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: | 04-30-2017 |
ITEM 1. REPORTS TO STOCKHOLDERS.
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
Adaptive 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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Microsoft Corp. | 2.2% |
Apple, Inc. | 2.0% |
RealPage, Inc. | 1.8% |
Alphabet, Inc., Class A | 1.7% |
Corning, Inc. | 1.6% |
Blue Buffalo Pet Products, Inc. | 1.6% |
Monster Beverage Corp. | 1.5% |
Home Depot, Inc. (The) | 1.4% |
Wal-Mart Stores, Inc. | 1.4% |
T-Mobile US, Inc. | 1.4% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 7.0% |
Software | 4.3% |
Equity Real Estate Investment Trusts (REITs) | 4.3% |
Health Care Providers and Services | 4.0% |
Media | 3.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.6% |
Temporary Cash Investments | 0.6% |
Other Assets and Liabilities | (0.2)% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,147.40 | $6.12 | 1.15% |
Investor Class (before waiver) | $1,000 | $1,147.40(2) | $6.66 | 1.25% |
I Class (after waiver) | $1,000 | $1,148.20 | $5.06 | 0.95% |
I Class (before waiver) | $1,000 | $1,148.20(2) | $5.59 | 1.05% |
A Class (after waiver) | $1,000 | $1,099.30(3) | $6.08(4) | 1.40% |
A Class (before waiver) | $1,000 | $1,099.30(2)(3) | $6.51(4) | 1.50% |
R Class (after waiver) | $1,000 | $1,098.10(3) | $7.16(4) | 1.65% |
R Class (before waiver) | $1,000 | $1,098.10(2)(3) | $7.59(4) | 1.75% |
R6 Class (after waiver) | $1,000 | $1,101.40(3) | $3.48(4) | 0.80% |
R6 Class (before waiver) | $1,000 | $1,101.40(2)(3) | $3.91(4) | 0.90% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.09 | $5.76 | 1.15% |
Investor Class (before waiver) | $1,000 | $1,018.60 | $6.26 | 1.25% |
I Class (after waiver) | $1,000 | $1,020.08 | $4.76 | 0.95% |
I Class (before waiver) | $1,000 | $1,019.59 | $5.26 | 1.05% |
A Class (after waiver) | $1,000 | $1,017.85(5) | $7.00(5) | 1.40% |
A Class (before waiver) | $1,000 | $1,017.36(5) | $7.50(5) | 1.50% |
R Class (after waiver) | $1,000 | $1,016.61(5) | $8.25(5) | 1.65% |
R Class (before waiver) | $1,000 | $1,016.12(5) | $8.75(5) | 1.75% |
R6 Class (after waiver) | $1,000 | $1,020.83(5) | $4.01(5) | 0.80% |
R6 Class (before waiver) | $1,000 | $1,020.33(5) | $4.51(5) | 0.90% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value assumes the return earned after waiver and would have been lower if a portion of the fees had not been waived. |
(3) | Ending account value based on actual return from December 1, 2016 (commencement of sale) through April 30, 2017. |
(4) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 151, the number of days in the period from December 1, 2016 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(5) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.6% | |||||
Aerospace and Defense — 2.2% | |||||
Curtiss-Wright Corp. | 14,033 | $ | 1,311,524 | ||
General Dynamics Corp. | 4,792 | 928,642 | |||
2,240,166 | |||||
Air Freight and Logistics — 0.6% | |||||
Atlas Air Worldwide Holdings, Inc.(1) | 10,624 | 616,192 | |||
Airlines — 0.8% | |||||
Southwest Airlines Co. | 15,108 | 849,372 | |||
Automobiles — 0.5% | |||||
Ford Motor Co. | 40,325 | 462,528 | |||
Banks — 2.0% | |||||
U.S. Bancorp | 23,373 | 1,198,567 | |||
Wells Fargo & Co. | 6,490 | 349,422 | |||
Westamerica Bancorporation | 7,629 | 419,748 | |||
1,967,737 | |||||
Beverages — 2.0% | |||||
Molson Coors Brewing Co., Class B | 5,170 | 495,751 | |||
Monster Beverage Corp.(1) | 33,570 | 1,523,407 | |||
2,019,158 | |||||
Biotechnology — 1.8% | |||||
AbbVie, Inc. | 10,626 | 700,678 | |||
Amgen, Inc. | 6,609 | 1,079,382 | |||
1,780,060 | |||||
Building Products — 0.3% | |||||
Simpson Manufacturing Co., Inc. | 7,024 | 292,971 | |||
Capital Markets — 2.6% | |||||
E*TRADE Financial Corp.(1) | 13,967 | 482,560 | |||
Janus Capital Group, Inc. | 79,375 | 1,084,263 | |||
Morgan Stanley | 17,397 | 754,508 | |||
Virtus Investment Partners, Inc. | 2,581 | 274,618 | |||
2,595,949 | |||||
Chemicals — 0.9% | |||||
Tronox Ltd., Class A | 57,437 | 948,285 | |||
Communications Equipment — 1.5% | |||||
Cisco Systems, Inc. | 35,238 | 1,200,558 | |||
Sierra Wireless, Inc.(1) | 10,066 | 254,670 | |||
1,455,228 | |||||
Consumer Finance — 2.3% | |||||
American Express Co. | 15,468 | 1,225,839 | |||
Green Dot Corp., Class A(1) | 31,944 | 1,095,360 | |||
2,321,199 | |||||
Diversified Financial Services — 1.0% | |||||
Berkshire Hathaway, Inc., Class B(1) | 5,868 | 969,452 | |||
Diversified Telecommunication Services — 1.2% | |||||
AT&T, Inc. | 20,064 | 795,136 |
6
Shares | Value | ||||
Nippon Telegraph & Telephone Corp. ADR | 9,320 | $ | 399,828 | ||
1,194,964 | |||||
Electric Utilities — 2.1% | |||||
Exelon Corp. | 13,033 | 451,333 | |||
Great Plains Energy, Inc. | 43,535 | 1,288,200 | |||
Westar Energy, Inc. | 7,199 | 374,564 | |||
2,114,097 | |||||
Electrical Equipment — 1.3% | |||||
Rockwell Automation, Inc. | 8,348 | 1,313,558 | |||
Electronic Equipment, Instruments and Components — 2.6% | |||||
Corning, Inc. | 55,405 | 1,598,434 | |||
Knowles Corp.(1) | 58,611 | 1,039,173 | |||
2,637,607 | |||||
Equity Real Estate Investment Trusts (REITs) — 4.3% | |||||
American Tower Corp. | 9,528 | 1,199,956 | |||
Ashford Hospitality Prime, Inc. | 35,096 | 371,667 | |||
CareTrust REIT, Inc. | 58,611 | 997,559 | |||
DuPont Fabros Technology, Inc. | 12,755 | 657,520 | |||
InfraREIT, Inc.(1) | 25,582 | 488,616 | |||
Macerich Co. (The) | 3,857 | 240,793 | |||
Uniti Group, Inc.(1) | 11,592 | 318,316 | |||
4,274,427 | |||||
Food and Staples Retailing — 2.9% | |||||
CVS Health Corp. | 10,682 | 880,624 | |||
PriceSmart, Inc. | 7,168 | 623,258 | |||
Wal-Mart Stores, Inc. | 18,572 | 1,396,243 | |||
2,900,125 | |||||
Food Products — 2.6% | |||||
Blue Buffalo Pet Products, Inc.(1) | 63,627 | 1,568,406 | |||
General Mills, Inc. | 5,348 | 307,563 | |||
Post Holdings, Inc.(1) | 8,988 | 756,700 | |||
2,632,669 | |||||
Gas Utilities — 0.6% | |||||
ONE Gas, Inc. | 8,207 | 564,888 | |||
Health Care Equipment and Supplies — 1.1% | |||||
Varian Medical Systems, Inc.(1) | 12,675 | 1,150,130 | |||
Health Care Providers and Services — 4.0% | |||||
Anthem, Inc. | 7,741 | 1,377,046 | |||
Cardinal Health, Inc. | 12,206 | 886,034 | |||
Cross Country Healthcare, Inc.(1) | 74,804 | 1,045,012 | |||
HCA Holdings, Inc.(1) | 7,968 | 670,985 | |||
3,979,077 | |||||
Hotels, Restaurants and Leisure — 1.2% | |||||
Buffalo Wild Wings, Inc.(1) | 5,039 | 793,894 | |||
Wynn Resorts Ltd. | 2,981 | 366,693 | |||
1,160,587 | |||||
Household Products — 0.4% | |||||
Procter & Gamble Co. (The) | 4,390 | 383,379 | |||
Independent Power and Renewable Electricity Producers — 1.1% | |||||
Ormat Technologies, Inc. | 18,765 | 1,108,261 |
7
Shares | Value | ||||
Industrial Conglomerates — 2.1% | |||||
3M Co. | 5,607 | $ | 1,098,019 | ||
General Electric Co. | 32,932 | 954,698 | |||
2,052,717 | |||||
Insurance — 2.3% | |||||
Aon plc | 8,079 | 968,187 | |||
Chubb Ltd. | 9,467 | 1,299,346 | |||
2,267,533 | |||||
Internet and Direct Marketing Retail — 2.9% | |||||
Amazon.com, Inc.(1) | 742 | 686,343 | |||
Netflix, Inc.(1) | 6,140 | 934,508 | |||
Nutrisystem, Inc. | 24,112 | 1,288,786 | |||
2,909,637 | |||||
Internet Software and Services — 2.7% | |||||
Alphabet, Inc., Class A(1) | 1,836 | 1,697,419 | |||
Momo, Inc. ADR(1) | 19,849 | 753,865 | |||
NIC, Inc. | 13,620 | 290,787 | |||
2,742,071 | |||||
IT Services — 3.2% | |||||
Conduent, Inc.(1) | 20,202 | 329,495 | |||
CoreLogic, Inc.(1) | 21,946 | 937,972 | |||
Euronet Worldwide, Inc.(1) | 4,101 | 338,824 | |||
EVERTEC, Inc. | 38,260 | 606,421 | |||
Square, Inc.(1) | 31,845 | 580,853 | |||
Visa, Inc., Class A | 3,962 | 361,414 | |||
3,154,979 | |||||
Leisure Products — 0.6% | |||||
Callaway Golf Co. | 46,965 | 556,535 | |||
Life Sciences Tools and Services — 1.5% | |||||
Cambrex Corp.(1) | 7,897 | 468,687 | |||
Quintiles IMS Holdings, Inc.(1) | 11,719 | 987,677 | |||
1,456,364 | |||||
Machinery — 1.7% | |||||
IDEX Corp. | 10,423 | 1,091,913 | |||
Xylem Inc | 10,914 | 561,089 | |||
1,653,002 | |||||
Media — 3.9% | |||||
Comcast Corp., Class A | 30,797 | 1,206,934 | |||
Liberty Media Corp-Liberty Formula One, Class A(1) | 21,942 | 744,053 | |||
Omnicom Group, Inc. | 10,013 | 822,268 | |||
Walt Disney Co. (The) | 9,718 | 1,123,401 | |||
3,896,656 | |||||
Metals and Mining — 0.9% | |||||
Compass Minerals International, Inc. | 7,021 | 463,386 | |||
United States Steel Corp. | 17,794 | 397,162 | |||
860,548 | |||||
Mortgage Real Estate Investment Trusts (REITs) — 0.7% | |||||
AGNC Investment Corp. | 35,604 | 750,176 | |||
Oil, Gas and Consumable Fuels — 7.0% | |||||
American Midstream Partners LP | 85,003 | 1,262,295 | |||
Clean Energy Fuels Corp.(1) | 208,206 | 508,023 |
8
Shares | Value | ||||
ConocoPhillips | 7,783 | $ | 372,884 | ||
EP Energy Corp., Class A(1) | 206,097 | 931,558 | |||
Exxon Mobil Corp. | 11,053 | 902,477 | |||
Laredo Petroleum, Inc.(1) | 56,181 | 722,488 | |||
Marathon Oil Corp. | 23,127 | 343,898 | |||
Marathon Petroleum Corp. | 6,496 | 330,906 | |||
Occidental Petroleum Corp. | 9,979 | 614,108 | |||
Williams Cos., Inc. (The) | 33,904 | 1,038,479 | |||
7,027,116 | |||||
Paper and Forest Products — 0.5% | |||||
Domtar Corp. | 11,668 | 462,636 | |||
Personal Products — 0.5% | |||||
Estee Lauder Cos., Inc. (The), Class A | 5,825 | 507,591 | |||
Pharmaceuticals — 3.6% | |||||
Endo International plc(1) | 50,001 | 568,511 | |||
Merck & Co., Inc. | 11,378 | 709,191 | |||
Pfizer, Inc. | 32,127 | 1,089,748 | |||
Phibro Animal Health Corp., Class A | 18,700 | 556,325 | |||
Sanofi ADR | 13,265 | 627,434 | |||
3,551,209 | |||||
Professional Services — 1.1% | |||||
Equifax, Inc. | 8,095 | 1,095,334 | |||
Road and Rail — 0.6% | |||||
Saia, Inc.(1) | 11,689 | 562,825 | |||
Semiconductors and Semiconductor Equipment — 3.8% | |||||
Applied Materials, Inc. | 17,030 | 691,588 | |||
Intel Corp. | 36,683 | 1,326,091 | |||
Kulicke & Soffa Industries, Inc.(1) | 22,079 | 492,803 | |||
NVIDIA Corp. | 3,512 | 366,302 | |||
STMicroelectronics NV | 37,121 | 593,565 | |||
Texas Instruments, Inc. | 3,768 | 298,350 | |||
3,768,699 | |||||
Software — 4.3% | |||||
Intuit, Inc. | 3,241 | 405,805 | |||
Microsoft Corp. | 31,715 | 2,171,209 | |||
RealPage, Inc.(1) | 47,519 | 1,760,579 | |||
4,337,593 | |||||
Specialty Retail — 3.1% | |||||
Home Depot, Inc. (The) | 9,175 | 1,432,218 | |||
Lowe's Cos., Inc. | 15,238 | 1,293,401 | |||
Ulta Salon, Cosmetics & Fragrance, Inc.(1) | 1,150 | 323,656 | |||
3,049,275 | |||||
Technology Hardware, Storage and Peripherals — 2.9% | |||||
Apple, Inc. | 13,582 | 1,951,055 | |||
Hewlett Packard Enterprise Co. | 34,848 | 649,218 | |||
Seagate Technology plc | 7,808 | 328,951 | |||
2,929,224 | |||||
Thrifts and Mortgage Finance — 3.3% | |||||
Essent Group Ltd.(1) | 35,974 | 1,331,398 | |||
Northwest Bancshares, Inc. | 66,713 | 1,076,748 |
9
Shares | Value | ||||
Radian Group, Inc. | 51,358 | $ | 866,923 | ||
3,275,069 | |||||
Tobacco — 1.1% | |||||
Altria Group, Inc. | 15,823 | 1,135,775 | |||
Wireless Telecommunication Services — 1.4% | |||||
T-Mobile US, Inc.(1) | 20,550 | 1,382,399 | |||
TOTAL COMMON STOCKS (Cost $83,444,254) | 99,317,029 | ||||
TEMPORARY CASH INVESTMENTS — 0.6% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $320,771), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $314,571) | 314,553 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $321,413), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $314,006) | 314,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 979 | 979 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $629,532) | 629,532 | ||||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $84,073,786) | 99,946,561 | ||||
OTHER ASSETS AND LIABILITIES — (0.2)% | (202,512 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 99,744,049 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 149,154 | USD | 158,697 | UBS AG | 6/30/17 | $ | 4,258 | |||
EUR | 257,316 | USD | 276,791 | UBS AG | 6/30/17 | 4,334 | ||||
EUR | 28,004 | USD | 30,105 | UBS AG | 6/30/17 | 490 | ||||
USD | 1,434,080 | EUR | 1,316,080 | UBS AG | 6/30/17 | (3,775 | ) | |||
USD | 36,889 | EUR | 34,445 | UBS AG | 6/30/17 | (744 | ) | |||
USD | 28,886 | EUR | 26,489 | UBS AG | 6/30/17 | (54 | ) | |||
JPY | 1,278,336 | USD | 11,533 | Credit Suisse AG | 6/30/17 | (38 | ) | |||
JPY | 1,240,314 | USD | 11,279 | Credit Suisse AG | 6/30/17 | (126 | ) | |||
JPY | 990,021 | USD | 9,093 | Credit Suisse AG | 6/30/17 | (191 | ) | |||
USD | 365,092 | JPY | 40,119,429 | Credit Suisse AG | 6/30/17 | 4,346 | ||||
USD | 9,353 | JPY | 1,037,683 | Credit Suisse AG | 6/30/17 | 22 | ||||
$ | 8,522 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
EUR | - | Euro |
JPY | - | Japanese Yen |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $84,073,786) | $ | 99,946,561 | |
Receivable for capital shares sold | 9,235 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 13,450 | ||
Dividends and interest receivable | 66,149 | ||
100,035,395 | |||
Liabilities | |||
Payable for investments purchased | 183,176 | ||
Payable for capital shares redeemed | 10,137 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 4,928 | ||
Accrued management fees | 93,083 | ||
Distribution and service fees payable | 22 | ||
291,346 | |||
Net Assets | $ | 99,744,049 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 81,013,852 | |
Undistributed net investment income | 70,372 | ||
Undistributed net realized gain | 2,778,528 | ||
Net unrealized appreciation | 15,881,297 | ||
$ | 99,744,049 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $96,392,596 | 8,636,495 | $11.16 | |
I Class, $0.01 Par Value | $2,996,809 | 262,562 | $11.41 | |
A Class, $0.01 Par Value | $27,482 | 2,443 | $11.25* | |
R Class, $0.01 Par Value | $40,405 | 3,595 | $11.24 | |
R6 Class, $0.01 Par Value | $286,757 | 24,861 | $11.53 |
*Maximum offering price $11.94 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,324) | $ | 848,069 | |
Interest | 683 | ||
848,752 | |||
Expenses: | |||
Management fees | 596,838 | ||
Distribution and service fees: | |||
A Class | 27 | ||
R Class | 66 | ||
Directors' fees and expenses | 1,369 | ||
Other expenses | 187 | ||
598,487 | |||
Fees waived(1) | (47,994 | ) | |
550,493 | |||
Net investment income (loss) | 298,259 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 4,148,094 | ||
Foreign currency transactions | 37,431 | ||
4,185,525 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 8,722,687 | ||
Translation of assets and liabilities in foreign currencies | (27,713 | ) | |
8,694,974 | |||
Net realized and unrealized gain (loss) | 12,880,499 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 13,178,758 |
(1) | Amount consists of $46,445, $1,497, $11, $13 and $28 for the Investor Class, I Class, A Class, R Class and R6 Class, respectively. |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 298,259 | $ | 993,300 | ||
Net realized gain (loss) | 4,185,525 | (1,249,801 | ) | |||
Change in net unrealized appreciation (depreciation) | 8,694,974 | 2,029,647 | ||||
Net increase (decrease) in net assets resulting from operations | 13,178,758 | 1,773,146 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (897,365 | ) | (1,053,460 | ) | ||
I Class | (33,360 | ) | (32,985 | ) | ||
A Class | (15 | ) | — | |||
R Class | (10 | ) | — | |||
R6 Class | (28 | ) | — | |||
From net realized gains: | ||||||
Investor Class | — | (9,000,208 | ) | |||
I Class | — | (238,821 | ) | |||
Decrease in net assets from distributions | (930,778 | ) | (10,325,474 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (3,121,514 | ) | (2,638,765 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 685 | 2,101 | ||||
Net increase (decrease) in net assets | 9,127,151 | (11,188,992 | ) | |||
Net Assets | ||||||
Beginning of period | 90,616,898 | 101,805,890 | ||||
End of period | $ | 99,744,049 | $ | 90,616,898 | ||
Undistributed net investment income | $ | 70,372 | $ | 702,891 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2017 (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. Adaptive 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.
The fund offers the Investor Class, I Class (formerly Institutional Class), A Class, R Class and R6 Class. The A Class may incur an initial sales charge and may be subject to a contingent deferred sales charge. Sale of the A Class, R Class and R6 Class commenced on December 1, 2016.
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 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
14
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 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.
15
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets). During the period ended April 30, 2017, the investment advisor agreed to waive 0.10% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2018 and cannot terminate it prior to such date without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended April 30, 2017 are as follows:
Effective Annual Management Fee | |||
Management Fee Schedule Range | Before Waiver | After Waiver | |
Investor Class | 1.000% to 1.250% | 1.25% | 1.15% |
I Class | 0.800% to 1.050% | 1.05% | 0.95% |
A Class | 1.000% to 1.250% | 1.25% | 1.15% |
R Class | 1.000% to 1.250% | 1.25% | 1.15% |
R6 Class | 0.650% to 0.900% | 0.90% | 0.80% |
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 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 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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $577,772 and $424,131, respectively. The effect of interfund transactions on the Statement of Operations was $79,381 in net realized gain (loss) on investment transactions.
16
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $39,064,216 and $42,459,668, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 140,000,000 | 200,000,000 | ||||||||
Sold | 278,153 | $ | 2,962,071 | 611,237 | $ | 5,868,811 | ||||
Issued in reinvestment of distributions | 82,377 | 870,726 | 1,052,445 | 9,808,781 | ||||||
Redeemed | (677,192 | ) | (7,188,455 | ) | (1,942,395 | ) | (18,588,341 | ) | ||
(316,662 | ) | (3,355,658 | ) | (278,713 | ) | (2,910,749 | ) | |||
I Class/Shares Authorized | 70,000,000 | 90,000,000 | ||||||||
Sold | 14,720 | 158,429 | 19,452 | 191,524 | ||||||
Issued in reinvestment of distributions | 3,089 | 33,360 | 28,551 | 271,806 | ||||||
Redeemed | (26,931 | ) | (299,904 | ) | (19,365 | ) | (191,346 | ) | ||
(9,122 | ) | (108,115 | ) | 28,638 | 271,984 | |||||
A Class/Shares Authorized | 40,000,000 | N/A | ||||||||
Sold | 2,442 | 25,000 | ||||||||
Issued in reinvestment of distributions | 1 | 15 | ||||||||
2,443 | 25,015 | |||||||||
R Class/Shares Authorized | 40,000,000 | N/A | ||||||||
Sold | 3,594 | 37,564 | ||||||||
Issued in reinvestment of distributions | 1 | 10 | ||||||||
3,595 | 37,574 | |||||||||
R6 Class/Shares Authorized | 40,000,000 | N/A | ||||||||
Sold | 24,858 | 279,642 | ||||||||
Issued in reinvestment of distributions | 3 | 28 | ||||||||
24,861 | 279,670 | |||||||||
Net increase (decrease) | (294,885 | ) | $ | (3,121,514 | ) | (250,075 | ) | $ | (2,638,765 | ) |
(1) | December 1, 2016 (commencement of sale) through April 30, 2017 for the A Class, R Class and R6 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
17
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 99,317,029 | — | — | ||||
Temporary Cash Investments | 979 | $ | 628,553 | — | ||||
$ | 99,318,008 | $ | 628,553 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 13,450 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 4,928 | — |
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 $2,205,260.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $13,450 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $4,928 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $37,431 in net realized gain (loss) on foreign currency transactions and $(27,713) 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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 84,144,063 | |
Gross tax appreciation of investments | $ | 17,751,125 | |
Gross tax depreciation of investments | (1,948,627 | ) | |
Net tax appreciation (depreciation) of investments | $ | 15,802,498 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
18
As of October 31, 2016, the fund had accumulated short-term capital losses of $(1,356,809), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
9. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | 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 | |||||||||||||||||
2017(3) | $9.82 | 0.03 | 1.41 | 1.44 | (0.10) | — | (0.10) | $11.16 | 14.74% | 1.15%(4) | 1.25%(4) | 0.62%(4) | 0.52%(4) | 41% | $96,393 | ||
2016 | $10.74 | 0.10 | 0.08 | 0.18 | (0.12) | (0.98) | (1.10) | $9.82 | 2.20% | 1.23% | 1.25% | 1.04% | 1.02% | 116% | $87,888 | ||
2015 | $10.15 | 0.06 | 0.59 | 0.65 | (0.06) | — | (0.06) | $10.74 | 6.40% | 1.26% | 1.26% | 0.54% | 0.54% | 185% | $99,141 | ||
2014 | $9.08 | 0.06 | 1.11 | 1.17 | (0.10) | — | (0.10) | $10.15 | 12.96% | 1.25% | 1.25% | 0.59% | 0.59% | 184% | $91,093 | ||
2013 | $6.90 | 0.06 | 2.25 | 2.31 | (0.13) | — | (0.13) | $9.08 | 34.11% | 1.25% | 1.25% | 0.80% | 0.80% | 158% | $88,256 | ||
2012 | $6.25 | 0.09 | 0.65 | 0.74 | (0.09) | — | (0.09) | $6.90 | 12.03% | 1.26% | 1.26% | 1.35% | 1.35% | 257% | $72,311 | ||
I Class(5) | |||||||||||||||||
2017(3) | $10.05 | 0.04 | 1.44 | 1.48 | (0.12) | — | (0.12) | $11.41 | 14.82% | 0.95%(4) | 1.05%(4) | 0.82%(4) | 0.72%(4) | 41% | $2,997 | ||
2016 | $10.96 | 0.12 | 0.09 | 0.21 | (0.14) | (0.98) | (1.12) | $10.05 | 2.47% | 1.03% | 1.05% | 1.24% | 1.22% | 116% | $2,729 | ||
2015 | $10.36 | 0.08 | 0.60 | 0.68 | (0.08) | — | (0.08) | $10.96 | 6.58% | 1.06% | 1.06% | 0.74% | 0.74% | 185% | $2,665 | ||
2014 | $9.27 | 0.09 | 1.11 | 1.20 | (0.11) | — | (0.11) | $10.36 | 13.13% | 1.05% | 1.05% | 0.79% | 0.79% | 184% | $2,501 | ||
2013 | $7.03 | 0.07 | 2.31 | 2.38 | (0.14) | — | (0.14) | $9.27 | 34.41% | 1.05% | 1.05% | 1.00% | 1.00% | 158% | $317 | ||
2012 | $6.37 | 0.10 | 0.66 | 0.76 | (0.10) | — | (0.10) | $7.03 | 12.18% | 1.06% | 1.06% | 1.55% | 1.55% | 257% | $158 | ||
A Class | |||||||||||||||||
2017(6) | $10.24 | 0.01 | 1.01 | 1.02 | (0.01) | — | (0.01) | $11.25 | 9.93% | 1.40%(4) | 1.50%(4) | 0.18%(4) | 0.08%(4) | 41%(7) | $27 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||||
2017(6) | $10.24 | —(8) | 1.00 | 1.00 | —(8) | — | —(8) | $11.24 | 9.81% | 1.65%(4) | 1.75%(4) | (0.08)%(4) | (0.18)%(4) | 41%(7) | $40 | ||
R6 Class | |||||||||||||||||
2017(6) | $10.48 | 0.01 | 1.05 | 1.06 | (0.01) | — | (0.01) | $11.53 | 10.14% | 0.80%(4) | 0.90%(4) | 0.31%(4) | 0.21%(4) | 41%(7) | $287 |
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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | December 1, 2016 (commencement of sale) through April 30, 2017 (unaudited). |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(8) | 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.
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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92364 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc.* | 7.2% |
Facebook, Inc., Class A | 3.8% |
Amazon.com, Inc. | 3.7% |
Apple, Inc. | 3.6% |
Microsoft Corp. | 3.3% |
Mastercard, Inc., Class A | 2.4% |
Lowe's Cos., Inc. | 2.3% |
Starbucks Corp. | 2.2% |
Newell Brands, Inc. | 2.2% |
FedEx Corp. | 2.2% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Internet Software and Services | 11.6% |
Software | 7.1% |
IT Services | 6.2% |
Specialty Retail | 5.5% |
Health Care Equipment and Supplies | 4.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.5% |
Temporary Cash Investments | 0.5% |
Other Assets and Liabilities | —** |
**Category is less than 0.05% of total net assets.
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, 2016 to April 30, 2017.
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 I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,141.30 | $5.31 | 1.00% |
I Class | $1,000 | $1,142.30 | $4.25 | 0.80% |
A Class | $1,000 | $1,139.70 | $6.63 | 1.25% |
C Class | $1,000 | $1,135.60 | $10.59 | 2.00% |
R Class | $1,000 | $1,138.00 | $7.95 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
I Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
A Class | $1,000 | $1,018.60 | $6.26 | 1.25% |
C Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
R Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.5% | |||||
Aerospace and Defense — 0.9% | |||||
Cubic Corp. | 62,450 | $ | 3,241,155 | ||
L3 Technologies, Inc. | 35,641 | 6,122,055 | |||
9,363,210 | |||||
Air Freight and Logistics — 2.2% | |||||
FedEx Corp. | 124,295 | 23,578,761 | |||
Airlines — 1.2% | |||||
American Airlines Group, Inc. | 183,816 | 7,834,238 | |||
Spirit Airlines, Inc.(1) | 90,937 | 5,207,962 | |||
13,042,200 | |||||
Automobiles — 0.6% | |||||
Tesla, Inc.(1) | 19,926 | 6,258,159 | |||
Banks — 2.1% | |||||
BankUnited, Inc. | 146,267 | 5,161,762 | |||
SVB Financial Group(1) | 44,724 | 7,868,741 | |||
Zions Bancorp | 238,190 | 9,534,746 | |||
22,565,249 | |||||
Beverages — 3.4% | |||||
Constellation Brands, Inc., Class A | 63,774 | 11,003,566 | |||
Molson Coors Brewing Co., Class B | 110,773 | 10,622,023 | |||
Monster Beverage Corp.(1) | 330,329 | 14,990,330 | |||
36,615,919 | |||||
Biotechnology — 4.5% | |||||
Alexion Pharmaceuticals, Inc.(1) | 105,228 | 13,446,034 | |||
Celgene Corp.(1) | 71,186 | 8,830,623 | |||
Incyte Corp.(1) | 50,873 | 6,322,496 | |||
Shire plc | 218,940 | 12,865,613 | |||
Shire plc ADR | 42,193 | 7,466,473 | |||
48,931,239 | |||||
Capital Markets — 2.9% | |||||
Affiliated Managers Group, Inc. | 23,870 | 3,952,633 | |||
CBOE Holdings, Inc. | 45,795 | 3,773,966 | |||
Charles Schwab Corp. (The) | 290,461 | 11,284,410 | |||
S&P Global, Inc. | 47,146 | 6,326,522 | |||
SEI Investments Co. | 125,618 | 6,370,089 | |||
31,707,620 | |||||
Chemicals — 1.1% | |||||
Axalta Coating Systems Ltd.(1) | 114,801 | 3,601,307 | |||
Ingevity Corp.(1) | 55,147 | 3,486,945 | |||
Scotts Miracle-Gro Co. (The), Class A | 55,158 | 5,328,263 | |||
12,416,515 | |||||
Commercial Services and Supplies — 0.4% | |||||
Brink's Co. (The) | 63,509 | 3,899,453 | |||
Communications Equipment — 0.2% | |||||
Palo Alto Networks, Inc.(1) | 24,983 | 2,708,407 |
6
Shares | Value | ||||
Construction and Engineering — 0.5% | |||||
Jacobs Engineering Group, Inc. | 97,008 | $ | 5,327,679 | ||
Construction Materials — 1.1% | |||||
Vulcan Materials Co. | 103,438 | 12,503,585 | |||
Consumer Finance — 0.5% | |||||
Discover Financial Services | 90,433 | 5,660,201 | |||
Containers and Packaging — 1.0% | |||||
Ball Corp. | 139,752 | 10,745,531 | |||
Electrical Equipment — 0.7% | |||||
AMETEK, Inc. | 137,082 | 7,841,090 | |||
Electronic Equipment, Instruments and Components — 0.9% | |||||
Dolby Laboratories, Inc., Class A | 183,500 | 9,675,955 | |||
Equity Real Estate Investment Trusts (REITs) — 1.8% | |||||
Crown Castle International Corp. | 101,100 | 9,564,060 | |||
SBA Communications Corp.(1) | 76,513 | 9,678,129 | |||
19,242,189 | |||||
Food and Staples Retailing — 1.3% | |||||
Costco Wholesale Corp. | 78,144 | 13,872,123 | |||
Food Products — 4.0% | |||||
Blue Buffalo Pet Products, Inc.(1) | 235,372 | 5,801,920 | |||
Dean Foods Co. | 184,059 | 3,633,325 | |||
Mondelez International, Inc., Class A | 341,488 | 15,377,205 | |||
TreeHouse Foods, Inc.(1) | 214,036 | 18,749,553 | |||
43,562,003 | |||||
Health Care Equipment and Supplies — 4.8% | |||||
Baxter International, Inc. | 300,054 | 16,707,007 | |||
Hill-Rom Holdings, Inc. | 50,915 | 3,851,211 | |||
Nevro Corp.(1) | 57,319 | 5,400,596 | |||
NuVasive, Inc.(1) | 82,418 | 5,976,129 | |||
Teleflex, Inc. | 80,281 | 16,609,336 | |||
West Pharmaceutical Services, Inc. | 40,668 | 3,742,676 | |||
52,286,955 | |||||
Health Care Providers and Services — 3.3% | |||||
Amedisys, Inc.(1) | 166,798 | 9,040,452 | |||
Centene Corp.(1) | 63,443 | 4,720,159 | |||
Humana, Inc. | 64,511 | 14,320,152 | |||
Universal Health Services, Inc., Class B | 60,133 | 7,261,661 | |||
35,342,424 | |||||
Hotels, Restaurants and Leisure — 4.7% | |||||
Chipotle Mexican Grill, Inc.(1) | 16,542 | 7,848,683 | |||
Las Vegas Sands Corp. | 121,190 | 7,148,998 | |||
MGM Resorts International | 372,522 | 11,440,150 | |||
Starbucks Corp. | 402,684 | 24,185,201 | |||
50,623,032 | |||||
Household Durables — 2.2% | |||||
Newell Brands, Inc. | 497,731 | 23,761,678 | |||
Internet and Direct Marketing Retail — 4.8% | |||||
Amazon.com, Inc.(1) | 42,888 | 39,670,971 | |||
Duluth Holdings, Inc., Class B(1) | 120,332 | 2,665,354 | |||
Expedia, Inc. | 35,246 | 4,713,095 |
7
Shares | Value | ||||
Priceline Group, Inc. (The)(1) | 2,509 | $ | 4,633,671 | ||
51,683,091 | |||||
Internet Software and Services — 11.6% | |||||
Alibaba Group Holding Ltd. ADR(1) | 53,026 | 6,124,503 | |||
Alphabet, Inc., Class A(1) | 76,573 | 70,793,270 | |||
Alphabet, Inc., Class C(1) | 7,702 | 6,977,704 | |||
eBay, Inc.(1) | 33,880 | 1,131,931 | |||
Facebook, Inc., Class A(1) | 271,962 | 40,862,290 | |||
125,889,698 | |||||
IT Services — 6.2% | |||||
Alliance Data Systems Corp. | 67,012 | 16,728,206 | |||
Booz Allen Hamilton Holding Corp. | 301,344 | 10,827,290 | |||
DXC Technology Co.(1) | 40,415 | 3,044,866 | |||
Mastercard, Inc., Class A | 219,847 | 25,572,603 | |||
Visa, Inc., Class A | 123,856 | 11,298,144 | |||
67,471,109 | |||||
Life Sciences Tools and Services — 0.5% | |||||
Bio-Techne Corp. | 56,332 | 6,032,031 | |||
Machinery — 2.8% | |||||
Ingersoll-Rand plc | 63,658 | 5,649,648 | |||
Kennametal, Inc. | 161,023 | 6,695,336 | |||
Middleby Corp. (The)(1) | 89,973 | 12,248,025 | |||
Snap-on, Inc. | 36,216 | 6,067,266 | |||
30,660,275 | |||||
Media — 1.9% | |||||
Comcast Corp., Class A | 517,558 | 20,283,098 | |||
Multiline Retail — 0.7% | |||||
Dollar Tree, Inc.(1) | 86,869 | 7,190,147 | |||
Oil, Gas and Consumable Fuels — 1.7% | |||||
Concho Resources, Inc.(1) | 41,682 | 5,279,442 | |||
Pioneer Natural Resources Co. | 27,385 | 4,737,331 | |||
Range Resources Corp. | 308,655 | 8,176,271 | |||
18,193,044 | |||||
Pharmaceuticals — 2.7% | |||||
Catalent, Inc.(1) | 1,318 | 38,591 | |||
Eli Lilly & Co. | 87,128 | 7,149,724 | |||
Jazz Pharmaceuticals plc(1) | 28,817 | 4,589,972 | |||
Zoetis, Inc. | 310,877 | 17,443,308 | |||
29,221,595 | |||||
Road and Rail — 1.3% | |||||
Canadian Pacific Railway Ltd., (New York) | 35,060 | 5,372,945 | |||
Norfolk Southern Corp. | 78,027 | 9,167,392 | |||
14,540,337 | |||||
Semiconductors and Semiconductor Equipment — 1.9% | |||||
Broadcom Ltd. | 62,666 | 13,837,280 | |||
KLA-Tencor Corp. | 67,120 | 6,592,526 | |||
20,429,806 | |||||
Software — 7.1% | |||||
Adobe Systems, Inc.(1) | 102,825 | 13,751,816 | |||
Electronic Arts, Inc.(1) | 141,893 | 13,454,294 | |||
Microsoft Corp. | 529,370 | 36,240,670 |
8
Shares | Value | ||||
salesforce.com, Inc.(1) | 158,661 | $ | 13,663,885 | ||
77,110,665 | |||||
Specialty Retail — 5.5% | |||||
AutoZone, Inc.(1) | 10,086 | 6,981,428 | |||
Burlington Stores, Inc.(1) | 42,275 | 4,181,843 | |||
Home Depot, Inc. (The) | 94,821 | 14,801,558 | |||
Lowe's Cos., Inc. | 294,352 | 24,984,598 | |||
Michaels Cos., Inc. (The)(1) | 148,626 | 3,471,904 | |||
Ross Stores, Inc. | 89,346 | 5,807,490 | |||
60,228,821 | |||||
Technology Hardware, Storage and Peripherals — 3.6% | |||||
Apple, Inc. | 274,158 | 39,382,797 | |||
Textiles, Apparel and Luxury Goods — 0.3% | |||||
NIKE, Inc., Class B | 60,677 | 3,362,113 | |||
Tobacco — 0.6% | |||||
Philip Morris International, Inc. | 61,935 | 6,864,875 | |||
TOTAL COMMON STOCKS (Cost $734,633,891) | 1,080,074,679 | ||||
TEMPORARY CASH INVESTMENTS — 0.5% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $2,627,263), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $2,576,481) | 2,576,335 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $2,628,764), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $2,577,047) | 2,577,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 2,845 | 2,845 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $5,156,180) | 5,156,180 | ||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $739,790,071) | 1,085,230,859 | ||||
OTHER ASSETS AND LIABILITIES† | 306,662 | ||||
TOTAL NET ASSETS — 100.0% | $ | 1,085,537,521 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 1,001,815 | USD | 744,358 | Morgan Stanley | 6/30/17 | $ | (9,816 | ) | ||
CAD | 156,650 | USD | 116,663 | Morgan Stanley | 6/30/17 | (1,806 | ) | |||
USD | 5,487,383 | CAD | 7,332,650 | Morgan Stanley | 6/30/17 | 111,006 | ||||
USD | 128,598 | CAD | 172,375 | Morgan Stanley | 6/30/17 | 2,211 | ||||
USD | 129,829 | CAD | 172,907 | Morgan Stanley | 6/30/17 | 3,052 | ||||
GBP | 354,015 | USD | 440,582 | Credit Suisse AG | 6/30/17 | 18,709 | ||||
GBP | 468,094 | USD | 599,699 | Credit Suisse AG | 6/30/17 | 7,595 | ||||
USD | 18,216,932 | GBP | 14,543,063 | Credit Suisse AG | 6/30/17 | (650,888 | ) | |||
USD | 628,771 | GBP | 489,286 | Credit Suisse AG | 6/30/17 | (6,016 | ) | |||
$ | (525,953 | ) |
9
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CAD | - | Canadian Dollar |
GBP | - | British Pound |
USD | - | United States Dollar |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $739,790,071) | $ | 1,085,230,859 | |
Foreign currency holdings, at value (cost of $57,795) | 58,529 | ||
Receivable for investments sold | 6,776,791 | ||
Receivable for capital shares sold | 96,707 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 142,573 | ||
Dividends and interest receivable | 199,848 | ||
1,092,505,307 | |||
Liabilities | |||
Payable for investments purchased | 4,935,953 | ||
Payable for capital shares redeemed | 477,052 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 668,526 | ||
Accrued management fees | 874,143 | ||
Distribution and service fees payable | 12,112 | ||
6,967,786 | |||
Net Assets | $ | 1,085,537,521 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 680,471,239 | |
Accumulated net investment loss | (1,847,979 | ) | |
Undistributed net realized gain | 61,998,691 | ||
Net unrealized appreciation | 344,915,570 | ||
$ | 1,085,537,521 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $1,054,453,757 | 32,781,090 | $32.17 | |||
I Class, $0.01 Par Value | $391,385 | 12,003 | $32.61 | |||
A Class, $0.01 Par Value | $11,472,393 | 363,024 | $31.60* | |||
C Class, $0.01 Par Value | $4,543,305 | 151,687 | $29.95 | |||
R Class, $0.01 Par Value | $14,676,681 | 472,754 | $31.05 |
*Maximum offering price $33.53 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $6,161) | $ | 4,835,034 | |
Interest | 6,000 | ||
4,841,034 | |||
Expenses: | |||
Management fees | 5,119,022 | ||
Distribution and service fees: | |||
A Class | 14,233 | ||
C Class | 22,948 | ||
R Class | 34,878 | ||
Directors' fees and expenses | 14,648 | ||
Other expenses | 230 | ||
5,205,959 | |||
Net investment income (loss) | (364,925 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 61,532,744 | ||
Foreign currency transactions | 805,840 | ||
62,338,584 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 76,703,263 | ||
Translation of assets and liabilities in foreign currencies | (1,773,726 | ) | |
74,929,537 | |||
Net realized and unrealized gain (loss) | 137,268,121 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 136,903,196 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | (364,925 | ) | $ | (1,153,911 | ) |
Net realized gain (loss) | 62,338,584 | 79,210,812 | ||||
Change in net unrealized appreciation (depreciation) | 74,929,537 | (77,603,568 | ) | |||
Net increase (decrease) in net assets resulting from operations | 136,903,196 | 453,333 | ||||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (76,992,389 | ) | (66,713,169 | ) | ||
I Class | (24,235 | ) | (17,255 | ) | ||
A Class | (892,906 | ) | (698,339 | ) | ||
C Class | (367,332 | ) | (308,984 | ) | ||
R Class | (1,122,342 | ) | (870,358 | ) | ||
Decrease in net assets from distributions | (79,399,204 | ) | (68,608,105 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 27,251,897 | (42,618,561 | ) | |||
Net increase (decrease) in net assets | 84,755,889 | (110,773,333 | ) | |||
Net Assets | ||||||
Beginning of period | 1,000,781,632 | 1,111,554,965 | ||||
End of period | $ | 1,085,537,521 | $ | 1,000,781,632 | ||
Accumulated net investment loss | $ | (1,847,979 | ) | $ | (1,483,054 | ) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), A Class, C Class and 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.
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 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
14
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.
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.
15
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class.
The annual management fee for each class is as follows:
Investor Class | I Class | A Class | C Class | R Class |
1.000% | 0.800% | 1.000% | 1.000% | 1.000% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $481,474 and $2,321,144, respectively. The effect of interfund transactions on the Statement of Operations was $14,913 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $255,032,990 and $309,494,886, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017 | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 275,000,000 | 275,000,000 | ||||||||
Sold | 680,797 | $ | 20,678,231 | 1,072,643 | $ | 32,383,996 | ||||
Issued in reinvestment of distributions | 2,577,725 | 75,140,689 | 2,166,415 | 65,165,760 | ||||||
Redeemed | (2,270,584 | ) | (68,904,356 | ) | (4,719,984 | ) | (142,192,350 | ) | ||
987,938 | 26,914,564 | (1,480,926 | ) | (44,642,594 | ) | |||||
I Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 2,462 | 76,530 | 2,512 | 75,506 | ||||||
Issued in reinvestment of distributions | 821 | 24,235 | 568 | 17,255 | ||||||
Redeemed | (1,556 | ) | (48,356 | ) | (1,339 | ) | (39,989 | ) | ||
1,727 | 52,409 | 1,741 | 52,772 | |||||||
A Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 68,130 | 2,060,177 | 108,895 | 3,249,461 | ||||||
Issued in reinvestment of distributions | 30,812 | 883,069 | 23,456 | 696,394 | ||||||
Redeemed | (92,840 | ) | (2,823,842 | ) | (106,911 | ) | (3,133,904 | ) | ||
6,102 | 119,404 | 25,440 | 811,951 | |||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 21,092 | 593,253 | 41,379 | 1,195,441 | ||||||
Issued in reinvestment of distributions | 13,485 | 367,332 | 10,826 | 308,984 | ||||||
Redeemed | (33,277 | ) | (960,432 | ) | (51,903 | ) | (1,488,220 | ) | ||
1,300 | 153 | 302 | 16,205 | |||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 54,069 | 1,595,904 | 148,513 | 4,392,248 | ||||||
Issued in reinvestment of distributions | 39,828 | 1,122,342 | 29,705 | 870,358 | ||||||
Redeemed | (86,934 | ) | (2,552,879 | ) | (138,739 | ) | (4,119,501 | ) | ||
6,963 | 165,367 | 39,479 | 1,143,105 | |||||||
Net increase (decrease) | 1,004,030 | $ | 27,251,897 | (1,413,964 | ) | $ | (42,618,561 | ) |
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.
17
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,067,209,066 | $ | 12,865,613 | — | |||
Temporary Cash Investments | 2,845 | 5,153,335 | — | |||||
$ | 1,067,211,911 | $ | 18,018,948 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 142,573 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 668,526 | — |
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 $32,692,527.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $142,573 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $668,526 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $811,262 in net realized gain (loss) on foreign currency transactions and $(1,781,706) 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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 740,508,875 | |
Gross tax appreciation of investments | $ | 355,475,976 | |
Gross tax depreciation of investments | (10,753,992 | ) | |
Net tax appreciation (depreciation) of investments | $ | 344,721,984 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
18
As of October 31, 2016, the fund had late-year ordinary loss deferrals of $(227,301), 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.
9. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | 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 | |||||||||||||||
2017(3) | $30.56 | (0.01) | 4.07 | 4.06 | — | (2.45) | (2.45) | $32.17 | 14.13% | 1.00%(4) | (0.06)%(4) | 25% | $1,054,454 | ||
2016 | $32.53 | (0.03) | 0.08 | 0.05 | — | (2.02) | (2.02) | $30.56 | 0.24% | 1.00% | (0.09)% | 49% | $971,588 | ||
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 | ||
I Class(5) | |||||||||||||||
2017(3) | $30.92 | 0.02 | 4.12 | 4.14 | — | (2.45) | (2.45) | $32.61 | 14.23% | 0.80%(4) | 0.14%(4) | 25% | $391 | ||
2016 | $32.83 | 0.03 | 0.08 | 0.11 | — | (2.02) | (2.02) | $30.92 | 0.46% | 0.80% | 0.11% | 49% | $318 | ||
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 | —(6) | 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 |
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 | |||||||||||||||
2017(3) | $30.10 | (0.05) | 4.00 | 3.95 | — | (2.45) | (2.45) | $31.60 | 13.97% | 1.25%(4) | (0.31)%(4) | 25% | $11,472 | ||
2016 | $32.15 | (0.10) | 0.07 | (0.03) | — | (2.02) | (2.02) | $30.10 | (0.02)% | 1.25% | (0.34)% | 49% | $10,743 | ||
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 | ||
C Class | |||||||||||||||
2017(3) | $28.75 | (0.15) | 3.80 | 3.65 | — | (2.45) | (2.45) | $29.95 | 13.56% | 2.00%(4) | (1.06)%(4) | 25% | $4,543 | ||
2016 | $31.02 | (0.31) | 0.06 | (0.25) | — | (2.02) | (2.02) | $28.75 | (0.77)% | 2.00% | (1.09)% | 49% | $4,324 | ||
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 | ||
R Class | |||||||||||||||
2017(3) | $29.65 | (0.08) | 3.93 | 3.85 | — | (2.45) | (2.45) | $31.05 | 13.80% | 1.50%(4) | (0.56)%(4) | 25% | $14,677 | ||
2016 | $31.77 | (0.18) | 0.08 | (0.10) | — | (2.02) | (2.02) | $29.65 | (0.25)% | 1.50% | (0.59)% | 49% | $13,809 | ||
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 |
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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | 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.
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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92361 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Common Stocks | % of net assets |
Alphabet, Inc., Class A | 2.1% |
Microsoft Corp. | 2.0% |
Apple, Inc. | 1.8% |
Amazon.com, Inc. | 1.5% |
Facebook, Inc., Class A | 1.5% |
Johnson & Johnson | 1.1% |
UnitedHealth Group, Inc. | 1.0% |
Intel Corp. | 1.0% |
Cisco Systems, Inc. | 1.0% |
Merck & Co., Inc. | 1.0% |
Top Five Common Stocks Industries | % of net assets |
Software | 4.3% |
Internet Software and Services | 3.6% |
Semiconductors and Semiconductor Equipment | 3.5% |
Biotechnology | 3.1% |
Health Care Equipment and Supplies | 2.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 59.7% |
Exchange-Traded Funds | 0.6% |
Total Equity Exposure | 60.3% |
U.S. Treasury Securities | 12.1% |
Corporate Bonds | 11.9% |
U.S. Government Agency Mortgage-Backed Securities | 9.8% |
Collateralized Mortgage Obligations | 2.2% |
Asset-Backed Securities | 2.0% |
Commercial Mortgage-Backed Securities | 1.8% |
U.S. Government Agency Securities | 0.8% |
Sovereign Governments and Agencies | 0.6% |
Municipal Securities | 0.4% |
Temporary Cash Investments | 2.4% |
Other Assets and Liabilities | (4.3)% |
Key Fixed-Income Portfolio Statistics | |
Weighted Average Life | 8.1 years |
Average Duration (effective) | 6.0 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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,073.80 | $4.63 | 0.90% |
I Class | $1,000 | $1,074.90 | $3.60 | 0.70% |
R5 Class | $1,000 | $1,010.50(2) | $0.40(3) | 0.70% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.33 | $4.51 | 0.90% |
I Class | $1,000 | $1,021.32 | $3.51 | 0.70% |
R5 Class | $1,000 | $1,021.32(4) | $3.51(4) | 0.70% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares/ Principal Amount | Value | ||||||
COMMON STOCKS — 59.7% | |||||||
Aerospace and Defense — 1.5% | |||||||
Boeing Co. (The) | 37,668 | $ | 6,962,176 | ||||
United Technologies Corp. | 52,709 | 6,271,844 | |||||
13,234,020 | |||||||
Airlines — 0.1% | |||||||
JetBlue Airways Corp.(1) | 34,469 | 752,458 | |||||
Auto Components — 0.4% | |||||||
Delphi Automotive plc | 28,129 | 2,261,572 | |||||
LCI Industries | 4,090 | 413,703 | |||||
Tenneco, Inc. | 5,087 | 320,634 | |||||
2,995,909 | |||||||
Automobiles — 0.5% | |||||||
Ford Motor Co. | 403,064 | 4,623,144 | |||||
Banks — 2.2% | |||||||
Bank of America Corp. | 62,748 | 1,464,538 | |||||
BB&T Corp. | 47,966 | 2,071,172 | |||||
Citigroup, Inc. | 94,825 | 5,606,054 | |||||
East West Bancorp, Inc. | 23,225 | 1,260,421 | |||||
JPMorgan Chase & Co. | 38,081 | 3,313,047 | |||||
U.S. Bancorp | 43,727 | 2,242,320 | |||||
Valley National Bancorp | 90,056 | 1,059,059 | |||||
Wells Fargo & Co. | 38,452 | 2,070,256 | |||||
19,086,867 | |||||||
Beverages — 0.1% | |||||||
Boston Beer Co., Inc. (The), Class A(1) | 2,431 | 350,915 | |||||
Coca-Cola Co. (The) | 1,209 | 52,168 | |||||
PepsiCo, Inc. | 1,701 | 192,689 | |||||
595,772 | |||||||
Biotechnology — 3.1% | |||||||
AbbVie, Inc. | 99,348 | 6,551,007 | |||||
Amgen, Inc. | 44,949 | 7,341,071 | |||||
Biogen, Inc.(1) | 12,423 | 3,369,242 | |||||
Celgene Corp.(1) | 48,803 | 6,054,012 | |||||
Gilead Sciences, Inc. | 48,987 | 3,358,059 | |||||
26,673,391 | |||||||
Building Products — 0.5% | |||||||
Owens Corning | 64,668 | 3,935,048 | |||||
USG Corp.(1) | 22,537 | 682,871 | |||||
4,617,919 | |||||||
Capital Markets — 1.6% | |||||||
Eaton Vance Corp. | 30,540 | 1,311,082 | |||||
Evercore Partners, Inc., Class A | 47,551 | 3,506,886 |
6
Shares/ Principal Amount | Value | ||||||
Franklin Resources, Inc. | 56,503 | $ | 2,435,844 | ||||
Goldman Sachs Group, Inc. (The) | 26,737 | 5,983,741 | |||||
Thomson Reuters Corp. | 4,760 | 216,247 | |||||
13,453,800 | |||||||
Chemicals — 2.0% | |||||||
Air Products & Chemicals, Inc. | 34,776 | 4,886,028 | |||||
Cabot Corp. | 73,745 | 4,438,712 | |||||
Dow Chemical Co. (The) | 26,891 | 1,688,755 | |||||
E.I. du Pont de Nemours & Co. | 22,663 | 1,807,374 | |||||
FMC Corp. | 43,652 | 3,196,636 | |||||
Monsanto Co. | 10,809 | 1,260,437 | |||||
17,277,942 | |||||||
Commercial Services and Supplies — 0.3% | |||||||
Waste Management, Inc. | 33,194 | 2,415,859 | |||||
Communications Equipment — 1.0% | |||||||
Cisco Systems, Inc. | 243,908 | 8,309,946 | |||||
Consumer Finance — 0.2% | |||||||
Ally Financial, Inc. | 50,761 | 1,005,068 | |||||
OneMain Holdings, Inc.(1) | 9,250 | 215,710 | |||||
Synchrony Financial | 31,910 | 887,098 | |||||
2,107,876 | |||||||
Diversified Financial Services — 0.4% | |||||||
Berkshire Hathaway, Inc., Class B(1) | 21,469 | 3,546,893 | |||||
Diversified Telecommunication Services — 0.5% | |||||||
AT&T, Inc. | 87,416 | 3,464,296 | |||||
Verizon Communications, Inc. | 21,564 | 990,003 | |||||
4,454,299 | |||||||
Electric Utilities — 0.7% | |||||||
ALLETE, Inc. | 2,603 | 181,975 | |||||
FirstEnergy Corp. | 123,271 | 3,690,734 | |||||
PPL Corp. | 60,535 | 2,306,989 | |||||
6,179,698 | |||||||
Electrical Equipment — 0.4% | |||||||
Eaton Corp. plc | 47,288 | 3,576,864 | |||||
Energy Equipment and Services — 1.5% | |||||||
Baker Hughes, Inc. | 65,950 | 3,915,452 | |||||
Dril-Quip, Inc.(1) | 56,102 | 2,892,058 | |||||
Helmerich & Payne, Inc. | 57,605 | 3,493,167 | |||||
Rowan Cos. plc(1) | 30,784 | 433,131 | |||||
Schlumberger Ltd. | 29,530 | 2,143,583 | |||||
TechnipFMC plc(1) | 12,986 | 391,268 | |||||
13,268,659 | |||||||
Equity Real Estate Investment Trusts (REITs) — 1.0% | |||||||
American Tower Corp. | 14,772 | 1,860,386 | |||||
Care Capital Properties, Inc. | 50,799 | 1,364,969 | |||||
DuPont Fabros Technology, Inc. | 14,191 | 731,546 | |||||
Empire State Realty Trust, Inc. | 12,260 | 255,008 |
7
Shares/ Principal Amount | Value | ||||||
Gaming and Leisure Properties, Inc. | 3,440 | $ | 119,712 | ||||
Lamar Advertising Co., Class A | 6,296 | 453,753 | |||||
WP Carey, Inc. | 64,005 | 4,006,713 | |||||
8,792,087 | |||||||
Food and Staples Retailing — 2.1% | |||||||
CVS Health Corp. | 70,796 | 5,836,422 | |||||
Wal-Mart Stores, Inc. | 83,931 | 6,309,933 | |||||
Walgreens Boots Alliance, Inc. | 65,281 | 5,649,418 | |||||
17,795,773 | |||||||
Food Products — 1.5% | |||||||
Bunge Ltd. | 39,964 | 3,158,355 | |||||
Campbell Soup Co. | 58,516 | 3,367,011 | |||||
Dean Foods Co. | 61,775 | 1,219,438 | |||||
J.M. Smucker Co. (The) | 3,662 | 464,049 | |||||
Tyson Foods, Inc., Class A | 69,600 | 4,472,496 | |||||
12,681,349 | |||||||
Gas Utilities — 0.3% | |||||||
National Fuel Gas Co. | 43,727 | 2,421,601 | |||||
Health Care Equipment and Supplies — 2.9% | |||||||
Becton Dickinson and Co. | 27,576 | 5,155,885 | |||||
C.R. Bard, Inc. | 5,990 | 1,841,805 | |||||
Cooper Cos., Inc. (The) | 2,936 | 588,169 | |||||
Danaher Corp. | 18,102 | 1,508,440 | |||||
Hologic, Inc.(1) | 96,740 | 4,367,811 | |||||
Medtronic plc | 83,115 | 6,906,025 | |||||
Teleflex, Inc. | 1,169 | 241,855 | |||||
Zimmer Biomet Holdings, Inc. | 36,916 | 4,416,999 | |||||
25,026,989 | |||||||
Health Care Providers and Services — 1.4% | |||||||
Anthem, Inc. | 17,999 | 3,201,842 | |||||
HealthSouth Corp. | 5,464 | 256,262 | |||||
UnitedHealth Group, Inc. | 48,276 | 8,442,507 | |||||
11,900,611 | |||||||
Hotels, Restaurants and Leisure — 1.2% | |||||||
Carnival Corp. | 78,400 | 4,842,768 | |||||
Darden Restaurants, Inc. | 62,225 | 5,300,948 | |||||
10,143,716 | |||||||
Household Durables — 0.1% | |||||||
Garmin Ltd. | 16,347 | 831,081 | |||||
Household Products — 1.2% | |||||||
Kimberly-Clark Corp. | 33,965 | 4,406,959 | |||||
Procter & Gamble Co. (The) | 21,274 | 1,857,858 | |||||
Spectrum Brands Holdings, Inc. | 30,285 | 4,352,863 | |||||
10,617,680 | |||||||
Industrial Conglomerates — 1.0% | |||||||
3M Co. | 11,109 | 2,175,475 | |||||
Carlisle Cos., Inc. | 36,707 | 3,721,723 |
8
Shares/ Principal Amount | Value | ||||||
General Electric Co. | 89,077 | $ | 2,582,342 | ||||
8,479,540 | |||||||
Insurance — 1.8% | |||||||
Aflac, Inc. | 64,606 | 4,837,697 | |||||
American Financial Group, Inc. | 6,009 | 584,736 | |||||
Everest Re Group Ltd. | 2,150 | 541,177 | |||||
FNF Group | 66,912 | 2,740,046 | |||||
Lincoln National Corp. | 7,740 | 510,298 | |||||
Old Republic International Corp. | 56,776 | 1,174,128 | |||||
Reinsurance Group of America, Inc. | 13,421 | 1,678,162 | |||||
Travelers Cos., Inc. (The) | 18,185 | 2,212,387 | |||||
Validus Holdings Ltd. | 29,991 | 1,657,902 | |||||
15,936,533 | |||||||
Internet and Direct Marketing Retail — 1.5% | |||||||
Amazon.com, Inc.(1) | 14,256 | 13,186,657 | |||||
Internet Software and Services — 3.6% | |||||||
Alphabet, Inc., Class A(1) | 19,608 | 18,127,988 | |||||
Facebook, Inc., Class A(1) | 85,633 | 12,866,358 | |||||
30,994,346 | |||||||
IT Services — 0.9% | |||||||
International Business Machines Corp. | 46,741 | 7,492,115 | |||||
Leisure Products — 0.4% | |||||||
Brunswick Corp. | 66,069 | 3,749,416 | |||||
Life Sciences Tools and Services — 0.1% | |||||||
Waters Corp.(1) | 4,843 | 822,777 | |||||
Machinery — 2.2% | |||||||
Cummins, Inc. | 26,717 | 4,032,664 | |||||
Fortive Corp. | 6,356 | 402,081 | |||||
Ingersoll-Rand plc | 60,150 | 5,338,312 | |||||
Oshkosh Corp. | 24,506 | 1,700,471 | |||||
Parker-Hannifin Corp. | 12,691 | 2,040,713 | |||||
Snap-on, Inc. | 12,791 | 2,142,876 | |||||
Timken Co. (The) | 8,383 | 404,480 | |||||
Toro Co. (The) | 40,024 | 2,598,358 | |||||
18,659,955 | |||||||
Media — 1.6% | |||||||
DISH Network Corp., Class A(1) | 59,314 | 3,822,194 | |||||
MSG Networks, Inc., Class A(1) | 22,742 | 567,413 | |||||
Omnicom Group, Inc. | 49,203 | 4,040,551 | |||||
Twenty-First Century Fox, Inc., Class A | 168,441 | 5,144,188 | |||||
13,574,346 | |||||||
Metals and Mining — 1.1% | |||||||
Barrick Gold Corp. | 218,081 | 3,646,315 | |||||
Nucor Corp. | 71,088 | 4,359,827 | |||||
Reliance Steel & Aluminum Co. | 15,343 | 1,209,335 | |||||
9,215,477 |
9
Shares/ Principal Amount | Value | ||||||
Multi-Utilities — 0.2% | |||||||
CenterPoint Energy, Inc. | 66,218 | $ | 1,889,200 | ||||
Oil, Gas and Consumable Fuels — 2.0% | |||||||
Apache Corp. | 41,209 | 2,004,406 | |||||
Chevron Corp. | 11,894 | 1,269,090 | |||||
Devon Energy Corp. | 6,406 | 252,973 | |||||
Exxon Mobil Corp. | 57,260 | 4,675,279 | |||||
Kinder Morgan, Inc. | 150,920 | 3,113,480 | |||||
ONEOK, Inc. | 20,891 | 1,099,075 | |||||
Williams Cos., Inc. (The) | 148,642 | 4,552,904 | |||||
16,967,207 | |||||||
Personal Products† | |||||||
Nu Skin Enterprises, Inc., Class A | 5,949 | 328,563 | |||||
Pharmaceuticals — 2.4% | |||||||
Johnson & Johnson | 75,066 | 9,268,399 | |||||
Merck & Co., Inc. | 132,076 | 8,232,297 | |||||
Pfizer, Inc. | 82,645 | 2,803,319 | |||||
20,304,015 | |||||||
Professional Services† | |||||||
FTI Consulting, Inc.(1) | 11,292 | 390,590 | |||||
Real Estate Management and Development — 0.1% | |||||||
Realogy Holdings Corp. | 37,783 | 1,154,271 | |||||
Road and Rail — 0.7% | |||||||
Union Pacific Corp. | 56,560 | 6,332,458 | |||||
Semiconductors and Semiconductor Equipment — 3.5% | |||||||
Analog Devices, Inc. | 7,162 | 545,744 | |||||
Applied Materials, Inc. | 139,236 | 5,654,374 | |||||
Broadcom Ltd. | 3,393 | 749,208 | |||||
Intel Corp. | 230,705 | 8,339,986 | |||||
Lam Research Corp. | 29,103 | 4,215,569 | |||||
QUALCOMM, Inc. | 93,632 | 5,031,784 | |||||
Texas Instruments, Inc. | 68,432 | 5,418,446 | |||||
29,955,111 | |||||||
Software — 4.3% | |||||||
Activision Blizzard, Inc. | 4,737 | 247,508 | |||||
Adobe Systems, Inc.(1) | 40,750 | 5,449,905 | |||||
Intuit, Inc. | 22,233 | 2,783,794 | |||||
Microsoft Corp. | 249,997 | 17,114,795 | |||||
Oracle Corp. (New York) | 140,038 | 6,296,109 | |||||
Synopsys, Inc.(1) | 7,502 | 552,897 | |||||
VMware, Inc., Class A(1) | 53,399 | 5,025,914 | |||||
37,470,922 | |||||||
Specialty Retail — 1.2% | |||||||
Best Buy Co., Inc. | 89,687 | 4,646,684 | |||||
Lowe's Cos., Inc. | 66,438 | 5,639,257 | |||||
10,285,941 |
10
Shares/ Principal Amount | Value | ||||||
Technology Hardware, Storage and Peripherals — 1.8% | |||||||
Apple, Inc. | 106,683 | $ | 15,325,013 | ||||
Thrifts and Mortgage Finance — 0.5% | |||||||
Essent Group Ltd.(1) | 120,692 | 4,466,811 | |||||
Trading Companies and Distributors — 0.1% | |||||||
United Rentals, Inc.(1) | 5,234 | 573,960 | |||||
TOTAL COMMON STOCKS (Cost $405,722,699) | 514,937,427 | ||||||
U.S. TREASURY SECURITIES — 12.1% | |||||||
U.S. Treasury Bonds, 3.50%, 2/15/39 | $ | 1,050,000 | 1,171,468 | ||||
U.S. Treasury Bonds, 4.375%, 11/15/39 | 1,500,000 | 1,886,103 | |||||
U.S. Treasury Bonds, 4.375%, 5/15/41 | 1,850,000 | 2,332,626 | |||||
U.S. Treasury Bonds, 3.125%, 11/15/41 | 1,500,000 | 1,555,927 | |||||
U.S. Treasury Bonds, 3.00%, 5/15/42 | 200,000 | 202,664 | |||||
U.S. Treasury Bonds, 2.75%, 11/15/42 | 2,180,000 | 2,104,295 | |||||
U.S. Treasury Bonds, 2.875%, 5/15/43 | 1,420,000 | 1,401,668 | |||||
U.S. Treasury Bonds, 3.75%, 11/15/43 | 250,000 | 288,066 | |||||
U.S. Treasury Bonds, 3.125%, 8/15/44 | 1,830,000 | 1,891,654 | |||||
U.S. Treasury Bonds, 3.00%, 11/15/44 | 1,580,000 | 1,594,381 | |||||
U.S. Treasury Bonds, 2.50%, 2/15/45 | 5,520,000 | 5,030,100 | |||||
U.S. Treasury Bonds, 3.00%, 5/15/45 | 200,000 | 201,617 | |||||
U.S. Treasury Bonds, 2.25%, 8/15/46 | 190,000 | 163,074 | |||||
U.S. Treasury Inflation Indexed Notes, 0.125%, 7/15/26 | 1,117,908 | 1,097,809 | |||||
U.S. Treasury Notes, 0.75%, 10/31/17 | 1,500,000 | 1,498,242 | |||||
U.S. Treasury Notes, 0.875%, 1/31/18 | 3,400,000 | 3,394,689 | |||||
U.S. Treasury Notes, 1.00%, 3/15/18 | 7,150,000 | 7,143,858 | |||||
U.S. Treasury Notes, 0.75%, 4/15/18 | 1,200,000 | 1,195,805 | |||||
U.S. Treasury Notes, 2.625%, 4/30/18 | 875,000 | 887,732 | |||||
U.S. Treasury Notes, 1.375%, 7/31/18(2) | 1,130,000 | 1,132,957 | |||||
U.S. Treasury Notes, 1.25%, 10/31/18 | 2,350,000 | 2,351,469 | |||||
U.S. Treasury Notes, 1.25%, 11/30/18 | 3,100,000 | 3,101,755 | |||||
U.S. Treasury Notes, 1.375%, 11/30/18 | 200,000 | 200,512 | |||||
U.S. Treasury Notes, 1.125%, 1/31/19 | 2,000,000 | 1,996,250 | |||||
U.S. Treasury Notes, 1.50%, 2/28/19 | 3,000,000 | 3,013,710 | |||||
U.S. Treasury Notes, 1.625%, 7/31/19 | 1,350,000 | 1,359,492 | |||||
U.S. Treasury Notes, 1.625%, 8/31/19 | 8,350,000 | 8,406,914 | |||||
U.S. Treasury Notes, 1.75%, 9/30/19 | 2,600,000 | 2,625,493 | |||||
U.S. Treasury Notes, 1.50%, 10/31/19 | 5,650,000 | 5,670,634 | |||||
U.S. Treasury Notes, 1.50%, 11/30/19 | 2,600,000 | 2,608,835 | |||||
U.S. Treasury Notes, 1.625%, 12/31/19 | 950,000 | 955,993 | |||||
U.S. Treasury Notes, 1.375%, 1/15/20 | 3,000,000 | 2,998,125 | |||||
U.S. Treasury Notes, 1.375%, 3/31/20 | 2,950,000 | 2,944,354 | |||||
U.S. Treasury Notes, 1.375%, 4/30/20 | 1,500,000 | 1,496,280 | |||||
U.S. Treasury Notes, 1.625%, 6/30/20 | 2,350,000 | 2,358,721 | |||||
U.S. Treasury Notes, 1.75%, 12/31/20 | 600,000 | 602,848 | |||||
U.S. Treasury Notes, 2.25%, 4/30/21 | 2,000,000 | 2,043,594 | |||||
U.S. Treasury Notes, 2.00%, 10/31/21 | 12,880,000 | 13,007,293 |
11
Shares/ Principal Amount | Value | ||||||
U.S. Treasury Notes, 1.875%, 1/31/22 | $ | 4,600,000 | $ | 4,615,364 | |||
U.S. Treasury Notes, 1.50%, 2/28/23 | 2,100,000 | 2,045,818 | |||||
U.S. Treasury Notes, 1.375%, 6/30/23 | 780,000 | 751,025 | |||||
U.S. Treasury Notes, 1.375%, 8/31/23 | 1,350,000 | 1,296,791 | |||||
U.S. Treasury Notes, 2.25%, 11/15/25 | 2,000,000 | 2,001,210 | |||||
TOTAL U.S. TREASURY SECURITIES (Cost $103,970,676) | 104,627,215 | ||||||
CORPORATE BONDS — 11.9% | |||||||
Aerospace and Defense — 0.2% | |||||||
Boeing Co. (The), 2.20%, 10/30/22 | 190,000 | 187,290 | |||||
Lockheed Martin Corp., 4.25%, 11/15/19 | 250,000 | 264,543 | |||||
Lockheed Martin Corp., 3.55%, 1/15/26 | 300,000 | 310,141 | |||||
Lockheed Martin Corp., 3.80%, 3/1/45 | 80,000 | 76,725 | |||||
Rockwell Collins, Inc., 4.35%, 4/15/47 | 80,000 | 81,356 | |||||
United Technologies Corp., 6.05%, 6/1/36 | 250,000 | 317,608 | |||||
United Technologies Corp., 3.75%, 11/1/46 | 100,000 | 96,071 | |||||
1,333,734 | |||||||
Auto Components — 0.1% | |||||||
Schaeffler Finance BV, 4.25%, 5/15/21(3) | 200,000 | 204,585 | |||||
Tenneco, Inc., 5.00%, 7/15/26 | 90,000 | 90,900 | |||||
ZF North America Capital, Inc., 4.00%, 4/29/20(3) | 150,000 | 156,750 | |||||
452,235 | |||||||
Automobiles — 0.3% | |||||||
American Honda Finance Corp., 1.50%, 9/11/17(3) | 70,000 | 70,056 | |||||
American Honda Finance Corp., 2.125%, 10/10/18 | 150,000 | 151,201 | |||||
Ford Motor Co., 4.35%, 12/8/26 | 240,000 | 246,333 | |||||
Ford Motor Credit Co. LLC, 5.00%, 5/15/18 | 400,000 | 412,496 | |||||
Ford Motor Credit Co. LLC, 8.125%, 1/15/20 | 150,000 | 171,956 | |||||
Ford Motor Credit Co. LLC, 5.875%, 8/2/21 | 440,000 | 490,045 | |||||
General Motors Co., 5.00%, 4/1/35 | 210,000 | 208,369 | |||||
General Motors Financial Co., Inc., 3.25%, 5/15/18 | 350,000 | 354,652 | |||||
General Motors Financial Co., Inc., 3.10%, 1/15/19 | 110,000 | 111,711 | |||||
General Motors Financial Co., Inc., 3.20%, 7/6/21 | 140,000 | 141,393 | |||||
General Motors Financial Co., Inc., 5.25%, 3/1/26 | 260,000 | 280,818 | |||||
Jaguar Land Rover Automotive plc, 4.125%, 12/15/18(3) | 150,000 | 153,937 | |||||
2,792,967 | |||||||
Banks — 1.8% | |||||||
Banco Inbursa SA Institucion de Banca Multiple, 4.375%, 4/11/27(3) | 230,000 | 225,975 | |||||
Bank of America Corp., 4.10%, 7/24/23 | 70,000 | 73,702 | |||||
Bank of America Corp., MTN, 5.625%, 7/1/20 | 310,000 | 340,746 | |||||
Bank of America Corp., MTN, 4.00%, 4/1/24 | 420,000 | 437,584 | |||||
Bank of America Corp., MTN, 4.20%, 8/26/24 | 380,000 | 392,310 | |||||
Bank of America Corp., MTN, 4.00%, 1/22/25 | 600,000 | 606,380 | |||||
Bank of America Corp., MTN, 5.00%, 1/21/44 | 110,000 | 120,538 | |||||
Bank of America Corp., MTN, VRN, 4.44%, 1/20/47 | 140,000 | 141,824 | |||||
Barclays Bank plc, 5.14%, 10/14/20 | 200,000 | 214,870 |
12
Shares/ Principal Amount | Value | ||||||
Barclays plc, 4.375%, 1/12/26 | $ | 200,000 | $ | 205,734 | |||
Barclays plc, MTN, VRN, 2.625%, 11/11/20 | EUR | 600,000 | 668,692 | ||||
BPCE SA, 5.15%, 7/21/24(3) | $ | 200,000 | 208,671 | ||||
Branch Banking & Trust Co., 3.625%, 9/16/25 | 113,000 | 116,798 | |||||
Branch Banking & Trust Co., 3.80%, 10/30/26 | 130,000 | 136,679 | |||||
Capital One Financial Corp., 4.20%, 10/29/25 | 445,000 | 448,891 | |||||
Capital One N.A., 2.35%, 8/17/18 | 250,000 | 251,430 | |||||
Citigroup, Inc., 1.75%, 5/1/18 | 710,000 | 709,811 | |||||
Citigroup, Inc., 2.90%, 12/8/21 | 400,000 | 402,558 | |||||
Citigroup, Inc., 4.05%, 7/30/22 | 70,000 | 73,391 | |||||
Citigroup, Inc., 3.20%, 10/21/26 | 125,000 | 121,105 | |||||
Citigroup, Inc., 4.45%, 9/29/27 | 1,040,000 | 1,066,214 | |||||
Commerzbank AG, 8.125%, 9/19/23(3) | 200,000 | 236,736 | |||||
Cooperatieve Rabobank UA, 3.875%, 2/8/22 | 430,000 | 457,376 | |||||
Fifth Third Bancorp, 4.30%, 1/16/24 | 110,000 | 116,083 | |||||
Fifth Third Bank, 2.875%, 10/1/21 | 250,000 | 254,539 | |||||
HBOS plc, MTN, 6.75%, 5/21/18(3) | 300,000 | 313,796 | |||||
Huntington Bancshares, Inc., 2.30%, 1/14/22 | 260,000 | 255,460 | |||||
Intesa Sanpaolo SpA, 5.02%, 6/26/24(3) | 230,000 | 219,453 | |||||
JPMorgan Chase & Co., 2.55%, 3/1/21 | 420,000 | 422,265 | |||||
JPMorgan Chase & Co., 4.625%, 5/10/21 | 460,000 | 498,278 | |||||
JPMorgan Chase & Co., 3.25%, 9/23/22 | 220,000 | 225,608 | |||||
JPMorgan Chase & Co., 3.875%, 9/10/24 | 370,000 | 379,572 | |||||
JPMorgan Chase & Co., 3.125%, 1/23/25 | 570,000 | 564,572 | |||||
JPMorgan Chase & Co., 4.95%, 6/1/45 | 100,000 | 106,744 | |||||
KeyCorp, MTN, 2.30%, 12/13/18 | 220,000 | 221,252 | |||||
Kreditanstalt fuer Wiederaufbau, 2.00%, 10/4/22 | 300,000 | 298,252 | |||||
PNC Financial Services Group, Inc. (The), 4.375%, 8/11/20 | 200,000 | 213,642 | |||||
Santander Issuances SAU, MTN, 2.50%, 3/18/25 | EUR | 600,000 | 665,361 | ||||
SunTrust Bank, 3.30%, 5/15/26 | $ | 200,000 | 196,282 | ||||
Turkiye Garanti Bankasi AS, 5.875%, 3/16/23(3) | 350,000 | 363,629 | |||||
U.S. Bancorp, MTN, 3.00%, 3/15/22 | 110,000 | 112,871 | |||||
U.S. Bancorp, MTN, 3.60%, 9/11/24 | 330,000 | 342,313 | |||||
Wells Fargo & Co., 3.07%, 1/24/23 | 210,000 | 212,576 | |||||
Wells Fargo & Co., 4.125%, 8/15/23 | 200,000 | 211,151 | |||||
Wells Fargo & Co., 3.00%, 4/22/26 | 450,000 | 435,800 | |||||
Wells Fargo & Co., MTN, 2.60%, 7/22/20 | 320,000 | 324,134 | |||||
Wells Fargo & Co., MTN, 3.55%, 9/29/25 | 160,000 | 162,630 | |||||
Wells Fargo & Co., MTN, 4.10%, 6/3/26 | 210,000 | 217,900 | |||||
Wells Fargo & Co., MTN, 4.65%, 11/4/44 | 200,000 | 202,463 | |||||
Wells Fargo & Co., MTN, 4.75%, 12/7/46 | 120,000 | 123,872 | |||||
15,318,513 | |||||||
Beverages — 0.3% | |||||||
Anheuser-Busch InBev Finance, Inc., 3.30%, 2/1/23 | 670,000 | 687,890 | |||||
Anheuser-Busch InBev Finance, Inc., 3.65%, 2/1/26 | 250,000 | 256,119 | |||||
Anheuser-Busch InBev Finance, Inc., 4.90%, 2/1/46 | 500,000 | 548,302 | |||||
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/19 | 390,000 | 428,080 |
13
Shares/ Principal Amount | Value | ||||||
Constellation Brands, Inc., 4.75%, 12/1/25 | $ | 330,000 | $ | 359,226 | |||
Molson Coors Brewing Co., 3.00%, 7/15/26 | 250,000 | 239,776 | |||||
2,519,393 | |||||||
Biotechnology — 0.4% | |||||||
AbbVie, Inc., 2.90%, 11/6/22 | 220,000 | 221,255 | |||||
AbbVie, Inc., 3.60%, 5/14/25 | 120,000 | 121,222 | |||||
AbbVie, Inc., 4.40%, 11/6/42 | 240,000 | 232,316 | |||||
AbbVie, Inc., 4.45%, 5/14/46 | 40,000 | 38,994 | |||||
Amgen, Inc., 4.66%, 6/15/51 | 289,000 | 292,374 | |||||
Biogen, Inc., 3.625%, 9/15/22 | 370,000 | 385,952 | |||||
Celgene Corp., 3.25%, 8/15/22 | 190,000 | 194,487 | |||||
Celgene Corp., 3.625%, 5/15/24 | 300,000 | 307,837 | |||||
Celgene Corp., 3.875%, 8/15/25 | 300,000 | 311,297 | |||||
Celgene Corp., 5.00%, 8/15/45 | 90,000 | 96,413 | |||||
Gilead Sciences, Inc., 4.40%, 12/1/21 | 310,000 | 334,969 | |||||
Gilead Sciences, Inc., 3.65%, 3/1/26 | 680,000 | 692,495 | |||||
3,229,611 | |||||||
Building Products† | |||||||
Masco Corp., 4.45%, 4/1/25 | 170,000 | 181,623 | |||||
Capital Markets — 0.1% | |||||||
Jefferies Group LLC, 5.125%, 4/13/18 | 110,000 | 113,353 | |||||
Jefferies Group LLC, 4.85%, 1/15/27 | 110,000 | 114,461 | |||||
UBS Group Funding Switzerland AG, 3.49%, 5/23/23(3) | 300,000 | 305,027 | |||||
532,841 | |||||||
Chemicals — 0.1% | |||||||
Ashland LLC, 4.75%, 8/15/22 | 160,000 | 167,400 | |||||
Dow Chemical Co. (The), 4.375%, 11/15/42 | 170,000 | 171,383 | |||||
Eastman Chemical Co., 3.60%, 8/15/22 | 95,000 | 98,444 | |||||
Ecolab, Inc., 4.35%, 12/8/21 | 250,000 | 271,390 | |||||
LyondellBasell Industries NV, 5.00%, 4/15/19 | 200,000 | 210,182 | |||||
LyondellBasell Industries NV, 4.625%, 2/26/55 | 140,000 | 131,615 | |||||
Mosaic Co. (The), 5.625%, 11/15/43 | 120,000 | 124,181 | |||||
1,174,595 | |||||||
Commercial Services and Supplies† | |||||||
Republic Services, Inc., 3.55%, 6/1/22 | 220,000 | 229,811 | |||||
Waste Management, Inc., 4.10%, 3/1/45 | 150,000 | 152,835 | |||||
382,646 | |||||||
Communications Equipment† | |||||||
Cisco Systems, Inc., 5.90%, 2/15/39 | 130,000 | 167,982 | |||||
CommScope Technologies LLC, 5.00%, 3/15/27(3) | 160,000 | 161,800 | |||||
329,782 | |||||||
Construction Materials† | |||||||
Owens Corning, 4.20%, 12/15/22 | 160,000 | 167,911 | |||||
Consumer Finance — 0.4% | |||||||
American Express Centurion Bank, MTN, 6.00%, 9/13/17 | 250,000 | 254,154 | |||||
American Express Co., 1.55%, 5/22/18 | 220,000 | 219,928 | |||||
American Express Credit Corp., 2.60%, 9/14/20 | 115,000 | 116,582 |
14
Shares/ Principal Amount | Value | ||||||
American Express Credit Corp., MTN, 2.25%, 5/5/21 | $ | 250,000 | $ | 249,444 | |||
American Express Credit Corp., MTN, 3.30%, 5/3/27(4) | 140,000 | 139,552 | |||||
Capital One Bank USA N.A., 2.30%, 6/5/19 | 250,000 | 250,521 | |||||
Capital One Bank USA N.A., 3.375%, 2/15/23 | 250,000 | 252,088 | |||||
CIT Group, Inc., 4.25%, 8/15/17 | 470,000 | 473,760 | |||||
CIT Group, Inc., 5.00%, 8/15/22 | 90,000 | 97,047 | |||||
Discover Bank, 3.45%, 7/27/26 | 250,000 | 243,729 | |||||
Equifax, Inc., 3.30%, 12/15/22 | 140,000 | 143,520 | |||||
GLP Capital LP / GLP Financing II, Inc., 4.875%, 11/1/20 | 150,000 | 160,500 | |||||
PNC Bank N.A., 1.95%, 3/4/19 | 300,000 | 300,811 | |||||
Synchrony Financial, 2.60%, 1/15/19 | 160,000 | 161,144 | |||||
Synchrony Financial, 3.00%, 8/15/19 | 90,000 | 91,400 | |||||
3,154,180 | |||||||
Containers and Packaging — 0.1% | |||||||
Ball Corp., 4.00%, 11/15/23 | 180,000 | 183,375 | |||||
Crown Americas LLC / Crown Americas Capital Corp. IV, 4.50%, 1/15/23 | 250,000 | 258,750 | |||||
WestRock RKT Co., 4.00%, 3/1/23 | 240,000 | 249,433 | |||||
691,558 | |||||||
Diversified Consumer Services† | |||||||
Catholic Health Initiatives, 2.95%, 11/1/22 | 110,000 | 107,366 | |||||
George Washington University (The), 3.55%, 9/15/46 | 115,000 | 102,420 | |||||
209,786 | |||||||
Diversified Financial Services — 1.1% | |||||||
Ally Financial, Inc., 3.50%, 1/27/19 | 100,000 | 101,500 | |||||
Ally Financial, Inc., 4.625%, 3/30/25 | 100,000 | 99,062 | |||||
Banco Santander SA, 3.50%, 4/11/22 | 400,000 | 404,610 | |||||
BNP Paribas SA, 4.375%, 9/28/25(3) | 200,000 | 204,126 | |||||
Credit Suisse Group Funding Guernsey Ltd., 3.45%, 4/16/21 | 280,000 | 286,114 | |||||
GE Capital International Funding Co. Unlimited Co., 2.34%, 11/15/20 | 694,000 | 699,637 | |||||
Goldman Sachs Group, Inc. (The), 2.30%, 12/13/19 | 860,000 | 862,415 | |||||
Goldman Sachs Group, Inc. (The), 5.375%, 3/15/20 | 110,000 | 119,181 | |||||
Goldman Sachs Group, Inc. (The), 5.75%, 1/24/22 | 460,000 | 519,595 | |||||
Goldman Sachs Group, Inc. (The), 3.50%, 1/23/25 | 460,000 | 462,777 | |||||
Goldman Sachs Group, Inc. (The), 4.25%, 10/21/25 | 130,000 | 134,050 | |||||
Goldman Sachs Group, Inc. (The), 3.50%, 11/16/26 | 100,000 | 99,304 | |||||
Goldman Sachs Group, Inc. (The), 5.15%, 5/22/45 | 100,000 | 106,028 | |||||
Goldman Sachs Group, Inc. (The), MTN, 4.80%, 7/8/44 | 400,000 | 430,989 | |||||
HSBC Holdings plc, 2.95%, 5/25/21 | 800,000 | 809,189 | |||||
HSBC Holdings plc, 4.30%, 3/8/26 | 400,000 | 422,940 | |||||
HSBC Holdings plc, 4.375%, 11/23/26 | 220,000 | 225,762 | |||||
HSBC Holdings plc, VRN, 3.26%, 3/13/22 | 220,000 | 222,969 | |||||
JPMorgan Chase & Co., VRN, 3.54%, 5/1/27 | 320,000 | 319,198 | |||||
Morgan Stanley, 5.00%, 11/24/25 | 810,000 | 880,854 | |||||
Morgan Stanley, 4.375%, 1/22/47 | 90,000 | 90,906 | |||||
Morgan Stanley, MTN, 5.625%, 9/23/19 | 870,000 | 940,086 |
15
Shares/ Principal Amount | Value | ||||||
Morgan Stanley, MTN, 2.50%, 4/21/21 | $ | 200,000 | $ | 199,601 | |||
Morgan Stanley, MTN, 3.70%, 10/23/24 | 460,000 | 471,931 | |||||
S&P Global, Inc., 3.30%, 8/14/20 | 120,000 | 123,096 | |||||
UBS Group Funding Jersey Ltd., 4.125%, 9/24/25(3) | 200,000 | 205,664 | |||||
9,441,584 | |||||||
Diversified Telecommunication Services — 0.6% | |||||||
AT&T, Inc., 5.00%, 3/1/21 | 250,000 | 271,683 | |||||
AT&T, Inc., 3.60%, 2/17/23 | 200,000 | 204,198 | |||||
AT&T, Inc., 4.45%, 4/1/24 | 120,000 | 126,484 | |||||
AT&T, Inc., 3.40%, 5/15/25 | 890,000 | 868,186 | |||||
AT&T, Inc., 6.55%, 2/15/39 | 287,000 | 339,566 | |||||
AT&T, Inc., 4.30%, 12/15/42 | 130,000 | 116,915 | |||||
British Telecommunications plc, 5.95%, 1/15/18 | 480,000 | 494,600 | |||||
CenturyLink, Inc., Series Q, 6.15%, 9/15/19 | 140,000 | 150,150 | |||||
Deutsche Telekom International Finance BV, 3.60%, 1/19/27(3) | 290,000 | 292,939 | |||||
Frontier Communications Corp., 8.50%, 4/15/20 | 150,000 | 159,187 | |||||
Orange SA, 4.125%, 9/14/21 | 210,000 | 223,197 | |||||
Orange SA, 5.50%, 2/6/44 | 80,000 | 93,088 | |||||
Telefonica Emisiones SAU, 5.46%, 2/16/21 | 100,000 | 110,674 | |||||
Telefonica Emisiones SAU, 5.21%, 3/8/47 | 180,000 | 186,875 | |||||
Verizon Communications, Inc., 2.45%, 11/1/22 | 130,000 | 127,241 | |||||
Verizon Communications, Inc., 2.625%, 8/15/26 | 160,000 | 146,931 | |||||
Verizon Communications, Inc., 4.125%, 3/16/27 | 150,000 | 153,259 | |||||
Verizon Communications, Inc., 5.05%, 3/15/34 | 570,000 | 584,888 | |||||
Verizon Communications, Inc., 4.75%, 11/1/41 | 150,000 | 145,263 | |||||
Verizon Communications, Inc., 4.86%, 8/21/46 | 250,000 | 243,720 | |||||
Verizon Communications, Inc., 5.01%, 8/21/54 | 199,000 | 194,526 | |||||
5,233,570 | |||||||
Energy Equipment and Services† | |||||||
Ensco plc, 5.20%, 3/15/25 | 40,000 | 34,100 | |||||
Halliburton Co., 3.80%, 11/15/25 | 220,000 | 226,660 | |||||
260,760 | |||||||
Equity Real Estate Investment Trusts (REITs) — 0.3% | |||||||
American Tower Corp., 5.05%, 9/1/20 | 130,000 | 140,634 | |||||
American Tower Corp., 3.375%, 10/15/26 | 280,000 | 273,252 | |||||
Boston Properties LP, 3.65%, 2/1/26 | 160,000 | 160,977 | |||||
Crown Castle International Corp., 5.25%, 1/15/23 | 180,000 | 199,457 | |||||
Crown Castle International Corp., 4.45%, 2/15/26 | 40,000 | 42,390 | |||||
Essex Portfolio LP, 3.625%, 8/15/22 | 150,000 | 154,900 | |||||
Essex Portfolio LP, 3.25%, 5/1/23 | 50,000 | 50,152 | |||||
Hospitality Properties Trust, 4.65%, 3/15/24 | 450,000 | 463,500 | |||||
Kilroy Realty LP, 3.80%, 1/15/23 | 140,000 | 145,005 | |||||
Kilroy Realty LP, 4.375%, 10/1/25 | 140,000 | 147,431 | |||||
Kimco Realty Corp., 2.80%, 10/1/26 | 240,000 | 222,982 | |||||
Simon Property Group LP, 3.25%, 11/30/26 | 150,000 | 149,013 | |||||
Ventas Realty LP, 4.125%, 1/15/26 | 100,000 | 102,978 |
16
Shares/ Principal Amount | Value | ||||||
VEREIT Operating Partnership LP, 4.125%, 6/1/21 | $ | 230,000 | $ | 240,494 | |||
Welltower, Inc., 3.75%, 3/15/23 | 130,000 | 134,107 | |||||
2,627,272 | |||||||
Food and Staples Retailing — 0.3% | |||||||
CVS Health Corp., 3.50%, 7/20/22 | 220,000 | 228,899 | |||||
CVS Health Corp., 2.75%, 12/1/22 | 170,000 | 170,364 | |||||
CVS Health Corp., 5.125%, 7/20/45 | 160,000 | 179,474 | |||||
Dollar General Corp., 3.25%, 4/15/23 | 160,000 | 162,171 | |||||
Kroger Co. (The), 3.30%, 1/15/21 | 330,000 | 339,977 | |||||
Kroger Co. (The), 3.875%, 10/15/46 | 150,000 | 136,423 | |||||
Mondelez International Holdings Netherlands BV, 1.625%, 10/28/19(3) | 350,000 | 345,115 | |||||
Sysco Corp., 3.30%, 7/15/26 | 100,000 | 99,401 | |||||
Target Corp., 2.50%, 4/15/26 | 310,000 | 295,856 | |||||
Wal-Mart Stores, Inc., 4.75%, 10/2/43 | 50,000 | 56,635 | |||||
Wal-Mart Stores, Inc., 4.30%, 4/22/44 | 390,000 | 416,005 | |||||
2,430,320 | |||||||
Food Products — 0.1% | |||||||
Kraft Heinz Foods Co., 3.95%, 7/15/25 | 100,000 | 102,845 | |||||
Kraft Heinz Foods Co., 5.20%, 7/15/45 | 140,000 | 148,383 | |||||
Kraft Heinz Foods Co., 4.375%, 6/1/46 | 120,000 | 114,670 | |||||
Lamb Weston Holdings, Inc., 4.625%, 11/1/24(3) | 210,000 | 217,350 | |||||
583,248 | |||||||
Gas Utilities — 0.6% | |||||||
Boardwalk Pipelines LP, 4.45%, 7/15/27 | 110,000 | 112,762 | |||||
Enbridge Energy Partners LP, 6.50%, 4/15/18 | 130,000 | 135,562 | |||||
Enbridge Energy Partners LP, 5.20%, 3/15/20 | 100,000 | 107,345 | |||||
Enbridge, Inc., 4.00%, 10/1/23 | 140,000 | 145,644 | |||||
Enbridge, Inc., 4.50%, 6/10/44 | 120,000 | 116,190 | |||||
Energy Transfer Equity LP, 7.50%, 10/15/20 | 150,000 | 169,781 | |||||
Energy Transfer Partners LP, 4.15%, 10/1/20 | 200,000 | 208,293 | |||||
Energy Transfer Partners LP, 3.60%, 2/1/23 | 160,000 | 161,483 | |||||
Energy Transfer Partners LP, 4.90%, 3/15/35 | 70,000 | 68,089 | |||||
Energy Transfer Partners LP, 6.50%, 2/1/42 | 180,000 | 200,570 | |||||
Enterprise Products Operating LLC, 4.85%, 3/15/44 | 460,000 | 472,577 | |||||
Enterprise Products Operating LLC, VRN, 7.03%, 1/15/18 | 140,000 | 145,250 | |||||
Kinder Morgan Energy Partners LP, 6.50%, 4/1/20 | 210,000 | 232,836 | |||||
Kinder Morgan Energy Partners LP, 5.30%, 9/15/20 | 170,000 | 183,945 | |||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39 | 210,000 | 236,351 | |||||
Kinder Morgan, Inc., 5.55%, 6/1/45 | 150,000 | 159,429 | |||||
Magellan Midstream Partners LP, 6.55%, 7/15/19 | 100,000 | 109,276 | |||||
MPLX LP, 4.875%, 6/1/25 | 410,000 | 436,782 | |||||
MPLX LP, 5.20%, 3/1/47 | 50,000 | 51,382 | |||||
Plains All American Pipeline LP / PAA Finance Corp., 3.65%, 6/1/22 | 310,000 | 314,224 | |||||
Sabine Pass Liquefaction LLC, 5.625%, 3/1/25 | 450,000 | 492,701 | |||||
Sunoco Logistics Partners Operations LP, 3.45%, 1/15/23 | 330,000 | 332,165 |
17
Shares/ Principal Amount | Value | ||||||
Sunoco Logistics Partners Operations LP, 3.90%, 7/15/26 | $ | 100,000 | $ | 99,320 | |||
Williams Cos., Inc. (The), 3.70%, 1/15/23 | 100,000 | 99,000 | |||||
Williams Partners LP, 4.125%, 11/15/20 | 200,000 | 209,640 | |||||
Williams Partners LP, 5.10%, 9/15/45 | 200,000 | 204,725 | |||||
5,205,322 | |||||||
Health Care Equipment and Supplies — 0.3% | |||||||
Abbott Laboratories, 2.00%, 9/15/18 | 110,000 | 110,104 | |||||
Abbott Laboratories, 3.75%, 11/30/26 | 300,000 | 304,267 | |||||
Becton Dickinson and Co., 3.73%, 12/15/24 | 280,000 | 282,046 | |||||
Medtronic, Inc., 2.50%, 3/15/20 | 130,000 | 132,485 | |||||
Medtronic, Inc., 3.50%, 3/15/25 | 230,000 | 237,719 | |||||
Medtronic, Inc., 4.375%, 3/15/35 | 360,000 | 381,640 | |||||
Thermo Fisher Scientific, Inc., 3.60%, 8/15/21 | 150,000 | 156,437 | |||||
Thermo Fisher Scientific, Inc., 3.30%, 2/15/22 | 148,000 | 152,032 | |||||
Thermo Fisher Scientific, Inc., 2.95%, 9/19/26 | 130,000 | 125,164 | |||||
Thermo Fisher Scientific, Inc., 5.30%, 2/1/44 | 110,000 | 125,495 | |||||
Zimmer Biomet Holdings, Inc., 2.70%, 4/1/20 | 120,000 | 121,403 | |||||
2,128,792 | |||||||
Health Care Providers and Services — 0.2% | |||||||
Aetna, Inc., 2.75%, 11/15/22 | 130,000 | 130,816 | |||||
Ascension Health, 3.95%, 11/15/46 | 40,000 | 39,099 | |||||
Express Scripts Holding Co., 3.40%, 3/1/27 | 80,000 | 76,290 | |||||
HCA, Inc., 3.75%, 3/15/19 | 310,000 | 317,750 | |||||
Johns Hopkins Health System Corp. (The), 3.84%, 5/15/46 | 100,000 | 97,924 | |||||
Kaiser Foundation Hospitals, 4.15%, 5/1/47(4) | 80,000 | 80,734 | |||||
Mylan NV, 3.95%, 6/15/26 | 130,000 | 128,823 | |||||
NYU Hospitals Center, 4.43%, 7/1/42 | 90,000 | 91,650 | |||||
UnitedHealth Group, Inc., 2.875%, 12/15/21 | 230,000 | 236,370 | |||||
UnitedHealth Group, Inc., 2.875%, 3/15/22 | 310,000 | 318,082 | |||||
UnitedHealth Group, Inc., 3.75%, 7/15/25 | 210,000 | 221,092 | |||||
Universal Health Services, Inc., 4.75%, 8/1/22(3) | 130,000 | 134,311 | |||||
1,872,941 | |||||||
Hotels, Restaurants and Leisure — 0.1% | |||||||
Aramark Services, Inc., 5.00%, 4/1/25(3) | 100,000 | 104,750 | |||||
Hilton Domestic Operating Co., Inc., 4.25%, 9/1/24(3) | 170,000 | 171,700 | |||||
McDonald's Corp., MTN, 3.25%, 6/10/24 | 100,000 | 103,308 | |||||
McDonald's Corp., MTN, 3.375%, 5/26/25 | 80,000 | 81,765 | |||||
McDonald's Corp., MTN, 4.45%, 3/1/47 | 330,000 | 338,871 | |||||
Royal Caribbean Cruises Ltd., 5.25%, 11/15/22 | 130,000 | 143,975 | |||||
944,369 | |||||||
Household Durables — 0.2% | |||||||
D.R. Horton, Inc., 3.625%, 2/15/18 | 270,000 | 272,539 | |||||
D.R. Horton, Inc., 5.75%, 8/15/23 | 110,000 | 124,693 | |||||
Lennar Corp., 4.75%, 12/15/17 | 210,000 | 212,363 | |||||
Lennar Corp., 4.75%, 4/1/21 | 152,000 | 160,550 | |||||
M.D.C. Holdings, Inc., 5.50%, 1/15/24 | 140,000 | 146,258 | |||||
Newell Brands, Inc., 4.20%, 4/1/26 | 110,000 | 115,739 |
18
Shares/ Principal Amount | Value | ||||||
Newell Brands, Inc., 5.50%, 4/1/46 | $ | 260,000 | $ | 302,979 | |||
Toll Brothers Finance Corp., 6.75%, 11/1/19 | 100,000 | 110,375 | |||||
TRI Pointe Group, Inc. / TRI Pointe Homes, Inc., 4.375%, 6/15/19 | 100,000 | 103,500 | |||||
1,548,996 | |||||||
Industrial Conglomerates — 0.1% | |||||||
FedEx Corp., 4.40%, 1/15/47 | 130,000 | 128,448 | |||||
General Electric Co., 2.70%, 10/9/22 | 210,000 | 213,804 | |||||
General Electric Co., 4.125%, 10/9/42 | 180,000 | 186,294 | |||||
General Electric Co., MTN, 4.375%, 9/16/20 | 250,000 | 269,120 | |||||
Ingersoll-Rand Luxembourg Finance SA, 3.55%, 11/1/24 | 170,000 | 174,292 | |||||
971,958 | |||||||
Insurance — 0.6% | |||||||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust, 3.75%, 5/15/19 | 150,000 | 154,391 | |||||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust, 5.00%, 10/1/21 | 300,000 | 324,851 | |||||
Allianz Finance II BV, MTN, VRN, 5.75%, 7/8/21 | EUR | 600,000 | 769,078 | ||||
American International Group, Inc., 4.125%, 2/15/24 | $ | 550,000 | 573,921 | ||||
American International Group, Inc., 4.50%, 7/16/44 | 120,000 | 117,843 | |||||
Berkshire Hathaway Finance Corp., 3.00%, 5/15/22 | 230,000 | 236,850 | |||||
Berkshire Hathaway, Inc., 4.50%, 2/11/43 | 220,000 | 238,333 | |||||
Chubb INA Holdings, Inc., 3.15%, 3/15/25 | 280,000 | 283,577 | |||||
Chubb INA Holdings, Inc., 3.35%, 5/3/26 | 110,000 | 112,696 | |||||
CNP Assurances, VRN, 4.00%, 11/18/24 | EUR | 300,000 | 344,386 | ||||
Hartford Financial Services Group, Inc. (The), 5.95%, 10/15/36 | $ | 50,000 | 59,406 | ||||
International Lease Finance Corp., 6.25%, 5/15/19 | 100,000 | 107,846 | |||||
Markel Corp., 4.90%, 7/1/22 | 190,000 | 207,534 | |||||
Markel Corp., 3.625%, 3/30/23 | 100,000 | 103,086 | |||||
MetLife, Inc., 4.125%, 8/13/42 | 110,000 | 110,101 | |||||
MetLife, Inc., 4.875%, 11/13/43 | 110,000 | 121,365 | |||||
Metropolitan Life Global Funding I, 3.00%, 1/10/23(3) | 200,000 | 202,944 | |||||
Principal Financial Group, Inc., 3.30%, 9/15/22 | 70,000 | 71,756 | |||||
Prudential Financial, Inc., 5.375%, 6/21/20 | 70,000 | 76,827 | |||||
Prudential Financial, Inc., 5.625%, 5/12/41 | 370,000 | 439,828 | |||||
Travelers Cos., Inc. (The), 4.30%, 8/25/45 | 60,000 | 63,250 | |||||
Voya Financial, Inc., 5.70%, 7/15/43 | 160,000 | 179,820 | |||||
WR Berkley Corp., 4.625%, 3/15/22 | 130,000 | 140,227 | |||||
WR Berkley Corp., 4.75%, 8/1/44 | 90,000 | 90,843 | |||||
5,130,759 | |||||||
IT Services — 0.1% | |||||||
Fidelity National Information Services, Inc., 1.45%, 6/5/17 | 150,000 | 149,995 | |||||
Fidelity National Information Services, Inc., 3.875%, 6/5/24 | 260,000 | 269,747 | |||||
Fidelity National Information Services, Inc., 3.00%, 8/15/26 | 200,000 | 192,007 | |||||
Hewlett Packard Enterprise Co., 3.60%, 10/15/20 | 280,000 | 290,290 | |||||
Hewlett Packard Enterprise Co., 4.90%, 10/15/25 | 130,000 | 136,824 | |||||
1,038,863 |
19
Shares/ Principal Amount | Value | ||||||
Machinery† | |||||||
Oshkosh Corp., 5.375%, 3/1/22 | $ | 290,000 | $ | 302,325 | |||
Media — 0.7% | |||||||
21st Century Fox America, Inc., 3.70%, 10/15/25 | 220,000 | 225,863 | |||||
21st Century Fox America, Inc., 6.90%, 8/15/39 | 70,000 | 90,796 | |||||
21st Century Fox America, Inc., 4.75%, 9/15/44 | 80,000 | 81,726 | |||||
CBS Corp., 3.50%, 1/15/25 | 100,000 | 100,820 | |||||
CBS Corp., 4.85%, 7/1/42 | 60,000 | 61,414 | |||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 4.91%, 7/23/25 | 870,000 | 934,488 | |||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 6.48%, 10/23/45 | 70,000 | 82,232 | |||||
Comcast Corp., 6.40%, 5/15/38 | 310,000 | 398,708 | |||||
Comcast Corp., 4.75%, 3/1/44 | 260,000 | 277,615 | |||||
Discovery Communications LLC, 5.625%, 8/15/19 | 56,000 | 60,371 | |||||
Discovery Communications LLC, 3.25%, 4/1/23 | 140,000 | 138,545 | |||||
Discovery Communications LLC, 4.90%, 3/11/26 | 130,000 | 136,703 | |||||
Interpublic Group of Cos., Inc. (The), 4.00%, 3/15/22 | 160,000 | 167,623 | |||||
Lamar Media Corp., 5.375%, 1/15/24 | 180,000 | 190,800 | |||||
NBCUniversal Media LLC, 2.875%, 1/15/23 | 120,000 | 121,526 | |||||
NBCUniversal Media LLC,, 4.375%, 4/1/21 | 380,000 | 410,782 | |||||
Nielsen Finance LLC / Nielsen Finance Co., 5.00%, 4/15/22(3) | 160,000 | 165,100 | |||||
Omnicom Group, Inc., 3.60%, 4/15/26 | 270,000 | 272,569 | |||||
TEGNA, Inc., 5.125%, 7/15/20 | 330,000 | 341,137 | |||||
Time Warner Cable LLC, 6.75%, 7/1/18 | 130,000 | 137,120 | |||||
Time Warner Cable LLC, 5.50%, 9/1/41 | 70,000 | 72,711 | |||||
Time Warner Cable LLC, 4.50%, 9/15/42 | 100,000 | 92,045 | |||||
Time Warner, Inc., 4.70%, 1/15/21 | 140,000 | 150,722 | |||||
Time Warner, Inc., 3.60%, 7/15/25 | 400,000 | 398,291 | |||||
Time Warner, Inc., 3.80%, 2/15/27 | 150,000 | 149,638 | |||||
Time Warner, Inc., 5.35%, 12/15/43 | 120,000 | 124,576 | |||||
Viacom, Inc., 3.125%, 6/15/22 | 190,000 | 190,121 | |||||
Viacom, Inc., 4.25%, 9/1/23 | 160,000 | 166,724 | |||||
Virgin Media Secured Finance plc, 5.25%, 1/15/26(3) | 200,000 | 203,250 | |||||
Walt Disney Co. (The), MTN, 4.125%, 6/1/44 | 80,000 | 82,230 | |||||
6,026,246 | |||||||
Metals and Mining — 0.1% | |||||||
Barrick North America Finance LLC, 5.75%, 5/1/43 | 70,000 | 82,181 | |||||
Glencore Finance Canada Ltd., 4.95%, 11/15/21(3) | 110,000 | 118,321 | |||||
Southern Copper Corp., 5.25%, 11/8/42 | 100,000 | 98,084 | |||||
Steel Dynamics, Inc., 5.00%, 12/15/26(3) | 200,000 | 205,000 | |||||
Vale Overseas Ltd., 5.625%, 9/15/19 | 90,000 | 95,697 | |||||
Vale Overseas Ltd., 6.25%, 8/10/26 | 150,000 | 164,295 | |||||
763,578 | |||||||
Multi-Utilities — 0.6% | |||||||
AmeriGas Partners LP / AmeriGas Finance Corp., 5.625%, 5/20/24 | 180,000 | 184,050 |
20
Shares/ Principal Amount | Value | ||||||
Berkshire Hathaway Energy Co., 3.50%, 2/1/25 | $ | 160,000 | $ | 164,525 | |||
CMS Energy Corp., 8.75%, 6/15/19 | 180,000 | 204,524 | |||||
Consolidated Edison Co. of New York, Inc., 3.95%, 3/1/43 | 150,000 | 149,027 | |||||
Dominion Resources, Inc., 6.40%, 6/15/18 | 190,000 | 199,176 | |||||
Dominion Resources, Inc., 2.75%, 9/15/22 | 210,000 | 208,560 | |||||
Dominion Resources, Inc., 3.625%, 12/1/24 | 300,000 | 306,107 | |||||
Dominion Resources, Inc., 4.90%, 8/1/41 | 120,000 | 127,731 | |||||
Duke Energy Corp., 3.55%, 9/15/21 | 90,000 | 93,773 | |||||
Duke Energy Florida LLC, 6.35%, 9/15/37 | 110,000 | 145,676 | |||||
Duke Energy Florida LLC, 3.85%, 11/15/42 | 220,000 | 215,551 | |||||
Duke Energy Progress LLC, 4.15%, 12/1/44 | 130,000 | 134,194 | |||||
Exelon Corp., 5.15%, 12/1/20 | 220,000 | 237,993 | |||||
Exelon Corp., 4.45%, 4/15/46 | 140,000 | 141,020 | |||||
Exelon Generation Co. LLC, 4.25%, 6/15/22 | 120,000 | 126,287 | |||||
Exelon Generation Co. LLC, 5.60%, 6/15/42 | 70,000 | 67,407 | |||||
FirstEnergy Corp., 4.25%, 3/15/23 | 180,000 | 187,755 | |||||
Florida Power & Light Co., 4.125%, 2/1/42 | 140,000 | 146,849 | |||||
Georgia Power Co., 4.30%, 3/15/42 | 70,000 | 69,969 | |||||
IPALCO Enterprises, Inc., 5.00%, 5/1/18 | 230,000 | 237,475 | |||||
MidAmerican Energy Co., 4.40%, 10/15/44 | 250,000 | 268,781 | |||||
NextEra Energy Capital Holdings, Inc., 3.55%, 5/1/27 | 290,000 | 291,527 | |||||
NextEra Energy Capital Holdings, Inc., VRN, 7.30%, 9/1/17 | 210,000 | 211,562 | |||||
NiSource Finance Corp., 5.65%, 2/1/45 | 140,000 | 167,816 | |||||
Pacific Gas & Electric Co., 4.00%, 12/1/46 | 200,000 | 200,827 | |||||
Potomac Electric Power Co., 3.60%, 3/15/24 | 120,000 | 124,886 | |||||
Progress Energy, Inc., 3.15%, 4/1/22 | 90,000 | 91,756 | |||||
Sempra Energy, 2.875%, 10/1/22 | 200,000 | 200,968 | |||||
Southern Co. Gas Capital Corp., 3.95%, 10/1/46 | 90,000 | 84,047 | |||||
Southern Power Co., 5.15%, 9/15/41 | 40,000 | 41,421 | |||||
Virginia Electric & Power Co., 3.45%, 2/15/24 | 160,000 | 165,755 | |||||
Xcel Energy, Inc., 3.35%, 12/1/26 | 100,000 | 101,087 | |||||
Xcel Energy, Inc., 4.80%, 9/15/41 | 50,000 | 52,381 | |||||
5,350,463 | |||||||
Multiline Retail† | |||||||
Macy's Retail Holdings, Inc., 2.875%, 2/15/23 | 190,000 | 178,380 | |||||
Oil, Gas and Consumable Fuels — 0.7% | |||||||
Anadarko Petroleum Corp., 5.55%, 3/15/26 | 180,000 | 201,818 | |||||
Anadarko Petroleum Corp., 6.45%, 9/15/36 | 110,000 | 130,727 | |||||
Antero Resources Corp., 5.00%, 3/1/25(3) | 230,000 | 227,700 | |||||
Apache Corp., 4.75%, 4/15/43 | 120,000 | 122,606 | |||||
BP Capital Markets plc, 4.50%, 10/1/20 | 100,000 | 107,624 | |||||
BP Capital Markets plc, 2.75%, 5/10/23 | 200,000 | 199,393 | |||||
Cenovus Energy, Inc., 4.25%, 4/15/27(3) | 110,000 | 109,488 | |||||
Chevron Corp., 2.10%, 5/16/21 | 280,000 | 279,405 | |||||
Cimarex Energy Co., 4.375%, 6/1/24 | 220,000 | 231,347 | |||||
CNOOC Nexen Finance 2014 ULC, 4.25%, 4/30/24 | 140,000 | 146,336 | |||||
Concho Resources, Inc., 5.50%, 4/1/23 | 180,000 | 187,538 |
21
Shares/ Principal Amount | Value | ||||||
Concho Resources, Inc., 4.375%, 1/15/25 | $ | 200,000 | $ | 203,500 | |||
ConocoPhillips Holding Co., 6.95%, 4/15/29 | 40,000 | 52,126 | |||||
Ecopetrol SA, 4.125%, 1/16/25 | 90,000 | 87,255 | |||||
Encana Corp., 6.50%, 2/1/38 | 170,000 | 192,284 | |||||
EOG Resources, Inc., 5.625%, 6/1/19 | 150,000 | 160,925 | |||||
EOG Resources, Inc., 4.10%, 2/1/21 | 130,000 | 137,427 | |||||
Exxon Mobil Corp., 2.71%, 3/6/25 | 280,000 | 278,040 | |||||
Exxon Mobil Corp., 3.04%, 3/1/26 | 100,000 | 101,121 | |||||
Hess Corp., 6.00%, 1/15/40 | 190,000 | 197,974 | |||||
Marathon Oil Corp., 3.85%, 6/1/25 | 210,000 | 208,947 | |||||
Marathon Oil Corp., 5.20%, 6/1/45 | 90,000 | 90,812 | |||||
Newfield Exploration Co., 5.75%, 1/30/22 | 220,000 | 234,850 | |||||
Noble Energy, Inc., 4.15%, 12/15/21 | 290,000 | 306,829 | |||||
Petroleos Mexicanos, 6.00%, 3/5/20 | 120,000 | 129,660 | |||||
Petroleos Mexicanos, 4.875%, 1/24/22 | 240,000 | 248,640 | |||||
Petroleos Mexicanos, 3.50%, 1/30/23 | 60,000 | 57,426 | |||||
Petroleos Mexicanos, 6.625%, 6/15/35 | 50,000 | 52,250 | |||||
Petroleos Mexicanos, 5.50%, 6/27/44 | 230,000 | 202,975 | |||||
Phillips 66, 4.30%, 4/1/22 | 250,000 | 270,080 | |||||
Shell International Finance BV, 2.375%, 8/21/22 | 130,000 | 129,008 | |||||
Shell International Finance BV, 3.25%, 5/11/25 | 200,000 | 204,118 | |||||
Shell International Finance BV, 3.625%, 8/21/42 | 140,000 | 127,558 | |||||
Statoil ASA, 2.45%, 1/17/23 | 190,000 | 189,106 | |||||
Statoil ASA, 3.95%, 5/15/43 | 150,000 | 147,376 | |||||
Suncor Energy, Inc., 6.50%, 6/15/38 | 70,000 | 88,749 | |||||
Total Capital Canada Ltd., 2.75%, 7/15/23 | 120,000 | 120,579 | |||||
6,163,597 | |||||||
Paper and Forest Products — 0.1% | |||||||
Georgia-Pacific LLC, 5.40%, 11/1/20(3) | 350,000 | 384,528 | |||||
International Paper Co., 6.00%, 11/15/41 | 70,000 | 84,531 | |||||
International Paper Co., 4.40%, 8/15/47 | 190,000 | 186,640 | |||||
655,699 | |||||||
Pharmaceuticals — 0.3% | |||||||
Actavis Funding SCS, 3.85%, 6/15/24 | 320,000 | 329,225 | |||||
Actavis Funding SCS, 4.55%, 3/15/35 | 150,000 | 151,804 | |||||
Actavis, Inc., 1.875%, 10/1/17 | 220,000 | 220,197 | |||||
Actavis, Inc., 3.25%, 10/1/22 | 200,000 | 203,274 | |||||
Actavis, Inc., 4.625%, 10/1/42 | 60,000 | 59,422 | |||||
Baxalta, Inc., 4.00%, 6/23/25 | 230,000 | 236,959 | |||||
Forest Laboratories LLC, 4.875%, 2/15/21(3) | 270,000 | 291,849 | |||||
GlaxoSmithKline Capital plc, 2.85%, 5/8/22 | 250,000 | 254,312 | |||||
Merck & Co., Inc., 2.40%, 9/15/22 | 100,000 | 100,344 | |||||
Perrigo Finance Unlimited Co., 3.50%, 3/15/21 | 200,000 | 205,200 | |||||
Shire Acquisitions Investments Ireland DAC, 2.40%, 9/23/21 | 460,000 | 454,880 | |||||
2,507,466 | |||||||
Road and Rail — 0.2% | |||||||
Burlington Northern Santa Fe LLC, 3.60%, 9/1/20 | 176,000 | 184,366 |
22
Shares/ Principal Amount | Value | ||||||
Burlington Northern Santa Fe LLC, 3.25%, 6/15/27 | $ | 70,000 | $ | 71,519 | |||
Burlington Northern Santa Fe LLC, 4.95%, 9/15/41 | 50,000 | 56,822 | |||||
Burlington Northern Santa Fe LLC, 4.45%, 3/15/43 | 220,000 | 233,576 | |||||
Burlington Northern Santa Fe LLC, 4.15%, 4/1/45 | 180,000 | 183,464 | |||||
CSX Corp., 3.40%, 8/1/24 | 180,000 | 185,486 | |||||
CSX Corp., 3.80%, 11/1/46 | 60,000 | 56,652 | |||||
Norfolk Southern Corp., 5.75%, 4/1/18 | 40,000 | 41,511 | |||||
Norfolk Southern Corp., 3.25%, 12/1/21 | 200,000 | 206,913 | |||||
Penske Truck Leasing Co. LP / PTL Finance Corp., 2.875%, 7/17/18(3) | 40,000 | 40,467 | |||||
Union Pacific Corp., 4.00%, 2/1/21 | 100,000 | 106,482 | |||||
Union Pacific Corp., 4.75%, 9/15/41 | 150,000 | 164,788 | |||||
Union Pacific Corp., 4.05%, 11/15/45 | 80,000 | 80,510 | |||||
1,612,556 | |||||||
Semiconductors and Semiconductor Equipment — 0.1% | |||||||
Lam Research Corp., 2.80%, 6/15/21 | 330,000 | 333,762 | |||||
NXP BV / NXP Funding LLC, 4.125%, 6/15/20(3) | 200,000 | 210,250 | |||||
544,012 | |||||||
Software — 0.2% | |||||||
Microsoft Corp., 2.70%, 2/12/25 | 570,000 | 568,724 | |||||
Microsoft Corp., 3.125%, 11/3/25 | 110,000 | 112,539 | |||||
Microsoft Corp., 3.45%, 8/8/36 | 220,000 | 211,876 | |||||
Microsoft Corp., 4.25%, 2/6/47 | 240,000 | 249,636 | |||||
Oracle Corp., 2.50%, 10/15/22 | 260,000 | 260,972 | |||||
Oracle Corp., 3.625%, 7/15/23 | 280,000 | 296,591 | |||||
Oracle Corp., 2.65%, 7/15/26 | 100,000 | 96,642 | |||||
Oracle Corp., 4.30%, 7/8/34 | 160,000 | 168,875 | |||||
Oracle Corp., 4.00%, 7/15/46 | 150,000 | 146,822 | |||||
2,112,677 | |||||||
Specialty Retail — 0.1% | |||||||
Home Depot, Inc. (The), 3.35%, 9/15/25 | 120,000 | 124,322 | |||||
Home Depot, Inc. (The), 5.95%, 4/1/41 | 360,000 | 467,865 | |||||
Lowe's Cos., Inc., 3.10%, 5/3/27(4) | 190,000 | 190,220 | |||||
Lowe's Cos., Inc., 4.05%, 5/3/47(4) | 80,000 | 79,735 | |||||
United Rentals North America, Inc., 4.625%, 7/15/23 | 170,000 | 177,106 | |||||
1,039,248 | |||||||
Technology Hardware, Storage and Peripherals — 0.2% | |||||||
Apple, Inc., 2.85%, 5/6/21 | 180,000 | 185,548 | |||||
Apple, Inc., 3.00%, 2/9/24 | 100,000 | 102,050 | |||||
Apple, Inc., 2.50%, 2/9/25 | 540,000 | 529,157 | |||||
Apple, Inc., 4.65%, 2/23/46 | 100,000 | 109,107 | |||||
Dell International LLC / EMC Corp., 6.02%, 6/15/26(3) | 670,000 | 739,285 | |||||
Seagate HDD Cayman, 4.75%, 6/1/23 | 210,000 | 213,380 | |||||
1,878,527 | |||||||
Textiles, Apparel and Luxury Goods† | |||||||
PVH Corp., 4.50%, 12/15/22 | 210,000 | 216,300 |
23
Shares/ Principal Amount | Value | ||||||
Tobacco — 0.1% | |||||||
Altria Group, Inc., 2.85%, 8/9/22 | $ | 270,000 | $ | 273,047 | |||
Philip Morris International, Inc., 4.125%, 5/17/21 | 180,000 | 192,379 | |||||
465,426 | |||||||
Wireless Telecommunication Services — 0.1% | |||||||
America Movil SAB de CV, 3.125%, 7/16/22 | 310,000 | 315,331 | |||||
Sprint Communications, Inc., 9.00%, 11/15/18(3) | 200,000 | 219,250 | |||||
534,581 | |||||||
TOTAL CORPORATE BONDS (Cost $100,007,351) | 102,241,210 | ||||||
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES(5) — 9.8% | |||||||
Adjustable-Rate U.S. Government Agency Mortgage-Backed Securities — 1.1% | |||||||
FHLMC, VRN, 1.81%, 5/15/17 | 96,366 | 99,347 | |||||
FHLMC, VRN, 1.91%, 5/15/17 | 162,525 | 167,173 | |||||
FHLMC, VRN, 1.99%, 5/15/17 | 130,789 | 135,695 | |||||
FHLMC, VRN, 2.32%, 5/15/17 | 574,830 | 583,183 | |||||
FHLMC, VRN, 2.38%, 5/15/17 | 351,488 | 359,648 | |||||
FHLMC, VRN, 2.51%, 5/15/17 | 644,743 | 664,427 | |||||
FHLMC, VRN, 2.59%, 5/15/17 | 288,522 | 295,073 | |||||
FHLMC, VRN, 2.68%, 5/15/17 | 266,845 | 282,250 | |||||
FHLMC, VRN, 2.86%, 5/15/17 | 126,857 | 134,231 | |||||
FHLMC, VRN, 2.87%, 5/15/17 | 323,064 | 333,773 | |||||
FHLMC, VRN, 2.88%, 5/15/17 | 635,555 | 670,382 | |||||
FHLMC, VRN, 2.92%, 5/15/17 | 244,472 | 258,106 | |||||
FHLMC, VRN, 3.08%, 5/15/17 | 29,419 | 31,098 | |||||
FHLMC, VRN, 3.14%, 5/15/17 | 139,697 | 146,738 | |||||
FHLMC, VRN, 3.20%, 5/15/17 | 67,481 | 71,256 | |||||
FHLMC, VRN, 3.67%, 5/15/17 | 106,093 | 111,064 | |||||
FHLMC, VRN, 4.07%, 5/15/17 | 116,300 | 120,757 | |||||
FHLMC, VRN, 4.11%, 5/15/17 | 57,160 | 59,239 | |||||
FHLMC, VRN, 4.18%, 5/15/17 | 102,885 | 106,046 | |||||
FHLMC, VRN, 4.25%, 5/15/17 | 273,093 | 284,193 | |||||
FHLMC, VRN, 4.32%, 5/15/17 | 131,897 | 137,989 | |||||
FHLMC, VRN, 5.12%, 5/15/17 | 20,426 | 21,195 | |||||
FNMA, VRN, 2.04%, 5/25/17 | 707,423 | 733,007 | |||||
FNMA, VRN, 2.625%, 5/25/17 | 440,921 | 450,738 | |||||
FNMA, VRN, 2.80%, 5/25/17 | 180,849 | 189,411 | |||||
FNMA, VRN, 2.82%, 5/25/17 | 246,525 | 260,522 | |||||
FNMA, VRN, 2.82%, 5/25/17 | 290,406 | 302,091 | |||||
FNMA, VRN, 2.82%, 5/25/17 | 210,622 | 219,459 | |||||
FNMA, VRN, 2.82%, 5/25/17 | 481,133 | 500,521 | |||||
FNMA, VRN, 2.82%, 5/25/17 | 360,316 | 375,241 | |||||
FNMA, VRN, 3.07%, 5/25/17 | 34,151 | 35,861 | |||||
FNMA, VRN, 3.21%, 5/25/17 | 349,372 | 359,372 | |||||
FNMA, VRN, 3.30%, 5/25/17 | 59,507 | 62,852 | |||||
FNMA, VRN, 3.31%, 5/25/17 | 113,346 | 118,283 | |||||
FNMA, VRN, 3.32%, 5/25/17 | 48,004 | 50,256 |
24
Shares/ Principal Amount | Value | ||||||
FNMA, VRN, 3.60%, 5/25/17 | $ | 176,401 | $ | 184,682 | |||
FNMA, VRN, 3.93%, 5/25/17 | 146,751 | 152,755 | |||||
FNMA, VRN, 4.97%, 5/25/17 | 78,172 | 82,792 | |||||
9,150,706 | |||||||
Fixed-Rate U.S. Government Agency Mortgage-Backed Securities — 8.7% | |||||||
FHLMC, 4.50%, 1/1/19 | 47,739 | 49,017 | |||||
FHLMC, 6.50%, 1/1/28 | 16,738 | 19,043 | |||||
FHLMC, 5.50%, 12/1/33 | 127,301 | 143,677 | |||||
FHLMC, 5.00%, 7/1/35 | 1,125,083 | 1,241,480 | |||||
FHLMC, 5.50%, 1/1/38 | 114,761 | 127,508 | |||||
FHLMC, 6.00%, 8/1/38 | 59,903 | 68,256 | |||||
FHLMC, 3.00%, 2/1/43 | 983,806 | 988,954 | |||||
FHLMC, 6.50%, 7/1/47 | 7,133 | 7,662 | |||||
FNMA, 3.00%, 5/11/17(6) | 5,250,000 | 5,245,488 | |||||
FNMA, 3.50%, 5/11/17(6) | 13,900,000 | 14,294,195 | |||||
FNMA, 4.00%, 5/11/17(6) | 7,450,000 | 7,846,945 | |||||
FNMA, 4.50%, 5/11/17(6) | 1,705,000 | 1,834,740 | |||||
FNMA, 4.50%, 5/1/19 | 20,590 | 21,137 | |||||
FNMA, 4.50%, 5/1/19 | 50,984 | 52,338 | |||||
FNMA, 5.00%, 9/1/20 | 152,340 | 157,074 | |||||
FNMA, 6.50%, 1/1/28 | 14,985 | 16,660 | |||||
FNMA, 6.50%, 1/1/29 | 23,791 | 27,226 | |||||
FNMA, 7.50%, 7/1/29 | 56,519 | 63,202 | |||||
FNMA, 7.50%, 9/1/30 | 13,965 | 16,818 | |||||
FNMA, 5.00%, 7/1/31 | 697,990 | 767,520 | |||||
FNMA, 6.50%, 9/1/31 | 16,053 | 17,857 | |||||
FNMA, 7.00%, 9/1/31 | 8,173 | 9,017 | |||||
FNMA, 6.50%, 1/1/32 | 19,509 | 21,701 | |||||
FNMA, 6.50%, 8/1/32 | 24,721 | 28,385 | |||||
FNMA, 5.50%, 6/1/33 | 73,574 | 82,665 | |||||
FNMA, 5.50%, 7/1/33 | 123,026 | 137,859 | |||||
FNMA, 5.50%, 8/1/33 | 208,522 | 233,847 | |||||
FNMA, 5.50%, 9/1/33 | 138,648 | 156,849 | |||||
FNMA, 5.00%, 11/1/33 | 412,812 | 454,232 | |||||
FNMA, 5.00%, 4/1/35 | 542,877 | 595,569 | |||||
FNMA, 4.50%, 9/1/35 | 247,789 | 267,880 | |||||
FNMA, 5.00%, 2/1/36 | 355,787 | 390,755 | |||||
FNMA, 5.50%, 4/1/36 | 133,596 | 149,489 | |||||
FNMA, 5.50%, 5/1/36 | 258,636 | 289,370 | |||||
FNMA, 5.00%, 11/1/36 | 948,661 | 1,042,156 | |||||
FNMA, 5.50%, 2/1/37 | 64,346 | 71,777 | |||||
FNMA, 6.00%, 7/1/37 | 533,846 | 609,145 | |||||
FNMA, 6.50%, 8/1/37 | 124,295 | 137,795 | |||||
FNMA, 5.50%, 7/1/39 | 436,036 | 488,282 | |||||
FNMA, 5.00%, 4/1/40 | 1,050,861 | 1,153,091 | |||||
FNMA, 5.00%, 6/1/40 | 852,837 | 935,467 | |||||
FNMA, 4.50%, 8/1/40 | 1,260,186 | 1,361,733 |
25
Shares/ Principal Amount | Value | ||||||
FNMA, 4.50%, 9/1/40 | $ | 2,341,520 | $ | 2,536,942 | |||
FNMA, 3.50%, 1/1/41 | 1,267,723 | 1,311,720 | |||||
FNMA, 4.00%, 1/1/41 | 1,199,761 | 1,280,270 | |||||
FNMA, 4.00%, 5/1/41 | 1,263,817 | 1,336,387 | |||||
FNMA, 4.50%, 7/1/41 | 442,621 | 479,577 | |||||
FNMA, 4.50%, 9/1/41 | 460,214 | 497,437 | |||||
FNMA, 4.50%, 9/1/41 | 1,975,640 | 2,135,773 | |||||
FNMA, 4.00%, 12/1/41 | 1,156,077 | 1,228,865 | |||||
FNMA, 4.00%, 1/1/42 | 695,478 | 735,661 | |||||
FNMA, 4.00%, 1/1/42 | 938,405 | 992,433 | |||||
FNMA, 3.50%, 5/1/42 | 1,805,186 | 1,866,790 | |||||
FNMA, 3.50%, 6/1/42 | 627,316 | 648,651 | |||||
FNMA, 3.00%, 11/1/42 | 1,526,015 | 1,533,683 | |||||
FNMA, 3.50%, 5/1/45 | 1,761,468 | 1,815,514 | |||||
FNMA, 6.50%, 8/1/47 | 13,831 | 14,972 | |||||
FNMA, 6.50%, 9/1/47 | 31,805 | 34,356 | |||||
FNMA, 6.50%, 9/1/47 | 1,800 | 1,949 | |||||
FNMA, 6.50%, 9/1/47 | 23,475 | 25,337 | |||||
FNMA, 6.50%, 9/1/47 | 6,263 | 6,747 | |||||
GNMA, 3.00%, 5/18/17(6) | 3,150,000 | 3,192,697 | |||||
GNMA, 3.50%, 5/18/17(6) | 3,300,000 | 3,428,777 | |||||
GNMA, 4.00%, 5/18/17(6) | 2,000,000 | 2,114,531 | |||||
GNMA, 7.00%, 4/20/26 | 41,972 | 48,488 | |||||
GNMA, 7.50%, 8/15/26 | 24,663 | 28,296 | |||||
GNMA, 7.00%, 2/15/28 | 9,538 | 9,609 | |||||
GNMA, 7.50%, 2/15/28 | 11,615 | 11,743 | |||||
GNMA, 7.00%, 12/15/28 | 10,067 | 10,132 | |||||
GNMA, 7.00%, 5/15/31 | 49,136 | 57,887 | |||||
GNMA, 5.50%, 11/15/32 | 154,071 | 173,968 | |||||
GNMA, 4.50%, 5/20/41 | 516,888 | 557,517 | |||||
GNMA, 4.50%, 6/15/41 | 563,570 | 617,587 | |||||
GNMA, 4.00%, 12/15/41 | 887,027 | 941,188 | |||||
GNMA, 3.50%, 6/20/42 | 1,074,636 | 1,122,666 | |||||
GNMA, 3.50%, 7/20/42 | 525,767 | 548,783 | |||||
GNMA, 4.50%, 11/20/43 | 705,779 | 753,967 | |||||
GNMA, 2.50%, 7/20/46 | 1,433,743 | 1,401,277 | |||||
75,126,038 | |||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $83,444,495) | 84,276,744 | ||||||
COLLATERALIZED MORTGAGE OBLIGATIONS(5) — 2.2% | |||||||
Private Sponsor Collateralized Mortgage Obligations — 1.6% | |||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 19,003 | 19,187 | |||||
Adjustable Rate Mortgage Trust, Series 2004-4, Class 4A1, VRN, 3.26%, 5/1/17 | 276,054 | 273,965 | |||||
Agate Bay Mortgage Loan Trust, Series 2014-2, Class A14, VRN, 3.75%, 5/1/17(3) | 375,704 | 387,566 |
26
Shares/ Principal Amount | Value | ||||||
Agate Bay Mortgage Loan Trust, Series 2016-3, Class A3, VRN, 3.50%, 5/1/17(3) | $ | 432,550 | $ | 435,169 | |||
Banc of America Mortgage Securities, Inc., Series 2004-E, Class 2A6 SEQ, VRN, 3.35%, 5/1/17 | 254,786 | 252,435 | |||||
Banc of America Mortgage Securities, Inc., Series 2005-1, Class 1A15, 5.50%, 2/25/35 | 75,394 | 77,579 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A4, VRN, 2.97%, 5/1/17 | 388,836 | 377,560 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A5, VRN, 2.73%, 5/1/17 | 707,461 | 698,277 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 3.05%, 5/1/17 | 107,985 | 106,405 | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-6, Class A2, VRN, 3.18%, 5/1/17 | 200,628 | 207,538 | |||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35 | 6,294 | 6,263 | |||||
First Horizon Alternative Mortgage Securities Trust, Series 2004-AA4, Class A1, VRN, 3.17%, 5/1/17 | 453,728 | 445,226 | |||||
First Horizon Mortgage Pass-Through Trust, Series 2005-AR3, Class 4A1, VRN, 2.90%, 5/1/17 | 89,278 | 86,686 | |||||
GSR Mortgage Loan Trust, Series 2004-7, Class 3A1, VRN, 2.71%, 5/1/17 | 161,022 | 156,502 | |||||
GSR Mortgage Loan Trust, Series 2004-AR5, Class 3A3, VRN, 3.45%, 5/1/17 | 188,093 | 186,756 | |||||
GSR Mortgage Loan Trust, Series 2005-AR1, Class 3A1, VRN, 3.10%, 5/1/17 | 289,842 | 286,771 | |||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 2A1, VRN, 3.09%, 5/1/17 | 288,438 | 298,134 | |||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 4A5, VRN, 3.06%, 5/1/17 | 379,271 | 379,470 | |||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 1A1, VRN, 3.16%, 5/1/17 | 93,103 | 92,638 | |||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 2A1, VRN, 3.28%, 5/1/17 | 55,523 | 55,242 | |||||
JPMorgan Mortgage Trust, Series 2006-A3, Class 7A1, VRN, 3.60%, 5/1/17 | 251,127 | 253,380 | |||||
JPMorgan Mortgage Trust, Series 2013-1, Class 2A2 SEQ, VRN, 2.50%, 5/1/17(3) | 105,468 | 105,155 | |||||
JPMorgan Mortgage Trust, Series 2016-4, Class A3, VRN, 3.50%, 5/1/17(3) | 325,021 | 330,741 | |||||
JPMorgan Mortgage Trust, Series 2017-1, Class A2, VRN, 3.50%, 5/1/17(3) | 840,338 | 855,125 | |||||
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 3A7, VRN, 3.05%, 5/1/17 | 367,087 | 376,021 | |||||
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 2A, VRN, 3.09%, 5/25/17 | 197,719 | 194,408 | |||||
Merrill Lynch Mortgage Investors Trust, Series 2005-A2, Class A1, VRN, 2.97%, 5/1/17 | 287,297 | 282,559 | |||||
New Residential Mortgage Loan Trust, Series 2017-2A, Class A3, VRN, 4.00%, 5/1/17(3) | 600,000 | 621,937 | |||||
PHHMC Mortgage Pass-Through Certificates, Series 2007-6, Class A1, VRN, 5.83%, 5/1/17 | 25,189 | 25,963 | |||||
Sequoia Mortgage Trust, Series 2012-1, Class 1A1, VRN, 2.87%, 5/1/17 | 36,790 | 37,195 | |||||
Sequoia Mortgage Trust, Series 2013-12, Class A1 SEQ, 4.00%, 12/25/43(3) | 151,977 | 157,300 |
27
Shares/ Principal Amount | Value | ||||||
Sequoia Mortgage Trust, Series 2017-1, Class A1, VRN, 3.50%, 5/1/17(3) | $ | 618,678 | $ | 628,668 | |||
Sofi Mortgage Trust, Series 2016-1A, Class 1A4 SEQ, VRN, 3.00%, 5/1/17(3) | 309,974 | 303,793 | |||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-6, Class 3A2, VRN, 3.19%, 5/1/17 | 203,184 | 210,857 | |||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-8, Class 2A1, VRN, 3.22%, 5/1/17 | 162,084 | 161,314 | |||||
Thornburg Mortgage Securities Trust, Series 2004-3, Class A, VRN, 1.73%, 5/25/17 | 739,380 | 682,353 | |||||
Towd Point Mortgage Trust, Series 2016-1, Class A1, VRN, 3.50%, 5/1/17(3) | 418,306 | 428,507 | |||||
WaMu Mortgage Pass-Through Certificates, Series 2005-AR3, Class A1, VRN, 3.01%, 5/1/17 | 527,991 | 516,521 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-4, Class A9, 5.50%, 5/25/34 | 51,810 | 53,018 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-S, Class A1, VRN, 3.05%, 5/1/17 | 141,279 | 143,880 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-Z, Class 2A2, VRN, 3.00%, 5/1/17 | 137,836 | 139,491 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-17, Class 1A1, 5.50%, 1/25/36 | 69,146 | 67,899 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-9, Class 2A6, 5.25%, 10/25/35 | 236,798 | 243,729 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 1A1, VRN, 3.09%, 5/1/17 | 483,682 | 505,658 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 2A15, VRN, 3.09%, 5/1/17 | 48,897 | 49,981 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR10, Class 2A17, VRN, 3.09%, 5/1/17 | 325,978 | 332,382 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR16, Class 3A2, VRN, 3.20%, 5/1/17 | 250,464 | 251,674 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR7, Class 1A1, VRN, 3.29%, 5/1/17 | 250,793 | 250,646 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-10, Class A4 SEQ, 6.00%, 8/25/36 | 114,602 | 114,375 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-13, Class A5, 6.00%, 10/25/36 | 140,474 | 139,310 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-13, Class A1, 6.00%, 9/25/37 | 80,142 | 80,904 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-14, Class 2A2, 5.50%, 10/25/22 | 59,325 | 60,870 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-16, Class 1A1, 6.00%, 12/28/37 | 50,477 | 52,897 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-AR10, Class 1A1, VRN, 6.36%, 5/1/17 | 97,812 | 94,754 | |||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2008-1, Class 4A1, 5.75%, 2/25/38 | 183,643 | 193,203 | |||||
13,775,837 | |||||||
U.S. Government Agency Collateralized Mortgage Obligations — 0.6% | |||||||
FHLMC, Series 2016-DNA4, Class M2, VRN, 2.29%, 5/25/17 | 40,000 | 40,356 | |||||
FHLMC, Series 2016-HQA3, Class M2, VRN, 2.34%, 5/25/17 | 475,000 | 480,572 | |||||
FHLMC, Series 77, Class H, 8.50%, 9/15/20 | 954 | 988 | |||||
FHLMC, Series KF29, Class A, VRN, 1.34%, 5/25/17 | 1,800,000 | 1,803,325 | |||||
FNMA, Series 2014-C02, Class 1M2, VRN, 3.59%, 5/25/17 | 350,000 | 365,109 |
28
Shares/ Principal Amount | Value | ||||||
FNMA, Series 2014-C02, Class 2M2, VRN, 3.59%, 5/25/17 | $ | 650,000 | $ | 676,246 | |||
FNMA, Series 2016-C04, Class 1M1, VRN, 2.44%, 5/25/17 | 861,081 | 868,537 | |||||
FNMA, Series 2016-C05, Class 2M1, VRN, 2.34%, 5/25/17 | 569,506 | 574,307 | |||||
FNMA, Series 2017-C01, Class 1M1, VRN, 2.29%, 5/25/17 | 738,457 | 744,629 | |||||
5,554,069 | |||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $19,330,637) | 19,329,906 | ||||||
ASSET-BACKED SECURITIES(5) — 2.0% | |||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2012-2A, Class A SEQ, 2.80%, 5/20/18(3) | 125,000 | 125,107 | |||||
BRE Grand Islander Timeshare Issuer LLC, Series 2017-1A, Class A SEQ, 2.94%, 5/25/29(3) | 625,000 | 625,000 | |||||
Citibank Credit Card Issuance Trust, Series 2017-A5, Class A5, VRN, 1.64%, 5/22/17(4) | 1,250,000 | 1,250,000 | |||||
Colony American Homes, Series 2014-2A, Class A, VRN, 1.93%, 5/17/17(3) | 767,539 | 767,893 | |||||
Colony Starwood Homes, Series 2016-2A, Class A, VRN, 2.24%, 5/17/17(3) | 1,396,798 | 1,407,798 | |||||
Dell Equipment Finance Trust, Series 2015-2, Class A2B, VRN, 1.89%, 5/22/17(3) | 80,053 | 80,105 | |||||
Enterprise Fleet Financing LLC, Series 2015-2, Class A2 SEQ, 1.59%, 2/22/21(3) | 572,020 | 572,104 | |||||
Enterprise Fleet Financing LLC, Series 2016-1, Class A2 SEQ, 1.83%, 9/20/21(3) | 615,413 | 615,372 | |||||
Enterprise Fleet Financing LLC, Series 2016-2, Class A2 SEQ, 1.74%, 2/22/22(3) | 1,800,000 | 1,797,569 | |||||
Enterprise Fleet Financing LLC, Series 2017-1, Class A2 SEQ, 2.13%, 7/20/22(3) | 650,000 | 649,982 | |||||
Hertz Fleet Lease Funding LP, Series 2014-1, Class A, VRN, 1.39%, 5/10/17(3) | 206,121 | 206,104 | |||||
Hertz Vehicle Financing LLC, Series 2013-1A, Class A2 SEQ, 1.83%, 8/25/19(3) | 725,000 | 722,936 | |||||
Hilton Grand Vacations Trust, Series 2013-A, Class A SEQ, 2.28%, 1/25/26(3) | 108,935 | 108,689 | |||||
Hilton Grand Vacations Trust, Series 2014-AA, Class A SEQ, 1.77%, 11/25/26(3) | 584,233 | 575,391 | |||||
Hilton Grand Vacations Trust, Series 2017-AA, Class A SEQ, 2.66%, 12/26/28(3) | 554,103 | 555,044 | |||||
Honda Auto Receivables Owner Trust, Series 2017-1, Class A2 SEQ, 1.42%, 7/22/19 | 760,000 | 760,261 | |||||
Hyundai Auto Receivables Trust, Series 2017-A, Class A2A SEQ, 1.48%, 2/18/20 | 900,000 | 901,133 | |||||
Invitation Homes Trust, Series 2014-SFR1, Class A, VRN, 1.99%, 5/17/17(3) | 730,301 | 730,912 | |||||
Invitation Homes Trust, Series 2014-SFR3, Class A, VRN, 2.19%, 5/17/17(3) | 755,366 | 756,310 | |||||
MVW Owner Trust, Series 2014-1A, Class A, 2.25%, 9/22/31(3) | 342,415 | 340,342 | |||||
MVW Owner Trust, Series 2015-1A, Class A SEQ, 2.52%, 12/20/32(3) | 403,547 | 401,982 | |||||
MVW Owner Trust, Series 2016-1A, Class A SEQ, 2.25%, 12/20/33(3) | 613,953 | 607,102 | |||||
Progress Residential Trust, Series 2016-SFR2, Class A, VRN, 2.39%, 5/17/17(3) | 550,000 | 556,073 | |||||
Sierra Receivables Funding Co. LLC, Series 2017-1A, Class A SEQ, 2.91%, 3/20/34(3) | 493,015 | 498,004 |
29
Shares/ Principal Amount | Value | ||||||
Sierra Timeshare Receivables Funding LLC, Series 2014-1A, Class A SEQ, 2.07%, 3/20/30(3) | $ | 441,471 | $ | 441,197 | |||
Sierra Timeshare Receivables Funding LLC, Series 2015-1A, Class A, 2.40%, 3/22/32(3) | 241,840 | 242,597 | |||||
US Airways Pass-Through Trust, Series 2013-1, Class A, 3.95%, 5/15/27 | 142,642 | 145,844 | |||||
VSE VOI Mortgage LLC, Series 2016-A, Class A SEQ, 2.54%, 7/20/33(3) | 827,047 | 825,700 | |||||
TOTAL ASSET-BACKED SECURITIES (Cost $17,256,017) | 17,266,551 | ||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES(5) — 1.8% | |||||||
Bank of America Merrill Lynch Commercial Mortgage Securities Trust, Series 2014-ICTS, Class A, VRN, 1.79%, 5/15/17(3) | 825,000 | 826,079 | |||||
Bank of America Merrill Lynch Commercial Mortgage Securities Trust, Series 2015-200P, Class B, 3.49%, 4/14/33(3) | 625,000 | 638,368 | |||||
BB-UBS Trust, Series 2012-SHOW, Class A SEQ, 3.43%, 11/5/36(3) | 1,000,000 | 1,031,753 | |||||
BLCP Hotel Trust, Series 2014-CLRN, Class A, VRN, 1.94%, 5/15/17(3) | 1,344,314 | 1,346,337 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-BBG, Class A, VRN, 1.79%, 5/15/17(3) | 925,000 | 927,323 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-CR15, Class AM SEQ, VRN, 4.43%, 5/1/17 | 675,000 | 728,767 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-LC17, Class AM, VRN, 4.19%, 5/1/17 | 775,000 | 819,670 | |||||
Commercial Mortgage Pass-Through Certificates, Series 2014-UBS5, Class AM, VRN, 4.19%, 5/1/17 | 900,000 | 947,401 | |||||
Commercial Mortgage Trust, Series 2016-CD1, Class AM, 2.93%, 8/10/49 | 400,000 | 392,100 | |||||
Core Industrial Trust, Series 2015-WEST, Class A SEQ, 3.29%, 2/10/37(3) | 1,100,000 | 1,120,760 | |||||
GS Mortgage Securities Corp. II, Series 2016-GS2, Class B, VRN, 3.76%, 5/1/17 | 1,000,000 | 1,025,672 | |||||
Hudson Yards Mortgage Trust, Series 2016-10HY, Class B, VRN, 3.08%, 5/1/17(3) | 1,275,000 | 1,251,443 | |||||
JPMBB Commercial Mortgage Securities Trust, Series 2014-C21, Class B, VRN, 4.34%, 5/1/17 | 475,000 | 496,615 | |||||
JPMDB Commercial Mortgage Securities Trust, Series 2017-C5, Class A4, 3.41%, 3/15/50 | 920,000 | 946,571 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2013-C16, Class A4, 4.17%, 12/15/46 | 275,000 | 295,945 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2013-C16, Class AS, 4.52%, 12/15/46 | 450,000 | 486,328 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2014-CBM, Class A, VRN, 1.89%, 5/15/17(3) | 925,000 | 925,555 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2016-JP2, Class A4, 2.82%, 8/15/49 | 600,000 | 587,588 | |||||
Morgan Stanley Capital I Trust, Series 2014-CPT, Class C, VRN, 3.56%, 5/1/17(3) | 725,000 | 736,527 | |||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $15,454,533) | 15,530,802 | ||||||
U.S. GOVERNMENT AGENCY SECURITIES — 0.8% | |||||||
FNMA, 2.125%, 4/24/26 | 270,000 | 260,691 |
30
Shares/ Principal Amount | Value | ||||||
FNMA, 6.625%, 11/15/30 | $ | 4,870,000 | $ | 6,954,706 | |||
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $7,025,756) | 7,215,397 | ||||||
SOVEREIGN GOVERNMENTS AND AGENCIES — 0.6% | |||||||
Chile† | |||||||
Chile Government International Bond, 3.25%, 9/14/21 | 100,000 | 103,945 | |||||
Chile Government International Bond, 3.625%, 10/30/42 | 100,000 | 99,630 | |||||
203,575 | |||||||
Colombia — 0.1% | |||||||
Colombia Government International Bond, 4.375%, 7/12/21 | 310,000 | 329,995 | |||||
Colombia Government International Bond, 7.375%, 9/18/37 | 300,000 | 387,300 | |||||
Colombia Government International Bond, 6.125%, 1/18/41 | 100,000 | 115,500 | |||||
832,795 | |||||||
Italy† | |||||||
Republic of Italy Government International Bond, 6.875%, 9/27/23 | 220,000 | 259,938 | |||||
Mexico — 0.1% | |||||||
Mexico Government International Bond, 4.15%, 3/28/27 | 600,000 | 617,670 | |||||
Mexico Government International Bond, MTN, 4.75%, 3/8/44 | 400,000 | 396,600 | |||||
1,014,270 | |||||||
Peru — 0.1% | |||||||
Peruvian Government International Bond, 6.55%, 3/14/37 | 70,000 | 92,050 | |||||
Peruvian Government International Bond, 5.625%, 11/18/50 | 170,000 | 206,550 | |||||
298,600 | |||||||
Philippines — 0.1% | |||||||
Philippine Government International Bond, 4.00%, 1/15/21 | 300,000 | 319,537 | |||||
Philippine Government International Bond, 6.375%, 10/23/34 | 150,000 | 200,824 | |||||
520,361 | |||||||
Poland† | |||||||
Republic of Poland Government International Bond, 5.125%, 4/21/21 | 140,000 | 153,980 | |||||
Republic of Poland Government International Bond, 3.00%, 3/17/23 | 140,000 | 140,436 | |||||
294,416 | |||||||
Portugal — 0.2% | |||||||
Portugal Obrigacoes do Tesouro OT, 2.875%, 10/15/25(3) | EUR | 880,000 | 948,869 | ||||
Portugal Obrigacoes do Tesouro OT, 4.125%, 4/14/27(3) | EUR | 620,000 | 709,691 | ||||
1,658,560 | |||||||
South Africa† | |||||||
Republic of South Africa Government International Bond, 4.67%, 1/17/24 | $ | 110,000 | 111,421 | ||||
Uruguay† | |||||||
Uruguay Government International Bond, 4.125%, 11/20/45 | 120,000 | 108,180 | |||||
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES (Cost $5,184,281) | 5,302,116 | ||||||
EXCHANGE-TRADED FUNDS — 0.6% | |||||||
SPDR S&P Bank ETF (Cost $5,113,253) | 118,140 | 5,035,127 | |||||
31
Shares/ Principal Amount | Value | ||||||
MUNICIPAL SECURITIES — 0.4% | |||||||
Bay Area Toll Authority Rev., 6.92%, 4/1/40 | $ | 195,000 | $ | 266,620 | |||
California GO, (Building Bonds), 7.60%, 11/1/40 | 80,000 | 120,386 | |||||
Los Angeles Community College District GO, 6.68%, 8/1/36 | 100,000 | 135,197 | |||||
Metropolitan Transportation Authority Rev., 6.69%, 11/15/40 | 105,000 | 140,151 | |||||
Metropolitan Transportation Authority Rev., 6.81%, 11/15/40 | 60,000 | 81,072 | |||||
Missouri Highway & Transportation Commission Rev., 5.45%, 5/1/33 | 130,000 | 155,947 | |||||
New Jersey State Turnpike Authority Rev., 7.41%, 1/1/40 | 200,000 | 290,128 | |||||
New Jersey Turnpike Authority Rev., 7.10%, 1/1/41 | 95,000 | 133,696 | |||||
New York City GO, 6.27%, 12/1/37 | 95,000 | 125,120 | |||||
Ohio Water Development Authority Water Pollution Control Loan Fund Rev., 4.88%, 12/1/34 | 110,000 | 125,880 | |||||
Oregon State Department of Transportation Highway User Tax Rev., Series 2010 A, (Building Bonds), 5.83%, 11/15/34 | 70,000 | 89,012 | |||||
Port Authority of New York & New Jersey Rev., 4.93%, 10/1/51 | 50,000 | 56,283 | |||||
Port Authority of New York & New Jersey Rev., 4.46%, 10/1/62 | 245,000 | 253,756 | |||||
Rutgers State University of New Jersey Rev., 5.67%, 5/1/40 | 205,000 | 244,104 | |||||
Sacramento Municipal Utility District Electric Rev., 6.16%, 5/15/36 | 210,000 | 261,834 | |||||
Salt River Project Agricultural Improvement & Power District Rev., 4.84%, 1/1/41 | 95,000 | 110,014 | |||||
San Francisco Public Utilities Commission Water Rev., 6.00%, 11/1/40 | 105,000 | 130,582 | |||||
San Francisco Public Utilities Commission Water Rev., 6.95%, 11/1/50 | 65,000 | 93,559 | |||||
Santa Clara Valley Transportation Authority Rev., 5.88%, 4/1/32 | 120,000 | 148,387 | |||||
State of California GO, 7.55%, 4/1/39 | 100,000 | 148,068 | |||||
State of California GO, 7.30%, 10/1/39 | 290,000 | 411,295 | |||||
State of Illinois GO, 5.10%, 6/1/33 | 245,000 | 220,899 | |||||
State of Texas GO, 5.52%, 4/1/39 | 50,000 | 63,302 | |||||
State of Washington GO, 5.14%, 8/1/40 | 20,000 | 24,237 | |||||
TOTAL MUNICIPAL SECURITIES (Cost $3,247,423) | 3,829,529 | ||||||
TEMPORARY CASH INVESTMENTS(7) — 2.4% | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class (Cost $20,372,607) | 20,372,607 | 20,372,607 | |||||
TOTAL INVESTMENT SECURITIES — 104.3% (Cost $786,129,728) | 899,964,631 | ||||||
OTHER ASSETS AND LIABILITIES — (4.3)% | (37,007,606 | ) | |||||
TOTAL NET ASSETS — 100.0% | $ | 862,957,025 |
32
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 122,305 | USD | 130,071 | JPMorgan Chase Bank N.A. | 6/21/17 | $ | 3,484 | |||
EUR | 881 | USD | 939 | JPMorgan Chase Bank N.A. | 6/21/17 | 23 | ||||
EUR | 497,897 | USD | 541,532 | JPMorgan Chase Bank N.A. | 6/21/17 | 2,164 | ||||
USD | 4,349,709 | EUR | 4,090,629 | JPMorgan Chase Bank N.A. | 6/21/17 | (117,195 | ) | |||
USD | 215,959 | EUR | 203,074 | JPMorgan Chase Bank N.A. | 6/21/17 | (5,795 | ) | |||
USD | 15,146 | EUR | 14,230 | JPMorgan Chase Bank N.A. | 6/21/17 | (393 | ) | |||
USD | 9,960 | EUR | 9,272 | JPMorgan Chase Bank N.A. | 6/21/17 | (165 | ) | |||
$ | (117,877 | ) |
FUTURES CONTRACTS | ||||||||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | |||||
38 | U.S. Treasury 2-Year Notes | June 2017 | $ | 8,231,157 | $ | (84 | ) | |
45 | U.S. Treasury 5-Year Notes | June 2017 | 5,328,281 | (1,062 | ) | |||
$ | 13,559,438 | $ | (1,146 | ) |
SWAP AGREEMENTS | |||||||||||
CENTRALLY CLEARED CREDIT DEFAULT | |||||||||||
Reference Entity | Notional Amount | Buy/Sell* Protection | Interest Rate | Termination Date | Implied Credit Spread** | Unrealized Appreciation (Depreciation) | Value | ||||
Markit CDX North America Investment Grade Index Series 27 | $2,000,000 | Sell | 1.00% | 12/20/21 | 0.56% | $ | 22,358 | $ | 40,932 |
CENTRALLY CLEARED TOTAL RETURN | ||||||||||||
Floating Rate Referenced Index | Notional Amount | Pay/Receive Total Return of Referenced Index | Fixed Rate | Termination Date | Unrealized Appreciation (Depreciation) | Value | ||||||
U.S. CPI Urban Consumers NSA Index | $ | 1,300,000 | Receive | 2.24% | 11/15/26 | $ | (39 | ) | $ | 452 | ||
U.S. CPI Urban Consumers NSA Index | 1,300,000 | Receive | 2.28% | 11/16/26 | (4,358 | ) | (3,867 | ) | ||||
U.S. CPI Urban Consumers NSA Index | 1,300,000 | Receive | 2.27% | 11/21/26 | (3,809 | ) | (3,317 | ) | ||||
$ | (8,206 | ) | $ | (6,732 | ) |
33
TOTAL RETURN | ||||||||||
Counterparty | Notional Amount | Floating Rate Referenced Index | Pay/Receive Total Return of Referenced Index | Fixed Rate | Termination Date | Value | ||||
Bank of America N.A. | $ | 1,000,000 | U.S. CPI Urban Consumers NSA Index | Receive | 2.26% | 11/15/26 | $ | (1,377 | ) | |
Bank of America N.A. | 1,000,000 | U.S. CPI Urban Consumers NSA Index | Receive | 2.29% | 11/16/26 | (4,002 | ) | |||
Bank of America N.A. | 1,000,000 | U.S. CPI Urban Consumers NSA Index | Receive | 2.28% | 11/21/26 | (2,942 | ) | |||
Barclays Bank plc | 1,000,000 | U.S. CPI Urban Consumers NSA Index | Receive | 2.25% | 11/15/26 | (159 | ) | |||
Barclays Bank plc | 1,000,000 | U.S. CPI Urban Consumers NSA Index | Receive | 2.28% | 11/16/26 | (3,392 | ) | |||
Barclays Bank plc | 1,000,000 | U.S. CPI Urban Consumers NSA Index | Receive | 2.26% | 11/21/26 | (1,672 | ) | |||
$ | (13,544 | ) |
* | The maximum potential amount the fund could be required to deliver as a seller of credit protection if a credit event occurs as defined under the terms of the agreement is the notional amount. The maximum potential amount may be partially offset by any recovery values of the reference entities and upfront payments received upon entering into the agreement. |
** | Implied credit spreads for centrally cleared credit default swap agreements are linked to the weighted average spread across the underlying reference entities included in a particular index. Implied credit spreads serve as an indication of the seller's performance risk related to the likelihood of a credit event occurring as defined in the agreement. Implied credit spreads are used to determine the value of swap agreements and reflect the cost of buying/selling protection, which may include upfront payments made/received upon entering the agreement. Therefore, higher spreads would indicate a greater likelihood that a seller will be obligated to perform under the contract terms. Increasing values, in absolute terms and relative to notional amounts, are also indicative of greater performance risk. |
34
NOTES TO SCHEDULE OF INVESTMENTS | ||
CDX | - | Credit Derivatives Indexes |
CPI | - | Consumer Price Index |
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 |
NSA | - | Not Seasonally Adjusted |
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, or a portion thereof, has been pledged at the custodian bank or with a broker for margin requirements on futures contracts and/or swap agreements. At the period end, the aggregate value of securities pledged was $367,146. |
(3) | 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 $36,339,781, which represented 4.2% of total net assets. |
(4) | 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. |
(5) | Final maturity date indicated, unless otherwise noted. |
(6) | Forward commitment. Settlement date is indicated. |
(7) | Collateral has been received at the custodian bank for margin requirements on forward commitments. At the period end, the aggregate value of cash deposits received was $256,000. |
See Notes to Financial Statements.
35
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $786,129,728) | $ | 899,964,631 | |
Receivable for investments sold | 6,204,319 | ||
Receivable for capital shares sold | 118,073 | ||
Receivable for variation margin on swap agreements | 4,065 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 5,671 | ||
Dividends and interest receivable | 2,801,421 | ||
909,098,180 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 125,058 | ||
Payable for collateral received for forward commitments | 256,000 | ||
Payable for investments purchased | 44,874,224 | ||
Payable for capital shares redeemed | 123,626 | ||
Payable for variation margin on futures contracts | 1,078 | ||
Payable for variation margin on swap agreements | 322 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 123,548 | ||
Swap agreements, at value | 13,544 | ||
Accrued management fees | 623,755 | ||
46,141,155 | |||
Net Assets | $ | 862,957,025 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 731,386,272 | |
Undistributed net investment income | 903,429 | ||
Undistributed net realized gain | 16,949,957 | ||
Net unrealized appreciation | 113,717,367 | ||
$ | 862,957,025 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $800,258,126 | 43,574,267 | $18.37 | |
I Class, $0.01 Par Value | $62,693,846 | 3,411,685 | $18.38 | |
R5 Class, $0.01 Par Value | $5,053 | 275 | $18.37 |
See Notes to Financial Statements.
36
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,765) | $ | 5,053,689 | |
Interest | 4,642,361 | ||
9,696,050 | |||
Expenses: | |||
Management fees | 3,694,907 | ||
Directors' fees and expenses | 11,933 | ||
Other expenses | 424 | ||
3,707,264 | |||
Net investment income (loss) | 5,988,786 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 19,517,637 | ||
Futures contract transactions | (88,835 | ) | |
Swap agreement transactions | 5,646 | ||
Foreign currency transactions | 378,009 | ||
19,812,457 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 34,095,724 | ||
Futures contracts | 16,238 | ||
Swap agreements | 608 | ||
Translation of assets and liabilities in foreign currencies | (289,561 | ) | |
33,823,009 | |||
Net realized and unrealized gain (loss) | 53,635,466 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 59,624,252 |
See Notes to Financial Statements.
37
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,988,786 | $ | 11,746,695 | ||
Net realized gain (loss) | 19,812,457 | 7,899,815 | ||||
Change in net unrealized appreciation (depreciation) | 33,823,009 | 5,014,397 | ||||
Net increase (decrease) in net assets resulting from operations | 59,624,252 | 24,660,907 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (5,671,642 | ) | (11,708,828 | ) | ||
I Class | (502,986 | ) | (933,774 | ) | ||
From net realized gains: | ||||||
Investor Class | (7,066,911 | ) | (33,526,043 | ) | ||
I Class | (560,856 | ) | (2,302,749 | ) | ||
Decrease in net assets from distributions | (13,802,395 | ) | (48,471,394 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 3,263,388 | (5,756,686 | ) | |||
Net increase (decrease) in net assets | 49,085,245 | (29,567,173 | ) | |||
Net Assets | ||||||
Beginning of period | 813,871,780 | 843,438,953 | ||||
End of period | $ | 862,957,025 | $ | 813,871,780 | ||
Undistributed net investment income | $ | 903,429 | $ | 1,089,271 |
See Notes to Financial Statements.
38
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class) and R5 Class. Sale of the R5 Class commenced on April 10, 2017.
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. Swap agreements are valued at an evaluated mean as provided by independent pricing services or independent brokers. 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
39
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 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.
40
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Class | Management Fee Schedule Range | Effective Annual Management Fee |
Investor Class | 0.800% to 0.900% | 0.90% |
I Class | 0.600% to 0.700% | 0.70% |
R5 Class | 0.600% to 0.700% | 0.70% |
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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $2,266,753 and $3,253,184, respectively. The effect of interfund transactions on the Statement of Operations was $210,720 in net realized gain (loss) on investment transactions.
41
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the period ended April 30, 2017 totaled $474,459,341, of which $240,873,044 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 totaled $477,346,785, of which $226,843,450 represented U.S. Treasury and Government Agency obligations.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 360,000,000 | 350,000,000 | ||||||||
Sold | 2,417,977 | $ | 43,090,285 | 3,304,995 | $ | 56,554,508 | ||||
Issued in reinvestment of distributions | 701,849 | 12,449,652 | 2,618,200 | 44,184,540 | ||||||
Redeemed | (2,951,234 | ) | (52,779,628 | ) | (6,581,040 | ) | (112,672,745 | ) | ||
168,592 | 2,760,309 | (657,845 | ) | (11,933,697 | ) | |||||
I Class/Shares Authorized | 40,000,000 | 25,000,000 | ||||||||
Sold | 355,236 | 6,377,266 | 603,519 | 10,443,061 | ||||||
Issued in reinvestment of distributions | 59,927 | 1,063,842 | 191,542 | 3,236,523 | ||||||
Redeemed | (388,760 | ) | (6,943,029 | ) | (435,815 | ) | (7,502,573 | ) | ||
26,403 | 498,079 | 359,246 | 6,177,011 | |||||||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 275 | 5,000 | ||||||||
Net increase (decrease) | 195,270 | $ | 3,263,388 | (298,599 | ) | $ | (5,756,686 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the R5 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
42
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 | $ | 514,937,427 | — | — | ||||
U.S. Treasury Securities | — | $ | 104,627,215 | — | ||||
Corporate Bonds | — | 102,241,210 | — | |||||
U.S. Government Agency Mortgage-Backed Securities | — | 84,276,744 | — | |||||
Collateralized Mortgage Obligations | — | 19,329,906 | — | |||||
Asset-Backed Securities | — | 17,266,551 | — | |||||
Commercial Mortgage-Backed Securities | — | 15,530,802 | — | |||||
U.S. Government Agency Securities | — | 7,215,397 | — | |||||
Sovereign Governments and Agencies | — | 5,302,116 | — | |||||
Exchange-Traded Funds | 5,035,127 | — | — | |||||
Municipal Securities | — | 3,829,529 | — | |||||
Temporary Cash Investments | 20,372,607 | — | — | |||||
$ | 540,345,161 | $ | 359,619,470 | — | ||||
Other Financial Instruments | ||||||||
Swap Agreements | — | $ | 41,384 | — | ||||
Forward Foreign Currency Exchange Contracts | — | 5,671 | — | |||||
— | $ | 47,055 | — | |||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 1,146 | — | — | ||||
Swap Agreements | — | $ | 20,728 | — | ||||
Forward Foreign Currency Exchange Contracts | — | 123,548 | — | |||||
$ | 1,146 | $ | 144,276 | — |
7. Derivative Instruments
Credit Risk — The fund is subject to credit risk in the normal course of pursuing its investment objectives. The value of a bond generally declines as the credit quality of its issuer declines. Credit default swap agreements enable a fund to buy/sell protection against a credit event of a specific issuer or index. A fund may attempt to enhance returns by selling protection or attempt to mitigate credit risk by buying protection. Upon entering into a centrally cleared swap, a fund is required to deposit cash or securities (initial margin) with a financial intermediary in an amount equal to a certain percentage of the notional amount. 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 value and is a component of unrealized gains and losses. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The risks of entering into swap agreements include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments. The fund's average notional amount held during the period was $2,000,000.
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
43
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 $6,448,892.
Interest Rate Risk — The fund is subject to interest rate risk in the normal course of pursuing its investment objectives. The value of bonds generally declines as interest rates rise. A fund may enter into futures contracts based on a bond index or a specific underlying security. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the futures contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The fund's average exposure to interest rate risk derivative instruments held during the period was 59 contracts.
Other Contracts — A fund may enter into total return swap agreements in order to attempt to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets or gain exposure to certain markets in the most economical way possible. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Changes in value, including the periodic amounts of interest to be paid or received on swap agreements, are recorded as unrealized appreciation (depreciation) on swap agreements. Upon entering into a centrally cleared swap, a fund is required to deposit cash or securities (initial margin) with a financial intermediary in an amount equal to a certain percentage of the notional amount. 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 value and is a component of unrealized gains and losses. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The risks of entering into swap agreements include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments, including inflationary risk. The fund's average notional amount held during the period was $9,900,000.
Value of Derivative Instruments as of April 30, 2017
Asset Derivatives | Liability Derivatives | |||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||
Credit Risk | Receivable for variation margin on swap agreements* | — | Payable for variation margin on swap agreements* | $ | 322 | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 5,671 | Unrealized depreciation on forward foreign currency exchange contracts | 123,548 | |||
Interest Rate Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | 1,078 | ||||
Other Contracts | Receivable for variation margin on swap agreements* | 4,065 | Payable for variation margin on swap agreements* | — | ||||
Other Contracts | Swap agreements | — | Swap agreements | 13,544 | ||||
$ | 9,736 | $ | 138,492 |
* Included in the unrealized appreciation (depreciation) on centrally cleared credit default swap agreements, futures contracts or centrally cleared total return swap agreements, as applicable, as reported in the Schedule of Investments.
44
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2017
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 | ||||
Credit Risk | Net realized gain (loss) on swap agreement transactions | $ | 5,646 | Change in net unrealized appreciation (depreciation) on swap agreements | $ | 22,358 | ||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | 382,861 | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (291,397 | ) | |||
Interest Rate Risk | Net realized gain (loss) on futures contract transactions | (88,835 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | 16,238 | |||
Other Contracts | Net realized gain (loss) on swap agreement transactions | — | Change in net unrealized appreciation (depreciation) on swap agreements | (21,750 | ) | |||
$ | 299,672 | $ | (274,551 | ) |
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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 789,052,224 | |
Gross tax appreciation of investments | $ | 118,999,347 | |
Gross tax depreciation of investments | (8,086,940 | ) | |
Net tax appreciation (depreciation) of investments | $ | 110,912,407 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
10. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
45
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 | |||||||||||||||
2017(3) | $17.39 | 0.13 | 1.14 | 1.27 | (0.13) | (0.16) | (0.29) | $18.37 | 7.38% | 0.90%(4) | 1.42%(4) | 55% | $800,258 | ||
2016 | $17.91 | 0.25 | 0.26 | 0.51 | (0.26) | (0.77) | (1.03) | $17.39 | 3.14% | 0.90% | 1.44% | 104% | $754,957 | ||
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 | ||
I Class(5) | |||||||||||||||
2017(3) | $17.40 | 0.14 | 1.15 | 1.29 | (0.15) | (0.16) | (0.31) | $18.38 | 7.49% | 0.70%(4) | 1.62%(4) | 55% | $62,694 | ||
2016 | $17.92 | 0.28 | 0.27 | 0.55 | (0.30) | (0.77) | (1.07) | $17.40 | 3.35% | 0.70% | 1.64% | 104% | $58,915 | ||
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 | ||
R5 Class | |||||||||||||||
2017(7) | $18.18 | 0.01 | 0.18 | 0.19 | — | — | — | $18.37 | 1.05% | 0.70%(4) | 1.05%(4) | 55%(6) | $5 |
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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(7) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
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.
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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92356 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
JPMorgan Chase & Co. | 3.3% |
Wells Fargo & Co. | 3.3% |
Chevron Corp. | 2.8% |
Johnson & Johnson | 2.8% |
Oracle Corp. (New York) | 2.8% |
Pfizer, Inc. | 2.7% |
TOTAL SA | 2.5% |
Bank of America Corp. | 2.3% |
Schlumberger Ltd. | 2.3% |
United Technologies Corp. | 2.3% |
Top Five Industries | % of net assets |
Banks | 14.6% |
Oil, Gas and Consumable Fuels | 13.7% |
Pharmaceuticals | 9.0% |
Insurance | 5.7% |
Health Care Equipment and Supplies | 5.1% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 93.1% |
Foreign Common Stocks* | 5.7% |
Total Common Stocks | 98.8% |
Temporary Cash Investments | 1.0% |
Other Assets and Liabilities | 0.2% |
*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, 2016 to April 30, 2017.
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 I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,126.20 | $5.27 | 1.00% |
Investor Class (before waiver) | $1,000 | $1,126.20(2) | $5.80 | 1.10% |
I Class (after waiver) | $1,000 | $1,128.20 | $4.22 | 0.80% |
I Class (before waiver) | $1,000 | $1,128.20(2) | $4.75 | 0.90% |
A Class (after waiver) | $1,000 | $1,125.00 | $6.59 | 1.25% |
A Class (before waiver) | $1,000 | $1,125.00(2) | $7.11 | 1.35% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.84 | $5.01 | 1.00% |
Investor Class (before waiver) | $1,000 | $1,019.34 | $5.51 | 1.10% |
I Class (after waiver) | $1,000 | $1,020.83 | $4.01 | 0.80% |
I Class (before waiver) | $1,000 | $1,020.33 | $4.51 | 0.90% |
A Class (after waiver) | $1,000 | $1,018.60 | $6.26 | 1.25% |
A Class (before waiver) | $1,000 | $1,018.10 | $6.76 | 1.35% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value assumes the return earned after waiver and would have been lower if a portion of the fees had not been waived. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.8% | |||||
Aerospace and Defense — 3.1% | |||||
Textron, Inc. | 27,050 | $ | 1,262,153 | ||
United Technologies Corp. | 29,690 | 3,532,813 | |||
4,794,966 | |||||
Auto Components — 1.3% | |||||
BorgWarner, Inc. | 18,500 | 782,180 | |||
Delphi Automotive plc | 14,670 | 1,179,468 | |||
1,961,648 | |||||
Automobiles — 0.6% | �� | ||||
Ford Motor Co. | 76,550 | 878,029 | |||
Banks — 14.6% | |||||
Bank of America Corp. | 152,020 | 3,548,147 | |||
BB&T Corp. | 21,000 | 906,780 | |||
Citigroup, Inc. | 34,300 | 2,027,816 | |||
JPMorgan Chase & Co. | 59,070 | 5,139,090 | |||
KeyCorp | 40,370 | 736,349 | |||
PNC Financial Services Group, Inc. (The) | 19,960 | 2,390,210 | |||
U.S. Bancorp | 54,410 | 2,790,145 | |||
Wells Fargo & Co. | 93,670 | 5,043,192 | |||
22,581,729 | |||||
Beverages — 0.9% | |||||
PepsiCo, Inc. | 12,290 | 1,392,211 | |||
Biotechnology — 0.3% | |||||
Amgen, Inc. | 3,100 | 506,292 | |||
Building Products — 1.8% | |||||
Johnson Controls International plc | 67,860 | 2,820,940 | |||
Capital Markets — 5.1% | |||||
Ameriprise Financial, Inc. | 7,440 | 951,204 | |||
BlackRock, Inc. | 3,750 | 1,442,138 | |||
Goldman Sachs Group, Inc. (The) | 5,380 | 1,204,044 | |||
Invesco Ltd. | 24,580 | 809,665 | |||
Morgan Stanley | 21,520 | 933,322 | |||
State Street Corp. | 30,940 | 2,595,866 | |||
7,936,239 | |||||
Chemicals — 1.4% | |||||
Dow Chemical Co. (The) | 27,870 | 1,750,236 | |||
LyondellBasell Industries NV, Class A | 4,270 | 361,925 | |||
2,112,161 | |||||
Communications Equipment — 2.2% | |||||
Cisco Systems, Inc. | 99,640 | 3,394,735 | |||
Containers and Packaging — 0.5% | |||||
WestRock Co. | 15,450 | 827,502 | |||
Diversified Financial Services — 0.7% | |||||
Berkshire Hathaway, Inc., Class B(1) | 6,080 | 1,004,477 | |||
Diversified Telecommunication Services — 1.7% | |||||
AT&T, Inc. | 66,800 | 2,647,284 |
6
Shares | Value | ||||
Electric Utilities — 3.3% | |||||
Edison International | 17,790 | $ | 1,422,666 | ||
Eversource Energy | 18,450 | 1,095,930 | |||
PG&E Corp. | 19,030 | 1,275,962 | |||
Xcel Energy, Inc. | 30,340 | 1,366,817 | |||
5,161,375 | |||||
Electrical Equipment — 0.1% | |||||
Rockwell Automation, Inc. | 1,400 | 220,290 | |||
Energy Equipment and Services — 3.1% | |||||
Baker Hughes, Inc. | 20,490 | 1,216,491 | |||
Schlumberger Ltd. | 48,840 | 3,545,296 | |||
4,761,787 | |||||
Equity Real Estate Investment Trusts (REITs) — 0.5% | |||||
Brixmor Property Group, Inc. | 39,360 | 777,360 | |||
Food and Staples Retailing — 2.2% | |||||
CVS Health Corp. | 29,500 | 2,431,980 | |||
Wal-Mart Stores, Inc. | 13,180 | 990,872 | |||
3,422,852 | |||||
Food Products — 1.0% | |||||
Kellogg Co. | 11,180 | 793,780 | |||
Mead Johnson Nutrition Co. | 7,940 | 704,437 | |||
1,498,217 | |||||
Health Care Equipment and Supplies — 5.1% | |||||
Abbott Laboratories | 60,330 | 2,632,801 | |||
Medtronic plc | 41,280 | 3,429,956 | |||
Zimmer Biomet Holdings, Inc. | 15,700 | 1,878,505 | |||
7,941,262 | |||||
Health Care Providers and Services — 2.3% | |||||
Aetna, Inc. | 4,780 | 645,635 | |||
Anthem, Inc. | 5,680 | 1,010,415 | |||
Cardinal Health, Inc. | 9,890 | 717,915 | |||
HCA Holdings, Inc.(1) | 10,190 | 858,100 | |||
McKesson Corp. | 2,650 | 366,468 | |||
3,598,533 | |||||
Household Products — 1.5% | |||||
Procter & Gamble Co. (The) | 27,280 | 2,382,362 | |||
Industrial Conglomerates — 1.1% | |||||
General Electric Co. | 43,380 | 1,257,586 | |||
Honeywell International, Inc. | 3,730 | 489,152 | |||
1,746,738 | |||||
Insurance — 5.7% | |||||
Allstate Corp. (The) | 17,670 | 1,436,394 | |||
American International Group, Inc. | 25,610 | 1,559,905 | |||
Chubb Ltd. | 20,970 | 2,878,132 | |||
MetLife, Inc. | 27,480 | 1,423,739 | |||
Principal Financial Group, Inc. | 6,830 | 444,838 | |||
Prudential Financial, Inc. | 9,620 | 1,029,629 | |||
8,772,637 | |||||
Leisure Products — 0.3% | |||||
Mattel, Inc. | 17,820 | 399,524 |
7
Shares | Value | ||||
Machinery — 2.1% | |||||
Ingersoll-Rand plc | 24,690 | $ | 2,191,238 | ||
Stanley Black & Decker, Inc. | 7,780 | 1,059,247 | |||
3,250,485 | |||||
Media — 1.0% | |||||
Time Warner, Inc. | 15,430 | 1,531,736 | |||
Multiline Retail — 0.4% | |||||
Target Corp. | 11,030 | 616,026 | |||
Oil, Gas and Consumable Fuels — 13.7% | |||||
Anadarko Petroleum Corp. | 27,750 | 1,582,305 | |||
Apache Corp. | 4,910 | 238,822 | |||
Chevron Corp. | 40,770 | 4,350,159 | |||
ConocoPhillips | 43,510 | 2,084,564 | |||
Exxon Mobil Corp. | 22,980 | 1,876,317 | |||
Imperial Oil Ltd. | 62,130 | 1,807,393 | |||
Noble Energy, Inc. | 41,950 | 1,356,244 | |||
Occidental Petroleum Corp. | 43,540 | 2,679,452 | |||
Royal Dutch Shell plc ADR | 22,000 | 1,190,640 | |||
TOTAL SA | 76,350 | 3,923,036 | |||
21,088,932 | |||||
Pharmaceuticals — 9.0% | |||||
Allergan plc | 4,180 | 1,019,335 | |||
Johnson & Johnson | 34,720 | 4,286,878 | |||
Merck & Co., Inc. | 48,970 | 3,052,300 | |||
Pfizer, Inc. | 123,140 | 4,176,909 | |||
Roche Holding AG | 3,640 | 952,253 | |||
Teva Pharmaceutical Industries Ltd. ADR | 11,575 | 365,539 | |||
13,853,214 | |||||
Road and Rail — 1.2% | |||||
Union Pacific Corp. | 16,640 | 1,863,014 | |||
Semiconductors and Semiconductor Equipment — 3.1% | |||||
Applied Materials, Inc. | 54,050 | 2,194,971 | |||
Intel Corp. | 33,840 | 1,223,316 | |||
Microchip Technology, Inc. | 4,180 | 315,924 | |||
NXP Semiconductors NV(1) | 4,940 | 522,405 | |||
QUALCOMM, Inc. | 9,410 | 505,693 | |||
4,762,309 | |||||
Software — 3.0% | |||||
Electronic Arts, Inc.(1) | 3,250 | 308,165 | |||
Oracle Corp. (New York) | 94,530 | 4,250,069 | |||
4,558,234 | |||||
Specialty Retail — 1.4% | |||||
Advance Auto Parts, Inc. | 8,070 | 1,147,069 | |||
L Brands, Inc. | 12,680 | 669,631 | |||
Lowe's Cos., Inc. | 4,660 | 395,541 | |||
2,212,241 | |||||
Technology Hardware, Storage and Peripherals — 1.4% | |||||
Apple, Inc. | 15,030 | 2,159,060 | |||
Textiles, Apparel and Luxury Goods — 0.4% | |||||
Ralph Lauren Corp. | 7,660 | 618,315 |
8
Shares | Value | ||||
Tobacco — 1.7% | |||||
Altria Group, Inc. | 8,600 | $ | 617,308 | ||
Philip Morris International, Inc. | 17,670 | 1,958,543 | |||
2,575,851 | |||||
TOTAL COMMON STOCKS (Cost $105,111,381) | 152,630,567 | ||||
TEMPORARY CASH INVESTMENTS — 1.0% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $815,462), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $799,700) | 799,655 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $816,286), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $800,015) | 800,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 746 | 746 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,600,401) | 1,600,401 | ||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $106,711,782) | 154,230,968 | ||||
OTHER ASSETS AND LIABILITIES — 0.2% | 236,923 | ||||
TOTAL NET ASSETS — 100.0% | $ | 154,467,891 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 55,917 | USD | 42,028 | Morgan Stanley | 6/30/17 | $ | (1,029 | ) | ||
CAD | 61,043 | USD | 44,773 | Morgan Stanley | 6/30/17 | (16 | ) | |||
USD | 1,380,042 | CAD | 1,844,115 | Morgan Stanley | 6/30/17 | 27,917 | ||||
USD | 58,215 | CAD | 78,032 | Morgan Stanley | 6/30/17 | 1,001 | ||||
USD | 46,583 | CAD | 63,373 | Morgan Stanley | 6/30/17 | 118 | ||||
USD | 310,139 | CHF | 308,523 | Credit Suisse AG | 6/30/17 | (1,059 | ) | |||
USD | 320,039 | CHF | 318,690 | Credit Suisse AG | 6/30/17 | (1,413 | ) | |||
USD | 46,709 | CHF | 46,368 | Credit Suisse AG | 6/30/17 | (61 | ) | |||
USD | 75,365 | CHF | 74,803 | Credit Suisse AG | 6/30/17 | (87 | ) | |||
EUR | 86,428 | USD | 92,913 | UBS AG | 6/30/17 | 1,512 | ||||
USD | 77,760 | EUR | 72,609 | UBS AG | 6/30/17 | (1,567 | ) | |||
USD | 3,034,122 | EUR | 2,784,467 | UBS AG | 6/30/17 | (7,987 | ) | |||
USD | 113,931 | EUR | 107,136 | UBS AG | 6/30/17 | (3,118 | ) | |||
GBP | 24,926 | USD | 31,253 | Credit Suisse AG | 6/30/17 | 1,086 | ||||
GBP | 21,976 | USD | 28,155 | Credit Suisse AG | 6/30/17 | 357 | ||||
GBP | 23,119 | USD | 29,641 | Credit Suisse AG | 6/30/17 | 354 | ||||
USD | 976,042 | GBP | 779,200 | Credit Suisse AG | 6/30/17 | (34,874 | ) | |||
USD | 29,314 | GBP | 23,555 | Credit Suisse AG | 6/30/17 | (1,245 | ) | |||
USD | 25,538 | GBP | 19,872 | Credit Suisse AG | 6/30/17 | (244 | ) | |||
$ | (20,355 | ) |
9
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CAD | - | Canadian Dollar |
CHF | - | Swiss Franc |
EUR | - | Euro |
GBP | - | British Pound |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $106,711,782) | $ | 154,230,968 | |
Receivable for investments sold | 387,911 | ||
Receivable for capital shares sold | 30,582 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 32,345 | ||
Dividends and interest receivable | 168,816 | ||
154,850,622 | |||
Liabilities | |||
Payable for investments purchased | 186,894 | ||
Payable for capital shares redeemed | 15,379 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 52,700 | ||
Accrued management fees | 126,847 | ||
Distribution and service fees payable | 911 | ||
382,731 | |||
Net Assets | $ | 154,467,891 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 99,241,158 | |
Undistributed net investment income | 526,309 | ||
Undistributed net realized gain | 7,201,593 | ||
Net unrealized appreciation | 47,498,831 | ||
$ | 154,467,891 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $148,032,556 | 16,387,415 | $9.03 | |||
I Class, $0.01 Par Value | $1,983,788 | 219,066 | $9.06 | |||
A Class, $0.01 Par Value | $4,451,547 | 494,204 | $9.01* |
*Maximum offering price $9.56 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $17,553) | $ | 1,895,496 | |
Interest | 1,431 | ||
1,896,927 | |||
Expenses: | |||
Management fees | 831,586 | ||
Distribution and service fees – A Class | 5,919 | ||
Directors' fees and expenses | 2,151 | ||
Other expenses | 360 | ||
840,016 | |||
Fees waived(1) | (75,783 | ) | |
764,233 | |||
Net investment income (loss) | 1,132,694 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 7,949,442 | ||
Foreign currency transactions | 157,315 | ||
8,106,757 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 8,491,934 | ||
Translation of assets and liabilities in foreign currencies | (145,022 | ) | |
8,346,912 | |||
Net realized and unrealized gain (loss) | 16,453,669 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 17,586,363 |
(1) | Amount consists of $72,400, $1,015 and $2,368 for the Investor Class, I Class and A Class, respectively. |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,132,694 | $ | 2,424,105 | ||
Net realized gain (loss) | 8,106,757 | 10,704,341 | ||||
Change in net unrealized appreciation (depreciation) | 8,346,912 | (7,223,914 | ) | |||
Net increase (decrease) in net assets resulting from operations | 17,586,363 | 5,904,532 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (2,191,476 | ) | (2,244,362 | ) | ||
I Class | (35,875 | ) | (48,846 | ) | ||
A Class | (59,449 | ) | (60,089 | ) | ||
From net realized gains: | ||||||
Investor Class | (9,545,164 | ) | (8,499,296 | ) | ||
I Class | (137,766 | ) | (164,845 | ) | ||
A Class | (311,203 | ) | (268,334 | ) | ||
Decrease in net assets from distributions | (12,280,933 | ) | (11,285,772 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 9,195,467 | (5,924,588 | ) | |||
Net increase (decrease) in net assets | 14,500,897 | (11,305,828 | ) | |||
Net Assets | ||||||
Beginning of period | 139,966,994 | 151,272,822 | ||||
End of period | $ | 154,467,891 | $ | 139,966,994 | ||
Undistributed net investment income | $ | 526,309 | $ | 1,680,415 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class) and A Class. The A Class may incur an initial sales charge and may be subject to a contingent deferred sales charge.
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 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
14
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. 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.
15
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets). During the period ended April 30, 2017, the investment advisor agreed to waive 0.10% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2018 and cannot terminate it prior to such date without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended April 30, 2017 are as follows:
Effective Annual Management Fee | |||
Class | Management Fee Schedule Range | Before Waiver | After Waiver |
Investor Class | 0.900% to 1.100% | 1.10% | 1.00% |
I Class | 0.700% to 0.900% | 0.90% | 0.80% |
A Class | 0.900% to 1.100% | 1.10% | 1.00% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $619,684 and $125,129, respectively. The effect of interfund transactions on the Statement of Operations was $65,696 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $21,718,494 and $24,797,056, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017 | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 180,000,000 | 200,000,000 | ||||||||
Sold | 782,475 | $ | 7,134,316 | 624,518 | $ | 5,261,374 | ||||
Issued in reinvestment of distributions | 1,257,615 | 11,104,738 | 1,245,917 | 10,191,589 | ||||||
Redeemed | (999,906 | ) | (9,001,057 | ) | (2,406,725 | ) | (20,339,514 | ) | ||
1,040,184 | 9,237,997 | (536,290 | ) | (4,886,551 | ) | |||||
I Class/Shares Authorized | 20,000,000 | 15,000,000 | ||||||||
Sold | 2,459 | 23,733 | 12,428 | 104,453 | ||||||
Issued in reinvestment of distributions | 12,824 | 113,359 | 18,746 | 153,720 | ||||||
Redeemed | (16,223 | ) | (145,996 | ) | (149,579 | ) | (1,260,000 | ) | ||
(940 | ) | (8,904 | ) | (118,405 | ) | (1,001,827 | ) | |||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 82,480 | 746,690 | 132,211 | 1,112,660 | ||||||
Issued in reinvestment of distributions | 41,700 | 367,377 | 39,753 | 324,780 | ||||||
Redeemed | (126,768 | ) | (1,147,693 | ) | (175,034 | ) | (1,473,650 | ) | ||
(2,588 | ) | (33,626 | ) | (3,070 | ) | (36,210 | ) | |||
Net increase (decrease) | 1,036,656 | $ | 9,195,467 | (657,765 | ) | $ | (5,924,588 | ) |
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.
17
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 145,947,885 | $ | 6,682,682 | — | |||
Temporary Cash Investments | 746 | 1,599,655 | — | |||||
$ | 145,948,631 | $ | 8,282,337 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 32,345 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 52,700 | — |
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 $6,130,759.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $32,345 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $52,700 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $157,646 in net realized gain (loss) on foreign currency transactions and $(145,200) 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.
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.
18
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 107,554,682 | |
Gross tax appreciation of investments | $ | 47,774,327 | |
Gross tax depreciation of investments | (1,098,041 | ) | |
Net tax appreciation (depreciation) of investments | $ | 46,676,286 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
10. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | 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 | |||||||||||||||||
2017(3) | $8.71 | 0.07 | 1.01 | 1.08 | (0.14) | (0.62) | (0.76) | $9.03 | 12.62% | 1.00%(4) | 1.10%(4) | 1.50%(4) | 1.40%(4) | 14% | $148,033 | ||
2016 | $9.05 | 0.14 | 0.21 | 0.35 | (0.14) | (0.55) | (0.69) | $8.71 | 4.36% | 1.00% | 1.10% | 1.72% | 1.62% | 45% | $133,732 | ||
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 | ||
I Class(5) | |||||||||||||||||
2017(3) | $8.74 | 0.08 | 1.02 | 1.10 | (0.16) | (0.62) | (0.78) | $9.06 | 12.82% | 0.80%(4) | 0.90%(4) | 1.70%(4) | 1.60%(4) | 14% | $1,984 | ||
2016 | $9.08 | 0.16 | 0.21 | 0.37 | (0.16) | (0.55) | (0.71) | $8.74 | 4.67% | 0.80% | 0.90% | 1.92% | 1.82% | 45% | $1,924 | ||
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 |
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 | |||||||||||||||||
2017(3) | $8.68 | 0.06 | 1.01 | 1.07 | (0.12) | (0.62) | (0.74) | $9.01 | 12.50% | 1.25%(4) | 1.35%(4) | 1.25%(4) | 1.15%(4) | 14% | $4,452 | ||
2016 | $9.01 | 0.12 | 0.22 | 0.34 | (0.12) | (0.55) | (0.67) | $8.68 | 4.21% | 1.25% | 1.35% | 1.47% | 1.37% | 45% | $4,312 | ||
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 |
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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92360 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc., Class A | 7.6% |
Apple, Inc. | 4.6% |
Amazon.com, Inc. | 4.3% |
Comcast Corp., Class A | 3.2% |
Microsoft Corp. | 3.2% |
Visa, Inc., Class A | 2.9% |
PepsiCo, Inc. | 2.3% |
Amgen, Inc. | 2.2% |
Activision Blizzard, Inc. | 1.9% |
O'Reilly Automotive, Inc. | 1.8% |
Top Five Industries | % of net assets |
Internet Software and Services | 10.0% |
Software | 9.7% |
IT Services | 5.8% |
Biotechnology | 5.8% |
Internet and Direct Marketing Retail | 5.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.1% |
Temporary Cash Investments | 1.8% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,149.30 | $5.22 | 0.98% |
I Class | $1,000 | $1,150.20 | $4.16 | 0.78% |
Y Class | $1,000 | $1,027.80(2) | $0.37(3) | 0.63% |
A Class | $1,000 | $1,148.00 | $6.55 | 1.23% |
C Class | $1,000 | $1,143.90 | $10.53 | 1.98% |
R Class | $1,000 | $1,146.60 | $7.88 | 1.48% |
R5 Class | $1,000 | $1,027.80(2) | $0.46(3) | 0.78% |
R6 Class | $1,000 | $1,151.60 | $3.36 | 0.63% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.94 | $4.91 | 0.98% |
I Class | $1,000 | $1,020.93 | $3.91 | 0.78% |
Y Class | $1,000 | $1,021.67(4) | $3.16(4) | 0.63% |
A Class | $1,000 | $1,018.70 | $6.16 | 1.23% |
C Class | $1,000 | $1,014.98 | $9.89 | 1.98% |
R Class | $1,000 | $1,017.46 | $7.40 | 1.48% |
R5 Class | $1,000 | $1,020.93(4) | $3.91(4) | 0.78% |
R6 Class | $1,000 | $1,021.67 | $3.16 | 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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.1% | |||||
Aerospace and Defense — 2.2% | |||||
Boeing Co. (The) | 157,097 | $ | 29,036,239 | ||
Lockheed Martin Corp. | 513,021 | 138,233,508 | |||
167,269,747 | |||||
Airlines — 1.4% | |||||
Delta Air Lines, Inc. | 2,440,576 | 110,899,773 | |||
Banks — 1.3% | |||||
Bank of America Corp. | 1,551,537 | 36,212,873 | |||
Citizens Financial Group, Inc. | 955,091 | 35,061,391 | |||
Regions Financial Corp. | 2,027,948 | 27,884,285 | |||
99,158,549 | |||||
Beverages — 2.7% | |||||
Dr Pepper Snapple Group, Inc. | 349,373 | 32,020,035 | |||
PepsiCo, Inc. | 1,552,714 | 175,891,442 | |||
207,911,477 | |||||
Biotechnology — 5.8% | |||||
Amgen, Inc. | 1,015,867 | 165,911,398 | |||
Biogen, Inc.(1) | 443,136 | 120,182,915 | |||
Gilead Sciences, Inc. | 1,047,863 | 71,831,009 | |||
Incyte Corp.(1) | 210,389 | 26,147,145 | |||
Regeneron Pharmaceuticals, Inc.(1) | 153,325 | 59,565,229 | |||
443,637,696 | |||||
Capital Markets — 1.0% | |||||
Charles Schwab Corp. (The) | 2,038,980 | 79,214,373 | |||
Chemicals — 2.2% | |||||
Dow Chemical Co. (The) | 1,604,482 | 100,761,470 | |||
LyondellBasell Industries NV, Class A | 798,028 | 67,640,853 | |||
168,402,323 | |||||
Communications Equipment — 1.1% | |||||
Palo Alto Networks, Inc.(1) | 752,730 | 81,603,459 | |||
Consumer Finance — 0.9% | |||||
American Express Co. | 906,134 | 71,811,120 | |||
Electronic Equipment, Instruments and Components — 0.6% | |||||
CDW Corp. | 784,039 | 46,328,865 | |||
Energy Equipment and Services — 0.4% | |||||
Halliburton Co. | 727,886 | 33,395,410 | |||
Equity Real Estate Investment Trusts (REITs) — 2.3% | |||||
Equity Residential | 1,557,476 | 100,581,800 | |||
SBA Communications Corp.(1) | 631,234 | 79,844,789 | |||
180,426,589 | |||||
Food and Staples Retailing — 2.3% | |||||
Kroger Co. (The) | 1,532,649 | 45,443,043 | |||
Wal-Mart Stores, Inc. | 1,755,555 | 131,982,625 | |||
177,425,668 | |||||
Food Products — 0.5% | |||||
Hormel Foods Corp. | 1,165,751 | 40,894,545 |
6
Shares | Value | ||||
Health Care Equipment and Supplies — 3.4% | |||||
Edwards Lifesciences Corp.(1) | 913,435 | $ | 100,176,417 | ||
Hologic, Inc.(1) | 986,747 | 44,551,627 | |||
Intuitive Surgical, Inc.(1) | 139,929 | 116,962,453 | |||
261,690,497 | |||||
Health Care Providers and Services — 1.8% | |||||
Cardinal Health, Inc. | 813,301 | 59,037,520 | |||
Express Scripts Holding Co.(1) | 791,817 | 48,570,055 | |||
Quest Diagnostics, Inc. | 295,371 | 31,164,594 | |||
138,772,169 | |||||
Health Care Technology — 0.7% | |||||
Cerner Corp.(1) | 825,374 | 53,442,967 | |||
Hotels, Restaurants and Leisure — 2.1% | |||||
Chipotle Mexican Grill, Inc.(1) | 124,600 | 59,118,962 | |||
Darden Restaurants, Inc. | 483,164 | 41,160,741 | |||
Las Vegas Sands Corp. | 1,050,632 | 61,976,782 | |||
162,256,485 | |||||
Household Products — 1.8% | |||||
Church & Dwight Co., Inc. | 1,214,055 | 60,132,144 | |||
Procter & Gamble Co. (The) | 863,669 | 75,424,214 | |||
135,556,358 | |||||
Industrial Conglomerates — 1.5% | |||||
3M Co. | 609,837 | 119,424,380 | |||
Internet and Direct Marketing Retail — 5.3% | |||||
Amazon.com, Inc.(1) | 362,134 | 334,970,329 | |||
Expedia, Inc. | 538,263 | 71,976,528 | |||
406,946,857 | |||||
Internet Software and Services — 10.0% | |||||
Alphabet, Inc., Class A(1) | 630,686 | 583,081,821 | |||
Facebook, Inc., Class A(1) | 758,036 | 113,894,909 | |||
LogMeIn, Inc. | 164,845 | 18,627,485 | |||
VeriSign, Inc.(1) | 608,820 | 54,136,274 | |||
769,740,489 | |||||
IT Services — 5.8% | |||||
DXC Technology Co.(1) | 751,803 | 56,640,838 | |||
Fiserv, Inc.(1) | 981,860 | 116,978,800 | |||
Global Payments, Inc. | 558,197 | 45,638,187 | |||
Visa, Inc., Class A | 2,489,501 | 227,092,281 | |||
446,350,106 | |||||
Life Sciences Tools and Services — 1.2% | |||||
Agilent Technologies, Inc. | 1,152,594 | 63,450,299 | |||
Illumina, Inc.(1) | 90,945 | 16,812,093 | |||
Waters Corp.(1) | 89,411 | 15,190,035 | |||
95,452,427 | |||||
Machinery — 3.7% | |||||
Caterpillar, Inc. | 465,163 | 47,567,568 | |||
Cummins, Inc. | 424,582 | 64,086,407 | |||
Parker-Hannifin Corp. | 236,523 | 38,032,899 | |||
WABCO Holdings, Inc.(1) | 588,376 | 69,940,255 | |||
Wabtec Corp. | 746,251 | 62,602,996 | |||
282,230,125 |
7
Shares | Value | ||||
Media — 5.0% | |||||
Comcast Corp., Class A | 6,372,933 | $ | 249,755,244 | ||
DISH Network Corp., Class A(1) | 364,578 | 23,493,406 | |||
Sirius XM Holdings, Inc. | 7,247,938 | 35,877,293 | |||
Walt Disney Co. (The) | 666,366 | 77,031,910 | |||
386,157,853 | |||||
Multiline Retail — 1.2% | |||||
Dollar Tree, Inc.(1) | 1,126,250 | 93,219,712 | |||
Oil, Gas and Consumable Fuels — 0.5% | |||||
Concho Resources, Inc.(1) | 287,670 | 36,436,282 | |||
Personal Products — 0.9% | |||||
Estee Lauder Cos., Inc. (The), Class A | 820,189 | 71,471,269 | |||
Pharmaceuticals — 1.9% | |||||
Bristol-Myers Squibb Co. | 1,109,340 | 62,178,507 | |||
Johnson & Johnson | 695,579 | 85,883,139 | |||
148,061,646 | |||||
Road and Rail — 0.9% | |||||
Union Pacific Corp. | 596,928 | 66,832,059 | |||
Semiconductors and Semiconductor Equipment — 4.0% | |||||
Applied Materials, Inc. | 1,967,001 | 79,879,911 | |||
ASML Holding NV | 325,597 | 43,039,534 | |||
Broadcom Ltd. | 495,013 | 109,303,820 | |||
Marvell Technology Group Ltd. | 1,851,768 | 27,813,555 | |||
Maxim Integrated Products, Inc. | 1,159,194 | 51,178,415 | |||
311,215,235 | |||||
Software — 9.7% | |||||
Activision Blizzard, Inc. | 2,787,084 | 145,625,139 | |||
Electronic Arts, Inc.(1) | 715,413 | 67,835,461 | |||
Microsoft Corp. | 3,575,335 | 244,767,434 | |||
Oracle Corp. (New York) | 1,378,469 | 61,975,966 | |||
salesforce.com, Inc.(1) | 975,846 | 84,039,857 | |||
Splunk, Inc.(1) | 1,018,983 | 65,530,797 | |||
Symantec Corp. | 1,214,073 | 38,401,129 | |||
VMware, Inc., Class A(1) | 376,538 | 35,439,757 | |||
743,615,540 | |||||
Specialty Retail — 4.8% | |||||
Home Depot, Inc. (The) | 295,049 | 46,057,149 | |||
O'Reilly Automotive, Inc.(1) | 573,849 | 142,400,629 | |||
Ross Stores, Inc. | 765,171 | 49,736,115 | |||
TJX Cos., Inc. (The) | 1,434,996 | 112,848,086 | |||
Williams-Sonoma, Inc. | 401,381 | 21,694,643 | |||
372,736,622 | |||||
Technology Hardware, Storage and Peripherals — 4.6% | |||||
Apple, Inc. | 2,465,422 | 354,157,870 | |||
Textiles, Apparel and Luxury Goods — 0.7% | |||||
Coach, Inc. | 1,288,726 | 50,762,917 | |||
Tobacco — 1.9% | |||||
Altria Group, Inc. | 1,118,028 | 80,252,050 |
8
Shares/Principal Amount | Value | |||||
Philip Morris International, Inc. | 592,102 | $ | 65,628,586 | |||
145,880,636 | ||||||
TOTAL COMMON STOCKS (Cost $5,388,125,309) | 7,560,790,095 | |||||
TEMPORARY CASH INVESTMENTS — 1.8% | ||||||
Federal Home Loan Bank Discount Notes, 0.69%, 5/1/17(2) | $ | 75,000,000 | 75,000,000 | |||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $30,286,694), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $29,701,276) | 29,699,593 | |||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $30,314,836), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $29,718,545) | 29,718,000 | |||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 51,881 | 51,881 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $134,469,474) | 134,469,474 | |||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $5,522,594,783) | 7,695,259,569 | |||||
OTHER ASSETS AND LIABILITIES — 0.1% | 9,877,921 | |||||
TOTAL NET ASSETS — 100.0% | $ | 7,705,137,490 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 1,079,354 | USD | 1,164,191 | UBS AG | 6/30/17 | $ | 15,033 | |||
USD | 36,248,897 | EUR | 33,266,245 | UBS AG | 6/30/17 | (95,420 | ) | |||
USD | 1,017,006 | EUR | 940,975 | UBS AG | 6/30/17 | (11,036 | ) | |||
USD | 895,629 | EUR | 816,434 | UBS AG | 6/30/17 | 3,651 | ||||
$ | (87,772 | ) |
FUTURES CONTRACTS | ||||||||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | |||||
233 | NASDAQ 100 E-Mini | June 2017 | $ | 26,005,130 | $ | 319,237 | ||
434 | S&P 500 E-Mini | June 2017 | 51,656,850 | 189,585 | ||||
$ | 77,661,980 | $ | 508,822 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
(2) | The rate indicated is the yield to maturity at purchase. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $5,522,594,783) | $ | 7,695,259,569 | |
Deposits with broker for futures contracts | 3,078,700 | ||
Receivable for investments sold | 42,513,218 | ||
Receivable for capital shares sold | 1,771,851 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 18,684 | ||
Dividends and interest receivable | 3,512,419 | ||
7,746,154,441 | |||
Liabilities | |||
Payable for investments purchased | 31,259,056 | ||
Payable for capital shares redeemed | 3,779,615 | ||
Payable for variation margin on futures contracts | 170,450 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 106,456 | ||
Accrued management fees | 5,624,722 | ||
Distribution and service fees payable | 76,652 | ||
41,016,951 | |||
Net Assets | $ | 7,705,137,490 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 5,207,768,169 | |
Undistributed net investment income | 14,971,435 | ||
Undistributed net realized gain | 309,312,138 | ||
Net unrealized appreciation | 2,173,085,748 | ||
$ | 7,705,137,490 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $5,488,415,062 | 175,323,314 | $31.30 | |||
I Class, $0.01 Par Value | $1,118,083,039 | 35,154,405 | $31.80 | |||
Y Class, $0.01 Par Value | $5,150 | 162 | $31.79 | |||
A Class, $0.01 Par Value | $142,926,919 | 4,693,466 | $30.45* | |||
C Class, $0.01 Par Value | $10,101,599 | 343,243 | $29.43 | |||
R Class, $0.01 Par Value | $97,874,738 | 3,272,589 | $29.91 | |||
R5 Class, $0.01 Par Value | $5,153 | 162 | $31.81 | |||
R6 Class, $0.01 Par Value | $847,725,830 | 26,669,239 | $31.79 |
*Maximum offering price $32.31 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $63,821) | $ | 49,586,768 | |
Interest | 189,865 | ||
49,776,633 | |||
Expenses: | |||
Management fees | 33,162,732 | ||
Distribution and service fees: | |||
A Class | 176,465 | ||
C Class | 48,661 | ||
R Class | 238,663 | ||
Directors' fees and expenses | 103,912 | ||
Other expenses | 111 | ||
33,730,544 | |||
Net investment income (loss) | 16,046,089 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 304,500,171 | ||
Futures contract transactions | 6,174,243 | ||
Foreign currency transactions | 2,182,354 | ||
312,856,768 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 697,056,253 | ||
Futures contracts | 1,087,835 | ||
Translation of assets and liabilities in foreign currencies | (1,154,062 | ) | |
696,990,026 | |||
Net realized and unrealized gain (loss) | 1,009,846,794 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,025,892,883 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 16,046,089 | $ | 46,001,282 | ||
Net realized gain (loss) | 312,856,768 | 333,902,023 | ||||
Change in net unrealized appreciation (depreciation) | 696,990,026 | (373,298,587 | ) | |||
Net increase (decrease) in net assets resulting from operations | 1,025,892,883 | 6,604,718 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (30,098,984 | ) | (19,299,202 | ) | ||
I Class | (10,110,336 | ) | (8,735,464 | ) | ||
A Class | (493,592 | ) | (213,438 | ) | ||
R Class | (77,006 | ) | — | |||
R6 Class | (3,809,345 | ) | (2,228,096 | ) | ||
From net realized gains: | ||||||
Investor Class | (227,335,709 | ) | (362,748,942 | ) | ||
I Class | (56,667,053 | ) | (103,384,171 | ) | ||
A Class | (6,581,911 | ) | (15,137,419 | ) | ||
C Class | (441,655 | ) | (763,235 | ) | ||
R Class | (4,398,218 | ) | (7,186,670 | ) | ||
R6 Class | (17,899,899 | ) | (20,634,765 | ) | ||
Decrease in net assets from distributions | (357,913,708 | ) | (540,331,402 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (26,204,175 | ) | (828,721,980 | ) | ||
Net increase (decrease) in net assets | 641,775,000 | (1,362,448,664 | ) | |||
Net Assets | ||||||
Beginning of period | 7,063,362,490 | 8,425,811,154 | ||||
End of period | $ | 7,705,137,490 | $ | 7,063,362,490 | ||
Undistributed net investment income | $ | 14,971,435 | $ | 43,514,609 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and 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. Sale of the Y Class and R5 Class commenced on April 10, 2017.
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. U.S. Treasury and Government Agency securities 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.
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
13
security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
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. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 5% of the shares of the fund.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and 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 management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 0.800% to 0.990% | 0.98% |
I Class | 0.600% to 0.790% | 0.78% |
Y Class | 0.450% to 0.640% | 0.63% |
A Class | 0.800% to 0.990% | 0.98% |
C Class | 0.800% to 0.990% | 0.98% |
R Class | 0.800% to 0.990% | 0.98% |
R5 Class | 0.600% to 0.790% | 0.78% |
R6 Class | 0.450% to 0.640% | 0.63% |
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%.
15
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $12,582,216 and $4,851,882, respectively. The effect of interfund transactions on the Statement of Operations was $237,469 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $1,520,158,585 and $1,951,013,799, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 1,500,000,000 | 1,330,000,000 | ||||||||
Sold | 4,569,642 | $ | 134,593,264 | 8,647,841 | $ | 243,040,048 | ||||
Issued in reinvestment of distributions | 8,815,440 | 249,565,108 | 13,248,696 | 371,360,933 | ||||||
Redeemed | (16,916,269 | ) | (495,355,944 | ) | (37,793,076 | ) | (1,060,416,668 | ) | ||
(3,531,187 | ) | (111,197,572 | ) | (15,896,539 | ) | (446,015,687 | ) | |||
I Class/Shares Authorized | 400,000,000 | 420,000,000 | ||||||||
Sold | 3,239,833 | 97,816,535 | 6,303,266 | 179,701,920 | ||||||
Issued in reinvestment of distributions | 2,309,948 | 66,411,012 | 3,922,377 | 111,552,414 | ||||||
Redeemed | (14,980,957 | ) | (443,942,135 | ) | (21,172,647 | ) | (608,989,395 | ) | ||
(9,431,176 | ) | (279,714,588 | ) | (10,947,004 | ) | (317,735,061 | ) | |||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 162 | 5,000 | ||||||||
A Class/Shares Authorized | 120,000,000 | 200,000,000 | ||||||||
Sold | 465,018 | 13,354,423 | 933,876 | 25,777,376 | ||||||
Issued in reinvestment of distributions | 225,286 | 6,211,139 | 514,611 | 14,064,308 | ||||||
Redeemed | (1,277,771 | ) | (36,259,504 | ) | (5,907,288 | ) | (167,530,067 | ) | ||
(587,467 | ) | (16,693,942 | ) | (4,458,801 | ) | (127,688,383 | ) | |||
C Class/Shares Authorized | 20,000,000 | 15,000,000 | ||||||||
Sold | 34,266 | 941,718 | 51,407 | 1,381,134 | ||||||
Issued in reinvestment of distributions | 12,938 | 345,575 | 21,933 | 584,089 | ||||||
Redeemed | (51,682 | ) | (1,448,294 | ) | (128,450 | ) | (3,356,084 | ) | ||
(4,478 | ) | (161,001 | ) | (55,110 | ) | (1,390,861 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 171,038 | 4,844,651 | 483,186 | 12,840,380 | ||||||
Issued in reinvestment of distributions | 162,884 | 4,414,145 | 262,174 | 7,047,238 | ||||||
Redeemed | (586,836 | ) | (16,458,847 | ) | (1,131,715 | ) | (30,786,463 | ) | ||
(252,914 | ) | (7,200,051 | ) | (386,355 | ) | (10,898,845 | ) | |||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 162 | 5,000 | ||||||||
R6 Class/Shares Authorized | 300,000,000 | 95,000,000 | ||||||||
Sold | 14,530,129 | 428,096,048 | 4,427,156 | 126,197,799 | ||||||
Issued in reinvestment of distributions | 756,156 | 21,709,244 | 804,747 | 22,862,861 | ||||||
Redeemed | (2,020,904 | ) | (61,052,313 | ) | (2,567,545 | ) | (74,053,803 | ) | ||
13,265,381 | 388,752,979 | 2,664,358 | 75,006,857 | |||||||
Net increase (decrease) | (541,517 | ) | $ | (26,204,175 | ) | (29,079,451 | ) | $ | (828,721,980 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the Y Class and R5 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for |
17
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 | $ | 7,517,750,561 | $ | 43,039,534 | — | |||
Temporary Cash Investments | 51,881 | 134,417,593 | — | |||||
$ | 7,517,802,442 | $ | 177,457,127 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 508,822 | — | — | ||||
Forward Foreign Currency Exchange Contracts | — | $ | 18,684 | — | ||||
$ | 508,822 | $ | 18,684 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 106,456 | — |
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 798 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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $53,924,987.
18
Value of Derivative Instruments as of April 30, 2017
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 * | $ | 170,450 | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 18,684 | Unrealized depreciation on forward foreign currency exchange contracts | 106,456 | |||
$ | 18,684 | $ | 276,906 |
* 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, 2017
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 | $ | 6,174,243 | Change in net unrealized appreciation (depreciation) on futures contracts | $ | 1,087,835 | ||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | 2,188,531 | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (1,154,169 | ) | |||
$ | 8,362,774 | $ | (66,334 | ) |
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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 5,526,240,471 | |
Gross tax appreciation of investments | $ | 2,201,094,596 | |
Gross tax depreciation of investments | (32,075,498 | ) | |
Net tax appreciation (depreciation) of investments | $ | 2,169,019,098 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
9. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | 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 | |||||||||||||||
2017(3) | $28.64 | 0.06 | 4.06 | 4.12 | (0.17) | (1.29) | (1.46) | $31.30 | 14.93% | 0.98%(4) | 0.39%(4) | 21% | $5,488,415 | ||
2016 | $30.57 | 0.16 | (0.08) | 0.08 | (0.10) | (1.91) | (2.01) | $28.64 | 0.40% | 0.98% | 0.57% | 36% | $5,122,550 | ||
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 | ||
I Class(5) | |||||||||||||||
2017(3) | $29.11 | 0.09 | 4.12 | 4.21 | (0.23) | (1.29) | (1.52) | $31.80 | 15.02% | 0.78%(4) | 0.59%(4) | 21% | $1,118,083 | ||
2016 | $31.03 | 0.23 | (0.08) | 0.15 | (0.16) | (1.91) | (2.07) | $29.11 | 0.64% | 0.78% | 0.77% | 36% | $1,297,685 | ||
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 | ||
Y Class | |||||||||||||||
2017(6) | $30.93 | —(8) | 0.86 | 0.86 | — | — | — | $31.79 | 2.78% | 0.63%(4) | (0.28)%(4) | 21%(7) | $5 |
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 | |||||||||||||||
2017(3) | $27.86 | 0.02 | 3.96 | 3.98 | (0.10) | (1.29) | (1.39) | $30.45 | 14.80% | 1.23%(4) | 0.14%(4) | 21% | $142,927 | ||
2016 | $29.78 | 0.10 | (0.08) | 0.02 | (0.03) | (1.91) | (1.94) | $27.86 | 0.18% | 1.23% | 0.32% | 36% | $147,133 | ||
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 | ||
C Class | |||||||||||||||
2017(3) | $26.97 | (0.08) | 3.83 | 3.75 | — | (1.29) | (1.29) | $29.43 | 14.39% | 1.98%(4) | (0.61)%(4) | 21% | $10,102 | ||
2016 | $29.08 | (0.11) | (0.09) | (0.20) | — | (1.91) | (1.91) | $26.97 | (0.58)% | 1.98% | (0.43)% | 36% | $9,379 | ||
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 | ||
R Class | |||||||||||||||
2017(3) | $27.35 | (0.01) | 3.88 | 3.87 | (0.02) | (1.29) | (1.31) | $29.91 | 14.66% | 1.48%(4) | (0.11)%(4) | 21% | $97,875 | ||
2016 | $29.31 | 0.02 | (0.07) | (0.05) | — | (1.91) | (1.91) | $27.35 | (0.06)% | 1.48% | 0.07% | 36% | $96,415 | ||
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 | —(8) | (0.91) | (0.91) | $26.82 | 10.12% | 1.47% | 0.04% | 74% | $115,208 |
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) | |||
R5 Class | |||||||||||||||
2017(6) | $30.95 | (0.01) | 0.87 | 0.86 | — | — | — | $31.81 | 2.78% | 0.78%(4) | (0.43)%(4) | 21%(7) | $5 | ||
R6 Class | |||||||||||||||
2017(3) | $29.11 | 0.10 | 4.14 | 4.24 | (0.27) | (1.29) | (1.56) | $31.79 | 15.16% | 0.63%(4) | 0.74%(4) | 21% | $847,726 | ||
2016 | $31.04 | 0.26 | (0.07) | 0.19 | (0.21) | (1.91) | (2.12) | $29.11 | 0.76% | 0.63% | 0.92% | 36% | $390,201 | ||
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(9) | $31.22 | 0.05 | 2.24 | 2.29 | — | — | — | $33.51 | 7.34% | 0.62%(4) | 0.64%(4) | 67%(10) | $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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(8) | Per-share amount was less than $0.005. |
(9) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(10) | 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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92358 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Newell Brands, Inc. | 2.8% |
Zoetis, Inc. | 2.2% |
Electronic Arts, Inc. | 2.0% |
Ball Corp. | 1.9% |
Equinix, Inc. | 1.7% |
Middleby Corp. (The) | 1.7% |
Teleflex, Inc. | 1.6% |
Fidelity National Information Services, Inc. | 1.6% |
Baxter International, Inc. | 1.5% |
Concho Resources, Inc. | 1.4% |
Top Five Industries | % of net assets |
Software | 7.3% |
IT Services | 6.2% |
Specialty Retail | 6.1% |
Machinery | 5.8% |
Health Care Equipment and Supplies | 5.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.4% |
Temporary Cash Investments | 1.4% |
Other Assets and Liabilities | 0.2% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,128.10 | $5.28 | 1.00% |
I Class | $1,000 | $1,128.80 | $4.22 | 0.80% |
Y Class | $1,000 | $1,028.00(2) | $0.38(3) | 0.65% |
A Class | $1,000 | $1,126.20 | $6.59 | 1.25% |
C Class | $1,000 | $1,122.30 | $10.52 | 2.00% |
R Class | $1,000 | $1,125.00 | $7.90 | 1.50% |
R5 Class | $1,000 | $1,027.80(2) | $0.47(3) | 0.80% |
R6 Class | $1,000 | $1,129.90 | $3.43 | 0.65% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
I Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
Y Class | $1,000 | $1,021.57(4) | $3.26(4) | 0.65% |
A Class | $1,000 | $1,018.60 | $6.26 | 1.25% |
C Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
R Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
R5 Class | $1,000 | $1,020.83(4) | $4.01(4) | 0.80% |
R6 Class | $1,000 | $1,021.57 | $3.26 | 0.65% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.4% | |||||
Aerospace and Defense — 0.7% | |||||
L3 Technologies, Inc. | 192,786 | $ | 33,114,851 | ||
Airlines — 0.7% | |||||
Spirit Airlines, Inc.(1) | 622,284 | 35,638,205 | |||
Auto Components — 0.5% | |||||
Delphi Automotive plc | 313,499 | 25,205,320 | |||
Banks — 2.4% | |||||
BankUnited, Inc. | 926,501 | 32,696,220 | |||
SVB Financial Group(1) | 212,605 | 37,405,724 | |||
Zions Bancorp | 1,206,626 | 48,301,239 | |||
118,403,183 | |||||
Beverages — 3.2% | |||||
Constellation Brands, Inc., Class A | 306,549 | 52,891,964 | |||
Molson Coors Brewing Co., Class B | 509,392 | 48,845,599 | |||
Monster Beverage Corp.(1) | 1,228,702 | 55,758,497 | |||
157,496,060 | |||||
Biotechnology — 3.0% | |||||
Alexion Pharmaceuticals, Inc.(1) | 371,942 | 47,526,749 | |||
Alkermes plc(1) | 247,841 | 14,436,738 | |||
BioMarin Pharmaceutical, Inc.(1) | 281,309 | 26,960,654 | |||
Incyte Corp.(1) | 485,185 | 60,298,792 | |||
149,222,933 | |||||
Building Products — 1.5% | |||||
Fortune Brands Home & Security, Inc. | 691,924 | 44,103,236 | |||
Lennox International, Inc. | 193,772 | 32,047,951 | |||
76,151,187 | |||||
Capital Markets — 3.8% | |||||
Affiliated Managers Group, Inc. | 354,015 | 58,621,344 | |||
CBOE Holdings, Inc. | 294,346 | 24,257,054 | |||
S&P Global, Inc. | 369,237 | 49,547,913 | |||
SEI Investments Co. | 1,148,946 | 58,263,051 | |||
190,689,362 | |||||
Chemicals — 1.7% | |||||
Axalta Coating Systems Ltd.(1) | 768,432 | 24,105,712 | |||
Ingevity Corp.(1) | 490,955 | 31,043,085 | |||
Scotts Miracle-Gro Co. (The), Class A | 297,092 | 28,699,087 | |||
83,847,884 | |||||
Commercial Services and Supplies — 0.4% | |||||
Brink's Co. (The) | 344,552 | 21,155,493 | |||
Communications Equipment — 0.6% | |||||
Palo Alto Networks, Inc.(1) | 263,321 | 28,546,630 | |||
Construction and Engineering — 0.5% | |||||
Jacobs Engineering Group, Inc. | 490,999 | 26,965,665 | |||
Construction Materials — 1.4% | |||||
Vulcan Materials Co. | 576,258 | 69,658,067 |
6
Shares | Value | ||||
Consumer Finance — 0.9% | |||||
Discover Financial Services | 681,472 | $ | 42,653,332 | ||
Containers and Packaging — 1.9% | |||||
Ball Corp. | 1,198,793 | 92,175,194 | |||
Distributors — 1.0% | |||||
LKQ Corp.(1) | 1,622,024 | 50,672,030 | |||
Electrical Equipment — 0.7% | |||||
AMETEK, Inc. | 612,677 | 35,045,124 | |||
Electronic Equipment, Instruments and Components — 2.1% | |||||
CDW Corp. | 208,661 | 12,329,779 | |||
Dolby Laboratories, Inc., Class A | 905,339 | 47,738,525 | |||
Trimble, Inc.(1) | 1,276,258 | 45,217,821 | |||
�� | 105,286,125 | ||||
Equity Real Estate Investment Trusts (REITs) — 3.7% | |||||
Crown Castle International Corp. | 507,916 | 48,048,854 | |||
Equinix, Inc. | 202,870 | 84,738,799 | |||
SBA Communications Corp.(1) | 404,740 | 51,195,562 | |||
183,983,215 | |||||
Food and Staples Retailing — 0.8% | |||||
Costco Wholesale Corp. | 224,394 | 39,834,423 | |||
Food Products — 2.1% | |||||
Blue Buffalo Pet Products, Inc.(1) | 1,297,938 | 31,994,171 | |||
Dean Foods Co. | 763,966 | 15,080,689 | |||
TreeHouse Foods, Inc.(1) | 659,808 | 57,799,181 | |||
104,874,041 | |||||
Health Care Equipment and Supplies — 5.4% | |||||
Baxter International, Inc. | 1,358,288 | 75,629,476 | |||
Nevro Corp.(1) | 389,190 | 36,669,482 | |||
NuVasive, Inc.(1) | 479,733 | 34,785,440 | |||
Teleflex, Inc. | 383,651 | 79,373,555 | |||
West Pharmaceutical Services, Inc. | 467,083 | 42,985,648 | |||
269,443,601 | |||||
Health Care Providers and Services — 3.1% | |||||
Amedisys, Inc.(1) | 576,128 | 31,226,138 | |||
Centene Corp.(1) | 423,876 | 31,536,374 | |||
Humana, Inc. | 246,578 | 54,735,384 | |||
Universal Health Services, Inc., Class B | 317,071 | 38,289,494 | |||
155,787,390 | |||||
Hotels, Restaurants and Leisure — 4.5% | |||||
Chipotle Mexican Grill, Inc.(1) | 101,318 | 48,072,352 | |||
Hilton Worldwide Holdings, Inc. | 407,633 | 24,038,118 | |||
Las Vegas Sands Corp. | 575,202 | 33,931,166 | |||
MGM Resorts International | 1,746,941 | 53,648,558 | |||
Papa John's International, Inc. | 314,350 | 24,852,511 | |||
Vail Resorts, Inc. | 191,949 | 37,940,639 | |||
222,483,344 | |||||
Household Durables — 3.6% | |||||
Mohawk Industries, Inc.(1) | 166,603 | 39,116,718 | |||
Newell Brands, Inc. | 2,944,982 | 140,593,441 | |||
179,710,159 | |||||
7
Shares | Value | ||||
Internet and Direct Marketing Retail — 1.1% | |||||
Expedia, Inc. | 395,127 | $ | 52,836,382 | ||
Internet Software and Services — 2.0% | |||||
CoStar Group, Inc.(1) | 173,539 | 41,803,810 | |||
eBay, Inc.(1) | 709,756 | 23,712,948 | |||
LogMeIn, Inc. | 281,483 | 31,807,579 | |||
97,324,337 | |||||
IT Services — 6.2% | |||||
Alliance Data Systems Corp. | 246,402 | 61,509,331 | |||
Booz Allen Hamilton Holding Corp. | 1,703,413 | 61,203,629 | |||
DXC Technology Co.(1) | 311,458 | 23,465,246 | |||
Fidelity National Information Services, Inc. | 925,678 | 77,932,831 | |||
First Data Corp., Class A(1) | 1,433,390 | 22,389,552 | |||
Vantiv, Inc., Class A(1) | 953,815 | 59,174,682 | |||
305,675,271 | |||||
Life Sciences Tools and Services — 1.5% | |||||
Bio-Techne Corp. | 255,983 | 27,410,660 | |||
Illumina, Inc.(1) | 248,677 | 45,970,430 | |||
73,381,090 | |||||
Machinery — 5.8% | |||||
Ingersoll-Rand plc | 447,754 | 39,738,167 | |||
John Bean Technologies Corp. | 338,778 | 30,032,670 | |||
Kennametal, Inc. | 731,658 | 30,422,340 | |||
Middleby Corp. (The)(1) | 617,949 | 84,121,397 | |||
Parker-Hannifin Corp. | 174,369 | 28,038,535 | |||
Snap-on, Inc. | 294,171 | 49,282,468 | |||
WABCO Holdings, Inc.(1) | 233,257 | 27,727,260 | |||
289,362,837 | |||||
Media — 1.5% | |||||
Charter Communications, Inc., Class A(1) | 117,862 | 40,681,248 | |||
Scripps Networks Interactive, Inc., Class A | 470,118 | 35,127,217 | |||
75,808,465 | |||||
Multiline Retail — 1.9% | |||||
Dollar General Corp. | 531,028 | 38,611,046 | |||
Dollar Tree, Inc.(1) | 690,227 | 57,130,089 | |||
95,741,135 | |||||
Oil, Gas and Consumable Fuels — 1.4% | |||||
Concho Resources, Inc.(1) | 558,905 | 70,790,907 | |||
Pharmaceuticals — 3.2% | |||||
Catalent, Inc.(1) | 770,924 | 22,572,655 | |||
Jazz Pharmaceuticals plc(1) | 159,393 | 25,388,117 | |||
Zoetis, Inc. | 1,970,431 | 110,560,883 | |||
158,521,655 | |||||
Professional Services — 3.4% | |||||
Equifax, Inc. | 519,310 | 70,267,836 | |||
IHS Markit Ltd.(1) | 665,870 | 28,898,758 | |||
Verisk Analytics, Inc., Class A(1) | 853,582 | 70,685,126 | |||
169,851,720 | |||||
Road and Rail — 1.4% | |||||
Canadian Pacific Railway Ltd. (New York) | 157,306 | 24,107,145 |
8
Shares/ Principal Amount | Value | |||||
Norfolk Southern Corp. | 377,531 | $ | 44,356,117 | |||
68,463,262 | ||||||
Semiconductors and Semiconductor Equipment — 3.6% | ||||||
Broadcom Ltd. | 215,260 | 47,531,561 | ||||
Cavium, Inc.(1) | 342,087 | 23,552,690 | ||||
KLA-Tencor Corp. | 612,921 | 60,201,101 | ||||
NVIDIA Corp. | 466,048 | 48,608,806 | ||||
179,894,158 | ||||||
Software — 7.3% | ||||||
CDK Global, Inc. | 672,699 | 43,732,162 | ||||
Electronic Arts, Inc.(1) | 1,028,582 | 97,530,145 | ||||
Guidewire Software, Inc.(1) | 604,174 | 37,150,659 | ||||
ServiceNow, Inc.(1) | 529,267 | 50,005,146 | ||||
Splunk, Inc.(1) | 643,857 | 41,406,444 | ||||
Symantec Corp. | 922,370 | 29,174,563 | ||||
Tyler Technologies, Inc.(1) | 371,934 | 60,844,683 | ||||
359,843,802 | ||||||
Specialty Retail — 6.1% | ||||||
AutoZone, Inc.(1) | 66,129 | 45,773,833 | ||||
Burlington Stores, Inc.(1) | 508,935 | 50,343,850 | ||||
Michaels Cos., Inc. (The)(1) | 986,061 | 23,034,385 | ||||
O'Reilly Automotive, Inc.(1) | 274,615 | 68,145,712 | ||||
Ross Stores, Inc. | 1,063,442 | 69,123,730 | ||||
Ulta Salon, Cosmetics & Fragrance, Inc.(1) | 155,653 | 43,806,980 | ||||
300,228,490 | ||||||
Textiles, Apparel and Luxury Goods — 1.0% | ||||||
Coach, Inc. | 606,184 | 23,877,588 | ||||
Columbia Sportswear Co. | 415,342 | 23,516,664 | ||||
47,394,252 | ||||||
Trading Companies and Distributors — 0.8% | ||||||
United Rentals, Inc.(1) | 341,173 | 37,413,031 | ||||
TOTAL COMMON STOCKS (Cost $3,776,908,978) | 4,880,573,612 | |||||
TEMPORARY CASH INVESTMENTS — 1.4% | ||||||
Federal Home Loan Bank Discount Notes, 0.69%, 5/1/17(2) | $ | 35,000,000 | 35,000,000 | |||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $17,594,407), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $17,254,321) | 17,253,343 | |||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $17,611,379), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $17,264,317) | 17,264,000 | |||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 12,544 | 12,544 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $69,529,887) | 69,529,887 | |||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $3,846,438,865) | 4,950,103,499 | |||||
OTHER ASSETS AND LIABILITIES — 0.2% | 8,095,047 | |||||
TOTAL NET ASSETS — 100.0% | $ | 4,958,198,546 |
9
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 4,021,130 | USD | 2,987,736 | Morgan Stanley | 6/30/17 | $ | (39,401 | ) | ||
USD | 24,735,841 | CAD | 33,053,870 | Morgan Stanley | 6/30/17 | 500,388 | ||||
USD | 579,691 | CAD | 777,026 | Morgan Stanley | 6/30/17 | 9,967 | ||||
$ | 470,954 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
(2) | The rate indicated is the yield to maturity at purchase. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $3,846,438,865) | $ | 4,950,103,499 | |
Receivable for investments sold | 31,263,011 | ||
Receivable for capital shares sold | 6,281,508 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 510,355 | ||
Dividends and interest receivable | 624,290 | ||
4,988,782,663 | |||
Liabilities | |||
Payable for investments purchased | 14,717,647 | ||
Payable for capital shares redeemed | 11,672,718 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 39,401 | ||
Accrued management fees | 3,951,806 | ||
Distribution and service fees payable | 202,545 | ||
30,584,117 | |||
Net Assets | $ | 4,958,198,546 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 3,677,436,096 | |
Accumulated net investment loss | (17,787,199 | ) | |
Undistributed net realized gain | 194,387,724 | ||
Net unrealized appreciation | 1,104,161,925 | ||
$ | 4,958,198,546 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $3,998,581,771 | 180,882,965 | $22.11 | |||
I Class, $0.01 Par Value | $140,402,855 | 6,019,746 | $23.32 | |||
Y Class, $0.01 Par Value | $5,142 | 219 | $23.48 | |||
A Class, $0.01 Par Value | $525,683,099 | 25,475,191 | $20.64* | |||
C Class, $0.01 Par Value | $96,243,894 | 5,626,637 | $17.11 | |||
R Class, $0.01 Par Value | $41,439,648 | 1,999,973 | $20.72 | |||
R5 Class, $0.01 Par Value | $5,130 | 220 | $23.32 | |||
R6 Class, $0.01 Par Value | $155,837,007 | 6,636,551 | $23.48 |
*Maximum offering price $21.90 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $34,104) | $ | 21,006,090 | |
Interest | 41,134 | ||
21,047,224 | |||
Expenses: | |||
Management fees | 23,882,070 | ||
Distribution and service fees: | |||
A Class | 679,115 | ||
C Class | 493,265 | ||
R Class | 105,348 | ||
Directors' fees and expenses | 69,789 | ||
Other expenses | 3,893 | ||
25,233,480 | |||
Net investment income (loss) | (4,186,256 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 198,365,703 | ||
Foreign currency transactions | (21,953 | ) | |
198,343,750 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 395,020,018 | ||
Translation of assets and liabilities in foreign currencies | (293,411 | ) | |
394,726,607 | |||
Net realized and unrealized gain (loss) | 593,070,357 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 588,884,101 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | (4,186,256 | ) | $ | (13,564,912 | ) |
Net realized gain (loss) | 198,343,750 | 392,559,276 | ||||
Change in net unrealized appreciation (depreciation) | 394,726,607 | (511,638,261 | ) | |||
Net increase (decrease) in net assets resulting from operations | 588,884,101 | (132,643,897 | ) | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (309,914,663 | ) | (476,523,199 | ) | ||
I Class | (11,179,521 | ) | (18,120,987 | ) | ||
A Class | (47,529,397 | ) | (91,679,856 | ) | ||
C Class | (10,202,472 | ) | (17,882,234 | ) | ||
R Class | (3,730,908 | ) | (6,346,684 | ) | ||
R6 Class | (9,792,656 | ) | (10,943,140 | ) | ||
Decrease in net assets from distributions | (392,349,617 | ) | (621,496,100 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (58,289,478 | ) | (28,900,566 | ) | ||
Net increase (decrease) in net assets | 138,245,006 | (783,040,563 | ) | |||
Net Assets | ||||||
Beginning of period | 4,819,953,540 | 5,602,994,103 | ||||
End of period | $ | 4,958,198,546 | $ | 4,819,953,540 | ||
Accumulated net investment loss | $ | (17,787,199 | ) | $ | (13,600,943 | ) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and 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. Sale of the Y Class and R5 Class commenced on April 10, 2017.
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. U.S. Treasury and Government Agency securities 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.
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
14
security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
15
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class.
The annual management fee for each class is as follows:
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.000% | 0.800% | 0.650% | 1.000% | 1.000% | 1.000% | 0.800% | 0.650% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $3,319,492 and $16,828,818, respectively. The effect of interfund transactions on the Statement of Operations was $1,415,461 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $1,146,401,382 and $1,631,237,994, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | ||||||||
Shares | Amount | Shares | Amount | ||||||
Investor Class/Shares Authorized | 1,500,000,000 | 1,270,000,000 | |||||||
Sold | 7,091,789 | $ | 150,736,410 | 12,665,346 | $ | 267,899,742 | |||
Issued in reinvestment of distributions | 14,633,383 | 299,984,349 | 21,839,340 | 461,902,032 | |||||
Redeemed | (20,508,772) | (437,770,705) | (31,751,604 | ) | (680,380,619 | ) | |||
1,216,400 | 12,950,054 | 2,753,082 | 49,421,155 | ||||||
I Class/Shares Authorized | 130,000,000 | 120,000,000 | |||||||
Sold | 881,916 | 20,014,105 | 1,961,747 | 44,663,069 | |||||
Issued in reinvestment of distributions | 505,042 | 10,913,955 | 791,046 | 17,529,582 | |||||
Redeemed | (2,336,971) | (52,733,959) | (2,170,480 | ) | (48,819,503 | ) | |||
(950,013) | (21,805,899) | 582,313 | 13,373,148 | ||||||
Y Class/Shares Authorized | 50,000,000 | N/A | |||||||
Sold | 219 | 5,000 | |||||||
A Class/Shares Authorized | 340,000,000 | 450,000,000 | |||||||
Sold | 1,947,894 | 38,819,875 | 4,766,511 | 97,356,035 | |||||
Issued in reinvestment of distributions | 2,399,006 | 45,940,961 | 4,477,628 | 89,194,354 | |||||
Redeemed | (7,388,689) | (147,367,779) | (14,972,490 | ) | (301,149,639 | ) | |||
(3,041,789) | (62,606,943) | (5,728,351 | ) | (114,599,250 | ) | ||||
C Class/Shares Authorized | 80,000,000 | 80,000,000 | |||||||
Sold | 275,782 | 4,554,908 | 707,195 | 12,265,998 | |||||
Issued in reinvestment of distributions | 582,590 | 9,274,836 | 944,287 | 16,015,100 | |||||
Redeemed | (1,335,377) | (22,205,853) | (2,151,091 | ) | (36,799,144 | ) | |||
(477,005) | (8,376,109) | (499,609 | ) | (8,518,046 | ) | ||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | |||||||
Sold | 233,364 | 4,691,510 | 605,044 | 12,283,208 | |||||
Issued in reinvestment of distributions | 191,545 | 3,687,238 | 315,250 | 6,323,925 | |||||
Redeemed | (608,074) | (12,095,680) | (1,025,372 | ) | (20,375,900 | ) | |||
(183,165) | (3,716,932) | (105,078 | ) | (1,768,767 | ) | ||||
R5 Class/Shares Authorized | 50,000,000 | N/A | |||||||
Sold | 220 | 5,000 | |||||||
R6 Class/Shares Authorized | 60,000,000 | 60,000,000 | |||||||
Sold | 1,820,969 | 41,264,104 | 2,752,948 | 61,715,522 | |||||
Issued in reinvestment of distributions | 450,237 | 9,792,656 | 491,826 | 10,943,140 | |||||
Redeemed | (1,141,096) | (25,800,409) | (1,744,390 | ) | (39,467,468 | ) | |||
1,130,110 | 25,256,351 | 1,500,384 | 33,191,194 | ||||||
Net increase (decrease) | (2,305,023) | $ | (58,289,478 | ) | (1,497,259 | ) | $ | (28,900,566 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the Y Class and R5 Class. |
17
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. 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 | $ | 4,880,573,612 | — | — | ||||
Temporary Cash Investments | 12,544 | $ | 69,517,343 | — | ||||
$ | 4,880,586,156 | $ | 69,517,343 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 510,355 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 39,401 | — |
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 $54,044,097.
18
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $510,355 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $39,401 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(20,968) in net realized gain (loss) on foreign currency transactions and $(296,006) 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.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 3,851,700,595 | |
Gross tax appreciation of investments | $ | 1,124,187,643 | |
Gross tax depreciation of investments | (25,784,739 | ) | |
Net tax appreciation (depreciation) of investments | $ | 1,098,402,904 |
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, 2016, the fund had late-year ordinary loss deferrals of $(12,833,983), 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.
10. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net 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 | |||||||||||||
2017(5) | $21.28 | (0.01) | 2.60 | 2.59 | (1.76) | $22.11 | 12.81% | 1.00%(3) | (0.13)%(3) | 24% | $3,998,582 | ||
2016 | $24.59 | (0.05) | (0.53) | (0.58) | (2.73) | $21.28 | (2.26)% | 1.00% | (0.21)% | 62% | $3,823,112 | ||
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 | ||
I Class(4) | |||||||||||||
2017(5) | $22.34 | 0.01 | 2.73 | 2.74 | (1.76) | $23.32 | 12.88% | 0.80%(3) | 0.07%(3) | 24% | $140,403 | ||
2016 | $25.62 | —(6) | (0.55) | (0.55) | (2.73) | $22.34 | (2.07)% | 0.80% | (0.01)% | 62% | $155,695 | ||
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 | ||
Y Class | |||||||||||||
2017(7) | $22.84 | (0.01) | 0.65 | 0.64 | — | $23.48 | 2.80% | 0.65%(3) | (0.56)%(3) | 24%(8) | $5 |
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 | |||||||||||||
2017(5) | $20.00 | (0.04) | 2.44 | 2.40 | (1.76) | $20.64 | 12.62% | 1.25%(3) | (0.38)%(3) | 24% | $525,683 | ||
2016 | $23.33 | (0.09) | (0.51) | (0.60) | (2.73) | $20.00 | (2.53)% | 1.25% | (0.46)% | 62% | $570,298 | ||
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 | ||
C Class | |||||||||||||
2017(5) | $16.92 | (0.09) | 2.04 | 1.95 | (1.76) | $17.11 | 12.23% | 2.00%(3) | (1.13)%(3) | 24% | $96,244 | ||
2016 | $20.31 | (0.21) | (0.45) | (0.66) | (2.73) | $16.92 | (3.29)% | 2.00% | (1.21)% | 62% | $103,292 | ||
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 | ||
R Class | |||||||||||||
2017(5) | $20.10 | (0.06) | 2.44 | 2.38 | (1.76) | $20.72 | 12.50% | 1.50%(3) | (0.63)%(3) | 24% | $41,440 | ||
2016 | $23.48 | (0.15) | (0.50) | (0.65) | (2.73) | $20.10 | (2.75)% | 1.50% | (0.71)% | 62% | $43,875 | ||
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 |
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) | |||
R5 Class | |||||||||||||
2017(7) | $22.69 | (0.01) | 0.64 | 0.63 | — | $23.32 | 2.78% | 0.80%(3) | (0.71)%(3) | 24%(8) | $5 | ||
R6 Class | |||||||||||||
2017(5) | $22.46 | 0.02 | 2.76 | 2.78 | (1.76) | $23.48 | 12.99% | 0.65%(3) | 0.22%(3) | 24% | $155,837 | ||
2016 | $25.72 | 0.03 | (0.56) | (0.53) | (2.73) | $22.46 | (1.93)% | 0.65% | 0.14% | 62% | $123,681 | ||
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% | $56,442 | ||
2013(9) | $27.22 | —(6) | 2.03 | 2.03 | — | $29.25 | 7.46% | 0.65%(3) | (0.07)%(3) | 70%(10) | $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) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(5) | Six months ended April 30, 2017 (unaudited). |
(6) | Per-share amount was less than $0.005. |
(7) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(9) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(10) | 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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92365 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
CDW Corp. | 1.5% |
Tivity Health, Inc. | 1.3% |
Catalent, Inc. | 1.3% |
Ball Corp. | 1.2% |
Tyler Technologies, Inc. | 1.2% |
Brunswick Corp. | 1.2% |
Cooper Cos., Inc. (The) | 1.2% |
Bright Horizons Family Solutions, Inc. | 1.1% |
Burlington Stores, Inc. | 1.1% |
Aramark | 1.1% |
Top Five Industries | % of net assets |
Health Care Equipment and Supplies | 5.6% |
Internet Software and Services | 5.5% |
IT Services | 5.4% |
Machinery | 5.1% |
Biotechnology | 4.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.6% |
Temporary Cash Investments | 1.6% |
Other Assets and Liabilities | (0.2)% |
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, 2016 to April 30, 2017.
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 I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,185.30 | $7.31 | 1.35% |
Investor Class (before waiver) | $1,000 | $1,185.30(2) | $8.13 | 1.50% |
I Class (after waiver) | $1,000 | $1,186.60 | $6.23 | 1.15% |
I Class (before waiver) | $1,000 | $1,186.60(2) | $7.05 | 1.30% |
A Class (after waiver) | $1,000 | $1,182.70 | $8.66 | 1.60% |
A Class (before waiver) | $1,000 | $1,182.70(2) | $9.47 | 1.75% |
C Class (after waiver) | $1,000 | $1,178.40 | $12.69 | 2.35% |
C Class (before waiver) | $1,000 | $1,178.40(2) | $13.50 | 2.50% |
R Class (after waiver) | $1,000 | $1,181.00 | $10.00 | 1.85% |
R Class (before waiver) | $1,000 | $1,181.00(2) | $10.82 | 2.00% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,018.10 | $6.76 | 1.35% |
Investor Class (before waiver) | $1,000 | $1,017.36 | $7.50 | 1.50% |
I Class (after waiver) | $1,000 | $1,019.09 | $5.76 | 1.15% |
I Class (before waiver) | $1,000 | $1,018.35 | $6.51 | 1.30% |
A Class (after waiver) | $1,000 | $1,016.86 | $8.00 | 1.60% |
A Class (before waiver) | $1,000 | $1,016.12 | $8.75 | 1.75% |
C Class (after waiver) | $1,000 | $1,013.14 | $11.73 | 2.35% |
C Class (before waiver) | $1,000 | $1,012.40 | $12.47 | 2.50% |
R Class (after waiver) | $1,000 | $1,015.62 | $9.25 | 1.85% |
R Class (before waiver) | $1,000 | $1,014.88 | $9.99 | 2.00% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | 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, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.6% | |||||
Aerospace and Defense — 3.0% | |||||
AAR Corp. | 33,983 | $ | 1,223,048 | ||
Cubic Corp. | 24,780 | 1,286,082 | |||
KLX, Inc.(1) | 36,827 | 1,741,917 | |||
Mercury Systems, Inc.(1) | 40,638 | 1,519,049 | |||
5,770,096 | |||||
Air Freight and Logistics — 0.9% | |||||
XPO Logistics, Inc.(1) | 34,877 | 1,722,575 | |||
Airlines — 0.5% | |||||
Alaska Air Group, Inc. | 11,060 | 941,095 | |||
Auto Components — 1.2% | |||||
LCI Industries | 13,712 | 1,386,969 | |||
Tenneco, Inc. | 15,417 | 971,733 | |||
2,358,702 | |||||
Banks — 2.5% | |||||
Cathay General Bancorp. | 37,768 | 1,437,073 | |||
FCB Financial Holdings, Inc., Class A(1) | 42,844 | 2,024,379 | |||
SVB Financial Group(1) | 8,649 | 1,521,705 | |||
4,983,157 | |||||
Beverages — 1.3% | |||||
Coca-Cola Bottling Co. Consolidated | 7,417 | 1,571,366 | |||
MGP Ingredients, Inc. | 17,865 | 935,411 | |||
2,506,777 | |||||
Biotechnology — 4.9% | |||||
ACADIA Pharmaceuticals, Inc.(1) | 16,873 | 579,250 | |||
Aimmune Therapeutics, Inc.(1) | 19,758 | 384,095 | |||
Alder Biopharmaceuticals, Inc.(1) | 16,137 | 323,547 | |||
Alkermes plc(1) | 15,393 | 896,642 | |||
Alnylam Pharmaceuticals, Inc.(1) | 9,703 | 520,081 | |||
Clovis Oncology, Inc.(1) | 6,995 | 404,941 | |||
Exelixis, Inc.(1) | 26,812 | 600,589 | |||
Flexion Therapeutics, Inc.(1) | 21,477 | 438,346 | |||
Ionis Pharmaceuticals, Inc.(1) | 13,077 | 630,181 | |||
Ironwood Pharmaceuticals, Inc.(1) | 15,032 | 245,322 | |||
Jounce Therapeutics, Inc.(1) | 8,565 | 242,561 | |||
Kite Pharma, Inc.(1) | 7,541 | 618,965 | |||
Neurocrine Biosciences, Inc.(1) | 15,325 | 818,355 | |||
Opko Health, Inc.(1) | 29,689 | 230,683 | |||
Puma Biotechnology, Inc.(1) | 3,977 | 161,466 | |||
Radius Health, Inc.(1) | 9,366 | 365,930 | |||
Sarepta Therapeutics, Inc.(1) | 4,928 | 178,689 | |||
Seattle Genetics, Inc.(1) | 9,816 | 670,433 | |||
Spark Therapeutics, Inc.(1) | 6,273 | 363,646 | |||
TESARO, Inc.(1) | 4,009 | 591,688 | |||
Ultragenyx Pharmaceutical, Inc.(1) | 4,182 | 269,279 | |||
9,534,689 |
6
Shares | Value | ||||
Building Products — 2.3% | |||||
Fortune Brands Home & Security, Inc. | 33,717 | $ | 2,149,121 | ||
Lennox International, Inc. | 7,435 | 1,229,675 | |||
Masonite International Corp.(1) | 13,365 | 1,111,968 | |||
4,490,764 | |||||
Capital Markets — 3.2% | |||||
Affiliated Managers Group, Inc. | 6,573 | 1,088,423 | |||
CBOE Holdings, Inc. | 21,661 | 1,785,083 | |||
MarketAxess Holdings, Inc. | 6,032 | 1,161,280 | |||
MSCI, Inc., Class A | 21,649 | 2,171,828 | |||
6,206,614 | |||||
Chemicals — 2.3% | |||||
Ingevity Corp.(1) | 30,912 | 1,954,566 | |||
Scotts Miracle-Gro Co. (The), Class A | 16,483 | 1,592,258 | |||
Valvoline, Inc. | 42,130 | 937,392 | |||
4,484,216 | |||||
Commercial Services and Supplies — 1.5% | |||||
Advanced Disposal Services, Inc.(1) | 70,814 | 1,683,957 | |||
Multi-Color Corp. | 16,060 | 1,233,408 | |||
2,917,365 | |||||
Communications Equipment — 0.3% | |||||
Ciena Corp.(1) | 28,913 | 662,397 | |||
Construction and Engineering — 1.0% | |||||
Granite Construction, Inc. | 37,305 | 1,966,347 | |||
Construction Materials — 0.8% | |||||
Summit Materials, Inc., Class A(1) | 61,880 | 1,587,841 | |||
Consumer Finance — 1.0% | |||||
Enova International, Inc.(1) | 68,650 | 974,830 | |||
Green Dot Corp., Class A(1) | 26,480 | 907,999 | |||
1,882,829 | |||||
Containers and Packaging — 2.1% | |||||
Ball Corp. | 31,638 | 2,432,646 | |||
Sealed Air Corp. | 38,681 | 1,702,737 | |||
4,135,383 | |||||
Distributors — 1.4% | |||||
LKQ Corp.(1) | 52,672 | 1,645,473 | |||
Pool Corp. | 8,828 | 1,056,006 | |||
2,701,479 | |||||
Diversified Consumer Services — 2.5% | |||||
Bright Horizons Family Solutions, Inc.(1) | 29,276 | 2,228,489 | |||
Chegg, Inc.(1) | 135,186 | 1,218,026 | |||
Nord Anglia Education, Inc.(1) | 41,915 | 1,349,663 | |||
4,796,178 | |||||
Electrical Equipment — 0.5% | |||||
AMETEK, Inc. | 18,897 | 1,080,908 | |||
Electronic Equipment, Instruments and Components — 3.0% | |||||
CDW Corp. | 50,484 | 2,983,100 | |||
Dolby Laboratories, Inc., Class A | 34,500 | 1,819,185 | |||
Orbotech Ltd.(1) | 29,571 | 973,773 | |||
5,776,058 |
7
Shares | Value | ||||
Equity Real Estate Investment Trusts (REITs) — 2.3% | |||||
CyrusOne, Inc. | 36,516 | $ | 1,995,234 | ||
Healthcare Trust of America, Inc., Class A | 34,615 | 1,103,872 | |||
Sun Communities, Inc. | 15,870 | 1,326,891 | |||
4,425,997 | |||||
Food Products — 2.7% | |||||
AdvancePierre Foods Holdings, Inc. | 33,931 | 1,378,277 | |||
Blue Buffalo Pet Products, Inc.(1) | 39,061 | 962,854 | |||
Hostess Brands, Inc.(1) | 78,494 | 1,345,387 | |||
TreeHouse Foods, Inc.(1) | 19,027 | 1,666,765 | |||
5,353,283 | |||||
Health Care Equipment and Supplies — 5.6% | |||||
Align Technology, Inc.(1) | 9,461 | 1,273,640 | |||
Cooper Cos., Inc. (The) | 11,298 | 2,263,328 | |||
Merit Medical Systems, Inc.(1) | 57,852 | 1,949,613 | |||
Nevro Corp.(1) | 10,800 | 1,017,576 | |||
NuVasive, Inc.(1) | 17,180 | 1,245,722 | |||
STERIS plc | 21,333 | 1,574,375 | |||
Teleflex, Inc. | 7,933 | 1,641,258 | |||
10,965,512 | |||||
Health Care Providers and Services — 4.2% | |||||
Acadia Healthcare Co., Inc.(1) | 25,337 | 1,104,187 | |||
Amedisys, Inc.(1) | 21,140 | 1,145,788 | |||
American Renal Associates Holdings, Inc.(1) | 51,744 | 890,514 | |||
HealthEquity, Inc.(1) | 39,884 | 1,815,520 | |||
Tivity Health, Inc.(1) | 77,279 | 2,596,574 | |||
VCA, Inc.(1) | 7,762 | 710,766 | |||
8,263,349 | |||||
Health Care Technology — 1.0% | |||||
Cotiviti Holdings, Inc.(1) | 44,976 | 1,879,547 | |||
Hotels, Restaurants and Leisure — 3.8% | |||||
Aramark | 60,110 | 2,195,217 | |||
Cedar Fair LP | 21,346 | 1,529,868 | |||
Papa John's International, Inc. | 14,735 | 1,164,949 | |||
Planet Fitness, Inc., Class A | 53,338 | 1,109,431 | |||
Vail Resorts, Inc. | 7,691 | 1,520,203 | |||
7,519,668 | |||||
Household Durables — 0.3% | |||||
Newell Brands, Inc. | 11,629 | 555,168 | |||
Insurance — 1.5% | |||||
Arthur J. Gallagher & Co. | 32,105 | 1,791,780 | |||
James River Group Holdings Ltd. | 25,609 | 1,115,528 | |||
2,907,308 | |||||
Internet Software and Services — 5.5% | |||||
2U, Inc.(1) | 37,285 | 1,692,739 | |||
Alarm.com Holdings, Inc.(1) | 47,193 | 1,538,964 | |||
CoStar Group, Inc.(1) | 5,813 | 1,400,294 | |||
Five9, Inc.(1) | 58,236 | 1,062,516 | |||
j2 Global, Inc. | 10,195 | 919,997 | |||
LogMeIn, Inc. | 17,542 | 1,982,246 | |||
Q2 Holdings, Inc.(1) | 33,490 | 1,277,643 |
8
Shares | Value | ||||
Shopify, Inc., Class A(1) | 10,793 | $ | 819,728 | ||
10,694,127 | |||||
IT Services — 5.4% | |||||
Acxiom Corp.(1) | 60,665 | 1,753,219 | |||
Booz Allen Hamilton Holding Corp. | 51,858 | 1,863,258 | |||
Broadridge Financial Solutions, Inc. | 22,519 | 1,574,979 | |||
DXC Technology Co.(1) | 17,872 | 1,346,477 | |||
Leidos Holdings, Inc. | 36,584 | 1,926,513 | |||
Vantiv, Inc., Class A(1) | 23,801 | 1,476,614 | |||
WEX, Inc.(1) | 6,107 | 619,616 | |||
10,560,676 | |||||
Leisure Products — 1.2% | |||||
Brunswick Corp. | 40,508 | 2,298,829 | |||
Life Sciences Tools and Services — 1.5% | |||||
Patheon NV(1) | 47,811 | 1,286,594 | |||
PRA Health Sciences, Inc.(1) | 24,619 | 1,574,631 | |||
2,861,225 | |||||
Machinery — 5.1% | |||||
CIRCOR International, Inc. | 14,470 | 965,294 | |||
Dover Corp. | 11,550 | 911,064 | |||
ITT, Inc. | 38,324 | 1,614,590 | |||
John Bean Technologies Corp. | 20,728 | 1,837,537 | |||
Middleby Corp. (The)(1) | 10,330 | 1,406,223 | |||
Mueller Water Products, Inc., Class A | 48,197 | 542,216 | |||
Snap-on, Inc. | 7,245 | 1,213,755 | |||
WABCO Holdings, Inc.(1) | 13,038 | 1,549,827 | |||
10,040,506 | |||||
Media — 1.6% | |||||
AMC Entertainment Holdings, Inc., Class A | 41,831 | 1,267,479 | |||
Emerald Expositions Events, Inc.(1) | 15,209 | 296,576 | |||
Interpublic Group of Cos., Inc. (The) | 69,161 | 1,630,125 | |||
3,194,180 | |||||
Multiline Retail — 0.6% | |||||
Ollie's Bargain Outlet Holdings, Inc.(1) | 32,435 | 1,242,261 | |||
Oil, Gas and Consumable Fuels — 1.8% | |||||
Diamondback Energy, Inc.(1) | 15,840 | 1,581,466 | |||
Newfield Exploration Co.(1) | 25,450 | 881,079 | |||
RSP Permian, Inc.(1) | 26,401 | 1,004,558 | |||
3,467,103 | |||||
Paper and Forest Products — 0.6% | |||||
KapStone Paper and Packaging Corp. | 54,738 | 1,154,424 | |||
Pharmaceuticals — 2.4% | |||||
Aerie Pharmaceuticals, Inc.(1) | 7,462 | 328,701 | |||
Catalent, Inc.(1) | 83,656 | 2,449,447 | |||
Horizon Pharma plc(1) | 45,052 | 692,900 | |||
Impax Laboratories, Inc.(1) | 16,314 | 229,212 | |||
Medicines Co. (The)(1) | 9,415 | 464,348 | |||
Pacira Pharmaceuticals, Inc.(1) | 8,556 | 415,394 | |||
Theravance Biopharma, Inc.(1) | 3,681 | 148,455 | |||
4,728,457 |
9
Shares | Value | ||||
Real Estate Management and Development — 1.2% | |||||
FirstService Corp. | 18,218 | $ | 1,133,745 | ||
RE/MAX Holdings, Inc., Class A | 20,019 | 1,184,124 | |||
2,317,869 | |||||
Road and Rail — 0.6% | |||||
Saia, Inc.(1) | 23,935 | 1,152,470 | |||
Semiconductors and Semiconductor Equipment — 2.3% | |||||
Cavium, Inc.(1) | 19,490 | 1,341,887 | |||
Microsemi Corp.(1) | 26,277 | 1,233,442 | |||
Monolithic Power Systems, Inc. | 12,002 | 1,098,183 | |||
ON Semiconductor Corp.(1) | 65,151 | 923,841 | |||
4,597,353 | |||||
Software — 4.7% | |||||
Callidus Software, Inc.(1) | 46,175 | 971,984 | |||
CDK Global, Inc. | 18,716 | 1,216,727 | |||
RealPage, Inc.(1) | 46,042 | 1,705,856 | |||
RingCentral, Inc., Class A(1) | 51,307 | 1,639,259 | |||
ServiceNow, Inc.(1) | 6,958 | 657,392 | |||
Tyler Technologies, Inc.(1) | 14,122 | 2,310,218 | |||
Ultimate Software Group, Inc.(1) | 3,130 | 634,357 | |||
9,135,793 | |||||
Specialty Retail — 2.5% | |||||
Burlington Stores, Inc.(1) | 22,302 | 2,206,114 | |||
Foot Locker, Inc. | 23,496 | 1,817,181 | |||
RH(1) | 16,320 | 782,870 | |||
4,806,165 | |||||
Textiles, Apparel and Luxury Goods — 0.5% | |||||
Coach, Inc. | 24,578 | 968,127 | |||
Thrifts and Mortgage Finance — 0.8% | |||||
Essent Group Ltd.(1) | 44,825 | 1,658,973 | |||
Trading Companies and Distributors — 2.7% | |||||
BMC Stock Holdings, Inc.(1) | 69,237 | 1,613,222 | |||
MRC Global, Inc.(1) | 82,832 | 1,510,027 | |||
SiteOne Landscape Supply, Inc.(1) | 43,701 | 2,089,345 | |||
5,212,594 | |||||
TOTAL COMMON STOCKS (Cost $149,843,253) | 192,466,434 | ||||
TEMPORARY CASH INVESTMENTS — 1.6% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $1,578,640), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $1,548,126) | 1,548,038 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $1,583,177), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $1,549,028) | 1,549,000 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,097,038) | 3,097,038 | ||||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $152,940,291) | 195,563,472 | ||||
OTHER ASSETS AND LIABILITIES — (0.2)% | (317,480 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 195,245,992 |
10
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 3,754 | USD | 2,802 | Morgan Stanley | 6/30/17 | $ | (49 | ) | ||
CAD | 233,702 | USD | 175,685 | Morgan Stanley | 6/30/17 | (4,332 | ) | |||
CAD | 44,893 | USD | 33,560 | Morgan Stanley | 6/30/17 | (644 | ) | |||
USD | 1,184,681 | CAD | 1,583,060 | Morgan Stanley | 6/30/17 | 23,965 | ||||
USD | 43,492 | CAD | 58,534 | Morgan Stanley | 6/30/17 | 574 | ||||
USD | 32,591 | CAD | 44,434 | Morgan Stanley | 6/30/17 | 11 | ||||
$ | 19,525 |
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, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $152,940,291) | $ | 195,563,472 | |
Receivable for investments sold | 2,271,356 | ||
Receivable for capital shares sold | 14,512 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 24,550 | ||
Dividends and interest receivable | 17,724 | ||
197,891,614 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 345,867 | ||
Payable for investments purchased | 2,056,248 | ||
Payable for capital shares redeemed | 24,294 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 5,025 | ||
Accrued management fees | 211,683 | ||
Distribution and service fees payable | 2,505 | ||
2,645,622 | |||
Net Assets | $ | 195,245,992 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 149,805,391 | |
Accumulated net investment loss | (1,577,051 | ) | |
Undistributed net realized gain | 4,374,946 | ||
Net unrealized appreciation | 42,642,706 | ||
$ | 195,245,992 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $185,343,324 | 16,526,098 | $11.22 | |||
I Class, $0.01 Par Value | $69,948 | 6,132 | $11.41 | |||
A Class, $0.01 Par Value | $8,669,004 | 790,357 | $10.97* | |||
C Class, $0.01 Par Value | $829,508 | 80,783 | $10.27 | |||
R Class, $0.01 Par Value | $334,208 | 31,141 | $10.73 |
*Maximum offering price $11.64 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $805) | $ | 717,461 | |
Interest | 4,202 | ||
721,663 | |||
Expenses: | |||
Management fees | 1,353,168 | ||
Distribution and service fees: | |||
A Class | 5,850 | ||
C Class | 1,769 | ||
R Class | 749 | ||
Directors' fees and expenses | 2,554 | ||
1,364,090 | |||
Fees waived(1) | (135,324 | ) | |
1,228,766 | |||
Net investment income (loss) | (507,103 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 5,444,728 | ||
Foreign currency transactions | 15,157 | ||
5,459,885 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 25,171,128 | ||
Translation of assets and liabilities in foreign currencies | 7,212 | ||
25,178,340 | |||
Net realized and unrealized gain (loss) | 30,638,225 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 30,131,122 |
(1) | Amount consists of $131,275, $49, $3,510, $265 and $225 for the Investor Class, I Class, A Class, C Class and R Class, respectively. |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | (507,103 | ) | $ | (1,173,071 | ) |
Net realized gain (loss) | 5,459,885 | 7,120,671 | ||||
Change in net unrealized appreciation (depreciation) | 25,178,340 | (9,823,321 | ) | |||
Net increase (decrease) in net assets resulting from operations | 30,131,122 | (3,875,721 | ) | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Investor Class | (7,064,053 | ) | (22,582,859 | ) | ||
I Class | (2,529 | ) | (7,129 | ) | ||
A Class | (39,678 | ) | (110,456 | ) | ||
C Class | (6,119 | ) | (20,905 | ) | ||
R Class | (12,027 | ) | (26,875 | ) | ||
Decrease in net assets from distributions | (7,124,406 | ) | (22,748,224 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 9,507,966 | 472,762 | ||||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 829 | 2,796 | ||||
Net increase (decrease) in net assets | 32,515,511 | (26,148,387 | ) | |||
Net Assets | ||||||
Beginning of period | 162,730,481 | 188,878,868 | ||||
End of period | $ | 195,245,992 | $ | 162,730,481 | ||
Accumulated net investment loss | $ | (1,577,051 | ) | $ | (1,069,948 | ) |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), A Class, C Class and 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.
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 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
15
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 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
16
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, expenses, 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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets). During the period ended April 30, 2017, the investment advisor agreed to waive 0.15% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2018 and cannot terminate it prior to such date without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended April 30, 2017 are as follows:
Effective Annual Management Fee | |||
Class | Management Fee Schedule Range | Before Waiver | After Waiver |
Investor Class | 1.100% to 1.500% | 1.50% | 1.35% |
I Class | 0.900% to 1.300% | 1.30% | 1.15% |
A Class | 1.100% to 1.500% | 1.50% | 1.35% |
C Class | 1.100% to 1.500% | 1.50% | 1.35% |
R Class | 1.100% to 1.500% | 1.50% | 1.35% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $225,280 and $339,339, respectively. The effect of interfund transactions on the Statement of Operations was $4,837 in net realized gain (loss) on investment transactions.
17
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $66,569,477 and $63,303,867, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017 | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 180,000,000 | 200,000,000 | ||||||||
Sold | 541,429 | $ | 5,832,366 | 365,558 | $ | 3,513,968 | ||||
Issued in reinvestment of distributions | 633,720 | 6,597,025 | 2,143,803 | 21,137,897 | ||||||
Redeemed | (1,018,548 | ) | (10,896,779 | ) | (2,462,757 | ) | (24,399,910 | ) | ||
156,601 | 1,532,612 | 46,604 | 251,955 | |||||||
I Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 69 | 748 | 97 | 946 | ||||||
Issued in reinvestment of distributions | 239 | 2,529 | 714 | 7,129 | ||||||
Redeemed | — | — | (51 | ) | (515 | ) | ||||
308 | 3,277 | 760 | 7,560 | |||||||
A Class/Shares Authorized | 30,000,000 | 15,000,000 | ||||||||
Sold | 709,078 | 7,345,023 | 18,054 | 184,086 | ||||||
Issued in reinvestment of distributions | 3,894 | 39,678 | 11,381 | 110,165 | ||||||
Redeemed | (9,958 | ) | (104,565 | ) | (18,107 | ) | (184,026 | ) | ||
703,014 | 7,280,136 | 11,328 | 110,225 | |||||||
C Class/Shares Authorized | 20,000,000 | 15,000,000 | ||||||||
Sold | 68,099 | 676,873 | 6,124 | 57,454 | ||||||
Issued in reinvestment of distributions | 639 | 6,119 | 2,277 | 20,905 | ||||||
Redeemed | (2,956 | ) | (29,411 | ) | (7,617 | ) | (63,518 | ) | ||
65,782 | 653,581 | 784 | 14,841 | |||||||
R Class/Shares Authorized | 20,000,000 | 15,000,000 | ||||||||
Sold | 3,942 | 40,098 | 10,122 | 95,401 | ||||||
Issued in reinvestment of distributions | 1,205 | 12,027 | 2,826 | 26,875 | ||||||
Redeemed | (1,337 | ) | (13,765 | ) | (3,657 | ) | (34,095 | ) | ||
3,810 | 38,360 | 9,291 | 88,181 | |||||||
Net increase (decrease) | 929,515 | $ | 9,507,966 | 68,767 | $ | 472,762 |
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). |
18
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 | $ | 191,332,689 | $ | 1,133,745 | — | |||
Temporary Cash Investments | — | 3,097,038 | — | |||||
$ | 191,332,689 | $ | 4,230,783 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 24,550 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 5,025 | — |
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 $1,233,231.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $24,550 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $5,025 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $16,099 in net realized gain (loss) on foreign currency transactions and $7,212 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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 154,007,040 | |
Gross tax appreciation of investments | $ | 43,247,754 | |
Gross tax depreciation of investments | (1,691,322 | ) | |
Net tax appreciation (depreciation) of investments | $ | 41,556,432 |
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, 2016, the fund had late-year ordinary loss deferrals of $(1,057,635), 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.
10. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
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 | |||||||||||||||
2017(3) | $9.86 | (0.03) | 1.82 | 1.79 | (0.43) | $11.22 | 18.53% | 1.35%(4) | 1.50%(4) | (0.55)%(4) | (0.70)%(4) | 36% | $185,343 | ||
2016 | $11.49 | (0.07) | (0.15) | (0.22) | (1.41) | $9.86 | (1.93)% | 1.35% | 1.50% | (0.68)% | (0.83)% | 100% | $161,432 | ||
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 | ||
I Class(5) | |||||||||||||||
2017(3) | $10.01 | (0.02) | 1.85 | 1.83 | (0.43) | $11.41 | 18.66% | 1.15%(4) | 1.30%(4) | (0.35)%(4) | (0.50)%(4) | 36% | $70 | ||
2016 | $11.63 | (0.05) | (0.16) | (0.21) | (1.41) | $10.01 | (1.80)% | 1.15% | 1.30% | (0.48)% | (0.63)% | 100% | $58 | ||
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 | —(6) | 0.68 | 0.68 | — | $8.17 | 9.08% | 1.30% | 1.30% | (0.02)% | (0.02)% | 63% | $34 |
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 | |||||||||||||||
2017(3) | $9.67 | (0.05) | 1.78 | 1.73 | (0.43) | $10.97 | 18.27% | 1.60%(4) | 1.75%(4) | (0.80)%(4) | (0.95)%(4) | 36% | $8,669 | ||
2016 | $11.32 | (0.09) | (0.15) | (0.24) | (1.41) | $9.67 | (2.15)% | 1.60% | 1.75% | (0.93)% | (1.08)% | 100% | $844 | ||
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 | ||
C Class | |||||||||||||||
2017(3) | $9.11 | (0.08) | 1.67 | 1.59 | (0.43) | $10.27 | 17.84% | 2.35%(4) | 2.50%(4) | (1.55)%(4) | (1.70)%(4) | 36% | $830 | ||
2016 | $10.82 | (0.16) | (0.14) | (0.30) | (1.41) | $9.11 | (2.89)% | 2.35% | 2.50% | (1.68)% | (1.83)% | 100% | $137 | ||
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 | ||
R Class | |||||||||||||||
2017(3) | $9.48 | (0.05) | 1.73 | 1.68 | (0.43) | $10.73 | 18.10% | 1.85%(4) | 2.00%(4) | (1.05)%(4) | (1.20)%(4) | 36% | $334 | ||
2016 | $11.15 | (0.11) | (0.15) | (0.26) | (1.41) | $9.48 | (2.39)% | 1.85% | 2.00% | (1.18)% | (1.33)% | 100% | $259 | ||
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 |
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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | 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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92362 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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, 2017 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc., Class A | 7.6% |
Apple, Inc. | 4.6% |
Amazon.com, Inc. | 4.4% |
PepsiCo, Inc. | 4.2% |
Comcast Corp., Class A | 3.3% |
Microsoft Corp. | 3.2% |
Visa, Inc., Class A | 3.0% |
Amgen, Inc. | 2.2% |
Activision Blizzard, Inc. | 1.9% |
O'Reilly Automotive, Inc. | 1.9% |
Top Five Industries | % of net assets |
Internet Software and Services | 10.1% |
Software | 9.7% |
IT Services | 5.8% |
Biotechnology | 5.8% |
Internet and Direct Marketing Retail | 5.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.6% |
Exchange-Traded Funds | 1.1% |
Total Equity Exposure | 99.7% |
Temporary Cash Investments | 0.9% |
Other Assets and Liabilities | (0.6)% |
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, 2016 to April 30, 2017.
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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $1,148.50 | $4.16 | 0.78% |
R6 Class | $1,000 | $1,149.60 | $3.36 | 0.63% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.93 | $3.91 | 0.78% |
R6 Class | $1,000 | $1,021.67 | $3.16 | 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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
3
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.6% | |||||
Aerospace and Defense — 2.2% | |||||
Boeing Co. (The) | 27,294 | $ | 5,044,750 | ||
Lockheed Martin Corp. | 89,198 | 24,034,401 | |||
29,079,151 | |||||
Airlines — 1.4% | |||||
Delta Air Lines, Inc. | 422,187 | 19,184,177 | |||
Banks — 1.3% | |||||
Bank of America Corp. | 268,199 | 6,259,765 | |||
Citizens Financial Group, Inc. | 164,730 | 6,047,238 | |||
Regions Financial Corp. | 351,243 | 4,829,591 | |||
17,136,594 | |||||
Beverages — 4.6% | |||||
Dr Pepper Snapple Group, Inc. | 63,283 | 5,799,887 | |||
PepsiCo, Inc. | 492,788 | 55,823,025 | |||
61,622,912 | |||||
Biotechnology — 5.8% | |||||
Amgen, Inc. | 176,619 | 28,845,415 | |||
Biogen, Inc.(1) | 76,933 | 20,864,999 | |||
Gilead Sciences, Inc. | 181,491 | 12,441,208 | |||
Incyte Corp.(1) | 36,035 | 4,478,430 | |||
Regeneron Pharmaceuticals, Inc.(1) | 26,341 | 10,233,215 | |||
76,863,267 | |||||
Capital Markets — 1.0% | |||||
Charles Schwab Corp. (The) | 354,911 | 13,788,292 | |||
Chemicals — 2.2% | |||||
Dow Chemical Co. (The) | 277,838 | 17,448,226 | |||
LyondellBasell Industries NV, Class A | 138,759 | 11,761,213 | |||
29,209,439 | |||||
Communications Equipment — 1.1% | |||||
Palo Alto Networks, Inc.(1) | 130,992 | 14,200,843 | |||
Consumer Finance — 0.9% | |||||
American Express Co. | 158,312 | 12,546,226 | |||
Electronic Equipment, Instruments and Components — 0.6% | |||||
CDW Corp. | 134,781 | 7,964,209 | |||
Energy Equipment and Services — 0.4% | |||||
Halliburton Co. | 127,464 | 5,848,048 | |||
Equity Real Estate Investment Trusts (REITs) — 2.3% | |||||
Equity Residential | 269,789 | 17,422,974 | |||
SBA Communications Corp.(1) | 109,344 | 13,830,922 | |||
31,253,896 | |||||
Food and Staples Retailing — 2.3% | |||||
Kroger Co. (The) | 265,755 | 7,879,636 | |||
Wal-Mart Stores, Inc. | 304,101 | 22,862,313 | |||
30,741,949 | |||||
Food Products — 0.5% | |||||
Hormel Foods Corp. | 203,847 | 7,150,953 |
4
Shares | Value | ||||
Health Care Equipment and Supplies — 3.4% | |||||
Edwards Lifesciences Corp.(1) | 161,197 | $ | 17,678,475 | ||
Hologic, Inc.(1) | 170,913 | 7,716,722 | |||
Intuitive Surgical, Inc.(1) | 24,332 | 20,338,389 | |||
45,733,586 | |||||
Health Care Providers and Services — 1.8% | |||||
Cardinal Health, Inc. | 139,954 | 10,159,261 | |||
Express Scripts Holding Co.(1) | 137,663 | 8,444,249 | |||
Quest Diagnostics, Inc. | 51,673 | 5,452,018 | |||
24,055,528 | |||||
Health Care Technology — 0.7% | |||||
Cerner Corp.(1) | 142,956 | 9,256,401 | |||
Hotels, Restaurants and Leisure — 2.1% | |||||
Chipotle Mexican Grill, Inc.(1) | 21,411 | 10,158,877 | |||
Darden Restaurants, Inc. | 83,050 | 7,075,030 | |||
Las Vegas Sands Corp. | 180,562 | 10,651,352 | |||
27,885,259 | |||||
Household Products — 1.8% | |||||
Church & Dwight Co., Inc. | 210,933 | 10,447,511 | |||
Procter & Gamble Co. (The) | 150,123 | 13,110,242 | |||
23,557,753 | |||||
Industrial Conglomerates — 1.6% | |||||
3M Co. | 105,762 | 20,711,372 | |||
Internet and Direct Marketing Retail — 5.3% | |||||
Amazon.com, Inc.(1) | 62,966 | 58,242,920 | |||
Expedia, Inc. | 93,590 | 12,514,855 | |||
70,757,775 | |||||
Internet Software and Services — 10.1% | |||||
Alphabet, Inc., Class A(1) | 109,794 | 101,506,749 | |||
Facebook, Inc., Class A(1) | 131,641 | 19,779,060 | |||
LogMeIn, Inc. | 28,687 | 3,241,631 | |||
VeriSign, Inc.(1) | 106,106 | 9,434,946 | |||
133,962,386 | |||||
IT Services — 5.8% | |||||
DXC Technology Co.(1) | 130,256 | 9,813,487 | |||
Fiserv, Inc.(1) | 170,703 | 20,337,555 | |||
Global Payments, Inc. | 96,660 | 7,902,922 | |||
Visa, Inc., Class A | 432,205 | 39,425,740 | |||
77,479,704 | |||||
Life Sciences Tools and Services — 1.3% | |||||
Agilent Technologies, Inc. | 201,749 | 11,106,283 | |||
Illumina, Inc.(1) | 16,526 | 3,054,996 | |||
Waters Corp.(1) | 16,992 | 2,886,771 | |||
17,048,050 | |||||
Machinery — 3.7% | |||||
Caterpillar, Inc. | 80,896 | 8,272,425 | |||
Cummins, Inc. | 73,857 | 11,147,976 | |||
Parker-Hannifin Corp. | 41,121 | 6,612,257 | |||
WABCO Holdings, Inc.(1) | 102,299 | 12,160,282 | |||
Wabtec Corp. | 132,550 | 11,119,619 | |||
49,312,559 |
5
Shares | Value | ||||
Media — 5.0% | |||||
Comcast Corp., Class A | 1,108,003 | $ | 43,422,638 | ||
DISH Network Corp., Class A(1) | 62,444 | 4,023,891 | |||
Sirius XM Holdings, Inc. | 1,253,704 | 6,205,835 | |||
Walt Disney Co. (The) | 116,402 | 13,456,071 | |||
67,108,435 | |||||
Multiline Retail — 1.2% | |||||
Dollar Tree, Inc.(1) | 194,587 | 16,105,966 | |||
Oil, Gas and Consumable Fuels — 0.5% | |||||
Concho Resources, Inc.(1) | 51,791 | 6,559,848 | |||
Personal Products — 0.9% | |||||
Estee Lauder Cos., Inc. (The), Class A | 142,058 | 12,378,934 | |||
Pharmaceuticals — 1.9% | |||||
Bristol-Myers Squibb Co. | 192,162 | 10,770,680 | |||
Johnson & Johnson | 120,952 | 14,933,944 | |||
25,704,624 | |||||
Road and Rail — 0.9% | |||||
Union Pacific Corp. | 103,000 | 11,531,880 | |||
Semiconductors and Semiconductor Equipment — 4.1% | |||||
Applied Materials, Inc. | 340,688 | 13,835,340 | |||
ASML Holding NV | 55,767 | 7,371,646 | |||
Broadcom Ltd. | 86,697 | 19,143,564 | |||
Marvell Technology Group Ltd. | 320,730 | 4,817,365 | |||
Maxim Integrated Products, Inc. | 205,989 | 9,094,414 | |||
54,262,329 | |||||
Software — 9.7% | |||||
Activision Blizzard, Inc. | 485,016 | 25,342,086 | |||
Electronic Arts, Inc.(1) | 124,308 | 11,786,884 | |||
Microsoft Corp. | 619,921 | 42,439,792 | |||
Oracle Corp. (New York) | 237,209 | 10,664,917 | |||
salesforce.com, Inc.(1) | 169,682 | 14,613,014 | |||
Splunk, Inc.(1) | 174,528 | 11,223,896 | |||
Symantec Corp. | 210,506 | 6,658,305 | |||
VMware, Inc., Class A(1) | 65,712 | 6,184,813 | |||
128,913,707 | |||||
Specialty Retail — 4.9% | |||||
Home Depot, Inc. (The) | 51,806 | 8,086,917 | |||
O'Reilly Automotive, Inc.(1) | 99,503 | 24,691,669 | |||
Ross Stores, Inc. | 132,245 | 8,595,925 | |||
TJX Cos., Inc. (The) | 248,210 | 19,519,234 | |||
Williams-Sonoma, Inc. | 69,598 | 3,761,772 | |||
64,655,517 | |||||
Technology Hardware, Storage and Peripherals — 4.6% | |||||
Apple, Inc. | 428,863 | 61,606,170 | |||
Textiles, Apparel and Luxury Goods — 0.7% | |||||
Coach, Inc. | 221,895 | 8,740,444 | |||
TOTAL COMMON STOCKS (Cost $963,356,667) | 1,313,918,183 | ||||
EXCHANGE-TRADED FUNDS — 1.1% | |||||
iShares Russell 1000 Growth ETF (Cost $13,771,437) | 120,616 | 14,031,259 |
6
Shares | Value | ||||
TEMPORARY CASH INVESTMENTS — 0.9% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $6,438,207), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $6,313,761) | $ | 6,313,403 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $6,443,561), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $6,317,116) | 6,317,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 4,946 | 4,946 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $12,635,349) | 12,635,349 | ||||
TOTAL INVESTMENT SECURITIES — 100.6% (Cost $989,763,453) | 1,340,584,791 | ||||
OTHER ASSETS AND LIABILITIES — (0.6)% | (7,855,587 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 1,332,729,204 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 184,868 | USD | 199,398 | UBS AG | 6/30/17 | $ | 2,575 | |||
USD | 6,208,571 | EUR | 5,697,714 | UBS AG | 6/30/17 | (16,343 | ) | |||
USD | 174,189 | EUR | 161,167 | UBS AG | 6/30/17 | (1,890 | ) | |||
USD | 153,400 | EUR | 139,836 | UBS AG | 6/30/17 | 625 | ||||
$ | (15,033 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
7
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $989,763,453) | $ | 1,340,584,791 | |
Receivable for investments sold | 6,709,661 | ||
Receivable for capital shares sold | 16,409 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 3,200 | ||
Dividends and interest receivable | 605,158 | ||
1,347,919,219 | |||
Liabilities | |||
Payable for investments purchased | 6,936,755 | ||
Payable for capital shares redeemed | 7,418,245 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 18,233 | ||
Accrued management fees | 816,782 | ||
15,190,015 | |||
Net Assets | $ | 1,332,729,204 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 944,535,357 | |
Undistributed net investment income | 1,306,492 | ||
Undistributed net realized gain | 36,081,030 | ||
Net unrealized appreciation | 350,806,325 | ||
$ | 1,332,729,204 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Institutional Class, $0.01 Par Value | $1,189,823,355 | 72,507,172 | $16.41 | |||
R6 Class, $0.01 Par Value | $142,905,849 | 8,716,391 | $16.40 |
See Notes to Financial Statements.
8
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $10,931) | $ | 8,595,492 | |
Interest | 12,745 | ||
8,608,237 | |||
Expenses: | |||
Management fees | 4,791,473 | ||
Directors' fees and expenses | 18,036 | ||
Other expenses | 148 | ||
4,809,657 | |||
Net investment income (loss) | 3,798,580 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 42,798,866 | ||
Futures contract transactions | (719,440 | ) | |
Foreign currency transactions | 368,684 | ||
42,448,110 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 131,161,088 | ||
Translation of assets and liabilities in foreign currencies | (197,006 | ) | |
130,964,082 | |||
Net realized and unrealized gain (loss) | 173,412,192 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 177,210,772 |
See Notes to Financial Statements.
9
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 3,798,580 | $ | 8,665,449 | ||
Net realized gain (loss) | 42,448,110 | 17,371,506 | ||||
Change in net unrealized appreciation (depreciation) | 130,964,082 | (11,186,280 | ) | |||
Net increase (decrease) in net assets resulting from operations | 177,210,772 | 14,850,675 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Institutional Class | (8,520,575 | ) | (4,751,626 | ) | ||
R6 Class | (1,102,965 | ) | (402,024 | ) | ||
From net realized gains: | ||||||
Institutional Class | (17,018,924 | ) | (61,284,133 | ) | ||
R6 Class | (1,839,876 | ) | (3,940,677 | ) | ||
Decrease in net assets from distributions | (28,482,340 | ) | (70,378,460 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (27,835,549 | ) | 158,651,324 | |||
Net increase (decrease) in net assets | 120,892,883 | 103,123,539 | ||||
Net Assets | ||||||
Beginning of period | 1,211,836,321 | 1,108,712,782 | ||||
End of period | $ | 1,332,729,204 | $ | 1,211,836,321 | ||
Undistributed net investment income | $ | 1,306,492 | $ | 7,131,452 |
See Notes to Financial Statements.
10
Notes to Financial Statements |
APRIL 30, 2017 (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 R6 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. 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.
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
11
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.
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.
12
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services, which may be provided indirectly through another American Century Investments mutual fund. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and 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 management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Class | Management Fee Schedule Range | Effective Annual Management Fee |
Institutional Class | 0.600% to 0.790% | 0.78% |
R6 Class | 0.450% to 0.640% | 0.63% |
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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $3,595,731 and $3,205,945, respectively. The effect of interfund transactions on the Statement of Operations was $215,265 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $395,416,543 and $449,666,259, respectively.
13
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017 | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional Class/Shares Authorized | 590,000,000 | 475,000,000 | ||||||||
Sold | 3,710,717 | $ | 55,433,004 | 11,629,984 | $ | 160,606,033 | ||||
Issued in reinvestment of distributions | 1,719,832 | 25,539,499 | 4,617,885 | 66,035,759 | ||||||
Redeemed | (8,514,232 | ) | (129,896,370 | ) | (8,178,147 | ) | (120,163,445 | ) | ||
(3,083,683 | ) | (48,923,867 | ) | 8,069,722 | 106,478,347 | |||||
R6 Class/Shares Authorized | 70,000,000 | 55,000,000 | ||||||||
Sold | 1,923,821 | 29,343,026 | 3,717,992 | 53,645,133 | ||||||
Issued in reinvestment of distributions | 198,438 | 2,942,841 | 304,111 | 4,342,701 | ||||||
Redeemed | (728,918 | ) | (11,197,549 | ) | (401,556 | ) | (5,814,857 | ) | ||
1,393,341 | 21,088,318 | 3,620,547 | 52,172,977 | |||||||
Net increase (decrease) | (1,690,342 | ) | $ | (27,835,549 | ) | 11,690,269 | $ | 158,651,324 |
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 | $ | 1,306,546,537 | $ | 7,371,646 | — | |||
Exchange-Traded Funds | 14,031,259 | — | — | |||||
Temporary Cash Investments | 4,946 | 12,630,403 | — | |||||
$ | 1,320,582,742 | $ | 20,002,049 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 3,200 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 18,233 | — |
14
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's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $9,101,988.
Value of Derivative Instruments as of April 30, 2017
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 | $ | 3,200 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 18,233 |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2017
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 | $ | (719,440 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | — | ||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | 370,163 | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | (197,025 | ) | ||
$ | (349,277 | ) | $ | (197,025 | ) |
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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 995,696,370 | |
Gross tax appreciation of investments | $ | 349,919,287 | |
Gross tax depreciation of investments | (5,030,866 | ) | |
Net tax appreciation (depreciation) of investments | $ | 344,888,421 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
9. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
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 | |||||||||||||||
2017(3) | $14.62 | 0.04 | 2.10 | 2.14 | (0.12) | (0.23) | (0.35) | $16.41 | 14.85% | 0.78%(4) | 0.58%(4) | 31% | $1,189,823 | ||
2016 | $15.57 | 0.11 | (0.06) | 0.05 | (0.07) | (0.93) | (1.00) | $14.62 | 0.49% | 0.78% | 0.74% | 60% | $1,104,817 | ||
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 | ||
R6 Class | |||||||||||||||
2017(3) | $14.61 | 0.05 | 2.11 | 2.16 | (0.14) | (0.23) | (0.37) | $16.40 | 14.96% | 0.63%(4) | 0.73%(4) | 31% | $142,906 | ||
2016 | $15.57 | 0.12 | (0.05) | 0.07 | (0.10) | (0.93) | (1.03) | $14.61 | 0.58% | 0.63% | 0.89% | 60% | $107,020 | ||
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, 2017 (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
![]() | ||
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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92374 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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, 2017 | |
Top Ten Holdings | % of net assets |
Newell Brands, Inc. | 2.8% |
Zoetis, Inc. | 2.2% |
Electronic Arts, Inc. | 1.9% |
Ball Corp. | 1.9% |
Equinix, Inc. | 1.7% |
Middleby Corp. (The) | 1.7% |
Fidelity National Information Services, Inc. | 1.6% |
Teleflex, Inc. | 1.6% |
Baxter International, Inc. | 1.5% |
Verisk Analytics, Inc., Class A | 1.4% |
Top Five Industries | % of net assets |
Software | 7.3% |
IT Services | 6.2% |
Specialty Retail | 6.1% |
Machinery | 5.9% |
Health Care Equipment and Supplies | 5.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.7% |
Temporary Cash Investments | 1.8% |
Other Assets and Liabilities | (0.5)% |
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, 2016 to April 30, 2017.
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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $1,128.80 | $4.22 | 0.80% |
R6 Class | $1,000 | $1,130.60 | $3.43 | 0.65% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
R6 Class | $1,000 | $1,021.57 | $3.26 | 0.65% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
3
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.7% | |||||
Aerospace and Defense — 0.7% | |||||
L3 Technologies, Inc. | 29,975 | $ | 5,148,806 | ||
Airlines — 0.7% | |||||
Spirit Airlines, Inc.(1) | 99,830 | 5,717,264 | |||
Auto Components — 0.5% | |||||
Delphi Automotive plc | 52,079 | 4,187,152 | |||
Banks — 2.4% | |||||
BankUnited, Inc. | 148,132 | 5,227,578 | |||
SVB Financial Group(1) | 34,853 | 6,132,037 | |||
Zions Bancorp | 193,386 | 7,741,242 | |||
19,100,857 | |||||
Beverages — 3.2% | |||||
Constellation Brands, Inc., Class A | 49,305 | 8,507,084 | |||
Molson Coors Brewing Co., Class B | 82,166 | 7,878,898 | |||
Monster Beverage Corp.(1) | 197,305 | 8,953,701 | |||
25,339,683 | |||||
Biotechnology — 3.0% | |||||
Alexion Pharmaceuticals, Inc.(1) | 59,611 | 7,617,093 | |||
Alkermes plc(1) | 40,343 | 2,349,980 | |||
BioMarin Pharmaceutical, Inc.(1) | 46,069 | 4,415,253 | |||
Incyte Corp.(1) | 77,372 | 9,615,792 | |||
23,998,118 | |||||
Building Products — 1.5% | |||||
Fortune Brands Home & Security, Inc. | 110,835 | 7,064,623 | |||
Lennox International, Inc. | 30,077 | 4,974,435 | |||
12,039,058 | |||||
Capital Markets — 3.8% | |||||
Affiliated Managers Group, Inc. | 56,053 | 9,281,816 | |||
CBOE Holdings, Inc. | 46,966 | 3,870,468 | |||
S&P Global, Inc. | 59,640 | 8,003,092 | |||
SEI Investments Co. | 180,988 | 9,177,901 | |||
30,333,277 | |||||
Chemicals — 1.7% | |||||
Axalta Coating Systems Ltd.(1) | 120,193 | 3,770,455 | |||
Ingevity Corp.(1) | 79,974 | 5,056,756 | |||
Scotts Miracle-Gro Co. (The), Class A | 47,467 | 4,585,312 | |||
13,412,523 | |||||
Commercial Services and Supplies — 0.4% | |||||
Brink's Co. (The) | 52,535 | 3,225,649 | |||
Communications Equipment — 0.6% | |||||
Palo Alto Networks, Inc.(1) | 42,134 | 4,567,747 | |||
Construction and Engineering — 0.6% | |||||
Jacobs Engineering Group, Inc. | 79,594 | 4,371,302 | |||
Construction Materials — 1.4% | |||||
Vulcan Materials Co. | 92,058 | 11,127,971 |
4
Shares | Value | ||||
Consumer Finance — 0.9% | |||||
Discover Financial Services | 110,232 | $ | 6,899,421 | ||
Containers and Packaging — 1.9% | |||||
Ball Corp. | 191,710 | 14,740,582 | |||
Distributors — 1.0% | |||||
LKQ Corp.(1) | 256,875 | 8,024,775 | |||
Electrical Equipment — 0.7% | |||||
AMETEK, Inc. | 98,266 | 5,620,815 | |||
Electronic Equipment, Instruments and Components — 2.2% | |||||
CDW Corp. | 33,467 | 1,977,565 | |||
Dolby Laboratories, Inc., Class A | 146,352 | 7,717,141 | |||
Trimble, Inc.(1) | 206,051 | 7,300,387 | |||
16,995,093 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.8% | |||||
Crown Castle International Corp. | 82,442 | 7,799,013 | |||
Equinix, Inc. | 32,436 | 13,548,517 | |||
SBA Communications Corp.(1) | 66,261 | 8,381,354 | |||
29,728,884 | |||||
Food and Staples Retailing — 0.8% | |||||
Costco Wholesale Corp. | 35,560 | 6,312,611 | |||
Food Products — 2.1% | |||||
Blue Buffalo Pet Products, Inc.(1) | 207,473 | 5,114,209 | |||
Dean Foods Co. | 119,825 | 2,365,346 | |||
TreeHouse Foods, Inc.(1) | 105,063 | 9,203,519 | |||
16,683,074 | |||||
Health Care Equipment and Supplies — 5.3% | |||||
Baxter International, Inc. | 210,663 | 11,729,716 | |||
Nevro Corp.(1) | 62,112 | 5,852,193 | |||
NuVasive, Inc.(1) | 76,926 | 5,577,904 | |||
Teleflex, Inc. | 59,621 | 12,334,989 | |||
West Pharmaceutical Services, Inc. | 72,947 | 6,713,312 | |||
42,208,114 | |||||
Health Care Providers and Services — 3.1% | |||||
Amedisys, Inc.(1) | 91,715 | 4,970,953 | |||
Centene Corp.(1) | 67,115 | 4,993,356 | |||
Humana, Inc. | 39,249 | 8,712,493 | |||
Universal Health Services, Inc., Class B | 51,336 | 6,199,335 | |||
24,876,137 | |||||
Hotels, Restaurants and Leisure — 4.6% | |||||
Chipotle Mexican Grill, Inc.(1) | 16,254 | 7,712,036 | |||
Hilton Worldwide Holdings, Inc. | 65,041 | 3,835,468 | |||
Las Vegas Sands Corp. | 93,494 | 5,515,211 | |||
MGM Resorts International | 280,311 | 8,608,351 | |||
Papa John's International, Inc. | 51,006 | 4,032,534 | |||
Vail Resorts, Inc. | 31,582 | 6,242,498 | |||
35,946,098 | |||||
Household Durables — 3.6% | |||||
Mohawk Industries, Inc.(1) | 26,733 | 6,276,641 | |||
Newell Brands, Inc. | 471,218 | 22,495,947 | |||
28,772,588 |
5
Shares | Value | ||||
Internet and Direct Marketing Retail — 1.1% | |||||
Expedia, Inc. | 63,407 | $ | 8,478,784 | ||
Internet Software and Services — 2.0% | |||||
CoStar Group, Inc.(1) | 28,851 | 6,949,917 | |||
eBay, Inc.(1) | 113,350 | 3,787,024 | |||
LogMeIn, Inc. | 44,942 | 5,078,446 | |||
15,815,387 | |||||
IT Services — 6.2% | |||||
Alliance Data Systems Corp. | 39,987 | 9,981,955 | |||
Booz Allen Hamilton Holding Corp. | 269,577 | 9,685,902 | |||
DXC Technology Co.(1) | 52,180 | 3,931,241 | |||
Fidelity National Information Services, Inc. | 147,461 | 12,414,741 | |||
First Data Corp., Class A(1) | 229,730 | 3,588,383 | |||
Vantiv, Inc., Class A(1) | 152,868 | 9,483,931 | |||
49,086,153 | |||||
Life Sciences Tools and Services — 1.5% | |||||
Bio-Techne Corp. | 40,821 | 4,371,113 | |||
Illumina, Inc.(1) | 39,780 | 7,353,731 | |||
11,724,844 | |||||
Machinery — 5.9% | |||||
Ingersoll-Rand plc | 73,331 | 6,508,126 | |||
John Bean Technologies Corp. | 54,791 | 4,857,222 | |||
Kennametal, Inc. | 117,318 | 4,878,083 | |||
Middleby Corp. (The)(1) | 98,941 | 13,468,838 | |||
Parker-Hannifin Corp. | 28,901 | 4,647,281 | |||
Snap-on, Inc. | 47,147 | 7,898,537 | |||
WABCO Holdings, Inc.(1) | 37,882 | 4,503,033 | |||
46,761,120 | |||||
Media — 1.5% | |||||
Charter Communications, Inc., Class A(1) | 18,890 | 6,520,072 | |||
Scripps Networks Interactive, Inc., Class A | 73,576 | 5,497,599 | |||
12,017,671 | |||||
Multiline Retail — 1.9% | |||||
Dollar General Corp. | 84,166 | 6,119,710 | |||
Dollar Tree, Inc.(1) | 108,341 | 8,967,384 | |||
15,087,094 | |||||
Oil, Gas and Consumable Fuels — 1.4% | |||||
Concho Resources, Inc.(1) | 89,643 | 11,354,182 | |||
Pharmaceuticals — 3.2% | |||||
Catalent, Inc.(1) | 123,495 | 3,615,934 | |||
Jazz Pharmaceuticals plc(1) | 25,504 | 4,062,277 | |||
Zoetis, Inc. | 314,069 | 17,622,411 | |||
25,300,622 | |||||
Professional Services — 3.4% | |||||
Equifax, Inc. | 83,230 | 11,261,851 | |||
IHS Markit Ltd.(1) | 106,183 | 4,608,342 | |||
Verisk Analytics, Inc., Class A(1) | 137,385 | 11,376,852 | |||
27,247,045 | |||||
Road and Rail — 1.4% | |||||
Canadian Pacific Railway Ltd. (New York) | 25,151 | 3,854,391 |
6
Shares | Value | ||||
Norfolk Southern Corp. | 60,565 | $ | 7,115,782 | ||
10,970,173 | |||||
Semiconductors and Semiconductor Equipment — 3.6% | |||||
Broadcom Ltd. | 33,763 | 7,455,208 | |||
Cavium, Inc.(1) | 53,933 | 3,713,287 | |||
KLA-Tencor Corp. | 96,138 | 9,442,674 | |||
NVIDIA Corp. | 74,122 | 7,730,925 | |||
28,342,094 | |||||
Software — 7.3% | |||||
CDK Global, Inc. | 108,234 | 7,036,293 | |||
Electronic Arts, Inc.(1) | 161,876 | 15,349,082 | |||
Guidewire Software, Inc.(1) | 94,767 | 5,827,223 | |||
ServiceNow, Inc.(1) | 84,929 | 8,024,092 | |||
Splunk, Inc.(1) | 105,094 | 6,758,595 | |||
Symantec Corp. | 144,670 | 4,575,912 | |||
Tyler Technologies, Inc.(1) | 59,671 | 9,761,579 | |||
57,332,776 | |||||
Specialty Retail — 6.1% | |||||
AutoZone, Inc.(1) | 10,479 | 7,253,459 | |||
Burlington Stores, Inc.(1) | 81,080 | 8,020,434 | |||
Michaels Cos., Inc. (The)(1) | 157,778 | 3,685,694 | |||
O'Reilly Automotive, Inc.(1) | 43,728 | 10,851,103 | |||
Ross Stores, Inc. | 169,263 | 11,002,095 | |||
Ulta Salon, Cosmetics & Fragrance, Inc.(1) | 24,954 | 7,023,054 | |||
47,835,839 | |||||
Textiles, Apparel and Luxury Goods — 0.9% | |||||
Coach, Inc. | 96,723 | 3,809,919 | |||
Columbia Sportswear Co. | 64,744 | 3,665,805 | |||
7,475,724 | |||||
Trading Companies and Distributors — 0.8% | |||||
United Rentals, Inc.(1) | 54,744 | 6,003,227 | |||
TOTAL COMMON STOCKS (Cost $616,387,141) | 780,210,334 | ||||
TEMPORARY CASH INVESTMENTS — 1.8% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $7,389,108), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $7,246,283) | 7,245,872 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $7,397,596), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $7,250,133) | 7,250,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 5,677 | 5,677 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $14,501,549) | 14,501,549 | ||||
TOTAL INVESTMENT SECURITIES — 100.5% (Cost $630,888,690) | 794,711,883 | ||||
OTHER ASSETS AND LIABILITIES — (0.5)% | (4,303,981 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 790,407,902 |
7
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 788,754 | USD | 586,051 | Morgan Stanley | 6/30/17 | $ | (7,728 | ) | ||
CAD | 111,370 | USD | 82,942 | Morgan Stanley | 6/30/17 | (1,284 | ) | |||
USD | 3,985,853 | CAD | 5,326,194 | Morgan Stanley | 6/30/17 | 80,631 | ||||
USD | 93,410 | CAD | 125,208 | Morgan Stanley | 6/30/17 | 1,606 | ||||
USD | 94,304 | CAD | 125,594 | Morgan Stanley | 6/30/17 | 2,217 | ||||
$ | 75,442 |
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, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $630,888,690) | $ | 794,711,883 | |
Receivable for investments sold | 5,189,005 | ||
Receivable for capital shares sold | 1,263 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 84,454 | ||
Dividends and interest receivable | 66,218 | ||
800,052,823 | |||
Liabilities | |||
Payable for investments purchased | 3,208,605 | ||
Payable for capital shares redeemed | 5,924,847 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 9,012 | ||
Accrued management fees | 502,457 | ||
9,644,921 | |||
Net Assets | $ | 790,407,902 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 614,589,560 | |
Accumulated net investment loss | (127,181 | ) | |
Undistributed net realized gain | 12,046,888 | ||
Net unrealized appreciation | 163,898,635 | ||
$ | 790,407,902 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Institutional Class, $0.01 Par Value | $705,463,092 | 52,558,505 | $13.42 | |
R6 Class, $0.01 Par Value | $84,944,810 | 6,288,970 | $13.51 |
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $5,373) | $ | 3,208,861 | |
Interest | 9,608 | ||
3,218,469 | |||
Expenses: | |||
Management fees | 2,938,496 | ||
Directors' fees and expenses | 10,708 | ||
2,949,204 | |||
Net investment income (loss) | 269,265 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 18,407,670 | ||
Futures contract transactions | (464,764 | ) | |
Foreign currency transactions | 8,564 | ||
17,951,470 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 73,662,741 | ||
Translation of assets and liabilities in foreign currencies | (35,091 | ) | |
73,627,650 | |||
Net realized and unrealized gain (loss) | 91,579,120 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 91,848,385 |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 269,265 | $ | (70,959 | ) | |
Net realized gain (loss) | 17,951,470 | 20,897,994 | ||||
Change in net unrealized appreciation (depreciation) | 73,627,650 | (26,687,178 | ) | |||
Net increase (decrease) in net assets resulting from operations | 91,848,385 | (5,860,143 | ) | |||
Distributions to Shareholders | ||||||
From net realized gains: | ||||||
Institutional Class | (22,613,046 | ) | (47,436,142 | ) | ||
R6 Class | (2,450,807 | ) | (3,027,088 | ) | ||
Decrease in net assets from distributions | (25,063,853 | ) | (50,463,230 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 10,184,882 | 126,330,213 | ||||
Net increase (decrease) in net assets | 76,969,414 | 70,006,840 | ||||
Net Assets | ||||||
Beginning of period | 713,438,488 | 643,431,648 | ||||
End of period | $ | 790,407,902 | $ | 713,438,488 | ||
Accumulated net investment loss | $ | (127,181 | ) | $ | (396,446 | ) |
See Notes to Financial Statements.
11
Notes to Financial Statements |
APRIL 30, 2017 (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 R6 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. 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.
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
12
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.
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.
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services, which may be provided indirectly through another American Century Investments mutual fund. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class.
The annual management fee for each class is as follows:
Institutional Class | R6 Class |
0.800% | 0.650% |
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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $1,230,880 and $3,770,150, respectively. The effect of interfund transactions on the Statement of Operations was $(116,082) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $240,563,536 and $256,314,797, respectively.
14
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017 | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional Class/Shares Authorized | 430,000,000 | 335,000,000 | ||||||||
Sold | 3,026,508 | $ | 37,833,595 | 9,790,354 | $ | 114,337,876 | ||||
Issued in reinvestment of distributions | 1,817,769 | 22,613,046 | 3,888,208 | 47,436,142 | ||||||
Redeemed | (5,101,891 | ) | (65,134,873 | ) | (5,527,519 | ) | (68,697,827 | ) | ||
(257,614 | ) | (4,688,232 | ) | 8,151,043 | 93,076,191 | |||||
R6 Class/Shares Authorized | 70,000,000 | 50,000,000 | ||||||||
Sold | 1,426,242 | 18,400,250 | 2,710,867 | 33,673,026 | ||||||
Issued in reinvestment of distributions | 195,908 | 2,450,807 | 247,109 | 3,027,088 | ||||||
Redeemed | (464,722 | ) | (5,977,943 | ) | (278,019 | ) | (3,446,092 | ) | ||
1,157,428 | 14,873,114 | 2,679,957 | 33,254,022 | |||||||
Net increase (decrease) | 899,814 | $ | 10,184,882 | 10,831,000 | $ | 126,330,213 |
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 | $ | 780,210,334 | — | — | ||||
Temporary Cash Investments | 5,677 | $ | 14,495,872 | — | ||||
$ | 780,216,011 | $ | 14,495,872 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 84,454 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 9,012 | — |
15
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 $8,820,378.
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.
Value of Derivative Instruments as of April 30, 2017
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 | $ | 84,454 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 9,012 |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2017
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 | $ | 8,092 | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | (35,091 | ) | |
Equity Price Risk | Net realized gain (loss) on futures contract transactions | (464,764 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | — | |||
$ | (456,672 | ) | $ | (35,091 | ) |
16
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.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 635,745,147 | |
Gross tax appreciation of investments | $ | 162,820,558 | |
Gross tax depreciation of investments | (3,853,822 | ) | |
Net tax appreciation (depreciation) of investments | $ | 158,966,736 |
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, 2016, the fund had late-year ordinary loss deferrals of $(285,913), 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.
10. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
17
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Institutional Class | |||||||||||||||
2017(3) | $12.31 | —(4) | 1.55 | 1.55 | — | (0.44) | (0.44) | $13.42 | 12.88% | 0.80%(5) | 0.06%(5) | 32% | $705,463 | ||
2016 | $13.65 | —(4) | (0.28) | (0.28) | — | (1.06) | (1.06) | $12.31 | (2.01)% | 0.80% | (0.02)% | 73% | $649,951 | ||
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 | ||
R6 Class | |||||||||||||||
2017(3) | $12.37 | 0.01 | 1.57 | 1.58 | — | (0.44) | (0.44) | $13.51 | 13.06% | 0.65%(5) | 0.21%(5) | 32% | $84,945 | ||
2016 | $13.70 | 0.01 | (0.28) | (0.27) | — | (1.06) | (1.06) | $12.37 | (1.92)% | 0.65% | 0.13% | 73% | $63,487 | ||
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, 2017 (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.
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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92375 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 9.0% |
Alphabet, Inc.* | 7.8% |
UnitedHealth Group, Inc. | 4.1% |
Facebook, Inc., Class A | 4.0% |
Amazon.com, Inc. | 3.9% |
Mastercard, Inc., Class A | 3.5% |
Home Depot, Inc. (The) | 3.3% |
Microsoft Corp. | 3.0% |
Celgene Corp. | 2.7% |
Biogen, Inc. | 2.5% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Internet Software and Services | 12.5% |
Technology Hardware, Storage and Peripherals | 9.0% |
Biotechnology | 8.4% |
Specialty Retail | 7.8% |
Health Care Providers and Services | 5.2% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.1% |
Temporary Cash Investments | 0.4% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,150.20 | $5.28 | 0.99% |
I Class | $1,000 | $1,151.30 | $4.21 | 0.79% |
Y Class | $1,000 | $1,028.70(2) | $0.37(3) | 0.64% |
A Class | $1,000 | $1,148.90 | $6.61 | 1.24% |
C Class | $1,000 | $1,144.50 | $10.58 | 1.99% |
R Class | $1,000 | $1,147.50 | $7.93 | 1.49% |
R5 Class | $1,000 | $1,028.70(2) | $0.46(3) | 0.79% |
R6 Class | $1,000 | $1,152.10 | $3.42 | 0.64% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $4.96 | 0.99% |
I Class | $1,000 | $1,020.88 | $3.96 | 0.79% |
Y Class | $1,000 | $1,021.62(4) | $3.21(4) | 0.64% |
A Class | $1,000 | $1,018.65 | $6.21 | 1.24% |
C Class | $1,000 | $1,014.93 | $9.94 | 1.99% |
R Class | $1,000 | $1,017.41 | $7.45 | 1.49% |
R5 Class | $1,000 | $1,020.88(4) | $3.96(4) | 0.79% |
R6 Class | $1,000 | $1,021.62 | $3.21 | 0.64% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.1% | |||||
Aerospace and Defense — 3.7% | |||||
Boeing Co. (The) | 339,400 | $ | 62,731,302 | ||
United Technologies Corp. | 291,000 | 34,626,090 | |||
97,357,392 | |||||
Auto Components — 1.3% | |||||
Delphi Automotive plc | 172,900 | 13,901,160 | |||
Gentex Corp. | 943,500 | 19,483,275 | |||
33,384,435 | |||||
Banks — 1.9% | |||||
JPMorgan Chase & Co. | 581,400 | 50,581,800 | |||
Beverages — 2.7% | |||||
Constellation Brands, Inc., Class A | 275,200 | 47,483,008 | |||
Diageo plc | 832,000 | 24,208,413 | |||
71,691,421 | |||||
Biotechnology — 8.4% | |||||
Biogen, Inc.(1) | 240,000 | 65,090,400 | |||
Celgene Corp.(1) | 561,000 | 69,592,050 | |||
Gilead Sciences, Inc. | 549,000 | 37,633,950 | |||
Regeneron Pharmaceuticals, Inc.(1) | 80,600 | 31,312,294 | |||
Vertex Pharmaceuticals, Inc.(1) | 150,300 | 17,780,490 | |||
221,409,184 | |||||
Capital Markets — 1.5% | |||||
CBOE Holdings, Inc. | 472,000 | 38,897,520 | |||
Chemicals — 1.7% | |||||
Monsanto Co. | 289,500 | 33,758,595 | |||
Valvoline, Inc. | 476,500 | 10,602,125 | |||
44,360,720 | |||||
Energy Equipment and Services — 1.1% | |||||
Core Laboratories NV | 138,000 | 15,293,160 | |||
Schlumberger Ltd. | 182,300 | 13,233,157 | |||
28,526,317 | |||||
Equity Real Estate Investment Trusts (REITs) — 1.9% | |||||
American Tower Corp. | 388,400 | 48,915,096 | |||
Food and Staples Retailing — 2.8% | |||||
Costco Wholesale Corp. | 264,600 | 46,971,792 | |||
Wal-Mart Stores, Inc. | 346,400 | 26,042,352 | |||
73,014,144 | |||||
Food Products — 0.4% | |||||
Hostess Brands, Inc.(1) | 544,200 | 9,327,588 | |||
Health Care Providers and Services — 5.2% | |||||
Cigna Corp. | 181,400 | 28,365,518 | |||
UnitedHealth Group, Inc. | 615,700 | 107,673,616 | |||
136,039,134 | |||||
Hotels, Restaurants and Leisure — 3.3% | |||||
Papa John's International, Inc. | 138,100 | 10,918,186 | |||
Starbucks Corp. | 871,300 | 52,330,278 |
6
Shares | Value | ||||
Wynn Resorts Ltd. | 180,800 | $ | 22,240,208 | ||
85,488,672 | |||||
Industrial Conglomerates — 1.1% | |||||
Roper Technologies, Inc. | 134,600 | 29,437,020 | |||
Insurance — 1.3% | |||||
MetLife, Inc. | 677,900 | 35,121,999 | |||
Internet and Direct Marketing Retail — 3.9% | |||||
Amazon.com, Inc.(1) | 111,800 | 103,413,882 | |||
Internet Software and Services — 12.5% | |||||
Alphabet, Inc., Class A(1) | 103,500 | 95,687,820 | |||
Alphabet, Inc., Class C(1) | 121,100 | 109,711,756 | |||
Baidu, Inc. ADR(1) | 102,400 | 18,455,552 | |||
Facebook, Inc., Class A(1) | 698,700 | 104,979,675 | |||
328,834,803 | |||||
IT Services — 3.5% | |||||
Mastercard, Inc., Class A | 780,300 | 90,764,496 | |||
Machinery — 3.8% | |||||
FANUC Corp. | 145,100 | 29,488,590 | |||
Graco, Inc. | 225,900 | 24,363,315 | |||
Middleby Corp. (The)(1) | 345,000 | 46,964,850 | |||
100,816,755 | |||||
Media — 4.6% | |||||
Time Warner, Inc. | 566,100 | 56,196,747 | |||
Walt Disney Co. (The) | 549,300 | 63,499,080 | |||
119,695,827 | |||||
Oil, Gas and Consumable Fuels — 0.9% | |||||
EOG Resources, Inc. | 260,600 | 24,105,500 | |||
Personal Products — 1.2% | |||||
Estee Lauder Cos., Inc. (The), Class A | 373,100 | 32,511,934 | |||
Pharmaceuticals — 2.2% | |||||
Bristol-Myers Squibb Co. | 1,051,200 | 58,919,760 | |||
Professional Services — 2.1% | |||||
IHS Markit Ltd.(1) | 400,828 | 17,395,935 | |||
Verisk Analytics, Inc., Class A(1) | 451,300 | 37,372,153 | |||
54,768,088 | |||||
Road and Rail — 1.0% | |||||
Canadian Pacific Railway Ltd. | 179,000 | 27,427,303 | |||
Semiconductors and Semiconductor Equipment — 2.1% | |||||
Analog Devices, Inc. | 331,500 | 25,260,300 | |||
QUALCOMM, Inc. | 529,800 | 28,471,452 | |||
53,731,752 | |||||
Software — 5.0% | |||||
Electronic Arts, Inc.(1) | 560,700 | 53,165,574 | |||
Microsoft Corp. | 1,145,400 | 78,414,084 | |||
131,579,658 | |||||
Specialty Retail — 7.8% | |||||
AutoZone, Inc.(1) | 65,900 | 45,615,321 | |||
Home Depot, Inc. (The) | 561,000 | 87,572,100 | |||
TJX Cos., Inc. (The) | 738,500 | 58,075,640 | |||
Williams-Sonoma, Inc. | 225,700 | 12,199,085 | |||
203,462,146 |
7
Shares | Value | ||||
Technology Hardware, Storage and Peripherals — 9.0% | |||||
Apple, Inc. | 1,638,900 | $ | 235,427,985 | ||
Tobacco — 1.2% | |||||
Philip Morris International, Inc. | 291,500 | 32,309,860 | |||
TOTAL COMMON STOCKS (Cost $1,280,377,244) | 2,601,322,191 | ||||
TEMPORARY CASH INVESTMENTS — 0.4% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $5,271,378), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $5,169,486) | 5,169,193 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $5,280,353), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $5,172,095) | 5,172,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 2,686 | 2,686 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $10,343,879) | 10,343,879 | ||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $1,290,721,123) | 2,611,666,070 | ||||
OTHER ASSETS AND LIABILITIES — 0.5% | 13,085,719 | ||||
TOTAL NET ASSETS — 100.0% | $ | 2,624,751,789 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
USD | 608,313 | CAD | 824,474 | Morgan Stanley | 6/30/17 | $ | 3,800 | |||
USD | 18,224,781 | CAD | 24,353,308 | Morgan Stanley | 6/30/17 | 368,674 | ||||
USD | 683,613 | CAD | 910,931 | Morgan Stanley | 6/30/17 | 15,709 | ||||
$ | 388,183 |
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.
8
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $1,290,721,123) | $ | 2,611,666,070 | |
Receivable for investments sold | 17,423,338 | ||
Receivable for capital shares sold | 469,444 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 388,183 | ||
Dividends and interest receivable | 1,374,346 | ||
2,631,321,381 | |||
Liabilities | |||
Payable for investments purchased | 3,392,363 | ||
Payable for capital shares redeemed | 1,081,778 | ||
Accrued management fees | 2,082,170 | ||
Distribution and service fees payable | 13,281 | ||
6,569,592 | |||
Net Assets | $ | 2,624,751,789 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,198,905,270 | |
Undistributed net investment income | 3,799,088 | ||
Undistributed net realized gain | 100,715,682 | ||
Net unrealized appreciation | 1,321,331,749 | ||
$ | 2,624,751,789 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $2,535,716,834 | 39,214,473 | $64.66 | |||
I Class, $0.01 Par Value | $30,765,569 | 468,570 | $65.66 | |||
Y Class, $0.01 Par Value | $5,119 | 78 | $65.63 | |||
A Class, $0.01 Par Value | $41,530,670 | 654,898 | $63.42* | |||
C Class, $0.01 Par Value | $4,624,099 | 79,819 | $57.93 | |||
R Class, $0.01 Par Value | $3,088,252 | 48,914 | $63.14 | |||
R5 Class, $0.01 Par Value | $5,187 | 79 | $65.66 | |||
R6 Class, $0.01 Par Value | $9,016,059 | 137,370 | $65.63 |
*Maximum offering price $67.29 (net asset value divided by 0.9425).
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $68,247) | $ | 16,215,065 | |
Interest | 16,894 | ||
16,231,959 | |||
Expenses: | |||
Management fees | 12,090,339 | ||
Distribution and service fees: | |||
A Class | 47,831 | ||
C Class | 22,383 | ||
R Class | 7,282 | ||
Directors' fees and expenses | 34,989 | ||
Other expenses | 1,002 | ||
12,203,826 | |||
Net investment income (loss) | 4,028,133 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 103,103,040 | ||
Foreign currency transactions | 132,055 | ||
103,235,095 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 239,723,249 | ||
Translation of assets and liabilities in foreign currencies | 229,881 | ||
239,953,130 | |||
Net realized and unrealized gain (loss) | 343,188,225 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 347,216,358 |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 4,028,133 | $ | 8,536,611 | ||
Net realized gain (loss) | 103,235,095 | 79,512,477 | ||||
Change in net unrealized appreciation (depreciation) | 239,953,130 | (69,641,770 | ) | |||
Net increase (decrease) in net assets resulting from operations | 347,216,358 | 18,407,318 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (8,554,850 | ) | (9,847,674 | ) | ||
I Class | (156,843 | ) | (192,491 | ) | ||
A Class | (43,226 | ) | (67,613 | ) | ||
R6 Class | (57,884 | ) | (75,146 | ) | ||
From net realized gains: | ||||||
Investor Class | (76,803,447 | ) | (138,659,649 | ) | ||
I Class | (907,444 | ) | (1,826,497 | ) | ||
A Class | (1,250,457 | ) | (2,410,121 | ) | ||
C Class | (169,263 | ) | (359,667 | ) | ||
R Class | (97,514 | ) | (189,769 | ) | ||
R6 Class | (264,392 | ) | (572,948 | ) | ||
Decrease in net assets from distributions | (88,305,320 | ) | (154,201,575 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (2,084,265 | ) | (30,480,042 | ) | ||
Net increase (decrease) in net assets | 256,826,773 | (166,274,299 | ) | |||
Net Assets | ||||||
Beginning of period | 2,367,925,016 | 2,534,199,315 | ||||
End of period | $ | 2,624,751,789 | $ | 2,367,925,016 | ||
Undistributed net investment income | $ | 3,799,088 | $ | 8,583,758 |
See Notes to Financial Statements.
11
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and 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. Sale of the Y Class and R5 Class commenced on April 10, 2017.
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 specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could
12
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.
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.
13
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Class | Management Fee Schedule Range | Effective Annual Management Fee |
Investor Class | 0.800% to 0.990% | 0.99% |
I Class | 0.600% to 0.790% | 0.79% |
Y Class | 0.450% to 0.640% | 0.64% |
A Class | 0.800% to 0.990% | 0.99% |
C Class | 0.800% to 0.990% | 0.99% |
R Class | 0.800% to 0.990% | 0.99% |
R5 Class | 0.600% to 0.790% | 0.79% |
R6 Class | 0.450% to 0.640% | 0.64% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $5,904,188 and $1,230,401, respectively. The effect of interfund transactions on the Statement of Operations was $125,219 in net realized gain (loss) on investment transactions.
14
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $194,144,652 and $229,772,912, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 350,000,000 | 310,000,000 | ||||||||
Sold | 681,029 | $ | 41,478,058 | 1,385,269 | $ | 79,339,972 | ||||
Issued in reinvestment of distributions | 1,386,370 | 81,463,131 | 2,504,165 | 142,011,190 | ||||||
Redeemed | (2,080,150 | ) | (125,227,902 | ) | (4,298,761 | ) | (243,954,392 | ) | ||
(12,751 | ) | (2,286,713 | ) | (409,327 | ) | (22,603,230 | ) | |||
I Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||
Sold | 26,762 | 1,648,678 | 157,917 | 9,320,449 | ||||||
Issued in reinvestment of distributions | 17,851 | 1,064,278 | 35,107 | 2,018,979 | ||||||
Redeemed | (49,677 | ) | (3,032,200 | ) | (248,703 | ) | (14,144,529 | ) | ||
(5,064 | ) | (319,244 | ) | (55,679 | ) | (2,805,101 | ) | |||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 78 | 5,000 | ||||||||
A Class/Shares Authorized | 50,000,000 | 60,000,000 | ||||||||
Sold | 98,453 | 5,941,898 | 105,157 | 5,844,418 | ||||||
Issued in reinvestment of distributions | 21,975 | 1,267,277 | 43,484 | 2,422,041 | ||||||
Redeemed | (107,991 | ) | (6,455,753 | ) | (197,111 | ) | (10,823,964 | ) | ||
12,437 | 753,422 | (48,470 | ) | (2,557,505 | ) | |||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 9,343 | 517,159 | 8,090 | 415,641 | ||||||
Issued in reinvestment of distributions | 2,670 | 141,044 | 5,496 | 283,057 | ||||||
Redeemed | (19,219 | ) | (1,042,985 | ) | (32,315 | ) | (1,657,750 | ) | ||
(7,206 | ) | (384,782 | ) | (18,729 | ) | (959,052 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 3,736 | 221,752 | 8,446 | 481,416 | ||||||
Issued in reinvestment of distributions | 1,697 | 97,514 | 3,414 | 189,769 | ||||||
Redeemed | (5,961 | ) | (352,535 | ) | (17,144 | ) | (961,949 | ) | ||
(528 | ) | (33,269 | ) | (5,284 | ) | (290,764 | ) | |||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 79 | 5,000 | ||||||||
R6 Class/Shares Authorized | 50,000,000 | 45,000,000 | ||||||||
Sold | 10,408 | 639,994 | 34,678 | 2,085,331 | ||||||
Issued in reinvestment of distributions | 5,411 | 322,276 | 11,279 | 648,094 | ||||||
Redeemed | (12,740 | ) | (785,949 | ) | (69,099 | ) | (3,997,815 | ) | ||
3,079 | 176,321 | (23,142 | ) | (1,264,390 | ) | |||||
Net increase (decrease) | (9,876 | ) | $ | (2,084,265 | ) | (560,631 | ) | $ | (30,480,042 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the Y Class and R5 Class. |
15
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 | $ | 2,520,197,885 | $ | 81,124,306 | — | |||
Temporary Cash Investments | 2,686 | 10,341,193 | — | |||||
$ | 2,520,200,571 | $ | 91,465,499 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 388,183 | — |
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 $19,071,056.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $388,183 in unrealized appreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $199,759 in net realized gain (loss) on foreign currency transactions and $161,687 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
16
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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,291,819,005 | |
Gross tax appreciation of investments | $ | 1,326,070,019 | |
Gross tax depreciation of investments | (6,222,954 | ) | |
Net tax appreciation (depreciation) of investments | $ | 1,319,847,065 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
9. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
17
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2017(3) | $58.32 | 0.10 | 8.44 | 8.54 | (0.22) | (1.98) | (2.20) | $64.66 | 15.02% | 0.99%(4) | 0.33%(4) | 8% | $2,535,717 | ||
2016 | $61.57 | 0.20 | 0.30 | 0.50 | (0.25) | (3.50) | (3.75) | $58.32 | 0.98% | 0.99% | 0.36% | 16% | $2,287,797 | ||
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 | ||
I Class(5) | |||||||||||||||
2017(3) | $59.25 | 0.16 | 8.57 | 8.73 | (0.34) | (1.98) | (2.32) | $65.66 | 15.13% | 0.79%(4) | 0.53%(4) | 8% | $30,766 | ||
2016 | $62.49 | 0.32 | 0.31 | 0.63 | (0.37) | (3.50) | (3.87) | $59.25 | 1.19% | 0.79% | 0.56% | 16% | $28,061 | ||
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 | ||
Y Class | |||||||||||||||
2017(6) | $63.80 | (0.01) | 1.84 | 1.83 | — | — | — | $65.63 | 2.87% | 0.64%(4) | (0.27)%(4) | 8%(7) | $5 |
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 | |||||||||||||||
2017(3) | $57.16 | 0.02 | 8.29 | 8.31 | (0.07) | (1.98) | (2.05) | $63.42 | 14.89% | 1.24%(4) | 0.08%(4) | 8% | $41,531 | ||
2016 | $60.41 | 0.06 | 0.29 | 0.35 | (0.10) | (3.50) | (3.60) | $57.16 | 0.73% | 1.24% | 0.11% | 16% | $36,723 | ||
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 | ||
C Class | |||||||||||||||
2017(3) | $52.51 | (0.18) | 7.58 | 7.40 | — | (1.98) | (1.98) | $57.93 | 14.45% | 1.99%(4) | (0.67)%(4) | 8% | $4,624 | ||
2016 | $56.09 | (0.33) | 0.25 | (0.08) | — | (3.50) | (3.50) | $52.51 | (0.02)% | 1.99% | (0.64)% | 16% | $4,570 | ||
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 | ||
R Class | |||||||||||||||
2017(3) | $56.92 | (0.05) | 8.25 | 8.20 | — | (1.98) | (1.98) | $63.14 | 14.75% | 1.49%(4) | (0.17)%(4) | 8% | $3,088 | ||
2016 | $60.21 | (0.08) | 0.29 | 0.21 | — | (3.50) | (3.50) | $56.92 | 0.49% | 1.49% | (0.14)% | 16% | $2,814 | ||
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 |
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) | |||
R5 Class | |||||||||||||||
2017(6) | $63.83 | (0.01) | 1.84 | 1.83 | — | — | — | $65.66 | 2.87% | 0.79%(4) | (0.42)%(4) | 8%(7) | $5 | ||
R6 Class | |||||||||||||||
2017(3) | $59.27 | 0.21 | 8.56 | 8.77 | (0.43) | (1.98) | (2.41) | $65.63 | 15.21% | 0.64%(4) | 0.68%(4) | 8% | $9,016 | ||
2016 | $62.51 | 0.41 | 0.31 | 0.72 | (0.46) | (3.50) | (3.96) | $59.27 | 1.35% | 0.64% | 0.71% | 16% | $7,959 | ||
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(8) | $49.95 | 0.10 | 3.76 | 3.86 | — | — | — | $53.81 | 7.73% | 0.65%(4) | 0.72%(4) | 31%(9) | $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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(8) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(9) | 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.
21
Notes |
22
Notes |
23
Notes |
24
![]() | ||
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92357 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Catalent, Inc. | 1.7% |
LogMeIn, Inc. | 1.6% |
Bright Horizons Family Solutions, Inc. | 1.5% |
Microsemi Corp. | 1.5% |
Tivity Health, Inc. | 1.4% |
Sensient Technologies Corp. | 1.3% |
Cathay General Bancorp. | 1.3% |
Ingevity Corp. | 1.3% |
FCB Financial Holdings, Inc., Class A | 1.3% |
RingCentral, Inc., Class A | 1.2% |
Top Five Industries | % of net assets |
Internet Software and Services | 7.0% |
Biotechnology | 6.6% |
Semiconductors and Semiconductor Equipment | 4.8% |
Machinery | 4.8% |
Software | 4.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.1% |
Temporary Cash Investments | 2.0% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,196.00 | $7.35 | 1.35% |
I Class | $1,000 | $1,197.00 | $6.26 | 1.15% |
Y Class | $1,000 | $1,035.20(2) | $0.59(3) | 1.00% |
A Class | $1,000 | $1,194.30 | $8.71 | 1.60% |
C Class | $1,000 | $1,189.70 | $12.76 | 2.35% |
R Class | $1,000 | $1,192.70 | $10.06 | 1.85% |
R5 Class | $1,000 | $1,035.40(2) | $0.67(3) | 1.15% |
R6 Class | $1,000 | $1,197.60 | $5.45 | 1.00% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.10 | $6.76 | 1.35% |
I Class | $1,000 | $1,019.09 | $5.76 | 1.15% |
Y Class | $1,000 | $1,019.84(4) | $5.01(4) | 1.00% |
A Class | $1,000 | $1,016.86 | $8.00 | 1.60% |
C Class | $1,000 | $1,013.14 | $11.73 | 2.35% |
R Class | $1,000 | $1,015.62 | $9.25 | 1.85% |
R5 Class | $1,000 | $1,019.09(4) | $5.76(4) | 1.15% |
R6 Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.1% | |||||
Aerospace and Defense — 3.1% | |||||
AAR Corp. | 103,291 | $ | 3,717,443 | ||
Cubic Corp. | 87,132 | 4,522,151 | |||
KLX, Inc.(1) | 114,620 | 5,421,526 | |||
Mercury Systems, Inc.(1) | 130,510 | 4,878,464 | |||
18,539,584 | |||||
Air Freight and Logistics — 1.0% | |||||
XPO Logistics, Inc.(1) | 120,106 | 5,932,035 | |||
Auto Components — 1.8% | |||||
LCI Industries | 59,976 | 6,066,573 | |||
Tenneco, Inc. | 73,606 | 4,639,386 | |||
10,705,959 | |||||
Banks — 3.2% | |||||
Ameris Bancorp | 75,104 | 3,537,398 | |||
Cathay General Bancorp. | 207,229 | 7,885,064 | |||
FCB Financial Holdings, Inc., Class A(1) | 158,464 | 7,487,424 | |||
18,909,886 | |||||
Beverages — 1.6% | |||||
Coca-Cola Bottling Co. Consolidated | 28,159 | 5,965,766 | |||
MGP Ingredients, Inc. | 66,353 | 3,474,243 | |||
9,440,009 | |||||
Biotechnology — 6.6% | |||||
Aimmune Therapeutics, Inc.(1) | 84,655 | 1,645,693 | |||
Alder Biopharmaceuticals, Inc.(1) | 65,822 | 1,319,731 | |||
Clovis Oncology, Inc.(1) | 33,156 | 1,919,401 | |||
Exact Sciences Corp.(1) | 74,369 | 2,231,814 | |||
Exelixis, Inc.(1) | 141,606 | 3,171,974 | |||
FibroGen, Inc.(1) | 73,609 | 2,061,052 | |||
Flexion Therapeutics, Inc.(1) | 81,136 | 1,655,986 | |||
Halozyme Therapeutics, Inc.(1) | 121,215 | 1,689,737 | |||
Ironwood Pharmaceuticals, Inc.(1) | 90,997 | 1,485,071 | |||
Jounce Therapeutics, Inc.(1) | 25,143 | 712,050 | |||
Kite Pharma, Inc.(1) | 40,075 | 3,289,356 | |||
Ligand Pharmaceuticals, Inc., Class B(1) | 16,179 | 1,798,619 | |||
Neurocrine Biosciences, Inc.(1) | 19,536 | 1,043,222 | |||
Portola Pharmaceuticals, Inc.(1) | 49,647 | 1,985,384 | |||
Prothena Corp. plc(1) | 21,828 | 1,181,550 | |||
Puma Biotechnology, Inc.(1) | 22,034 | 894,580 | |||
Radius Health, Inc.(1) | 39,721 | 1,551,900 | |||
Sage Therapeutics, Inc.(1) | 25,641 | 1,820,511 | |||
Sarepta Therapeutics, Inc.(1) | 31,101 | 1,127,722 | |||
Spark Therapeutics, Inc.(1) | 30,903 | 1,791,447 | |||
TESARO, Inc.(1) | 21,010 | 3,100,866 | |||
Ultragenyx Pharmaceutical, Inc.(1) | 28,967 | 1,865,185 | |||
39,342,851 |
6
Shares | Value | ||||
Building Products — 1.4% | |||||
Masonite International Corp.(1) | 64,612 | $ | 5,375,718 | ||
PGT Innovations, Inc.(1) | 266,239 | 2,902,005 | |||
8,277,723 | |||||
Chemicals — 3.1% | |||||
Ingevity Corp.(1) | 122,869 | 7,769,007 | |||
Sensient Technologies Corp. | 96,515 | 7,894,927 | |||
Valvoline, Inc. | 117,035 | 2,604,029 | |||
18,267,963 | |||||
Commercial Services and Supplies — 2.5% | |||||
ABM Industries, Inc. | 85,388 | 3,687,908 | |||
Advanced Disposal Services, Inc.(1) | 267,592 | 6,363,338 | |||
Multi-Color Corp. | 60,868 | 4,674,662 | |||
14,725,908 | |||||
Communications Equipment — 0.9% | |||||
Ciena Corp.(1) | 157,293 | 3,603,583 | |||
Lumentum Holdings, Inc.(1) | 42,916 | 1,834,659 | |||
5,438,242 | |||||
Construction and Engineering — 1.2% | |||||
Granite Construction, Inc. | 135,067 | 7,119,382 | |||
Construction Materials — 1.0% | |||||
Summit Materials, Inc., Class A(1) | 242,507 | 6,222,730 | |||
Consumer Finance — 1.2% | |||||
Enova International, Inc.(1) | 250,573 | 3,558,137 | |||
Green Dot Corp., Class A(1) | 98,411 | 3,374,513 | |||
6,932,650 | |||||
Diversified Consumer Services — 3.1% | |||||
Bright Horizons Family Solutions, Inc.(1) | 118,573 | 9,025,777 | |||
Chegg, Inc.(1) | 552,447 | 4,977,548 | |||
Nord Anglia Education, Inc.(1) | 137,042 | 4,412,752 | |||
18,416,077 | |||||
Electronic Equipment, Instruments and Components — 3.4% | |||||
Coherent, Inc.(1) | 21,701 | 4,678,736 | |||
Dolby Laboratories, Inc., Class A | 102,573 | 5,408,674 | |||
Fabrinet(1) | 66,774 | 2,315,055 | |||
Orbotech Ltd.(1) | 123,123 | 4,054,440 | |||
TTM Technologies, Inc.(1) | 230,113 | 3,849,790 | |||
20,306,695 | |||||
Equity Real Estate Investment Trusts (REITs) — 2.6% | |||||
National Health Investors, Inc. | 56,014 | 4,098,544 | |||
PS Business Parks, Inc. | 24,773 | 3,010,911 | |||
QTS Realty Trust, Inc., Class A | 118,786 | 6,347,924 | |||
Sun Communities, Inc. | 22,020 | 1,841,092 | |||
15,298,471 | |||||
Food Products — 1.9% | |||||
AdvancePierre Foods Holdings, Inc. | 118,971 | 4,832,602 | |||
Blue Buffalo Pet Products, Inc.(1) | 102,638 | 2,530,026 | |||
Hostess Brands, Inc.(1) | 239,177 | 4,099,494 | |||
11,462,122 | |||||
Health Care Equipment and Supplies — 3.5% | |||||
Merit Medical Systems, Inc.(1) | 200,050 | 6,741,685 |
7
Shares | Value | ||||
Nevro Corp.(1) | 45,949 | $ | 4,329,315 | ||
NuVasive, Inc.(1) | 75,427 | 5,469,212 | |||
STERIS plc | 54,602 | 4,029,627 | |||
20,569,839 | |||||
Health Care Providers and Services — 4.1% | |||||
Acadia Healthcare Co., Inc.(1) | 75,894 | 3,307,461 | |||
Amedisys, Inc.(1) | 74,634 | 4,045,163 | |||
American Renal Associates Holdings, Inc.(1) | 163,525 | 2,814,265 | |||
HealthEquity, Inc.(1) | 136,246 | 6,201,918 | |||
Tivity Health, Inc.(1) | 241,487 | 8,113,963 | |||
24,482,770 | |||||
Health Care Technology — 1.7% | |||||
Cotiviti Holdings, Inc.(1) | 118,673 | 4,959,344 | |||
Evolent Health, Inc.(1) | 221,079 | 5,140,087 | |||
10,099,431 | |||||
Hotels, Restaurants and Leisure — 3.9% | |||||
Cedar Fair LP | 84,625 | 6,065,074 | |||
ClubCorp Holdings, Inc. | 243,237 | 3,271,537 | |||
Jack in the Box, Inc. | 20,298 | 2,069,787 | |||
Papa John's International, Inc. | 65,339 | 5,165,701 | |||
Planet Fitness, Inc., Class A | 218,131 | 4,537,125 | |||
Texas Roadhouse, Inc. | 45,651 | 2,140,119 | |||
23,249,343 | |||||
Household Durables — 0.8% | |||||
Installed Building Products, Inc.(1) | 93,492 | 4,987,798 | |||
Insurance — 0.8% | |||||
James River Group Holdings Ltd. | 114,907 | 5,005,349 | |||
Internet Software and Services — 7.0% | |||||
2U, Inc.(1) | 157,448 | 7,148,139 | |||
Alarm.com Holdings, Inc.(1) | 148,260 | 4,834,759 | |||
Five9, Inc.(1) | 266,385 | 4,860,194 | |||
j2 Global, Inc. | 47,747 | 4,308,689 | |||
LogMeIn, Inc. | 83,033 | 9,382,729 | |||
Q2 Holdings, Inc.(1) | 149,829 | 5,715,977 | |||
Shopify, Inc., Class A(1) | 36,417 | 2,765,871 | |||
Wix.com Ltd.(1) | 30,669 | 2,528,659 | |||
41,545,017 | |||||
IT Services — 3.6% | |||||
Acxiom Corp.(1) | 218,525 | 6,315,372 | |||
Booz Allen Hamilton Holding Corp. | 160,906 | 5,781,353 | |||
MAXIMUS, Inc. | 67,025 | 4,087,855 | |||
Science Applications International Corp. | 70,787 | 5,166,743 | |||
21,351,323 | |||||
Leisure Products — 0.8% | |||||
Brunswick Corp. | 83,836 | 4,757,693 | |||
Life Sciences Tools and Services — 1.7% | |||||
Patheon NV(1) | 167,344 | 4,503,227 | |||
PRA Health Sciences, Inc.(1) | 84,338 | 5,394,258 | |||
9,897,485 | |||||
Machinery — 4.8% | |||||
CIRCOR International, Inc. | 58,758 | 3,919,746 |
8
Shares | Value | ||||
EnPro Industries, Inc. | 93,305 | $ | 6,591,998 | ||
ITT, Inc. | 118,938 | 5,010,858 | |||
John Bean Technologies Corp. | 75,762 | 6,716,301 | |||
Mueller Water Products, Inc., Class A | 242,968 | 2,733,390 | |||
Woodward, Inc. | 51,659 | 3,495,765 | |||
28,468,058 | |||||
Media — 1.3% | |||||
AMC Entertainment Holdings, Inc., Class A | 153,575 | 4,653,322 | |||
Emerald Expositions Events, Inc.(1) | 46,317 | 903,182 | |||
Madison Square Garden Co. (The)(1) | 11,959 | 2,412,967 | |||
7,969,471 | |||||
Multiline Retail — 0.8% | |||||
Ollie's Bargain Outlet Holdings, Inc.(1) | 128,676 | 4,928,291 | |||
Oil, Gas and Consumable Fuels — 1.9% | |||||
Callon Petroleum Co.(1) | 355,990 | 4,214,922 | |||
Eclipse Resources Corp.(1) | 1,072,610 | 2,155,946 | |||
RSP Permian, Inc.(1) | 124,700 | 4,744,835 | |||
11,115,703 | |||||
Paper and Forest Products — 0.7% | |||||
KapStone Paper and Packaging Corp. | 188,729 | 3,980,295 | |||
Personal Products — 0.6% | |||||
Inter Parfums, Inc. | 93,232 | 3,538,154 | |||
Pharmaceuticals — 4.2% | |||||
Aerie Pharmaceuticals, Inc.(1) | 37,959 | 1,672,094 | |||
Catalent, Inc.(1) | 336,769 | 9,860,596 | |||
Dermira, Inc.(1) | 45,760 | 1,558,586 | |||
Horizon Pharma plc(1) | 207,230 | 3,187,197 | |||
Impax Laboratories, Inc.(1) | 74,801 | 1,050,954 | |||
Medicines Co. (The)(1) | 56,676 | 2,795,260 | |||
Pacira Pharmaceuticals, Inc.(1) | 42,005 | 2,039,343 | |||
Supernus Pharmaceuticals, Inc.(1) | 53,601 | 1,747,393 | |||
Theravance Biopharma, Inc.(1) | 25,887 | 1,044,023 | |||
24,955,446 | |||||
Real Estate Management and Development — 1.3% | |||||
FirstService Corp. | 66,227 | 4,121,449 | |||
RE/MAX Holdings, Inc., Class A | 60,835 | 3,598,390 | |||
7,719,839 | |||||
Road and Rail — 0.6% | |||||
Saia, Inc.(1) | 74,013 | 3,563,726 | |||
Semiconductors and Semiconductor Equipment — 4.8% | |||||
Advanced Micro Devices, Inc.(1) | 233,709 | 3,108,330 | |||
Cavium, Inc.(1) | 88,034 | 6,061,141 | |||
Inphi Corp.(1) | 65,157 | 2,698,803 | |||
MACOM Technology Solutions Holdings, Inc.(1) | 42,734 | 2,088,838 | |||
Microsemi Corp.(1) | 184,639 | 8,666,955 | |||
Monolithic Power Systems, Inc. | 66,285 | 6,065,077 | |||
28,689,144 | |||||
Software — 4.3% | |||||
Callidus Software, Inc.(1) | 160,818 | 3,385,219 | |||
Proofpoint, Inc.(1) | 41,336 | 3,115,494 | |||
RealPage, Inc.(1) | 180,708 | 6,695,231 |
9
Shares | Value | ||||
RingCentral, Inc., Class A(1) | 226,084 | $ | 7,223,384 | ||
Tyler Technologies, Inc.(1) | 31,286 | 5,118,077 | |||
25,537,405 | |||||
Specialty Retail — 1.4% | |||||
Burlington Stores, Inc.(1) | 63,334 | 6,264,999 | |||
RH(1) | 49,946 | 2,395,910 | |||
8,660,909 | |||||
Thrifts and Mortgage Finance — 1.1% | |||||
Essent Group Ltd.(1) | 179,636 | 6,648,328 | |||
Trading Companies and Distributors — 2.8% | |||||
BMC Stock Holdings, Inc.(1) | 228,807 | 5,331,203 | |||
MRC Global, Inc.(1) | 272,180 | 4,961,841 | |||
SiteOne Landscape Supply, Inc.(1) | 136,806 | 6,540,695 | |||
16,833,739 | |||||
TOTAL COMMON STOCKS (Cost $490,526,449) | 583,892,843 | ||||
TEMPORARY CASH INVESTMENTS — 2.0% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $5,867,412), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $5,753,999) | 5,753,673 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $5,872,160), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $5,757,106) | 5,757,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 85,339 | 85,339 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $11,596,012) | 11,596,012 | ||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $502,122,461) | 595,488,855 | ||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (314,566 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 595,174,289 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 722,186 | USD | 542,902 | Morgan Stanley | 6/30/17 | $ | (13,387 | ) | ||
CAD | 140,907 | USD | 105,336 | Morgan Stanley | 6/30/17 | (2,022 | ) | |||
USD | 4,178,468 | CAD | 5,583,579 | Morgan Stanley | 6/30/17 | 84,527 | ||||
USD | 5,913 | CAD | 7,924 | Morgan Stanley | 6/30/17 | 104 | ||||
USD | 158,103 | CAD | 212,787 | Morgan Stanley | 6/30/17 | 2,085 | ||||
USD | 118,475 | CAD | 161,528 | Morgan Stanley | 6/30/17 | 41 | ||||
$ | 71,348 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $502,122,461) | $ | 595,488,855 | |
Receivable for investments sold | 4,034,652 | ||
Receivable for capital shares sold | 191,692 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 86,757 | ||
Dividends and interest receivable | 129,184 | ||
599,931,140 | |||
Liabilities | |||
Payable for investments purchased | 3,628,083 | ||
Payable for capital shares redeemed | 500,840 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 15,409 | ||
Accrued management fees | 585,223 | ||
Distribution and service fees payable | 27,296 | ||
4,756,851 | |||
Net Assets | $ | 595,174,289 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 539,142,581 | |
Accumulated net investment loss | (5,488,218 | ) | |
Accumulated net realized loss | (31,917,816 | ) | |
Net unrealized appreciation | 93,437,742 | ||
$ | 595,174,289 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $160,008,062 | 10,324,667 | $15.50 | |
I Class, $0.01 Par Value | $298,727,386 | 18,912,090 | $15.80 | |
Y Class, $0.01 Par Value | $5,177 | 326 | $15.88 | |
A Class, $0.01 Par Value | $91,139,018 | 6,051,086 | $15.06* | |
C Class, $0.01 Par Value | $9,716,127 | 697,978 | $13.92 | |
R Class, $0.01 Par Value | $3,039,550 | 205,541 | $14.79 | |
R5 Class, $0.01 Par Value | $5,181 | 328 | $15.80 | |
R6 Class, $0.01 Par Value | $32,533,788 | 2,048,682 | $15.88 |
*Maximum offering price $15.98 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $2,825) | $ | 1,755,261 | |
Interest | 12,526 | ||
1,767,787 | |||
Expenses: | |||
Management fees | 3,489,463 | ||
Distribution and service fees: | |||
A Class | 112,927 | ||
C Class | 48,048 | ||
R Class | 7,260 | ||
Directors' fees and expenses | 8,102 | ||
Other expenses | 193 | ||
3,665,993 | |||
Net investment income (loss) | (1,898,206 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 22,594,581 | ||
Foreign currency transactions | 53,379 | ||
22,647,960 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 80,124,062 | ||
Translation of assets and liabilities in foreign currencies | 28,533 | ||
80,152,595 | |||
Net realized and unrealized gain (loss) | 102,800,555 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 100,902,349 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | (1,898,206 | ) | $ | (4,169,510 | ) |
Net realized gain (loss) | 22,647,960 | 24,815,641 | ||||
Change in net unrealized appreciation (depreciation) | 80,152,595 | (31,010,506 | ) | |||
Net increase (decrease) in net assets resulting from operations | 100,902,349 | (10,364,375 | ) | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (32,445,521 | ) | (30,017,121 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 23,218 | 44,134 | ||||
Net increase (decrease) in net assets | 68,480,046 | (40,337,362 | ) | |||
Net Assets | ||||||
Beginning of period | 526,694,243 | 567,031,605 | ||||
End of period | $ | 595,174,289 | $ | 526,694,243 | ||
Accumulated net investment loss | $ | (5,488,218 | ) | $ | (3,590,012 | ) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and 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. Sale of the Y Class and R5 Class commenced on April 10, 2017.
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 specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could
14
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 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.
15
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Class | Management Fee Schedule Range | Effective Annual Management Fee |
Investor Class | 1.100% to 1.500% | 1.35% |
I Class | 0.900% to 1.300% | 1.15% |
Y Class | 0.750% to 1.150% | 1.00% |
A Class | 1.100% to 1.500% | 1.35% |
C Class | 1.100% to 1.500% | 1.35% |
R Class | 1.100% to 1.500% | 1.35% |
R5 Class | 0.900% to 1.300% | 1.15% |
R6 Class | 0.750% to 1.150% | 1.00% |
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 period ended April 30, 2017 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.
16
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $878,959 and $557,918, respectively. The effect of interfund transactions on the Statement of Operations was $(13,306) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $204,170,283 and $232,999,458, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 140,000,000 | 160,000,000 | ||||||||
Sold | 1,382,835 | $ | 20,217,899 | 1,389,385 | $ | 17,147,388 | ||||
Redeemed | (1,329,707 | ) | (19,321,327 | ) | (4,251,053 | ) | (52,453,638 | ) | ||
53,128 | 896,572 | (2,861,668 | ) | (35,306,250 | ) | |||||
I Class/Shares Authorized | 200,000,000 | 160,000,000 | ||||||||
Sold | 1,450,744 | 21,400,068 | 11,003,624 | 141,487,812 | ||||||
Redeemed | (2,927,284 | ) | (43,558,744 | ) | (9,909,515 | ) | (122,997,407 | ) | ||
(1,476,540 | ) | (22,158,676 | ) | 1,094,109 | 18,490,405 | |||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 326 | 5,000 | ||||||||
A Class/Shares Authorized | 130,000,000 | 110,000,000 | ||||||||
Sold | 247,521 | 3,458,322 | 758,373 | 9,466,335 | ||||||
Redeemed | (1,066,306 | ) | (15,032,545 | ) | (2,030,654 | ) | (24,473,819 | ) | ||
(818,785 | ) | (11,574,223 | ) | (1,272,281 | ) | (15,007,484 | ) | |||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 37,856 | 502,295 | 89,433 | 1,005,649 | ||||||
Redeemed | (121,511 | ) | (1,599,393 | ) | (270,189 | ) | (3,060,448 | ) | ||
(83,655 | ) | (1,097,098 | ) | (180,756 | ) | (2,054,799 | ) | |||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 39,086 | 545,481 | 129,087 | 1,551,834 | ||||||
Redeemed | (49,021 | ) | (679,268 | ) | (83,700 | ) | (1,004,939 | ) | ||
(9,935 | ) | (133,787 | ) | 45,387 | 546,895 | |||||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 328 | 5,000 | ||||||||
R6 Class/Shares Authorized | 50,000,000 | 45,000,000 | ||||||||
Sold | 498,113 | 7,630,950 | 1,096,234 | 14,013,731 | ||||||
Redeemed | (409,802 | ) | (6,019,259 | ) | (806,343 | ) | (10,699,619 | ) | ||
88,311 | 1,611,691 | 289,891 | 3,314,112 | |||||||
Net increase (decrease) | (2,246,822 | ) | $ | (32,445,521 | ) | (2,885,318 | ) | $ | (30,017,121 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the Y Class and R5 Class. |
17
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. 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 | $ | 579,771,394 | $ | 4,121,449 | — | |||
Temporary Cash Investments | 85,339 | 11,510,673 | — | |||||
$ | 579,856,733 | $ | 15,632,122 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 86,757 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 15,409 | — |
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 $4,301,357.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $86,757 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $15,409 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $56,242 in net realized gain (loss) on foreign currency transactions and $28,533 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
18
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.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 503,883,304 | |
Gross tax appreciation of investments | $ | 104,479,431 | |
Gross tax depreciation of investments | (12,873,880 | ) | |
Net tax appreciation (depreciation) of investments | $ | 91,605,551 |
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, 2016, the fund had accumulated short-term capital losses of $(51,937,215), 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, 2016, the fund had late-year ordinary loss deferrals of $(3,547,198), 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.
10. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
19
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2017(3) | $12.96 | (0.05) | 2.59 | 2.54 | — | $15.50 | 19.60% | 1.35%(4) | (0.73)%(4) | 36% | $160,008 | ||
2016 | $13.06 | (0.10) | —(5) | (0.10) | — | $12.96 | (0.77)% | 1.36% | (0.83)% | 130% | $133,140 | ||
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 | ||
I Class(6) | |||||||||||||
2017(3) | $13.20 | (0.04) | 2.64 | 2.60 | — | $15.80 | 19.70% | 1.15%(4) | (0.53)%(4) | 36% | $298,727 | ||
2016 | $13.27 | (0.08) | 0.01 | (0.07) | — | $13.20 | (0.53)% | 1.16% | (0.63)% | 130% | $269,094 | ||
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 | ||
Y Class | |||||||||||||
2017(7) | $15.34 | (0.01) | 0.55 | 0.54 | — | $15.88 | 3.52% | 1.00%(4) | (0.89)%(4) | 36%(8) | $5 |
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 | |||||||||||||
2017(3) | $12.61 | (0.07) | 2.52 | 2.45 | — | $15.06 | 19.43% | 1.60%(4) | (0.98)%(4) | 36% | $91,139 | ||
2016 | $12.74 | (0.13) | —(5) | (0.13) | — | $12.61 | (1.02)% | 1.61% | (1.08)% | 130% | $86,651 | ||
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 | ||
C Class | |||||||||||||
2017(3) | $11.70 | (0.11) | 2.33 | 2.22 | — | $13.92 | 18.97% | 2.35%(4) | (1.73)%(4) | 36% | $9,716 | ||
2016 | $11.91 | (0.21) | —(5) | (0.21) | — | $11.70 | (1.68)% | 2.36% | (1.83)% | 130% | $9,146 | ||
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 | ||
R Class | |||||||||||||
2017(3) | $12.40 | (0.08) | 2.47 | 2.39 | — | $14.79 | 19.27% | 1.85%(4) | (1.23)%(4) | 36%(8) | $3,040 | ||
2016 | $12.55 | (0.16) | 0.01 | (0.15) | — | $12.40 | (1.20)% | 1.86% | (1.33)% | 130% | $2,672 | ||
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 |
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) | |||
R5 Class | |||||||||||||
2017(7) | $15.26 | (0.01) | 0.55 | 0.54 | — | $15.80 | 3.54% | 1.15%(4) | (1.04)%(4) | 36%(8) | $5 | ||
R6 Class | |||||||||||||
2017(3) | $13.26 | (0.03) | 2.65 | 2.62 | — | $15.88 | 19.76% | 1.00%(4) | (0.38)%(4) | 36% | $32,534 | ||
2016 | $13.31 | (0.06) | 0.01 | (0.05) | — | $13.26 | (0.38)% | 1.01% | (0.48)% | 130% | $25,992 | ||
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(9) | $11.33 | (0.02) | 0.79 | 0.77 | — | $12.10 | 6.80% | 1.05%(4) | (0.55)%(4) | 80%(10) | $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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Amount is less than $0.005. |
(6) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(7) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(9) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(10) | 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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92366 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
Sustainable 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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc.* | 3.9% |
JPMorgan Chase & Co. | 3.8% |
3M Co. | 3.3% |
Prologis, Inc. | 2.7% |
Microsoft Corp. | 2.6% |
Comcast Corp., Class A | 2.6% |
PepsiCo, Inc. | 2.6% |
Cisco Systems, Inc. | 2.4% |
Home Depot, Inc. (The) | 2.4% |
Amazon.com, Inc. | 2.3% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Banks | 7.8% |
Software | 5.7% |
Internet Software and Services | 5.1% |
Semiconductors and Semiconductor Equipment | 4.2% |
IT Services | 3.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.7% |
Exchange-Traded Funds | 0.6% |
Total Equity Exposure | 99.3% |
Temporary Cash Investments | 0.8% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,133.00 | $5.24 | 0.99% |
I Class | $1,000 | $1,134.50 | $4.18 | 0.79% |
Y Class | $1,000 | $1,021.80(2) | $0.37(3) | 0.64% |
A Class | $1,000 | $1,131.60 | $6.55 | 1.24% |
C Class | $1,000 | $1,127.80 | $10.50 | 1.99% |
R Class | $1,000 | $1,130.40 | $7.87 | 1.49% |
R5 Class | $1,000 | $1,021.80(2) | $0.46(3) | 0.79% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $4.96 | 0.99% |
I Class | $1,000 | $1,020.88 | $3.96 | 0.79% |
Y Class | $1,000 | $1,021.62(4) | $3.21(4) | 0.64% |
A Class | $1,000 | $1,018.65 | $6.21 | 1.24% |
C Class | $1,000 | $1,014.93 | $9.94 | 1.99% |
R Class | $1,000 | $1,017.41 | $7.45 | 1.49% |
R5 Class | $1,000 | $1,020.88(4) | $3.96(4) | 0.79% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 98.7% | |||||
Aerospace and Defense — 2.4% | |||||
Boeing Co. (The) | 16,453 | $ | 3,041,008 | ||
Northrop Grumman Corp. | 9,305 | 2,288,658 | |||
5,329,666 | |||||
Airlines — 1.2% | |||||
Delta Air Lines, Inc. | 58,038 | 2,637,247 | |||
Automobiles — 0.5% | |||||
Ford Motor Co. | 94,965 | 1,089,249 | |||
Banks — 7.8% | |||||
Bank of America Corp. | 171,169 | 3,995,084 | |||
Citigroup, Inc. | 80,097 | 4,735,335 | |||
JPMorgan Chase & Co. | 96,916 | 8,431,692 | |||
17,162,111 | |||||
Beverages — 2.6% | |||||
PepsiCo, Inc. | 49,841 | 5,645,988 | |||
Biotechnology — 3.1% | |||||
AbbVie, Inc. | 18,215 | 1,201,097 | |||
Amgen, Inc. | 10,587 | 1,729,069 | |||
Biogen, Inc.(1) | 11,817 | 3,204,888 | |||
Incyte Corp.(1) | 5,310 | 659,927 | |||
6,794,981 | |||||
Capital Markets — 1.1% | |||||
Ameriprise Financial, Inc. | 11,636 | 1,487,662 | |||
Franklin Resources, Inc. | 5,345 | 230,423 | |||
S&P Global, Inc. | 5,351 | 718,051 | |||
2,436,136 | |||||
Chemicals — 2.5% | |||||
Dow Chemical Co. (The) | 48,147 | 3,023,632 | |||
LyondellBasell Industries NV, Class A | 5,715 | 484,403 | |||
Sherwin-Williams Co. (The) | 5,632 | 1,884,918 | |||
5,392,953 | |||||
Communications Equipment — 3.8% | |||||
Cisco Systems, Inc. | 157,053 | 5,350,796 | |||
Motorola Solutions, Inc. | 34,064 | 2,928,482 | |||
8,279,278 | |||||
Containers and Packaging — 0.6% | |||||
International Paper Co. | 24,033 | 1,297,061 | |||
Diversified Telecommunication Services — 1.4% | |||||
AT&T, Inc. | 21,079 | 835,361 | |||
CenturyLink, Inc. | 24,030 | 616,850 | |||
Level 3 Communications, Inc.(1) | 9,182 | 557,898 | |||
Verizon Communications, Inc. | 24,492 | 1,124,428 | |||
3,134,537 | |||||
Electric Utilities — 0.1% | |||||
Exelon Corp. | 7,235 | 250,548 |
6
Shares | Value | ||||
Electrical Equipment — 0.9% | |||||
Eaton Corp. plc | 27,379 | $ | 2,070,948 | ||
Energy Equipment and Services — 1.4% | |||||
Halliburton Co. | 12,263 | 562,626 | |||
Schlumberger Ltd. | 34,003 | 2,468,278 | |||
3,030,904 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.5% | |||||
Prologis, Inc. | 108,782 | 5,918,828 | |||
SBA Communications Corp.(1) | 12,620 | 1,596,304 | |||
Simon Property Group, Inc. | 965 | 159,476 | |||
7,674,608 | |||||
Food and Staples Retailing — 3.0% | |||||
CVS Health Corp. | 38,877 | 3,205,020 | |||
Kroger Co. (The) | 45,622 | 1,352,692 | |||
Wal-Mart Stores, Inc. | 26,964 | 2,027,154 | |||
6,584,866 | |||||
Food Products — 1.5% | |||||
Archer-Daniels-Midland Co. | 17,662 | 808,037 | |||
Campbell Soup Co. | 9,880 | 568,495 | |||
Pinnacle Foods, Inc. | 34,870 | 2,027,690 | |||
3,404,222 | |||||
Health Care Equipment and Supplies — 3.6% | |||||
Abbott Laboratories | 14,919 | 651,065 | |||
Edwards Lifesciences Corp.(1) | 28,598 | 3,136,343 | |||
Hologic, Inc.(1) | 90,169 | 4,071,130 | |||
7,858,538 | |||||
Health Care Providers and Services — 3.6% | |||||
Aetna, Inc. | 28,492 | 3,848,415 | |||
Express Scripts Holding Co.(1) | 33,213 | 2,037,285 | |||
UnitedHealth Group, Inc. | 11,630 | 2,033,854 | |||
7,919,554 | |||||
Hotels, Restaurants and Leisure — 0.7% | |||||
Royal Caribbean Cruises Ltd. | 5,826 | 621,052 | |||
Starbucks Corp. | 13,626 | 818,377 | |||
1,439,429 | |||||
Household Products — 1.1% | |||||
Procter & Gamble Co. (The) | 27,605 | 2,410,745 | |||
Industrial Conglomerates — 3.3% | |||||
3M Co. | 37,659 | 7,374,762 | |||
Insurance — 2.7% | |||||
Aflac, Inc. | 15,772 | 1,181,007 | |||
Prudential Financial, Inc. | 1,855 | 198,541 | |||
Travelers Cos., Inc. (The) | 38,132 | 4,639,139 | |||
6,018,687 | |||||
Internet and Direct Marketing Retail — 2.7% | |||||
Amazon.com, Inc.(1) | 5,417 | 5,010,671 | |||
Expedia, Inc. | 7,525 | 1,006,243 | |||
6,016,914 | |||||
Internet Software and Services — 5.1% | |||||
Alphabet, Inc., Class A(1) | 6,901 | 6,380,113 | |||
Alphabet, Inc., Class C(1) | 2,489 | 2,254,934 |
7
Shares | Value | ||||
Facebook, Inc., Class A(1) | 14,466 | $ | 2,173,517 | ||
IAC/InterActiveCorp(1) | 5,006 | 415,548 | |||
11,224,112 | |||||
IT Services — 3.8% | |||||
Accenture plc, Class A | 31,442 | 3,813,914 | |||
Alliance Data Systems Corp. | 5,179 | 1,292,834 | |||
Visa, Inc., Class A | 36,222 | 3,304,171 | |||
8,410,919 | |||||
Life Sciences Tools and Services — 0.8% | |||||
Agilent Technologies, Inc. | 32,280 | 1,777,014 | |||
Machinery — 3.4% | |||||
Caterpillar, Inc. | 41,029 | 4,195,625 | |||
Cummins, Inc. | 11,470 | 1,731,282 | |||
Parker-Hannifin Corp. | 9,681 | 1,556,705 | |||
7,483,612 | |||||
Media — 3.2% | |||||
Comcast Corp., Class A | 145,198 | 5,690,310 | |||
Time Warner, Inc. | 13,043 | 1,294,778 | |||
6,985,088 | |||||
Multi-Utilities — 0.7% | |||||
DTE Energy Co. | 14,239 | 1,489,257 | |||
Multiline Retail — 1.5% | |||||
Target Corp. | 60,458 | 3,376,579 | |||
Oil, Gas and Consumable Fuels — 3.0% | |||||
Concho Resources, Inc.(1) | 2,942 | 372,634 | |||
ConocoPhillips | 42,450 | 2,033,779 | |||
EOG Resources, Inc. | 13,504 | 1,249,120 | |||
Marathon Petroleum Corp. | 22,966 | 1,169,888 | |||
Occidental Petroleum Corp. | 11,997 | 738,295 | |||
Valero Energy Corp. | 16,832 | 1,087,516 | |||
6,651,232 | |||||
Pharmaceuticals — 3.1% | |||||
Bristol-Myers Squibb Co. | 48,248 | 2,704,300 | |||
Johnson & Johnson | 29,933 | 3,695,828 | |||
Merck & Co., Inc. | 7,281 | 453,825 | |||
6,853,953 | |||||
Professional Services — 1.6% | |||||
ManpowerGroup, Inc. | 35,887 | 3,623,869 | |||
Road and Rail — 0.3% | |||||
Ryder System, Inc. | 9,644 | 654,924 | |||
Semiconductors and Semiconductor Equipment — 4.2% | |||||
Applied Materials, Inc. | 84,327 | 3,424,520 | |||
Intel Corp. | 91,243 | 3,298,434 | |||
QUALCOMM, Inc. | 32,108 | 1,725,484 | |||
Texas Instruments, Inc. | 11,169 | 884,361 | |||
9,332,799 | |||||
Software — 5.7% | |||||
Adobe Systems, Inc.(1) | 14,831 | 1,983,498 | |||
Electronic Arts, Inc.(1) | 10,099 | 957,587 | |||
Microsoft Corp. | 83,844 | 5,739,960 | |||
Oracle Corp. (New York) | 57,334 | 2,577,737 |
8
Shares | Value | ||||
Red Hat, Inc.(1) | 13,944 | $ | 1,228,188 | ||
12,486,970 | |||||
Specialty Retail — 3.5% | |||||
Home Depot, Inc. (The) | 33,366 | 5,208,433 | |||
Lowe's Cos., Inc. | 1,377 | 116,880 | |||
O'Reilly Automotive, Inc.(1) | 8,517 | 2,113,493 | |||
Ross Stores, Inc. | 4,954 | 322,010 | |||
7,760,816 | |||||
Technology Hardware, Storage and Peripherals — 2.4% | |||||
Apple, Inc. | 28,259 | 4,059,405 | |||
HP, Inc. | 64,078 | 1,205,948 | |||
5,265,353 | |||||
Tobacco — 1.3% | |||||
Philip Morris International, Inc. | 25,732 | 2,852,135 | |||
TOTAL COMMON STOCKS (Cost $169,571,512) | 217,482,564 | ||||
EXCHANGE-TRADED FUNDS — 0.6% | |||||
SPDR S&P 500 ETF Trust (Cost $1,323,841) | 5,639 | 1,342,533 | |||
TEMPORARY CASH INVESTMENTS — 0.8% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $914,559), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $896,881) | 896,830 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $918,322), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $897,016) | 897,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 1,043 | 1,043 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,794,873) | 1,794,873 | ||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $172,690,226) | 220,619,970 | ||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (116,636 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 220,503,334 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $172,690,226) | $ | 220,619,970 | |
Receivable for capital shares sold | 236,167 | ||
Dividends and interest receivable | 252,123 | ||
221,108,260 | |||
Liabilities | |||
Payable for capital shares redeemed | 392,108 | ||
Accrued management fees | 176,181 | ||
Distribution and service fees payable | 36,637 | ||
604,926 | |||
Net Assets | $ | 220,503,334 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 170,291,640 | |
Undistributed net investment income | 499,756 | ||
Undistributed net realized gain | 1,782,194 | ||
Net unrealized appreciation | 47,929,744 | ||
$ | 220,503,334 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $94,730,914 | 3,888,582 | $24.36 | |
I Class, $0.01 Par Value | $6,337,889 | 259,672 | $24.41 | |
Y Class, $0.01 Par Value | $5,102 | 209 | $24.41 | |
A Class, $0.01 Par Value | $96,601,120 | 3,975,018 | $24.30* | |
C Class, $0.01 Par Value | $18,804,058 | 785,237 | $23.95 | |
R Class, $0.01 Par Value | $4,019,149 | 166,077 | $24.20 | |
R5 Class, $0.01 Par Value | $5,102 | 209 | $24.41 |
*Maximum offering price $25.78 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends | $ | 2,203,935 | |
Interest | 1,544 | ||
2,205,479 | |||
Expenses: | |||
Management fees | 1,057,603 | ||
Distribution and service fees: | |||
A Class | 121,229 | ||
C Class | 94,427 | ||
R Class | 9,579 | ||
Directors' fees and expenses | 3,075 | ||
Other expenses | 742 | ||
1,286,655 | |||
Net investment income (loss) | 918,824 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on investment transactions | 4,311,248 | ||
Change in net unrealized appreciation (depreciation) on investments | 21,630,379 | ||
Net realized and unrealized gain (loss) | 25,941,627 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 26,860,451 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 918,824 | $ | 2,215,677 | ||
Net realized gain (loss) | 4,311,248 | 36,997,341 | ||||
Change in net unrealized appreciation (depreciation) | 21,630,379 | (38,849,766 | ) | |||
Net increase (decrease) in net assets resulting from operations | 26,860,451 | 363,252 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (1,035,045 | ) | (1,002,434 | ) | ||
I Class | (86,690 | ) | (177,843 | ) | ||
A Class | (912,366 | ) | (975,431 | ) | ||
C Class | (30,542 | ) | (16,625 | ) | ||
R Class | (25,123 | ) | (31,720 | ) | ||
Decrease in net assets from distributions | (2,089,766 | ) | (2,204,053 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (17,511,909 | ) | (43,272,294 | ) | ||
Net increase (decrease) in net assets | 7,258,776 | (45,113,095 | ) | |||
Net Assets | ||||||
Beginning of period | 213,244,558 | 258,357,653 | ||||
End of period | $ | 220,503,334 | $ | 213,244,558 | ||
Undistributed net investment income | $ | 499,756 | $ | 1,670,698 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2017 (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. Sustainable 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, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class and R5 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. Sale of the Y Class and R5 Class commenced on April 10, 2017.
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 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.
13
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
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 difference in the fee among the classes is a result of their separate arrangements for shareholder services. It
14
is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 0.800% to 0.990% | 0.99% |
I Class | 0.600% to 0.790% | 0.79% |
Y Class | 0.450% to 0.640% | 0.64% |
A Class | 0.800% to 0.990% | 0.99% |
C Class | 0.800% to 0.990% | 0.99% |
R Class | 0.800% to 0.990% | 0.99% |
R5 Class | 0.600% to 0.790% | 0.79% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $606,890 and $108,319, respectively. The effect of interfund transactions on the Statement of Operations was $32,470 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $17,885,613 and $36,515,637, respectively.
15
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 120,000,000 | 140,000,000 | ||||||||
Sold | 657,402 | $ | 15,341,847 | 1,315,790 | $ | 27,773,723 | ||||
Issued in reinvestment of distributions | 40,885 | 941,572 | 44,610 | 939,045 | ||||||
Redeemed | (849,462 | ) | (19,609,907 | ) | (1,687,573 | ) | (35,290,320 | ) | ||
(151,175 | ) | (3,326,488 | ) | (327,173 | ) | (6,577,552 | ) | |||
I Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 73,010 | 1,709,682 | 177,059 | 3,608,045 | ||||||
Issued in reinvestment of distributions | 3,759 | 86,690 | 8,437 | 177,843 | ||||||
Redeemed | (75,521 | ) | (1,776,408 | ) | (571,756 | ) | (12,085,552 | ) | ||
1,248 | 19,964 | (386,260 | ) | (8,299,664 | ) | |||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 209 | 5,000 | ||||||||
A Class/Shares Authorized | 120,000,000 | 140,000,000 | ||||||||
Sold | 126,183 | 2,930,560 | 316,665 | 6,681,629 | ||||||
Issued in reinvestment of distributions | 37,477 | 861,603 | 43,720 | 918,990 | ||||||
Redeemed | (665,337 | ) | (15,395,163 | ) | (1,530,482 | ) | (32,046,890 | ) | ||
(501,677 | ) | (11,603,000 | ) | (1,170,097 | ) | (24,446,271 | ) | |||
C Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 31,530 | 719,077 | 140,148 | 2,911,206 | ||||||
Issued in reinvestment of distributions | 1,095 | 24,880 | 636 | 13,209 | ||||||
Redeemed | (123,627 | ) | (2,828,532 | ) | (252,386 | ) | (5,252,976 | ) | ||
(91,002 | ) | (2,084,575 | ) | (111,602 | ) | (2,328,561 | ) | |||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 16,119 | 373,510 | 62,022 | 1,307,560 | ||||||
Issued in reinvestment of distributions | 1,096 | 25,123 | 1,514 | 31,720 | ||||||
Redeemed | (40,924 | ) | (926,443 | ) | (137,016 | ) | (2,959,526 | ) | ||
(23,709 | ) | (527,810 | ) | (73,480 | ) | (1,620,246 | ) | |||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 209 | 5,000 | ||||||||
Net increase (decrease) | (765,897 | ) | $ | (17,511,909 | ) | (2,068,612 | ) | $ | (43,272,294 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the Y Class and R5 Class. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
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 | $ | 217,482,564 | — | — | ||||
Exchange-Traded Funds | 1,342,533 | — | — | |||||
Temporary Cash Investments | 1,043 | $ | 1,793,830 | — | ||||
$ | 218,826,140 | $ | 1,793,830 | — |
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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 173,704,431 | |
Gross tax appreciation of investments | $ | 50,774,933 | |
Gross tax depreciation of investments | (3,859,394 | ) | |
Net tax appreciation (depreciation) of investments | $ | 46,915,539 |
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, 2016, the fund had accumulated short-term capital losses of $1,473,503, 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.
8. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
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: | 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 | |||||||||||||
2017(3) | $21.75 | 0.12 | 2.76 | 2.88 | (0.27) | $24.36 | 13.30% | 0.99%(4) | 1.06%(4) | 8% | $94,731 | ||
2016 | $21.77 | 0.25 | (0.04) | 0.21 | (0.23) | $21.75 | 0.99% | 0.99% | 1.18% | 71% | $87,865 | ||
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 | ||
I Class(5) | |||||||||||||
2017(3) | $21.81 | 0.14 | 2.77 | 2.91 | (0.31) | $24.41 | 13.45% | 0.79%(4) | 1.26%(4) | 8% | $6,338 | ||
2016 | $21.84 | 0.29 | (0.05) | 0.24 | (0.27) | $21.81 | 1.19% | 0.79% | 1.38% | 71% | $5,637 | ||
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 | ||
Y Class | |||||||||||||
2017(6) | $23.89 | 0.01 | 0.51 | 0.52 | — | $24.41 | 2.18% | 0.64%(4) | 0.80%(4) | 8%(7) | $5 |
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 | |||||||||||||
2017(3) | $21.67 | 0.09 | 2.75 | 2.84 | (0.21) | $24.30 | 13.16% | 1.24%(4) | 0.81%(4) | 8% | $96,601 | ||
2016 | $21.69 | 0.20 | (0.05) | 0.15 | (0.17) | $21.67 | 0.74% | 1.24% | 0.93% | 71% | $97,012 | ||
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 | ||
C Class | |||||||||||||
2017(3) | $21.27 | 0.01 | 2.71 | 2.72 | (0.04) | $23.95 | 12.78% | 1.99%(4) | 0.06%(4) | 8% | $18,804 | ||
2016 | $21.29 | 0.04 | (0.04) | —(8) | (0.02) | $21.27 | (0.02)% | 1.99% | 0.18% | 71% | $18,640 | ||
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 | ||
R Class | |||||||||||||
2017(3) | $21.55 | 0.06 | 2.74 | 2.80 | (0.15) | $24.20 | 13.04% | 1.49%(4) | 0.56%(4) | 8% | $4,019 | ||
2016 | $21.58 | 0.14 | (0.05) | 0.09 | (0.12) | $21.55 | 0.44% | 1.49% | 0.68% | 71% | $4,090 | ||
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 | ||
R5 Class | |||||||||||||
2017(6) | $23.89 | 0.01 | 0.51 | 0.52 | — | $24.41 | 2.18% | 0.79%(4) | 0.65%(4) | 8%(7) | $5 |
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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(8) | 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.
21
Notes |
22
Notes |
23
Notes |
24
![]() | ||
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92359 1706 |
![acihorizblkb99.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/acihorizblkb99.jpg)
Semiannual Report | |
April 30, 2017 | |
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 |
![jthomasrev0514.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/jthomasrev0514.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2017. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, plus other investment insights, we encourage you to visit our website, americancentury.com.
“Trump Trade” Triggered Surges in U.S. Stock Prices and Treasury Yields
Especially in the U.S., the signature events of the six-month period were Donald Trump’s victory in the U.S. presidential election in November and the resulting “Trump Trade.” President Trump’s aggressive pro-growth fiscal policy agenda triggered risk-on rallies in higher-risk assets such as stocks and high-yield corporate bonds that produced double-digit gains for many broad U.S. and global/non-U.S. equity indices. For example, the S&P 500 Index and the MSCI EAFE Index gained 13.32% and 11.47%, respectively. In the U.S., growth and small-cap equity indices generally outperformed their value and large-cap counterparts.
The Trump Trade and improving global economic conditions also drove government bond yields higher, and boosted the value of the U.S. dollar against other currencies. This caused most bond indices to decline during the period, except those representing emerging market and corporate debt, which benefited from investors’ continuing search for more yield than what’s available in government bonds. Also, higher-yielding and corporate bonds are perceived as less price change-sensitive to rising interest rates.
Yields rose for short- and long-maturity U.S. Treasuries as the Federal Reserve raised its interest rate target twice during the reporting period, and suggested that it might raise rates again and start gradually reducing its balance sheet by the end of 2017. These factors, plus rising inflation, could trigger more bouts of U.S. bond market volatility. Meanwhile, the Trump Trade could prove to be double-edged—its momentum faded as health care and tax reform enactment faced delays. This, along with ongoing questions about the Trump administration’s practices, policies, and alliances, could impede further risk-on sentiment. In this unsettled environment, we believe in remaining focused on investment goals, using disciplined, actively managed, risk-aware strategies. We appreciate your continued trust in us.
Sincerely,
![image48a01.jpg](https://capedge.com/proxy/N-CSRS/0000100334-17-000132/image48a01.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2017 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 9.0% |
Alphabet, Inc.* | 6.7% |
Amazon.com, Inc. | 4.8% |
Facebook, Inc., Class A | 4.4% |
Visa, Inc., Class A | 3.6% |
UnitedHealth Group, Inc. | 3.5% |
Mastercard, Inc., Class A | 2.9% |
Intuitive Surgical, Inc. | 2.7% |
Celgene Corp. | 2.7% |
Time Warner, Inc. | 2.5% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Internet Software and Services | 12.7% |
Technology Hardware, Storage and Peripherals | 9.0% |
Biotechnology | 7.0% |
IT Services | 6.8% |
Internet and Direct Marketing Retail | 5.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.2% |
Temporary Cash Investments | 0.5% |
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, 2016 to April 30, 2017 (except as noted).
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I 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 11/1/16 | Ending Account Value 4/30/17 | Expenses Paid During Period(1) 11/1/16 - 4/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,150.70 | $5.23 | 0.98% |
I Class | $1,000 | $1,151.60 | $4.16 | 0.78% |
Y Class | $1,000 | $1,029.90(2) | $0.37(3) | 0.63% |
A Class | $1,000 | $1,149.00 | $6.55 | 1.23% |
C Class | $1,000 | $1,144.80 | $10.53 | 1.98% |
R Class | $1,000 | $1,147.40 | $7.88 | 1.48% |
R5 Class | $1,000 | $1,029.70(2) | $0.46(3) | 0.78% |
R6 Class | $1,000 | $1,152.40 | $3.36 | 0.63% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.94 | $4.91 | 0.98% |
I Class | $1,000 | $1,020.93 | $3.91 | 0.78% |
Y Class | $1,000 | $1,021.67(4) | $3.16(4) | 0.63% |
A Class | $1,000 | $1,018.70 | $6.16 | 1.23% |
C Class | $1,000 | $1,014.98 | $9.89 | 1.98% |
R Class | $1,000 | $1,017.46 | $7.40 | 1.48% |
R5 Class | $1,000 | $1,020.93(4) | $3.91(4) | 0.78% |
R6 Class | $1,000 | $1,021.67 | $3.16 | 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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value based on actual return from April 10, 2017 (commencement of sale) through April 30, 2017. |
(3) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 21, the number of days in the period from April 10, 2017 (commencement of sale) through April 30, 2017, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. |
(4) | Ending account value and expenses paid during the period assumes the class had been available throughout the entire period and are calculated using the class’s annualized expense ratio listed in the table above. |
5
Schedule of Investments |
APRIL 30, 2017 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.2% | |||||
Aerospace and Defense — 3.5% | |||||
Boeing Co. (The) | 1,092,000 | $ | 201,834,360 | ||
United Technologies Corp. | 1,006,000 | 119,703,940 | |||
321,538,300 | |||||
Automobiles — 1.7% | |||||
Tesla, Inc.(1) | 478,000 | 150,125,460 | |||
Banks — 2.7% | |||||
JPMorgan Chase & Co. | 1,800,000 | 156,600,000 | |||
U.S. Bancorp | 1,720,000 | 88,201,600 | |||
244,801,600 | |||||
Beverages — 1.8% | |||||
Boston Beer Co., Inc. (The), Class A(1) | 220,000 | 31,757,000 | |||
Constellation Brands, Inc., Class A | 753,000 | 129,922,620 | |||
161,679,620 | |||||
Biotechnology — 7.0% | |||||
Celgene Corp.(1) | 1,984,000 | 246,115,200 | |||
Gilead Sciences, Inc. | 1,605,000 | 110,022,750 | |||
Ionis Pharmaceuticals, Inc.(1) | 728,000 | 35,082,320 | |||
Kite Pharma, Inc.(1) | 340,000 | 27,907,200 | |||
Regeneron Pharmaceuticals, Inc.(1) | 485,000 | 188,417,650 | |||
Spark Therapeutics, Inc.(1) | 386,000 | 22,376,420 | |||
629,921,540 | |||||
Chemicals — 2.8% | |||||
Ecolab, Inc. | 945,000 | 121,990,050 | |||
Monsanto Co. | 862,000 | 100,517,820 | |||
PPG Industries, Inc. | 287,000 | 31,524,080 | |||
254,031,950 | |||||
Electrical Equipment — 0.8% | |||||
Acuity Brands, Inc. | 404,000 | 71,144,400 | |||
Electronic Equipment, Instruments and Components — 0.5% | |||||
Yaskawa Electric Corp. | 2,409,000 | 46,008,172 | |||
Energy Equipment and Services — 0.7% | |||||
Core Laboratories NV | 549,000 | 60,840,180 | |||
Food and Staples Retailing — 1.8% | |||||
Costco Wholesale Corp. | 914,000 | 162,253,280 | |||
Food Products — 0.1% | |||||
Hershey Co. (The) | 91,000 | 9,846,200 | |||
Health Care Equipment and Supplies — 3.8% | |||||
ABIOMED, Inc.(1) | 159,000 | 20,720,880 | |||
Edwards Lifesciences Corp.(1) | 484,000 | 53,080,280 | |||
IDEXX Laboratories, Inc.(1) | 159,000 | 26,669,070 | |||
Intuitive Surgical, Inc.(1) | 295,342 | 246,867,518 | |||
347,337,748 | |||||
Health Care Providers and Services — 4.2% | |||||
Cigna Corp. | 398,000 | 62,235,260 |
6
Shares | Value | ||||
UnitedHealth Group, Inc. | 1,832,000 | $ | 320,380,160 | ||
382,615,420 | |||||
Health Care Technology — 0.5% | |||||
Cerner Corp.(1) | 651,000 | 42,152,250 | |||
Hotels, Restaurants and Leisure — 3.3% | |||||
Chipotle Mexican Grill, Inc.(1) | 97,000 | 46,023,590 | |||
Starbucks Corp. | 3,007,000 | 180,600,420 | |||
Wynn Resorts Ltd. | 574,000 | 70,607,740 | |||
297,231,750 | |||||
Insurance — 1.4% | |||||
MetLife, Inc. | 2,370,000 | 122,789,700 | |||
Internet and Direct Marketing Retail — 5.9% | |||||
Amazon.com, Inc.(1) | 474,000 | 438,445,260 | |||
Netflix, Inc.(1) | 649,000 | 98,777,800 | |||
537,223,060 | |||||
Internet Software and Services — 12.7% | |||||
Alphabet, Inc., Class A(1) | 316,058 | 292,201,942 | |||
Alphabet, Inc., Class C(1) | 350,000 | 317,086,000 | |||
Baidu, Inc. ADR(1) | 308,000 | 55,510,840 | |||
Facebook, Inc., Class A(1) | 2,639,000 | 396,509,750 | |||
Tencent Holdings Ltd. | 2,779,000 | 86,960,422 | |||
1,148,268,954 | |||||
IT Services — 6.8% | |||||
Mastercard, Inc., Class A | 2,237,123 | 260,222,147 | |||
PayPal Holdings, Inc.(1) | 500,000 | 23,860,000 | |||
Visa, Inc., Class A | 3,606,000 | 328,939,320 | |||
613,021,467 | |||||
Machinery — 3.9% | |||||
Cummins, Inc. | 617,000 | 93,129,980 | |||
Donaldson Co., Inc. | 675,000 | 31,239,000 | |||
WABCO Holdings, Inc.(1) | 841,000 | 99,969,670 | |||
Wabtec Corp. | 1,593,000 | 133,636,770 | |||
357,975,420 | |||||
Media — 5.3% | |||||
Scripps Networks Interactive, Inc., Class A | 879,000 | 65,678,880 | |||
Time Warner, Inc. | 2,259,000 | 224,250,930 | |||
Walt Disney Co. (The) | 1,651,000 | 190,855,600 | |||
480,785,410 | |||||
Oil, Gas and Consumable Fuels — 1.3% | |||||
Concho Resources, Inc.(1) | 323,000 | 40,911,180 | |||
EOG Resources, Inc. | 813,000 | 75,202,500 | |||
116,113,680 | |||||
Personal Products — 1.7% | |||||
Estee Lauder Cos., Inc. (The), Class A | 1,792,000 | 156,154,880 | |||
Pharmaceuticals — 0.8% | |||||
Eli Lilly & Co. | 52,000 | 4,267,120 | |||
Pfizer, Inc. | 2,053,000 | 69,637,760 | |||
73,904,880 | |||||
Road and Rail — 0.7% | |||||
J.B. Hunt Transport Services, Inc. | 742,000 | 66,527,720 |
7
Shares | Value | ||||
Semiconductors and Semiconductor Equipment — 2.3% | |||||
Analog Devices, Inc. | 745,000 | $ | 56,769,000 | ||
Maxim Integrated Products, Inc. | 1,555,000 | 68,653,250 | |||
Xilinx, Inc. | 1,320,617 | 83,344,139 | |||
208,766,389 | |||||
Software — 5.0% | |||||
Adobe Systems, Inc.(1) | 175,000 | 23,404,500 | |||
Microsoft Corp. | 3,062,000 | 209,624,520 | |||
salesforce.com, Inc.(1) | 1,733,000 | 149,245,960 | |||
Splunk, Inc.(1) | 594,000 | 38,200,140 | |||
Tableau Software, Inc., Class A(1) | 671,000 | 36,019,280 | |||
456,494,400 | |||||
Specialty Retail — 4.4% | |||||
L Brands, Inc. | 584,000 | 30,841,040 | |||
O'Reilly Automotive, Inc.(1) | 485,000 | 120,352,750 | |||
Ross Stores, Inc. | 818,000 | 53,170,000 | |||
TJX Cos., Inc. (The) | 2,487,000 | 195,577,680 | |||
399,941,470 | |||||
Technology Hardware, Storage and Peripherals — 9.0% | |||||
Apple, Inc. | 5,654,953 | 812,333,998 | |||
Textiles, Apparel and Luxury Goods — 1.2% | |||||
NIKE, Inc., Class B | 1,992,009 | 110,377,219 | |||
Tobacco — 1.6% | |||||
Philip Morris International, Inc. | 1,311,000 | 145,311,240 | |||
TOTAL COMMON STOCKS (Cost $3,932,492,778) | 8,987,517,757 | ||||
TEMPORARY CASH INVESTMENTS — 0.5% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 2.875%, 6/30/17 - 5/15/43, valued at $21,157,451), in a joint trading account at 0.68%, dated 4/28/17, due 5/1/17 (Delivery value $20,748,495) | 20,747,319 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.00%, 11/15/44, valued at $21,177,530), at 0.22%, dated 4/28/17, due 5/1/17 (Delivery value $20,760,381) | 20,760,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 26,716 | 26,716 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $41,534,035) | 41,534,035 | ||||
TOTAL INVESTMENT SECURITIES — 99.7% (Cost $3,974,026,813) | 9,029,051,792 | ||||
OTHER ASSETS AND LIABILITIES — 0.3% | 27,152,395 | ||||
TOTAL NET ASSETS — 100.0% | $ | 9,056,204,187 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
JPY | 69,346,200 | USD | 627,227 | Credit Suisse AG | 6/30/17 | $ | (3,679 | ) | ||
USD | 9,793,940 | JPY | 1,097,896,800 | Credit Suisse AG | 6/30/17 | (78,146 | ) | |||
USD | 642,335 | JPY | 71,006,950 | Credit Suisse AG | 6/30/17 | 3,854 | ||||
USD | 618,146 | JPY | 67,353,650 | Credit Suisse AG | 6/30/17 | 12,514 | ||||
USD | 938,816 | JPY | 101,956,050 | Credit Suisse AG | 6/30/17 | 22,046 | ||||
USD | 2,715,377 | JPY | 301,814,100 | Credit Suisse AG | 6/30/17 | 1,520 | ||||
USD | 1,684,798 | JPY | 187,286,400 | Credit Suisse AG | 6/30/17 | 754 | ||||
$ | (41,137 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
JPY | - | Japanese Yen |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2017 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $3,974,026,813) | $ | 9,029,051,792 | |
Receivable for investments sold | 51,363,632 | ||
Receivable for capital shares sold | 1,896,714 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 40,688 | ||
Dividends and interest receivable | 1,894,164 | ||
9,084,246,990 | |||
Liabilities | |||
Payable for investments purchased | 18,193,676 | ||
Payable for capital shares redeemed | 2,729,704 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 81,825 | ||
Accrued management fees | 7,017,486 | ||
Distribution and service fees payable | 20,112 | ||
28,042,803 | |||
Net Assets | $ | 9,056,204,187 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 3,636,560,368 | |
Undistributed net investment income | 6,745,095 | ||
Undistributed net realized gain | 357,893,415 | ||
Net unrealized appreciation | 5,055,005,309 | ||
$ | 9,056,204,187 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $8,646,177,984 | 219,793,597 | $39.34 | |
I Class, $0.01 Par Value | $209,270,737 | 5,157,231 | $40.58 | |
Y Class, $0.01 Par Value | $5,154 | 127 | $40.58 | |
A Class, $0.01 Par Value | $70,773,415 | 1,872,070 | $37.80* | |
C Class, $0.01 Par Value | $3,580,083 | 109,251 | $32.77 | |
R Class, $0.01 Par Value | $10,044,723 | 271,452 | $37.00 | |
R5 Class, $0.01 Par Value | $5,154 | 127 | $40.58 | |
R6 Class, $0.01 Par Value | $116,346,937 | 2,867,652 | $40.57 |
*Maximum offering price $40.11 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $86,378) | $ | 47,651,350 | |
Interest | 65,260 | ||
47,716,610 | |||
Expenses: | |||
Management fees | 40,722,362 | ||
Distribution and service fees: | |||
A Class | 75,606 | ||
C Class | 16,845 | ||
R Class | 23,419 | ||
Directors' fees and expenses | 120,180 | ||
Other expenses | 166 | ||
40,958,578 | |||
Net investment income (loss) | 6,758,032 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 375,510,450 | ||
Foreign currency transactions | 74,630 | ||
375,585,080 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 815,587,065 | ||
Translation of assets and liabilities in foreign currencies | 56,075 | ||
815,643,140 | |||
Net realized and unrealized gain (loss) | 1,191,228,220 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,197,986,252 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2016 | ||||||
Increase (Decrease) in Net Assets | April 30, 2017 | October 31, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 6,758,032 | $ | 15,142,479 | ||
Net realized gain (loss) | 375,585,080 | 366,260,214 | ||||
Change in net unrealized appreciation (depreciation) | 815,643,140 | (397,815,232 | ) | |||
Net increase (decrease) in net assets resulting from operations | 1,197,986,252 | (16,412,539 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (22,034,029 | ) | (17,978,057 | ) | ||
I Class | (936,176 | ) | (931,198 | ) | ||
A Class | (16,542 | ) | — | |||
R6 Class | (510,662 | ) | (211,120 | ) | ||
From net realized gains: | ||||||
Investor Class | (343,677,983 | ) | (396,365,081 | ) | ||
I Class | (8,476,528 | ) | (10,890,656 | ) | ||
A Class | (2,668,802 | ) | (3,822,340 | ) | ||
C Class | (170,965 | ) | (191,807 | ) | ||
R Class | (428,166 | ) | (482,530 | ) | ||
R6 Class | (3,517,159 | ) | (1,825,199 | ) | ||
Decrease in net assets from distributions | (382,437,012 | ) | (432,697,988 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 97,071,380 | (8,028,452 | ) | |||
Net increase (decrease) in net assets | 912,620,620 | (457,138,979 | ) | |||
Net Assets | ||||||
Beginning of period | 8,143,583,567 | 8,600,722,546 | ||||
End of period | $ | 9,056,204,187 | $ | 8,143,583,567 | ||
Undistributed net investment income | $ | 6,745,095 | $ | 23,484,472 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2017 (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, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and 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. Sale of the Y Class and R5 Class commenced on April 10, 2017.
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 specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could
13
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.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
14
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. 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 use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 0.800% to 0.990% | 0.98% |
I Class | 0.600% to 0.790% | 0.78% |
Y Class | 0.450% to 0.640% | 0.63% |
A Class | 0.800% to 0.990% | 0.98% |
C Class | 0.800% to 0.990% | 0.98% |
R Class | 0.800% to 0.990% | 0.98% |
R5 Class | 0.600% to 0.790% | 0.78% |
R6 Class | 0.450% to 0.640% | 0.63% |
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 period ended April 30, 2017 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $22,922,194 and $4,873,180, respectively. The effect of interfund transactions on the Statement of Operations was $(293,638) in net realized gain (loss) on investment transactions.
15
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2017 were $748,235,185 and $931,855,325, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2017(1) | Year ended October 31, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 3,350,000,000 | 3,400,000,000 | ||||||||
Sold | 3,124,436 | $ | 116,025,273 | 6,003,589 | $ | 209,184,788 | ||||
Issued in reinvestment of distributions | 9,969,759 | 353,029,181 | 11,470,135 | 400,537,097 | ||||||
Redeemed | (10,698,073 | ) | (392,322,775 | ) | (18,890,025 | ) | (662,960,210 | ) | ||
2,396,122 | 76,731,679 | (1,416,301 | ) | (53,238,325 | ) | |||||
I Class/Shares Authorized | 130,000,000 | 200,000,000 | ||||||||
Sold | 175,900 | 6,714,847 | 1,213,416 | 45,659,701 | ||||||
Issued in reinvestment of distributions | 252,374 | 9,211,667 | 322,809 | 11,601,769 | ||||||
Redeemed | (655,139 | ) | (24,390,313 | ) | (1,433,066 | ) | (52,604,666 | ) | ||
(226,865 | ) | (8,463,799 | ) | 103,159 | 4,656,804 | |||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 127 | 5,000 | ||||||||
A Class/Shares Authorized | 70,000,000 | 80,000,000 | ||||||||
Sold | 447,196 | 16,080,765 | 728,373 | 24,333,624 | ||||||
Issued in reinvestment of distributions | 73,609 | 2,507,131 | 108,105 | 3,636,643 | ||||||
Redeemed | (356,250 | ) | (12,538,280 | ) | (1,105,320 | ) | (36,645,386 | ) | ||
164,555 | 6,049,616 | (268,842 | ) | (8,675,119 | ) | |||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 21,261 | 660,202 | 49,793 | 1,497,508 | ||||||
Issued in reinvestment of distributions | 5,087 | 150,568 | 5,377 | 159,439 | ||||||
Redeemed | (26,676 | ) | (828,998 | ) | (37,296 | ) | (1,089,188 | ) | ||
(328 | ) | (18,228 | ) | 17,874 | 567,759 | |||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 32,406 | 1,127,945 | 86,852 | 2,851,097 | ||||||
Issued in reinvestment of distributions | 11,791 | 393,362 | 13,601 | 449,650 | ||||||
Redeemed | (41,068 | ) | (1,425,463 | ) | (100,941 | ) | (3,320,102 | ) | ||
3,129 | 95,844 | (488 | ) | (19,355 | ) | |||||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 127 | 5,000 | ||||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 760,860 | 28,383,457 | 1,491,438 | 55,368,124 | ||||||
Issued in reinvestment of distributions | 110,442 | 4,027,821 | 56,706 | 2,036,319 | ||||||
Redeemed | (258,688 | ) | (9,745,010 | ) | (241,819 | ) | (8,724,659 | ) | ||
612,614 | 22,666,268 | 1,306,325 | 48,679,784 | |||||||
Net increase (decrease) | 2,949,481 | $ | 97,071,380 | (258,273 | ) | $ | (8,028,452 | ) |
(1) | April 10, 2017 (commencement of sale) through April 30, 2017 for the Y Class and R5 Class. |
16
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 | $ | 8,854,549,163 | $ | 132,968,594 | — | |||
Temporary Cash Investments | 26,716 | 41,507,319 | — | |||||
$ | 8,854,575,879 | $ | 174,475,913 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 40,688 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 81,825 | — |
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 $13,728,458.
The value of foreign currency risk derivative instruments as of April 30, 2017, is disclosed on the Statement of Assets and Liabilities as an asset of $40,688 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $81,825 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2017, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(41,137) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
17
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 period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 3,991,893,406 | |
Gross tax appreciation of investments | $ | 5,055,778,778 | |
Gross tax depreciation of investments | (18,620,392 | ) | |
Net tax appreciation (depreciation) of investments | $ | 5,037,158,386 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
9. Recently Issued Accounting Guidance
In October 2016, the Securities and Exchange Commission adopted new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The amendments to Regulation S-X will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other provisions. Compliance with the amendments is effective on August 1, 2017. Management is currently evaluating the impact that adopting the amendments will have on the financial statement disclosures.
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 | 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 | |||||||||||||||||
2017(3) | $35.83 | 0.03 | 5.18 | 5.21 | (0.10) | (1.60) | (1.70) | $39.34 | 15.07% | 0.98%(4) | 0.98%(4) | 0.15%(4) | 0.15%(4) | 9% | $8,646,178 | ||
2016 | $37.81 | 0.06 | (0.14) | (0.08) | (0.08) | (1.82) | (1.90) | $35.83 | (0.06)% | 0.98% | 0.98% | 0.19% | 0.19% | 18% | $7,790,085 | ||
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 | ||
I Class(5) | |||||||||||||||||
2017(3) | $36.95 | 0.07 | 5.34 | 5.41 | (0.18) | (1.60) | (1.78) | $40.58 | 15.16% | 0.78%(4) | 0.78%(4) | 0.35%(4) | 0.35%(4) | 9% | $209,271 | ||
2016 | $38.93 | 0.14 | (0.14) | — | (0.16) | (1.82) | (1.98) | $36.95 | 0.14% | 0.78% | 0.78% | 0.39% | 0.39% | 18% | $198,930 | ||
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 | ||
Y Class | |||||||||||||||||
2017(7) | $39.40 | (0.02) | 1.20 | 1.18 | — | — | — | $40.58 | 2.99% | 0.63%(4) | 0.63%(4) | (0.56)%(4) | (0.56)%(4) | 9%(8) | $5 |
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 | |||||||||||||||||
2017(3) | $34.45 | (0.02) | 4.98 | 4.96 | (0.01) | (1.60) | (1.61) | $37.80 | 14.90% | 1.23%(4) | 1.23%(4) | (0.10)%(4) | (0.10)%(4) | 9% | $70,773 | ||
2016 | $36.43 | (0.02) | (0.14) | (0.16) | — | (1.82) | (1.82) | $34.45 | (0.31)% | 1.23% | 1.23% | (0.06)% | (0.06)% | 18% | $58,829 | ||
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 | —(6) | 2.14 | 2.14 | — | — | — | $24.89 | 9.41% | 1.24% | 1.24% | 0.01% | 0.01% | 13% | $63,461 | ||
C Class | |||||||||||||||||
2017(3) | $30.17 | (0.13) | 4.33 | 4.20 | — | (1.60) | (1.60) | $32.77 | 14.48% | 1.98%(4) | 1.98%(4) | (0.85)%(4) | (0.85)%(4) | 9% | $3,580 | ||
2016 | $32.36 | (0.25) | (0.12) | (0.37) | — | (1.82) | (1.82) | $30.17 | (1.03)% | 1.98% | 1.98% | (0.81)% | (0.81)% | 18% | $3,306 | ||
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 | ||
R Class | |||||||||||||||||
2017(3) | $33.79 | (0.06) | 4.87 | 4.81 | — | (1.60) | (1.60) | $37.00 | 14.74% | 1.48%(4) | 1.48%(4) | (0.35)%(4) | (0.35)%(4) | 9% | $10,045 | ||
2016 | $35.85 | (0.10) | (0.14) | (0.24) | — | (1.82) | (1.82) | $33.79 | (0.55)% | 1.48% | 1.48% | (0.31)% | (0.31)% | 18% | $9,066 | ||
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 |
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) | |||
R5 Class | |||||||||||||||||
2017(7) | $39.41 | (0.02) | 1.19 | 1.17 | — | — | — | $40.58 | 2.97% | 0.78%(4) | 0.78%(4) | (0.71)%(4) | (0.71)%(4) | 9%(8) | $5 | ||
R6 Class | |||||||||||||||||
2017(3) | $36.97 | 0.09 | 5.34 | 5.43 | (0.23) | (1.60) | (1.83) | $40.57 | 15.24% | 0.63%(4) | 0.63%(4) | 0.50%(4) | 0.50%(4) | 9% | $116,347 | ||
2016 | $38.95 | 0.17 | (0.12) | 0.05 | (0.21) | (1.82) | (2.03) | $36.97 | 0.29% | 0.63% | 0.63% | 0.54% | 0.54% | 18% | $83,367 | ||
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(9) | $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%(10) | $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, 2017 (unaudited). |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | Per-share amount was less than $0.005. |
(7) | April 10, 2017 (commencement of sale) through April 30, 2017 (unaudited). |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the six months ended April 30, 2017. |
(9) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(10) | 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. | ||
©2017 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92363 1706 |
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 27, 2017 |
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 27, 2017 |
By: | /s/ C. Jean Wade | |
Name: | C. Jean Wade | |
Title: | Vice President, Treasurer, and | |
Chief Financial Officer | ||
(principal financial officer) | ||
Date: | June 27, 2017 |