Series 2010 W, (Building Bonds), 6.16%, 5/15/36 | 210,000 | 269,489 | |||||
Salt River Agricultural Improvement & Power District Electric Rev., Series 2010 A, (Building Bonds), 4.84%, 1/1/41 | 95,000 | 116,028 | |||||
San Francisco City & County Public Utilities Water Commission Rev., Series 2010 B, (Building Bonds), 6.00%, 11/1/40 | 105,000 | 134,578 | |||||
San Francisco City & County Public Utilities Water Commission Rev., Series 2010 FG, (Building Bonds), 6.95%, 11/1/50 | 65,000 | 95,402 | |||||
Santa Clara Valley Transportation Authority Sales Tax Rev., Series 2010 A, (Building Bonds), 5.88%, 4/1/32 | 120,000 | 151,166 | |||||
Texas GO, (Building Bonds), 5.52%, 4/1/39 | 50,000 | 66,771 | |||||
Washington GO, Series 2010 F, (Building Bonds), 5.14%, 8/1/40 | 20,000 | 25,476 | |||||
TOTAL MUNICIPAL SECURITIES (Cost $3,312,166) | 4,068,399 | ||||||
TEMPORARY CASH INVESTMENTS(7) — 1.7% | |||||||
SSgA U.S. Government Money Market Fund, Class N | 7,687,582 | 7,687,582 | |||||
State Street Institutional Liquid Reserves Fund, Premier Class | 3,511,817 | 3,511,817 | |||||
U.S. Treasury Bills,0.25%,6/23/16(8) | $ | 3,000,000 | 2,999,409 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $14,198,325) | 14,198,808 | ||||||
TOTAL INVESTMENT SECURITIES — 102.5% (Cost $753,076,744) | 825,927,413 | ||||||
OTHER ASSETS AND LIABILITIES — (2.5)% | (19,941,574) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 805,985,839 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
EUR | 10,315,411 | USD | 11,704,226 | HSBC Holdings plc | 6/15/16 | $ | 122,639 | |
EUR | 22,578 | USD | 25,777 | JPMorgan Chase Bank N.A. | 6/15/16 | 109 | ||
EUR | 1,756,453 | USD | 2,006,535 | UBS AG | 6/15/16 | 7,280 | ||
USD | 11,221,924 | EUR | 10,157,196 | HSBC Holdings plc | 6/15/16 | (423,543) | ||
USD | 176,033 | EUR | 158,215 | HSBC Holdings plc | 6/15/16 | (5,364) | ||
USD | 11,618,027 | EUR | 10,241,471 | JPMorgan Chase Bank N.A. | 6/15/16 | (124,064) | ||
$ | (422,943 | ) |
32
FUTURES CONTRACTS | ||||||||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | |||||
32 | U.S. Treasury 2-Year Notes | June 2016 | $ | 6,996,000 | $ | (4,072 | ) | |
36 | U.S. Treasury 5-Year Notes | June 2016 | 4,352,906 | (20,331 | ) | |||
$ | 11,348,906 | $ | (24,403 | ) | ||||
Contracts Sold | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | |||||
27 | U.S. Treasury 10-Year Ultra Notes | June 2016 | $ | 3,795,188 | $ | 17,670 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
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 |
USD | - | United States Dollar |
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) | Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration, normally to qualified institutional investors. The aggregate value of these securities at the period end was $30,802,297, which represented 3.8% of total net assets. |
(3) | 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. |
(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 $75,145.
(5) | Final maturity date indicated, unless otherwise noted. |
(6) | Forward commitment. Settlement date is indicated. |
(7) | Category includes collateral received at the custodian bank for margin requirements on forward commitments. At the period end, the aggregate value of cash deposits received was $270,000. |
(8) | The rate indicated is the yield to maturity at purchase. |
See Notes to Financial Statements.
33
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $753,076,744) | $ | 825,927,413 | |
Receivable for investments sold | 20,089,559 | ||
Receivable for capital shares sold | 203,477 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 130,028 | ||
Dividends and interest receivable | 2,717,677 | ||
849,068,154 | |||
Liabilities | |||
Payable for collateral received for forward commitments | 270,000 | ||
Payable for investments purchased | 41,295,319 | ||
Payable for capital shares redeemed | 373,249 | ||
Payable for variation margin on futures contracts | 953 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 552,971 | ||
Accrued management fees | 589,823 | ||
43,082,315 | |||
Net Assets | $ | 805,985,839 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 739,607,601 | |
Undistributed net investment income | 1,214,947 | ||
Accumulated net realized loss | (7,264,603) | ||
Net unrealized appreciation | 72,427,894 | ||
$ | 805,985,839 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $752,913,126 | 44,329,517 | $16.98 | |
Institutional Class, $0.01 Par Value | $53,072,713 | 3,122,906 | $16.99 |
See Notes to Financial Statements.
34
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends | $ | 5,017,730 | |
Interest | 4,715,117 | ||
9,732,847 | |||
Expenses: | |||
Management fees | 3,552,533 | ||
Directors' fees and expenses | 14,824 | ||
Other expenses | 1,152 | ||
3,568,509 | |||
Net investment income (loss) | 6,164,338 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (4,647,431 | ) | |
Futures contract transactions | 11,225 | ||
Foreign currency transactions | 15,963 | ||
(4,620,243 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (2,029,292 | ) | |
Futures contracts | (6,733 | ) | |
Translation of assets and liabilities in foreign currencies | (416,042 | ) | |
(2,452,067 | ) | ||
Net realized and unrealized gain (loss) | (7,072,310 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (907,972 | ) |
See Notes to Financial Statements.
35
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 6,164,338 | $ | 12,525,644 | ||
Net realized gain (loss) | (4,620,243 | ) | 36,695,670 | |||
Change in net unrealized appreciation (depreciation) | (2,452,067 | ) | (40,507,302 | ) | ||
Net increase (decrease) in net assets resulting from operations | (907,972 | ) | 8,714,012 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (5,975,009 | ) | (12,448,959 | ) | ||
Institutional Class | (469,375 | ) | (874,926 | ) | ||
From net realized gains: | ||||||
Investor Class | (33,526,040 | ) | (57,795,802 | ) | ||
Institutional Class | (2,302,749 | ) | (3,452,739 | ) | ||
Decrease in net assets from distributions | (42,273,173 | ) | (74,572,426 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 5,728,031 | 44,652,515 | ||||
Net increase (decrease) in net assets | (37,453,114 | ) | (21,205,899 | ) | ||
Net Assets | ||||||
Beginning of period | 843,438,953 | 864,644,852 | ||||
End of period | $ | 805,985,839 | $ | 843,438,953 | ||
Undistributed net investment income | $ | 1,214,947 | $ | 1,494,993 |
See Notes to Financial Statements.
36
Notes to Financial Statements |
APRIL 30, 2016 (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’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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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 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. Corporate bonds, U.S. Treasury and Government Agency securities, convertible bonds, municipal securities, and sovereign governments and agencies are valued using market models that consider trade data, quotations from dealers and active market makers, relevant yield curve and spread data, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information. Mortgage-related and asset-backed securities are valued based on models that consider trade data, prepayment and default projections, benchmark yield and spread data and estimated cash flows of each tranche of the issuer. Fixed income 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.
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. 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.
37
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.
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.
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.
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
38
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.
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, 2016 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. 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, 2016 totaled $428,253,625, of which $181,958,505 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the six months ended April 30, 2016 totaled $462,019,588, of which $199,467,175 represented U.S. Treasury and Government Agency obligations.
39
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||
Shares | Amount | Shares | Amount | |||||
Investor Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||
Sold | 1,746,985 | $ | 29,399,023 | 4,908,713 | $ | 90,458,642 | ||
Issued in reinvestment of distributions | 2,293,412 | 38,589,249 | 3,820,611 | 68,651,270 | ||||
Redeemed | (3,774,400) | (63,843,209) | (6,753,372) | (123,350,081) | ||||
265,997 | 4,145,063 | 1,975,952 | 35,759,831 | |||||
Institutional Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||
Sold | 171,557 | 2,886,613 | 776,376 | 14,093,875 | ||||
Issued in reinvestment of distributions | 164,596 | 2,772,124 | 240,729 | 4,327,665 | ||||
Redeemed | (239,283) | (4,075,769) | (518,681) | (9,528,856) | ||||
96,870 | 1,582,968 | 498,424 | 8,892,684 | |||||
Net increase (decrease) | 362,867 | $ | 5,728,031 | 2,474,376 | $ | 44,652,515 |
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. There were no significant transfers between levels during the period.
40
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 | $ | 481,835,052 | — | — | ||||
Corporate Bonds | — | $ | 104,820,321 | — | ||||
U.S. Treasury Securities | — | 91,622,553 | — | |||||
U.S. Government Agency Mortgage-Backed Securities | — | 77,157,338 | — | |||||
Commercial Mortgage-Backed Securities | — | 15,367,284 | — | |||||
Collateralized Mortgage Obligations | — | 15,081,152 | — | |||||
Asset-Backed Securities | — | 11,870,893 | — | |||||
Sovereign Governments and Agencies | — | 5,650,723 | — | |||||
U.S. Government Agency Securities | — | 4,254,890 | — | |||||
Municipal Securities | — | 4,068,399 | — | |||||
Temporary Cash Investments | 11,199,399 | 2,999,409 | — | |||||
$ | 493,034,451 | $ | 332,892,962 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 17,670 | — | — | ||||
Forward Foreign Currency Exchange Contracts | — | $ | 130,028 | — | ||||
$ | 17,670 | $ | 130,028 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 24,403 | — | — | ||||
Forward Foreign Currency Exchange Contracts | — | $ | 552,971 | — | ||||
$ | 24,403 | $ | 552,971 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $27,840,702.
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
41
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's average exposure to interest rate risk derivative instruments held during the period was 72 contracts.
Value of Derivative Instruments as of April 30, 2016
Asset Derivatives | Liability Derivatives | |||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 130,028 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 552,971 | ||
Interest Rate Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | 953 | ||||
$ | 130,028 | $ | 553,924 |
* Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2016
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | |||||||
Type of Risk Exposure | Location on Statement of Operations | Value | Location on Statement of Operations | Value | ||||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | $ | (92,150 | ) | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | (422,943 | ) |
Interest Rate Risk | Net realized gain (loss) on futures contract transactions | 11,225 | Change in net unrealized appreciation (depreciation) on futures contracts | (6,733 | ) | |||
$ | (80,925 | ) | $ | (429,676 | ) |
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
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.
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 755,729,548 | |
Gross tax appreciation of investments | $ | 85,502,631 | |
Gross tax depreciation of investments | (15,304,766 | ) | |
Net tax appreciation (depreciation) of investments | $ | 70,197,865 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
42
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 | |||||||||||||||
2016(3) | $17.91 | 0.13 | (0.16) | (0.03) | (0.13) | (0.77) | (0.90) | $16.98 | 0.00% | 0.90%(4) | 1.53%(4) | 52% | $752,913 | ||
2015 | $19.38 | 0.26 | (0.08) | 0.18 | (0.28) | (1.37) | (1.65) | $17.91 | 0.98% | 0.90% | 1.43% | 94% | $789,209 | ||
2014 | $19.19 | 0.25 | 1.66 | 1.91 | (0.28) | (1.44) | (1.72) | $19.38 | 10.76% | 0.90% | 1.36% | 64% | $815,636 | ||
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 | ||
Institutional Class | |||||||||||||||
2016(3) | $17.92 | 0.15 | (0.16) | (0.01) | (0.15) | (0.77) | (0.92) | $16.99 | 0.10% | 0.70%(4) | 1.73%(4) | 52% | $53,073 | ||
2015 | $19.39 | 0.30 | (0.09) | 0.21 | (0.31) | (1.37) | (1.68) | $17.92 | 1.19% | 0.70% | 1.63% | 94% | $54,230 | ||
2014 | $19.20 | 0.29 | 1.65 | 1.94 | (0.31) | (1.44) | (1.75) | $19.39 | 10.98% | 0.70% | 1.56% | 64% | $49,009 | ||
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 |
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, 2016 (unaudited). |
(4) | Annualized. |
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.
45
Notes |
46
Notes |
47
Notes |
48
![]() | ||
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89207 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
JPMorgan Chase & Co. | 4.0% |
Wells Fargo & Co. | 3.4% |
Chevron Corp. | 3.1% |
Johnson & Johnson | 2.5% |
Exxon Mobil Corp. | 2.4% |
TOTAL SA | 2.4% |
Medtronic plc | 2.4% |
Cisco Systems, Inc. | 2.3% |
Pfizer, Inc. | 2.3% |
Oracle Corp. | 2.2% |
Top Five Industries | % of net assets |
Banks | 14.0% |
Oil, Gas and Consumable Fuels | 13.8% |
Pharmaceuticals | 7.7% |
Insurance | 6.3% |
Capital Markets | 4.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.8% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | (0.1)% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,011.20 | $5.05 | 1.01% |
Investor Class (before waiver) | $1,000 | $1,011.20(2) | $5.55 | 1.11% |
Institutional Class (after waiver) | $1,000 | $1,013.20 | $4.05 | 0.81% |
Institutional Class (before waiver) | $1,000 | $1,013.20(2) | $4.56 | 0.91% |
A Class (after waiver) | $1,000 | $1,010.90 | $6.30 | 1.26% |
A Class (before waiver) | $1,000 | $1,010.90(2) | $6.80 | 1.36% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.84 | $5.07 | 1.01% |
Investor Class (before waiver) | $1,000 | $1,019.34 | $5.57 | 1.11% |
Institutional Class (after waiver) | $1,000 | $1,020.84 | $4.07 | 0.81% |
Institutional Class (before waiver) | $1,000 | $1,020.34 | $4.57 | 0.91% |
A Class (after waiver) | $1,000 | $1,018.60 | $6.32 | 1.26% |
A Class (before waiver) | $1,000 | $1,018.10 | $6.82 | 1.36% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, 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 fees had not been waived. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.8% | ||||
Aerospace and Defense — 4.2% | ||||
Honeywell International, Inc. | 13,600 | $ | 1,554,072 | |
Huntington Ingalls Industries, Inc. | 6,500 | 941,005 | ||
Textron, Inc. | 22,400 | 866,432 | ||
United Technologies Corp. | 24,870 | 2,595,682 | ||
5,957,191 | ||||
Auto Components — 1.7% | ||||
BorgWarner, Inc. | 38,390 | 1,378,969 | ||
Delphi Automotive plc | 15,060 | 1,108,868 | ||
2,487,837 | ||||
Automobiles — 1.1% | ||||
Ford Motor Co. | 81,700 | 1,107,852 | ||
Harley-Davidson, Inc. | 8,640 | 413,251 | ||
1,521,103 | ||||
Banks — 14.0% | ||||
Bank of America Corp. | 201,860 | 2,939,082 | ||
Citigroup, Inc. | 13,740 | 635,887 | ||
JPMorgan Chase & Co. | 91,210 | 5,764,472 | ||
KeyCorp | 36,300 | 446,127 | ||
PNC Financial Services Group, Inc. (The) | 27,280 | 2,394,638 | ||
U.S. Bancorp | 68,370 | 2,918,715 | ||
Wells Fargo & Co. | 98,530 | 4,924,530 | ||
20,023,451 | ||||
Biotechnology — 0.5% | ||||
Amgen, Inc. | 4,520 | 715,516 | ||
Capital Markets — 4.8% | ||||
Ameriprise Financial, Inc. | 15,850 | 1,520,015 | ||
BlackRock, Inc. | 3,780 | 1,346,927 | ||
Goldman Sachs Group, Inc. (The) | 10,670 | 1,751,054 | ||
Invesco Ltd. | 56,620 | 1,755,786 | ||
Morgan Stanley | 18,320 | 495,739 | ||
6,869,521 | ||||
Chemicals — 1.6% | ||||
Dow Chemical Co. (The) | 27,870 | 1,466,241 | ||
LyondellBasell Industries NV, Class A | 10,050 | 830,833 | ||
2,297,074 | ||||
Commercial Services and Supplies — 0.8% | ||||
Tyco International plc | 28,560 | 1,100,131 | ||
Communications Equipment — 2.3% | ||||
Cisco Systems, Inc. | 122,080 | 3,355,979 | ||
Consumer Finance — 1.7% | ||||
Capital One Financial Corp. | 19,940 | 1,443,457 | ||
Discover Financial Services | 17,200 | 967,844 | ||
2,411,301 | ||||
Containers and Packaging — 0.8% | ||||
International Paper Co. | 13,100 | 566,837 |
6
Shares | Value | |||
WestRock Co. | 13,720 | $ | 574,182 | |
1,141,019 | ||||
Diversified Financial Services — 1.3% | ||||
Berkshire Hathaway, Inc., Class B(1) | 12,430 | 1,808,316 | ||
Diversified Telecommunication Services — 0.7% | ||||
AT&T, Inc. | 27,210 | 1,056,292 | ||
Electric Utilities — 2.6% | ||||
Edison International | 17,460 | 1,234,597 | ||
Westar Energy, Inc. | 25,140 | 1,297,475 | ||
Xcel Energy, Inc. | 29,560 | 1,183,287 | ||
3,715,359 | ||||
Electrical Equipment — 0.7% | ||||
Rockwell Automation, Inc. | 9,130 | 1,035,981 | ||
Electronic Equipment, Instruments and Components — 0.5% | ||||
VeriFone Systems, Inc.(1) | 23,770 | 676,494 | ||
Energy Equipment and Services — 2.8% | ||||
Halliburton Co. | 30,290 | 1,251,280 | ||
Schlumberger Ltd. | 34,350 | 2,759,679 | ||
4,010,959 | ||||
Food and Staples Retailing — 2.4% | ||||
CVS Health Corp. | 26,550 | 2,668,275 | ||
Sysco Corp. | 15,340 | 706,714 | ||
3,374,989 | ||||
Food Products — 0.6% | ||||
Flowers Foods, Inc. | 22,950 | 439,722 | ||
Hershey Co. (The) | 3,970 | 369,647 | ||
809,369 | ||||
Health Care Equipment and Supplies — 4.3% | ||||
Abbott Laboratories | 29,970 | 1,165,833 | ||
Medtronic plc | 43,000 | 3,403,450 | ||
Zimmer Biomet Holdings, Inc. | 13,250 | 1,533,952 | ||
6,103,235 | ||||
Health Care Providers and Services — 3.6% | ||||
Aetna, Inc. | 6,760 | 758,945 | ||
Anthem, Inc. | 8,140 | 1,145,868 | ||
HCA Holdings, Inc.(1) | 12,190 | 982,758 | ||
Laboratory Corp. of America Holdings(1) | 10,120 | 1,268,238 | ||
McKesson Corp. | 6,290 | 1,055,588 | ||
5,211,397 | ||||
Hotels, Restaurants and Leisure — 0.6% | ||||
Marriott International, Inc., Class A | 11,660 | 817,249 | ||
Household Durables — 1.2% | ||||
Whirlpool Corp. | 9,470 | 1,649,106 | ||
Household Products — 0.7% | ||||
Procter & Gamble Co. (The) | 12,720 | 1,019,126 | ||
Industrial Conglomerates — 0.7% | ||||
General Electric Co. | 33,940 | 1,043,655 | ||
Insurance — 6.3% | ||||
Allstate Corp. (The) | 19,880 | 1,293,194 | ||
American International Group, Inc. | 29,880 | 1,667,902 | ||
Chubb Ltd. | 19,240 | 2,267,626 |
7
Shares | Value | |||
MetLife, Inc. | 42,320 | $ | 1,908,632 | |
Principal Financial Group, Inc. | 14,400 | 614,592 | ||
Prudential Financial, Inc. | 17,050 | 1,323,762 | ||
9,075,708 | ||||
Machinery — 3.0% | ||||
Ingersoll-Rand plc | 47,360 | 3,103,974 | ||
Stanley Black & Decker, Inc. | 11,230 | 1,256,862 | ||
4,360,836 | ||||
Media — 2.1% | ||||
AMC Networks, Inc., Class A(1) | 14,310 | 933,441 | ||
Time Warner, Inc. | 27,690 | 2,080,627 | ||
3,014,068 | ||||
Oil, Gas and Consumable Fuels — 13.8% | ||||
Anadarko Petroleum Corp. | 20,120 | 1,061,531 | ||
Apache Corp. | 12,130 | 659,872 | ||
Chevron Corp. | 42,850 | 4,378,413 | ||
Exxon Mobil Corp. | 38,810 | 3,430,804 | ||
Imperial Oil Ltd. | 66,860 | 2,217,299 | ||
Noble Energy, Inc. | 27,410 | 989,775 | ||
Occidental Petroleum Corp. | 34,760 | 2,664,354 | ||
TOTAL SA | 68,145 | 3,427,834 | ||
Valero Energy Corp. | 15,880 | 934,856 | ||
19,764,738 | ||||
Pharmaceuticals — 7.7% | ||||
Allergan plc(1) | 6,050 | 1,310,188 | ||
Johnson & Johnson | 31,550 | 3,536,124 | ||
Merck & Co., Inc. | 42,580 | 2,335,087 | ||
Pfizer, Inc. | 99,790 | 3,264,131 | ||
Teva Pharmaceutical Industries Ltd. ADR | 10,350 | 563,558 | ||
11,009,088 | ||||
Real Estate Investment Trusts (REITs) — 0.3% | ||||
Brixmor Property Group, Inc. | 16,570 | 418,393 | ||
Road and Rail — 0.8% | ||||
Union Pacific Corp. | 12,450 | 1,086,013 | ||
Semiconductors and Semiconductor Equipment — 3.0% | ||||
Applied Materials, Inc. | 123,480 | 2,527,636 | ||
Intel Corp. | 18,200 | 551,096 | ||
Microchip Technology, Inc. | 15,690 | 762,377 | ||
NXP Semiconductors NV(1) | 5,990 | 510,827 | ||
4,351,936 | ||||
Software — 3.9% | ||||
Electronic Arts, Inc.(1) | 25,140 | 1,554,909 | ||
Microsoft Corp. | 18,110 | 903,146 | ||
Oracle Corp. | 77,900 | 3,105,094 | ||
5,563,149 | ||||
Specialty Retail — 1.2% | ||||
Advance Auto Parts, Inc. | 2,200 | 343,420 | ||
Lowe's Cos., Inc. | 18,770 | 1,426,895 | ||
1,770,315 | ||||
Tobacco — 1.5% | ||||
Altria Group, Inc. | 11,240 | 704,861 |
8
Shares | Value | |||
Philip Morris International, Inc. | 15,210 | $ | 1,492,405 | |
2,197,266 | ||||
TOTAL COMMON STOCKS (Cost $101,365,503) | 142,823,160 | |||
TEMPORARY CASH INVESTMENTS — 0.3% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% -1.50%, 6/15/16 - 7/31/16, valued at $175,760), in a joint trading account at 0.15%, dated 4/29/16 due 5/2/16 (Delivery value $172,296) | 172,294 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $295,969), in a joint trading account at 0.08%, dated 4/29/16 due 5/2/16 (Delivery value $287,002) | 287,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $459,294) | 459,294 | |||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $101,824,797) | 143,282,454 | |||
OTHER ASSETS AND LIABILITIES — (0.1)% | (157,764) | |||
TOTAL NET ASSETS — 100.0% | $ | 143,124,690 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 60,375 | USD | 45,615 | Morgan Stanley | 6/30/16 | $ | 2,505 | |
CAD | 98,284 | USD | 74,518 | Morgan Stanley | 6/30/16 | 3,815 | ||
USD | 1,578,755 | CAD | 2,083,625 | Morgan Stanley | 6/30/16 | (81,914 | ) | |
EUR | 60,480 | USD | 67,942 | UBS AG | 6/30/16 | 1,434 | ||
EUR | 71,851 | USD | 82,124 | UBS AG | 6/30/16 | 296 | ||
USD | 2,401,637 | EUR | 2,144,233 | UBS AG | 6/30/16 | (57,993 | ) | |
USD | 72,417 | EUR | 63,305 | UBS AG | 6/30/16 | (199 | ) | |
USD | 190,278 | EUR | 168,613 | UBS AG | 6/30/16 | (3,136 | ) | |
USD | 76,714 | EUR | 67,912 | UBS AG | 6/30/16 | (1,187 | ) | |
USD | 76,745 | EUR | 66,976 | UBS AG | 6/30/16 | (83 | ) | |
$ | (136,462 | ) |
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.
9
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $101,824,797) | $ | 143,282,454 | |
Cash | 371 | ||
Receivable for investments sold | 444,568 | ||
Receivable for capital shares sold | 40,215 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 8,050 | ||
Dividends and interest receivable | 138,375 | ||
143,914,033 | |||
Liabilities | |||
Payable for investments purchased | 420,451 | ||
Payable for capital shares redeemed | 107,520 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 144,512 | ||
Accrued management fees | 115,980 | ||
Distribution and service fees payable | 880 | ||
789,343 | |||
Net Assets | $ | 143,124,690 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 96,981,625 | |
Undistributed net investment income | 650,069 | ||
Undistributed net realized gain | 4,171,776 | ||
Net unrealized appreciation | 41,321,220 | ||
$ | 143,124,690 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $136,591,722 | 16,178,963 | $8.44 | |||
Institutional Class, $0.01 Par Value | $2,168,923 | 256,317 | $8.46 | |||
A Class, $0.01 Par Value | $4,364,045 | 518,367 | $8.42* |
*Maximum offering price $8.93 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $11,930) | $ | 1,785,262 | |
Interest | 116 | ||
1,785,378 | |||
Expenses: | |||
Management fees | 767,213 | ||
Distribution and service fees — A Class | 5,342 | ||
Directors' fees and expenses | 2,606 | ||
Other expenses | 964 | ||
776,125 | |||
Fees waived | (69,971 | ) | |
706,154 | |||
Net investment income (loss) | 1,079,224 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 5,318,329 | ||
Foreign currency transactions | (33,406 | ) | |
5,284,923 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (4,924,117 | ) | |
Translation of assets and liabilities in foreign currencies | (130,496 | ) | |
(5,054,613 | ) | ||
Net realized and unrealized gain (loss) | 230,310 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,309,534 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,079,224 | $ | 1,999,920 | ||
Net realized gain (loss) | 5,284,923 | 9,832,766 | ||||
Change in net unrealized appreciation (depreciation) | (5,054,613 | ) | (10,824,768 | ) | ||
Net increase (decrease) in net assets resulting from operations | 1,309,534 | 1,007,918 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (2,244,362 | ) | (2,061,009 | ) | ||
Institutional Class | (48,846 | ) | (47,038 | ) | ||
A Class | (60,089 | ) | (48,794 | ) | ||
From net realized gains: | ||||||
Investor Class | (8,499,296 | ) | (8,800,770 | ) | ||
Institutional Class | (164,845 | ) | (175,620 | ) | ||
A Class | (268,334 | ) | (254,043 | ) | ||
Decrease in net assets from distributions | (11,285,772 | ) | (11,387,274 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 1,828,106 | 2,811,062 | ||||
Net increase (decrease) in net assets | (8,148,132 | ) | (7,568,294 | ) | ||
Net Assets | ||||||
Beginning of period | 151,272,822 | 158,841,116 | ||||
End of period | $ | 143,124,690 | $ | 151,272,822 | ||
Undistributed net investment income | $ | 650,069 | $ | 1,924,142 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2016 (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’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 and 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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
13
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
14
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, 2016, the investment advisor voluntarily agreed to waive 0.100% of the management fee. The investment advisor expects this waiver to continue until February 28, 2017 and cannot terminate it prior to such date without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2016 was $66,602, $1,232 and $2,137 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, 2016 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, 2016 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, 2016 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. 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, 2016 were $37,844,213 and $45,998,842, respectively.
15
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 342,491 | $ | 2,823,998 | 1,064,442 | $ | 9,812,362 | ||||
Issued in reinvestment of distributions | 1,245,917 | 10,191,589 | 1,187,673 | 10,463,399 | ||||||
Redeemed | (1,292,966 | ) | (10,639,020 | ) | (1,990,525 | ) | (18,394,474 | ) | ||
295,442 | 2,376,567 | 261,590 | 1,881,287 | |||||||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 10,220 | 85,000 | 45,367 | 399,750 | ||||||
Issued in reinvestment of distributions | 18,746 | 153,720 | 15,972 | 140,869 | ||||||
Redeemed | (111,060 | ) | (933,119 | ) | (32,895 | ) | (288,560 | ) | ||
(82,094 | ) | (694,399 | ) | 28,444 | 252,059 | |||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 69,727 | 568,947 | 155,347 | 1,419,624 | ||||||
Issued in reinvestment of distributions | 39,753 | 324,780 | 34,040 | 299,551 | ||||||
Redeemed | (90,975 | ) | (747,789 | ) | (114,102 | ) | (1,041,459 | ) | ||
18,505 | 145,938 | 75,285 | 677,716 | |||||||
Net increase (decrease) | 231,853 | $ | 1,828,106 | 365,319 | $ | 2,811,062 |
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. There were no significant transfers between levels during the period.
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 | $ | 137,178,027 | $ | 5,645,133 | — | |||
Temporary Cash Investments | — | 459,294 | — | |||||
$ | 137,178,027 | $ | 6,104,427 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 8,050 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 144,512 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $4,078,388.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $8,050 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $144,512 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(36,689) in net realized gain (loss) on foreign currency transactions and $(130,437) 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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 103,004,301 | |
Gross tax appreciation of investments | $ | 41,385,073 | |
Gross tax depreciation of investments | (1,106,920 | ) | |
Net tax appreciation (depreciation) of investments | $ | 40,278,153 |
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 | 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 | |||||||||||||||||
2016(3) | $9.05 | 0.06 | 0.02 | 0.08 | (0.14) | (0.55) | (0.69) | $8.44 | 1.12% | 1.01%(4) | 1.11%(4) | 1.54%(4) | 1.44%(4) | 27% | $136,592 | ||
2015 | $9.71 | 0.12 | (0.08) | 0.04 | (0.13) | (0.57) | (0.70) | $9.05 | 0.61% | 1.00% | 1.10% | 1.28% | 1.18% | 31% | $143,698 | ||
2014 | $8.51 | 0.12 | 1.20 | 1.32 | (0.12) | — | (0.12) | $9.71 | 15.68% | 1.00% | 1.10% | 1.32% | 1.22% | 31% | $151,715 | ||
2013 | $6.89 | 0.13 | 1.61 | 1.74 | (0.12) | — | (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) | — | (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) | — | (0.09) | $5.96 | 5.67% | 1.00% | 1.10% | 1.53% | 1.43% | 37% | $111,188 | ||
Institutional Class | |||||||||||||||||
2016(3) | $9.08 | 0.07 | 0.02 | 0.09 | (0.16) | (0.55) | (0.71) | $8.46 | 1.32% | 0.81%(4) | 0.91%(4) | 1.74%(4) | 1.64%(4) | 27% | $2,169 | ||
2015 | $9.74 | 0.14 | (0.08) | 0.06 | (0.15) | (0.57) | (0.72) | $9.08 | 0.72% | 0.80% | 0.90% | 1.48% | 1.38% | 31% | $3,071 | ||
2014 | $8.54 | 0.14 | 1.20 | 1.34 | (0.14) | — | (0.14) | $9.74 | 15.86% | 0.80% | 0.90% | 1.52% | 1.42% | 31% | $3,019 | ||
2013 | $6.90 | 0.15 | 1.62 | 1.77 | (0.13) | — | (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) | — | (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) | — | (0.11) | $5.97 | 5.87% | 0.80% | 0.90% | 1.73% | 1.63% | 37% | $3,618 |
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 | |||||||||||||||||
2016(3) | $9.01 | 0.05 | 0.03 | 0.08 | (0.12) | (0.55) | (0.67) | $8.42 | 1.09% | 1.26%(4) | 1.36%(4) | 1.29%(4) | 1.19%(4) | 27% | $4,364 | ||
2015 | $9.67 | 0.09 | (0.07) | 0.02 | (0.11) | (0.57) | (0.68) | $9.01 | 0.34% | 1.25% | 1.35% | 1.03% | 0.93% | 31% | $4,504 | ||
2014 | $8.48 | 0.10 | 1.19 | 1.29 | (0.10) | — | (0.10) | $9.67 | 15.32% | 1.25% | 1.35% | 1.07% | 0.97% | 31% | $4,107 | ||
2013 | $6.87 | 0.11 | 1.62 | 1.73 | (0.12) | — | (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) | — | (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) | — | (0.08) | $5.95 | 5.41% | 1.25% | 1.35% | 1.28% | 1.18% | 37% | $3,326 |
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, 2016 (unaudited). |
(4) | Annualized. |
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.
20
![]() | ||
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89212 1606 |
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc., Class A | 4.7% |
PepsiCo, Inc. | 4.2% |
Visa, Inc., Class A | 4.2% |
Walt Disney Co. (The) | 4.1% |
Comcast Corp., Class A | 4.0% |
Boeing Co. (The) | 3.7% |
Amazon.com, Inc. | 3.6% |
Oracle Corp. | 3.4% |
Lockheed Martin Corp. | 3.3% |
C.R. Bard, Inc. | 3.0% |
Top Five Industries | % of net assets |
Internet Software and Services | 8.3% |
Media | 8.3% |
Software | 8.3% |
Aerospace and Defense | 7.0% |
Internet and Catalog Retail | 6.1% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.9% |
Exchange-Traded Funds | 0.8% |
Total Equity Exposure | 98.7% |
Temporary Cash Investments | 1.8% |
Other Assets and Liabilities | (0.5)% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $960.30 | $4.87 | 1.00% |
Institutional Class | $1,000 | $962.30 | $3.90 | 0.80% |
A Class | $1,000 | $960.10 | $6.09 | 1.25% |
C Class | $1,000 | $955.90 | $9.73 | 2.00% |
R Class | $1,000 | $957.70 | $7.30 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 97.9% | ||||
Aerospace and Defense — 7.0% | ||||
Boeing Co. (The) | 4,197 | $ | 565,756 | |
Lockheed Martin Corp. | 2,119 | 492,413 | ||
1,058,169 | ||||
Airlines — 2.8% | ||||
Alaska Air Group, Inc. | 3,536 | 249,040 | ||
Delta Air Lines, Inc. | 4,176 | 174,014 | ||
423,054 | ||||
Beverages — 4.2% | ||||
PepsiCo, Inc. | 6,114 | 629,497 | ||
Biotechnology — 4.8% | ||||
Biogen, Inc.(1) | 953 | 262,065 | ||
Gilead Sciences, Inc. | 2,466 | 217,526 | ||
Incyte Corp.(1) | 2,818 | 203,657 | ||
Regeneron Pharmaceuticals, Inc.(1) | 108 | 40,685 | ||
723,933 | ||||
Chemicals — 4.1% | ||||
Dow Chemical Co. (The) | 8,212 | 432,033 | ||
LyondellBasell Industries NV, Class A | 1,306 | 107,967 | ||
Sherwin-Williams Co. (The) | 255 | 73,264 | ||
613,264 | ||||
Consumer Finance — 0.7% | ||||
American Express Co. | 1,585 | 103,707 | ||
Energy Equipment and Services — 1.5% | ||||
Halliburton Co. | 5,551 | 229,312 | ||
Food Products — 2.6% | ||||
Mead Johnson Nutrition Co. | 4,438 | 386,772 | ||
Health Care Equipment and Supplies — 3.1% | ||||
C.R. Bard, Inc. | 2,137 | 453,407 | ||
Edwards Lifesciences Corp.(1) | 198 | 21,030 | ||
474,437 | ||||
Health Care Providers and Services — 4.5% | ||||
Cardinal Health, Inc. | 4,853 | 380,766 | ||
Express Scripts Holding Co.(1) | 3,961 | 292,045 | ||
VCA, Inc.(1) | 231 | 14,546 | ||
687,357 | ||||
Hotels, Restaurants and Leisure — 1.9% | ||||
Las Vegas Sands Corp. | 6,337 | 286,115 | ||
Household Products — 2.2% | ||||
Church & Dwight Co., Inc. | 354 | 32,816 | ||
Procter & Gamble Co. (The) | 3,695 | 296,043 | ||
328,859 | ||||
Insurance — 2.5% | ||||
American International Group, Inc. | 6,752 | 376,897 | ||
Internet and Catalog Retail — 6.1% | ||||
Amazon.com, Inc.(1) | 828 | 546,140 |
6
Shares | Value | |||
Expedia, Inc. | 3,313 | $ | 383,546 | |
929,686 | ||||
Internet Software and Services — 8.3% | ||||
Alphabet, Inc., Class A(1) | 999 | 707,172 | ||
Facebook, Inc., Class A(1) | 3,822 | 449,391 | ||
LinkedIn Corp., Class A(1) | 368 | 46,114 | ||
Pandora Media, Inc.(1) | 5,705 | 56,651 | ||
1,259,328 | ||||
IT Services — 6.1% | ||||
Cognizant Technology Solutions Corp., Class A(1) | 269 | 15,702 | ||
Fiserv, Inc.(1) | 2,802 | 273,811 | ||
Visa, Inc., Class A | 8,145 | 629,120 | ||
918,633 | ||||
Machinery — 2.6% | ||||
Parker-Hannifin Corp. | 2,138 | 248,051 | ||
WABCO Holdings, Inc.(1) | 1,354 | 151,864 | ||
399,915 | ||||
Media — 8.3% | ||||
Comcast Corp., Class A | 9,954 | 604,805 | ||
Sirius XM Holdings, Inc.(1) | 9,645 | 38,098 | ||
Walt Disney Co. (The) | 5,945 | 613,880 | ||
1,256,783 | ||||
Multiline Retail — 0.4% | ||||
Dollar Tree, Inc.(1) | 833 | 66,398 | ||
Oil, Gas and Consumable Fuels — 0.1% | ||||
Concho Resources, Inc.(1) | 184 | 21,375 | ||
Personal Products — 0.9% | ||||
Estee Lauder Cos., Inc. (The), Class A | 1,433 | 137,382 | ||
Pharmaceuticals — 4.3% | ||||
Johnson & Johnson | 2,335 | 261,707 | ||
Perrigo Co. plc | 547 | 52,878 | ||
Teva Pharmaceutical Industries Ltd. ADR | 6,168 | 335,848 | ||
650,433 | ||||
Road and Rail — 1.2% | ||||
Union Pacific Corp. | 2,000 | 174,460 | ||
Semiconductors and Semiconductor Equipment — 1.7% | ||||
Xilinx, Inc. | 6,123 | 263,779 | ||
Software — 8.3% | ||||
Electronic Arts, Inc.(1) | 6,006 | 371,471 | ||
Oracle Corp. | 12,791 | 509,849 | ||
ServiceNow, Inc.(1) | 2,230 | 159,401 | ||
Splunk, Inc.(1) | 4,037 | 209,843 | ||
1,250,564 | ||||
Specialty Retail — 4.7% | ||||
O'Reilly Automotive, Inc.(1) | 1,681 | 441,565 | ||
Ross Stores, Inc. | 4,290 | 243,586 | ||
TJX Cos., Inc. (The) | 363 | 27,523 | ||
712,674 | ||||
Textiles, Apparel and Luxury Goods — 2.8% | ||||
Carter's, Inc. | 3,994 | 426,040 | ||
7
Shares | Value | |||
Trading Companies and Distributors — 0.2% | ||||
United Rentals, Inc.(1) | 406 | $ | 27,174 | |
TOTAL COMMON STOCKS (Cost $12,357,635) | 14,815,997 | |||
EXCHANGE-TRADED FUNDS — 0.8% | ||||
iShares Russell 1000 Growth ETF (Cost $126,779) | 1,295 | 128,011 | ||
TEMPORARY CASH INVESTMENTS — 1.8% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc.,(collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $102,955),in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $100,925) | 100,924 | |||
Repurchase Agreement, Fixed Income Clearing Corp.,(collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $172,200),at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $168,001) | 168,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 323 | 323 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $269,247) | 269,247 | |||
TOTAL INVESTMENT SECURITIES — 100.5% (Cost $12,753,661) | 15,213,255 | |||
OTHER ASSETS AND LIABILITIES — (0.5)% | (77,580) | |||
TOTAL NET ASSETS — 100.0% | $ | 15,135,675 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
8
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $12,753,661) | $ | 15,213,255 | |
Receivable for investments sold | 48,495 | ||
Receivable for capital shares sold | 3,817 | ||
Dividends and interest receivable | 3,448 | ||
15,269,015 | |||
Liabilities | |||
Payable for investments purchased | 114,965 | ||
Payable for capital shares redeemed | 5,635 | ||
Accrued management fees | 12,387 | ||
Distribution and service fees payable | 353 | ||
133,340 | |||
Net Assets | $ | 15,135,675 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 12,572,555 | |
Undistributed net investment income | 15,911 | ||
Undistributed net realized gain | 87,615 | ||
Net unrealized appreciation | 2,459,594 | ||
$ | 15,135,675 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $14,198,924 | 1,224,629 | $11.59 | |||
Institutional Class, $0.01 Par Value | $40,662 | 3,506 | $11.60 | |||
A Class, $0.01 Par Value | $602,936 | 52,128 | $11.57* | |||
C Class, $0.01 Par Value | $277,244 | 25,335 | $10.94 | |||
R Class, $0.01 Par Value | $15,909 | 1,390 | $11.45 |
*Maximum offering price $12.28 (net asset value divided by 0.9425).
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $660) | $ | 109,888 | |
Interest | 127 | ||
110,015 | |||
Expenses: | |||
Management fees | 76,634 | ||
Distribution and service fees: | |||
A Class | 709 | ||
C Class | 1,336 | ||
R Class | 251 | ||
Directors' fees and expenses | 289 | ||
Other expenses | 52 | ||
79,271 | |||
Net investment income (loss) | 30,744 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on investment transactions | 109,074 | ||
Change in net unrealized appreciation (depreciation) on investments | (821,499 | ) | |
Net realized and unrealized gain (loss) | (712,425 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (681,681 | ) |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 30,744 | $ | 53,856 | ||
Net realized gain (loss) | 109,074 | 793,586 | ||||
Change in net unrealized appreciation (depreciation) | (821,499 | ) | 198,421 | |||
Net increase (decrease) in net assets resulting from operations | (681,681 | ) | 1,045,863 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (42,783 | ) | (58,116 | ) | ||
Institutional Class | (197 | ) | (222 | ) | ||
A Class | (185 | ) | (750 | ) | ||
From net realized gains: | ||||||
Investor Class | (656,628 | ) | (3,294,997 | ) | ||
Institutional Class | (1,768 | ) | (8,120 | ) | ||
A Class | (24,516 | ) | (137,956 | ) | ||
C Class | (13,165 | ) | (80,522 | ) | ||
R Class | (4,916 | ) | (24,279 | ) | ||
Decrease in net assets from distributions | (744,158 | ) | (3,604,962 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (135,173 | ) | 1,882,415 | |||
Net increase (decrease) in net assets | (1,561,012 | ) | (676,684 | ) | ||
Net Assets | ||||||
Beginning of period | 16,696,687 | 17,373,371 | ||||
End of period | $ | 15,135,675 | $ | 16,696,687 | ||
Undistributed net investment income | $ | 15,911 | $ | 28,332 |
See Notes to Financial Statements.
11
Notes to Financial Statements |
APRIL 30, 2016 (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’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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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.
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
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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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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.
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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 0.990% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.790% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2016 was 0.99% for the Investor Class, A Class, C Class and R Class and 0.79% 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, 2016 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. 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, 2016 were $3,043,397 and $3,801,735, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 44,015 | $ | 513,936 | 130,836 | $ | 1,660,216 | ||||
Issued in reinvestment of distributions | 58,519 | 686,425 | 280,501 | 3,295,886 | ||||||
Redeemed | (114,290 | ) | (1,301,226 | ) | (230,077 | ) | (2,845,220 | ) | ||
(11,756 | ) | (100,865 | ) | 181,260 | 2,110,882 | |||||
Institutional Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Issued in reinvestment of distributions | 167 | 1,965 | 711 | 8,342 | ||||||
A Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 5,659 | 63,754 | 10,274 | 128,143 | ||||||
Issued in reinvestment of distributions | 2,053 | 24,038 | 11,513 | 135,042 | ||||||
Redeemed | (1,866 | ) | (21,994 | ) | (37,614 | ) | (521,417 | ) | ||
5,846 | 65,798 | (15,827 | ) | (258,232 | ) | |||||
C Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 1,798 | 19,703 | 1,852 | 22,305 | ||||||
Issued in reinvestment of distributions | 917 | 10,183 | 5,686 | 63,915 | ||||||
Redeemed | (2,308 | ) | (25,281 | ) | (8,610 | ) | (99,638 | ) | ||
407 | 4,605 | (1,072 | ) | (13,418 | ) | |||||
R Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 2,299 | 27,653 | 1,038 | 12,798 | ||||||
Issued in reinvestment of distributions | 424 | 4,916 | 2,084 | 24,279 | ||||||
Redeemed | (12,107 | ) | (139,245 | ) | (174 | ) | (2,236 | ) | ||
(9,384 | ) | (106,676 | ) | 2,948 | 34,841 | |||||
Net increase (decrease) | (14,720 | ) | $ | (135,173 | ) | 168,020 | $ | 1,882,415 |
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. There were no significant transfers between levels during the period.
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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 | $ | 14,815,997 | — | — | ||||
Exchange-Traded Funds | 128,011 | — | — | |||||
Temporary Cash Investments | 323 | $ | 268,924 | — | ||||
$ | 14,944,331 | $ | 268,924 | — |
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 12,777,859 | |
Gross tax appreciation of investments | $ | 2,799,334 | |
Gross tax depreciation of investments | (363,938 | ) | |
Net tax appreciation (depreciation) of investments | $ | 2,435,396 |
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 | |||||||||||||||
2016(3) | $12.65 | 0.02 | (0.52) | (0.50) | (0.03) | (0.53) | (0.56) | $11.59 | (3.97)% | 1.00%(4) | 0.42%(4) | 20% | $14,199 | ||
2015 | $15.08 | 0.04 | 0.67 | 0.71 | (0.05) | (3.09) | (3.14) | $12.65 | 6.41% | 0.99% | 0.35% | 61% | $15,638 | ||
2014 | $14.89 | 0.05 | 1.80 | 1.85 | (0.06) | (1.60) | (1.66) | $15.08 | 13.75% | 1.00% | 0.38% | 97% | $15,906 | ||
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 | ||
Institutional Class | |||||||||||||||
2016(3) | $12.66 | 0.04 | (0.51) | (0.47) | (0.06) | (0.53) | (0.59) | $11.60 | (3.77)% | 0.80%(4) | 0.62%(4) | 20% | $41 | ||
2015 | $15.10 | 0.07 | 0.66 | 0.73 | (0.08) | (3.09) | (3.17) | $12.66 | 6.51% | 0.79% | 0.55% | 61% | $42 | ||
2014 | $14.91 | 0.08 | 1.80 | 1.88 | (0.09) | (1.60) | (1.69) | $15.10 | 14.06% | 0.80% | 0.58% | 97% | $40 | ||
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 | ||
A Class | |||||||||||||||
2016(3) | $12.60 | 0.01 | (0.51) | (0.50) | —(5) | (0.53) | (0.53) | $11.57 | (3.99)% | 1.25%(4) | 0.17%(4) | 20% | $603 | ||
2015 | $15.03 | 0.02 | 0.66 | 0.68 | (0.02) | (3.09) | (3.11) | $12.60 | 6.11% | 1.24% | 0.10% | 61% | $583 | ||
2014 | $14.84 | 0.02 | 1.79 | 1.81 | (0.02) | (1.60) | (1.62) | $15.03 | 13.49% | 1.25% | 0.13% | 97% | $933 | ||
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 |
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 | |||||||||||||||
2016(3) | $11.99 | (0.03) | (0.49) | (0.52) | — | (0.53) | (0.53) | $10.94 | (4.41)% | 2.00%(4) | (0.58)%(4) | 20% | $277 | ||
2015 | $14.52 | (0.08) | 0.64 | 0.56 | — | (3.09) | (3.09) | $11.99 | 5.28% | 1.99% | (0.65)% | 61% | $299 | ||
2014 | $14.47 | (0.09) | 1.74 | 1.65 | — | (1.60) | (1.60) | $14.52 | 12.66% | 2.00% | (0.62)% | 97% | $378 | ||
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 | ||
R Class | |||||||||||||||
2016(3) | $12.49 | —(5) | (0.51) | (0.51) | — | (0.53) | (0.53) | $11.45 | (4.23)% | 1.50%(4) | (0.08)%(4) | 20% | $16 | ||
2015 | $14.93 | (0.02) | 0.67 | 0.65 | — | (3.09) | (3.09) | $12.49 | 5.85% | 1.49% | (0.15)% | 61% | $135 | ||
2014 | $14.77 | 0.02 | 1.74 | 1.76 | — | (1.60) | (1.60) | $14.93 | 13.20% | 1.50% | (0.12)% | 97% | $117 | ||
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 |
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, 2016 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
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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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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89211 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Exxon Mobil Corp. | 4.2% |
Comcast Corp., Class A | 3.6% |
JPMorgan Chase & Co. | 3.6% |
Apple, Inc. | 3.3% |
Boeing Co. (The) | 3.3% |
CVS Health Corp. | 2.7% |
PepsiCo, Inc. | 2.5% |
Target Corp. | 2.4% |
Caterpillar, Inc. | 2.4% |
O'Reilly Automotive, Inc. | 2.2% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 6.0% |
Banks | 6.0% |
Aerospace and Defense | 5.4% |
Specialty Retail | 5.0% |
Pharmaceuticals | 4.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.7% |
Exchange-Traded Funds | 0.5% |
Total Equity Exposure | 99.2% |
Temporary Cash Investments | 0.9% |
Other Assets and Liabilities | (0.1)% |
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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, 2015 to April 30, 2016.
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.
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.
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Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $976.90 | $4.92 | 1.00% |
Institutional Class | $1,000 | $978.00 | $3.93 | 0.80% |
A Class | $1,000 | $975.80 | $6.14 | 1.25% |
C Class | $1,000 | $972.10 | $9.81 | 2.00% |
R Class | $1,000 | $974.10 | $7.36 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
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Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 98.7% | ||||
Aerospace and Defense — 5.4% | ||||
Boeing Co. (The) | 54,634 | $ | 7,364,663 | |
General Dynamics Corp. | 19,204 | 2,698,546 | ||
Northrop Grumman Corp. | 10,473 | 2,160,161 | ||
12,223,370 | ||||
Airlines — 1.2% | ||||
Delta Air Lines, Inc. | 64,022 | 2,667,797 | ||
Banks — 6.0% | ||||
Bank of America Corp. | 39,395 | 573,591 | ||
Citigroup, Inc. | 105,930 | 4,902,441 | ||
JPMorgan Chase & Co. | 127,696 | 8,070,387 | ||
13,546,419 | ||||
Beverages — 2.5% | ||||
PepsiCo, Inc. | 55,591 | 5,723,649 | ||
Biotechnology — 4.3% | ||||
AbbVie, Inc. | 20,737 | 1,264,957 | ||
Amgen, Inc. | 13,059 | 2,067,240 | ||
Biogen, Inc.(1) | 7,805 | 2,146,297 | ||
Gilead Sciences, Inc. | 32,825 | 2,895,493 | ||
Incyte Corp.(1) | 17,747 | 1,282,576 | ||
9,656,563 | ||||
Capital Markets — 1.1% | ||||
Ameriprise Financial, Inc. | 12,820 | 1,229,438 | ||
Franklin Resources, Inc. | 14,238 | 531,647 | ||
Legg Mason, Inc. | 22,904 | 735,447 | ||
2,496,532 | ||||
Chemicals — 2.3% | ||||
Dow Chemical Co. (The) | 52,993 | 2,787,962 | ||
LyondellBasell Industries NV, Class A | 6,084 | 502,964 | ||
Sherwin-Williams Co. (The) | 6,381 | 1,833,325 | ||
5,124,251 | ||||
Communications Equipment — 3.9% | ||||
Cisco Systems, Inc. | 173,195 | 4,761,130 | ||
Motorola Solutions, Inc. | 52,951 | 3,981,386 | ||
8,742,516 | ||||
Containers and Packaging — 0.5% | ||||
International Paper Co. | 26,330 | 1,139,299 | ||
Diversified Telecommunication Services — 2.4% | ||||
AT&T, Inc. | 24,901 | 966,657 | ||
CenturyLink, Inc. | 29,082 | 900,088 | ||
Level 3 Communications, Inc.(1) | 13,295 | 694,796 | ||
SBA Communications Corp., Class A(1) | 14,143 | 1,457,295 | ||
Verizon Communications, Inc. | 27,734 | 1,412,770 | ||
5,431,606 | ||||
Energy Equipment and Services — 0.4% | ||||
Halliburton Co. | 23,031 | 951,411 |
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Shares | Value | |||
Food and Staples Retailing — 4.0% | ||||
CVS Health Corp. | 60,594 | $ | 6,089,697 | |
Kroger Co. (The) | 50,878 | 1,800,573 | ||
Wal-Mart Stores, Inc. | 17,521 | 1,171,629 | ||
9,061,899 | ||||
Food Products — 2.9% | ||||
Archer-Daniels-Midland Co. | 38,783 | 1,548,993 | ||
Campbell Soup Co. | 12,053 | 743,791 | ||
Pilgrim's Pride Corp.(1) | 35,007 | 942,038 | ||
Pinnacle Foods, Inc. | 40,736 | 1,734,946 | ||
Tyson Foods, Inc., Class A | 22,659 | 1,491,416 | ||
6,461,184 | ||||
Health Care Equipment and Supplies — 4.1% | ||||
Abbott Laboratories | 17,921 | 697,127 | ||
Edwards Lifesciences Corp.(1) | 31,973 | 3,395,852 | ||
Hologic, Inc.(1) | 101,128 | 3,396,890 | ||
Intuitive Surgical, Inc.(1) | 2,784 | 1,743,786 | ||
9,233,655 | ||||
Health Care Providers and Services — 3.1% | ||||
Aetna, Inc. | 32,680 | 3,668,983 | ||
AmerisourceBergen Corp. | 7,071 | 601,742 | ||
Express Scripts Holding Co.(1) | 37,523 | 2,766,571 | ||
7,037,296 | ||||
Hotels, Restaurants and Leisure — 1.4% | ||||
Carnival Corp. | 53,811 | 2,639,429 | ||
Royal Caribbean Cruises Ltd. | 6,694 | 518,116 | ||
3,157,545 | ||||
Household Products — 1.1% | ||||
Procter & Gamble Co. (The) | 31,757 | 2,544,371 | ||
Industrial Conglomerates — 1.5% | ||||
3M Co. | 20,039 | 3,354,128 | ||
Insurance — 4.3% | ||||
Aflac, Inc. | 17,095 | 1,179,042 | ||
American International Group, Inc. | 66,215 | 3,696,121 | ||
Travelers Cos., Inc. (The) | 42,813 | 4,705,149 | ||
9,580,312 | ||||
Internet and Catalog Retail — 2.5% | ||||
Amazon.com, Inc.(1) | 4,896 | 3,229,353 | ||
Expedia, Inc. | 20,082 | 2,324,893 | ||
5,554,246 | ||||
Internet Software and Services — 3.8% | ||||
Alphabet, Inc., Class A(1) | 4,335 | 3,068,660 | ||
Alphabet, Inc., Class C(1) | 2,741 | 1,899,540 | ||
Facebook, Inc., Class A(1) | 27,324 | 3,212,756 | ||
IAC/InterActiveCorp | 6,855 | 317,661 | ||
8,498,617 | ||||
IT Services — 2.6% | ||||
Alliance Data Systems Corp.(1) | 5,794 | 1,177,978 | ||
Visa, Inc., Class A | 59,238 | 4,575,543 | ||
5,753,521 | ||||
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Shares | Value | |||
Machinery — 3.2% | ||||
Caterpillar, Inc. | 68,556 | $ | 5,328,173 | |
Cummins, Inc. | 5,738 | 671,518 | ||
Parker-Hannifin Corp. | 10,653 | 1,235,961 | ||
7,235,652 | ||||
Media — 4.2% | ||||
Comcast Corp., Class A | 133,800 | 8,129,688 | ||
Time Warner, Inc. | 7,053 | 529,962 | ||
Viacom, Inc., Class B | 18,124 | 741,272 | ||
9,400,922 | ||||
Multi-Utilities — 0.6% | ||||
DTE Energy Co. | 16,182 | 1,442,787 | ||
Multiline Retail — 2.4% | ||||
Target Corp. | 67,617 | 5,375,551 | ||
Oil, Gas and Consumable Fuels — 6.0% | ||||
Concho Resources, Inc.(1) | 3,166 | 367,794 | ||
ConocoPhillips | 46,228 | 2,209,236 | ||
EOG Resources, Inc. | 6,316 | 521,828 | ||
Exxon Mobil Corp. | 106,325 | 9,399,130 | ||
Valero Energy Corp. | 18,561 | 1,092,686 | ||
13,590,674 | ||||
Pharmaceuticals — 4.7% | ||||
Allergan plc(1) | 3,739 | 809,718 | ||
Johnson & Johnson | 44,120 | 4,944,970 | ||
Merck & Co., Inc. | 8,509 | 466,633 | ||
Perrigo Co. plc | 6,594 | 637,442 | ||
Pfizer, Inc. | 111,367 | 3,642,815 | ||
10,501,578 | ||||
Real Estate Investment Trusts (REITs) — 0.8% | ||||
Public Storage | 6,323 | 1,547,934 | ||
Simon Property Group, Inc. | 1,119 | 225,109 | ||
1,773,043 | ||||
Road and Rail — 0.3% | ||||
Ryder System, Inc. | 10,455 | 720,559 | ||
Semiconductors and Semiconductor Equipment — 3.1% | ||||
Applied Materials, Inc. | 53,037 | 1,085,667 | ||
Intel Corp. | 100,837 | 3,053,344 | ||
Linear Technology Corp. | 23,000 | 1,023,040 | ||
QUALCOMM, Inc. | 19,171 | 968,519 | ||
Texas Instruments, Inc. | 12,646 | 721,328 | ||
6,851,898 | ||||
Software — 1.7% | ||||
Electronic Arts, Inc.(1) | 12,310 | 761,373 | ||
Oracle Corp. | 35,108 | 1,399,405 | ||
Red Hat, Inc.(1) | 15,423 | 1,131,586 | ||
Symantec Corp. | 27,422 | 456,439 | ||
3,748,803 | ||||
Specialty Retail — 5.0% | ||||
Advance Auto Parts, Inc. | 8,588 | 1,340,587 | ||
Home Depot, Inc. (The) | 36,025 | 4,823,387 |
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Shares | Value | |||
O'Reilly Automotive, Inc.(1) | 19,208 | $ | 5,045,557 | |
11,209,531 | ||||
Technology Hardware, Storage and Peripherals — 4.1% | ||||
Apple, Inc. | 79,117 | 7,416,427 | ||
EMC Corp. | 31,407 | 820,037 | ||
HP, Inc. | 71,069 | 872,017 | ||
9,108,481 | ||||
Tobacco — 1.3% | ||||
Philip Morris International, Inc. | 29,038 | 2,849,209 | ||
TOTAL COMMON STOCKS (Cost $189,305,356) | 221,748,875 | |||
EXCHANGE-TRADED FUNDS — 0.5% | ||||
SPDR S&P 500 ETF Trust (Cost $1,216,174) | 6,095 | 1,257,399 | ||
TEMPORARY CASH INVESTMENTS — 0.9% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $762,219), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $747,197) | 747,187 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $1,270,325), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $1,245,008) | 1,245,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 1,064 | 1,064 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,993,251) | 1,993,251 | |||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $192,514,781) | 224,999,525 | |||
OTHER ASSETS AND LIABILITIES — (0.1)% | (324,593) | |||
TOTAL NET ASSETS — 100.0% | $ | 224,674,932 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
See Notes to Financial Statements.
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Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $192,514,781) | $ | 224,999,525 | |
Receivable for capital shares sold | 209,258 | ||
Dividends and interest receivable | 229,220 | ||
225,438,003 | |||
Liabilities | |||
Payable for capital shares redeemed | 537,405 | ||
Accrued management fees | 183,641 | ||
Distribution and service fees payable | 42,025 | ||
763,071 | |||
Net Assets | $ | 224,674,932 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 206,673,110 | |
Undistributed net investment income | 673,290 | ||
Accumulated net realized loss | (15,156,212) | ||
Net unrealized appreciation | 32,484,744 | ||
$ | 224,674,932 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $85,011,053 | 4,040,361 | $21.04 | |
Institutional Class, $0.01 Par Value | $5,713,667 | 271,045 | $21.08 | |
A Class, $0.01 Par Value | $107,651,770 | 5,128,742 | $20.99* | |
C Class, $0.01 Par Value | $20,970,619 | 1,013,923 | $20.68 | |
R Class, $0.01 Par Value | $5,327,823 | 254,885 | $20.90 |
*Maximum offering price $22.27 (net asset value divided by 0.9425).
See Notes to Financial Statements.
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Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends | $ | 2,535,996 | |
Interest | 1,246 | ||
2,537,242 | |||
Expenses: | |||
Management fees | 1,143,609 | ||
Distribution and service fees: | |||
A Class | 139,380 | ||
C Class | 103,003 | ||
R Class | 13,145 | ||
Directors' fees and expenses | 4,387 | ||
Other expenses | 929 | ||
1,404,453 | |||
Net investment income (loss) | 1,132,789 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 24,401,826 | ||
Futures contract transactions | 53,836 | ||
24,455,662 | |||
Change in net unrealized appreciation (depreciation) on investments | (32,664,387) | ||
Net realized and unrealized gain (loss) | (8,208,725 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (7,075,936 | ) |
See Notes to Financial Statements.
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Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,132,789 | $ | 2,574,848 | ||
Net realized gain (loss) | 24,455,662 | 12,459,810 | ||||
Change in net unrealized appreciation (depreciation) | (32,664,387 | ) | (7,358,924 | ) | ||
Net increase (decrease) in net assets resulting from operations | (7,075,936 | ) | 7,675,734 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (1,002,434 | ) | (983,981 | ) | ||
Institutional Class | (177,843 | ) | (156,428 | ) | ||
A Class | (975,430 | ) | (1,149,742 | ) | ||
B Class | — | (7,167 | ) | |||
C Class | (16,625 | ) | (42,651 | ) | ||
R Class | (31,720 | ) | (40,456 | ) | ||
Decrease in net assets from distributions | (2,204,052 | ) | (2,380,425 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (24,402,733 | ) | 23,773,890 | |||
Net increase (decrease) in net assets | (33,682,721 | ) | 29,069,199 | |||
Net Assets | ||||||
Beginning of period | 258,357,653 | 229,288,454 | ||||
End of period | $ | 224,674,932 | $ | 258,357,653 | ||
Undistributed net investment income | $ | 673,290 | $ | 1,744,553 |
See Notes to Financial Statements.
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Notes to Financial Statements |
APRIL 30, 2016 (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’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 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. On October 16, 2015, all outstanding B Class shares were converted to A Class shares and the fund discontinued offering the B Class.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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
13
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.
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.
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.
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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 0.990% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.790% for the Institutional Class. The effective annual management fee for each class for the six months ended April 30, 2016 was 0.99% for the Investor Class, A Class, C Class and R Class and 0.79% 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, 2016 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. 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, 2016 were $110,925,923 and $135,408,593, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 607,723 | $ | 12,608,934 | 2,320,787 | $ | 50,159,516 | ||||
Issued in reinvestment of distributions | 44,610 | 939,045 | 44,610 | 925,208 | ||||||
Redeemed | (978,902 | ) | (19,864,385 | ) | (1,613,312 | ) | (35,082,313 | ) | ||
(326,569 | ) | (6,316,406 | ) | 752,085 | 16,002,411 | |||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 151,554 | 3,054,557 | 223,403 | 4,826,023 | ||||||
Issued in reinvestment of distributions | 8,437 | 177,843 | 7,535 | 156,428 | ||||||
Redeemed | (533,630 | ) | (11,252,752 | ) | (88,445 | ) | (1,932,126 | ) | ||
(373,639 | ) | (8,020,352 | ) | 142,493 | 3,050,325 | |||||
A Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||
Sold | 223,039 | 4,656,973 | 1,094,041 | 23,727,128 | ||||||
Issued in reinvestment of distributions | 43,720 | 918,990 | 52,390 | 1,085,009 | ||||||
Redeemed | (784,809 | ) | (16,038,341 | ) | (985,870 | ) | (21,268,538 | ) | ||
(518,050 | ) | (10,462,378 | ) | 160,561 | 3,543,599 | |||||
B Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 5,457 | 116,461 | ||||||||
Issued in reinvestment of distributions | 312 | 6,391 | ||||||||
Redeemed | (150,262 | ) | (3,158,132 | ) | ||||||
(144,493 | ) | (3,035,280 | ) | |||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 115,803 | 2,393,329 | 273,473 | 5,865,142 | ||||||
Issued in reinvestment of distributions | 636 | 13,209 | 1,564 | 31,997 | ||||||
Redeemed | (90,357 | ) | (1,833,449 | ) | (92,353 | ) | (1,960,770 | ) | ||
26,082 | 573,089 | 182,684 | 3,936,369 | |||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 26,978 | 555,174 | 53,138 | 1,144,388 | ||||||
Issued in reinvestment of distributions | 1,514 | 31,720 | 1,960 | 40,456 | ||||||
Redeemed | (36,873 | ) | (763,580 | ) | (42,563 | ) | (908,378 | ) | ||
(8,381 | ) | (176,686 | ) | 12,535 | 276,466 | |||||
Net increase (decrease) | (1,200,557 | ) | $ | (24,402,733 | ) | 1,105,865 | $ | 23,773,890 |
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). |
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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. There were no significant transfers between levels during the period.
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 | $ | 221,748,875 | — | — | ||||
Exchange-Traded Funds | 1,257,399 | — | — | |||||
Temporary Cash Investments | 1,064 | $ | 1,992,187 | — | ||||
$ | 223,007,338 | $ | 1,992,187 | — |
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 participated in 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, 2016, the effect of equity price risk derivative instruments on the Statement of Operations was $53,836 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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 194,096,364 | |
Gross tax appreciation of investments | $ | 37,298,641 | |
Gross tax depreciation of investments | (6,395,480 | ) | |
Net tax appreciation (depreciation) of investments | $ | 30,903,161 |
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, 2015, the fund had accumulated short-term capital losses of $(37,407,097), 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.
9. Corporate Event
The fund will be renamed Sustainable Equity Fund effective August 10, 2016.
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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 | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2016(3) | $21.77 | 0.12 | (0.62) | (0.50) | (0.23) | $21.04 | (2.31)% | 1.00%(4) | 1.18%(4) | 48% | $85,011 | ||
2015 | $21.31 | 0.26 | 0.46 | 0.72 | (0.26) | $21.77 | 3.51% | 0.99% | 1.23% | 33% | $95,072 | ||
2014 | $18.41 | 0.24 | 2.88 | 3.12 | (0.22) | $21.31 | 17.06% | 1.00% | 1.19% | 41% | $77,015 | ||
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 | ||
Institutional Class | |||||||||||||
2016(3) | $21.84 | 0.14 | (0.63) | (0.49) | (0.27) | $21.08 | (2.20)% | 0.80%(4) | 1.38%(4) | 48% | $5,714 | ||
2015 | $21.37 | 0.31 | 0.47 | 0.78 | (0.31) | $21.84 | 3.66% | 0.79% | 1.43% | 33% | $14,077 | ||
2014 | $18.47 | 0.28 | 2.88 | 3.16 | (0.26) | $21.37 | 17.29% | 0.80% | 1.39% | 41% | $10,731 | ||
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 |
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 | |||||||||||||
2016(3) | $21.69 | 0.10 | (0.63) | (0.53) | (0.17) | $20.99 | (2.42)% | 1.25%(4) | 0.93%(4) | 48% | $107,652 | ||
2015 | $21.23 | 0.21 | 0.46 | 0.67 | (0.21) | $21.69 | 3.21% | 1.24% | 0.98% | 33% | $122,492 | ||
2014 | $18.35 | 0.19 | 2.86 | 3.05 | (0.17) | $21.23 | 16.76% | 1.25% | 0.94% | 41% | $116,462 | ||
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 | ||
C Class | |||||||||||||
2016(3) | $21.29 | 0.02 | (0.61) | (0.59) | (0.02) | $20.68 | (2.79)% | 2.00%(4) | 0.18%(4) | 48% | $20,971 | ||
2015 | $20.84 | 0.05 | 0.45 | 0.50 | (0.05) | $21.29 | 2.42% | 1.99% | 0.23% | 33% | $21,036 | ||
2014 | $18.01 | 0.04 | 2.82 | 2.86 | (0.03) | $20.84 | 15.90% | 2.00% | 0.19% | 41% | $16,777 | ||
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 | ||
R Class | |||||||||||||
2016(3) | $21.58 | 0.07 | (0.63) | (0.56) | (0.12) | $20.90 | (2.59)% | 1.50%(4) | 0.68%(4) | 48% | $5,328 | ||
2015 | $21.11 | 0.16 | 0.47 | 0.63 | (0.16) | $21.58 | 3.01% | 1.49% | 0.73% | 33% | $5,680 | ||
2014 | $18.25 | 0.14 | 2.84 | 2.98 | (0.12) | $21.11 | 16.45% | 1.50% | 0.69% | 41% | $5,294 | ||
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 |
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, 2016 (unaudited). |
(4) | Annualized. |
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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Notes |
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89210 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc., Class A | 5.6% |
Apple, Inc. | 4.4% |
Visa, Inc., Class A | 4.4% |
PepsiCo, Inc. | 3.6% |
Amazon.com, Inc. | 3.4% |
Comcast Corp., Class A | 3.0% |
O'Reilly Automotive, Inc. | 2.6% |
Facebook, Inc., Class A | 2.5% |
Walt Disney Co. (The) | 2.2% |
Lockheed Martin Corp. | 2.2% |
Top Five Industries | % of net assets |
Internet Software and Services | 8.7% |
Software | 7.5% |
Specialty Retail | 6.7% |
IT Services | 6.0% |
Media | 5.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.0% |
Temporary Cash Investments | 1.4% |
Other Assets and Liabilities | (0.4)% |
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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, 2015 to April 30, 2016.
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.
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.
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Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $965.80 | $4.79 | 0.98% |
Institutional Class | $1,000 | $967.00 | $3.81 | 0.78% |
A Class | $1,000 | $965.10 | $6.01 | 1.23% |
C Class | $1,000 | $961.40 | $9.66 | 1.98% |
R Class | $1,000 | $963.90 | $7.23 | 1.48% |
R6 Class | $1,000 | $967.80 | $3.08 | 0.63% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.99 | $4.92 | 0.98% |
Institutional Class | $1,000 | $1,020.99 | $3.92 | 0.78% |
A Class | $1,000 | $1,018.75 | $6.17 | 1.23% |
C Class | $1,000 | $1,015.02 | $9.92 | 1.98% |
R Class | $1,000 | $1,017.50 | $7.42 | 1.48% |
R6 Class | $1,000 | $1,021.73 | $3.17 | 0.63% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.0% | ||||
Aerospace and Defense — 4.1% | ||||
Boeing Co. (The) | 1,030,721 | $ | 138,941,191 | |
Lockheed Martin Corp. | 692,896 | 161,015,172 | ||
299,956,363 | ||||
Airlines — 1.3% | ||||
Alaska Air Group, Inc. | 363,424 | 25,595,952 | ||
Delta Air Lines, Inc. | 1,590,538 | 66,277,719 | ||
91,873,671 | ||||
Beverages — 3.6% | ||||
PepsiCo, Inc. | 2,562,674 | 263,852,915 | ||
Biotechnology — 5.3% | ||||
Amgen, Inc. | 743,806 | 117,744,490 | ||
Biogen, Inc.(1) | 357,068 | 98,190,129 | ||
Gilead Sciences, Inc. | 1,262,022 | 111,322,961 | ||
Incyte Corp.(1) | 310,519 | 22,441,208 | ||
Regeneron Pharmaceuticals, Inc.(1) | 96,132 | 36,213,886 | ||
385,912,674 | ||||
Chemicals — 4.5% | ||||
Dow Chemical Co. (The) | 1,890,674 | 99,468,359 | ||
LyondellBasell Industries NV, Class A | 739,118 | 61,102,885 | ||
PPG Industries, Inc. | 603,754 | 66,648,404 | ||
Sherwin-Williams Co. (The) | 360,396 | 103,545,375 | ||
330,765,023 | ||||
Communications Equipment — 0.2% | ||||
Cisco Systems, Inc. | 564,460 | 15,517,005 | ||
Consumer Finance — 0.7% | ||||
American Express Co. | 838,880 | 54,887,918 | ||
Electronic Equipment, Instruments and Components — 0.4% | ||||
CDW Corp. | 711,077 | 27,376,465 | ||
Energy Equipment and Services — 0.9% | ||||
Halliburton Co. | 1,625,584 | 67,152,875 | ||
Food and Staples Retailing — 1.1% | ||||
Kroger Co. (The) | 2,358,631 | 83,471,951 | ||
Food Products — 0.4% | ||||
Mead Johnson Nutrition Co. | 300,462 | 26,185,263 | ||
Health Care Equipment and Supplies — 2.5% | ||||
C.R. Bard, Inc. | 236,297 | 50,135,135 | ||
Cooper Cos., Inc. (The) | 265,662 | 40,667,539 | ||
Edwards Lifesciences Corp.(1) | 556,526 | 59,108,626 | ||
Intuitive Surgical, Inc.(1) | 57,150 | 35,796,474 | ||
185,707,774 | ||||
Health Care Providers and Services — 2.7% | ||||
Cardinal Health, Inc. | 1,066,693 | 83,692,733 | ||
Express Scripts Holding Co.(1) | 996,716 | 73,487,871 | ||
VCA, Inc.(1) | 648,511 | 40,836,737 | ||
198,017,341 |
6
Shares | Value | |||
Health Care Technology — 0.7% | ||||
Cerner Corp.(1) | 942,286 | $ | 52,899,936 | |
Hotels, Restaurants and Leisure — 0.4% | ||||
Las Vegas Sands Corp. | 655,147 | 29,579,887 | ||
Household Products — 1.8% | ||||
Church & Dwight Co., Inc. | 614,354 | 56,950,616 | ||
Procter & Gamble Co. (The) | 962,453 | 77,111,734 | ||
134,062,350 | ||||
Industrial Conglomerates — 2.0% | ||||
3M Co. | 862,311 | 144,333,615 | ||
Insurance — 0.9% | ||||
American International Group, Inc. | 1,133,114 | 63,250,423 | ||
Internet and Catalog Retail — 5.3% | ||||
Amazon.com, Inc.(1) | 383,190 | 252,748,292 | ||
Expedia, Inc. | 801,102 | 92,743,579 | ||
TripAdvisor, Inc.(1) | 682,487 | 44,081,835 | ||
389,573,706 | ||||
Internet Software and Services — 8.7% | ||||
Alphabet, Inc., Class A(1) | 584,815 | 413,978,842 | ||
Facebook, Inc., Class A(1) | 1,535,342 | 180,525,512 | ||
LinkedIn Corp., Class A(1) | 278,819 | 34,938,809 | ||
Pandora Media, Inc.(1) | 1,010,901 | 10,038,247 | ||
639,481,410 | ||||
IT Services — 6.0% | ||||
Cognizant Technology Solutions Corp., Class A(1) | 504,811 | 29,465,818 | ||
Fiserv, Inc.(1) | 874,240 | 85,430,733 | ||
Visa, Inc., Class A | 4,171,832 | 322,232,304 | ||
437,128,855 | ||||
Life Sciences Tools and Services — 0.8% | ||||
Agilent Technologies, Inc. | 505,321 | 20,677,735 | ||
Illumina, Inc.(1) | 106,181 | 14,333,373 | ||
Waters Corp.(1) | 196,402 | 25,563,685 | ||
60,574,793 | ||||
Machinery — 3.5% | ||||
Caterpillar, Inc. | 370,879 | 28,824,716 | ||
Deere & Co. | 284,107 | 23,896,240 | ||
Parker-Hannifin Corp. | 350,682 | 40,686,126 | ||
WABCO Holdings, Inc.(1) | 717,091 | 80,428,926 | ||
Wabtec Corp. | 1,020,455 | 84,626,333 | ||
258,462,341 | ||||
Media — 5.8% | ||||
Comcast Corp., Class A | 3,651,912 | 221,890,173 | ||
Sirius XM Holdings, Inc.(1) | 9,927,976 | 39,215,505 | ||
Walt Disney Co. (The) | 1,592,795 | 164,472,012 | ||
425,577,690 | ||||
Multiline Retail — 1.5% | ||||
Dollar Tree, Inc.(1) | 1,373,843 | 109,509,026 | ||
Oil, Gas and Consumable Fuels — 0.9% | ||||
Concho Resources, Inc.(1) | 570,172 | 66,236,881 | ||
Personal Products — 1.1% | ||||
Estee Lauder Cos., Inc. (The), Class A | 859,399 | 82,390,582 |
7
Shares | Value | |||
Pharmaceuticals — 4.5% | ||||
Allergan plc(1) | 98,921 | $ | 21,422,332 | |
Bristol-Myers Squibb Co. | 2,109,112 | 152,235,704 | ||
Johnson & Johnson | 279,700 | 31,348,776 | ||
Perrigo Co. plc | 386,607 | 37,373,299 | ||
Teva Pharmaceutical Industries Ltd. ADR | 951,398 | 51,803,621 | ||
Zoetis, Inc. | 746,163 | 35,092,046 | ||
329,275,778 | ||||
Real Estate Investment Trusts (REITs) — 1.1% | ||||
Simon Property Group, Inc. | 418,575 | 84,204,733 | ||
Road and Rail — 0.9% | ||||
Union Pacific Corp. | 783,560 | 68,349,939 | ||
Semiconductors and Semiconductor Equipment — 2.3% | ||||
ASML Holding NV | 264,152 | 25,528,245 | ||
Maxim Integrated Products, Inc. | 1,667,504 | 59,563,243 | ||
NXP Semiconductors NV(1) | 329,761 | 28,122,018 | ||
Xilinx, Inc. | 1,288,527 | 55,509,743 | ||
168,723,249 | ||||
Software — 7.5% | ||||
Adobe Systems, Inc.(1) | 707,006 | 66,614,105 | ||
Electronic Arts, Inc.(1) | 540,428 | 33,425,472 | ||
Microsoft Corp. | 2,469,205 | 123,139,254 | ||
Oracle Corp. | 3,373,407 | 134,464,003 | ||
salesforce.com, inc.(1) | 576,350 | 43,687,330 | ||
ServiceNow, Inc.(1) | 406,686 | 29,069,915 | ||
Splunk, Inc.(1) | 990,888 | 51,506,358 | ||
Symantec Corp. | 4,056,453 | 67,519,660 | ||
549,426,097 | ||||
Specialty Retail — 6.7% | ||||
Home Depot, Inc. (The) | 486,216 | 65,099,460 | ||
O'Reilly Automotive, Inc.(1) | 723,545 | 190,060,801 | ||
Ross Stores, Inc. | 1,320,959 | 75,004,052 | ||
TJX Cos., Inc. (The) | 1,772,176 | 134,366,384 | ||
Williams-Sonoma, Inc. | 507,510 | 29,831,438 | ||
494,362,135 | ||||
Technology Hardware, Storage and Peripherals — 4.6% | ||||
Apple, Inc. | 3,481,274 | 326,334,625 | ||
Western Digital Corp. | 308,828 | 12,620,256 | ||
338,954,881 | ||||
Textiles, Apparel and Luxury Goods — 1.4% | ||||
Carter's, Inc. | 596,096 | 63,585,561 | ||
Coach, Inc. | 963,338 | 38,793,621 | ||
102,379,182 | ||||
Tobacco — 2.6% | ||||
Altria Group, Inc. | 2,407,158 | 150,952,878 | ||
Philip Morris International, Inc. | 421,488 | 41,356,403 | ||
192,309,281 | ||||
Trading Companies and Distributors — 0.3% | ||||
United Rentals, Inc.(1) | 315,345 | 21,106,041 | ||
TOTAL COMMON STOCKS (Cost $5,822,394,662) | 7,272,830,049 |
8
Shares | Value | |||
TEMPORARY CASH INVESTMENTS — 1.4% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $38,941,594), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $38,174,102) | $ | 38,173,624 | ||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625% - 3.75%, 11/15/43 - 2/15/44, valued at $64,919,819), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $63,644,424) | 63,644,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $101,817,624) | 101,817,624 | |||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $5,924,212,286) | 7,374,647,673 | |||
OTHER ASSETS AND LIABILITIES — (0.4)% | (32,777,484) | |||
TOTAL NET ASSETS — 100.0% | $ | 7,341,870,189 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
EUR | 618,011 | USD | 699,083 | UBS AG | 6/30/16 | $ | 9,832 | |
USD | 1,992,040 | EUR | 1,745,408 | UBS AG | 6/30/16 | (10,103 | ) | |
USD | 1,789,021 | EUR | 1,564,233 | UBS AG | 6/30/16 | (5,297 | ) | |
USD | 1,958,368 | EUR | 1,714,126 | UBS AG | 6/30/16 | (7,890 | ) | |
USD | 1,957,072 | EUR | 1,710,802 | UBS AG | 6/30/16 | (5,374 | ) | |
USD | 1,845,938 | EUR | 1,618,946 | UBS AG | 6/30/16 | (11,140 | ) | |
USD | 2,011,981 | EUR | 1,776,270 | UBS AG | 6/30/16 | (25,563 | ) | |
USD | 1,910,145 | EUR | 1,685,665 | UBS AG | 6/30/16 | (23,466 | ) | |
USD | 2,074,434 | EUR | 1,832,199 | UBS AG | 6/30/16 | (27,265 | ) | |
USD | 1,608,877 | EUR | 1,416,215 | UBS AG | 6/30/16 | (15,651 | ) | |
USD | 2,141,322 | EUR | 1,868,751 | UBS AG | 6/30/16 | (2,306 | ) | |
USD | 1,956,167 | EUR | 1,713,475 | UBS AG | 6/30/16 | (9,346 | ) | |
USD | 1,900,906 | EUR | 1,663,130 | UBS AG | 6/30/16 | (6,856 | ) | |
$ | (140,425 | ) |
FUTURES CONTRACTS | ||||||||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | |||||
235 | NASDAQ 100 E-Mini | June 2016 | $ | 20,358,050 | $ | (908,496 | ) | |
406 | S&P 500 E-Mini | June 2016 | 41,799,730 | (449,521 | ) | |||
$ | 62,157,780 | $ | (1,358,017 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $5,924,212,286) | $ | 7,374,647,673 | |
Foreign currency holdings, at value (cost of $1,520,585) | 1,520,188 | ||
Deposits with broker for futures contracts | 2,861,000 | ||
Receivable for investments sold | 42,207,950 | ||
Receivable for capital shares sold | 2,077,954 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 9,832 | ||
Dividends and interest receivable | 2,260,000 | ||
7,425,584,597 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 8,909 | ||
Payable for investments purchased | 41,649,443 | ||
Payable for capital shares redeemed | 35,674,472 | ||
Payable for variation margin on futures contracts | 507,340 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 150,257 | ||
Accrued management fees | 5,631,436 | ||
Distribution and service fees payable | 92,551 | ||
83,714,408 | |||
Net Assets | $ | 7,341,870,189 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 5,783,168,748 | |
Undistributed net investment income | 29,724,017 | ||
Undistributed net realized gain | 80,053,641 | ||
Net unrealized appreciation | 1,448,923,783 | ||
$ | 7,341,870,189 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $5,217,232,306 | 189,350,209 | $27.55 | |||
Institutional Class, $0.01 Par Value | $1,465,336,519 | 52,385,004 | $27.97 | |||
A Class, $0.01 Par Value | $196,229,217 | 7,312,078 | $26.84* | |||
C Class, $0.01 Par Value | $9,639,727 | 369,610 | $26.08 | |||
R Class, $0.01 Par Value | $100,472,948 | 3,809,254 | $26.38 | |||
R6 Class, $0.01 Par Value | $352,959,472 | 12,625,328 | $27.96 |
*Maximum offering price $28.48 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $103,981) | $ | 65,347,500 | |
Interest | 49,564 | ||
65,397,064 | |||
Expenses: | |||
Management fees | 34,934,902 | ||
Distribution and service fees: | |||
A Class | 272,318 | ||
C Class | 52,981 | ||
R Class | 258,903 | ||
Directors' fees and expenses | 143,656 | ||
Other expenses | 2,747 | ||
35,665,507 | |||
Net investment income (loss) | 29,731,557 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 80,332,878 | ||
Futures contract transactions | 4,969,669 | ||
Foreign currency transactions | 3,384 | ||
85,305,931 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (398,959,115 | ) | |
Futures contracts | (1,358,017 | ) | |
Translation of assets and liabilities in foreign currencies | (153,394 | ) | |
(400,470,526 | ) | ||
Net realized and unrealized gain (loss) | (315,164,595 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (285,433,038 | ) |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 29,731,557 | $ | 34,975,654 | ||
Net realized gain (loss) | 85,305,931 | 653,565,321 | ||||
Change in net unrealized appreciation (depreciation) | (400,470,526 | ) | 121,810,034 | |||
Net increase (decrease) in net assets resulting from operations | (285,433,038 | ) | 810,351,009 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (19,299,202 | ) | (16,585,425 | ) | ||
Institutional Class | (8,735,464 | ) | (10,940,258 | ) | ||
A Class | (213,438 | ) | (217,419 | ) | ||
R6 Class | (2,228,096 | ) | (4,181,750 | ) | ||
From net realized gains: | ||||||
Investor Class | (362,748,942 | ) | (1,198,333,475 | ) | ||
Institutional Class | (103,384,171 | ) | (462,150,035 | ) | ||
A Class | (15,137,419 | ) | (141,524,178 | ) | ||
C Class | (763,235 | ) | (2,779,036 | ) | ||
R Class | (7,186,670 | ) | (29,100,730 | ) | ||
R6 Class | (20,634,765 | ) | (134,632,055 | ) | ||
Decrease in net assets from distributions | (540,331,402 | ) | (2,000,444,361 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (258,176,525 | ) | (329,633,462 | ) | ||
Net increase (decrease) in net assets | (1,083,940,965 | ) | (1,519,726,814 | ) | ||
Net Assets | ||||||
Beginning of period | 8,425,811,154 | 9,945,537,968 | ||||
End of period | $ | 7,341,870,189 | $ | 8,425,811,154 | ||
Undistributed net investment income | $ | 29,724,017 | $ | 30,468,660 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2016 (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'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.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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. 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 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.
13
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.
14
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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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 0.990% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.790% for the Institutional Class and 0.450% to 0.640% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2016 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, 2016 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. 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, 2016 were $1,480,718,664 and $2,271,977,018, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 1,300,000,000 | 1,300,000,000 | ||||||||
Sold | 5,001,101 | $ | 138,789,520 | 18,485,200 | $ | 560,677,873 | ||||
Issued in reinvestment of distributions | 13,248,701 | 371,361,079 | 42,695,891 | 1,180,114,422 | ||||||
Redeemed | (23,650,633 | ) | (657,730,411 | ) | (36,577,463 | ) | (1,108,049,747 | ) | ||
(5,400,831 | ) | (147,579,812 | ) | 24,603,628 | 632,742,548 | |||||
Institutional Class/Shares Authorized | 400,000,000 | 400,000,000 | ||||||||
Sold | 3,794,968 | 106,604,881 | 11,177,091 | 340,793,902 | ||||||
Issued in reinvestment of distributions | 3,922,377 | 111,552,414 | 16,531,989 | 463,061,000 | ||||||
Redeemed | (10,864,926 | ) | (307,363,176 | ) | (41,473,294 | ) | (1,282,347,776 | ) | ||
(3,147,581 | ) | (89,205,881 | ) | (13,764,214 | ) | (478,492,874 | ) | |||
A Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||
Sold | 582,110 | 16,001,223 | 2,271,840 | 66,169,613 | ||||||
Issued in reinvestment of distributions | 514,611 | 14,064,308 | 4,969,965 | 134,139,352 | ||||||
Redeemed | (3,524,377 | ) | (100,303,888 | ) | (18,241,406 | ) | (540,778,384 | ) | ||
(2,427,656 | ) | (70,238,357 | ) | (10,999,601 | ) | (340,469,419 | ) | |||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 31,926 | 856,215 | 61,912 | 1,753,477 | ||||||
Issued in reinvestment of distributions | 21,933 | 584,089 | 75,478 | 2,001,685 | ||||||
Redeemed | (87,080 | ) | (2,243,900 | ) | (126,773 | ) | (3,649,693 | ) | ||
(33,221 | ) | (803,596 | ) | 10,617 | 105,469 | |||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 293,767 | 7,701,694 | 859,031 | 24,682,075 | ||||||
Issued in reinvestment of distributions | 262,174 | 7,047,238 | 1,071,849 | 28,532,630 | ||||||
Redeemed | (658,545 | ) | (17,881,319 | ) | (2,186,151 | ) | (63,135,342 | ) | ||
(102,604 | ) | (3,132,387 | ) | (255,271 | ) | (9,920,637 | ) | |||
R6 Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||
Sold | 2,016,898 | 56,182,589 | 7,521,520 | 245,615,273 | ||||||
Issued in reinvestment of distributions | 804,747 | 22,862,861 | 4,961,180 | 138,813,805 | ||||||
Redeemed | (935,817 | ) | (26,261,942 | ) | (17,559,794 | ) | (518,027,627 | ) | ||
1,885,828 | 52,783,508 | (5,077,094 | ) | (133,598,549 | ) | |||||
Net increase (decrease) | (9,226,065 | ) | $ | (258,176,525 | ) | (5,481,935 | ) | $ | (329,633,462 | ) |
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). |
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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. There were no significant transfers between levels during the period.
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 | $ | 7,247,301,804 | $ | 25,528,245 | — | |||
Temporary Cash Investments | — | 101,817,624 | — | |||||
$ | 7,247,301,804 | $ | 127,345,869 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 9,832 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 1,358,017 | — | — | ||||
Forward Foreign Currency Exchange Contracts | — | $ | 150,257 | — | ||||
$ | 1,358,017 | $ | 150,257 | — |
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. The fund's average exposure to equity price risk derivative instruments held during the period was 556 contracts.
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 began investing in forward foreign currency exchange contracts in April 2016. The fund's U.S. dollar exposure to foreign currency risk derivative instruments at period end was $23,845,354.
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Value of Derivative Instruments as of April 30, 2016
Asset Derivatives | Liability Derivatives | |||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||
Equity Price Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | $ | 507,340 | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 9,832 | Unrealized depreciation on forward foreign currency exchange contracts | 150,257 | |||
$ | 9,832 | $ | 657,597 |
* Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2016
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | |||||||
Type of Risk Exposure | Location on Statement of Operations | Value | Location on Statement of Operations | Value | ||||
Equity Price Risk | Net realized gain (loss) on futures contract transactions | $ | 4,969,669 | Change in net unrealized appreciation (depreciation) on futures contracts | $ | (1,358,017 | ) | |
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | — | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (140,425 | ) | |||
$ | 4,969,669 | $ | (1,498,442 | ) |
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 5,931,446,355 | |
Gross tax appreciation of investments | $ | 1,573,259,433 | |
Gross tax depreciation of investments | (130,058,115 | ) | |
Net tax appreciation (depreciation) of investments | $ | 1,443,201,318 |
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 | |||||||||||||||
2016(3) | $30.57 | 0.10 | (1.11) | (1.01) | (0.10) | (1.91) | (2.01) | $27.55 | (3.42)% | 0.98%(4) | 0.74%(4) | 19% | $5,217,232 | ||
2015 | $35.39 | 0.10 | 2.34 | 2.44 | (0.10) | (7.16) | (7.26) | $30.57 | 9.07% | 0.97% | 0.35% | 49% | $5,952,798 | ||
2014 | $33.10 | 0.11 | 4.22 | 4.33 | (0.12) | (1.92) | (2.04) | $35.39 | 13.84% | 0.97% | 0.32% | 103% | $6,021,115 | ||
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 | ||
Institutional Class | |||||||||||||||
2016(3) | $31.03 | 0.13 | (1.12) | (0.99) | (0.16) | (1.91) | (2.07) | $27.97 | (3.30)% | 0.78%(4) | 0.94%(4) | 19% | $1,465,337 | ||
2015 | $35.83 | 0.17 | 2.36 | 2.53 | (0.17) | (7.16) | (7.33) | $31.03 | 9.30% | 0.77% | 0.55% | 49% | $1,723,219 | ||
2014 | $33.49 | 0.18 | 4.27 | 4.45 | (0.19) | (1.92) | (2.11) | $35.83 | 14.03% | 0.77% | 0.52% | 103% | $2,482,606 | ||
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 |
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 | |||||||||||||||
2016(3) | $29.78 | 0.07 | (1.07) | (1.00) | (0.03) | (1.91) | (1.94) | $26.84 | (3.49)% | 1.23%(4) | 0.49%(4) | 19% | $196,229 | ||
2015 | $34.65 | 0.04 | 2.26 | 2.30 | (0.01) | (7.16) | (7.17) | $29.78 | 8.78% | 1.22% | 0.10% | 49% | $290,077 | ||
2014 | $32.45 | 0.03 | 4.13 | 4.16 | (0.04) | (1.92) | (1.96) | $34.65 | 13.53% | 1.22% | 0.07% | 103% | $718,640 | ||
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 | ||
C Class | |||||||||||||||
2016(3) | $29.08 | (0.03) | (1.06) | (1.09) | — | (1.91) | (1.91) | $26.08 | (3.86)% | 1.98%(4) | (0.26)%(4) | 19% | $9,640 | ||
2015 | $34.20 | (0.19) | 2.23 | 2.04 | — | (7.16) | (7.16) | $29.08 | 7.95% | 1.97% | (0.65)% | 49% | $11,713 | ||
2014 | $32.24 | (0.22) | 4.10 | 3.88 | — | (1.92) | (1.92) | $34.20 | 12.71% | 1.97% | (0.68)% | 103% | $13,413 | ||
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 | ||
R Class | |||||||||||||||
2016(3) | $29.31 | 0.03 | (1.05) | (1.02) | — | (1.91) | (1.91) | $26.38 | (3.61)% | 1.48%(4) | 0.24%(4) | 19% | $100,473 | ||
2015 | $34.28 | (0.04) | 2.23 | 2.19 | — | (7.16) | (7.16) | $29.31 | 8.50% | 1.47% | (0.15)% | 49% | $114,672 | ||
2014 | $32.16 | (0.06) | 4.10 | 4.04 | — | (1.92) | (1.92) | $34.28 | 13.26% | 1.47% | (0.18)% | 103% | $142,845 | ||
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 | —(5) | (0.91) | (0.91) | $26.82 | 10.12% | 1.47% | 0.04% | 74% | $115,208 | ||
2011 | $23.49 | —(5) | 1.79 | 1.79 | — | — | — | $25.28 | 7.62% | 1.48% | 0.08% | 79% | $79,569 |
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 | |||||||||||||||
2016(3) | $31.04 | 0.15 | (1.11) | (0.96) | (0.21) | (1.91) | (2.12) | $27.96 | (3.22)% | 0.63%(4) | 1.09%(4) | 19% | $352,959 | ||
2015 | $35.84 | 0.23 | 2.35 | 2.58 | (0.22) | (7.16) | (7.38) | $31.04 | 9.46% | 0.62% | 0.70% | 49% | $333,333 | ||
2014 | $33.51 | 0.18 | 4.31 | 4.49 | (0.24) | (1.92) | (2.16) | $35.84 | 14.20% | 0.62% | 0.67% | 103% | $566,919 | ||
2013(6) | $31.22 | 0.05 | 2.24 | 2.29 | — | — | — | $33.51 | 7.34% | 0.62%(4) | 0.64%(4) | 67%(7) | $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, 2016 (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.
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89209 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Constellation Brands, Inc., Class A | 2.9% |
Electronic Arts, Inc. | 2.3% |
SBA Communications Corp., Class A | 2.3% |
Middleby Corp. (The) | 2.0% |
Teleflex, Inc. | 2.0% |
Affiliated Managers Group, Inc. | 1.9% |
Snap-on, Inc. | 1.8% |
Kellogg Co. | 1.8% |
Ball Corp. | 1.8% |
Newell Brands, Inc. | 1.7% |
Top Five Industries | % of net assets |
Specialty Retail | 7.3% |
Software | 7.2% |
Machinery | 6.5% |
Health Care Equipment and Supplies | 5.9% |
Food Products | 4.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.6% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.1% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $958.10 | $4.92 | 1.01% |
Institutional Class | $1,000 | $959.20 | $3.95 | 0.81% |
A Class | $1,000 | $956.70 | $6.13 | 1.26% |
C Class | $1,000 | $952.80 | $9.76 | 2.01% |
R Class | $1,000 | $955.60 | $7.34 | 1.51% |
R6 Class | $1,000 | $959.80 | $3.22 | 0.66% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.07 | 1.01% |
Institutional Class | $1,000 | $1,020.84 | $4.07 | 0.81% |
A Class | $1,000 | $1,018.60 | $6.32 | 1.26% |
C Class | $1,000 | $1,014.87 | $10.07 | 2.01% |
R Class | $1,000 | $1,017.36 | $7.57 | 1.51% |
R6 Class | $1,000 | $1,021.58 | $3.32 | 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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.6% | ||||
Airlines — 1.8% | ||||
Alaska Air Group, Inc. | 533,197 | $ | 37,553,065 | |
American Airlines Group, Inc. | 583,192 | 20,230,930 | ||
Spirit Airlines, Inc.(1) | 764,505 | 33,584,705 | ||
91,368,700 | ||||
Auto Components — 1.2% | ||||
Delphi Automotive plc | 815,894 | 60,074,275 | ||
Automobiles — 0.3% | ||||
Tesla Motors, Inc.(1) | 60,875 | 14,656,265 | ||
Banks — 1.2% | ||||
BankUnited, Inc. | 1,072,052 | 36,985,794 | ||
SVB Financial Group(1) | 211,929 | 22,099,956 | ||
59,085,750 | ||||
Beverages — 3.8% | ||||
Constellation Brands, Inc., Class A | 925,772 | 144,475,978 | ||
Monster Beverage Corp.(1) | 340,371 | 49,088,306 | ||
193,564,284 | ||||
Biotechnology — 2.3% | ||||
BioMarin Pharmaceutical, Inc.(1) | 537,679 | 45,530,658 | ||
Incyte Corp.(1) | 466,131 | 33,687,287 | ||
Neurocrine Biosciences, Inc.(1) | 328,581 | 14,976,722 | ||
Vertex Pharmaceuticals, Inc.(1) | 241,948 | 20,405,894 | ||
114,600,561 | ||||
Building Products — 1.7% | ||||
Fortune Brands Home & Security, Inc. | 530,370 | 29,387,802 | ||
Lennox International, Inc. | 408,688 | 55,152,445 | ||
84,540,247 | ||||
Capital Markets — 3.0% | ||||
Affiliated Managers Group, Inc.(1) | 567,228 | 96,610,273 | ||
SEI Investments Co. | 1,100,030 | 52,889,442 | ||
149,499,715 | ||||
Chemicals — 2.0% | ||||
Ashland, Inc. | 266,226 | 29,710,822 | ||
Axalta Coating Systems Ltd.(1) | 1,660,861 | 47,284,713 | ||
Scotts Miracle-Gro Co. (The), Class A | 341,144 | 24,146,172 | ||
101,141,707 | ||||
Commercial Services and Supplies — 1.1% | ||||
KAR Auction Services, Inc. | 1,462,565 | 54,992,444 | ||
Consumer Finance — 1.1% | ||||
Discover Financial Services | 982,128 | 55,264,343 | ||
Containers and Packaging — 1.8% | ||||
Ball Corp. | 1,298,184 | 92,664,374 | ||
Distributors — 1.4% | ||||
LKQ Corp.(1) | 2,178,002 | 69,804,964 | ||
Diversified Financial Services — 1.5% | ||||
S&P Global, Inc. | 731,315 | 78,141,008 |
6
Shares | Value | |||
Diversified Telecommunication Services — 2.3% | ||||
SBA Communications Corp., Class A(1) | 1,129,377 | $ | 116,371,006 | |
Electrical Equipment — 1.6% | ||||
Acuity Brands, Inc. | 79,773 | 19,455,837 | ||
AMETEK, Inc. | 1,280,475 | 61,578,043 | ||
81,033,880 | ||||
Electronic Equipment, Instruments and Components — 0.4% | ||||
CDW Corp. | 254,195 | 9,786,508 | ||
TE Connectivity Ltd. | 212,361 | 12,631,232 | ||
22,417,740 | ||||
Food and Staples Retailing — 1.2% | ||||
Costco Wholesale Corp. | 420,747 | 62,325,253 | ||
Food Products — 4.3% | ||||
Hain Celestial Group, Inc. (The)(1) | 603,600 | 25,266,696 | ||
Kellogg Co. | 1,206,706 | 92,687,088 | ||
Mead Johnson Nutrition Co. | 530,183 | 46,205,448 | ||
TreeHouse Foods, Inc.(1) | 273,565 | 24,183,146 | ||
WhiteWave Foods Co. (The), Class A(1) | 729,115 | 29,317,714 | ||
217,660,092 | ||||
Health Care Equipment and Supplies — 5.9% | ||||
Baxter International, Inc. | 1,532,848 | 67,782,539 | ||
DexCom, Inc.(1) | 532,446 | 34,278,873 | ||
Edwards Lifesciences Corp.(1) | 237,359 | 25,209,899 | ||
NuVasive, Inc.(1) | 772,116 | 40,875,821 | ||
Teleflex, Inc. | 638,373 | 99,445,746 | ||
West Pharmaceutical Services, Inc. | 442,629 | 31,515,185 | ||
299,108,063 | ||||
Health Care Providers and Services — 3.0% | ||||
AmerisourceBergen Corp. | 612,171 | 52,095,752 | ||
Universal Health Services, Inc., Class B | 334,300 | 44,689,224 | ||
VCA, Inc.(1) | 867,298 | 54,613,755 | ||
151,398,731 | ||||
Hotels, Restaurants and Leisure — 3.2% | ||||
Chipotle Mexican Grill, Inc.(1) | 70,830 | 29,817,305 | ||
Hilton Worldwide Holdings, Inc. | 2,065,923 | 45,553,602 | ||
MGM Resorts International(1) | 1,238,109 | 26,371,722 | ||
Panera Bread Co., Class A(1) | 160,651 | 34,458,033 | ||
Papa John's International, Inc. | 444,316 | 25,143,842 | ||
161,344,504 | ||||
Household Durables — 2.9% | ||||
Harman International Industries, Inc. | 128,857 | 9,891,063 | ||
Mohawk Industries, Inc.(1) | 131,638 | 25,357,428 | ||
Newell Brands, Inc. | 1,940,622 | 88,375,926 | ||
Whirlpool Corp. | 147,732 | 25,726,051 | ||
149,350,468 | ||||
Internet and Catalog Retail — 1.0% | ||||
Expedia, Inc. | 447,109 | 51,761,809 | ||
Internet Software and Services — 2.8% | ||||
Akamai Technologies, Inc.(1) | 750,056 | 38,245,356 | ||
CoStar Group, Inc.(1) | 422,533 | 83,369,986 |
7
Shares | Value | |||
LinkedIn Corp., Class A(1) | 182,010 | $ | 22,807,673 | |
144,423,015 | ||||
IT Services — 3.7% | ||||
Alliance Data Systems Corp.(1) | 324,007 | 65,873,863 | ||
Sabre Corp. | 1,965,570 | 56,903,252 | ||
Vantiv, Inc., Class A(1) | 1,188,565 | 64,824,335 | ||
187,601,450 | ||||
Leisure Products — 0.6% | ||||
Brunswick Corp. | 625,918 | 30,062,841 | ||
Machinery — 6.5% | ||||
Ingersoll-Rand plc | 550,067 | 36,051,391 | ||
ITT Corp. | 924,199 | 35,461,516 | ||
Middleby Corp. (The)(1) | 929,688 | 101,930,992 | ||
Snap-on, Inc. | 584,791 | 93,145,510 | ||
WABCO Holdings, Inc.(1) | 372,729 | 41,805,285 | ||
Xylem, Inc. | 497,288 | 20,776,693 | ||
329,171,387 | ||||
Media — 1.6% | ||||
Charter Communications, Inc., Class A(1) | 381,149 | 80,895,064 | ||
Multiline Retail — 1.6% | ||||
Dollar Tree, Inc.(1) | 1,022,487 | 81,502,439 | ||
Oil, Gas and Consumable Fuels — 1.5% | ||||
Concho Resources, Inc.(1) | 472,779 | 54,922,736 | ||
Gulfport Energy Corp.(1) | 600,955 | 18,809,892 | ||
73,732,628 | ||||
Pharmaceuticals — 1.7% | ||||
Zoetis, Inc. | 1,857,654 | 87,365,468 | ||
Professional Services — 3.8% | ||||
Equifax, Inc. | 353,822 | 42,547,095 | ||
Nielsen Holdings plc | 1,413,515 | 73,700,672 | ||
Verisk Analytics, Inc., Class A(1) | 959,058 | 74,403,720 | ||
190,651,487 | ||||
Real Estate Investment Trusts (REITs) — 1.1% | ||||
Crown Castle International Corp. | 631,770 | 54,888,178 | ||
Real Estate Management and Development — 0.4% | ||||
Jones Lang LaSalle, Inc. | 179,272 | 20,646,756 | ||
Road and Rail — 3.0% | ||||
Canadian Pacific Railway Ltd., New York Shares | 437,927 | 63,170,970 | ||
J.B. Hunt Transport Services, Inc. | 504,946 | 41,849,925 | ||
Norfolk Southern Corp. | 508,977 | 45,863,917 | ||
150,884,812 | ||||
Semiconductors and Semiconductor Equipment — 3.6% | ||||
Applied Materials, Inc. | 2,642,832 | 54,098,771 | ||
Broadcom Ltd. | 443,518 | 64,642,748 | ||
Cree, Inc.(1) | 1,028,374 | 25,205,447 | ||
NXP Semiconductors NV(1) | 457,126 | 38,983,705 | ||
182,930,671 | ||||
Software — 7.2% | ||||
Activision Blizzard, Inc. | 689,843 | 23,778,888 | ||
CDK Global, Inc. | 1,069,477 | 50,875,021 | ||
Electronic Arts, Inc.(1) | 1,893,297 | 117,100,420 |
8
Shares | Value | |||
Guidewire Software, Inc.(1) | 647,524 | $ | 36,889,442 | |
ServiceNow, Inc.(1) | 777,186 | 55,553,255 | ||
Symantec Corp. | 1,375,681 | 22,898,210 | ||
Tyler Technologies, Inc.(1) | 383,890 | 56,205,335 | ||
363,300,571 | ||||
Specialty Retail — 7.3% | ||||
AutoZone, Inc.(1) | 83,144 | 63,624,283 | ||
Burlington Stores, Inc.(1) | 560,039 | 31,905,422 | ||
L Brands, Inc. | 682,654 | 53,444,982 | ||
O'Reilly Automotive, Inc.(1) | 145,754 | 38,286,661 | ||
Ross Stores, Inc. | 315,540 | 17,916,361 | ||
Signet Jewelers Ltd. | 477,745 | 51,863,997 | ||
Tractor Supply Co. | 697,204 | 65,997,331 | ||
Ulta Salon Cosmetics & Fragrance, Inc.(1) | 220,859 | 46,000,512 | ||
369,039,549 | ||||
Textiles, Apparel and Luxury Goods — 2.7% | ||||
Coach, Inc. | 714,270 | 28,763,653 | ||
lululemon athletica, Inc.(1) | 560,901 | 36,767,060 | ||
Under Armour, Inc., Class A(1) | 818,924 | 35,983,521 | ||
Under Armour, Inc., Class C(1) | 840,946 | 34,310,597 | ||
135,824,831 | ||||
Trading Companies and Distributors — 0.5% | ||||
Fastenal Co. | 494,947 | 23,158,570 | ||
TOTAL COMMON STOCKS (Cost $4,121,410,194) | 5,038,249,900 | |||
TEMPORARY CASH INVESTMENTS — 0.3% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% -1.50%, 6/15/16 - 7/31/16, valued at $6,871,365), in a joint trading account at 0.15%, dated 4/29/16 due 5/2/16 (Delivery value $6,735,939) | 6,735,855 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 2/15/44, valued at $11,460,050), at 0.08%, dated 4/29/16 due 5/2/16 (Delivery value $11,230,075) | 11,230,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 4,156 | 4,156 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $17,970,011) | 17,970,011 | |||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $4,139,380,205) | 5,056,219,911 | |||
OTHER ASSETS AND LIABILITIES — 0.1% | 2,569,457 | |||
TOTAL NET ASSETS — 100.0% | $ | 5,058,789,368 |
9
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 2,635,909 | USD | 1,999,764 | Morgan Stanley | 6/30/16 | $ | 101,081 | |
CAD | 4,244,473 | USD | 3,273,693 | Morgan Stanley | 6/30/16 | 109,194 | ||
CAD | 6,063,272 | USD | 4,672,898 | Morgan Stanley | 6/30/16 | 159,588 | ||
CAD | 8,634,025 | USD | 6,704,320 | Morgan Stanley | 6/30/16 | 177,080 | ||
CAD | 6,036,509 | USD | 4,685,956 | Morgan Stanley | 6/30/16 | 125,200 | ||
CAD | 3,894,564 | USD | 3,024,810 | Morgan Stanley | 6/30/16 | 79,195 | ||
CAD | 1,659,095 | USD | 1,311,330 | Morgan Stanley | 6/30/16 | 10,984 | ||
USD | 78,449,274 | CAD | 103,536,568 | Morgan Stanley | 6/30/16 | (4,070,366 | ) | |
USD | 1,495,661 | CAD | 1,915,404 | Morgan Stanley | 6/30/16 | (30,934 | ) | |
$ | (3,338,978 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $4,139,380,205) | $ | 5,056,219,911 | |
Foreign currency holdings, at value (cost of $17,853) | 14,724 | ||
Receivable for investments sold | 30,606,156 | ||
Receivable for capital shares sold | 1,806,574 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 762,322 | ||
Dividends and interest receivable | 1,100,149 | ||
5,090,509,836 | |||
Liabilities | |||
Payable for investments purchased | 18,441,708 | ||
Payable for capital shares redeemed | 4,801,667 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 4,101,300 | ||
Accrued management fees | 4,122,432 | ||
Distribution and service fees payable | 253,361 | ||
31,720,468 | |||
Net Assets | $ | 5,058,789,368 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 4,107,537,506 | |
Accumulated net investment loss | (29,432,639 | ) | |
Undistributed net realized gain | 67,152,845 | ||
Net unrealized appreciation | 913,531,656 | ||
$ | 5,058,789,368 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $3,967,100,876 | 190,172,482 | $20.86 | |||
Institutional Class, $0.01 Par Value | $160,062,812 | 7,316,675 | $21.88 | |||
A Class, $0.01 Par Value | $661,292,347 | 33,687,733 | $19.63* | |||
C Class, $0.01 Par Value | $117,208,325 | 7,029,374 | $16.67 | |||
R Class, $0.01 Par Value | $44,628,481 | 2,259,494 | $19.75 | |||
R6 Class, $0.01 Par Value | $108,496,527 | 4,935,943 | $21.98 |
*Maximum offering price $20.83 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $54,304) | $ | 19,659,867 | |
Interest | 32,140 | ||
19,692,007 | |||
Expenses: | |||
Management fees | 25,133,475 | ||
Distribution and service fees: | |||
A Class | 877,255 | ||
C Class | 602,915 | ||
R Class | 120,874 | ||
Directors' fees and expenses | 95,574 | ||
Other expenses | 799 | ||
26,830,892 | |||
Net investment income (loss) | (7,138,885 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 72,973,858 | ||
Foreign currency transactions | 252,459 | ||
73,226,317 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (305,434,286 | ) | |
Translation of assets and liabilities in foreign currencies | (2,107,637 | ) | |
(307,541,923 | ) | ||
Net realized and unrealized gain (loss) | (234,315,606 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (241,454,491 | ) |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | (7,138,885 | ) | $ | (27,685,605 | ) |
Net realized gain (loss) | 73,226,317 | 705,799,339 | ||||
Change in net unrealized appreciation (depreciation) | (307,541,923 | ) | (281,251,446 | ) | ||
Net increase (decrease) in net assets resulting from operations | (241,454,491 | ) | 396,862,288 | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (476,523,199 | ) | (627,197,211 | ) | ||
Institutional Class | (18,120,987 | ) | (26,142,114 | ) | ||
A Class | (91,679,856 | ) | (127,268,570 | ) | ||
B Class | — | (380,363 | ) | |||
C Class | (17,882,234 | ) | (21,063,349 | ) | ||
R Class | (6,346,683 | ) | (8,236,815 | ) | ||
R6 Class | (10,943,140 | ) | (7,912,123 | ) | ||
Decrease in net assets from distributions | (621,496,099 | ) | (818,200,545 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 318,745,855 | 260,661,006 | ||||
Net increase (decrease) in net assets | (544,204,735 | ) | (160,677,251 | ) | ||
Net Assets | ||||||
Beginning of period | 5,602,994,103 | 5,763,671,354 | ||||
End of period | $ | 5,058,789,368 | $ | 5,602,994,103 | ||
Accumulated net investment loss | $ | (29,432,639 | ) | $ | (22,293,754 | ) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2016 (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'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. On October 16, 2015, all outstanding B Class shares were converted to A Class shares and the fund discontinued offering the B Class.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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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, 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 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, 2016 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. 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, 2016 were $1,684,355,421 and $1,891,711,259, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 1,160,000,000 | 1,160,000,000 | ||||||||
Sold | 8,022,595 | $ | 166,975,976 | 17,995,858 | $ | 448,520,966 | ||||
Issued in reinvestment of distributions | 21,839,347 | 461,902,188 | 27,126,049 | 608,166,025 | ||||||
Redeemed | (16,602,943 | ) | (350,347,000 | ) | (33,649,543 | ) | (842,439,307 | ) | ||
13,258,999 | 278,531,164 | 11,472,364 | 214,247,684 | |||||||
Institutional Class/Shares Authorized | 120,000,000 | 120,000,000 | ||||||||
Sold | 1,094,152 | 24,770,433 | 1,797,320 | 46,415,350 | ||||||
Issued in reinvestment of distributions | 791,046 | 17,529,582 | 1,077,578 | 25,139,900 | ||||||
Redeemed | (955,969 | ) | (20,809,724 | ) | (3,638,578 | ) | (94,836,634 | ) | ||
929,229 | 21,490,291 | (763,680 | ) | (23,281,384 | ) | |||||
A Class/Shares Authorized | 510,000,000 | 510,000,000 | ||||||||
Sold | 3,287,239 | 67,113,508 | 8,462,173 | 201,503,323 | ||||||
Issued in reinvestment of distributions | 4,477,628 | 89,194,354 | 5,811,176 | 123,894,272 | ||||||
Redeemed | (8,322,465 | ) | (165,219,671 | ) | (13,756,959 | ) | (323,412,390 | ) | ||
(557,598 | ) | (8,911,809 | ) | 516,390 | 1,985,205 | |||||
B Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 4,258 | 96,931 | ||||||||
Issued in reinvestment of distributions | 16,976 | 350,214 | ||||||||
Redeemed | (126,015 | ) | (2,818,601 | ) | ||||||
(104,781 | ) | (2,371,456 | ) | |||||||
C Class/Shares Authorized | 85,000,000 | 85,000,000 | ||||||||
Sold | 546,569 | 9,499,652 | 1,322,874 | 27,092,021 | ||||||
Issued in reinvestment of distributions | 944,287 | 16,015,100 | 956,169 | 17,861,230 | ||||||
Redeemed | (1,064,733 | ) | (17,930,783 | ) | (1,240,586 | ) | (25,713,987 | ) | ||
426,123 | 7,583,969 | 1,038,457 | 19,239,264 | |||||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 374,799 | 7,566,300 | 979,206 | 23,473,597 | ||||||
Issued in reinvestment of distributions | 315,250 | 6,323,925 | 382,413 | 8,225,706 | ||||||
Redeemed | (718,771 | ) | (14,062,294 | ) | (1,322,788 | ) | (31,758,123 | ) | ||
(28,722 | ) | (172,069 | ) | 38,831 | (58,820 | ) | ||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 1,181,893 | 25,624,100 | 2,929,320 | 76,749,542 | ||||||
Issued in reinvestment of distributions | 491,826 | 10,943,140 | 338,414 | 7,912,123 | ||||||
Redeemed | (743,833 | ) | (16,342,931 | ) | (1,287,420 | ) | (33,761,152 | ) | ||
929,886 | 20,224,309 | 1,980,314 | 50,900,513 | |||||||
Net increase (decrease) | 14,957,917 | $ | 318,745,855 | 14,177,895 | $ | 260,661,006 |
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. |
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• | 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. There were no significant transfers between levels during the period.
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 | $ | 5,038,249,900 | — | — | ||||
Temporary Cash Investments | 4,156 | $ | 17,965,855 | — | ||||
$ | 5,038,254,056 | $ | 17,965,855 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 762,322 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 4,101,300 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $89,352,982.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $762,322 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $4,101,300 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $252,308 in net realized gain (loss) on foreign currency transactions and $(2,114,569) 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, the fund 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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 4,145,626,755 | |
Gross tax appreciation of investments | $ | 1,028,470,200 | |
Gross tax depreciation of investments | (117,877,044 | ) | |
Net tax appreciation (depreciation) of investments | $ | 910,593,156 |
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, 2015, the fund had late-year ordinary loss deferrals of $(23,518,163), 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.
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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 Realized Gains | 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 | |||||||||||||
2016(4) | $24.59 | (0.02) | (0.98) | (1.00) | (2.73) | $20.86 | (4.19)% | 1.01%(3) | (0.24)%(3) | 33% | $3,967,101 | ||
2015 | $26.89 | (0.11) | 1.66 | 1.55 | (3.85) | $24.59 | 7.11% | 1.00% | (0.42)% | 62% | $4,349,601 | ||
2014 | $28.45 | (0.14) | 2.18 | 2.04 | (3.60) | $26.89 | 8.33% | 1.00% | (0.55)% | 73% | $4,449,377 | ||
2013 | $22.44 | (0.07) | 6.55 | 6.48 | (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 | ||
Institutional Class | |||||||||||||
2016(4) | $25.62 | —(5) | (1.01) | (1.01) | (2.73) | $21.88 | (4.08)% | 0.81%(3) | (0.04)%(3) | 33% | $160,063 | ||
2015 | $27.81 | (0.06) | 1.72 | 1.66 | (3.85) | $25.62 | 7.33% | 0.80% | (0.22)% | 62% | $163,670 | ||
2014 | $29.25 | (0.09) | 2.25 | 2.16 | (3.60) | $27.81 | 8.53% | 0.80% | (0.35)% | 73% | $198,895 | ||
2013 | $23.01 | (0.02) | 6.73 | 6.71 | (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 |
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 Realized Gains | 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 | |||||||||||||
2016(4) | $23.33 | (0.05) | (0.92) | (0.97) | (2.73) | $19.63 | (4.33)% | 1.26%(3) | (0.49)%(3) | 33% | $661,292 | ||
2015 | $25.78 | (0.16) | 1.56 | 1.40 | (3.85) | $23.33 | 6.88% | 1.25% | (0.67)% | 62% | $798,879 | ||
2014 | $27.48 | (0.20) | 2.10 | 1.90 | (3.60) | $25.78 | 8.04% | 1.25% | (0.80)% | 73% | $869,381 | ||
2013 | $21.74 | (0.13) | 6.34 | 6.21 | (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 | ||
C Class | |||||||||||||
2016(4) | $20.31 | (0.10) | (0.81) | (0.91) | (2.73) | $16.67 | (4.72)% | 2.01%(3) | (1.24)%(3) | 33% | $117,208 | ||
2015 | $23.10 | (0.30) | 1.36 | 1.06 | (3.85) | $20.31 | 6.09% | 2.00% | (1.42)% | 62% | $134,096 | ||
2014 | $25.16 | (0.35) | 1.89 | 1.54 | (3.60) | $23.10 | 7.25% | 2.00% | (1.55)% | 73% | $128,522 | ||
2013 | $20.09 | (0.28) | 5.82 | 5.54 | (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 |
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 Realized Gains | 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 | |||||||||||||
2016(4) | $23.48 | (0.07) | (0.93) | (1.00) | (2.73) | $19.75 | (4.44)% | 1.51%(3) | (0.74)%(3) | 33% | $44,628 | ||
2015 | $25.97 | (0.22) | 1.58 | 1.36 | (3.85) | $23.48 | 6.60% | 1.50% | (0.92)% | 62% | $53,731 | ||
2014 | $27.72 | (0.27) | 2.12 | 1.85 | (3.60) | $25.97 | 7.80% | 1.50% | (1.05)% | 73% | $58,426 | ||
2013 | $21.99 | (0.20) | 6.40 | 6.20 | (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 | ||
R6 Class | |||||||||||||
2016(4) | $25.72 | 0.01 | (1.02) | (1.01) | (2.73) | $21.98 | (4.02)% | 0.66%(3) | 0.11%(3) | 33% | $108,497 | ||
2015 | $27.86 | (0.02) | 1.73 | 1.71 | (3.85) | $25.72 | 7.48% | 0.65% | (0.07)% | 62% | $103,017 | ||
2014 | $29.25 | (0.07) | 2.28 | 2.21 | (3.60) | $27.86 | 8.72% | 0.65% | (0.20)% | 73% | $56442 | ||
2013(6) | $27.22 | —(5) | 2.03 | 2.03 | — | $29.25 | 7.46% | 0.65%(3) | (0.07)%(3) | 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) | Annualized. |
(4) | Six months ended April 30, 2016 (unaudited). |
(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.
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89217 1606 |
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
LKQ Corp. | 1.9% |
Middleby Corp. (The) | 1.7% |
CoStar Group, Inc. | 1.5% |
HD Supply Holdings, Inc. | 1.5% |
Ball Corp. | 1.4% |
Snap-on, Inc. | 1.4% |
Fortune Brands Home & Security, Inc. | 1.4% |
Tyler Technologies, Inc. | 1.3% |
Interpublic Group of Cos., Inc. (The) | 1.2% |
Sabre Corp. | 1.2% |
Top Five Industries | % of net assets |
Software | 6.9% |
Hotels, Restaurants and Leisure | 5.8% |
Machinery | 5.3% |
Health Care Equipment and Supplies | 5.3% |
Health Care Providers and Services | 4.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.5% |
Temporary Cash Investments | 1.7% |
Other Assets and Liabilities | 0.8% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $950.80 | $6.60 | 1.36% |
Investor Class (before waiver) | $1,000 | $950.80(2) | $7.32 | 1.51% |
Institutional Class (after waiver) | $1,000 | $951.60 | $5.63 | 1.16% |
Institutional Class (before waiver) | $1,000 | $951.60(2) | $6.36 | 1.31% |
A Class (after waiver) | $1,000 | $949.10 | $7.80 | 1.61% |
A Class (before waiver) | $1,000 | $949.10(2) | $8.53 | 1.76% |
C Class (after waiver) | $1,000 | $945.50 | $11.42 | 2.36% |
C Class (before waiver) | $1,000 | $945.50(2) | $12.14 | 2.51% |
R Class (after waiver) | $1,000 | $948.30 | $9.01 | 1.86% |
R Class (before waiver) | $1,000 | $948.30(2) | $9.74 | 2.01% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,018.10 | $6.82 | 1.36% |
Investor Class (before waiver) | $1,000 | $1,017.36 | $7.57 | 1.51% |
Institutional Class (after waiver) | $1,000 | $1,019.10 | $5.82 | 1.16% |
Institutional Class (before waiver) | $1,000 | $1,018.35 | $6.57 | 1.31% |
A Class (after waiver) | $1,000 | $1,016.86 | $8.07 | 1.61% |
A Class (before waiver) | $1,000 | $1,016.11 | $8.82 | 1.76% |
C Class (after waiver) | $1,000 | $1,013.13 | $11.81 | 2.36% |
C Class (before waiver) | $1,000 | $1,012.38 | $12.56 | 2.51% |
R Class (after waiver) | $1,000 | $1,015.61 | $9.32 | 1.86% |
R Class (before waiver) | $1,000 | $1,014.87 | $10.07 | 2.01% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, 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 fees had not been waived. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 97.5% | ||||
Aerospace and Defense — 0.5% | ||||
B/E Aerospace, Inc. | 17,585 | $ | 855,159 | |
Air Freight and Logistics — 0.8% | ||||
XPO Logistics, Inc.(1) | 45,695 | 1,377,247 | ||
Airlines — 0.5% | ||||
Alaska Air Group, Inc. | 12,539 | 883,122 | ||
Auto Components — 0.7% | ||||
Tenneco, Inc.(1) | 22,623 | 1,205,806 | ||
Banks — 3.0% | ||||
BankUnited, Inc. | 29,410 | 1,014,645 | ||
Cathay General Bancorp. | 26,932 | 821,965 | ||
FCB Financial Holdings, Inc., Class A(1) | 36,371 | 1,271,166 | ||
Signature Bank(1) | 13,240 | 1,824,869 | ||
4,932,645 | ||||
Beverages — 0.6% | ||||
Coca-Cola Bottling Co. Consolidated | 6,081 | 969,129 | ||
Biotechnology — 4.6% | ||||
ACADIA Pharmaceuticals, Inc.(1) | 11,071 | 357,593 | ||
Aimmune Therapeutics, Inc.(1) | 19,457 | 251,968 | ||
Alder Biopharmaceuticals, Inc.(1) | 12,311 | 326,857 | ||
Alkermes plc(1) | 13,347 | 530,543 | ||
Anacor Pharmaceuticals, Inc.(1) | 11,900 | 746,606 | ||
Bluebird Bio, Inc.(1) | 2,749 | 121,918 | ||
Cepheid, Inc.(1) | 6,537 | 186,566 | ||
Eagle Pharmaceuticals, Inc.(1) | 5,828 | 220,648 | ||
Exelixis, Inc.(1) | 100,799 | 464,684 | ||
Ionis Pharmaceuticals, Inc.(1) | 13,428 | 550,145 | ||
Kite Pharma, Inc.(1) | 5,981 | 276,801 | ||
Neurocrine Biosciences, Inc.(1) | 12,241 | 557,945 | ||
Novavax, Inc.(1) | 48,478 | 254,025 | ||
Opko Health, Inc.(1) | 31,379 | 337,324 | ||
Prothena Corp. plc(1) | 6,705 | 289,589 | ||
Radius Health, Inc.(1) | 10,932 | 389,179 | ||
Sarepta Therapeutics, Inc.(1) | 4,838 | 68,651 | ||
Seattle Genetics, Inc.(1) | 11,182 | 396,737 | ||
Spark Therapeutics, Inc.(1) | 6,009 | 215,663 | ||
TESARO, Inc.(1) | 4,870 | 201,813 | ||
Ultragenyx Pharmaceutical, Inc.(1) | 5,664 | 383,000 | ||
United Therapeutics Corp.(1) | 5,240 | 551,248 | ||
7,679,503 | ||||
Building Products — 3.8% | ||||
Apogee Enterprises, Inc. | 29,740 | 1,232,426 | ||
Fortune Brands Home & Security, Inc. | 41,012 | 2,272,475 | ||
Lennox International, Inc. | 9,715 | 1,311,039 | ||
Masonite International Corp.(1) | 21,813 | 1,475,867 | ||
6,291,807 |
6
Shares | Value | |||
Capital Markets — 1.8% | ||||
Affiliated Managers Group, Inc.(1) | 3,998 | $ | 680,939 | |
Evercore Partners, Inc., Class A | 21,635 | 1,117,231 | ||
Lazard Ltd., Class A | 32,073 | 1,156,232 | ||
2,954,402 | ||||
Chemicals — 2.4% | ||||
Ashland, Inc. | 15,340 | 1,711,944 | ||
International Flavors & Fragrances, Inc. | 10,503 | 1,254,793 | ||
PolyOne Corp. | 26,605 | 957,248 | ||
3,923,985 | ||||
Commercial Services and Supplies — 1.4% | ||||
KAR Auction Services, Inc. | 38,826 | 1,459,858 | ||
Multi-Color Corp. | 14,530 | 869,330 | ||
2,329,188 | ||||
Communications Equipment — 0.6% | ||||
Palo Alto Networks, Inc.(1) | 6,158 | 929,057 | ||
Construction Materials — 1.7% | ||||
Headwaters, Inc.(1) | 64,745 | 1,295,548 | ||
Summit Materials, Inc., Class A(1) | 71,107 | 1,486,136 | ||
2,781,684 | ||||
Containers and Packaging — 2.9% | ||||
Ball Corp. | 33,785 | 2,411,573 | ||
Berry Plastics Group, Inc.(1) | 32,145 | 1,157,863 | ||
Graphic Packaging Holding Co. | 98,687 | 1,310,564 | ||
4,880,000 | ||||
Distributors — 1.9% | ||||
LKQ Corp.(1) | 96,831 | 3,103,434 | ||
Diversified Consumer Services — 1.4% | ||||
Nord Anglia Education, Inc.(1) | 57,354 | 1,217,625 | ||
ServiceMaster Global Holdings, Inc.(1) | 30,971 | 1,186,809 | ||
2,404,434 | ||||
Diversified Financial Services — 2.9% | ||||
Bats Global Markets, Inc.(1) | 70,332 | 1,667,572 | ||
CBOE Holdings, Inc. | 7,397 | 458,318 | ||
MarketAxess Holdings, Inc. | 5,886 | 722,565 | ||
MSCI, Inc., Class A | 26,186 | 1,988,565 | ||
4,837,020 | ||||
Electrical Equipment — 1.4% | ||||
Acuity Brands, Inc. | 4,428 | 1,079,945 | ||
AMETEK, Inc. | 25,166 | 1,210,233 | ||
2,290,178 | ||||
Electronic Equipment, Instruments and Components — 2.7% | ||||
Belden, Inc. | 27,604 | 1,742,917 | ||
CDW Corp. | 40,109 | 1,544,196 | ||
Dolby Laboratories, Inc., Class A | 24,020 | 1,143,592 | ||
4,430,705 | ||||
Food and Staples Retailing — 0.3% | ||||
Casey's General Stores, Inc. | 5,043 | 564,816 | ||
Food Products — 1.2% | ||||
Hain Celestial Group, Inc. (The)(1) | 16,207 | 678,425 |
7
Shares | Value | |||
TreeHouse Foods, Inc.(1) | 15,182 | $ | 1,342,089 | |
2,020,514 | ||||
Health Care Equipment and Supplies — 5.3% | ||||
ABIOMED, Inc.(1) | 4,150 | 403,131 | ||
Cooper Cos., Inc. (The) | 9,217 | 1,410,938 | ||
DexCom, Inc.(1) | 9,934 | 639,551 | ||
Nevro Corp.(1) | 14,085 | 947,216 | ||
NuVasive, Inc.(1) | 36,226 | 1,917,805 | ||
STERIS plc | 17,647 | 1,247,114 | ||
Teleflex, Inc. | 8,490 | 1,322,572 | ||
West Pharmaceutical Services, Inc. | 13,556 | 965,187 | ||
8,853,514 | ||||
Health Care Providers and Services — 4.9% | ||||
Adeptus Health, Inc., Class A(1) | 27,660 | 1,884,199 | ||
American Renal Associates Holdings, Inc.(1) | 68,846 | 1,935,950 | ||
ExamWorks Group, Inc.(1) | 28,967 | 1,044,260 | ||
HealthEquity, Inc.(1) | 32,570 | 819,136 | ||
Molina Healthcare, Inc.(1) | 7,151 | 370,136 | ||
Team Health Holdings, Inc.(1) | 10,705 | 447,790 | ||
VCA, Inc.(1) | 25,988 | 1,636,464 | ||
8,137,935 | ||||
Health Care Technology — 1.0% | ||||
athenahealth, Inc.(1) | 3,583 | 477,614 | ||
Evolent Health, Inc.(1) | 53,483 | 642,331 | ||
Press Ganey Holdings, Inc.(1) | 19,493 | 593,951 | ||
1,713,896 | ||||
Hotels, Restaurants and Leisure — 5.8% | ||||
Aramark | 48,279 | 1,617,829 | ||
Bloomin' Brands, Inc. | 46,928 | 877,554 | ||
Cedar Fair LP | 10,259 | 595,740 | ||
ClubCorp Holdings, Inc. | 87,047 | 1,162,078 | ||
Madison Square Garden Co. (The)(1) | 7,229 | 1,134,808 | ||
Norwegian Cruise Line Holdings Ltd.(1) | 26,041 | 1,273,145 | ||
Papa John's International, Inc. | 15,817 | 895,084 | ||
Texas Roadhouse, Inc. | 31,800 | 1,294,896 | ||
Vail Resorts, Inc. | 5,821 | 754,634 | ||
9,605,768 | ||||
Household Durables — 2.0% | ||||
Harman International Industries, Inc. | 9,806 | 752,709 | ||
Newell Brands, Inc. | 39,174 | 1,783,984 | ||
Universal Electronics, Inc.(1) | 12,540 | 832,781 | ||
3,369,474 | ||||
Insurance — 2.0% | ||||
Allied World Assurance Co. Holdings Ltd. | 29,083 | 1,034,773 | ||
Arthur J Gallagher & Co. | 28,090 | 1,293,263 | ||
First American Financial Corp. | 25,786 | 928,812 | ||
3,256,848 | ||||
Internet Software and Services — 2.9% | ||||
Akamai Technologies, Inc.(1) | 13,844 | 705,906 | ||
CoStar Group, Inc.(1) | 12,770 | 2,519,649 |
8
Shares | Value | |||
Q2 Holdings, Inc.(1) | 64,605 | $ | 1,544,705 | |
4,770,260 | ||||
IT Services — 3.6% | ||||
EPAM Systems, Inc.(1) | 16,289 | 1,187,957 | ||
MAXIMUS, Inc. | 17,469 | 924,110 | ||
Sabre Corp. | 69,236 | 2,004,382 | ||
Vantiv, Inc., Class A(1) | 35,459 | 1,933,934 | ||
6,050,383 | ||||
Leisure Products — 1.2% | ||||
Brunswick Corp. | 40,428 | 1,941,757 | ||
Life Sciences Tools and Services — 1.8% | ||||
Mettler-Toledo International, Inc.(1) | 2,852 | 1,020,873 | ||
PAREXEL International Corp.(1) | 19,109 | 1,167,560 | ||
Quintiles Transnational Holdings, Inc.(1) | 11,968 | 826,630 | ||
3,015,063 | ||||
Machinery — 5.3% | ||||
EnPro Industries, Inc. | 19,224 | 1,126,142 | ||
ITT Corp. | 28,096 | 1,078,043 | ||
Middleby Corp. (The)(1) | 26,389 | 2,893,290 | ||
Snap-on, Inc. | 14,590 | 2,323,895 | ||
WABCO Holdings, Inc.(1) | 13,330 | 1,495,093 | ||
8,916,463 | ||||
Media — 1.2% | ||||
Interpublic Group of Cos., Inc. (The) | 89,776 | 2,059,461 | ||
Metals and Mining — 0.5% | ||||
Ferroglobe plc | 88,525 | 902,070 | ||
Oil, Gas and Consumable Fuels — 1.9% | ||||
Diamondback Energy, Inc.(1) | 11,421 | 988,830 | ||
Enviva Partners, LP | 65,098 | 1,478,376 | ||
Newfield Exploration Co.(1) | 21,553 | 781,296 | ||
3,248,502 | ||||
Pharmaceuticals — 0.8% | ||||
Horizon Pharma plc(1) | 25,070 | 385,326 | ||
Pacira Pharmaceuticals, Inc.(1) | 10,744 | 581,358 | ||
Supernus Pharmaceuticals, Inc.(1) | 25,778 | 442,350 | ||
1,409,034 | ||||
Professional Services — 0.7% | ||||
Korn / Ferry International | 45,350 | 1,230,799 | ||
Real Estate Investment Trusts (REITs) — 1.6% | ||||
Extra Space Storage, Inc. | 7,973 | 677,306 | ||
Sovran Self Storage, Inc. | 7,190 | 763,722 | ||
Sun Communities, Inc. | 17,330 | 1,176,187 | ||
2,617,215 | ||||
Real Estate Management and Development — 0.9% | ||||
FirstService Corp. | 33,946 | 1,525,365 | ||
Semiconductors and Semiconductor Equipment — 2.1% | ||||
M/A-COM Technology Solutions Holdings, Inc.(1) | 23,511 | 961,365 | ||
Microsemi Corp.(1) | 31,778 | 1,073,778 | ||
Monolithic Power Systems, Inc. | 10,842 | 676,758 | ||
Skyworks Solutions, Inc. | 11,740 | 784,467 | ||
3,496,368 |
9
Shares | Value | |||
Software — 6.9% | ||||
Callidus Software, Inc.(1) | 81,029 | $ | 1,482,831 | |
CDK Global, Inc. | 26,623 | 1,266,456 | ||
Guidewire Software, Inc.(1) | 13,399 | 763,341 | ||
Manhattan Associates, Inc.(1) | 22,543 | 1,364,753 | ||
RingCentral, Inc., Class A(1) | 41,791 | 797,372 | ||
SecureWorks Corp., Class A(1) | 84,311 | 1,123,866 | ||
ServiceNow, Inc.(1) | 10,906 | 779,561 | ||
Splunk, Inc.(1) | 11,554 | 600,577 | ||
Synchronoss Technologies, Inc.(1) | 38,261 | 1,188,769 | ||
Tyler Technologies, Inc.(1) | 14,950 | 2,188,830 | ||
11,556,356 | ||||
Specialty Retail — 2.7% | ||||
Burlington Stores, Inc.(1) | 22,443 | 1,278,578 | ||
Francesca's Holdings Corp.(1) | 53,648 | 890,557 | ||
Signet Jewelers Ltd. | 12,206 | 1,325,083 | ||
Ulta Salon Cosmetics & Fragrance, Inc.(1) | 4,989 | 1,039,109 | ||
4,533,327 | ||||
Technology Hardware, Storage and Peripherals — 0.8% | ||||
Super Micro Computer, Inc.(1) | 49,009 | 1,318,832 | ||
Textiles, Apparel and Luxury Goods — 2.5% | ||||
Coach, Inc. | 22,102 | 890,048 | ||
Hanesbrands, Inc. | 40,113 | 1,164,480 | ||
lululemon athletica, Inc.(1) | 10,296 | 674,903 | ||
Skechers U.S.A., Inc., Class A(1) | 45,400 | 1,500,470 | ||
4,229,901 | ||||
Trading Companies and Distributors — 2.0% | ||||
HD Supply Holdings, Inc.(1) | 73,290 | 2,512,381 | ||
Titan Machinery, Inc.(1) | 57,950 | 753,350 | ||
3,265,731 | ||||
TOTAL COMMON STOCKS (Cost $139,770,026) | 162,668,157 | |||
TEMPORARY CASH INVESTMENTS — 1.7% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $ 1,061,216), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $ 1,040,300) | 1,040,288 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $1,770,125), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $1,734,012) | 1,734,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 1,008 | 1,008 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $2,775,296) | 2,775,296 | |||
TOTAL INVESTMENT SECURITIES — 99.2% (Cost $142,545,322) | 165,443,453 | |||
OTHER ASSETS AND LIABILITIES — 0.8% | 1,394,768 | |||
TOTAL NET ASSETS — 100.0% | $ | 166,838,221 |
10
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 42,340 | USD | 32,831 | Morgan Stanley | 6/30/16 | $ | 914 | |
CAD | 45,296 | USD | 35,162 | Morgan Stanley | 6/30/16 | 939 | ||
CAD | 44,405 | USD | 35,015 | Morgan Stanley | 6/30/16 | 377 | ||
CAD | 64,933 | USD | 51,375 | Morgan Stanley | 6/30/16 | 377 | ||
CAD | 42,386 | USD | 33,648 | Morgan Stanley | 6/30/16 | 134 | ||
USD | 1,406,130 | CAD | 1,855,796 | Morgan Stanley | 6/30/16 | (72,958 | ) | |
USD | 44,782 | CAD | 58,992 | Morgan Stanley | 6/30/16 | (2,235 | ) | |
USD | 37,651 | CAD | 48,361 | Morgan Stanley | 6/30/16 | (893 | ) | |
$ | (73,345 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $142,545,322) | $ | 165,443,453 | |
Receivable for investments sold | 2,396,230 | ||
Receivable for capital shares sold | 2,196 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 2,741 | ||
Dividends and interest receivable | 20,372 | ||
167,864,992 | |||
Liabilities | |||
Payable for investments purchased | 754,008 | ||
Payable for capital shares redeemed | 10,261 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 76,086 | ||
Accrued management fees | 186,047 | ||
Distribution and service fees payable | 369 | ||
1,026,771 | |||
Net Assets | $ | 166,838,221 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 151,621,025 | |
Accumulated net investment loss | (2,093,774 | ) | |
Accumulated net realized loss | (5,513,964 | ) | |
Net unrealized appreciation | 22,824,934 | ||
$ | 166,838,221 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $165,567,218 | 17,322,312 | $9.56 | |||
Institutional Class, $0.01 Par Value | $56,432 | 5,820 | $9.70 | |||
A Class, $0.01 Par Value | $861,963 | 91,896 | $9.38* | |||
C Class, $0.01 Par Value | $134,959 | 15,216 | $8.87 | |||
R Class, $0.01 Par Value | $217,649 | 23,636 | $9.21 |
*Maximum offering price $9.95 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,229) | $ | 595,588 | |
Interest | 1,820 | ||
597,408 | |||
Expenses: | |||
Management fees | 1,272,836 | ||
Distribution and service fees: | |||
A Class | 1,007 | ||
C Class | 727 | ||
R Class | 527 | ||
Directors' fees and expenses | 3,195 | ||
Other expenses | 578 | ||
1,278,870 | |||
Fees waived | (127,289 | ) | |
1,151,581 | |||
Net investment income (loss) | (554,173 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (4,355,083 | ) | |
Foreign currency transactions | (5,498 | ) | |
(4,360,581 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (4,404,445 | ) | |
Translation of assets and liabilities in foreign currencies | (58,308 | ) | |
(4,462,753 | ) | ||
Net realized and unrealized gain (loss) | (8,823,334 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (9,377,507 | ) |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | (554,173 | ) | $ | (1,689,260 | ) |
Net realized gain (loss) | (4,360,581 | ) | 21,694,184 | |||
Change in net unrealized appreciation (depreciation) | (4,462,753 | ) | (14,188,991 | ) | ||
Net increase (decrease) in net assets resulting from operations | (9,377,507 | ) | 5,815,933 | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (22,582,859 | ) | (11,647,699 | ) | ||
Institutional Class | (7,129 | ) | (3,143 | ) | ||
A Class | (110,456 | ) | (26,309 | ) | ||
C Class | (20,905 | ) | (5,042 | ) | ||
R Class | (26,875 | ) | (7,030 | ) | ||
Decrease in net assets from distributions | (22,748,224 | ) | (11,689,223 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 10,083,206 | 7,979,713 | ||||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 1,878 | 11,491 | ||||
Net increase (decrease) in net assets | (22,040,647 | ) | 2,117,914 | |||
Net Assets | ||||||
Beginning of period | 188,878,868 | 186,760,954 | ||||
End of period | $ | 166,838,221 | $ | 188,878,868 | ||
Accumulated net investment loss | $ | (2,093,774 | ) | $ | (1,539,601 | ) |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2016 (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’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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
16
Redemption Fees — 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.
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. During the six months ended April 30, 2016, the investment advisor voluntarily agreed to waive 0.15% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2017 and cannot terminate it prior to such date without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2016 was $126,377, $41, $604, $109, and $158 for the Investor Class, Institutional Class, A Class, C Class and R Class, respectively. The effective annual management fee before waiver for each class for the six months ended April 30, 2016 was 1.50% for the Investor Class, A Class, C Class and R Class and 1.30% for the Institutional Class. The effective annual management fee after waiver for each class for the six months ended April 30, 2016 was 1.35% for the Investor Class, A Class, C Class and R Class and 1.15% 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, 2016 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. 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, 2016 were $77,265,089 and $88,571,453, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 248,515 | $ | 2,334,557 | 1,400,696 | $ | 17,280,896 | ||||
Issued in reinvestment of distributions | 2,143,803 | 21,137,897 | 1,005,158 | 10,905,967 | ||||||
Redeemed | (1,392,899 | ) | (13,622,579 | ) | (1,762,751 | ) | (20,908,191 | ) | ||
999,419 | 9,849,875 | 643,103 | 7,278,672 | |||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 42 | 393 | 658 | 8,455 | ||||||
Issued in reinvestment of distributions | 714 | 7,129 | 287 | 3,143 | ||||||
756 | 7,522 | 945 | 11,598 | |||||||
A Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 15,652 | 160,458 | 48,512 | 578,726 | ||||||
Issued in reinvestment of distributions | 11,381 | 110,165 | 2,393 | 25,627 | ||||||
Redeemed | (11,152 | ) | (114,030 | ) | (8,474 | ) | (99,565 | ) | ||
15,881 | 156,593 | 42,431 | 504,788 | |||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 4,724 | 44,365 | 7,590 | 89,494 | ||||||
Issued in reinvestment of distributions | 2,277 | 20,905 | 489 | 5,042 | ||||||
Redeemed | (6,002 | ) | (48,809 | ) | (520 | ) | (6,169 | ) | ||
999 | 16,461 | 7,559 | 88,367 | |||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 5,828 | 54,293 | 12,577 | 138,440 | ||||||
Issued in reinvestment of distributions | 2,826 | 26,875 | 665 | 7,030 | ||||||
Redeemed | (3,058 | ) | (28,413 | ) | (4,523 | ) | (49,182 | ) | ||
5,596 | 52,755 | 8,719 | 96,288 | |||||||
Net increase (decrease) | 1,022,651 | $ | 10,083,206 | 702,757 | $ | 7,979,713 |
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. There were no significant transfers between levels during the period.
18
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 | $ | 161,142,792 | $ | 1,525,365 | — | |||
Temporary Cash Investments | 1,008 | 2,774,288 | — | |||||
$ | 161,143,800 | $ | 4,299,653 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 2,741 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 76,086 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $1,432,931.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $2,741 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $76,086 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(5,753) in net realized gain (loss) on foreign currency transactions and $(58,456) 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, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
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.
19
As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 144,678,756 | |
Gross tax appreciation of investments | $ | 26,231,427 | |
Gross tax depreciation of investments | (5,466,730 | ) | |
Net tax appreciation (depreciation) of investments | $ | 20,764,697 |
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, 2015, the fund had late-year ordinary loss deferrals of $(1,554,490), 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.
20
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 Realized Gains | 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 | |||||||||||||||
2016(3) | $11.49 | (0.03) | (0.49) | (0.52) | (1.41) | $9.56 | (4.92)% | 1.36%(4) | 1.51%(4) | (0.65)%(4) | (0.80)%(4) | 46% | $165,567 | ||
2015 | $11.87 | (0.10) | 0.48 | 0.38 | (0.76) | $11.49 | 3.54% | 1.39% | 1.50% | (0.86)% | (0.97)% | 93% | $187,605 | ||
2014 | $10.93 | (0.11) | 1.05 | 0.94 | — | $11.87 | 8.60% | 1.48% | 1.50% | (0.93)% | (0.95)% | 76% | $186,134 | ||
2013 | $8.13 | (0.06) | 2.86 | 2.80 | — | $10.93 | 34.44% | 1.50% | 1.50% | (0.62)% | (0.62)% | 79% | $190,490 | ||
2012 | $7.47 | (0.02) | 0.68 | 0.66 | — | $8.13 | 8.84% | 1.50% | 1.50% | (0.22)% | (0.22)% | 63% | $154,517 | ||
2011 | $6.86 | (0.07) | 0.68 | 0.61 | — | $7.47 | 8.89% | 1.50% | 1.50% | (0.95)% | (0.95)% | 107% | $158,117 | ||
Institutional Class | |||||||||||||||
2016(3) | $11.63 | (0.02) | (0.50) | (0.52) | (1.41) | $9.70 | (4.84)% | 1.16%(4) | 1.31%(4) | (0.45)%(4) | (0.60)%(4) | 46% | $56 | ||
2015 | $11.98 | (0.08) | 0.49 | 0.41 | (0.76) | $11.63 | 3.77% | 1.19% | 1.30% | (0.66)% | (0.77)% | 93% | $59 | ||
2014 | $11.01 | (0.08) | 1.05 | 0.97 | — | $11.98 | 8.81% | 1.28% | 1.30% | (0.73)% | (0.75)% | 76% | $49 | ||
2013 | $8.17 | (0.04) | 2.88 | 2.84 | — | $11.01 | 34.76% | 1.30% | 1.30% | (0.42)% | (0.42)% | 79% | $45 | ||
2012 | $7.49 | —(5) | 0.68 | 0.68 | — | $8.17 | 9.08% | 1.30% | 1.30% | (0.02)% | (0.02)% | 63% | $34 | ||
2011 | $6.87 | (0.06) | 0.68 | 0.62 | — | $7.49 | 9.02% | 1.30% | 1.30% | (0.75)% | (0.75)% | 107% | $31 |
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 Realized Gains | 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 | |||||||||||||||
2016(3) | $11.32 | (0.04) | (0.49) | (0.53) | (1.41) | $9.38 | (5.09)% | 1.61%(4) | 1.76%(4) | (0.90)%(4) | (1.05)%(4) | 46% | $862 | ||
2015 | $11.73 | (0.13) | 0.48 | 0.35 | (0.76) | $11.32 | 3.31% | 1.64% | 1.75% | (1.11)% | (1.22)% | 93% | $860 | ||
2014 | $10.83 | (0.13) | 1.03 | 0.90 | — | $11.73 | 8.31% | 1.73% | 1.75% | (1.18)% | (1.20)% | 76% | $394 | ||
2013 | $8.08 | (0.08) | 2.83 | 2.75 | — | $10.83 | 34.03% | 1.75% | 1.75% | (0.87)% | (0.87)% | 79% | $322 | ||
2012 | $7.44 | (0.04) | 0.68 | 0.64 | — | $8.08 | 8.60% | 1.75% | 1.75% | (0.47)% | (0.47)% | 63% | $239 | ||
2011 | $6.85 | (0.09) | 0.68 | 0.59 | — | $7.44 | 8.61% | 1.75% | 1.75% | (1.20)% | (1.20)% | 107% | $282 | ||
C Class | |||||||||||||||
2016(3) | $10.82 | (0.08) | (0.46) | (0.54) | (1.41) | $8.87 | (5.45)% | 2.36%(4) | 2.51%(4) | (1.65)%(4) | (1.80)%(4) | 46% | $135 | ||
2015 | $11.33 | (0.21) | 0.46 | 0.25 | (0.76) | $10.82 | 2.59% | 2.39% | 2.50% | (1.86)% | (1.97)% | 93% | $154 | ||
2014 | $10.53 | (0.21) | 1.01 | 0.80 | — | $11.33 | 7.50% | 2.48% | 2.50% | (1.93)% | (1.95)% | 76% | $75 | ||
2013 | $7.91 | (0.15) | 2.77 | 2.62 | — | $10.53 | 33.12% | 2.50% | 2.50% | (1.62)% | (1.62)% | 79% | $117 | ||
2012 | $7.34 | (0.09) | 0.66 | 0.57 | — | $7.91 | 7.77% | 2.50% | 2.50% | (1.22)% | (1.22)% | 63% | $80 | ||
2011 | $6.81 | (0.15) | 0.68 | 0.53 | — | $7.34 | 7.78% | 2.50% | 2.50% | (1.95)% | (1.95)% | 107% | $57 | ||
R Class | |||||||||||||||
2016(3) | $11.15 | (0.05) | (0.48) | (0.53) | (1.41) | $9.21 | (5.17)% | 1.86%(4) | 2.01%(4) | (1.15)%(4) | (1.30)%(4) | 46% | $218 | ||
2015 | $11.59 | (0.16) | 0.48 | 0.32 | (0.76) | $11.15 | 3.08% | 1.89% | 2.00% | (1.36)% | (1.47)% | 93% | $201 | ||
2014 | $10.73 | (0.16) | 1.02 | 0.86 | — | $11.59 | 8.12% | 1.98% | 2.00% | (1.43)% | (1.45)% | 76% | $108 | ||
2013 | $8.02 | (0.11) | 2.82 | 2.71 | — | $10.73 | 33.67% | 2.00% | 2.00% | (1.12)% | (1.12)% | 79% | $93 | ||
2012 | $7.40 | (0.06) | 0.68 | 0.62 | — | $8.02 | 8.38% | 2.00% | 2.00% | (0.72)% | (0.72)% | 63% | $62 | ||
2011 | $6.84 | (0.11) | 0.67 | 0.56 | — | $7.40 | 8.19% | 2.00% | 2.00% | (1.45)% | (1.45)% | 107% | $48 |
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, 2016 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
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.
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89214 1606 |
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2016 | |
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.
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
PepsiCo, Inc. | 6.2% |
Alphabet, Inc., Class A | 5.6% |
Apple, Inc. | 4.4% |
Visa, Inc., Class A | 4.4% |
Amazon.com, Inc. | 3.4% |
Comcast Corp., Class A | 3.0% |
O'Reilly Automotive, Inc. | 2.6% |
Facebook, Inc., Class A | 2.4% |
Walt Disney Co. (The) | 2.2% |
Lockheed Martin Corp. | 2.2% |
Top Five Industries | % of net assets |
Internet Software and Services | 8.6% |
Software | 7.4% |
Specialty Retail | 6.7% |
Beverages | 6.2% |
IT Services | 5.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.0% |
Exchange-Traded Funds | 1.3% |
Total Equity Exposure | 99.3% |
Temporary Cash Investments | 1.1% |
Other Assets and Liabilities | (0.4)% |
2
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, 2015 to April 30, 2016.
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.
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.
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 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1) 11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $965.70 | $3.81 | 0.78% |
R6 Class | $1,000 | $966.50 | $3.08 | 0.63% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.99 | $3.92 | 0.78% |
R6 Class | $1,000 | $1,021.73 | $3.17 | 0.63% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
3
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 98.0% | ||||
Aerospace and Defense — 4.0% | ||||
Boeing Co. (The) | 158,897 | $ | 21,419,315 | |
Lockheed Martin Corp. | 106,728 | 24,801,453 | ||
46,220,768 | ||||
Airlines — 1.2% | ||||
Alaska Air Group, Inc. | 55,666 | 3,920,556 | ||
Delta Air Lines, Inc. | 243,625 | 10,151,854 | ||
14,072,410 | ||||
Beverages — 6.2% | ||||
PepsiCo, Inc. | 683,973 | 70,421,860 | ||
Biotechnology — 5.2% | ||||
Amgen, Inc. | 114,320 | 18,096,856 | ||
Biogen, Inc.(1) | 54,880 | 15,091,451 | ||
Gilead Sciences, Inc. | 193,967 | 17,109,829 | ||
Incyte Corp.(1) | 46,383 | 3,352,100 | ||
Regeneron Pharmaceuticals, Inc.(1) | 14,807 | 5,577,945 | ||
59,228,181 | ||||
Chemicals — 4.4% | ||||
Dow Chemical Co. (The) | 292,747 | 15,401,420 | ||
LyondellBasell Industries NV, Class A | 112,692 | 9,316,247 | ||
PPG Industries, Inc. | 92,329 | 10,192,198 | ||
Sherwin-Williams Co. (The) | 55,306 | 15,889,967 | ||
50,799,832 | ||||
Communications Equipment — 0.2% | ||||
Cisco Systems, Inc. | 83,294 | 2,289,752 | ||
Consumer Finance — 0.7% | ||||
American Express Co. | 128,927 | 8,435,694 | ||
Electronic Equipment, Instruments and Components — 0.4% | ||||
CDW Corp. | 106,434 | 4,097,709 | ||
Energy Equipment and Services — 0.9% | ||||
Halliburton Co. | 252,517 | 10,431,477 | ||
Food and Staples Retailing — 1.1% | ||||
Kroger Co. (The) | 361,954 | 12,809,552 | ||
Food Products — 0.4% | ||||
Mead Johnson Nutrition Co. | 45,304 | 3,948,244 | ||
Health Care Equipment and Supplies — 2.5% | ||||
C.R. Bard, Inc. | 36,048 | 7,648,304 | ||
Cooper Cos., Inc. (The) | 41,382 | 6,334,757 | ||
Edwards Lifesciences Corp.(1) | 84,834 | 9,010,219 | ||
Intuitive Surgical, Inc.(1) | 8,795 | 5,508,836 | ||
28,502,116 | ||||
Health Care Providers and Services — 2.7% | ||||
Cardinal Health, Inc. | 165,375 | 12,975,322 | ||
Express Scripts Holding Co.(1) | 154,329 | 11,378,677 | ||
VCA, Inc.(1) | 99,975 | 6,295,426 | ||
30,649,425 |
4
Shares | Value | |||
Health Care Technology — 0.7% | ||||
Cerner Corp.(1) | 146,043 | $ | 8,198,854 | |
Hotels, Restaurants and Leisure — 0.4% | ||||
Las Vegas Sands Corp. | 98,169 | 4,432,330 | ||
Household Products — 1.8% | ||||
Church & Dwight Co., Inc. | 94,278 | 8,739,570 | ||
Procter & Gamble Co. (The) | 147,698 | 11,833,564 | ||
20,573,134 | ||||
Industrial Conglomerates — 1.9% | ||||
3M Co. | 132,417 | 22,163,957 | ||
Insurance — 0.8% | ||||
American International Group, Inc. | 172,811 | 9,646,310 | ||
Internet and Catalog Retail — 5.3% | ||||
Amazon.com, Inc.(1) | 59,332 | 39,134,794 | ||
Expedia, Inc. | 123,937 | 14,348,187 | ||
TripAdvisor, Inc.(1) | 105,287 | 6,800,487 | ||
60,283,468 | ||||
Internet Software and Services — 8.6% | ||||
Alphabet, Inc., Class A(1) | 89,947 | 63,671,683 | ||
Facebook, Inc., Class A(1) | 236,690 | 27,830,010 | ||
LinkedIn Corp., Class A(1) | 43,265 | 5,421,537 | ||
Pandora Media, Inc.(1) | 176,630 | 1,753,936 | ||
98,677,166 | ||||
IT Services — 5.9% | ||||
Cognizant Technology Solutions Corp., Class A(1) | 77,255 | 4,509,374 | ||
Fiserv, Inc.(1) | 134,537 | 13,146,956 | ||
Visa, Inc., Class A | 646,555 | 49,939,908 | ||
67,596,238 | ||||
Life Sciences Tools and Services — 0.8% | ||||
Agilent Technologies, Inc. | 78,243 | 3,201,704 | ||
Illumina, Inc.(1) | 15,972 | 2,156,060 | ||
Waters Corp.(1) | 30,048 | 3,911,048 | ||
9,268,812 | ||||
Machinery — 3.5% | ||||
Caterpillar, Inc. | 56,953 | 4,426,387 | ||
Deere & Co. | 43,583 | 3,665,766 | ||
Parker-Hannifin Corp. | 53,663 | 6,225,981 | ||
WABCO Holdings, Inc.(1) | 109,756 | 12,310,233 | ||
Wabtec Corp. | 158,223 | 13,121,434 | ||
39,749,801 | ||||
Media — 5.8% | ||||
Comcast Corp., Class A | 562,982 | 34,206,786 | ||
Sirius XM Holdings, Inc.(1) | 1,555,064 | 6,142,503 | ||
Walt Disney Co. (The) | 245,750 | 25,376,145 | ||
65,725,434 | ||||
Multiline Retail — 1.5% | ||||
Dollar Tree, Inc.(1) | 210,500 | 16,778,955 | ||
Oil, Gas and Consumable Fuels — 0.9% | ||||
Concho Resources, Inc.(1) | 88,597 | 10,292,314 | ||
Personal Products — 1.1% | ||||
Estee Lauder Cos., Inc. (The), Class A | 132,486 | 12,701,433 |
5
Shares | Value | |||
Pharmaceuticals — 4.4% | ||||
Allergan plc(1) | 15,261 | $ | 3,304,922 | |
Bristol-Myers Squibb Co. | 325,383 | 23,486,145 | ||
Johnson & Johnson | 41,855 | 4,691,108 | ||
Perrigo Co. plc | 59,420 | 5,744,132 | ||
Teva Pharmaceutical Industries Ltd. ADR | 147,313 | 8,021,193 | ||
Zoetis, Inc. | 114,908 | 5,404,123 | ||
50,651,623 | ||||
Real Estate Investment Trusts (REITs) — 1.1% | ||||
Simon Property Group, Inc. | 64,474 | 12,970,235 | ||
Road and Rail — 0.9% | ||||
Union Pacific Corp. | 119,912 | 10,459,924 | ||
Semiconductors and Semiconductor Equipment — 2.3% | ||||
ASML Holding NV | 40,752 | 3,938,365 | ||
Maxim Integrated Products, Inc. | 256,450 | 9,160,394 | ||
NXP Semiconductors NV(1) | 49,527 | 4,223,663 | ||
Xilinx, Inc. | 198,788 | 8,563,787 | ||
25,886,209 | ||||
Software — 7.4% | ||||
Adobe Systems, Inc.(1) | 108,327 | 10,206,570 | ||
Electronic Arts, Inc.(1) | 82,705 | 5,115,304 | ||
Microsoft Corp. | 380,937 | 18,997,328 | ||
Oracle Corp. | 518,846 | 20,681,202 | ||
salesforce.com, inc.(1) | 88,584 | 6,714,667 | ||
ServiceNow, Inc.(1) | 63,651 | 4,549,774 | ||
Splunk, Inc.(1) | 153,847 | 7,996,967 | ||
Symantec Corp. | 625,989 | 10,419,587 | ||
84,681,399 | ||||
Specialty Retail — 6.7% | ||||
Home Depot, Inc. (The) | 74,454 | 9,968,646 | ||
O'Reilly Automotive, Inc.(1) | 111,542 | 29,299,853 | ||
Ross Stores, Inc. | 201,459 | 11,438,842 | ||
TJX Cos., Inc. (The) | 273,393 | 20,728,657 | ||
Williams-Sonoma, Inc. | 80,612 | 4,738,373 | ||
76,174,371 | ||||
Technology Hardware, Storage and Peripherals — 4.6% | ||||
Apple, Inc. | 537,263 | 50,363,034 | ||
Western Digital Corp. | 47,818 | 1,954,082 | ||
52,317,116 | ||||
Textiles, Apparel and Luxury Goods — 1.4% | ||||
Carter's, Inc. | 91,477 | 9,757,852 | ||
Coach, Inc. | 146,831 | 5,912,884 | ||
15,670,736 | ||||
Trading Companies and Distributors — 0.3% | ||||
United Rentals, Inc.(1) | 46,140 | 3,088,150 | ||
TOTAL COMMON STOCKS (Cost $923,658,595) | 1,119,894,989 | |||
EXCHANGE-TRADED FUNDS — 1.3% | ||||
iShares Russell 1000 Growth ETF (Cost $14,728,920) | 152,357 | 15,060,489 | ||
6
Shares | Value | |||
TEMPORARY CASH INVESTMENTS — 1.1% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $4,884,061), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $4,787,802) | $ | 4,787,742 | ||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 2/15/44, valued at $8,145,506), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $7,982,053) | 7,982,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 3,068 | 3,068 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $12,772,810) | 12,772,810 | |||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $951,160,325) | 1,147,728,288 | |||
OTHER ASSETS AND LIABILITIES — (0.4)% | (4,388,448) | |||
TOTAL NET ASSETS — 100.0% | $ | 1,143,339,840 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
EUR | 94,987 | USD | 107,448 | UBS AG | 6/30/16 | $ | 1,511 | |
USD | 298,290 | EUR | 261,282 | UBS AG | 6/30/16 | (1,425 | ) | |
USD | 289,643 | EUR | 253,413 | UBS AG | 6/30/16 | (1,045 | ) | |
USD | 303,732 | EUR | 266,127 | UBS AG | 6/30/16 | (1,540 | ) | |
USD | 271,717 | EUR | 237,576 | UBS AG | 6/30/16 | (805 | ) | |
USD | 299,583 | EUR | 262,220 | UBS AG | 6/30/16 | (1,207 | ) | |
USD | 303,678 | EUR | 265,464 | UBS AG | 6/30/16 | (834 | ) | |
USD | 283,836 | EUR | 248,933 | UBS AG | 6/30/16 | (1,713 | ) | |
USD | 310,322 | EUR | 273,967 | UBS AG | 6/30/16 | (3,943 | ) | |
USD | 301,431 | EUR | 266,007 | UBS AG | 6/30/16 | (3,703 | ) | |
USD | 323,390 | EUR | 285,627 | UBS AG | 6/30/16 | (4,250 | ) | |
USD | 253,857 | EUR | 223,457 | UBS AG | 6/30/16 | (2,469 | ) | |
USD | 330,891 | EUR | 288,771 | UBS AG | 6/30/16 | (356 | ) | |
$ | (21,779 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
7
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $951,160,325) | $ | 1,147,728,288 | |
Foreign currency holdings, at value (cost of $241,393) | 241,330 | ||
Receivable for investments sold | 6,192,725 | ||
Receivable for capital shares sold | 1,557,075 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 1,511 | ||
Dividends and interest receivable | 343,107 | ||
1,156,064,036 | |||
Liabilities | |||
Payable for investments purchased | 11,981,947 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 23,290 | ||
Accrued management fees | 718,959 | ||
12,724,196 | |||
Net Assets | $ | 1,143,339,840 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 951,583,415 | |
Undistributed net investment income | 3,564,703 | ||
Accumulated net realized loss | (8,352,396 | ) | |
Net unrealized appreciation | 196,544,118 | ||
$ | 1,143,339,840 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Institutional Class, $0.01 Par Value | $1,065,419,897 | 75,820,200 | $14.05 | |||
R6 Class, $0.01 Par Value | $77,919,943 | 5,549,770 | $14.04 |
See Notes to Financial Statements.
8
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $14,594) | $ | 9,321,210 | |
Interest | 6,587 | ||
9,327,797 | |||
Expenses: | |||
Management fees | 4,159,823 | ||
Directors' fees and expenses | 20,123 | ||
Other expenses | 3,321 | ||
4,183,267 | |||
Net investment income (loss) | 5,144,530 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (3,457,306 | ) | |
Futures contract transactions | (61,702 | ) | |
Foreign currency transactions | 568 | ||
(3,518,440 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (34,460,560 | ) | |
Translation of assets and liabilities in foreign currencies | (23,845 | ) | |
(34,484,405 | ) | ||
Net realized and unrealized gain (loss) | (38,002,845 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (32,858,315 | ) |
See Notes to Financial Statements.
9
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,144,530 | $ | 6,177,888 | ||
Net realized gain (loss) | (3,518,440 | ) | 79,995,780 | |||
Change in net unrealized appreciation (depreciation) | (34,484,405 | ) | 29,436,427 | |||
Net increase (decrease) in net assets resulting from operations | (32,858,315 | ) | 115,610,095 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Institutional Class | (4,751,626 | ) | (6,018,552 | ) | ||
R6 Class | (402,024 | ) | (241,854 | ) | ||
From net realized gains: | ||||||
Institutional Class | (61,284,133 | ) | (176,148,301 | ) | ||
R6 Class | (3,940,677 | ) | (5,428,799 | ) | ||
Decrease in net assets from distributions | (70,378,460 | ) | (187,837,506 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 137,863,833 | (90,080,395 | ) | |||
Net increase (decrease) in net assets | 34,627,058 | (162,307,806 | ) | |||
Net Assets | ||||||
Beginning of period | 1,108,712,782 | 1,271,020,588 | ||||
End of period | $ | 1,143,339,840 | $ | 1,108,712,782 | ||
Undistributed net investment income | $ | 3,564,703 | $ | 3,573,823 |
See Notes to Financial Statements.
10
Notes to Financial Statements |
APRIL 30, 2016 (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'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.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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. 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 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
11
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.
12
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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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 0.790% for the Institutional Class and 0.450% to 0.640% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2016 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. 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, 2016 were $427,965,390 and $357,538,449, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional Class/Shares Authorized | 420,000,000 | 420,000,000 | ||||||||
Sold | 8,087,077 | $ | 109,465,581 | 12,706,258 | $ | 190,286,851 | ||||
Issued in reinvestment of distributions | 4,617,885 | 66,035,759 | 12,910,479 | 182,166,853 | ||||||
Redeemed | (4,405,895 | ) | (64,019,099 | ) | (31,516,204 | ) | (485,196,366 | ) | ||
8,299,067 | 111,482,241 | (5,899,467 | ) | (112,742,662 | ) | |||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 1,704,245 | 24,298,108 | 2,849,575 | 42,900,849 | ||||||
Issued in reinvestment of distributions | 304,111 | 4,342,701 | 402,459 | 5,670,653 | ||||||
Redeemed | (161,089 | ) | (2,259,217 | ) | (1,703,424 | ) | (25,909,235 | ) | ||
1,847,267 | 26,381,592 | 1,548,610 | 22,662,267 | |||||||
Net increase (decrease) | 10,146,334 | $ | 137,863,833 | (4,350,857 | ) | $ | (90,080,395 | ) |
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. There were no significant transfers between levels during the period.
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 | $ | 1,115,956,624 | $ | 3,938,365 | — | |||
Exchange-Traded Funds | 15,060,489 | — | — | |||||
Temporary Cash Investments | 3,068 | 12,769,742 | — | |||||
$ | 1,131,020,181 | $ | 16,708,107 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,511 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 23,290 | — |
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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 participated in equity price risk derivative instruments for temporary investment purposes.
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 began investing in forward foreign currency exchange contracts in April 2016. The fund's U.S. dollar exposure to foreign currency risk derivative instruments at period end was $3,677,818.
Value of Derivative Instruments as of April 30, 2016
Asset Derivatives | Liability Derivatives | |||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 1,511 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 23,290 | ||
$ | 1,511 | $ | 23,290 |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2016
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | |||||||
Type of Risk Exposure | Location on Statement of Operations | Value | Location on Statement of Operations | Value | ||||
Equity Price Risk | Net realized gain (loss) on futures contract transactions | $ | (61,702 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | — | ||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | — | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | (21,779 | ) | ||
$ | (61,702 | ) | $ | (21,779 | ) |
15
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 959,301,080 | |
Gross tax appreciation of investments | $ | 207,193,996 | |
Gross tax depreciation of investments | (18,766,788 | ) | |
Net tax appreciation (depreciation) of investments | $ | 188,427,208 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
16
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 | |||||||||||||||
2016(3) | $15.57 | 0.07 | (0.59) | (0.52) | (0.07) | (0.93) | (1.00) | $14.05 | (3.43)% | 0.78%(4) | 0.93%(4) | 33% | $1,065,420 | ||
2015 | $16.82 | 0.08 | 1.17 | 1.25 | (0.08) | (2.42) | (2.50) | $15.57 | 8.97% | 0.77% | 0.52% | 82% | $1,051,077 | ||
2014 | $15.42 | 0.08 | 2.02 | 2.10 | (0.09) | (0.61) | (0.70) | $16.82 | 14.17% | 0.77% | 0.50% | 119% | $1,234,784 | ||
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 | ||
R6 Class | |||||||||||||||
2016(3) | $15.57 | 0.08 | (0.58) | (0.50) | (0.10) | (0.93) | (1.03) | $14.04 | (3.35)% | 0.63%(4) | 1.08%(4) | 33% | $77,920 | ||
2015 | $16.82 | 0.10 | 1.18 | 1.28 | (0.11) | (2.42) | (2.53) | $15.57 | 9.16% | 0.62% | 0.67% | 82% | $57,636 | ||
2014 | $15.43 | 0.10 | 2.01 | 2.11 | (0.11) | (0.61) | (0.72) | $16.82 | 14.27% | 0.62% | 0.65% | 119% | $36,237 | ||
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, 2016 (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.
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.
19
Notes |
20
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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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89226 1606 |
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Semiannual Report | |
April 30, 2016 | |
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.
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Constellation Brands, Inc., Class A | 2.9% |
Electronic Arts, Inc. | 2.3% |
SBA Communications Corp., Class A | 2.3% |
Middleby Corp. (The) | 2.0% |
Teleflex, Inc. | 1.9% |
Affiliated Managers Group, Inc. | 1.9% |
Snap-on, Inc. | 1.8% |
Kellogg Co. | 1.8% |
Ball Corp. | 1.8% |
Newell Brands, Inc. | 1.7% |
Top Five Industries | % of net assets |
Specialty Retail | 7.3% |
Software | 7.2% |
Machinery | 6.5% |
Health Care Equipment and Supplies | 5.9% |
Food Products | 4.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.4% |
Temporary Cash Investments | 0.5% |
Other Assets and Liabilities | 0.1% |
2
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, 2015 to April 30, 2016.
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.
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.
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 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $960.00 | $3.95 | 0.81% |
R6 Class | $1,000 | $960.20 | $3.22 | 0.66% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.84 | $4.07 | 0.81% |
R6 Class | $1,000 | $1,021.58 | $3.32 | 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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
3
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.4% | ||||
Airlines — 1.8% | ||||
Alaska Air Group, Inc. | 71,322 | $ | 5,023,209 | |
American Airlines Group, Inc. | 77,658 | 2,693,956 | ||
Spirit Airlines, Inc.(1) | 102,469 | 4,501,463 | ||
12,218,628 | ||||
Auto Components — 1.2% | ||||
Delphi Automotive plc | 110,436 | 8,131,403 | ||
Automobiles — 0.3% | ||||
Tesla Motors, Inc.(1) | 8,866 | 2,134,578 | ||
Banks — 1.2% | ||||
BankUnited, Inc. | 145,175 | 5,008,537 | ||
SVB Financial Group(1) | 28,934 | 3,017,238 | ||
8,025,775 | ||||
Beverages — 3.8% | ||||
Constellation Brands, Inc., Class A | 125,188 | 19,536,839 | ||
Monster Beverage Corp.(1) | 45,970 | 6,629,794 | ||
26,166,633 | ||||
Biotechnology — 2.2% | ||||
BioMarin Pharmaceutical, Inc.(1) | 71,749 | 6,075,705 | ||
Incyte Corp.(1) | 62,201 | 4,495,266 | ||
Neurocrine Biosciences, Inc.(1) | 44,063 | 2,008,392 | ||
Vertex Pharmaceuticals, Inc.(1) | 33,602 | 2,833,993 | ||
15,413,356 | ||||
Building Products — 1.6% | ||||
Fortune Brands Home & Security, Inc. | 71,428 | 3,957,825 | ||
Lennox International, Inc. | 54,484 | 7,352,616 | ||
11,310,441 | ||||
Capital Markets — 2.9% | ||||
Affiliated Managers Group, Inc.(1) | 76,888 | 13,095,564 | ||
SEI Investments Co. | 147,440 | 7,088,915 | ||
20,184,479 | ||||
Chemicals — 2.0% | ||||
Ashland, Inc. | 36,111 | 4,029,987 | ||
Axalta Coating Systems Ltd.(1) | 222,610 | 6,337,707 | ||
Scotts Miracle-Gro Co. (The), Class A | 46,074 | 3,261,118 | ||
13,628,812 | ||||
Commercial Services and Supplies — 1.1% | ||||
KAR Auction Services, Inc. | 201,734 | 7,585,198 | ||
Consumer Finance — 1.1% | ||||
Discover Financial Services | 133,393 | 7,506,024 | ||
Containers and Packaging — 1.8% | ||||
Ball Corp. | 174,217 | 12,435,609 | ||
Distributors — 1.4% | ||||
LKQ Corp.(1) | 291,330 | 9,337,126 | ||
Diversified Financial Services — 1.5% | ||||
S&P Global, Inc. | 98,118 | 10,483,908 |
4
Shares | Value | |||
Diversified Telecommunication Services — 2.3% | ||||
SBA Communications Corp., Class A(1) | 152,781 | $ | 15,742,554 | |
Electrical Equipment — 1.6% | ||||
Acuity Brands, Inc. | 10,692 | 2,607,672 | ||
AMETEK, Inc. | 173,187 | 8,328,563 | ||
10,936,235 | ||||
Electronic Equipment, Instruments and Components — 0.4% | ||||
CDW Corp. | 34,359 | 1,322,821 | ||
TE Connectivity Ltd. | 28,704 | 1,707,314 | ||
3,030,135 | ||||
Food and Staples Retailing — 1.2% | ||||
Costco Wholesale Corp. | 57,604 | 8,532,881 | ||
Food Products — 4.3% | ||||
Hain Celestial Group, Inc. (The)(1) | 81,618 | 3,416,530 | ||
Kellogg Co. | 163,035 | 12,522,718 | ||
Mead Johnson Nutrition Co. | 71,657 | 6,244,908 | ||
TreeHouse Foods, Inc.(1) | 37,845 | 3,345,498 | ||
WhiteWave Foods Co. (The), Class A(1) | 97,463 | 3,918,987 | ||
29,448,641 | ||||
Health Care Equipment and Supplies — 5.9% | ||||
Baxter International, Inc. | 207,134 | 9,159,465 | ||
DexCom, Inc.(1) | 71,157 | 4,581,088 | ||
Edwards Lifesciences Corp.(1) | 31,966 | 3,395,109 | ||
NuVasive, Inc.(1) | 102,334 | 5,417,562 | ||
Teleflex, Inc. | 85,389 | 13,301,898 | ||
West Pharmaceutical Services, Inc. | 60,860 | 4,333,232 | ||
40,188,354 | ||||
Health Care Providers and Services — 3.0% | ||||
AmerisourceBergen Corp. | 82,737 | 7,040,919 | ||
Universal Health Services, Inc., Class B | 45,307 | 6,056,640 | ||
VCA, Inc.(1) | 119,588 | 7,530,456 | ||
20,628,015 | ||||
Hotels, Restaurants and Leisure — 3.2% | ||||
Chipotle Mexican Grill, Inc.(1) | 9,592 | 4,037,944 | ||
Hilton Worldwide Holdings, Inc. | 275,370 | 6,071,908 | ||
MGM Resorts International(1) | 165,030 | 3,515,139 | ||
Panera Bread Co., Class A(1) | 21,479 | 4,607,031 | ||
Papa John's International, Inc. | 60,008 | 3,395,853 | ||
21,627,875 | ||||
Household Durables — 3.0% | ||||
Harman International Industries, Inc. | 17,416 | 1,336,852 | ||
Mohawk Industries, Inc.(1) | 18,087 | 3,484,099 | ||
Newell Brands, Inc. | 262,408 | 11,950,060 | ||
Whirlpool Corp. | 19,905 | 3,466,257 | ||
20,237,268 | ||||
Internet and Catalog Retail — 1.0% | ||||
Expedia, Inc. | 60,386 | 6,990,887 | ||
Internet Software and Services — 2.9% | ||||
Akamai Technologies, Inc.(1) | 100,509 | 5,124,954 | ||
CoStar Group, Inc.(1) | 57,527 | 11,350,652 |
5
Shares | Value | |||
LinkedIn Corp., Class A(1) | 24,964 | $ | 3,128,239 | |
19,603,845 | ||||
IT Services — 3.7% | ||||
Alliance Data Systems Corp.(1) | 43,428 | 8,829,347 | ||
Sabre Corp. | 266,001 | 7,700,729 | ||
Vantiv, Inc., Class A(1) | 160,649 | 8,761,796 | ||
25,291,872 | ||||
Leisure Products — 0.6% | ||||
Brunswick Corp. | 84,535 | 4,060,216 | ||
Machinery — 6.5% | ||||
Ingersoll-Rand plc | 75,994 | 4,980,647 | ||
ITT Corp. | 123,565 | 4,741,189 | ||
Middleby Corp. (The)(1) | 125,603 | 13,771,113 | ||
Snap-on, Inc. | 79,191 | 12,613,542 | ||
WABCO Holdings, Inc.(1) | 51,693 | 5,797,887 | ||
Xylem, Inc. | 67,163 | 2,806,070 | ||
44,710,448 | ||||
Media — 1.6% | ||||
Charter Communications, Inc., Class A(1) | 50,959 | 10,815,538 | ||
Multiline Retail — 1.6% | ||||
Dollar Tree, Inc.(1) | 137,102 | 10,928,400 | ||
Oil, Gas and Consumable Fuels — 1.4% | ||||
Concho Resources, Inc.(1) | 63,709 | 7,401,075 | ||
Gulfport Energy Corp.(1) | 80,141 | 2,508,413 | ||
9,909,488 | ||||
Pharmaceuticals — 1.7% | ||||
Zoetis, Inc. | 251,421 | 11,824,330 | ||
Professional Services — 3.8% | ||||
Equifax, Inc. | 47,825 | 5,750,956 | ||
Nielsen Holdings plc | 190,365 | 9,925,631 | ||
Verisk Analytics, Inc., Class A(1) | 130,106 | 10,093,624 | ||
25,770,211 | ||||
Real Estate Investment Trusts (REITs) — 1.1% | ||||
Crown Castle International Corp. | 85,493 | 7,427,632 | ||
Real Estate Management and Development — 0.4% | ||||
Jones Lang LaSalle, Inc. | 24,062 | 2,771,221 | ||
Road and Rail — 3.0% | ||||
Canadian Pacific Railway Ltd., New York Shares | 58,766 | 8,476,995 | ||
J.B. Hunt Transport Services, Inc. | 68,375 | 5,666,920 | ||
Norfolk Southern Corp. | 68,579 | 6,179,654 | ||
20,323,569 | ||||
Semiconductors and Semiconductor Equipment — 3.6% | ||||
Applied Materials, Inc. | 355,924 | 7,285,764 | ||
Broadcom Ltd. | 59,369 | 8,653,032 | ||
Cree, Inc.(1) | 137,036 | 3,358,753 | ||
NXP Semiconductors NV(1) | 62,629 | 5,341,001 | ||
24,638,550 | ||||
Software — 7.2% | ||||
Activision Blizzard, Inc. | 92,147 | 3,176,307 | ||
CDK Global, Inc. | 144,512 | 6,874,436 | ||
Electronic Arts, Inc.(1) | 256,116 | 15,840,775 |
6
Shares | Value | |||
Guidewire Software, Inc.(1) | 87,257 | $ | 4,971,031 | |
ServiceNow, Inc.(1) | 105,192 | 7,519,124 | ||
Symantec Corp. | 183,813 | 3,059,567 | ||
Tyler Technologies, Inc.(1) | 51,731 | 7,573,936 | ||
49,015,176 | ||||
Specialty Retail — 7.3% | ||||
AutoZone, Inc.(1) | 11,417 | 8,736,631 | ||
Burlington Stores, Inc.(1) | 77,825 | 4,433,690 | ||
L Brands, Inc. | 92,198 | 7,218,182 | ||
O'Reilly Automotive, Inc.(1) | 19,552 | 5,135,919 | ||
Ross Stores, Inc. | 42,667 | 2,422,632 | ||
Signet Jewelers Ltd. | 64,196 | 6,969,118 | ||
Tractor Supply Co. | 93,893 | 8,887,911 | ||
Ulta Salon Cosmetics & Fragrance, Inc.(1) | 29,784 | 6,203,412 | ||
50,007,495 | ||||
Textiles, Apparel and Luxury Goods — 2.7% | ||||
Coach, Inc. | 97,628 | 3,931,480 | ||
lululemon athletica, Inc.(1) | 75,899 | 4,975,179 | ||
Under Armour, Inc., Class A(1) | 112,051 | 4,923,521 | ||
Under Armour, Inc., Class C(1) | 112,051 | 4,571,681 | ||
18,401,861 | ||||
Trading Companies and Distributors — 0.5% | ||||
Fastenal Co. | 67,888 | 3,176,480 | ||
TOTAL COMMON STOCKS (Cost $577,874,783) | 680,601,147 | |||
TEMPORARY CASH INVESTMENTS — 0.5% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $1,192,838), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $1,169,329) | 1,169,314 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $1,988,788), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $1,949,013) | 1,949,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 1,198 | 1,198 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,119,512) | 3,119,512 | |||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $580,994,295) | 683,720,659 | |||
OTHER ASSETS AND LIABILITIES — 0.1% | 1,026,317 | |||
TOTAL NET ASSETS — 100.0% | $ | 684,746,976 |
7
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 820,492 | USD | 632,344 | Morgan Stanley | 6/30/16 | $ | 21,596 | |
CAD | 860,830 | USD | 663,944 | Morgan Stanley | 6/30/16 | 22,146 | ||
CAD | 1,171,456 | USD | 909,635 | Morgan Stanley | 6/30/16 | 24,026 | ||
CAD | 754,436 | USD | 585,646 | Morgan Stanley | 6/30/16 | 15,648 | ||
CAD | 515,391 | USD | 400,291 | Morgan Stanley | 6/30/16 | 10,480 | ||
CAD | 222,636 | USD | 175,969 | Morgan Stanley | 6/30/16 | 1,474 | ||
USD | 10,448,289 | CAD | 13,789,547 | Morgan Stanley | 6/30/16 | (542,113 | ) | |
USD | 199,584 | CAD | 255,596 | Morgan Stanley | 6/30/16 | (4,128 | ) | |
$ | (450,871 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
8
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $580,994,295) | $ | 683,720,659 | |
Receivable for investments sold | 4,104,476 | ||
Receivable for capital shares sold | 491,000 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 95,370 | ||
Dividends and interest receivable | 118,775 | ||
688,530,280 | |||
Liabilities | |||
Payable for investments purchased | 2,619,572 | ||
Payable for capital shares redeemed | 174,532 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 546,241 | ||
Accrued management fees | 442,959 | ||
3,783,304 | |||
Net Assets | $ | 684,746,976 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 591,194,793 | |
Accumulated net investment loss | (1,098,322 | ) | |
Accumulated net realized loss | (7,624,987 | ) | |
Net unrealized appreciation | 102,275,492 | ||
$ | 684,746,976 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Institutional Class, $0.01 Par Value | $638,665,226 | 52,970,532 | $12.06 | |
R6 Class, $0.01 Par Value | $46,081,750 | 3,804,481 | $12.11 |
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $6,830) | $ | 2,498,586 | |
Interest | 5,897 | ||
2,504,483 | |||
Expenses: | |||
Management fees | 2,546,147 | ||
Directors' fees and expenses | 11,835 | ||
Other expenses | 2,686 | ||
2,560,668 | |||
Net investment income (loss) | (56,185 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (5,449,954 | ) | |
Foreign currency transactions | (83,897 | ) | |
(5,533,851 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (14,371,801 | ) | |
Translation of assets and liabilities in foreign currencies | (310,870 | ) | |
(14,682,671 | ) | ||
Net realized and unrealized gain (loss) | (20,216,522 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (20,272,707 | ) |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | (56,185 | ) | $ | (1,358,079 | ) |
Net realized gain (loss) | (5,533,851 | ) | 51,559,645 | |||
Change in net unrealized appreciation (depreciation) | (14,682,671 | ) | (3,386,679 | ) | ||
Net increase (decrease) in net assets resulting from operations | (20,272,707 | ) | 46,814,887 | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Institutional Class | (47,436,142 | ) | (26,719,040 | ) | ||
R6 Class | (3,027,088 | ) | (826,114 | ) | ||
Decrease in net assets from distributions | (50,463,230 | ) | (27,545,154 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 112,051,265 | 35,084,809 | ||||
Net increase (decrease) in net assets | 41,315,328 | 54,354,542 | ||||
Net Assets | ||||||
Beginning of period | 643,431,648 | 589,077,106 | ||||
End of period | $ | 684,746,976 | $ | 643,431,648 | ||
Accumulated net investment loss | $ | (1,098,322 | ) | $ | (1,042,137 | ) |
See Notes to Financial Statements.
11
Notes to Financial Statements |
APRIL 30, 2016 (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'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.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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
12
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
13
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. 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, 2016 were $312,959,236 and $239,909,018, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional Class/Shares Authorized | 275,000,000 | 275,000,000 | ||||||||
Sold | 7,530,342 | $ | 85,871,603 | 7,084,059 | $ | 95,797,215 | ||||
Issued in reinvestment of distributions | 3,888,208 | 47,436,142 | 2,147,833 | 26,719,040 | ||||||
Redeemed | (3,113,094 | ) | (37,779,837 | ) | (7,358,993 | ) | (103,376,982 | ) | ||
8,305,456 | 95,527,908 | 1,872,899 | 19,139,273 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 1,228,790 | 14,950,002 | 1,609,018 | 21,940,103 | ||||||
Issued in reinvestment of distributions | 247,109 | 3,027,088 | 66,248 | 826,114 | ||||||
Redeemed | (123,003 | ) | (1,453,733 | ) | (492,311 | ) | (6,820,681 | ) | ||
1,352,896 | 16,523,357 | 1,182,955 | 15,945,536 | |||||||
Net increase (decrease) | 9,658,352 | $ | 112,051,265 | 3,055,854 | $ | 35,084,809 |
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.
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• | 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. There were no significant transfers between levels during the period.
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 | $ | 680,601,147 | — | — | ||||
Temporary Cash Investments | 1,198 | $ | 3,118,314 | — | ||||
$ | 680,602,345 | $ | 3,118,314 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 95,370 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 546,241 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $11,498,115.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $95,370 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $546,241 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(83,984) in net realized gain (loss) on foreign currency transactions and $(310,869) 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, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
15
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 587,576,204 | |
Gross tax appreciation of investments | $ | 110,266,019 | |
Gross tax depreciation of investments | (14,121,564 | ) | |
Net tax appreciation (depreciation) of investments | $ | 96,144,455 |
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, 2015, the fund had late-year ordinary loss deferrals of $(1,182,139), 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.
16
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 | |||||||||||||||
2016(3) | $13.65 | —(4) | (0.53) | (0.53) | — | (1.06) | (1.06) | $12.06 | (4.00)% | 0.81%(5) | (0.03)%(5) | 37% | $638,665 | ||
2015 | $13.37 | (0.03) | 0.93 | 0.90 | — | (0.62) | (0.62) | $13.65 | 7.20% | 0.80% | (0.22)% | 83% | $609,841 | ||
2014 | $13.81 | (0.04) | 1.08 | 1.04 | — | (1.48) | (1.48) | $13.37 | 8.53% | 0.80% | (0.31)% | 76% | $572,085 | ||
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 | —(4) | 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 | ||
R6 Class | |||||||||||||||
2016(3) | $13.70 | 0.01 | (0.54) | (0.53) | — | (1.06) | (1.06) | $12.11 | (3.98)% | 0.66%(5) | 0.12%(5) | 37% | $46,082 | ||
2015 | $13.39 | (0.01) | 0.94 | 0.93 | — | (0.62) | (0.62) | $13.70 | 7.42% | 0.65% | (0.07)% | 83% | $33,591 | ||
2014 | $13.82 | (0.02) | 1.07 | 1.05 | — | (1.48) | (1.48) | $13.39 | 8.60% | 0.65% | (0.16)% | 76% | $16,992 | ||
2013(6) | $12.92 | —(4) | 0.90 | 0.90 | — | — | — | $13.82 | 6.97% | 0.65%(5) | 0.03%(5) | 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, 2016 (unaudited). |
(4) | Per-share amount was less than $0.005. |
(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.
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.
19
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89227 1606 |
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2016 | |
Select 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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 7.6% |
Alphabet, Inc.* | 6.6% |
Bristol-Myers Squibb Co. | 3.4% |
Walt Disney Co. (The) | 3.3% |
MasterCard, Inc., Class A | 3.3% |
UnitedHealth Group, Inc. | 3.3% |
Amazon.com, Inc. | 3.3% |
Facebook, Inc., Class A | 3.2% |
Constellation Brands, Inc., Class A | 3.0% |
Home Depot, Inc. (The) | 2.9% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Internet Software and Services | 11.4% |
Specialty Retail | 8.0% |
Technology Hardware, Storage and Peripherals | 7.6% |
Biotechnology | 6.5% |
Pharmaceuticals | 5.8% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 93.5% |
Foreign Common Stocks** | 6.4% |
Total Common Stocks | 99.9% |
Temporary Cash Investments | 0.8% |
Other Assets and Liabilities | (0.7)% |
**Includes depositary shares, dual listed securities and foreign ordinary shares. |
3
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, 2015 to April 30, 2016.
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.
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.
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Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $960.10 | $4.87 | 1.00% |
Institutional Class | $1,000 | $961.00 | $3.90 | 0.80% |
A Class | $1,000 | $958.90 | $6.09 | 1.25% |
C Class | $1,000 | $955.30 | $9.72 | 2.00% |
R Class | $1,000 | $957.70 | $7.30 | 1.50% |
R6 Class | $1,000 | $961.90 | $3.17 | 0.65% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
R6 Class | $1,000 | $1,021.63 | $3.27 | 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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.9% | ||||
Aerospace and Defense — 2.8% | ||||
Boeing Co. (The) | 397,000 | $ | 53,515,600 | |
United Technologies Corp. | 121,000 | 12,628,770 | ||
66,144,370 | ||||
Auto Components — 2.1% | ||||
Delphi Automotive plc | 392,200 | 28,877,686 | ||
Gentex Corp. | 1,369,200 | 21,961,968 | ||
50,839,654 | ||||
Banks — 1.3% | ||||
JPMorgan Chase & Co. | 501,300 | 31,682,160 | ||
Beverages — 4.0% | ||||
Constellation Brands, Inc., Class A | 451,300 | 70,429,878 | ||
Diageo plc | 873,300 | 23,555,386 | ||
93,985,264 | ||||
Biotechnology — 6.5% | ||||
Biogen, Inc.(1) | 199,700 | 54,915,503 | ||
Celgene Corp.(1) | 244,400 | 25,273,404 | ||
Gilead Sciences, Inc. | 756,000 | 66,686,760 | ||
Vertex Pharmaceuticals, Inc.(1) | 91,800 | 7,742,412 | ||
154,618,079 | ||||
Capital Markets — 0.9% | ||||
Franklin Resources, Inc. | 546,200 | 20,395,108 | ||
Chemicals — 2.0% | ||||
Ashland, Inc. | 183,800 | 20,512,080 | ||
Monsanto Co. | 278,500 | 26,089,880 | ||
46,601,960 | ||||
Diversified Financial Services — 1.6% | ||||
CBOE Holdings, Inc. | 611,600 | 37,894,736 | ||
Energy Equipment and Services — 0.8% | ||||
Core Laboratories NV | 55,900 | 7,471,594 | ||
Schlumberger Ltd. | 151,900 | 12,203,646 | ||
19,675,240 | ||||
Food and Staples Retailing — 3.2% | ||||
Costco Wholesale Corp. | 362,900 | 53,756,377 | ||
Wal-Mart Stores, Inc. | 341,900 | 22,862,853 | ||
76,619,230 | ||||
Food Products — 1.6% | ||||
Mead Johnson Nutrition Co. | 436,500 | 38,040,975 | ||
Health Care Providers and Services — 4.3% | ||||
Cigna Corp. | 116,900 | 16,195,326 | ||
Express Scripts Holding Co.(1) | 103,700 | 7,645,801 | ||
UnitedHealth Group, Inc. | 593,800 | 78,191,584 | ||
102,032,711 | ||||
Hotels, Restaurants and Leisure — 3.5% | ||||
Papa John's International, Inc. | 270,500 | 15,307,595 |
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Shares | Value | |||
Starbucks Corp. | 1,212,300 | $ | 68,167,629 | |
83,475,224 | ||||
Industrial Conglomerates — 1.5% | ||||
Roper Technologies, Inc. | 196,900 | 34,672,121 | ||
Insurance — 0.9% | ||||
MetLife, Inc. | 478,500 | 21,580,350 | ||
Internet and Catalog Retail — 3.3% | ||||
Amazon.com, Inc.(1) | 117,700 | 77,633,743 | ||
Internet Software and Services — 11.4% | ||||
Alphabet, Inc., Class A(1) | 105,600 | 74,752,128 | ||
Alphabet, Inc., Class C(1) | 116,700 | 80,874,267 | ||
Baidu, Inc. ADR(1) | 115,300 | 22,402,790 | ||
Facebook, Inc., Class A(1) | 655,200 | 77,038,416 | ||
LinkedIn Corp., Class A(1) | 133,700 | 16,753,947 | ||
271,821,548 | ||||
IT Services — 3.3% | ||||
MasterCard, Inc., Class A | 810,800 | 78,639,492 | ||
Machinery — 5.0% | ||||
FANUC Corp. | 117,200 | 17,193,837 | ||
Graco, Inc. | 366,600 | 28,737,774 | ||
KUKA AG | 280,500 | 27,634,899 | ||
Middleby Corp. (The)(1) | 330,800 | 36,268,912 | ||
Nordson Corp. | 119,200 | 9,146,216 | ||
118,981,638 | ||||
Media — 5.4% | ||||
Time Warner, Inc. | 650,900 | 48,908,626 | ||
Walt Disney Co. (The) | 770,500 | 79,561,830 | ||
128,470,456 | ||||
Oil, Gas and Consumable Fuels — 0.6% | ||||
EOG Resources, Inc. | 172,500 | 14,251,950 | ||
Personal Products — 1.4% | ||||
Estee Lauder Cos., Inc. (The), Class A | 347,900 | 33,353,173 | ||
Pharmaceuticals — 5.8% | ||||
Allergan plc(1) | 79,200 | 17,151,552 | ||
Bristol-Myers Squibb Co. | 1,121,800 | 80,971,524 | ||
Teva Pharmaceutical Industries Ltd. ADR | 738,000 | 40,184,100 | ||
138,307,176 | ||||
Professional Services — 2.2% | ||||
IHS, Inc., Class A(1) | 112,700 | 13,882,386 | ||
Verisk Analytics, Inc., Class A(1) | 488,200 | 37,874,556 | ||
51,756,942 | ||||
Real Estate Investment Trusts (REITs) — 1.7% | ||||
American Tower Corp. | 385,100 | 40,389,288 | ||
Road and Rail — 0.9% | ||||
Canadian Pacific Railway Ltd. | 142,300 | 20,531,258 | ||
Semiconductors and Semiconductor Equipment — 2.0% | ||||
Linear Technology Corp. | 1,070,700 | 47,624,736 | ||
Software — 3.1% | ||||
Electronic Arts, Inc.(1) | 707,500 | 43,758,875 | ||
Oracle Corp. | 773,000 | 30,811,780 | ||
74,570,655 |
7
Shares | Value | |||
Specialty Retail — 8.0% | ||||
AutoZone, Inc.(1) | 58,600 | $ | 44,842,478 | |
Home Depot, Inc. (The) | 512,500 | 68,618,625 | ||
L Brands, Inc. | 294,400 | 23,048,576 | ||
TJX Cos., Inc. (The) | 689,900 | 52,308,218 | ||
188,817,897 | ||||
Technology Hardware, Storage and Peripherals — 7.6% | ||||
Apple, Inc. | 1,926,200 | 180,561,988 | ||
Tobacco — 1.2% | ||||
Philip Morris International, Inc. | 291,500 | 28,601,980 | ||
TOTAL COMMON STOCKS (Cost $1,352,548,576) | 2,372,571,102 | |||
TEMPORARY CASH INVESTMENTS — 0.8% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $7,620,720), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $7,470,524) | 7,470,431 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 2/15/44, valued at $12,706,750), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $12,455,083) | 12,455,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 4,303 | 4,303 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $19,929,734) | 19,929,734 | |||
TOTAL INVESTMENT SECURITIES — 100.7% (Cost $1,372,478,310) | 2,392,500,836 | |||
OTHER ASSETS AND LIABILITIES — (0.7)% | (16,671,039) | |||
TOTAL NET ASSETS — 100.0% | $ | 2,375,829,797 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 559,824 | USD | 442,186 | Morgan Stanley | 6/30/16 | $ | 3,999 | |
CAD | 699,004 | USD | 552,485 | Morgan Stanley | 6/30/16 | 4,628 | ||
USD | 13,575,235 | CAD | 17,916,460 | Morgan Stanley | 6/30/16 | (704,356 | ) | |
USD | 410,688 | CAD | 531,412 | Morgan Stanley | 6/30/16 | (12,852 | ) | |
USD | 375,871 | CAD | 484,058 | Morgan Stanley | 6/30/16 | (9,928 | ) | |
USD | 974,928 | CAD | 1,252,237 | Morgan Stanley | 6/30/16 | (23,117 | ) | |
USD | 734,658 | CAD | 929,197 | Morgan Stanley | 6/30/16 | (5,921 | ) | |
EUR | 536,456 | USD | 608,400 | UBS AG | 6/30/16 | 6,964 | ||
EUR | 596,063 | USD | 673,321 | UBS AG | 6/30/16 | 10,418 | ||
EUR | 741,502 | USD | 841,197 | UBS AG | 6/30/16 | 9,373 | ||
USD | 23,566,874 | EUR | 21,041,006 | UBS AG | 6/30/16 | (569,079 | ) | |
USD | 633,361 | EUR | 565,067 | UBS AG | 6/30/16 | (14,823 | ) | |
USD | 764,281 | EUR | 674,743 | UBS AG | 6/30/16 | (9,710 | ) | |
USD | 732,177 | EUR | 646,132 | UBS AG | 6/30/16 | (8,995 | ) | |
GBP | 360,018 | USD | 525,425 | Credit Suisse AG | 6/30/16 | 706 | ||
USD | 19,575,797 | GBP | 13,869,969 | Credit Suisse AG | 6/30/16 | (693,798 | ) | |
USD | 557,107 | GBP | 393,422 | Credit Suisse AG | 6/30/16 | (17,840 | ) | |
JPY | 48,813,800 | USD | 439,233 | Credit Suisse AG | 6/30/16 | 20,270 | ||
JPY | 50,806,200 | USD | 464,128 | Credit Suisse AG | 6/30/16 | 14,130 | ||
JPY | 49,810,000 | USD | 458,587 | Credit Suisse AG | 6/30/16 | 10,293 | ||
JPY | 81,688,400 | USD | 748,251 | Credit Suisse AG | 6/30/16 | 20,713 | ||
JPY | 57,779,600 | USD | 533,219 | Credit Suisse AG | 6/30/16 | 10,682 | ||
JPY | 181,308,400 | USD | 1,699,952 | Credit Suisse AG | 6/30/16 | 6,773 | ||
USD | 15,391,254 | JPY | 1,728,407,000 | Credit Suisse AG | 6/30/16 | (878,899 | ) | |
USD | 695,454 | JPY | 75,213,100 | Credit Suisse AG | 6/30/16 | (12,555 | ) | |
USD | 722,546 | JPY | 78,699,800 | Credit Suisse AG | 6/30/16 | (18,286 | ) | |
USD | 1,017,471 | JPY | 110,578,200 | Credit Suisse AG | 6/30/16 | (23,444 | ) | |
USD | 616,124 | JPY | 67,243,500 | Credit Suisse AG | 6/30/16 | (16,864 | ) | |
USD | 489,103 | JPY | 54,292,900 | Credit Suisse AG | 6/30/16 | (21,977 | ) | |
$ | (2,923,495 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CAD | - | Canadian Dollar |
EUR | - | Euro |
GBP | - | British Pound |
JPY | - | Japanese Yen |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $1,372,478,310) | $ | 2,392,500,836 | |
Foreign currency holdings, at value (cost of $464,764) | 474,823 | ||
Receivable for investments sold | 3,603,421 | ||
Receivable for capital shares sold | 246,894 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 118,949 | ||
Dividends and interest receivable | 1,321,055 | ||
2,398,265,978 | |||
Liabilities | |||
Payable for investments purchased | 15,843,216 | ||
Payable for capital shares redeemed | 1,577,020 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 3,042,444 | ||
Accrued management fees | 1,960,105 | ||
Distribution and service fees payable | 13,396 | ||
22,436,181 | |||
Net Assets | $ | 2,375,829,797 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,329,330,459 | |
Undistributed net investment income | 4,293,892 | ||
Undistributed net realized gain | 25,084,912 | ||
Net unrealized appreciation | 1,017,120,534 | ||
$ | 2,375,829,797 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $2,292,202,902 | 41,340,496 | $55.45 | |||
Institutional Class, $0.01 Par Value | $29,121,380 | 517,533 | $56.27 | |||
A Class, $0.01 Par Value | $37,499,074 | 689,185 | $54.41* | |||
C Class, $0.01 Par Value | $4,990,914 | 99,469 | $50.18 | |||
R Class, $0.01 Par Value | $3,103,754 | 57,210 | $54.25 | |||
R6 Class, $0.01 Par Value | $8,911,773 | 158,439 | $56.25 |
*Maximum offering price $57.73 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $108,068) | $ | 16,104,504 | |
Interest | 10,070 | ||
16,114,574 | |||
Expenses: | |||
Management fees | 11,804,942 | ||
Distribution and service fees: | |||
A Class | 48,117 | ||
C Class | 26,736 | ||
R Class | 7,694 | ||
Directors' fees and expenses | 44,644 | ||
Other expenses | 3,826 | ||
11,935,959 | |||
Net investment income (loss) | 4,178,615 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 27,374,095 | ||
Foreign currency transactions | 321,300 | ||
27,695,395 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (131,113,643 | ) | |
Translation of assets and liabilities in foreign currencies | (2,786,212 | ) | |
(133,899,855 | ) | ||
Net realized and unrealized gain (loss) | (106,204,460 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (102,025,845 | ) |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 4,178,615 | $ | 8,439,945 | ||
Net realized gain (loss) | 27,695,395 | 147,856,643 | ||||
Change in net unrealized appreciation (depreciation) | (133,899,855 | ) | 96,431,182 | |||
Net increase (decrease) in net assets resulting from operations | (102,025,845 | ) | 252,727,770 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (9,847,872 | ) | (8,938,027 | ) | ||
Institutional Class | (192,491 | ) | (156,488 | ) | ||
A Class | (67,613 | ) | (56,611 | ) | ||
R6 Class | (75,146 | ) | (55,615 | ) | ||
From net realized gains: | ||||||
Investor Class | (138,662,431 | ) | (201,146,776 | ) | ||
Institutional Class | (1,826,497 | ) | (2,344,544 | ) | ||
A Class | (2,410,121 | ) | (3,423,892 | ) | ||
C Class | (359,667 | ) | (533,273 | ) | ||
R Class | (189,769 | ) | (268,899 | ) | ||
R6 Class | (572,948 | ) | (666,192 | ) | ||
Decrease in net assets from distributions | (154,204,555 | ) | (217,590,317 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 97,860,882 | 119,601,168 | ||||
Net increase (decrease) in net assets | (158,369,518 | ) | 154,738,621 | |||
Net Assets | ||||||
Beginning of period | 2,534,199,315 | 2,379,460,694 | ||||
End of period | $ | 2,375,829,797 | $ | 2,534,199,315 | ||
Undistributed net investment income | $ | 4,293,892 | $ | 10,298,399 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2016 (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’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.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
13
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
14
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 0.990% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.790% for the Institutional Class and 0.450% to 0.640% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2016 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.
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, 2016 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. 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, 2016 were $177,459,357 and $217,258,421, respectively.
15
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||
Sold | 1,028,555 | $ | 58,775,654 | 1,972,555 | $ | 117,198,082 | ||||
Issued in reinvestment of distributions | 2,504,217 | 142,014,170 | 3,711,291 | 200,706,584 | ||||||
Redeemed | (1,828,827 | ) | (102,300,094 | ) | (3,460,978 | ) | (205,089,478 | ) | ||
1,703,945 | 98,489,730 | 2,222,868 | 112,815,188 | |||||||
Institutional Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 29,668 | 1,684,604 | 269,381 | 15,887,264 | ||||||
Issued in reinvestment of distributions | 35,107 | 2,018,979 | 45,621 | 2,499,550 | ||||||
Redeemed | (76,555 | ) | (4,367,348 | ) | (254,396 | ) | (15,401,415 | ) | ||
(11,780 | ) | (663,765 | ) | 60,606 | 2,985,399 | |||||
A Class/Shares Authorized | 75,000,000 | 75,000,000 | ||||||||
Sold | 68,492 | 3,769,805 | 188,110 | 11,072,552 | ||||||
Issued in reinvestment of distributions | 43,484 | 2,422,041 | 62,450 | 3,320,470 | ||||||
Redeemed | (113,722 | ) | (6,113,461 | ) | (220,012 | ) | (12,776,504 | ) | ||
(1,746 | ) | 78,385 | 30,548 | 1,616,518 | ||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||
Sold | 5,427 | 277,244 | 24,446 | 1,330,931 | ||||||
Issued in reinvestment of distributions | 5,496 | 283,057 | 8,094 | 402,289 | ||||||
Redeemed | (17,208 | ) | (874,397 | ) | (31,467 | ) | (1,733,109 | ) | ||
(6,285 | ) | (314,096 | ) | 1,073 | 111 | |||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 5,732 | 328,343 | 4,876 | 283,145 | ||||||
Issued in reinvestment of distributions | 3,414 | 189,769 | 5,062 | 268,899 | ||||||
Redeemed | (6,662 | ) | (380,963 | ) | (5,942 | ) | (348,849 | ) | ||
2,484 | 137,149 | 3,996 | 203,195 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 28,418 | 1,710,741 | 34,624 | 2,083,020 | ||||||
Issued in reinvestment of distributions | 11,279 | 648,094 | 13,186 | 721,807 | ||||||
Redeemed | (38,691 | ) | (2,225,356 | ) | (13,768 | ) | (824,070 | ) | ||
1,006 | 133,479 | 34,042 | 1,980,757 | |||||||
Net increase (decrease) | 1,687,624 | $ | 97,860,882 | 2,353,133 | $ | 119,601,168 |
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). |
16
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. There were no significant transfers between levels during the period.
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 | $ | 2,283,655,722 | $ | 88,915,380 | — | |||
Temporary Cash Investments | 4,303 | 19,925,431 | — | |||||
$ | 2,283,660,025 | $ | 108,840,811 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 118,949 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 3,042,444 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $72,972,431.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $118,949 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $3,042,444 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $325,603 in net realized gain (loss) on foreign currency transactions and $(2,804,154) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
17
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,376,400,970 | |
Gross tax appreciation of investments | $ | 1,043,536,895 | |
Gross tax depreciation of investments | (27,437,029 | ) | |
Net tax appreciation (depreciation) of investments | $ | 1,016,099,866 |
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 | |||||||||||||||
2016(3) | $61.57 | 0.10 | (2.47) | (2.37) | (0.25) | (3.50) | (3.75) | $55.45 | (3.99)% | 1.00%(4) | 0.35%(4) | 7% | $2,292,203 | ||
2015 | $61.31 | 0.21 | 5.71 | 5.92 | (0.24) | (5.42) | (5.66) | $61.57 | 10.93% | 0.99% | 0.35% | 24% | $2,440,319 | ||
2014 | $53.07 | 0.19 | 8.51 | 8.70 | (0.24) | (0.22) | (0.46) | $61.31 | 16.50% | 1.00% | 0.34% | 25% | $2,293,893 | ||
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 | ||
Institutional Class | |||||||||||||||
2016(3) | $62.49 | 0.16 | (2.51) | (2.35) | (0.37) | (3.50) | (3.87) | $56.27 | (3.90)% | 0.80%(4) | 0.55%(4) | 7% | $29,121 | ||
2015 | $62.15 | 0.34 | 5.78 | 6.12 | (0.36) | (5.42) | (5.78) | $62.49 | 11.16% | 0.79% | 0.55% | 24% | $33,075 | ||
2014 | $53.79 | 0.32 | 8.61 | 8.93 | (0.35) | (0.22) | (0.57) | $62.15 | 16.74% | 0.80% | 0.54% | 25% | $29,130 | ||
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 |
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 | |||||||||||||||
2016(3) | $60.41 | 0.03 | (2.43) | (2.40) | (0.10) | (3.50) | (3.60) | $54.41 | (4.11)% | 1.25%(4) | 0.10%(4) | 7% | $37,499 | ||
2015 | $60.25 | 0.06 | 5.61 | 5.67 | (0.09) | (5.42) | (5.51) | $60.41 | 10.67% | 1.24% | 0.10% | 24% | $41,737 | ||
2014 | $52.15 | 0.06 | 8.36 | 8.42 | (0.10) | (0.22) | (0.32) | $60.25 | 16.21% | 1.25% | 0.09% | 25% | $39,786 | ||
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 | ||
C Class | |||||||||||||||
2016(3) | $56.09 | (0.16) | (2.25) | (2.41) | — | (3.50) | (3.50) | $50.18 | (4.47)% | 2.00%(4) | (0.65)%(4) | 7% | $4,991 | ||
2015 | $56.64 | (0.36) | 5.23 | 4.87 | — | (5.42) | (5.42) | $56.09 | 9.83% | 1.99% | (0.65)% | 24% | $5,932 | ||
2014 | $49.32 | (0.34) | 7.88 | 7.54 | — | (0.22) | (0.22) | $56.64 | 15.34% | 2.00% | (0.66)% | 25% | $5,929 | ||
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 | ||
R Class | |||||||||||||||
2016(3) | $60.21 | (0.04) | (2.42) | (2.46) | — | (3.50) | (3.50) | $54.25 | (4.23)% | 1.50%(4) | (0.15)%(4) | 7% | $3,104 | ||
2015 | $60.12 | (0.09) | 5.60 | 5.51 | — | (5.42) | (5.42) | $60.21 | 10.38% | 1.49% | (0.15)% | 24% | $3,295 | ||
2014 | $52.07 | (0.08) | 8.35 | 8.27 | — | (0.22) | (0.22) | $60.12 | 15.92% | 1.50% | (0.16)% | 25% | $3,050 | ||
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 |
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 | |||||||||||||||
2016(3) | $62.51 | 0.20 | (2.50) | (2.30) | (0.46) | (3.50) | (3.96) | $56.25 | (3.81)% | 0.65%(4) | 0.70%(4) | 7% | $8,912 | ||
2015 | $62.18 | 0.41 | 5.79 | 6.20 | (0.45) | (5.42) | (5.87) | $62.51 | 11.31% | 0.64% | 0.70% | 24% | $9,841 | ||
2014 | $53.81 | 0.18 | 8.84 | 9.02 | (0.43) | (0.22) | (0.65) | $62.18 | 16.92% | 0.65% | 0.69% | 25% | $7,672 | ||
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, 2016 (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.
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89208 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Tyler Technologies, Inc. | 1.5% |
Masonite International Corp. | 1.4% |
NuVasive, Inc. | 1.3% |
XPO Logistics, Inc. | 1.3% |
Adeptus Health, Inc., Class A | 1.3% |
Q2 Holdings, Inc. | 1.2% |
Belden, Inc. | 1.2% |
Bright Horizons Family Solutions, Inc. | 1.2% |
Headwaters, Inc. | 1.2% |
LogMeIn, Inc. | 1.2% |
Top Five Industries | % of net assets |
Software | 8.5% |
Biotechnology | 7.2% |
Health Care Equipment and Supplies | 6.4% |
Hotels, Restaurants and Leisure | 5.5% |
Health Care Providers and Services | 5.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.0% |
Temporary Cash Investments | 2.7% |
Other Assets and Liabilities | 0.3% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $929.60 | $6.52 | 1.36% |
Institutional Class | $1,000 | $930.70 | $5.57 | 1.16% |
A Class | $1,000 | $928.60 | $7.72 | 1.61% |
C Class | $1,000 | $926.10 | $11.30 | 2.36% |
R Class | $1,000 | $927.50 | $8.91 | 1.86% |
R6 Class | $1,000 | $931.60 | $4.85 | 1.01% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.10 | $6.82 | 1.36% |
Institutional Class | $1,000 | $1,019.10 | $5.82 | 1.16% |
A Class | $1,000 | $1,016.86 | $8.07 | 1.61% |
C Class | $1,000 | $1,013.13 | $11.81 | 2.36% |
R Class | $1,000 | $1,015.61 | $9.32 | 1.86% |
R6 Class | $1,000 | $1,019.84 | $5.07 | 1.01% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 97.0% | ||||
Aerospace and Defense — 0.6% | ||||
Mercury Systems, Inc.(1) | 153,588 | $ | 3,228,420 | |
Air Freight and Logistics — 1.3% | ||||
XPO Logistics, Inc.(1) | 237,077 | 7,145,501 | ||
Airlines — 0.2% | ||||
Allegiant Travel Co. | 8,132 | 1,305,755 | ||
Auto Components — 0.9% | ||||
Tenneco, Inc.(1) | 97,294 | 5,185,770 | ||
Banks — 2.9% | ||||
BankUnited, Inc. | 143,305 | 4,944,023 | ||
Cathay General Bancorp. | 154,366 | 4,711,250 | ||
FCB Financial Holdings, Inc., Class A(1) | 177,046 | 6,187,758 | ||
15,843,031 | ||||
Beverages — 0.9% | ||||
Coca-Cola Bottling Co. Consolidated | 32,243 | 5,138,567 | ||
Biotechnology — 7.2% | ||||
ACADIA Pharmaceuticals, Inc.(1) | 73,229 | 2,365,297 | ||
Acceleron Pharma, Inc.(1) | 32,643 | 977,658 | ||
Achillion Pharmaceuticals, Inc.(1) | 105,071 | 898,357 | ||
Aimmune Therapeutics, Inc.(1) | 76,476 | 990,364 | ||
Alder Biopharmaceuticals, Inc.(1) | 58,116 | 1,542,980 | ||
Anacor Pharmaceuticals, Inc.(1) | 61,922 | 3,884,986 | ||
Cepheid, Inc.(1) | 49,737 | 1,419,494 | ||
Dynavax Technologies Corp.(1) | 83,535 | 1,370,809 | ||
Eagle Pharmaceuticals, Inc.(1) | 25,709 | 973,343 | ||
Exelixis, Inc.(1) | 453,289 | 2,089,662 | ||
FibroGen, Inc.(1) | 41,757 | 751,626 | ||
Halozyme Therapeutics, Inc.(1) | 171,153 | 1,805,664 | ||
Heron Therapeutics, Inc.(1) | 39,728 | 851,768 | ||
Kite Pharma, Inc.(1) | 31,202 | 1,444,029 | ||
Ligand Pharmaceuticals, Inc., Class B(1) | 15,582 | 1,883,396 | ||
Neurocrine Biosciences, Inc.(1) | 74,168 | 3,380,578 | ||
Novavax, Inc.(1) | 306,246 | 1,604,729 | ||
Ophthotech Corp.(1) | 22,245 | 1,039,731 | ||
Portola Pharmaceuticals, Inc.(1) | 46,519 | 1,105,292 | ||
Prothena Corp. plc(1) | 40,050 | 1,729,760 | ||
Radius Health, Inc.(1) | 53,709 | 1,912,040 | ||
Repligen Corp.(1) | 31,269 | 833,006 | ||
Sarepta Therapeutics, Inc.(1) | 31,956 | 453,456 | ||
Spark Therapeutics, Inc.(1) | 33,036 | 1,185,662 | ||
TESARO, Inc.(1) | 28,103 | 1,164,588 | ||
Ultragenyx Pharmaceutical, Inc.(1) | 33,656 | 2,275,819 | ||
39,934,094 | ||||
Building Products — 3.0% | ||||
Apogee Enterprises, Inc. | 136,693 | 5,664,558 | ||
Lennox International, Inc. | 5,713 | 770,969 |
6
Shares | Value | |||
Masonite International Corp.(1) | 112,744 | $ | 7,628,259 | |
Trex Co., Inc.(1) | 59,060 | 2,802,397 | ||
16,866,183 | ||||
Capital Markets — 1.0% | ||||
Evercore Partners, Inc., Class A | 112,593 | 5,814,303 | ||
Chemicals — 2.4% | ||||
Minerals Technologies, Inc. | 81,065 | 4,855,793 | ||
PolyOne Corp. | 125,806 | 4,526,500 | ||
Sensient Technologies Corp. | 58,491 | 3,933,520 | ||
13,315,813 | ||||
Commercial Services and Supplies — 1.8% | ||||
ABM Industries, Inc. | 127,564 | 4,103,734 | ||
KAR Auction Services, Inc. | 74,540 | 2,802,704 | ||
Multi-Color Corp. | 55,812 | 3,339,232 | ||
10,245,670 | ||||
Communications Equipment — 0.7% | ||||
Ciena Corp.(1) | 143,209 | 2,410,207 | ||
Infinera Corp.(1) | 131,376 | 1,562,061 | ||
3,972,268 | ||||
Construction Materials — 2.0% | ||||
Headwaters, Inc.(1) | 320,423 | 6,411,664 | ||
Summit Materials, Inc., Class A(1) | 234,584 | 4,902,806 | ||
11,314,470 | ||||
Containers and Packaging — 0.8% | ||||
Berry Plastics Group, Inc.(1) | 127,715 | 4,600,294 | ||
Distributors — 0.8% | ||||
LKQ Corp.(1) | 137,196 | 4,397,132 | ||
Diversified Consumer Services — 3.9% | ||||
2U, Inc.(1) | 100,522 | 2,817,631 | ||
Bright Horizons Family Solutions, Inc.(1) | 98,019 | 6,432,007 | ||
Chegg, Inc.(1) | 444,874 | 2,019,728 | ||
Houghton Mifflin Harcourt Co.(1) | 292,323 | 5,995,545 | ||
Nord Anglia Education, Inc.(1) | 197,121 | 4,184,879 | ||
21,449,790 | ||||
Diversified Financial Services — 1.6% | ||||
Bats Global Markets, Inc.(1) | 231,836 | 5,496,832 | ||
MarketAxess Holdings, Inc. | 25,583 | 3,140,569 | ||
8,637,401 | ||||
Electronic Equipment, Instruments and Components — 3.1% | ||||
Belden, Inc. | 107,559 | 6,791,275 | ||
Dolby Laboratories, Inc., Class A | 78,866 | 3,754,810 | ||
FEI Co. | 35,129 | 3,127,184 | ||
TTM Technologies, Inc.(1) | 569,179 | 3,711,047 | ||
17,384,316 | ||||
Food and Staples Retailing — 0.7% | ||||
Casey's General Stores, Inc. | 32,756 | 3,668,672 | ||
Food Products — 0.4% | ||||
J&J Snack Foods Corp. | 21,236 | 2,147,597 | ||
Health Care Equipment and Supplies — 6.4% | ||||
ABIOMED, Inc.(1) | 29,151 | 2,831,728 | ||
Cantel Medical Corp. | 32,066 | 2,148,101 |
7
Shares | Value | |||
ICU Medical, Inc.(1) | 29,357 | $ | 2,916,324 | |
Nevro Corp.(1) | 59,716 | 4,015,901 | ||
NuVasive, Inc.(1) | 139,000 | 7,358,660 | ||
STERIS plc | 89,757 | 6,343,127 | ||
Tandem Diabetes Care, Inc.(1) | 268,099 | 2,983,942 | ||
Teleflex, Inc. | 8,163 | 1,271,632 | ||
West Pharmaceutical Services, Inc. | 79,482 | 5,659,119 | ||
35,528,534 | ||||
Health Care Providers and Services — 5.4% | ||||
Adeptus Health, Inc., Class A(1) | 104,762 | 7,136,387 | ||
American Renal Associates Holdings, Inc.(1) | 227,710 | 6,403,205 | ||
ExamWorks Group, Inc.(1) | 123,489 | 4,451,778 | ||
HealthEquity, Inc.(1) | 127,877 | 3,216,107 | ||
Molina Healthcare, Inc.(1) | 39,956 | 2,068,123 | ||
Team Health Holdings, Inc.(1) | 64,222 | 2,686,406 | ||
VCA, Inc.(1) | 61,818 | 3,892,680 | ||
29,854,686 | ||||
Health Care Technology — 1.3% | ||||
Evolent Health, Inc.(1) | 191,627 | 2,301,440 | ||
HMS Holdings Corp.(1) | 156,278 | 2,639,536 | ||
Press Ganey Holdings, Inc.(1) | 75,451 | 2,298,992 | ||
7,239,968 | ||||
Hotels, Restaurants and Leisure — 5.5% | ||||
Bloomin' Brands, Inc. | 201,566 | 3,769,284 | ||
Cedar Fair LP | 58,747 | 3,411,438 | ||
ClubCorp Holdings, Inc. | 352,738 | 4,709,052 | ||
Madison Square Garden Co. (The)(1) | 25,148 | 3,947,733 | ||
Papa John's International, Inc. | 64,430 | 3,646,094 | ||
Texas Roadhouse, Inc. | 143,609 | 5,847,759 | ||
Vail Resorts, Inc. | 40,419 | 5,239,919 | ||
30,571,279 | ||||
Household Durables — 1.1% | ||||
Installed Building Products, Inc.(1) | 110,807 | 2,945,250 | ||
Universal Electronics, Inc.(1) | 45,659 | 3,032,214 | ||
5,977,464 | ||||
Household Products — 0.2% | ||||
Central Garden & Pet Co.(1) | 80,861 | 1,317,226 | ||
Insurance — 1.3% | ||||
Allied World Assurance Co. Holdings Ltd. | 91,638 | 3,260,480 | ||
First American Financial Corp. | 103,818 | 3,739,524 | ||
7,000,004 | ||||
Internet Software and Services — 4.2% | ||||
comScore, Inc.(1) | 50,445 | 1,544,626 | ||
CoStar Group, Inc.(1) | 10,575 | 2,086,553 | ||
inContact, Inc.(1) | 668,582 | 6,224,498 | ||
LogMeIn, Inc.(1) | 107,374 | 6,410,228 | ||
Q2 Holdings, Inc.(1) | 284,891 | 6,811,744 | ||
23,077,649 | ||||
IT Services — 3.4% | ||||
EPAM Systems, Inc.(1) | 81,840 | 5,968,591 | ||
MAXIMUS, Inc. | 89,338 | 4,725,980 |
8
Shares | Value | |||
Science Applications International Corp. | 113,926 | $ | 6,048,332 | |
Virtusa Corp.(1) | 62,271 | 2,213,111 | ||
18,956,014 | ||||
Leisure Products — 0.9% | ||||
Brunswick Corp. | 96,428 | 4,631,437 | ||
MCBC Holdings, Inc.(1) | 40,650 | 545,523 | ||
5,176,960 | ||||
Life Sciences Tools and Services — 1.1% | ||||
PAREXEL International Corp.(1) | 97,099 | 5,932,749 | ||
Machinery — 5.4% | ||||
EnPro Industries, Inc. | 84,680 | 4,960,554 | ||
ITT Corp. | 116,215 | 4,459,170 | ||
John Bean Technologies Corp. | 93,020 | 4,850,063 | ||
Middleby Corp. (The)(1) | 45,709 | 5,011,535 | ||
Rexnord Corp.(1) | 265,419 | 5,786,134 | ||
Woodward, Inc. | 84,972 | 4,606,332 | ||
29,673,788 | ||||
Metals and Mining — 0.6% | ||||
Ferroglobe plc | 314,991 | 3,209,758 | ||
Oil, Gas and Consumable Fuels — 2.0% | ||||
Callon Petroleum Co.(1) | 319,962 | 3,362,801 | ||
Carrizo Oil & Gas, Inc.(1) | 87,512 | 3,095,299 | ||
Enviva Partners, LP | 205,606 | 4,669,312 | ||
11,127,412 | ||||
Pharmaceuticals — 1.8% | ||||
Cempra, Inc.(1) | 54,979 | 930,795 | ||
Dermira, Inc.(1) | 38,953 | 985,121 | ||
Horizon Pharma plc(1) | 100,316 | 1,541,857 | ||
Pacira Pharmaceuticals, Inc.(1) | 53,112 | 2,873,890 | ||
Supernus Pharmaceuticals, Inc.(1) | 119,229 | 2,045,970 | ||
TherapeuticsMD, Inc.(1) | 173,989 | 1,435,409 | ||
9,813,042 | ||||
Professional Services — 1.0% | ||||
Korn / Ferry International | 214,459 | 5,820,417 | ||
Real Estate Investment Trusts (REITs) — 2.1% | ||||
CyrusOne, Inc. | 95,856 | 4,230,125 | ||
Sovran Self Storage, Inc. | 30,010 | 3,187,662 | ||
Sun Communities, Inc. | 61,125 | 4,148,554 | ||
11,566,341 | ||||
Real Estate Management and Development — 0.9% | ||||
FirstService Corp. | 106,420 | 4,781,987 | ||
Semiconductors and Semiconductor Equipment — 3.6% | ||||
Cavium, Inc.(1) | 58,846 | 2,905,227 | ||
Integrated Device Technology, Inc.(1) | 125,287 | 2,415,533 | ||
M/A-COM Technology Solutions Holdings, Inc.(1) | 84,226 | 3,444,001 | ||
Microsemi Corp.(1) | 166,753 | 5,634,584 | ||
Monolithic Power Systems, Inc. | 49,704 | 3,102,524 | ||
Synaptics, Inc.(1) | 31,493 | 2,253,324 | ||
19,755,193 | ||||
Software — 8.5% | ||||
Aspen Technology, Inc.(1) | 81,596 | 3,103,096 |
9
Shares | Value | |||
Callidus Software, Inc.(1) | 338,214 | $ | 6,189,316 | |
Guidewire Software, Inc.(1) | 85,083 | 4,847,178 | ||
Manhattan Associates, Inc.(1) | 101,871 | 6,167,270 | ||
Paylocity Holding Corp.(1) | 84,266 | 3,224,860 | ||
Proofpoint, Inc.(1) | 37,434 | 2,180,905 | ||
RingCentral, Inc., Class A(1) | 222,257 | 4,240,664 | ||
SecureWorks Corp., Class A(1) | 279,069 | 3,719,990 | ||
Synchronoss Technologies, Inc.(1) | 156,329 | 4,857,142 | ||
Tyler Technologies, Inc.(1) | 58,672 | 8,590,168 | ||
47,120,589 | ||||
Specialty Retail — 1.6% | ||||
Burlington Stores, Inc.(1) | 106,534 | 6,069,242 | ||
Francesca's Holdings Corp.(1) | 182,964 | 3,037,202 | ||
9,106,444 | ||||
Technology Hardware, Storage and Peripherals — 0.9% | ||||
Super Micro Computer, Inc.(1) | 183,555 | 4,939,465 | ||
Textiles, Apparel and Luxury Goods — 1.1% | ||||
G-III Apparel Group Ltd.(1) | 51,386 | 2,325,217 | ||
Skechers U.S.A., Inc., Class A(1) | 114,805 | 3,794,305 | ||
6,119,522 | ||||
Trading Companies and Distributors — 0.5% | ||||
Titan Machinery, Inc.(1) | 213,554 | 2,776,202 | ||
TOTAL COMMON STOCKS (Cost $522,086,442) | 538,037,740 | |||
TEMPORARY CASH INVESTMENTS — 2.7% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $5,709,328), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $5,596,804) | 5,596,734 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $9,519,431), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $9,331,062) | 9,331,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 3,316 | 3,316 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $14,931,050) | 14,931,050 | |||
TOTAL INVESTMENT SECURITIES — 99.7% (Cost $537,017,492) | 552,968,790 | |||
OTHER ASSETS AND LIABILITIES — 0.3% | 1,576,724 | |||
TOTAL NET ASSETS — 100.0% | $ | 554,545,514 |
10
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CAD | 144,391 | USD | 112,086 | Morgan Stanley | 6/30/16 | $ | 2,995 | |
CAD | 139,510 | USD | 110,082 | Morgan Stanley | 6/30/16 | 1,108 | ||
CAD | 147,198 | USD | 116,069 | Morgan Stanley | 6/30/16 | 1,249 | ||
CAD | 137,062 | USD | 108,444 | Morgan Stanley | 6/30/16 | 795 | ||
CAD | 124,180 | USD | 98,381 | Morgan Stanley | 6/30/16 | 592 | ||
CAD | 140,198 | USD | 111,297 | Morgan Stanley | 6/30/16 | 442 | ||
USD | 4,393,219 | CAD | 5,798,126 | Morgan Stanley | 6/30/16 | (227,944 | ) | |
USD | 139,914 | CAD | 184,311 | Morgan Stanley | 6/30/16 | (6,984 | ) | |
USD | 109,456 | CAD | 140,589 | Morgan Stanley | 6/30/16 | (2,595 | ) | |
$ | (230,342 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $537,017,492) | $ | 552,968,790 | |
Receivable for investments sold | 8,209,368 | ||
Receivable for capital shares sold | 424,011 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 7,181 | ||
Dividends and interest receivable | 47,092 | ||
561,656,442 | |||
Liabilities | |||
Payable for investments purchased | 6,051,032 | ||
Payable for capital shares redeemed | 235,329 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 237,523 | ||
Accrued management fees | 560,413 | ||
Distribution and service fees payable | 26,631 | ||
7,110,928 | |||
Net Assets | $ | 554,545,514 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 633,700,175 | |
Accumulated net investment loss | (5,687,780 | ) | |
Accumulated net realized loss | (89,188,330 | ) | |
Net unrealized appreciation | 15,721,449 | ||
$ | 554,545,514 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $140,016,307 | 11,530,151 | $12.14 | |
Institutional Class, $0.01 Par Value | $289,051,265 | 23,402,097 | $12.35 | |
A Class, $0.01 Par Value | $84,817,274 | 7,168,751 | $11.83* | |
C Class, $0.01 Par Value | $9,797,710 | 889,319 | $11.02 | |
R Class, $0.01 Par Value | $2,336,586 | 200,632 | $11.65 | |
R6 Class, $0.01 Par Value | $28,526,372 | 2,300,562 | $12.40 |
*Maximum offering price $12.55 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $3,818) | $ | 1,520,895 | |
Interest | 7,308 | ||
1,528,203 | |||
Expenses: | |||
Management fees | 3,388,155 | ||
Distribution and service fees: | |||
A Class | 112,093 | ||
C Class | 52,381 | ||
R Class | 5,368 | ||
Directors' fees and expenses | 10,182 | ||
Other expenses | 2,377 | ||
3,570,556 | |||
Net investment income (loss) | (2,042,353 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (9,613,554 | ) | |
Foreign currency transactions | (23,552 | ) | |
(9,637,106 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (28,389,724 | ) | |
Translation of assets and liabilities in foreign currencies | (184,480 | ) | |
(28,574,204 | ) | ||
Net realized and unrealized gain (loss) | (38,211,310 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (40,253,663 | ) |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | (2,042,353 | ) | $ | (4,185,255 | ) |
Net realized gain (loss) | (9,637,106 | ) | 30,475,460 | |||
Change in net unrealized appreciation (depreciation) | (28,574,204 | ) | (44,585,039 | ) | ||
Net increase (decrease) in net assets resulting from operations | (40,253,663 | ) | (18,294,834 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 27,746,001 | 210,144,181 | ||||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 21,571 | 55,952 | ||||
Net increase (decrease) in net assets | (12,486,091 | ) | 191,905,299 | |||
Net Assets | ||||||
Beginning of period | 567,031,605 | 375,126,306 | ||||
End of period | $ | 554,545,514 | $ | 567,031,605 | ||
Accumulated net investment loss | $ | (5,687,780 | ) | $ | (3,645,427 | ) |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2016 (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’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. On October 16, 2015, all outstanding B Class shares were converted to A Class shares and the fund discontinued offering the B Class.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
16
Redemption Fees — 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.
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 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, 2016 was 1.36% for the Investor Class, A Class, C Class and R Class, 1.16% for the Institutional Class and 1.01% 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, 2016 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. 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, 2016 were $323,516,480 and $297,883,374, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 165,000,000 | 165,000,000 | ||||||||
Sold | 843,543 | $ | 10,047,472 | 4,048,244 | $ | 57,398,527 | ||||
Redeemed | (2,446,599 | ) | (29,228,259 | ) | (4,195,236 | ) | (58,081,513 | ) | ||
(1,603,056 | ) | (19,180,787 | ) | (146,992 | ) | (682,986 | ) | |||
Institutional Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||
Sold | 6,361,851 | 78,130,374 | 15,295,628 | 226,693,536 | ||||||
Redeemed | (2,254,275 | ) | (27,561,471 | ) | (1,577,566 | ) | (22,030,720 | ) | ||
4,107,576 | 50,568,903 | 13,718,062 | 204,662,816 | |||||||
A Class/Shares Authorized | 110,000,000 | 110,000,000 | ||||||||
Sold | 328,771 | 3,886,179 | 1,587,003 | 21,914,685 | ||||||
Redeemed | (1,302,172 | ) | (15,190,399 | ) | (1,422,136 | ) | (19,220,665 | ) | ||
(973,401 | ) | (11,304,220 | ) | 164,867 | 2,694,020 | |||||
B Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 2,498 | 34,126 | ||||||||
Redeemed | (59,417 | ) | (728,188 | ) | ||||||
(56,919 | ) | (694,062 | ) | |||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 78,742 | 882,914 | 189,291 | 2,418,796 | ||||||
Redeemed | (151,812 | ) | (1,646,931 | ) | (219,855 | ) | (2,808,119 | ) | ||
(73,070 | ) | (764,017 | ) | (30,564 | ) | (389,323 | ) | |||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 78,394 | 924,210 | 84,279 | 1,131,737 | ||||||
Redeemed | (47,851 | ) | (557,783 | ) | (25,023 | ) | (330,330 | ) | ||
30,543 | 366,427 | 59,256 | 801,407 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 879,928 | 11,112,997 | 532,300 | 7,687,468 | ||||||
Redeemed | (249,846 | ) | (3,053,302 | ) | (277,834 | ) | (3,935,159 | ) | ||
630,082 | 8,059,695 | 254,466 | 3,752,309 | |||||||
Net increase (decrease) | 2,118,674 | $ | 27,746,001 | 13,962,176 | $ | 210,144,181 |
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. There were no significant transfers between levels during the period.
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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 | $ | 533,255,753 | $ | 4,781,987 | — | |||
Temporary Cash Investments | 3,316 | 14,927,734 | — | |||||
$ | 533,259,069 | $ | 19,709,721 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 7,181 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 237,523 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $4,460,340.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $7,181 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $237,523 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(23,289) in net realized gain (loss) on foreign currency transactions and $(184,973) 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, the fund 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.
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.
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As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 542,068,838 | |
Gross tax appreciation of investments | $ | 44,708,477 | |
Gross tax depreciation of investments | (33,808,525 | ) | |
Net tax appreciation (depreciation) of investments | $ | 10,899,952 |
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, 2015, the fund had accumulated short-term capital losses of $(74,076,823), 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, 2015, the fund had late-year ordinary loss deferrals of $(3,690,796), 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.
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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 | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2016(3) | $13.06 | (0.05) | (0.87) | (0.92) | — | $12.14 | (7.04)% | 1.36%(4) | (0.80)%(4) | 55% | $140,016 | ||
2015 | $12.82 | (0.13) | 0.37 | 0.24 | — | $13.06 | 1.87% | 1.39% | (0.92)% | 100% | $171,490 | ||
2014 | $11.95 | (0.11) | 0.98 | 0.87 | — | $12.82 | 7.28% | 1.40% | (0.93)% | 75% | $170,316 | ||
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 | ||
Institutional Class | |||||||||||||
2016(3) | $13.27 | (0.04) | (0.88) | (0.92) | — | $12.35 | (6.93)% | 1.16%(4) | (0.60)%(4) | 55% | $289,051 | ||
2015 | $13.01 | (0.10) | 0.36 | 0.26 | — | $13.27 | 2.00% | 1.17% | (0.70)% | 100% | $256,001 | ||
2014 | $12.10 | (0.09) | 1.00 | 0.91 | — | $13.01 | 7.52% | 1.20% | (0.73)% | 75% | $72,542 | ||
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 |
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 | |||||||||||||
2016(3) | $12.74 | (0.06) | (0.85) | (0.91) | — | $11.83 | (7.14)% | 1.61%(4) | (1.05)%(4) | 55% | $84,817 | ||
2015 | $12.54 | (0.16) | 0.36 | 0.20 | — | $12.74 | 1.59% | 1.64% | (1.17)% | 100% | $103,713 | ||
2014 | $11.72 | (0.14) | 0.96 | 0.82 | — | $12.54 | 7.00% | 1.65% | (1.18)% | 75% | $100,051 | ||
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 | ||
C Class | |||||||||||||
2016(3) | $11.91 | (0.10) | (0.79) | (0.89) | — | $11.02 | (7.39)% | 2.36%(4) | (1.80)%(4) | 55% | $9,798 | ||
2015 | $11.81 | (0.24) | 0.34 | 0.10 | — | $11.91 | 0.76% | 2.39% | (1.92)% | 100% | $11,458 | ||
2014 | $11.12 | (0.22) | 0.91 | 0.69 | — | $11.81 | 6.21% | 2.40% | (1.93)% | 75% | $11,727 | ||
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 | ||
R Class | |||||||||||||
2016(3) | $12.55 | (0.07) | (0.83) | (0.90) | — | $11.65 | (7.25)% | 1.86%(4) | (1.30)%(4) | 55% | $2,337 | ||
2015 | $12.39 | (0.19) | 0.35 | 0.16 | — | $12.55 | 1.29% | 1.89% | (1.42)% | 100% | $2,135 | ||
2014 | $11.61 | (0.17) | 0.95 | 0.78 | — | $12.39 | 6.72% | 1.90% | (1.43)% | 75% | $1,373 | ||
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 |
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) | |||
R6 Class | |||||||||||||
2016(3) | $13.31 | (0.03) | (0.88) | (0.91) | — | $12.40 | (6.84)% | 1.01%(4) | (0.45)%(4) | 55% | $28,526 | ||
2015 | $13.03 | (0.08) | 0.36 | 0.28 | — | $13.31 | 2.15% | 1.04% | (0.57)% | 100% | $22,235 | ||
2014 | $12.10 | (0.08) | 1.01 | 0.93 | — | $13.03 | 7.69% | 1.07% | (0.60)% | 75% | $18,447 | ||
2013(5) | $11.33 | (0.02) | 0.79 | 0.77 | — | $12.10 | 6.80% | 1.05%(4) | (0.55)%(4) | 80%(6) | $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, 2016 (unaudited). |
(4) | Annualized. |
(5) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(6) | 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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89218 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 7.4% |
Alphabet, Inc.* | 5.8% |
Amazon.com, Inc. | 4.2% |
Facebook, Inc., Class A | 3.6% |
Visa, Inc., Class A | 3.2% |
Starbucks Corp. | 3.0% |
UnitedHealth Group, Inc. | 3.0% |
MasterCard, Inc., Class A | 2.9% |
Gilead Sciences, Inc. | 2.8% |
Celgene Corp. | 2.7% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Internet Software and Services | 11.9% |
Biotechnology | 7.8% |
Technology Hardware, Storage and Peripherals | 7.3% |
IT Services | 6.0% |
Media | 5.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.2% |
Temporary Cash Investments | 1.5% |
Other Assets and Liabilities | (0.7)% |
3
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, 2015 to April 30, 2016.
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.
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.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $960.30 | $4.78 | 0.98% |
Institutional Class | $1,000 | $961.00 | $3.80 | 0.78% |
A Class | $1,000 | $959.00 | $5.99 | 1.23% |
C Class | $1,000 | $955.50 | $9.63 | 1.98% |
R Class | $1,000 | $957.70 | $7.20 | 1.48% |
R6 Class | $1,000 | $962.00 | $3.07 | 0.63% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.99 | $4.92 | 0.98% |
Institutional Class | $1,000 | $1,020.99 | $3.92 | 0.78% |
A Class | $1,000 | $1,018.75 | $6.17 | 1.23% |
C Class | $1,000 | $1,015.02 | $9.92 | 1.98% |
R Class | $1,000 | $1,017.50 | $7.42 | 1.48% |
R6 Class | $1,000 | $1,021.73 | $3.17 | 0.63% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.2% | ||||
Aerospace and Defense — 3.5% | ||||
Boeing Co. (The) | 1,262,000 | $ | 170,117,600 | |
Rockwell Collins, Inc. | 521,000 | 45,946,990 | ||
United Technologies Corp. | 648,000 | 67,631,760 | ||
283,696,350 | ||||
Automobiles — 1.4% | ||||
Tesla Motors, Inc.(1) | 476,000 | 114,601,760 | ||
Banks — 1.9% | ||||
JPMorgan Chase & Co. | 1,722,000 | 108,830,400 | ||
U.S. Bancorp | 1,006,000 | 42,946,140 | ||
151,776,540 | ||||
Beverages — 2.4% | ||||
Boston Beer Co., Inc. (The), Class A(1) | 275,000 | 42,922,000 | ||
Constellation Brands, Inc., Class A | 972,000 | 151,690,320 | ||
194,612,320 | ||||
Biotechnology — 7.8% | ||||
Alexion Pharmaceuticals, Inc.(1) | 197,000 | 27,438,160 | ||
Celgene Corp.(1) | 2,124,000 | 219,642,840 | ||
Gilead Sciences, Inc. | 2,541,000 | 224,141,610 | ||
Ionis Pharmaceuticals, Inc.(1) | 494,000 | 20,239,180 | ||
Kite Pharma, Inc.(1) | 241,000 | 11,153,480 | ||
Regeneron Pharmaceuticals, Inc.(1) | 304,000 | 114,519,840 | ||
Spark Therapeutics, Inc.(1) | 326,000 | 11,700,140 | ||
628,835,250 | ||||
Capital Markets — 1.3% | ||||
Franklin Resources, Inc. | 842,000 | 31,440,280 | ||
T. Rowe Price Group, Inc. | 939,000 | 70,697,310 | ||
102,137,590 | ||||
Chemicals — 2.1% | ||||
Ecolab, Inc. | 755,000 | 86,809,900 | ||
Monsanto Co. | 862,000 | 80,752,160 | ||
167,562,060 | ||||
Commercial Services and Supplies — 0.5% | ||||
Stericycle, Inc.(1) | 382,078 | 36,511,374 | ||
Consumer Finance — 0.4% | ||||
American Express Co. | 527,000 | 34,481,610 | ||
Electrical Equipment — 1.8% | ||||
Acuity Brands, Inc. | 535,000 | 130,481,150 | ||
Eaton Corp. plc | 212,000 | 13,413,240 | ||
143,894,390 | ||||
Energy Equipment and Services — 0.5% | ||||
Core Laboratories NV | 307,000 | 41,033,620 | ||
Food and Staples Retailing — 2.3% | ||||
Costco Wholesale Corp. | 1,274,000 | 188,717,620 | ||
Food Products — 1.3% | ||||
Mead Johnson Nutrition Co. | 1,185,000 | 103,272,750 |
6
Shares | Value | |||
Health Care Equipment and Supplies — 3.2% | ||||
Intuitive Surgical, Inc.(1) | 295,342 | $ | 184,990,415 | |
St. Jude Medical, Inc. | 974,000 | 74,218,800 | ||
259,209,215 | ||||
Health Care Providers and Services — 3.7% | ||||
Cigna Corp. | 424,000 | 58,740,960 | ||
UnitedHealth Group, Inc. | 1,832,000 | 241,237,760 | ||
299,978,720 | ||||
Health Care Technology — 0.5% | ||||
Cerner Corp.(1) | 776,000 | 43,564,640 | ||
Hotels, Restaurants and Leisure — 3.4% | ||||
Chipotle Mexican Grill, Inc.(1) | 74,000 | 31,151,780 | ||
Starbucks Corp. | 4,336,000 | 243,813,280 | ||
274,965,060 | ||||
Insurance — 1.1% | ||||
MetLife, Inc. | 1,997,000 | 90,064,700 | ||
Internet and Catalog Retail — 4.6% | ||||
Amazon.com, Inc.(1) | 516,000 | 340,348,440 | ||
Netflix, Inc.(1) | 342,000 | 30,790,260 | ||
371,138,700 | ||||
Internet Software and Services — 11.9% | ||||
Alphabet, Inc., Class A(1) | 323,794 | 229,207,297 | ||
Alphabet, Inc., Class C(1) | 342,000 | 237,009,420 | ||
Baidu, Inc. ADR(1) | 318,000 | 61,787,400 | ||
Facebook, Inc., Class A(1) | 2,471,000 | 290,540,180 | ||
LinkedIn Corp., Class A(1) | 630,000 | 78,945,300 | ||
Tencent Holdings Ltd. | 3,215,000 | 65,859,235 | ||
963,348,832 | ||||
IT Services — 6.0% | ||||
MasterCard, Inc., Class A | 2,381,850 | 231,015,631 | ||
Visa, Inc., Class A | 3,297,000 | 254,660,280 | ||
485,675,911 | ||||
Machinery — 4.3% | ||||
Cummins, Inc. | 794,000 | 92,921,820 | ||
Donaldson Co., Inc. | 690,000 | 22,549,200 | ||
Flowserve Corp. | 1,202,000 | 58,669,620 | ||
WABCO Holdings, Inc.(1) | 663,000 | 74,362,080 | ||
Wabtec Corp. | 1,205,000 | 99,930,650 | ||
348,433,370 | ||||
Media — 5.7% | ||||
Scripps Networks Interactive, Inc., Class A | 963,000 | 60,043,050 | ||
Time Warner, Inc. | 2,409,000 | 181,012,260 | ||
Walt Disney Co. (The) | 2,099,000 | 216,742,740 | ||
457,798,050 | ||||
Oil, Gas and Consumable Fuels — 1.0% | ||||
Concho Resources, Inc.(1) | 280,000 | 32,527,600 | ||
EOG Resources, Inc. | 603,000 | 49,819,860 | ||
82,347,460 | ||||
Personal Products — 2.0% | ||||
Estee Lauder Cos., Inc. (The), Class A | 1,718,000 | 164,704,660 |
7
Shares | Value | |||
Pharmaceuticals — 1.9% | ||||
Eli Lilly & Co. | 661,000 | $ | 49,925,330 | |
Pfizer, Inc. | 3,049,000 | 99,732,790 | ||
149,658,120 | ||||
Professional Services — 1.3% | ||||
Nielsen Holdings plc | 1,968,000 | 102,611,520 | ||
Road and Rail — 0.7% | ||||
J.B. Hunt Transport Services, Inc. | 652,000 | 54,037,760 | ||
Semiconductors and Semiconductor Equipment — 1.2% | ||||
ARM Holdings plc | 2,703,000 | 37,026,478 | ||
Linear Technology Corp. | 1,425,000 | 63,384,000 | ||
100,410,478 | ||||
Software — 3.1% | ||||
NetSuite, Inc.(1) | 596,000 | 48,299,840 | ||
Oracle Corp. | 1,678,000 | 66,885,080 | ||
salesforce.com, inc.(1) | 1,332,000 | 100,965,600 | ||
Splunk, Inc.(1) | 622,000 | 32,331,560 | ||
248,482,080 | ||||
Specialty Retail — 3.3% | ||||
O'Reilly Automotive, Inc.(1) | 403,000 | 105,860,040 | ||
TJX Cos., Inc. (The) | 2,089,000 | 158,387,980 | ||
264,248,020 | ||||
Technology Hardware, Storage and Peripherals — 7.3% | ||||
Apple, Inc. | 6,336,315 | 593,966,168 | ||
Textiles, Apparel and Luxury Goods — 3.9% | ||||
Burberry Group plc | 1,742,000 | 30,263,913 | ||
NIKE, Inc., Class B | 3,269,000 | 192,674,859 | ||
Under Armour, Inc., Class A(1) | 1,000,000 | 43,940,000 | ||
Under Armour, Inc., Class C(1) | 1,115,000 | 45,492,000 | ||
312,370,772 | ||||
Tobacco — 1.9% | ||||
Philip Morris International, Inc. | 1,587,000 | 155,716,440 | ||
TOTAL COMMON STOCKS (Cost $3,849,928,803) | 8,013,863,910 | |||
TEMPORARY CASH INVESTMENTS — 1.5% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $46,549,885), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $45,632,443) | 45,631,873 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 2/15/44, valued at $77,607,075), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $76,079,507) | 76,079,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 163,365 | 163,365 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $121,874,238) | 121,874,238 | |||
TOTAL INVESTMENT SECURITIES — 100.7% (Cost $3,971,803,041) | 8,135,738,148 | |||
OTHER ASSETS AND LIABILITIES — (0.7)% | (56,374,671) | |||
TOTAL NET ASSETS — 100.0% | $ | 8,079,363,477 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
GBP | 1,658,877 | USD | 2,368,840 | Credit Suisse AG | 6/30/16 | $ | 55,446 | |
GBP | 1,373,940 | USD | 1,980,179 | Credit Suisse AG | 6/30/16 | 27,699 | ||
GBP | 994,870 | USD | 1,448,282 | Credit Suisse AG | 6/30/16 | 5,623 | ||
USD | 61,047,736 | GBP | 43,253,933 | Credit Suisse AG | 6/30/16 | (2,163,631 | ) | |
$ | (2,074,863 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
GBP | - | British Pound |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $3,971,803,041) | $ | 8,135,738,148 | |
Foreign currency holdings, at value (cost of $674,347) | 681,035 | ||
Receivable for investments sold | 10,157,900 | ||
Receivable for capital shares sold | 590,399 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 88,768 | ||
Dividends and interest receivable | 2,781,189 | ||
8,150,037,439 | |||
Liabilities | |||
Payable for investments purchased | 59,610,487 | ||
Payable for capital shares redeemed | 2,334,723 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 2,163,631 | ||
Accrued management fees | 6,544,622 | ||
Distribution and service fees payable | 20,499 | ||
70,673,962 | |||
Net Assets | $ | 8,079,363,477 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 3,803,581,714 | |
Undistributed net investment income | 7,883,622 | ||
Undistributed net realized gain | 106,061,127 | ||
Net unrealized appreciation | 4,161,837,014 | ||
$ | 8,079,363,477 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $7,735,982,426 | 224,705,642 | $34.43 | |
Institutional Class, $0.01 Par Value | $221,648,558 | 6,250,239 | $35.46 | |
A Class, $0.01 Par Value | $67,988,762 | 2,051,396 | $33.14* | |
C Class, $0.01 Par Value | $2,997,292 | 102,891 | $29.13 | |
R Class, $0.01 Par Value | $9,060,765 | 278,426 | $32.54 | |
R6 Class, $0.01 Par Value | $41,685,674 | 1,175,718 | $35.46 |
*Maximum offering price $35.16 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $31,103) | $ | 47,230,431 | |
Interest | 59,383 | ||
47,289,814 | |||
Expenses: | |||
Management fees | 39,218,320 | ||
Distribution and service fees: | |||
A Class | 87,027 | ||
C Class | 15,465 | ||
R Class | 22,450 | ||
Directors' fees and expenses | 158,815 | ||
Other expenses | 1,525 | ||
39,503,602 | |||
Net investment income (loss) | 7,786,212 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 117,066,127 | ||
Foreign currency transactions | 5,762,693 | ||
122,828,820 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (473,423,913 | ) | |
Translation of assets and liabilities in foreign currencies | (1,916,474 | ) | |
(475,340,387 | ) | ||
Net realized and unrealized gain (loss) | (352,511,567 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (344,725,355 | ) |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 7,786,212 | $ | 18,439,966 | ||
Net realized gain (loss) | 122,828,820 | 436,628,785 | ||||
Change in net unrealized appreciation (depreciation) | (475,340,387 | ) | 326,333,175 | |||
Net increase (decrease) in net assets resulting from operations | (344,725,355 | ) | 781,401,926 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (17,978,057 | ) | (25,643,784 | ) | ||
Institutional Class | (931,198 | ) | (1,043,481 | ) | ||
A Class | — | (57,827 | ) | |||
R6 Class | (211,120 | ) | (199,356 | ) | ||
From net realized gains: | ||||||
Investor Class | (396,365,081 | ) | (539,477,977 | ) | ||
Institutional Class | (10,890,656 | ) | (13,666,153 | ) | ||
A Class | (3,822,340 | ) | (5,033,302 | ) | ||
C Class | (191,807 | ) | (192,382 | ) | ||
R Class | (482,530 | ) | (590,316 | ) | ||
R6 Class | (1,825,199 | ) | (2,035,262 | ) | ||
Decrease in net assets from distributions | (432,697,988 | ) | (587,939,840 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 256,064,274 | 105,215,556 | ||||
Net increase (decrease) in net assets | (521,359,069 | ) | 298,677,642 | |||
Net Assets | ||||||
Beginning of period | 8,600,722,546 | 8,302,044,904 | ||||
End of period | $ | 8,079,363,477 | $ | 8,600,722,546 | ||
Undistributed net investment income | $ | 7,883,622 | $ | 19,217,785 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2016 (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'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.
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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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.
13
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
14
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 0.990% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.600% to 0.790% for the Institutional Class and 0.450% to 0.640% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2016 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, 2016 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. 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, 2016 were $689,004,868 and $793,831,965, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 3,500,000,000 | 3,500,000,000 | ||||||||
Sold | 3,888,028 | $ | 134,124,788 | 5,798,421 | $ | 211,134,665 | ||||
Issued in reinvestment of distributions | 11,470,135 | 400,537,097 | 16,395,880 | 546,966,769 | ||||||
Redeemed | (9,466,297 | ) | (327,359,195 | ) | (17,932,247 | ) | (653,514,757 | ) | ||
5,891,866 | 207,302,690 | 4,262,054 | 104,586,677 | |||||||
Institutional Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 963,084 | 36,501,100 | 729,215 | 27,402,685 | ||||||
Issued in reinvestment of distributions | 322,809 | 11,601,769 | 419,817 | 14,391,326 | ||||||
Redeemed | (316,591 | ) | (11,053,055 | ) | (1,478,946 | ) | (54,360,741 | ) | ||
969,302 | 37,049,814 | (329,914 | ) | (12,566,730 | ) | |||||
A Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||
Sold | 575,075 | 19,097,043 | 426,909 | 15,057,252 | ||||||
Issued in reinvestment of distributions | 108,105 | 3,636,643 | 152,311 | 4,905,938 | ||||||
Redeemed | (608,141 | ) | (19,879,509 | ) | (596,724 | ) | (20,989,171 | ) | ||
75,039 | 2,854,177 | (17,504 | ) | (1,025,981 | ) | |||||
C Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 29,398 | 890,539 | 27,705 | 866,318 | ||||||
Issued in reinvestment of distributions | 5,377 | 159,439 | 4,717 | 135,843 | ||||||
Redeemed | (23,589 | ) | (676,441 | ) | (17,303 | ) | (539,564 | ) | ||
11,186 | 373,537 | 15,119 | 462,597 | |||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 57,534 | 1,870,378 | 92,187 | 3,206,940 | ||||||
Issued in reinvestment of distributions | 13,601 | 449,650 | 17,210 | 546,763 | ||||||
Redeemed | (61,520 | ) | (1,988,379 | ) | (65,738 | ) | (2,245,047 | ) | ||
9,615 | 331,649 | 43,659 | 1,508,656 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 269,141 | 9,647,910 | 425,005 | 16,007,551 | ||||||
Issued in reinvestment of distributions | 56,706 | 2,036,319 | 65,225 | 2,234,618 | ||||||
Redeemed | (98,842 | ) | (3,531,822 | ) | (160,774 | ) | (5,991,832 | ) | ||
227,005 | 8,152,407 | 329,456 | 12,250,337 | |||||||
Net increase (decrease) | 7,184,013 | $ | 256,064,274 | 4,302,870 | $ | 105,215,556 |
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. There were no significant transfers between levels during the period.
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 | $ | 7,880,714,284 | $ | 133,149,626 | — | |||
Temporary Cash Investments | 163,365 | 121,710,873 | — | |||||
$ | 7,880,877,649 | $ | 254,860,499 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 88,768 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 2,163,631 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $80,904,724.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $88,768 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $2,163,631 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $5,803,294 in net realized gain (loss) on foreign currency transactions and $(1,956,138) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
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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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 3,992,647,021 | |
Gross tax appreciation of investments | $ | 4,216,649,748 | |
Gross tax depreciation of investments | (73,558,621 | ) | |
Net tax appreciation (depreciation) of investments | $ | 4,143,091,127 |
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 | |||||||||||||||||
2016(3) | $37.81 | 0.03 | (1.51) | (1.48) | (0.08) | (1.82) | (1.90) | $34.43 | (3.97)% | 0.98%(4) | 0.98%(4) | 0.19%(4) | 0.19%(4) | 9% | $7,735,982 | ||
2015 | $37.20 | 0.08 | 3.18 | 3.26 | (0.12) | (2.53) | (2.65) | $37.81 | 9.72% | 0.98% | 0.98% | 0.22% | 0.22% | 16% | $8,273,589 | ||
2014 | $33.56 | 0.10 | 4.96 | 5.06 | (0.10) | (1.32) | (1.42) | $37.20 | 15.66% | 1.00% | 1.01% | 0.29% | 0.28% | 16% | $7,981,781 | ||
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 | ||
Institutional Class | |||||||||||||||||
2016(3) | $38.93 | 0.07 | (1.56) | (1.49) | (0.16) | (1.82) | (1.98) | $35.46 | (3.90)% | 0.78%(4) | 0.78%(4) | 0.39%(4) | 0.39%(4) | 9% | $221,649 | ||
2015 | $38.22 | 0.16 | 3.27 | 3.43 | (0.19) | (2.53) | (2.72) | $38.93 | 9.96% | 0.78% | 0.78% | 0.42% | 0.42% | 16% | $205,574 | ||
2014 | $34.44 | 0.17 | 5.10 | 5.27 | (0.17) | (1.32) | (1.49) | $38.22 | 15.90% | 0.80% | 0.81% | 0.49% | 0.48% | 16% | $214,464 | ||
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 |
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 | |||||||||||||||||
2016(3) | $36.43 | (0.01) | (1.46) | (1.47) | — | (1.82) | (1.82) | $33.14 | (4.10)% | 1.23%(4) | 1.23%(4) | (0.06)%(4) | (0.06)%(4) | 9% | $67,989 | ||
2015 | $35.94 | (0.01) | 3.06 | 3.05 | (0.03) | (2.53) | (2.56) | $36.43 | 9.46% | 1.23% | 1.23% | (0.03)% | (0.03)% | 16% | $72,004 | ||
2014 | $32.46 | 0.01 | 4.81 | 4.82 | (0.02) | (1.32) | (1.34) | $35.94 | 15.35% | 1.25% | 1.26% | 0.04% | 0.03% | 16% | $71,650 | ||
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 | ||
C Class | |||||||||||||||||
2016(3) | $32.36 | (0.12) | (1.29) | (1.41) | — | (1.82) | (1.82) | $29.13 | (4.45)% | 1.98%(4) | 1.98%(4) | (0.81)%(4) | (0.81)%(4) | 9% | $2,997 | ||
2015 | $32.41 | (0.25) | 2.73 | 2.48 | — | (2.53) | (2.53) | $32.36 | 8.63% | 1.98% | 1.98% | (0.78)% | (0.78)% | 16% | $2,968 | ||
2014 | $29.60 | (0.22) | 4.35 | 4.13 | — | (1.32) | (1.32) | $32.41 | 14.51% | 2.00% | 2.01% | (0.71)% | (0.72)% | 16% | $2,482 | ||
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 | ||
R Class | |||||||||||||||||
2016(3) | $35.85 | (0.05) | (1.44) | (1.49) | — | (1.82) | (1.82) | $32.54 | (4.23)% | 1.48%(4) | 1.48%(4) | (0.31)%(4) | (0.31)%(4) | 9% | $9,061 | ||
2015 | $35.46 | (0.10) | 3.02 | 2.92 | — | (2.53) | (2.53) | $35.85 | 9.19% | 1.48% | 1.48% | (0.28)% | (0.28)% | 16% | $9,637 | ||
2014 | $32.10 | (0.08) | 4.76 | 4.68 | — | (1.32) | (1.32) | $35.46 | 15.08% | 1.50% | 1.51% | (0.21)% | (0.22)% | 16% | $7,983 | ||
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 |
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) | |||
R6 Class | |||||||||||||||||
2016(3) | $38.95 | 0.09 | (1.55) | (1.46) | (0.21) | (1.82) | (2.03) | $35.46 | (3.80)% | 0.63%(4) | 0.63%(4) | 0.54%(4) | 0.54%(4) | 9% | $41,686 | ||
2015 | $38.25 | 0.20 | 3.28 | 3.48 | (0.25) | (2.53) | (2.78) | $38.95 | 10.12% | 0.63% | 0.63% | 0.57% | 0.57% | 16% | $36,951 | ||
2014 | $34.46 | 0.05 | 5.28 | 5.33 | (0.22) | (1.32) | (1.54) | $38.25 | 16.06% | 0.65% | 0.66% | 0.64% | 0.63% | 16% | $23,684 | ||
2013(6) | $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%(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, 2016 (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.
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89215 1606 |
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Semiannual Report | |
April 30, 2016 | |
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, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and 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 Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000100334-16-000185/jonathanthomassig.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 2.5% |
Microsoft Corp. | 1.8% |
Exxon Mobil Corp. | 1.5% |
Home Depot, Inc. (The) | 1.3% |
HCA Holdings, Inc. | 1.3% |
Wal-Mart Stores, Inc. | 1.3% |
Chubb Ltd. | 1.3% |
Lowe's Cos., Inc. | 1.2% |
Newfield Exploration Co. | 1.2% |
Intel Corp. | 1.2% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 7.2% |
Specialty Retail | 5.8% |
Food and Staples Retailing | 4.4% |
Technology Hardware, Storage and Peripherals | 4.4% |
IT Services | 4.2% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.6% |
Temporary Cash Investments | 0.5% |
Other Assets and Liabilities | (0.1)% |
3
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, 2015 to April 30, 2016.
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.
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.
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Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1)11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $975.20 | $6.19 | 1.26% |
Institutional Class | $1,000 | $976.80 | $5.21 | 1.06% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.60 | $6.32 | 1.26% |
Institutional Class | $1,000 | $1,019.59 | $5.32 | 1.06% |
(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 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 99.6% | ||||
Aerospace and Defense — 3.0% | ||||
Curtiss-Wright Corp. | 14,204 | $ | 1,087,742 | |
General Dynamics Corp. | 7,219 | 1,014,414 | ||
HEICO Corp. | 12,312 | 754,849 | ||
2,857,005 | ||||
Airlines — 1.0% | ||||
American Airlines Group, Inc. | 24,633 | 854,519 | ||
Southwest Airlines Co. | 2,740 | 122,231 | ||
976,750 | ||||
Auto Components — 0.6% | ||||
Delphi Automotive plc | 7,749 | 570,559 | ||
Automobiles — 0.8% | ||||
Ford Motor Co. | 58,138 | 788,351 | ||
Banks — 3.8% | ||||
Fifth Third Bancorp | 57,209 | 1,047,497 | ||
SVB Financial Group(1) | 68 | 7,091 | ||
U.S. Bancorp | 23,658 | 1,009,960 | ||
Wells Fargo & Co. | 14,611 | 730,258 | ||
Westamerica Bancorporation | 15,542 | 757,206 | ||
3,552,012 | ||||
Biotechnology — 2.9% | ||||
AbbVie, Inc. | 13,089 | 798,429 | ||
Amgen, Inc. | 6,690 | 1,059,027 | ||
Gilead Sciences, Inc. | 9,898 | 873,103 | ||
2,730,559 | ||||
Capital Markets — 3.6% | ||||
AllianceBernstein Holding LP | 41,715 | 979,885 | ||
E*Trade Financial Corp.(1) | 38,847 | 978,168 | ||
Janus Capital Group, Inc. | 66,457 | 970,272 | ||
Moelis & Co., Class A | 14,891 | 418,586 | ||
3,346,911 | ||||
Chemicals — 1.0% | ||||
International Flavors & Fragrances, Inc. | 7,548 | 901,760 | ||
Communications Equipment — 1.5% | ||||
Cisco Systems, Inc. | 35,668 | 980,513 | ||
Juniper Networks, Inc. | 17,410 | 407,394 | ||
1,387,907 | ||||
Construction Materials — 0.5% | ||||
Vulcan Materials Co. | 4,238 | 456,136 | ||
Consumer Finance — 1.0% | ||||
American Express Co. | 13,924 | 911,047 | ||
Diversified Financial Services — 0.6% | ||||
Berkshire Hathaway, Inc., Class B(1) | 3,566 | 518,782 | ||
Diversified Telecommunication Services — 2.0% | ||||
AT&T, Inc. | 25,944 | 1,007,146 |
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Shares | Value | |||
Verizon Communications, Inc. | 17,382 | $ | 885,439 | |
1,892,585 | ||||
Electric Utilities — 0.8% | ||||
Exelon Corp. | 22,712 | 796,964 | ||
Electrical Equipment — 2.2% | ||||
Acuity Brands, Inc. | 4,490 | 1,095,066 | ||
Rockwell Automation, Inc. | 8,519 | 966,651 | ||
2,061,717 | ||||
Electronic Equipment, Instruments and Components — 2.9% | ||||
Corning, Inc. | 55,236 | 1,031,256 | ||
Keysight Technologies, Inc.(1) | 35,493 | 925,657 | ||
Methode Electronics, Inc. | 24,601 | 731,388 | ||
2,688,301 | ||||
Food and Staples Retailing — 4.4% | ||||
Chefs' Warehouse, Inc. (The)(1) | 47,459 | 914,535 | ||
CVS Health Corp. | 10,813 | 1,086,706 | ||
PriceSmart, Inc. | 11,183 | 967,777 | ||
Wal-Mart Stores, Inc. | 17,786 | 1,189,350 | ||
4,158,368 | ||||
Food Products — 1.6% | ||||
General Mills, Inc. | 9,068 | 556,231 | ||
John B Sanfilippo & Son, Inc. | 16,529 | 914,550 | ||
1,470,781 | ||||
Gas Utilities — 0.7% | ||||
ONE Gas, Inc. | 11,477 | 671,060 | ||
Health Care Equipment and Supplies — 1.9% | ||||
IDEXX Laboratories, Inc.(1) | 9,260 | 781,081 | ||
Varian Medical Systems, Inc.(1) | 12,830 | 1,041,539 | ||
1,822,620 | ||||
Health Care Providers and Services — 3.5% | ||||
Anthem, Inc. | 7,836 | 1,103,074 | ||
Cardinal Health, Inc. | 12,477 | 978,945 | ||
HCA Holdings, Inc.(1) | 14,957 | 1,205,833 | ||
3,287,852 | ||||
Hotels, Restaurants and Leisure — 3.2% | ||||
Boyd Gaming Corp.(1) | 23,402 | 436,213 | ||
Buffalo Wild Wings, Inc.(1) | 6,675 | 892,181 | ||
Royal Caribbean Cruises Ltd. | 9,181 | 710,609 | ||
Sonic Corp. | 29,511 | 1,014,293 | ||
3,053,296 | ||||
Household Products — 0.5% | ||||
Procter & Gamble Co. (The) | 5,961 | 477,595 | ||
Independent Power and Renewable Electricity Producers — 1.4% | ||||
NRG Yield, Inc., Class A | 13,715 | 207,508 | ||
Ormat Technologies, Inc. | 24,701 | 1,072,023 | ||
1,279,531 | ||||
Industrial Conglomerates — 2.1% | ||||
3M Co. | 5,675 | 949,882 | ||
General Electric Co. | 33,334 | 1,025,020 | ||
1,974,902 |
7
Shares | Value | |||
Insurance — 2.8% | ||||
Chubb Ltd. | 10,019 | $ | 1,180,839 | |
HCI Group, Inc. | 13,737 | 411,561 | ||
Principal Financial Group, Inc. | 23,735 | 1,013,010 | ||
2,605,410 | ||||
Internet Software and Services — 2.1% | ||||
Alphabet, Inc., Class A(1) | 1,229 | 869,985 | ||
LogMeIn, Inc.(1) | 18,789 | 1,121,703 | ||
1,991,688 | ||||
IT Services — 4.2% | ||||
CoreLogic, Inc.(1) | 27,473 | 974,742 | ||
Fiserv, Inc.(1) | 1,486 | 145,212 | ||
International Business Machines Corp. | 6,723 | 981,155 | ||
Virtusa Corp.(1) | 26,075 | 926,705 | ||
Xerox Corp. | 95,172 | 913,651 | ||
3,941,465 | ||||
Life Sciences Tools and Services — 2.3% | ||||
Cambrex Corp.(1) | 11,003 | 530,785 | ||
PAREXEL International Corp.(1) | 14,930 | 912,223 | ||
Quintiles Transnational Holdings, Inc.(1) | 10,105 | 697,952 | ||
2,140,960 | ||||
Machinery — 1.0% | ||||
Proto Labs, Inc.(1) | 9,344 | 559,052 | ||
Xylem, Inc. | 8,071 | 337,206 | ||
896,258 | ||||
Media — 2.2% | ||||
Comcast Corp., Class A | 18,087 | 1,098,966 | ||
Walt Disney Co. (The) | 9,836 | 1,015,665 | ||
2,114,631 | ||||
Metals and Mining — 0.9% | ||||
Coeur d'Alene Mines Corp.(1) | 78,306 | 634,279 | ||
Haynes International, Inc. | 5,398 | 202,587 | ||
836,866 | ||||
Oil, Gas and Consumable Fuels — 7.2% | ||||
DHT Holdings, Inc. | 110,409 | 633,748 | ||
Dominion Midstream Partners LP(1) | 24,274 | 814,150 | ||
Exxon Mobil Corp. | 15,731 | 1,390,620 | ||
Newfield Exploration Co.(1) | 31,108 | 1,127,665 | ||
Occidental Petroleum Corp. | 13,220 | 1,013,313 | ||
Ship Finance International Ltd. | 58,825 | 892,375 | ||
Tesoro Corp. | 11,403 | 908,705 | ||
6,780,576 | ||||
Paper and Forest Products — 1.1% | ||||
Domtar Corp. | 26,191 | 1,012,020 | ||
Personal Products — 1.1% | ||||
Estee Lauder Cos., Inc. (The), Class A | 10,641 | 1,020,153 | ||
Pharmaceuticals — 2.1% | ||||
Pfizer, Inc. | 31,803 | 1,040,276 | ||
Sanofi ADR | 22,900 | 941,190 | ||
1,981,466 |
8
Shares | Value | |||
Professional Services — 1.6% | ||||
Equifax, Inc. | 8,194 | $ | 985,328 | |
Korn / Ferry International | 19,998 | 542,746 | ||
1,528,074 | ||||
Real Estate Investment Trusts (REITs) — 4.2% | ||||
American Tower Corp. | 10,009 | 1,049,744 | ||
CareTrust REIT, Inc. | 74,498 | 947,615 | ||
DuPont Fabros Technology, Inc. | 22,326 | 889,021 | ||
Equity Residential | 11,726 | 798,189 | ||
VEREIT, Inc. | 28,851 | 256,197 | ||
3,940,766 | ||||
Real Estate Management and Development — 1.2% | ||||
Jones Lang LaSalle, Inc. | 6,415 | 738,816 | ||
Marcus & Millichap, Inc.(1) | 17,162 | 430,423 | ||
1,169,239 | ||||
Semiconductors and Semiconductor Equipment — 2.1% | ||||
Intel Corp. | 37,131 | 1,124,327 | ||
STMicroelectronics NV | 140,307 | 861,485 | ||
1,985,812 | ||||
Software — 2.9% | ||||
Microsoft Corp. | 34,477 | 1,719,368 | ||
RealPage, Inc.(1) | 47,828 | 1,051,738 | ||
2,771,106 | ||||
Specialty Retail — 5.8% | ||||
AutoNation, Inc.(1) | 5,418 | 274,422 | ||
Caleres, Inc. | 30,131 | 759,603 | ||
Cato Corp. (The), Class A | 26,996 | 987,784 | ||
Home Depot, Inc. (The) | 9,287 | 1,243,436 | ||
Lowe's Cos., Inc. | 15,424 | 1,172,532 | ||
Tiffany & Co. | 13,706 | 977,923 | ||
5,415,700 | ||||
Technology Hardware, Storage and Peripherals — 4.4% | ||||
Apple, Inc. | 24,553 | 2,301,598 | ||
HP, Inc. | 76,603 | 939,919 | ||
NCR Corp.(1) | 29,306 | 852,512 | ||
4,094,029 | ||||
Textiles, Apparel and Luxury Goods — 0.3% | ||||
Vera Bradley, Inc.(1) | 17,010 | 298,355 | ||
Thrifts and Mortgage Finance — 1.0% | ||||
Northwest Bancshares, Inc. | 66,114 | 926,918 | ||
Tobacco — 1.6% | ||||
Altria Group, Inc. | 16,322 | 1,023,553 | ||
Philip Morris International, Inc. | 4,867 | 477,550 | ||
1,501,103 | ||||
TOTAL COMMON STOCKS (Cost $88,996,454) | 93,585,946 | |||
TEMPORARY CASH INVESTMENTS — 0.5% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $178,114), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $174,604) | 174,602 |
9
Shares | Value | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $301,350), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $291,002) | $ | 291,000 | ||
State Street Institutional Liquid Reserves Fund, Premier Class | 203 | 203 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $465,805) | 465,805 | |||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $89,462,259) | 94,051,751 | |||
OTHER ASSETS AND LIABILITIES — (0.1)% | (119,134) | |||
TOTAL NET ASSETS — 100.0% | $ | 93,932,617 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
EUR | 45,052 | USD | 51,527 | UBS AG | 6/30/16 | $ | 152 | |
EUR | 46,060 | USD | 52,778 | UBS AG | 6/30/16 | 57 | ||
USD | 902,254 | EUR | 805,552 | UBS AG | 6/30/16 | (21,787 | ) | |
USD | 636,440 | EUR | 557,643 | UBS AG | 6/30/16 | (3,228 | ) | |
USD | 40,947 | EUR | 35,840 | UBS AG | 6/30/16 | (165 | ) | |
USD | 39,035 | EUR | 34,590 | UBS AG | 6/30/16 | (643 | ) | |
USD | 53,518 | EUR | 47,109 | UBS AG | 6/30/16 | (521 | ) | |
$ | (26,135 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $89,462,259) | $ | 94,051,751 | |
Receivable for capital shares sold | 1,815 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 209 | ||
Dividends and interest receivable | 81,721 | ||
94,135,496 | |||
Liabilities | |||
Payable for capital shares redeemed | 78,911 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 26,344 | ||
Accrued management fees | 97,624 | ||
202,879 | |||
Net Assets | $ | 93,932,617 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 92,014,365 | |
Undistributed net investment income | 135,907 | ||
Accumulated net realized loss | (2,781,012 | ) | |
Net unrealized appreciation | 4,563,357 | ||
$ | 93,932,617 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $91,148,554 | 9,731,610 | $9.37 | |
Institutional Class, $0.01 Par Value | $2,784,063 | 290,745 | $9.58 |
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $4,301) | $ | 1,017,144 | |
Interest | 420 | ||
1,017,564 | |||
Expenses: | |||
Management fees | 586,282 | ||
Directors' fees and expenses | 1,759 | ||
Other expenses | 399 | ||
588,440 | |||
Net investment income (loss) | 429,124 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (2,603,870 | ) | |
Foreign currency transactions | (5,293 | ) | |
(2,609,163 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (560,144 | ) | |
Translation of assets and liabilities in foreign currencies | (33,175 | ) | |
(593,319 | ) | ||
Net realized and unrealized gain (loss) | (3,202,482 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (2,773,358 | ) |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 429,124 | $ | 537,715 | ||
Net realized gain (loss) | (2,609,163 | ) | 11,356,798 | |||
Change in net unrealized appreciation (depreciation) | (593,319 | ) | (6,136,452 | ) | ||
Net increase (decrease) in net assets resulting from operations | (2,773,358 | ) | 5,758,061 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (1,053,460 | ) | (488,270 | ) | ||
Institutional Class | (32,985 | ) | (18,491 | ) | ||
From net realized gains: | ||||||
Investor Class | (9,000,208 | ) | — | |||
Institutional Class | (238,821 | ) | — | |||
Decrease in net assets from distributions | (10,325,474 | ) | (506,761 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 5,223,965 | 2,953,683 | ||||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 1,594 | 7,491 | ||||
Net increase (decrease) in net assets | (7,873,273 | ) | 8,212,474 | |||
Net Assets | ||||||
Beginning of period | 101,805,890 | 93,593,416 | ||||
End of period | $ | 93,932,617 | $ | 101,805,890 | ||
Undistributed net investment income | $ | 135,907 | $ | 793,228 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2016 (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'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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
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.
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 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
14
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.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption Fees — The fund may impose a 2.00% redemption fee on shares held less than 60 days. 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.
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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 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, 2016 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. 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, 2016 were $63,648,707 and $67,530,558, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 495,985 | $ | 4,748,228 | 1,198,055 | $ | 12,988,123 | ||||
Issued in reinvestment of distributions | 1,052,444 | 9,808,781 | 47,838 | 475,961 | ||||||
Redeemed | (1,048,689 | ) | (9,793,280 | ) | (991,066 | ) | (10,528,396 | ) | ||
499,740 | 4,763,729 | 254,827 | 2,935,688 | |||||||
Institutional Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||
Sold | 19,287 | 189,804 | 4,741 | 50,579 | ||||||
Issued in reinvestment of distributions | 28,551 | 271,806 | 1,824 | 18,491 | ||||||
Redeemed | (139 | ) | (1,374 | ) | (4,914 | ) | (51,075 | ) | ||
47,699 | 460,236 | 1,651 | 17,995 | |||||||
Net increase (decrease) | 547,439 | $ | 5,223,965 | 256,478 | $ | 2,953,683 |
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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. There were no significant transfers between levels during the period.
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 | $ | 93,585,946 | — | — | ||||
Temporary Cash Investments | 203 | $ | 465,602 | — | ||||
$ | 93,586,149 | $ | 465,602 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 209 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 26,344 | — |
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $1,530,375.
The value of foreign currency risk derivative instruments as of April 30, 2016, is disclosed on the Statement of Assets and Liabilities as an asset of $209 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $26,344 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2016, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(5,293) in net realized gain (loss) on foreign currency transactions and $(33,175) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
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8. 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.
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, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 89,653,376 | |
Gross tax appreciation of investments | $ | 8,170,777 | |
Gross tax depreciation of investments | (3,772,402 | ) | |
Net tax appreciation (depreciation) of investments | $ | 4,398,375 |
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 | |||||||||||||||
2016(3) | $10.74 | 0.04 | (0.31) | (0.27) | (0.12) | (0.98) | (1.10) | $9.37 | (2.48)% | 1.26%(4) | 0.90%(4) | 67% | $91,149 | ||
2015 | $10.15 | 0.06 | 0.59 | 0.65 | (0.06) | — | — | $10.74 | 6.40% | 1.26% | 0.54% | 185% | $99,141 | ||
2014 | $9.08 | 0.06 | 1.11 | 1.17 | (0.10) | — | — | $10.15 | 12.96% | 1.25% | 0.59% | 184% | $91,093 | ||
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 | ||
Institutional Class | |||||||||||||||
2016(3) | $10.96 | 0.05 | (0.31) | (0.26) | (0.14) | (0.98) | (1.12) | $9.58 | (2.32)% | 1.06%(4) | 1.10%(4) | 67% | $2,784 | ||
2015 | $10.36 | 0.08 | 0.60 | 0.68 | (0.08) | — | — | $10.96 | 6.58% | 1.06% | 0.74% | 185% | $2,665 | ||
2014 | $9.27 | 0.09 | 1.11 | 1.20 | (0.11) | — | — | $10.36 | 13.13% | 1.05% | 0.79% | 184% | $2,501 | ||
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 |
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, 2016 (unaudited). |
(4) | Annualized. |
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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Notes |
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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89216 1606 |
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 28, 2016 |
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 28, 2016 |
By: | /s/ C. Jean Wade | |
Name: | C. Jean Wade | |
Title: | Vice President, Treasurer, and | |
Chief Financial Officer | ||
(principal financial officer) | ||
Date: | June 28, 2016 |