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: | 04-30-2020 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Semiannual Report | |
April 30, 2020 | |
Balanced Fund | |
Investor Class (TWBIX) | |
I Class (ABINX) | |
R5 Class (ABGNX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Key Fixed-Income Portfolio Statistics | |
Weighted Average Life to Maturity | 7.9 years |
Average Duration (effective) | 6.1 years |
Top Ten Common Stocks | % of net assets |
Apple, Inc. | 2.7% |
Microsoft Corp. | 2.7% |
Amazon.com, Inc. | 2.2% |
Alphabet, Inc., Class A | 1.8% |
Facebook, Inc., Class A | 1.8% |
Adobe, Inc. | 1.1% |
Discovery, Inc.* | 1.0% |
Merck & Co., Inc. | 1.0% |
Bristol-Myers Squibb Co. | 0.9% |
Broadcom, Inc. | 0.8% |
*Includes all classes of the issuer held by the fund. | |
Top Five Common Stocks Industries | % of net assets |
Software | 7.4% |
Interactive Media and Services | 3.6% |
Pharmaceuticals | 3.4% |
Technology Hardware, Storage and Peripherals | 3.2% |
Semiconductors and Semiconductor Equipment | 3.0% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 56.9% |
U.S. Treasury Securities | 15.8% |
Corporate Bonds | 10.5% |
U.S. Government Agency Mortgage-Backed Securities | 5.5% |
Asset-Backed Securities | 1.8% |
Collateralized Mortgage Obligations | 1.8% |
Collateralized Loan Obligations | 1.3% |
Municipal Securities | 1.0% |
Sovereign Governments and Agencies | 0.3% |
Commercial Mortgage-Backed Securities | 0.2% |
U.S. Government Agency Securities | 0.1% |
Temporary Cash Investments | 5.1% |
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, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $997.00 | $4.47 | 0.90% |
I Class | $1,000 | $998.50 | $3.48 | 0.70% |
R5 Class | $1,000 | $997.90 | $3.48 | 0.70% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.39 | $4.52 | 0.90% |
I Class | $1,000 | $1,021.38 | $3.52 | 0.70% |
R5 Class | $1,000 | $1,021.38 | $3.52 | 0.70% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares/ Principal Amount | Value | |||||
COMMON STOCKS — 56.9% | ||||||
Aerospace and Defense — 0.6% | ||||||
Huntington Ingalls Industries, Inc. | 4,412 | $ | 844,501 | |||
Lockheed Martin Corp. | 10,453 | 4,066,844 | ||||
4,911,345 | ||||||
Banks — 1.6% | ||||||
Bank of America Corp. | 114,929 | 2,764,043 | ||||
Citigroup, Inc. | 14,036 | 681,588 | ||||
JPMorgan Chase & Co. | 64,887 | 6,213,579 | ||||
M&T Bank Corp. | 18,363 | 2,058,125 | ||||
Wells Fargo & Co. | 55,264 | 1,605,419 | ||||
Zions Bancorp N.A. | 33,590 | 1,061,780 | ||||
14,384,534 | ||||||
Beverages — 0.6% | ||||||
Molson Coors Beverage Co., Class B | 63,127 | 2,588,838 | ||||
Monster Beverage Corp.(1) | 46,643 | 2,883,004 | ||||
5,471,842 | ||||||
Biotechnology — 2.2% | ||||||
AbbVie, Inc. | 69,672 | 5,727,038 | ||||
Amgen, Inc. | 5,306 | 1,269,301 | ||||
Biogen, Inc.(1) | 13,154 | 3,904,502 | ||||
Gilead Sciences, Inc. | 28,792 | 2,418,528 | ||||
Incyte Corp.(1) | 15,251 | 1,489,413 | ||||
Regeneron Pharmaceuticals, Inc.(1) | 6,786 | 3,568,622 | ||||
Vertex Pharmaceuticals, Inc.(1) | 3,658 | 918,890 | ||||
19,296,294 | ||||||
Building Products — 0.7% | ||||||
Fortune Brands Home & Security, Inc. | 37,456 | 1,805,379 | ||||
Masco Corp. | 114,442 | 4,696,700 | ||||
6,502,079 | ||||||
Capital Markets — 0.7% | ||||||
FactSet Research Systems, Inc. | 8,600 | 2,365,000 | ||||
Moody's Corp. | 11,537 | 2,813,875 | ||||
SEI Investments Co. | 25,595 | 1,304,321 | ||||
6,483,196 | ||||||
Chemicals — 0.1% | ||||||
Eastman Chemical Co. | 11,312 | 684,489 | ||||
Communications Equipment — 0.5% | ||||||
Cisco Systems, Inc. | 35,716 | 1,513,644 | ||||
Motorola Solutions, Inc. | 21,072 | 3,030,364 | ||||
4,544,008 | ||||||
Consumer Finance — 0.1% | ||||||
Capital One Financial Corp. | 11,568 | 749,144 |
6
Shares/ Principal Amount | Value | |||||
Containers and Packaging — 0.6% | ||||||
International Paper Co. | 53,350 | $ | 1,827,238 | |||
Packaging Corp. of America | 24,448 | 2,362,899 | ||||
WestRock Co. | 27,097 | 872,252 | ||||
5,062,389 | ||||||
Distributors — 0.2% | ||||||
LKQ Corp.(1) | 50,839 | 1,329,440 | ||||
Diversified Financial Services — 0.7% | ||||||
Berkshire Hathaway, Inc., Class B(1) | 34,326 | 6,431,319 | ||||
Diversified Telecommunication Services — 0.9% | ||||||
AT&T, Inc. | 101,136 | 3,081,614 | ||||
Verizon Communications, Inc. | 90,723 | 5,212,036 | ||||
8,293,650 | ||||||
Electric Utilities — 0.6% | ||||||
Evergy, Inc. | 42,245 | 2,468,375 | ||||
OGE Energy Corp. | 43,056 | 1,357,125 | ||||
PPL Corp. | 76,145 | 1,935,606 | ||||
5,761,106 | ||||||
Electrical Equipment — 0.7% | ||||||
Emerson Electric Co. | 82,339 | 4,695,793 | ||||
Hubbell, Inc. | 9,310 | 1,158,443 | ||||
5,854,236 | ||||||
Electronic Equipment, Instruments and Components — 0.3% | ||||||
Trimble, Inc.(1) | 27,465 | 951,113 | ||||
Zebra Technologies Corp., Class A(1) | 7,386 | 1,696,269 | ||||
2,647,382 | ||||||
Entertainment — 1.8% | ||||||
Activision Blizzard, Inc. | 65,978 | 4,204,778 | ||||
Electronic Arts, Inc.(1) | 53,269 | 6,086,516 | ||||
Netflix, Inc.(1) | 1,453 | 610,042 | ||||
Take-Two Interactive Software, Inc.(1) | 21,845 | 2,644,337 | ||||
Zynga, Inc., Class A(1) | 312,670 | 2,357,532 | ||||
15,903,205 | ||||||
Food and Staples Retailing — 0.2% | ||||||
Walgreens Boots Alliance, Inc. | 25,767 | 1,115,454 | ||||
Walmart, Inc. | 8,788 | 1,068,181 | ||||
2,183,635 | ||||||
Food Products — 1.8% | ||||||
Campbell Soup Co. | 13,408 | 670,132 | ||||
General Mills, Inc. | 80,753 | 4,836,297 | ||||
Hershey Co. (The) | 41,752 | 5,529,217 | ||||
Hormel Foods Corp. | 49,753 | 2,330,928 | ||||
Kellogg Co. | 40,899 | 2,678,885 | ||||
16,045,459 | ||||||
Health Care Equipment and Supplies — 2.8% | ||||||
Abbott Laboratories | 71,683 | 6,601,287 | ||||
Align Technology, Inc.(1) | 9,049 | 1,944,178 |
7
Shares/ Principal Amount | Value | |||||
Baxter International, Inc. | 40,747 | $ | 3,617,519 | |||
Danaher Corp. | 6,834 | 1,117,086 | ||||
DENTSPLY SIRONA, Inc. | 49,424 | 2,097,554 | ||||
DexCom, Inc.(1) | 7,884 | 2,642,717 | ||||
Edwards Lifesciences Corp.(1) | 14,902 | 3,241,185 | ||||
Hologic, Inc.(1) | 39,510 | 1,979,451 | ||||
Medtronic plc | 12,281 | 1,198,994 | ||||
Zimmer Biomet Holdings, Inc. | 6,332 | 757,940 | ||||
25,197,911 | ||||||
Health Care Providers and Services — 1.9% | ||||||
Cardinal Health, Inc. | 10,234 | 506,378 | ||||
CVS Health Corp. | 75,373 | 4,639,208 | ||||
Henry Schein, Inc.(1) | 8,380 | 457,213 | ||||
Humana, Inc. | 12,307 | 4,699,059 | ||||
McKesson Corp. | 23,409 | 3,306,521 | ||||
UnitedHealth Group, Inc. | 12,066 | 3,528,943 | ||||
17,137,322 | ||||||
Health Care Technology — 0.6% | ||||||
Cerner Corp. | 79,730 | 5,532,465 | ||||
Hotels, Restaurants and Leisure — 0.6% | ||||||
Las Vegas Sands Corp. | 26,913 | 1,292,362 | ||||
McDonald's Corp. | 3,969 | 744,426 | ||||
Starbucks Corp. | 44,529 | 3,416,710 | ||||
5,453,498 | ||||||
Household Durables — 0.3% | ||||||
Mohawk Industries, Inc.(1) | 13,069 | 1,146,412 | ||||
PulteGroup, Inc. | 48,747 | 1,378,078 | ||||
2,524,490 | ||||||
Household Products — 1.3% | ||||||
Colgate-Palmolive Co. | 33,466 | 2,351,656 | ||||
Kimberly-Clark Corp. | 26,344 | 3,648,117 | ||||
Procter & Gamble Co. (The) | 46,447 | 5,474,708 | ||||
11,474,481 | ||||||
Industrial Conglomerates — 0.5% | ||||||
Carlisle Cos., Inc. | 28,911 | 3,497,075 | ||||
Honeywell International, Inc. | 5,670 | 804,573 | ||||
4,301,648 | ||||||
Insurance — 1.1% | ||||||
American Financial Group, Inc. | 16,361 | 1,083,753 | ||||
Aon plc | 3,910 | 675,140 | ||||
Brown & Brown, Inc. | 45,578 | 1,636,706 | ||||
Fidelity National Financial, Inc. | 28,232 | 763,675 | ||||
Hartford Financial Services Group, Inc. (The) | 27,080 | 1,028,769 | ||||
Marsh & McLennan Cos., Inc. | 25,128 | 2,445,708 | ||||
MetLife, Inc. | 56,488 | 2,038,087 | ||||
9,671,838 |
8
Shares/ Principal Amount | Value | |||||
Interactive Media and Services — 3.6% | ||||||
Alphabet, Inc., Class A(1) | 11,998 | $ | 16,157,707 | |||
Facebook, Inc., Class A(1) | 78,514 | 16,072,601 | ||||
32,230,308 | ||||||
Internet and Direct Marketing Retail — 2.6% | ||||||
Amazon.com, Inc.(1) | 8,107 | 20,056,718 | ||||
eBay, Inc. | 88,127 | 3,510,098 | ||||
23,566,816 | ||||||
IT Services — 2.4% | ||||||
Accenture plc, Class A | 7,303 | 1,352,442 | ||||
Akamai Technologies, Inc.(1) | 53,704 | 5,247,418 | ||||
Amdocs Ltd. | 35,797 | 2,306,759 | ||||
International Business Machines Corp. | 39,712 | 4,986,239 | ||||
Mastercard, Inc., Class A | 7,367 | 2,025,704 | ||||
Visa, Inc., Class A | 16,914 | 3,022,870 | ||||
Western Union Co. (The) | 114,707 | 2,187,462 | ||||
21,128,894 | ||||||
Life Sciences Tools and Services — 0.6% | ||||||
Agilent Technologies, Inc. | 71,628 | 5,491,003 | ||||
Machinery — 1.6% | ||||||
Allison Transmission Holdings, Inc. | 76,123 | 2,766,310 | ||||
Cummins, Inc. | 41,518 | 6,788,193 | ||||
Snap-on, Inc. | 32,842 | 4,278,984 | ||||
13,833,487 | ||||||
Media — 1.3% | ||||||
Discovery, Inc., Class A(1) | 149,317 | 3,347,687 | ||||
Discovery, Inc., Class C(1) | 276,243 | 5,638,120 | ||||
DISH Network Corp., Class A(1) | 19,254 | 481,639 | ||||
Fox Corp., Class B(1) | 49,119 | 1,255,482 | ||||
Interpublic Group of Cos., Inc. (The) | 34,369 | 583,585 | ||||
11,306,513 | ||||||
Metals and Mining — 0.5% | ||||||
Reliance Steel & Aluminum Co. | 35,617 | 3,190,571 | ||||
Steel Dynamics, Inc. | 63,428 | 1,539,397 | ||||
4,729,968 | ||||||
Multi-Utilities — 0.1% | ||||||
Dominion Energy, Inc. | 7,152 | 551,634 | ||||
MDU Resources Group, Inc. | 29,346 | 659,111 | ||||
1,210,745 | ||||||
Multiline Retail — 0.4% | ||||||
Target Corp. | 31,049 | 3,407,317 | ||||
Oil, Gas and Consumable Fuels — 0.7% | ||||||
Chevron Corp. | 19,928 | 1,833,376 | ||||
Exxon Mobil Corp. | 59,549 | 2,767,242 | ||||
HollyFrontier Corp. | 28,108 | 928,688 | ||||
Kinder Morgan, Inc. | 58,603 | 892,524 | ||||
6,421,830 |
9
Shares/ Principal Amount | Value | |||||
Personal Products — 0.4% | ||||||
Estee Lauder Cos., Inc. (The), Class A | 21,895 | $ | 3,862,278 | |||
Pharmaceuticals — 3.4% | ||||||
Bristol-Myers Squibb Co. | 139,290 | 8,470,225 | ||||
Jazz Pharmaceuticals plc(1) | 15,036 | 1,657,719 | ||||
Johnson & Johnson | 47,781 | 7,169,061 | ||||
Merck & Co., Inc. | 110,316 | 8,752,472 | ||||
Mylan NV(1) | 159,142 | 2,668,811 | ||||
Pfizer, Inc. | 46,362 | 1,778,446 | ||||
30,496,734 | ||||||
Professional Services — 0.2% | ||||||
Nielsen Holdings plc | 40,621 | 598,347 | ||||
Robert Half International, Inc. | 33,424 | 1,579,953 | ||||
2,178,300 | ||||||
Road and Rail — 0.2% | ||||||
Kansas City Southern | 16,347 | 2,134,101 | ||||
Semiconductors and Semiconductor Equipment — 3.0% | ||||||
Applied Materials, Inc. | 102,492 | 5,091,803 | ||||
Broadcom, Inc. | 26,635 | 7,234,599 | ||||
Intel Corp. | 41,775 | 2,505,664 | ||||
KLA Corp. | 13,504 | 2,215,871 | ||||
Lam Research Corp. | 11,832 | 3,020,473 | ||||
Maxim Integrated Products, Inc. | 30,282 | 1,664,904 | ||||
NVIDIA Corp. | 2,270 | 663,476 | ||||
Qorvo, Inc.(1) | 10,769 | 1,055,685 | ||||
Texas Instruments, Inc. | 32,213 | 3,738,963 | ||||
27,191,438 | ||||||
Software — 7.4% | ||||||
Adobe, Inc.(1) | 27,355 | 9,673,822 | ||||
Autodesk, Inc.(1) | 19,559 | 3,660,076 | ||||
Cadence Design Systems, Inc.(1) | 49,911 | 4,049,279 | ||||
CDK Global, Inc. | 50,338 | 1,977,277 | ||||
Fortinet, Inc.(1) | 24,275 | 2,615,388 | ||||
Intuit, Inc. | 15,735 | 4,245,460 | ||||
Microsoft Corp. | 133,249 | 23,879,553 | ||||
NortonLifeLock, Inc. | 109,547 | 2,330,065 | ||||
Oracle Corp. (New York) | 32,135 | 1,702,191 | ||||
salesforce.com, Inc.(1) | 35,402 | 5,733,354 | ||||
ServiceNow, Inc.(1) | 11,112 | 3,906,312 | ||||
VMware, Inc., Class A(1) | 5,201 | 684,036 | ||||
Zoom Video Communications, Inc., Class A(1) | 10,293 | 1,391,305 | ||||
65,848,118 | ||||||
Specialty Retail — 0.6% | ||||||
AutoZone, Inc.(1) | 1,286 | 1,312,132 | ||||
Best Buy Co., Inc. | 15,244 | 1,169,672 | ||||
Home Depot, Inc. (The) | 3,033 | 666,744 |
10
Shares/ Principal Amount | Value | |||||
O'Reilly Automotive, Inc.(1) | 4,672 | $ | 1,804,981 | |||
4,953,529 | ||||||
Technology Hardware, Storage and Peripherals — 3.2% | ||||||
Apple, Inc. | 83,549 | 24,546,696 | ||||
Hewlett Packard Enterprise Co. | 102,951 | 1,035,687 | ||||
HP, Inc. | 130,695 | 2,027,080 | ||||
Xerox Holdings Corp.(1) | 45,382 | 830,037 | ||||
28,439,500 | ||||||
Textiles, Apparel and Luxury Goods — 0.3% | ||||||
Ralph Lauren Corp. | 35,913 | 2,649,661 | ||||
Trading Companies and Distributors — 0.4% | ||||||
W.W. Grainger, Inc. | 13,710 | 3,778,202 | ||||
TOTAL COMMON STOCKS (Cost $428,410,087) | 508,691,147 | |||||
U.S. TREASURY SECURITIES — 15.8% | ||||||
U.S. Treasury Bonds, 5.00%, 5/15/37 | $ | 200,000 | 330,508 | |||
U.S. Treasury Bonds, 3.50%, 2/15/39 | 150,000 | 214,898 | ||||
U.S. Treasury Bonds, 4.625%, 2/15/40 | 1,300,000 | 2,127,937 | ||||
U.S. Treasury Bonds, 4.375%, 5/15/41 | 1,400,000 | 2,252,195 | ||||
U.S. Treasury Bonds, 3.125%, 11/15/41 | 1,000,000 | 1,370,859 | ||||
U.S. Treasury Bonds, 3.00%, 5/15/42 | 3,300,000 | 4,455,000 | ||||
U.S. Treasury Bonds, 2.75%, 11/15/42 | 2,000,000 | 2,597,266 | ||||
U.S. Treasury Bonds, 2.875%, 5/15/43 | 1,300,000 | 1,723,770 | ||||
U.S. Treasury Bonds, 3.125%, 8/15/44 | 500,000 | 694,844 | ||||
U.S. Treasury Bonds, 3.00%, 11/15/44 | 600,000 | 819,188 | ||||
U.S. Treasury Bonds, 2.50%, 2/15/45(2) | 6,000,000 | 7,560,937 | ||||
U.S. Treasury Bonds, 3.00%, 5/15/45 | 600,000 | 822,680 | ||||
U.S. Treasury Bonds, 3.00%, 11/15/45 | 200,000 | 275,656 | ||||
U.S. Treasury Bonds, 3.375%, 11/15/48 | 1,900,000 | 2,854,676 | ||||
U.S. Treasury Bonds, 2.25%, 8/15/49 | 1,000,000 | 1,233,789 | ||||
U.S. Treasury Bonds, 2.375%, 11/15/49 | 1,900,000 | 2,404,539 | ||||
U.S. Treasury Bonds, 2.00%, 2/15/50 | 1,700,000 | 1,997,898 | ||||
U.S. Treasury Inflation Indexed Notes, 0.25%, 7/15/29 | 2,224,816 | 2,369,962 | ||||
U.S. Treasury Notes, 2.50%, 5/31/20(2) | 1,200,000 | 1,202,369 | ||||
U.S. Treasury Notes, 1.875%, 1/31/22(2) | 500,000 | 514,648 | ||||
U.S. Treasury Notes, 0.375%, 3/31/22 | 4,400,000 | 4,415,727 | ||||
U.S. Treasury Notes, 1.875%, 3/31/22 | 900,000 | 928,828 | ||||
U.S. Treasury Notes, 0.125%, 4/30/22 | 5,500,000 | 5,493,232 | ||||
U.S. Treasury Notes, 1.875%, 4/30/22 | 1,800,000 | 1,859,977 | ||||
U.S. Treasury Notes, 1.75%, 6/15/22 | 5,000,000 | 5,165,332 | ||||
U.S. Treasury Notes, 1.875%, 9/30/22 | 300,000 | 311,941 | ||||
U.S. Treasury Notes, 1.625%, 11/15/22 | 3,000,000 | 3,105,645 | ||||
U.S. Treasury Notes, 2.00%, 11/30/22 | 800,000 | 836,375 | ||||
U.S. Treasury Notes, 0.50%, 3/15/23 | 18,600,000 | 18,735,504 | ||||
U.S. Treasury Notes, 0.25%, 4/15/23 | 400,000 | 400,094 | ||||
U.S. Treasury Notes, 2.875%, 11/30/23 | 6,600,000 | 7,205,859 | ||||
U.S. Treasury Notes, 2.375%, 2/29/24 | 1,500,000 | 1,617,891 |
11
Shares/ Principal Amount | Value | |||||
U.S. Treasury Notes, 1.50%, 11/30/24 | $ | 6,100,000 | $ | 6,422,395 | ||
U.S. Treasury Notes, 1.125%, 2/28/25 | 11,500,000 | 11,931,250 | ||||
U.S. Treasury Notes, 0.50%, 3/31/25 | 3,500,000 | 3,524,336 | ||||
U.S. Treasury Notes, 0.25%, 4/30/25 | 3,000,000 | 3,002,520 | ||||
U.S. Treasury Notes, 2.625%, 12/31/25 | 2,200,000 | 2,468,211 | ||||
U.S. Treasury Notes, 1.375%, 8/31/26 | 1,500,000 | 1,582,090 | ||||
U.S. Treasury Notes, 1.625%, 10/31/26 | 100,000 | 107,152 | ||||
U.S. Treasury Notes, 1.75%, 12/31/26 | 700,000 | 756,574 | ||||
U.S. Treasury Notes, 1.50%, 1/31/27 | 2,000,000 | 2,129,766 | ||||
U.S. Treasury Notes, 1.125%, 2/28/27 | 1,200,000 | 1,248,562 | ||||
U.S. Treasury Notes, 0.625%, 3/31/27 | 13,000,000 | 13,086,836 | ||||
U.S. Treasury Notes, 0.50%, 4/30/27 | 3,600,000 | 3,591,703 | ||||
U.S. Treasury Notes, 1.50%, 2/15/30 | 3,200,000 | 3,460,500 | ||||
TOTAL U.S. TREASURY SECURITIES (Cost $131,318,407) | 141,211,919 | |||||
CORPORATE BONDS — 10.5% | ||||||
Aerospace and Defense — 0.1% | ||||||
Boeing Co. (The), 5.81%, 5/1/50(3) | 260,000 | 257,015 | ||||
Lockheed Martin Corp., 3.80%, 3/1/45 | 80,000 | 96,501 | ||||
Raytheon Technologies Corp., 6.05%, 6/1/36 | 250,000 | 351,295 | ||||
704,811 | ||||||
Automobiles — 0.2% | ||||||
Ford Motor Credit Co. LLC, 5.875%, 8/2/21 | 440,000 | 437,800 | ||||
Ford Motor Credit Co. LLC, 2.98%, 8/3/22 | 400,000 | 366,000 | ||||
Ford Motor Credit Co. LLC, 3.35%, 11/1/22 | 310,000 | 285,200 | ||||
General Motors Co., 5.15%, 4/1/38 | 260,000 | 213,142 | ||||
General Motors Financial Co., Inc., 3.20%, 7/6/21 | 620,000 | 606,452 | ||||
General Motors Financial Co., Inc., 5.25%, 3/1/26 | 290,000 | 278,804 | ||||
2,187,398 | ||||||
Banks — 2.2% | ||||||
Banco Santander SA, 3.50%, 4/11/22 | 400,000 | 409,206 | ||||
Bank of America Corp., MTN, 4.20%, 8/26/24 | 140,000 | 151,630 | ||||
Bank of America Corp., MTN, 4.00%, 1/22/25 | 1,475,000 | 1,595,314 | ||||
Bank of America Corp., VRN, 3.00%, 12/20/23 | 911,000 | 944,126 | ||||
Bank of Montreal, MTN, 3.30%, 2/5/24 | 765,000 | 808,274 | ||||
Barclays Bank plc, 5.14%, 10/14/20 | 200,000 | 202,440 | ||||
BNP Paribas SA, VRN, 2.82%, 11/19/25(4) | 393,000 | 396,467 | ||||
BPCE SA, 5.15%, 7/21/24(4) | 200,000 | 214,297 | ||||
Canadian Imperial Bank of Commerce, 2.25%, 1/28/25 | 493,000 | 498,151 | ||||
Citigroup, Inc., 2.90%, 12/8/21 | 1,287,000 | 1,311,417 | ||||
Citigroup, Inc., 2.75%, 4/25/22 | 355,000 | 363,717 | ||||
Citigroup, Inc., 4.05%, 7/30/22 | 70,000 | 73,535 | ||||
Citigroup, Inc., VRN, 3.11%, 4/8/26 | 767,000 | 804,572 | ||||
Citigroup, Inc., VRN, 3.52%, 10/27/28 | 390,000 | 414,465 | ||||
Cooperatieve Rabobank UA, 3.95%, 11/9/22 | 450,000 | 464,979 | ||||
Credit Suisse AG, 2.80%, 4/8/22 | 270,000 | 276,634 | ||||
Discover Bank, 3.35%, 2/6/23 | 250,000 | 253,833 |
12
Shares/ Principal Amount | Value | |||||
Discover Bank, 3.45%, 7/27/26 | $ | 239,000 | $ | 238,043 | ||
Fifth Third BanCorp., 4.30%, 1/16/24 | 110,000 | 118,210 | ||||
Fifth Third BanCorp., 2.375%, 1/28/25 | 600,000 | 610,138 | ||||
FNB Corp., 2.20%, 2/24/23 | 460,000 | 456,436 | ||||
HSBC Bank plc, 4.125%, 8/12/20(4) | 300,000 | 302,393 | ||||
HSBC Holdings plc, 2.95%, 5/25/21 | 800,000 | 812,032 | ||||
HSBC Holdings plc, 4.30%, 3/8/26 | 400,000 | 443,456 | ||||
HSBC Holdings plc, VRN, 2.63%, 11/7/25 | 370,000 | 377,557 | ||||
Huntington Bancshares, Inc., 2.55%, 2/4/30 | 590,000 | 572,797 | ||||
JPMorgan Chase & Co., VRN, 4.02%, 12/5/24 | 220,000 | 238,038 | ||||
JPMorgan Chase & Co., VRN, 3.70%, 5/6/30 | 905,000 | 998,883 | ||||
Lloyds Banking Group plc, VRN, 2.91%, 11/7/23 | 409,000 | 415,958 | ||||
Lloyds Banking Group plc, VRN, 2.44%, 2/5/26 | 340,000 | 340,000 | ||||
PNC Bank N.A., 2.70%, 10/22/29 | 480,000 | 498,621 | ||||
Regions Financial Corp., 3.80%, 8/14/23 | 250,000 | 264,286 | ||||
Royal Bank of Canada, 2.15%, 10/26/20 | 850,000 | 855,482 | ||||
Sumitomo Mitsui Financial Group, Inc., 2.35%, 1/15/25 | 800,000 | 814,071 | ||||
Truist Bank, 3.30%, 5/15/26 | 200,000 | 212,498 | ||||
Truist Bank, 2.25%, 3/11/30 | 250,000 | 243,224 | ||||
U.S. Bancorp, MTN, 3.60%, 9/11/24 | 330,000 | 358,156 | ||||
Wells Fargo & Co., 4.125%, 8/15/23 | 200,000 | 213,498 | ||||
Wells Fargo & Co., 3.00%, 10/23/26 | 600,000 | 628,462 | ||||
Wells Fargo & Co., VRN, 3.07%, 4/30/41 | 310,000 | 306,368 | ||||
19,501,664 | ||||||
Beverages — 0.2% | ||||||
Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide, Inc., 4.90%, 2/1/46 | 500,000 | 575,309 | ||||
Anheuser-Busch InBev Worldwide, Inc., 4.75%, 1/23/29 | 630,000 | 727,835 | ||||
PepsiCo, Inc., 1.625%, 5/1/30(3) | 110,000 | 109,597 | ||||
1,412,741 | ||||||
Biotechnology — 0.5% | ||||||
AbbVie, Inc., 2.90%, 11/6/22 | 620,000 | 645,692 | ||||
AbbVie, Inc., 3.60%, 5/14/25 | 120,000 | 130,460 | ||||
AbbVie, Inc., 3.20%, 11/21/29(4) | 440,000 | 467,301 | ||||
AbbVie, Inc., 4.40%, 11/6/42 | 240,000 | 278,825 | ||||
AbbVie, Inc., 4.25%, 11/21/49(4) | 330,000 | 382,895 | ||||
Amgen, Inc., 2.65%, 5/11/22 | 390,000 | 402,082 | ||||
Amgen, Inc., 4.66%, 6/15/51 | 289,000 | 378,684 | ||||
Biogen, Inc., 3.625%, 9/15/22 | 520,000 | 549,945 | ||||
Biogen, Inc., 2.25%, 5/1/30 | 337,000 | 335,799 | ||||
Gilead Sciences, Inc., 4.40%, 12/1/21 | 310,000 | 324,813 | ||||
Gilead Sciences, Inc., 3.65%, 3/1/26 | 840,000 | 944,324 | ||||
4,840,820 | ||||||
Building Products† | ||||||
Carrier Global Corp., 2.72%, 2/15/30(4) | 331,000 | 311,174 | ||||
Capital Markets — 0.7% | ||||||
Ares Capital Corp., 3.25%, 7/15/25 | 823,000 | 733,508 |
13
Shares/ Principal Amount | Value | |||||
Credit Suisse Group AG, VRN, 2.59%, 9/11/25(4) | $ | 280,000 | $ | 279,636 | ||
Goldman Sachs BDC, Inc., 3.75%, 2/10/25 | 262,000 | 257,408 | ||||
Goldman Sachs Group, Inc. (The), 3.50%, 4/1/25 | 490,000 | 522,099 | ||||
Goldman Sachs Group, Inc. (The), 3.50%, 11/16/26 | 930,000 | 988,491 | ||||
KKR Group Finance Co. VII LLC, 3.625%, 2/25/50(4) | 800,000 | 704,577 | ||||
Morgan Stanley, 2.75%, 5/19/22 | 200,000 | 205,179 | ||||
Morgan Stanley, MTN, 3.70%, 10/23/24 | 760,000 | 821,094 | ||||
Morgan Stanley, VRN, 2.19%, 4/28/26 | 435,000 | 440,252 | ||||
Northern Trust Corp., 1.95%, 5/1/30(3) | 425,000 | 424,045 | ||||
Oaktree Specialty Lending Corp., 3.50%, 2/25/25 | 360,000 | 330,353 | ||||
State Street Corp., VRN, 2.83%, 3/30/23(4) | 90,000 | 92,597 | ||||
UBS Group AG, 3.49%, 5/23/23(4) | 300,000 | 308,980 | ||||
UBS Group AG, 4.125%, 9/24/25(4) | 200,000 | 220,157 | ||||
6,328,376 | ||||||
Chemicals — 0.1% | ||||||
Air Products and Chemicals, Inc., 1.85%, 5/15/27 | 160,000 | 162,058 | ||||
CF Industries, Inc., 4.50%, 12/1/26(4) | 300,000 | 323,578 | ||||
CF Industries, Inc., 5.15%, 3/15/34 | 230,000 | 240,270 | ||||
725,906 | ||||||
Commercial Services and Supplies — 0.2% | ||||||
Republic Services, Inc., 3.55%, 6/1/22 | 220,000 | 229,741 | ||||
Republic Services, Inc., 2.30%, 3/1/30 | 840,000 | 853,639 | ||||
Waste Connections, Inc., 3.50%, 5/1/29 | 290,000 | 312,824 | ||||
Waste Connections, Inc., 2.60%, 2/1/30 | 580,000 | 592,100 | ||||
1,988,304 | ||||||
Communications Equipment† | ||||||
Cisco Systems, Inc., 5.90%, 2/15/39 | 130,000 | 193,399 | ||||
Construction Materials — 0.1% | ||||||
Martin Marietta Materials, Inc., 2.50%, 3/15/30 | 542,000 | 508,470 | ||||
Consumer Finance — 0.1% | ||||||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust, 5.00%, 10/1/21 | 300,000 | 288,578 | ||||
Capital One Bank USA N.A., 3.375%, 2/15/23 | 250,000 | 254,007 | ||||
Capital One Bank USA N.A., VRN, 2.28%, 1/28/26 | 198,000 | 191,568 | ||||
Park Aerospace Holdings Ltd., 5.50%, 2/15/24(4) | 370,000 | 326,334 | ||||
1,060,487 | ||||||
Diversified Consumer Services† | ||||||
Pepperdine University, 3.30%, 12/1/59 | 355,000 | 380,950 | ||||
Diversified Financial Services† | ||||||
Credit Suisse Group Funding Guernsey Ltd., 3.45%, 4/16/21 | 280,000 | 284,350 | ||||
Diversified Telecommunication Services — 0.5% | ||||||
AT&T, Inc., 3.875%, 8/15/21 | 500,000 | 516,579 | ||||
AT&T, Inc., 3.80%, 2/15/27 | 150,000 | 162,094 | ||||
AT&T, Inc., 4.10%, 2/15/28 | 150,000 | 165,775 | ||||
AT&T, Inc., 4.30%, 2/15/30 | 500,000 | 564,550 | ||||
AT&T, Inc., 5.15%, 11/15/46 | 141,000 | 169,435 | ||||
Deutsche Telekom AG, 3.625%, 1/21/50(4) | 500,000 | 550,296 |
14
Shares/ Principal Amount | Value | |||||
Deutsche Telekom International Finance BV, 3.60%, 1/19/27(4) | $ | 140,000 | $ | 152,388 | ||
Telefonica Emisiones SA, 5.46%, 2/16/21 | 100,000 | 103,017 | ||||
Verizon Communications, Inc., 2.95%, 3/15/22 | 459,000 | 477,826 | ||||
Verizon Communications, Inc., 2.45%, 11/1/22 | 280,000 | 290,609 | ||||
Verizon Communications, Inc., 4.40%, 11/1/34 | 705,000 | 858,890 | ||||
Verizon Communications, Inc., 4.75%, 11/1/41 | 260,000 | 340,477 | ||||
Verizon Communications, Inc., 5.01%, 8/21/54 | 250,000 | 360,376 | ||||
4,712,312 | ||||||
Electric Utilities — 0.7% | ||||||
AEP Transmission Co. LLC, 3.75%, 12/1/47 | 100,000 | 118,716 | ||||
American Electric Power Co., Inc., 3.20%, 11/13/27 | 110,000 | 117,169 | ||||
Berkshire Hathaway Energy Co., 3.50%, 2/1/25 | 160,000 | 175,219 | ||||
Berkshire Hathaway Energy Co., 3.80%, 7/15/48 | 150,000 | 178,141 | ||||
Commonwealth Edison Co., 3.20%, 11/15/49 | 215,000 | 235,056 | ||||
DTE Electric Co., 2.25%, 3/1/30 | 330,000 | 342,893 | ||||
Duke Energy Corp., 3.55%, 9/15/21 | 90,000 | 92,307 | ||||
Duke Energy Florida LLC, 6.35%, 9/15/37 | 110,000 | 160,777 | ||||
Duke Energy Florida LLC, 3.85%, 11/15/42 | 220,000 | 256,985 | ||||
Duke Energy Progress LLC, 4.15%, 12/1/44 | 130,000 | 158,868 | ||||
Duke Energy Progress LLC, 3.70%, 10/15/46 | 270,000 | 316,722 | ||||
Exelon Corp., 5.15%, 12/1/20 | 220,000 | 222,582 | ||||
Exelon Corp., 4.45%, 4/15/46 | 150,000 | 179,333 | ||||
Exelon Generation Co. LLC, 4.25%, 6/15/22 | 120,000 | 125,603 | ||||
FirstEnergy Corp., 4.85%, 7/15/47 | 90,000 | 116,236 | ||||
FirstEnergy Transmission LLC, 4.55%, 4/1/49(4) | 170,000 | 201,588 | ||||
Florida Power & Light Co., 4.125%, 2/1/42 | 140,000 | 176,142 | ||||
Florida Power & Light Co., 3.95%, 3/1/48 | 130,000 | 165,283 | ||||
Florida Power & Light Co., 3.15%, 10/1/49 | 170,000 | 196,165 | ||||
MidAmerican Energy Co., 4.40%, 10/15/44 | 250,000 | 323,988 | ||||
Nevada Power Co., 2.40%, 5/1/30 | 231,000 | 242,227 | ||||
NextEra Energy Capital Holdings, Inc., 3.55%, 5/1/27 | 290,000 | 319,355 | ||||
NextEra Energy Operating Partners LP, 4.50%, 9/15/27(4) | 120,000 | 123,846 | ||||
Oncor Electric Delivery Co. LLC, 3.10%, 9/15/49 | 170,000 | 191,864 | ||||
PacifiCorp, 2.70%, 9/15/30 | 99,000 | 107,736 | ||||
PacifiCorp, 3.30%, 3/15/51 | 310,000 | 348,989 | ||||
Potomac Electric Power Co., 3.60%, 3/15/24 | 120,000 | 128,743 | ||||
Progress Energy, Inc., 3.15%, 4/1/22 | 90,000 | 92,701 | ||||
Southern Co. Gas Capital Corp., 3.95%, 10/1/46 | 90,000 | 94,950 | ||||
Southwestern Public Service Co., 3.70%, 8/15/47 | 100,000 | 115,018 | ||||
Xcel Energy, Inc., 3.35%, 12/1/26 | 100,000 | 109,076 | ||||
Xcel Energy, Inc., 3.40%, 6/1/30 | 330,000 | 367,661 | ||||
6,101,939 | ||||||
Electronic Equipment, Instruments and Components — 0.1% | ||||||
Amphenol Corp., 2.05%, 3/1/25 | 500,000 | 498,324 | ||||
Energy Equipment and Services† | ||||||
Baker Hughes a GE Co. LLC / Baker Hughes Co-Obligor, Inc., 3.14%, 11/7/29 | 209,000 | 195,521 |
15
Shares/ Principal Amount | Value | |||||
Equity Real Estate Investment Trusts (REITs) — 0.4% | ||||||
Alexandria Real Estate Equities, Inc., 4.90%, 12/15/30 | $ | 100,000 | $ | 119,901 | ||
American Tower Corp., 3.375%, 10/15/26 | 110,000 | 118,594 | ||||
American Tower Corp., 2.90%, 1/15/30 | 449,000 | 472,511 | ||||
AvalonBay Communities, Inc., MTN, 3.20%, 1/15/28 | 120,000 | 126,426 | ||||
Crown Castle International Corp., 5.25%, 1/15/23 | 180,000 | 197,067 | ||||
Crown Castle International Corp., 3.30%, 7/1/30 | 474,000 | 509,402 | ||||
Duke Realty LP, 2.875%, 11/15/29 | 484,000 | 503,110 | ||||
Duke Realty LP, 3.05%, 3/1/50 | 200,000 | 190,204 | ||||
Essex Portfolio LP, 3.625%, 8/15/22 | 150,000 | 155,649 | ||||
Essex Portfolio LP, 3.25%, 5/1/23 | 50,000 | 51,049 | ||||
Healthcare Realty Trust, Inc., 2.40%, 3/15/30 | 300,000 | 265,641 | ||||
Kilroy Realty LP, 3.80%, 1/15/23 | 130,000 | 132,576 | ||||
Kimco Realty Corp., 2.80%, 10/1/26 | 240,000 | 228,964 | ||||
National Retail Properties, Inc., 2.50%, 4/15/30 | 114,000 | 100,675 | ||||
Prologis LP, 2.125%, 4/15/27 | 100,000 | 101,037 | ||||
Public Storage, 3.39%, 5/1/29 | 230,000 | 247,090 | ||||
Ventas Realty LP, 4.125%, 1/15/26 | 100,000 | 101,446 | ||||
3,621,342 | ||||||
Food and Staples Retailing — 0.1% | ||||||
Costco Wholesale Corp., 1.60%, 4/20/30 | 430,000 | 425,848 | ||||
Kroger Co. (The), 3.875%, 10/15/46 | 350,000 | 375,225 | ||||
Walmart, Inc., 4.05%, 6/29/48 | 210,000 | 274,321 | ||||
1,075,394 | ||||||
Food Products — 0.1% | ||||||
Campbell Soup Co., 2.375%, 4/24/30 | 60,000 | 60,731 | ||||
Mondelez International, Inc., 2.75%, 4/13/30 | 412,000 | 437,141 | ||||
497,872 | ||||||
Gas Utilities† | ||||||
ONE Gas, Inc., 2.00%, 5/15/30(3) | 170,000 | 169,747 | ||||
Health Care Equipment and Supplies — 0.1% | ||||||
Baxter International, Inc., 3.95%, 4/1/30(4) | 70,000 | 81,246 | ||||
Becton Dickinson and Co., 3.73%, 12/15/24 | 290,000 | 313,462 | ||||
DH Europe Finance II Sarl, 3.40%, 11/15/49 | 210,000 | 234,471 | ||||
Medtronic, Inc., 3.50%, 3/15/25 | 192,000 | 214,524 | ||||
Medtronic, Inc., 4.375%, 3/15/35 | 144,000 | 183,270 | ||||
1,026,973 | ||||||
Health Care Providers and Services — 0.4% | ||||||
Aetna, Inc., 2.75%, 11/15/22 | 130,000 | 134,058 | ||||
Anthem, Inc., 2.375%, 1/15/25 | 100,000 | 102,993 | ||||
Anthem, Inc., 3.65%, 12/1/27 | 140,000 | 152,951 | ||||
Cigna Corp., 2.40%, 3/15/30 | 330,000 | 333,227 | ||||
CommonSpirit Health, 2.95%, 11/1/22 | 110,000 | 111,006 | ||||
CVS Health Corp., 3.50%, 7/20/22 | 420,000 | 438,252 | ||||
CVS Health Corp., 4.30%, 3/25/28 | 620,000 | 699,755 | ||||
CVS Health Corp., 4.78%, 3/25/38 | 160,000 | 189,089 | ||||
Duke University Health System, Inc., 3.92%, 6/1/47 | 160,000 | 188,044 |
16
Shares/ Principal Amount | Value | |||||
Partners Healthcare System, Inc., 3.19%, 7/1/49 | $ | 215,000 | $ | 221,875 | ||
UnitedHealth Group, Inc., 2.875%, 3/15/22 | 310,000 | 320,497 | ||||
UnitedHealth Group, Inc., 3.75%, 7/15/25 | 210,000 | 234,998 | ||||
UnitedHealth Group, Inc., 4.75%, 7/15/45 | 140,000 | 184,678 | ||||
Universal Health Services, Inc., 4.75%, 8/1/22(4) | 130,000 | 130,813 | ||||
3,442,236 | ||||||
Hotels, Restaurants and Leisure† | ||||||
McDonald's Corp., MTN, 3.25%, 6/10/24 | 100,000 | 107,892 | ||||
McDonald's Corp., MTN, 3.375%, 5/26/25 | 80,000 | 86,747 | ||||
194,639 | ||||||
Household Durables — 0.1% | ||||||
D.R. Horton, Inc., 5.75%, 8/15/23 | 110,000 | 122,034 | ||||
D.R. Horton, Inc., 2.50%, 10/15/24 | 310,000 | 309,742 | ||||
Lennar Corp., 4.75%, 4/1/21 | 352,000 | 355,573 | ||||
Toll Brothers Finance Corp., 4.35%, 2/15/28 | 332,000 | 329,377 | ||||
1,116,726 | ||||||
Household Products† | ||||||
Kimberly-Clark Corp., 3.10%, 3/26/30 | 68,000 | 75,821 | ||||
Industrial Conglomerates — 0.1% | ||||||
Carlisle Cos., Inc., 2.75%, 3/1/30 | 815,000 | 746,360 | ||||
Insurance — 0.5% | ||||||
American International Group, Inc., 4.125%, 2/15/24 | 925,000 | 1,002,185 | ||||
American International Group, Inc., 4.50%, 7/16/44 | 313,000 | 346,083 | ||||
Chubb INA Holdings, Inc., 3.15%, 3/15/25 | 280,000 | 303,629 | ||||
Hartford Financial Services Group, Inc. (The), 3.60%, 8/19/49 | 467,000 | 499,374 | ||||
Liberty Mutual Group, Inc., 4.50%, 6/15/49(4) | 120,000 | 132,477 | ||||
Markel Corp., 4.90%, 7/1/22 | 190,000 | 202,364 | ||||
Massachusetts Mutual Life Insurance Co., 3.375%, 4/15/50(4) | 465,000 | 477,783 | ||||
MetLife, Inc., 4.125%, 8/13/42 | 110,000 | 128,432 | ||||
Metropolitan Life Global Funding I, 3.00%, 1/10/23(4) | 200,000 | 209,243 | ||||
New York Life Insurance Co., 3.75%, 5/15/50(4) | 100,000 | 113,381 | ||||
Prudential Financial, Inc., MTN, 1.50%, 3/10/26 | 700,000 | 696,640 | ||||
WR Berkley Corp., 4.625%, 3/15/22 | 130,000 | 135,347 | ||||
4,246,938 | ||||||
Internet and Direct Marketing Retail† | ||||||
eBay, Inc., 2.15%, 6/5/20 | 170,000 | 170,076 | ||||
IT Services — 0.2% | ||||||
Fiserv, Inc., 3.50%, 7/1/29 | 172,000 | 188,913 | ||||
Global Payments, Inc., 3.20%, 8/15/29 | 340,000 | 350,833 | ||||
International Business Machines Corp., 1.70%, 5/15/27(3) | 300,000 | 299,289 | ||||
International Business Machines Corp., 1.95%, 5/15/30(3) | 200,000 | 199,141 | ||||
Mastercard, Inc., 3.65%, 6/1/49 | 170,000 | 204,263 | ||||
Visa, Inc., 1.90%, 4/15/27 | 170,000 | 176,183 | ||||
Western Union Co. (The), 2.85%, 1/10/25 | 127,000 | 126,486 | ||||
1,545,108 | ||||||
Machinery — 0.1% | ||||||
Otis Worldwide Corp., 2.06%, 4/5/25(4) | 330,000 | 336,134 |
17
Shares/ Principal Amount | Value | |||||
Otis Worldwide Corp., VRN, 2.09%, 4/5/23(4) | $ | 150,000 | $ | 146,050 | ||
Stanley Black & Decker, Inc., 4.00%, 3/15/60 | 160,000 | 156,411 | ||||
638,595 | ||||||
Media — 0.3% | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 4.20%, 3/15/28 | 70,000 | 77,901 | ||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 2.80%, 4/1/31 | 60,000 | 60,479 | ||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 5.125%, 7/1/49 | 112,000 | 133,413 | ||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 4.80%, 3/1/50 | 180,000 | 204,101 | ||||
Comcast Corp., 3.20%, 7/15/36 | 785,000 | 851,045 | ||||
Comcast Corp., 6.40%, 5/15/38 | 310,000 | 452,032 | ||||
Comcast Corp., 3.97%, 11/1/47 | 102,000 | 120,479 | ||||
Time Warner Entertainment Co. LP, 8.375%, 3/15/23 | 201,000 | 232,792 | ||||
ViacomCBS, Inc., 3.125%, 6/15/22 | 190,000 | 191,253 | ||||
ViacomCBS, Inc., 4.25%, 9/1/23 | 160,000 | 168,997 | ||||
2,492,492 | ||||||
Metals and Mining† | ||||||
Steel Dynamics, Inc., 3.45%, 4/15/30 | 155,000 | 147,711 | ||||
Multi-Utilities — 0.2% | ||||||
Ameren Corp., 3.50%, 1/15/31 | 370,000 | 409,973 | ||||
CenterPoint Energy, Inc., 4.25%, 11/1/28 | 270,000 | 295,142 | ||||
Consolidated Edison Co. of New York, Inc., 3.95%, 3/1/43 | 150,000 | 172,825 | ||||
Dominion Energy, Inc., 4.90%, 8/1/41 | 200,000 | 238,496 | ||||
NiSource, Inc., 5.65%, 2/1/45 | 140,000 | 194,329 | ||||
Sempra Energy, 2.875%, 10/1/22 | 200,000 | 205,302 | ||||
Sempra Energy, 3.25%, 6/15/27 | 180,000 | 188,521 | ||||
Sempra Energy, 4.00%, 2/1/48 | 100,000 | 112,730 | ||||
1,817,318 | ||||||
Oil, Gas and Consumable Fuels — 0.8% | ||||||
Aker BP ASA, 3.75%, 1/15/30(4) | 510,000 | 431,388 | ||||
Diamondback Energy, Inc., 3.50%, 12/1/29 | 400,000 | 347,319 | ||||
Ecopetrol SA, 5.875%, 5/28/45 | 90,000 | 79,389 | ||||
Enbridge, Inc., 4.00%, 10/1/23 | 140,000 | 144,405 | ||||
Energy Transfer Operating LP, 3.60%, 2/1/23 | 160,000 | 155,870 | ||||
Energy Transfer Operating LP, 4.25%, 3/15/23 | 370,000 | 367,269 | ||||
Energy Transfer Operating LP, 3.75%, 5/15/30 | 350,000 | 318,830 | ||||
Energy Transfer Operating LP, 4.90%, 3/15/35 | 70,000 | 63,203 | ||||
Enterprise Products Operating LLC, 4.85%, 3/15/44 | 460,000 | 492,899 | ||||
EOG Resources, Inc., 4.10%, 2/1/21 | 130,000 | 132,362 | ||||
Equinor ASA, 3.25%, 11/18/49 | 230,000 | 241,217 | ||||
Exxon Mobil Corp., 1.57%, 4/15/23 | 390,000 | 395,806 | ||||
Kinder Morgan Energy Partners LP, 5.30%, 9/15/20 | 170,000 | 171,311 | ||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39 | 210,000 | 242,303 | ||||
MPLX LP, 5.25%, 1/15/25(4) | 200,000 | 198,317 | ||||
MPLX LP, 4.875%, 6/1/25 | 410,000 | 400,449 |
18
Shares/ Principal Amount | Value | |||||
MPLX LP, 4.50%, 4/15/38 | $ | 120,000 | $ | 107,222 | ||
Ovintiv, Inc., 6.50%, 2/1/38 | 90,000 | 55,445 | ||||
Petroleos Mexicanos, 4.875%, 1/24/22 | 240,000 | 230,400 | ||||
Petroleos Mexicanos, 3.50%, 1/30/23 | 60,000 | 53,250 | ||||
Petroleos Mexicanos, 6.625%, 6/15/35 | 50,000 | 35,500 | ||||
Petroleos Mexicanos, 5.50%, 6/27/44 | 230,000 | 148,925 | ||||
Phillips 66, 4.30%, 4/1/22 | 250,000 | 260,887 | ||||
Sabine Pass Liquefaction LLC, 5.625%, 3/1/25 | 590,000 | 618,056 | ||||
Shell International Finance BV, 3.25%, 5/11/25 | 200,000 | 214,095 | ||||
Sunoco Logistics Partners Operations LP, 4.00%, 10/1/27 | 200,000 | 187,618 | ||||
Total Capital Canada Ltd., 2.75%, 7/15/23 | 120,000 | 124,578 | ||||
Williams Cos., Inc. (The), 4.125%, 11/15/20 | 300,000 | 301,001 | ||||
Williams Cos., Inc. (The), 5.10%, 9/15/45 | 200,000 | 208,359 | ||||
6,727,673 | ||||||
Paper and Forest Products† | ||||||
Georgia-Pacific LLC, 2.10%, 4/30/27(4) | 370,000 | 369,962 | ||||
Pharmaceuticals — 0.2% | ||||||
Allergan Finance LLC, 3.25%, 10/1/22 | 400,000 | 410,713 | ||||
Allergan Funding SCS, 3.85%, 6/15/24 | 440,000 | 471,983 | ||||
Allergan Funding SCS, 4.55%, 3/15/35 | 110,000 | 127,104 | ||||
Bristol-Myers Squibb Co., 3.25%, 8/15/22(4) | 190,000 | 199,996 | ||||
Bristol-Myers Squibb Co., 3.625%, 5/15/24(4) | 300,000 | 330,378 | ||||
Bristol-Myers Squibb Co., 3.40%, 7/26/29(4) | 430,000 | 492,017 | ||||
2,032,191 | ||||||
Road and Rail — 0.3% | ||||||
Ashtead Capital, Inc., 4.125%, 8/15/25(4) | 400,000 | 397,000 | ||||
Burlington Northern Santa Fe LLC, 3.60%, 9/1/20 | 176,000 | 176,201 | ||||
Burlington Northern Santa Fe LLC, 4.95%, 9/15/41 | 50,000 | 63,533 | ||||
Burlington Northern Santa Fe LLC, 4.45%, 3/15/43 | 220,000 | 272,630 | ||||
Burlington Northern Santa Fe LLC, 4.15%, 4/1/45 | 310,000 | 371,837 | ||||
CSX Corp., 3.25%, 6/1/27 | 380,000 | 411,028 | ||||
Norfolk Southern Corp., 3.05%, 5/15/50(3) | 200,000 | 199,733 | ||||
Union Pacific Corp., 2.40%, 2/5/30 | 230,000 | 237,325 | ||||
Union Pacific Corp., 3.60%, 9/15/37 | 200,000 | 216,726 | ||||
Union Pacific Corp., 3.84%, 3/20/60(4) | 150,000 | 164,858 | ||||
Union Pacific Corp., MTN, 3.55%, 8/15/39 | 140,000 | 151,718 | ||||
2,662,589 | ||||||
Semiconductors and Semiconductor Equipment — 0.1% | ||||||
Analog Devices, Inc., 2.95%, 4/1/25 | 90,000 | 93,939 | ||||
Broadcom Corp. / Broadcom Cayman Finance Ltd., 3.125%, 1/15/25 | 126,000 | 130,287 | ||||
Lam Research Corp., 1.90%, 6/15/30(3) | 260,000 | 259,819 | ||||
NXP BV / NXP Funding, LLC / NXP USA, Inc., 3.875%, 9/1/22(4) | 200,000 | 207,425 | ||||
NXP BV / NXP Funding, LLC / NXP USA, Inc., 2.70%, 5/1/25(3)(4) | 70,000 | 70,932 | ||||
NXP BV / NXP Funding, LLC / NXP USA, Inc., 3.15%, 5/1/27(3)(4) | 120,000 | 121,548 | ||||
NXP BV / NXP Funding, LLC / NXP USA, Inc., 3.40%, 5/1/30(3)(4) | 120,000 | 121,133 |
19
Shares/ Principal Amount | Value | |||||
Texas Instruments, Inc., 1.75%, 5/4/30(3) | $ | 210,000 | $ | 209,840 | ||
1,214,923 | ||||||
Software — 0.2% | ||||||
Adobe, Inc., 2.30%, 2/1/30 | 500,000 | 526,435 | ||||
Oracle Corp., 2.50%, 10/15/22 | 260,000 | 270,333 | ||||
Oracle Corp., 3.625%, 7/15/23 | 280,000 | 303,290 | ||||
Oracle Corp., 2.65%, 7/15/26 | 100,000 | 106,592 | ||||
Oracle Corp., 2.80%, 4/1/27 | 145,000 | 155,835 | ||||
Oracle Corp., 3.25%, 11/15/27 | 430,000 | 472,279 | ||||
Oracle Corp., 2.95%, 4/1/30 | 205,000 | 224,584 | ||||
2,059,348 | ||||||
Specialty Retail — 0.1% | ||||||
Home Depot, Inc. (The), 3.75%, 2/15/24 | 150,000 | 165,352 | ||||
Home Depot, Inc. (The), 2.50%, 4/15/27 | 280,000 | 295,771 | ||||
Home Depot, Inc. (The), 3.90%, 6/15/47 | 50,000 | 59,074 | ||||
Home Depot, Inc. (The), 3.35%, 4/15/50 | 479,000 | 529,641 | ||||
1,049,838 | ||||||
Technology Hardware, Storage and Peripherals — 0.1% | ||||||
Dell International LLC / EMC Corp., 5.45%, 6/15/23(4) | 500,000 | 529,079 | ||||
Trading Companies and Distributors — 0.1% | ||||||
Air Lease Corp., 3.875%, 7/3/23 | 110,000 | 102,602 | ||||
Air Lease Corp., MTN, 3.00%, 2/1/30 | 442,000 | 354,000 | ||||
456,602 | ||||||
Water Utilities — 0.1% | ||||||
Essential Utilities, Inc., 2.70%, 4/15/30 | 470,000 | 482,580 | ||||
Wireless Telecommunication Services — 0.2% | ||||||
T-Mobile USA, Inc., 3.75%, 4/15/27(4) | 980,000 | 1,055,489 | ||||
Vodafone Group plc, 2.95%, 2/19/23 | 771,000 | 809,032 | ||||
1,864,521 | ||||||
TOTAL CORPORATE BONDS (Cost $91,084,060) | 94,411,600 | |||||
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES — 5.5% | ||||||
Adjustable-Rate U.S. Government Agency Mortgage-Backed Securities — 0.4% | ||||||
FHLMC, VRN, 4.14%, (1-year H15T1Y plus 2.25%), 9/1/35 | 124,818 | 130,852 | ||||
FHLMC, VRN, 4.31%, (12-month LIBOR plus 1.86%), 7/1/36 | 30,254 | 31,598 | ||||
FHLMC, VRN, 4.19%, (1-year H15T1Y plus 2.14%), 10/1/36 | 116,259 | 121,417 | ||||
FHLMC, VRN, 4.11%, (1-year H15T1Y plus 2.25%), 4/1/37 | 121,417 | 127,225 | ||||
FHLMC, VRN, 4.09%, (12-month LIBOR plus 1.80%), 2/1/38 | 40,379 | 42,295 | ||||
FHLMC, VRN, 3.87%, (12-month LIBOR plus 1.84%), 6/1/38 | 30,395 | 31,779 | ||||
FHLMC, VRN, 3.90%, (12-month LIBOR plus 1.78%), 9/1/40 | 39,212 | 40,715 | ||||
FHLMC, VRN, 4.68%, (12-month LIBOR plus 1.88%), 5/1/41 | 15,897 | 16,575 | ||||
FHLMC, VRN, 4.00%, (12-month LIBOR plus 1.87%), 7/1/41 | 126,757 | 132,580 | ||||
FHLMC, VRN, 3.64%, (12-month LIBOR plus 1.64%), 2/1/43 | 19,030 | 19,596 | ||||
FHLMC, VRN, 4.43%, (12-month LIBOR plus 1.65%), 6/1/43 | 10,109 | 10,139 | ||||
FHLMC, VRN, 4.50%, (12-month LIBOR plus 1.62%), 6/1/43 | 485 | 488 | ||||
FHLMC, VRN, 2.83%, (12-month LIBOR plus 1.63%), 1/1/44 | 193,012 | 199,103 | ||||
FHLMC, VRN, 2.57%, (12-month LIBOR plus 1.60%), 6/1/45 | 157,692 | 161,173 |
20
Shares/ Principal Amount | Value | |||||
FHLMC, VRN, 2.35%, (12-month LIBOR plus 1.63%), 8/1/46 | $ | 376,590 | $ | 386,866 | ||
FHLMC, VRN, 3.06%, (12-month LIBOR plus 1.64%), 9/1/47 | 639,321 | 662,728 | ||||
FNMA, VRN, 3.49%, (6-month LIBOR plus 1.57%), 6/1/35 | 73,604 | 74,932 | ||||
FNMA, VRN, 3.51%, (6-month LIBOR plus 1.57%), 6/1/35 | 86,282 | 87,830 | ||||
FNMA, VRN, 4.11%, (1-year H15T1Y plus 2.16%), 3/1/38 | 88,711 | 92,422 | ||||
FNMA, VRN, 3.69%, (12-month LIBOR plus 1.69%), 1/1/40 | 9,637 | 10,000 | ||||
FNMA, VRN, 3.89%, (12-month LIBOR plus 1.84%), 3/1/40 | 17,348 | 18,049 | ||||
FNMA, VRN, 3.81%, (12-month LIBOR plus 1.77%), 10/1/40 | 64,292 | 66,743 | ||||
FNMA, VRN, 3.72%, (12-month LIBOR plus 1.56%), 3/1/43 | 93,732 | 96,839 | ||||
FNMA, VRN, 3.17%, (12-month LIBOR plus 1.61%), 3/1/47 | 490,096 | 509,217 | ||||
FNMA, VRN, 3.16%, (12-month LIBOR plus 1.61%), 4/1/47 | 295,693 | 307,123 | ||||
FNMA, VRN, 3.25%, (12-month LIBOR plus 1.62%), 5/1/47 | 355,441 | 368,421 | ||||
3,746,705 | ||||||
Fixed-Rate U.S. Government Agency Mortgage-Backed Securities — 5.1% | ||||||
FHLMC, 6.50%, 1/1/28 | 8,331 | 9,299 | ||||
FHLMC, 5.50%, 12/1/33 | 70,961 | 80,395 | ||||
FHLMC, 5.00%, 7/1/35 | 623,383 | 712,764 | ||||
FHLMC, 5.50%, 1/1/38 | 58,515 | 66,727 | ||||
FHLMC, 6.00%, 8/1/38 | 33,050 | 37,931 | ||||
FHLMC, 3.50%, 12/1/47 | 471,979 | 502,368 | ||||
FNMA, 5.00%, 9/1/20 | 8,287 | 8,705 | ||||
FNMA, 6.50%, 1/1/29 | 13,422 | 15,449 | ||||
FNMA, 7.50%, 7/1/29 | 18,637 | 19,389 | ||||
FNMA, 7.50%, 9/1/30 | 7,719 | 9,133 | ||||
FNMA, 5.00%, 7/1/31 | 327,771 | 359,523 | ||||
FNMA, 6.50%, 9/1/31 | 11,219 | 12,515 | ||||
FNMA, 7.00%, 9/1/31 | 3,555 | 3,804 | ||||
FNMA, 6.50%, 1/1/32 | 12,845 | 14,738 | ||||
FNMA, 6.50%, 8/1/32 | 13,671 | 15,717 | ||||
FNMA, 5.50%, 6/1/33 | 45,753 | 51,841 | ||||
FNMA, 5.50%, 7/1/33 | 66,755 | 75,824 | ||||
FNMA, 5.50%, 8/1/33 | 131,607 | 150,491 | ||||
FNMA, 5.50%, 9/1/33 | 89,485 | 102,398 | ||||
FNMA, 5.00%, 11/1/33 | 229,210 | 262,105 | ||||
FNMA, 3.50%, 3/1/34 | 329,299 | 349,842 | ||||
FNMA, 5.00%, 4/1/35 | 305,087 | 348,823 | ||||
FNMA, 4.50%, 9/1/35 | 139,897 | 153,793 | ||||
FNMA, 5.00%, 2/1/36 | 194,679 | 222,683 | ||||
FNMA, 5.50%, 4/1/36 | 70,945 | 81,226 | ||||
FNMA, 5.50%, 5/1/36 | 137,868 | 157,862 | ||||
FNMA, 5.00%, 11/1/36 | 514,835 | 589,092 | ||||
FNMA, 5.50%, 2/1/37 | 34,921 | 39,931 | ||||
FNMA, 6.00%, 7/1/37 | 260,943 | 300,351 | ||||
FNMA, 6.50%, 8/1/37 | 21,651 | 25,030 | ||||
FNMA, 5.50%, 7/1/39 | 229,469 | 262,784 | ||||
FNMA, 5.00%, 4/1/40 | 571,488 | 654,157 | ||||
FNMA, 5.00%, 6/1/40 | 446,053 | 509,382 |
21
Shares/ Principal Amount | Value | |||||
FNMA, 4.50%, 8/1/40 | $ | 712,796 | $ | 793,121 | ||
FNMA, 4.50%, 9/1/40 | 1,440,832 | 1,603,254 | ||||
FNMA, 3.50%, 1/1/41 | 902,474 | 975,284 | ||||
FNMA, 4.00%, 1/1/41 | 698,664 | 782,919 | ||||
FNMA, 4.00%, 5/1/41 | 790,385 | 865,824 | ||||
FNMA, 4.50%, 7/1/41 | 273,597 | 304,288 | ||||
FNMA, 4.50%, 9/1/41 | 296,796 | 330,165 | ||||
FNMA, 4.50%, 9/1/41 | 1,284,325 | 1,428,963 | ||||
FNMA, 4.00%, 12/1/41 | 724,272 | 802,283 | ||||
FNMA, 4.00%, 1/1/42 | 587,866 | 644,045 | ||||
FNMA, 3.50%, 5/1/42 | 1,247,404 | 1,351,767 | ||||
FNMA, 3.50%, 6/1/42 | 417,051 | 454,566 | ||||
FNMA, 6.50%, 8/1/47 | 7,774 | 8,372 | ||||
FNMA, 6.50%, 9/1/47 | 15,741 | 16,911 | ||||
FNMA, 6.50%, 9/1/47 | 756 | 813 | ||||
FNMA, 6.50%, 9/1/47 | 8,276 | 8,888 | ||||
FNMA, 3.50%, 3/1/48 | 1,557,968 | 1,657,465 | ||||
FNMA, 4.00%, 6/1/48 | 4,805,694 | 5,124,632 | ||||
FNMA, 4.50%, 7/1/48 | 1,261,733 | 1,366,103 | ||||
FNMA, 4.00%, 8/1/48 | 3,643,408 | 3,889,448 | ||||
FNMA, 3.50%, 4/1/49 | 1,168,059 | 1,235,665 | ||||
FNMA, 4.00%, 6/1/49 | 6,601,315 | 7,037,408 | ||||
FNMA, 3.50%, 9/1/49 | 2,257,633 | 2,387,585 | ||||
GNMA, 7.00%, 4/20/26 | 21,484 | 24,324 | ||||
GNMA, 7.50%, 8/15/26 | 13,534 | 15,397 | ||||
GNMA, 7.00%, 2/15/28 | 4,634 | 4,651 | ||||
GNMA, 7.50%, 2/15/28 | 4,322 | 4,340 | ||||
GNMA, 7.00%, 12/15/28 | 6,308 | 6,332 | ||||
GNMA, 7.00%, 5/15/31 | 30,848 | 36,892 | ||||
GNMA, 5.50%, 11/15/32 | 85,529 | 96,300 | ||||
GNMA, 4.50%, 5/20/41 | 282,911 | 311,847 | ||||
GNMA, 4.50%, 6/15/41 | 328,482 | 369,348 | ||||
GNMA, 3.50%, 6/20/42 | 620,349 | 680,228 | ||||
GNMA, 4.50%, 11/20/43 | 375,449 | 412,889 | ||||
GNMA, 3.50%, 3/15/46 | 2,839,108 | 3,028,137 | ||||
GNMA, 2.50%, 7/20/46 | 670,397 | 711,398 | ||||
44,977,924 | ||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $46,639,064) | 48,724,629 | |||||
ASSET-BACKED SECURITIES — 1.8% | ||||||
BRE Grand Islander Timeshare Issuer LLC, Series 2017-1A, Class A SEQ, 2.94%, 5/25/29(4) | 511,815 | 494,586 | ||||
Goodgreen, Series 2018-1A, Class A, VRN, 3.93%, 10/15/53(4) | 605,733 | 633,023 | ||||
Hilton Grand Vacations Trust, Series 2014-AA, Class A SEQ, 1.77%, 11/25/26(4) | 154,536 | 152,997 | ||||
Hilton Grand Vacations Trust, Series 2017-AA, Class A SEQ, 2.66%, 12/26/28(4) | 220,163 | 212,056 | ||||
Hilton Grand Vacations Trust, Series 2018-AA, Class B, 3.70%, 2/25/32(4) | 1,200,329 | 1,137,850 |
22
Shares/ Principal Amount | Value | |||||
Invitation Homes Trust, Series 2018-SFR1, Class A, VRN, 1.45%, (1-month LIBOR plus 0.70%), 3/17/37(4) | $ | 1,421,842 | $ | 1,372,679 | ||
Invitation Homes Trust, Series 2018-SFR2, Class B, VRN, 1.89%, (1-month LIBOR plus 1.08%), 6/17/37(4) | 1,225,000 | 1,161,944 | ||||
Invitation Homes Trust, Series 2018-SFR3, Class A, VRN, 1.75%, (1-month LIBOR plus 1.00%), 7/17/37(4) | 1,773,313 | 1,734,890 | ||||
MVW Owner Trust, Series 2014-1A, Class A SEQ, 2.25%, 9/22/31(4) | 114,097 | 111,954 | ||||
MVW Owner Trust, Series 2015-1A, Class A SEQ, 2.52%, 12/20/32(4) | 117,705 | 114,873 | ||||
MVW Owner Trust, Series 2016-1A, Class A SEQ, 2.25%, 12/20/33(4) | 179,906 | 175,833 | ||||
MVW Owner Trust, Series 2017-1A, Class A SEQ, 2.42%, 12/20/34(4) | 418,599 | 403,010 | ||||
MVW Owner Trust, Series 2018-1A, Class A SEQ, 3.45%, 1/21/36(4) | 577,450 | 562,873 | ||||
Progress Residential Trust, Series 2018-SFR3, Class A SEQ, 3.88%, 10/17/35(4) | 999,372 | 1,043,017 | ||||
Progress Residential Trust, Series 2018-SFR3, Class B, 4.08%, 10/17/35(4) | 2,550,000 | 2,589,901 | ||||
Progress Residential Trust, Series 2019-SFR3, Class A SEQ, 2.27%, 9/17/36(4) | 1,150,000 | 1,157,284 | ||||
Sierra Timeshare Conduit Receivables Funding LLC, Series 2017-1A, Class A SEQ, 2.91%, 3/20/34(4) | 103,764 | 100,879 | ||||
Sierra Timeshare Receivables Funding LLC, Series 2018-2A, Class A SEQ, 3.50%, 6/20/35(4) | 413,783 | 405,163 | ||||
Sierra Timeshare Receivables Funding LLC, Series 2019-2A, Class A SEQ, 2.59%, 5/20/36(4) | 661,636 | 641,143 | ||||
Towd Point Mortgage Trust, Series 2017-6, Class A1, VRN, 2.75%, 10/25/57(4) | 394,889 | 399,245 | ||||
Towd Point Mortgage Trust, Series 2018-1, Class A1 SEQ, VRN, 3.00%, 1/25/58(4) | 326,438 | 333,384 | ||||
Towd Point Mortgage Trust, Series 2018-4, Class A1, VRN, 3.00%, 6/25/58(4) | 287,332 | 294,924 | ||||
US Airways Pass-Through Trust, Series 2013-1, Class A, 3.95%, 5/15/27 | 110,901 | 90,534 | ||||
VSE VOI Mortgage LLC, Series 2016-A, Class A SEQ, 2.54%, 7/20/33(4) | 272,805 | 265,193 | ||||
VSE VOI Mortgage LLC, Series 2018-A, Class B, 3.72%, 2/20/36(4) | 543,186 | 525,487 | ||||
TOTAL ASSET-BACKED SECURITIES (Cost $16,322,921) | 16,114,722 | |||||
COLLATERALIZED MORTGAGE OBLIGATIONS — 1.8% | ||||||
Private Sponsor Collateralized Mortgage Obligations — 1.2% | ||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 11,725 | 12,288 | ||||
Adjustable Rate Mortgage Trust, Series 2004-4, Class 4A1, VRN, 3.93%, 3/25/35 | 158,050 | 149,674 | ||||
Agate Bay Mortgage Loan Trust, Series 2016-3, Class A3, VRN, 3.50%, 8/25/46(4) | 266,931 | 272,654 | ||||
Banc of America Mortgage Trust, Series 2004-E, Class 2A6 SEQ, VRN, 4.78%, 6/25/34 | 107,412 | 99,375 | ||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A4, VRN, 3.67%, 8/25/34 | 136,427 | 124,324 | ||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A5, VRN, 3.77%, 8/25/34 | 283,644 | 263,275 |
23
Shares/ Principal Amount | Value | |||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 4.62%, 8/25/35 | $ | 37,002 | $ | 35,307 | ||
Citigroup Mortgage Loan Trust, Inc., Series 2005-6, Class A2, VRN, 2.29%, (1-year H15T1Y plus 2.15%), 9/25/35 | 70,983 | 67,458 | ||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35 | 2,776 | 2,626 | ||||
Credit Suisse Mortgage Trust, Series 2017-HL2, Class A3 SEQ, VRN, 3.50%, 10/25/47(4) | 434,220 | 439,416 | ||||
Credit Suisse Mortgage Trust, Series 2019-AFC1, Class A1, VRN, 2.57%, 7/25/49(4) | 514,213 | 515,098 | ||||
Credit Suisse Mortgage Trust, Series 2020-AFC1, Class A1, VRN, 2.24%, 2/25/50(4) | 458,947 | 438,434 | ||||
First Horizon Alternative Mortgage Securities Trust, Series 2004-AA4, Class A1, VRN, 3.57%, 10/25/34 | 167,054 | 157,766 | ||||
First Horizon Mortgage Pass-Through Trust, Series 2005-AR3, Class 4A1, VRN, 5.01%, 8/25/35 | 32,731 | 32,170 | ||||
Galton Funding Mortgage Trust, Series 2020-H1, Class A1, VRN, 2.31%, 1/25/60(4) | 810,527 | 807,373 | ||||
GSR Mortgage Loan Trust, Series 2004-7, Class 3A1, VRN, 4.04%, 6/25/34 | 43,355 | 40,468 | ||||
GSR Mortgage Loan Trust, Series 2004-AR5, Class 3A3, VRN, 4.27%, 5/25/34 | 71,788 | 66,297 | ||||
GSR Mortgage Loan Trust, Series 2005-AR1, Class 3A1, VRN, 4.00%, 1/25/35 | 107,340 | 99,439 | ||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 2A1, VRN, 4.09%, 9/25/35 | 100,027 | 96,647 | ||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 4A5, VRN, 4.51%, 9/25/35 | 130,526 | 125,571 | ||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 1A1, VRN, 4.06%, 7/25/35 | 30,036 | 29,483 | ||||
JPMorgan Mortgage Trust, Series 2005-A4, Class 2A1, VRN, 4.04%, 7/25/35 | 17,643 | 16,588 | ||||
JPMorgan Mortgage Trust, Series 2006-A3, Class 7A1, VRN, 4.01%, 4/25/35 | 85,202 | 82,555 | ||||
JPMorgan Mortgage Trust, Series 2013-1, Class 2A2 SEQ, VRN, 2.50%, 3/25/43(4) | 44,623 | 45,769 | ||||
JPMorgan Mortgage Trust, Series 2017-1, Class A2, VRN, 3.50%, 1/25/47(4) | 590,293 | 611,050 | ||||
JPMorgan Mortgage Trust, Series 2018-6, Class 1A4 SEQ, VRN, 3.50%, 12/25/48(4) | 319,551 | 321,172 | ||||
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 3A7, VRN, 4.68%, 11/21/34 | 135,089 | 131,326 | ||||
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 2A, VRN, 3.73%, 11/25/35 | 77,536 | 70,555 | ||||
Merrill Lynch Mortgage Investors Trust, Series 2005-A2, Class A1, VRN, 3.73%, 2/25/35 | 124,296 | 113,777 | ||||
New Residential Mortgage Loan Trust, Series 2017-1A, Class A1, VRN, 4.00%, 2/25/57(4) | 960,374 | 1,012,257 | ||||
New Residential Mortgage Loan Trust, Series 2017-2A, Class A3, VRN, 4.00%, 3/25/57(4) | 599,619 | 636,061 | ||||
New Residential Mortgage Loan Trust, Series 2017-5A, Class A1, VRN, 1.99%, (1-month LIBOR plus 1.50%), 6/25/57(4) | 332,085 | 325,586 | ||||
Residential Mortgage Loan Trust, Series 2019-2, Class A1 SEQ, VRN, 2.91%, 5/25/59(4) | 794,050 | 783,377 | ||||
Sequoia Mortgage Trust, Series 2017-CH1, Class A1, VRN, 4.00%, 8/25/47(4) | 458,402 | 469,537 |
24
Shares/ Principal Amount | Value | |||||
Sequoia Mortgage Trust, Series 2017-CH2, Class A10 SEQ, VRN, 4.00%, 12/25/47(4) | $ | 322,407 | $ | 327,246 | ||
Sequoia Mortgage Trust, Series 2018-CH2, Class A12 SEQ, VRN, 4.00%, 6/25/48(4) | 645,543 | 657,647 | ||||
Sofi Mortgage Trust, Series 2016-1A, Class 1A4 SEQ, VRN, 3.00%, 11/25/46(4) | 237,213 | 237,513 | ||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-8, Class 2A1, VRN, 3.78%, 7/25/34 | 62,016 | 59,000 | ||||
Thornburg Mortgage Securities Trust, Series 2004-3, Class A, VRN, 1.23%, (1-month LIBOR plus 0.74%), 9/25/34 | 428,987 | 381,590 | ||||
WaMu Mortgage Pass-Through Certificates, Series 2005-AR3, Class A1, VRN, 3.62%, 3/25/35 | 227,085 | 213,085 | ||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR7, Class 1A1, VRN, 4.37%, 5/25/35 | 79,749 | 79,670 | ||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-AR10, Class 1A1, VRN, 4.26%, 1/25/38 | 41,909 | 35,672 | ||||
10,486,176 | ||||||
U.S. Government Agency Collateralized Mortgage Obligations — 0.6% | ||||||
FHLMC, Series 2013-DN2, Class M2, VRN, 5.20%, (1-month LIBOR plus 4.25%), 11/25/23 | 707,369 | 612,944 | ||||
FHLMC, Series 2016-DNA3, Class M3, VRN, 5.95%, (1-month LIBOR plus 5.00%), 12/25/28 | 959,465 | 963,012 | ||||
FHLMC, Series 2016-DNA4, Class M2, VRN, 1.79%, (1-month LIBOR plus 1.30%), 3/25/29 | 7,200 | 7,114 | ||||
FHLMC, Series 2018-DNA1, Class M1, VRN, 0.94%, (1-month LIBOR plus 0.45%), 7/25/30 | 17,164 | 17,146 | ||||
FHLMC, Series 2019-DNA3, Class M2, VRN, 2.54%, (1-month LIBOR plus 2.05%), 7/25/49(4) | 582,742 | 505,234 | ||||
FNMA, Series 2014-C02, Class 1M2, VRN, 3.09%, (1-month LIBOR plus 2.60%), 5/25/24 | 109,164 | 83,502 | ||||
FNMA, Series 2014-C02, Class 2M2, VRN, 3.09%, (1-month LIBOR plus 2.60%), 5/25/24 | 413,509 | 332,029 | ||||
FNMA, Series 2015-C03, Class 1M2, VRN, 5.49%, (1-month LIBOR plus 5.00%), 7/25/25 | 1,276,903 | 964,195 | ||||
FNMA, Series 2015-C04, Class 1M2, VRN, 6.19%, (1-month LIBOR plus 5.70%), 4/25/28 | 421,639 | 430,963 | ||||
FNMA, Series 2016-C04, Class 1M2, VRN, 4.74%, (1-month LIBOR plus 4.25%), 1/25/29 | 723,260 | 717,696 | ||||
FNMA, Series 2016-C06, Class 1M2, VRN, 4.74%, (1-month LIBOR plus 4.25%), 4/25/29 | 350,000 | 345,551 | ||||
FNMA, Series 2018-C01, Class 1M1, VRN, 1.09%, (1-month LIBOR plus 0.60%), 7/25/30 | 329,168 | 328,425 | ||||
5,307,811 | ||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $16,352,118) | 15,793,987 | |||||
COLLATERALIZED LOAN OBLIGATIONS — 1.3% | ||||||
Anchorage Credit Opportunities CLO 1 Ltd., Series 2019-1A, Class A1, VRN, 3.69%, (3-month LIBOR plus 1.95%), 1/20/32(4) | 700,000 | 699,982 | ||||
Ares XLI CLO Ltd., Series 2016-41A, Class AR, VRN, 2.42%, (3-month LIBOR plus 1.20%), 1/15/29(4) | 375,000 | 364,707 | ||||
Bean Creek CLO Ltd., Series 2015-1A, Class AR, VRN, 2.16%, (3-month LIBOR plus 1.02%), 4/20/31(4) | 750,000 | 693,116 | ||||
CBAM Ltd., Series 2019-9A, Class A, VRN, 2.50%, (3-month LIBOR plus 1.28%), 2/12/30(4) | 650,000 | 619,755 | ||||
CIFC Funding Ltd., Series 2013-3RA, Class A1, VRN, 2.00%, (3-month LIBOR plus 0.98%), 4/24/31(4) | 450,000 | 433,897 |
25
Shares/ Principal Amount | Value | |||||
Dryden 64 CLO Ltd., Series 2018-64A, Class A, VRN, 2.11%, (3-month LIBOR plus 0.97%), 4/18/31(4) | $ | 550,000 | $ | 511,382 | ||
Elmwood CLO IV Ltd., Series 2020-1A, Class A, VRN, 2.42%, (3-month LIBOR plus 1.24%), 4/15/33(4) | 1,150,000 | 1,095,917 | ||||
Goldentree Loan Opportunities X Ltd., Series 2015-10A, Class AR, VRN, 2.26%, (3-month LIBOR plus 1.12%), 7/20/31(4) | 1,000,000 | 964,830 | ||||
KKR CLO Ltd., Series 2022A, Class A, VRN, 2.29%, (3-month LIBOR plus 1.15%), 7/20/31(4) | 500,000 | 465,343 | ||||
Madison Park Funding XXII Ltd., Series 2016-22A, Class A1R, VRN, 2.48%, (3-month LIBOR plus 1.26%), 1/15/33(4) | 1,000,000 | 980,000 | ||||
Magnetite VIII Ltd., Series 2014-8A, Class AR2, VRN, 2.20%, (3-month LIBOR plus 0.98%), 4/15/31(4) | 750,000 | 710,681 | ||||
Octagon Investment Partners 45 Ltd., Series 2019-1A, Class A, VRN, 2.55%, (3-month LIBOR plus 1.33%), 10/15/32(4) | 1,225,000 | 1,178,203 | ||||
Sounds Point CLO IV-R Ltd., Series 2013-3RA, Class A, VRN, 2.29%, (3-month LIBOR plus 1.15%), 4/18/31(4) | 885,000 | 818,007 | ||||
Symphony CLO XXII Ltd., Series 2020-22A, Class A1A, VRN, 2.29%, (3-month LIBOR plus 1.29%), 4/18/33(4) | 500,000 | 466,617 | ||||
Treman Park CLO Ltd., Series 2015-1A, Class ARR, VRN, 2.21%, (3-month LIBOR plus 1.07%), 10/20/28(4) | 750,000 | 715,315 | ||||
Voya CLO Ltd., Series 2013-2A, Class A1R, VRN, 1.96%, (3-month LIBOR plus 0.97%), 4/25/31(4) | 900,000 | 869,857 | ||||
TOTAL COLLATERALIZED LOAN OBLIGATIONS (Cost $12,091,429) | 11,587,609 | |||||
MUNICIPAL SECURITIES — 1.0% | ||||||
Bay Area Toll Authority Rev., 6.92%, 4/1/40 | 295,000 | 448,482 | ||||
California State University Rev., 2.98%, 11/1/51 | 500,000 | 498,250 | ||||
Foothill-Eastern Transportation Corridor Agency Rev., 4.09%, 1/15/49 | 275,000 | 277,233 | ||||
Grand Parkway Transportation Corp. Rev., 3.24%, 10/1/52 | 225,000 | 226,204 | ||||
Houston GO, 3.96%, 3/1/47 | 120,000 | 137,072 | ||||
Los Angeles Department of Water & Power Rev., 5.00%, 7/1/49 | 465,000 | 558,753 | ||||
Metropolitan Transportation Authority Rev., 6.69%, 11/15/40 | 105,000 | 127,240 | ||||
Metropolitan Transportation Authority Rev., 6.81%, 11/15/40 | 60,000 | 72,937 | ||||
Metropolitan Water Reclamation District of Greater Chicago GO, 5.72%, 12/1/38 | 650,000 | 876,265 | ||||
Missouri Highway & Transportation Commission Rev., 5.45%, 5/1/33 | 130,000 | 165,183 | ||||
New Jersey Turnpike Authority Rev., 7.41%, 1/1/40 | 200,000 | 314,828 | ||||
New Jersey Turnpike Authority Rev., 7.10%, 1/1/41 | 95,000 | 145,450 | ||||
New York City GO, 6.27%, 12/1/37 | 95,000 | 133,841 | ||||
New York City Water & Sewer System Rev., 5.00%, 6/15/48 | 350,000 | 401,492 | ||||
New York City Water & Sewer System Rev., 5.00%, 6/15/49 | 280,000 | 333,407 | ||||
Ohio Turnpike & Infrastructure Commission Rev., 3.22%, 2/15/48 | 330,000 | 332,713 | ||||
Ohio Water Development Authority Water Pollution Control Loan Fund Rev., 5.00%, 6/1/30 | 55,000 | 71,923 | ||||
Ohio Water Development Authority Water Pollution Control Loan Fund Rev., 5.00%, 12/1/30 | 50,000 | 65,445 | ||||
Ohio Water Development Authority Water Pollution Control Loan Fund Rev., 4.88%, 12/1/34 | 110,000 | 122,783 | ||||
Ohio Water Development Authority Water Pollution Control Loan Fund Rev., 5.00%, 12/1/50 | 225,000 | 276,469 | ||||
Port Authority of New York & New Jersey Rev., 4.93%, 10/1/51 | 50,000 | 63,977 |
26
Shares/ Principal Amount | Value | |||||
Regents of the University of California Medical Center Pooled Rev., 3.26%, 5/15/60 | $ | 185,000 | $ | 182,290 | ||
Rutgers The State University of New Jersey Rev., 5.67%, 5/1/40 | 300,000 | 396,657 | ||||
Sacramento Municipal Utility District Rev., 5.00%, 8/15/50(3) | 565,000 | 690,300 | ||||
Sacramento Municipal Utility District Rev., 6.16%, 5/15/36 | 210,000 | 284,754 | ||||
Salt River Project Agricultural Improvement & Power District Rev., 5.00%, 1/1/47 | 190,000 | 230,723 | ||||
San Francisco Public Utilities Commission Water Rev., 6.00%, 11/1/40 | 105,000 | 144,258 | ||||
Santa Clara Valley Transportation Authority Rev., 5.88%, 4/1/32 | 120,000 | 150,484 | ||||
State of California GO, 4.60%, 4/1/38 | 355,000 | 398,768 | ||||
State of California GO, 7.55%, 4/1/39 | 100,000 | 168,114 | ||||
State of California GO, 7.30%, 10/1/39 | 160,000 | 254,248 | ||||
State of California GO, 7.60%, 11/1/40 | 80,000 | 138,234 | ||||
State of Washington GO, 5.14%, 8/1/40 | 20,000 | 27,260 | ||||
University of Texas System (The) Rev., 5.00%, 8/15/40 | 215,000 | 319,238 | ||||
TOTAL MUNICIPAL SECURITIES (Cost $8,121,803) | 9,035,275 | |||||
SOVEREIGN GOVERNMENTS AND AGENCIES — 0.3% | ||||||
Chile† | ||||||
Chile Government International Bond, 3.25%, 9/14/21 | 100,000 | 103,441 | ||||
Chile Government International Bond, 3.625%, 10/30/42 | 100,000 | 105,000 | ||||
208,441 | ||||||
Colombia — 0.1% | ||||||
Colombia Government International Bond, 4.375%, 7/12/21 | 310,000 | 315,614 | ||||
Mexico — 0.1% | ||||||
Mexico Government International Bond, 4.15%, 3/28/27 | 600,000 | 602,250 | ||||
Peru† | ||||||
Peruvian Government International Bond, 5.625%, 11/18/50 | 170,000 | 255,000 | ||||
Philippines — 0.1% | ||||||
Philippine Government International Bond, 4.00%, 1/15/21 | 300,000 | 304,875 | ||||
Philippine Government International Bond, 6.375%, 10/23/34 | 150,000 | 214,716 | ||||
519,591 | ||||||
Poland† | ||||||
Republic of Poland Government International Bond, 5.125%, 4/21/21 | 140,000 | 145,465 | ||||
Republic of Poland Government International Bond, 3.00%, 3/17/23 | 140,000 | 146,852 | ||||
292,317 | ||||||
South Africa† | ||||||
Republic of South Africa Government International Bond, 4.67%, 1/17/24 | 110,000 | 108,763 | ||||
Uruguay† | ||||||
Uruguay Government International Bond, 4.125%, 11/20/45 | 120,000 | 124,051 | ||||
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES (Cost $2,272,529) | 2,426,027 | |||||
COMMERCIAL MORTGAGE-BACKED SECURITIES — 0.2% | ||||||
Commercial Mortgage Pass-Through Certificates, Series 2014-UBS5, Class AM, VRN, 4.19%, 9/10/47 | 900,000 | 934,566 |
27
Shares/ Principal Amount | Value | |||||
GS Mortgage Securities Trust, Series 2016-GS2, Class B, VRN, 3.76%, 5/10/49 | $ | 1,000,000 | $ | 965,278 | ||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $1,943,079) | 1,899,844 | |||||
U.S. GOVERNMENT AGENCY SECURITIES — 0.1% | ||||||
FNMA, 2.125%, 4/24/26 | 270,000 | 292,690 | ||||
FNMA, 6.625%, 11/15/30 | 600,000 | 929,367 | ||||
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $1,004,207) | 1,222,057 | |||||
TEMPORARY CASH INVESTMENTS — 5.1% | ||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class (Cost $45,591,163) | 45,591,163 | 45,591,163 | ||||
TOTAL INVESTMENT SECURITIES — 100.3% (Cost $801,150,867) | 896,709,979 | |||||
OTHER ASSETS AND LIABILITIES — (0.3)% | (2,745,671 | ) | ||||
TOTAL NET ASSETS — 100.0% | $ | 893,964,308 |
FUTURES CONTRACTS PURCHASED | |||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | ||||||
S&P 500 E-Mini | 135 | June 2020 | $ | 6,750 | $ | 19,591,200 | $ | 1,993,537 | |||
U.S. Treasury 10-Year Notes | 6 | June 2020 | $ | 600,000 | 834,375 | 549 | |||||
U.S. Treasury 2-Year Notes | 53 | June 2020 | $ | 10,600,000 | 11,682,773 | 104,235 | |||||
U.S. Treasury 5-Year Notes | 4 | June 2020 | $ | 400,000 | 501,938 | 85 | |||||
U.S. Treasury Long Bonds | 6 | June 2020 | $ | 600,000 | 1,086,187 | 549 | |||||
U.S. Treasury Ultra Bonds | 4 | June 2020 | $ | 400,000 | 899,125 | (4,009 | ) | ||||
$ | 34,595,598 | $ | 2,094,946 |
CENTRALLY CLEARED CREDIT DEFAULT SWAP AGREEMENTS | |||||||||||||||
Reference Entity | Type | Fixed Rate Received (Paid) Quarterly | Termination Date | Notional Amount | Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | Value^ | ||||||||
Markit CDX North America High Yield Index Series 33 | Buy | (5.00)% | 12/20/24 | $ | 11,595,000 | $ | 315,035 | $ | 296,220 | $ | 611,255 |
^The value for credit default swap agreements serves as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability or profit at the period end. Increasing values in absolute terms when compared to the notional amount of the credit default swap agreement represent a deterioration of the referenced entity's credit soundness and an increased likelihood or risk of a credit event occurring as defined in the agreement.
CENTRALLY CLEARED TOTAL RETURN SWAP AGREEMENTS | |||||||||||||||
Floating Rate Index | Pay/Receive Floating Rate Index at Termination | Fixed Rate | Termination Date | Notional Amount | Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | Value | ||||||||
CPURNSA | Receive | 1.78% | 8/5/24 | $ | 3,500,000 | $ | (450 | ) | $ | (163,107 | ) | $ | (163,557 | ) |
28
NOTES TO SCHEDULE OF INVESTMENTS | ||
CDX | - | Credit Derivatives Indexes |
CPURNSA | - | U.S. Consumer Price Index Urban Consumers Not Seasonally Adjusted Index |
FHLMC | - | Federal Home Loan Mortgage Corporation |
FNMA | - | Federal National Mortgage Association |
GNMA | - | Government National Mortgage Association |
GO | - | General Obligation |
H15T1Y | - | Constant Maturity U.S. Treasury Note Yield Curve Rate Index |
LIBOR | - | London Interbank Offered Rate |
MTN | - | Medium Term Note |
SEQ | - | Sequential Payer |
VRN | - | Variable Rate Note. The rate adjusts periodically based upon the terms set forth in the security’s offering documents. The rate shown is effective at the period end and the reference rate and spread, if any, is indicated. The security's effective maturity date may be shorter than the final maturity date shown. |
† | 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 collateral requirements on futures contracts and/or swap agreements. At the period end, the aggregate value of securities pledged was $1,190,303. |
(3) | When-issued security. The issue price and yield are fixed on the date of the commitment, but payment and delivery are scheduled for a future date. |
(4) | Security 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 $47,692,374, which represented 5.3% of total net assets. |
See Notes to Financial Statements.
29
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $801,150,867) | $ | 896,709,979 | |
Cash | 35,432 | ||
Deposits with broker for futures contracts | 1,620,000 | ||
Receivable for investments sold | 79,480 | ||
Receivable for capital shares sold | 628,699 | ||
Interest and dividends receivable | 2,225,329 | ||
$ | 901,298,919 | ||
Liabilities | |||
Payable for investments purchased | 6,158,773 | ||
Payable for capital shares redeemed | 287,610 | ||
Payable for variation margin on futures contracts | 263,628 | ||
Payable for variation margin on swap agreements | 9,137 | ||
Accrued management fees | 615,463 | ||
7,334,611 | |||
Net Assets | $ | 893,964,308 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 758,885,803 | |
Distributable earnings | 135,078,505 | ||
$ | 893,964,308 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $794,576,705 | 43,154,939 | $18.41 | |
I Class, $0.01 Par Value | $96,412,832 | 5,232,304 | $18.43 | |
R5 Class, $0.01 Par Value | $2,974,771 | 161,462 | $18.42 |
See Notes to Financial Statements.
30
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Interest | $ | 5,239,257 | |
Dividends | 4,525,534 | ||
9,764,791 | |||
Expenses: | |||
Management fees | 3,974,565 | ||
Directors' fees and expenses | 14,384 | ||
Other expenses | 2,547 | ||
3,991,496 | |||
Net investment income (loss) | 5,773,295 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 37,958,014 | ||
Futures contract transactions | (2,083,773 | ) | |
Swap agreement transactions | 2,032,423 | ||
37,906,664 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (50,086,621 | ) | |
Futures contracts | 2,085,425 | ||
Swap agreements | 165,841 | ||
(47,835,355 | ) | ||
Net realized and unrealized gain (loss) | (9,928,691 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (4,155,396 | ) |
See Notes to Financial Statements.
31
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,773,295 | $ | 14,020,828 | ||
Net realized gain (loss) | 37,906,664 | 32,088,158 | ||||
Change in net unrealized appreciation (depreciation) | (47,835,355 | ) | 52,232,418 | |||
Net increase (decrease) in net assets resulting from operations | (4,155,396 | ) | 98,341,404 | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (34,788,666 | ) | (56,693,821 | ) | ||
I Class | (2,987,701 | ) | (4,432,562 | ) | ||
R5 Class | (130,966 | ) | (189,961 | ) | ||
Decrease in net assets from distributions | (37,907,333 | ) | (61,316,344 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 25,776,085 | 10,455,267 | ||||
Net increase (decrease) in net assets | (16,286,644 | ) | 47,480,327 | |||
Net Assets | ||||||
Beginning of period | 910,250,952 | 862,770,625 | ||||
End of period | $ | 893,964,308 | $ | 910,250,952 |
See Notes to Financial Statements.
32
Notes to Financial Statements |
APRIL 30, 2020 (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 and R5 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.
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, bank loan obligations, 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. Collateralized loan obligations are valued based on discounted cash flow models that consider trade and economic data, prepayment assumptions and default projections.
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 exchange. Swap agreements are valued at an evaluated mean as provided by independent pricing services or independent brokers.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
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The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. 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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. 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 collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
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3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., 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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. 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 non-Rule 12b-1 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, 2020 are as follows:
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 $23,105,195 and $6,191,483, respectively. The effect of interfund transactions on the Statement of Operations was $479,306 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the period ended April 30, 2020 totaled $717,873,225, of which $230,690,069 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the period ended April 30, 2020 totaled $741,269,538, of which $237,975,432 represented U.S. Treasury and Government Agency obligations.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 530,000,000 | 530,000,000 | ||||||||
Sold | 1,965,051 | $ | 36,892,294 | 3,650,691 | $ | 67,082,586 | ||||
Issued in reinvestment of distributions | 1,781,100 | 33,927,323 | 3,226,922 | 55,463,226 | ||||||
Redeemed | (4,140,748 | ) | (76,413,788 | ) | (6,358,619 | ) | (116,495,515 | ) | ||
(394,597 | ) | (5,594,171 | ) | 518,994 | 6,050,297 | |||||
I Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 2,074,149 | 38,873,483 | 852,801 | 15,760,666 | ||||||
Issued in reinvestment of distributions | 156,887 | 2,986,572 | 257,104 | 4,432,356 | ||||||
Redeemed | (574,912 | ) | (10,553,440 | ) | (878,313 | ) | (16,141,605 | ) | ||
1,656,124 | 31,306,615 | 231,592 | 4,051,417 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 9,148 | 169,833 | 12,932 | 239,892 | ||||||
Issued in reinvestment of distributions | 6,874 | 130,966 | 11,020 | 189,961 | ||||||
Redeemed | (13,056 | ) | (237,158 | ) | (4,163 | ) | (76,300 | ) | ||
2,966 | 63,641 | 19,789 | 353,553 | |||||||
Net increase (decrease) | 1,264,493 | $ | 25,776,085 | 770,375 | $ | 10,455,267 |
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.
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The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 508,691,147 | — | — | ||||
U.S. Treasury Securities | — | $ | 141,211,919 | — | ||||
Corporate Bonds | — | 94,411,600 | — | |||||
U.S. Government Agency Mortgage-Backed Securities | — | 48,724,629 | — | |||||
Asset-Backed Securities | — | 16,114,722 | — | |||||
Collateralized Mortgage Obligations | — | 15,793,987 | — | |||||
Collateralized Loan Obligations | — | 11,587,609 | — | |||||
Municipal Securities | — | 9,035,275 | — | |||||
Sovereign Governments and Agencies | — | 2,426,027 | — | |||||
Commercial Mortgage-Backed Securities | — | 1,899,844 | — | |||||
U.S. Government Agency Securities | — | 1,222,057 | — | |||||
Temporary Cash Investments | 45,591,163 | — | — | |||||
$ | 554,282,310 | $ | 342,427,669 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 2,098,955 | — | — | ||||
Swap Agreements | — | $ | 611,255 | — | ||||
$ | 2,098,955 | $ | 611,255 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 4,009 | — | — | ||||
Swap Agreements | — | $ | 163,557 | — | ||||
$ | 4,009 | $ | 163,557 | — |
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. The buyer/seller of credit protection against a security or basket of securities may pay/receive an up-front or periodic payment to compensate for/against potential default events. 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. The fund's average notional amount held during the period was $15,670,000.
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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 notional exposure to equity price risk derivative instruments held during the period was $5,908 futures contracts purchased.
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 notional exposure to interest rate risk derivative instruments held during the period was $14,233,333 futures contracts purchased.
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 $3,500,000.
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Value of Derivative Instruments as of April 30, 2020
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* | $ | 4,116 | ||
Equity Price Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | 260,550 | |||
Interest Rate Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | 3,078 | |||
Other Contracts | Receivable for variation margin on swap agreements* | — | Payable for variation margin on swap agreements* | 5,021 | |||
— | $ | 272,765 |
*Included in the unrealized appreciation (depreciation) on centrally cleared swap agreements or futures contracts, as applicable, as reported in the Schedule of Investments.
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2020
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 | $ | 2,032,423 | Change in net unrealized appreciation (depreciation) on swap agreements | $ | 296,220 | ||
Equity Price Risk | Net realized gain (loss) on futures contract transactions | (2,465,931 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | 1,915,814 | |||
Interest Rate Risk | Net realized gain (loss) on futures contract transactions | 382,158 | Change in net unrealized appreciation (depreciation) on futures contracts | 169,611 | ||||
Other Contracts | Net realized gain (loss) on swap agreement transactions | — | Change in net unrealized appreciation (depreciation) on swap agreements | (130,379 | ) | |||
$ | (51,350 | ) | $ | 2,251,266 |
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund may invest in instruments that have variable or floating coupon rates based on the London Interbank Offered Rate (LIBOR). LIBOR is a benchmark interest rate intended to be representative of the rate at which certain major international banks lend to one another over short-terms. LIBOR will be phased out by the end of 2021. Uncertainty remains regarding a replacement rate or rates for LIBOR. The transition process may lead to increased volatility or illiquidity in markets for instruments that rely on LIBOR. This could result in a change to the value of such instruments.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
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9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 804,128,155 | |
Gross tax appreciation of investments | $ | 125,263,590 | |
Gross tax depreciation of investments | (32,681,766 | ) | |
Net tax appreciation (depreciation) of investments | $ | 92,581,824 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2020(3) | $19.25 | 0.12 | (0.15) | (0.03) | (0.12) | (0.69) | (0.81) | $18.41 | (0.30)% | 0.90%(4) | 1.27%(4) | 82% | $794,577 | ||
2019 | $18.55 | 0.29 | 1.73 | 2.02 | (0.29) | (1.03) | (1.32) | $19.25 | 11.82% | 0.90% | 1.58% | 101% | $838,309 | ||
2018 | $19.31 | 0.25 | 0.09 | 0.34 | (0.25) | (0.85) | (1.10) | $18.55 | 1.72% | 0.90% | 1.32% | 115% | $798,120 | ||
2017 | $17.39 | 0.26 | 2.10 | 2.36 | (0.28) | (0.16) | (0.44) | $19.31 | 13.78% | 0.91% | 1.44% | 112% | $814,569 | ||
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 | ||
I Class | |||||||||||||||
2020(3) | $19.26 | 0.14 | (0.14) | — | (0.14) | (0.69) | (0.83) | $18.43 | (0.15)% | 0.70%(4) | 1.47%(4) | 82% | $96,413 | ||
2019 | $18.56 | 0.33 | 1.72 | 2.05 | (0.32) | (1.03) | (1.35) | $19.26 | 12.04% | 0.70% | 1.78% | 101% | $68,889 | ||
2018 | $19.32 | 0.29 | 0.09 | 0.38 | (0.29) | (0.85) | (1.14) | $18.56 | 1.92% | 0.70% | 1.52% | 115% | $62,077 | ||
2017 | $17.40 | 0.30 | 2.09 | 2.39 | (0.31) | (0.16) | (0.47) | $19.32 | 13.99% | 0.71% | 1.64% | 112% | $73,385 | ||
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 | ||
R5 Class | |||||||||||||||
2020(3) | $19.26 | 0.14 | (0.15) | (0.01) | (0.14) | (0.69) | (0.83) | $18.42 | (0.21)% | 0.70%(4) | 1.47%(4) | 82% | $2,975 | ||
2019 | $18.56 | 0.33 | 1.72 | 2.05 | (0.32) | (1.03) | (1.35) | $19.26 | 12.04% | 0.70% | 1.78% | 101% | $3,053 | ||
2018 | $19.32 | 0.30 | 0.08 | 0.38 | (0.29) | (0.85) | (1.14) | $18.56 | 1.93% | 0.70% | 1.52% | 115% | $2,574 | ||
2017(5) | $18.18 | 0.17 | 1.14 | 1.31 | (0.17) | — | (0.17) | $19.32 | 7.21% | 0.71%(4) | 1.66%(4) | 112%(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, 2020 (unaudited). |
(4) | Annualized. |
(5) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92356 2006 |
Semiannual Report | |
April 30, 2020 | |
Growth Fund | |
Investor Class (TWCGX) | |
I Class (TWGIX) | |
Y Class (AGYWX) | |
A Class (TCRAX) | |
C Class (TWRCX) | |
R Class (AGWRX) | |
R5 Class (AGWUX) | |
R6 Class (AGRDX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Top Ten Holdings | % of net assets |
Microsoft Corp. | 12.0% |
Amazon.com, Inc. | 9.1% |
Alphabet, Inc., Class A | 8.4% |
Apple, Inc. | 6.8% |
Visa, Inc., Class A | 5.5% |
PayPal Holdings, Inc. | 3.0% |
Facebook, Inc., Class A | 2.6% |
SBA Communications Corp. | 2.4% |
UnitedHealth Group, Inc. | 2.4% |
Union Pacific Corp. | 2.3% |
Top Five Industries | % of net assets |
Software | 15.7% |
Interactive Media and Services | 11.6% |
Internet and Direct Marketing Retail | 9.5% |
IT Services | 9.4% |
Technology Hardware, Storage and Peripherals | 6.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.1% |
Temporary Cash Investments | 0.9% |
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, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,066.90 | $5.04 | 0.98% |
I Class | $1,000 | $1,067.70 | $4.01 | 0.78% |
Y Class | $1,000 | $1,068.60 | $3.24 | 0.63% |
A Class | $1,000 | $1,065.40 | $6.32 | 1.23% |
C Class | $1,000 | $1,061.30 | $10.15 | 1.98% |
R Class | $1,000 | $1,064.30 | $7.60 | 1.48% |
R5 Class | $1,000 | $1,067.60 | $4.01 | 0.78% |
R6 Class | $1,000 | $1,068.40 | $3.24 | 0.63% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.99 | $4.92 | 0.98% |
I Class | $1,000 | $1,020.99 | $3.92 | 0.78% |
Y Class | $1,000 | $1,021.73 | $3.17 | 0.63% |
A Class | $1,000 | $1,018.75 | $6.17 | 1.23% |
C Class | $1,000 | $1,015.02 | $9.92 | 1.98% |
R Class | $1,000 | $1,017.50 | $7.42 | 1.48% |
R5 Class | $1,000 | $1,020.99 | $3.92 | 0.78% |
R6 Class | $1,000 | $1,021.73 | $3.17 | 0.63% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.1% | |||||
Aerospace and Defense — 1.7% | |||||
Lockheed Martin Corp. | 395,898 | $ | 154,028,076 | ||
Auto Components — 1.0% | |||||
Aptiv plc | 1,356,325 | 94,332,404 | |||
Biotechnology — 2.2% | |||||
Biogen, Inc.(1) | 236,125 | 70,088,984 | |||
CRISPR Therapeutics AG(1) | 180,079 | 8,859,887 | |||
Vertex Pharmaceuticals, Inc.(1) | 482,486 | 121,200,483 | |||
200,149,354 | |||||
Capital Markets — 0.5% | |||||
Charles Schwab Corp. (The) | 1,177,318 | 44,408,435 | |||
Consumer Finance — 0.4% | |||||
American Express Co. | 383,344 | 34,980,140 | |||
Electrical Equipment — 1.1% | |||||
Ballard Power Systems, Inc.(1) | 467,853 | 4,753,386 | |||
Rockwell Automation, Inc. | 512,200 | 97,051,656 | |||
101,805,042 | |||||
Electronic Equipment, Instruments and Components — 0.8% | |||||
CDW Corp. | 704,367 | 78,043,864 | |||
Entertainment — 1.8% | |||||
Liberty Media Corp.-Liberty Formula One, Class C(1) | 1,115,449 | 35,906,304 | |||
Take-Two Interactive Software, Inc.(1) | 522,524 | 63,251,530 | |||
Walt Disney Co. (The) | 595,375 | 64,389,806 | |||
163,547,640 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.0% | |||||
Equity Residential | 838,042 | 54,523,012 | |||
SBA Communications Corp. | 772,914 | 224,083,227 | |||
278,606,239 | |||||
Food and Staples Retailing — 0.5% | |||||
Walmart, Inc. | 387,089 | 47,050,668 | |||
Food Products — 1.3% | |||||
Beyond Meat, Inc.(1) | 248,330 | 24,582,187 | |||
Mondelez International, Inc., Class A | 1,800,493 | 92,617,360 | |||
117,199,547 | |||||
Health Care Equipment and Supplies — 4.0% | |||||
Baxter International, Inc. | 1,395,753 | 123,914,951 | |||
Boston Scientific Corp.(1) | 3,314,834 | 124,239,978 | |||
Edwards Lifesciences Corp.(1) | 209,815 | 45,634,763 | |||
Intuitive Surgical, Inc.(1) | 140,941 | 72,003,938 | |||
365,793,630 | |||||
Health Care Providers and Services — 2.7% | |||||
Quest Diagnostics, Inc. | 254,226 | 27,992,825 |
6
Shares | Value | ||||
UnitedHealth Group, Inc. | 758,440 | $ | 221,820,947 | ||
249,813,772 | |||||
Hotels, Restaurants and Leisure — 2.8% | |||||
Chipotle Mexican Grill, Inc.(1) | 82,133 | 72,157,947 | |||
Domino's Pizza, Inc. | 89,901 | 32,537,869 | |||
Las Vegas Sands Corp. | 1,133,014 | 54,407,332 | |||
Starbucks Corp. | 1,316,519 | 101,016,503 | |||
260,119,651 | |||||
Household Products — 1.6% | |||||
Procter & Gamble Co. (The) | 1,265,916 | 149,213,519 | |||
Insurance — 1.0% | |||||
Progressive Corp. (The) | 1,192,405 | 92,172,906 | |||
Interactive Media and Services — 11.6% | |||||
Alphabet, Inc., Class A(1) | 576,218 | 775,992,781 | |||
Facebook, Inc., Class A(1) | 1,153,944 | 236,223,876 | |||
Twitter, Inc.(1) | 1,760,112 | 50,480,012 | |||
1,062,696,669 | |||||
Internet and Direct Marketing Retail — 9.5% | |||||
Amazon.com, Inc.(1) | 339,025 | 838,747,850 | |||
Chewy, Inc., Class A(1) | 261,669 | 11,314,568 | |||
Expedia Group, Inc. | 334,781 | 23,762,755 | |||
873,825,173 | |||||
IT Services — 9.4% | |||||
Fastly, Inc., Class A(1) | 1,582,114 | 34,252,768 | |||
PayPal Holdings, Inc.(1) | 2,226,795 | 273,895,785 | |||
Square, Inc., Class A(1) | 75,603 | 4,924,780 | |||
VeriSign, Inc.(1) | 222,194 | 46,547,421 | |||
Visa, Inc., Class A | 2,808,110 | 501,865,419 | |||
861,486,173 | |||||
Life Sciences Tools and Services — 1.3% | |||||
Agilent Technologies, Inc. | 636,764 | 48,814,328 | |||
Illumina, Inc.(1) | 209,472 | 66,827,852 | |||
115,642,180 | |||||
Machinery — 1.6% | |||||
Cummins, Inc. | 923,808 | 151,042,608 | |||
Personal Products — 0.8% | |||||
Estee Lauder Cos., Inc. (The), Class A | 429,969 | 75,846,532 | |||
Pharmaceuticals — 4.1% | |||||
Merck & Co., Inc. | 2,254,260 | 178,852,988 | |||
Novo Nordisk A/S, B Shares | 2,106,956 | 134,537,659 | |||
Zoetis, Inc. | 467,026 | 60,391,132 | |||
373,781,779 | |||||
Road and Rail — 2.7% | |||||
Lyft, Inc., Class A(1) | 1,082,669 | 35,544,023 | |||
Union Pacific Corp. | 1,326,908 | 212,026,630 | |||
247,570,653 | |||||
Semiconductors and Semiconductor Equipment — 6.4% | |||||
Advanced Micro Devices, Inc.(1) | 99,494 | 5,212,491 |
7
Shares | Value | ||||
Analog Devices, Inc. | 810,452 | $ | 88,825,539 | ||
Applied Materials, Inc. | 1,165,856 | 57,919,726 | |||
ASML Holding NV | 411,721 | 122,301,203 | |||
Broadcom, Inc. | 406,212 | 110,335,303 | |||
NVIDIA Corp. | 683,199 | 199,685,404 | |||
584,279,666 | |||||
Software — 15.7% | |||||
Anaplan, Inc.(1) | 622,450 | 25,433,307 | |||
Datadog, Inc., Class A(1) | 443,324 | 20,002,779 | |||
Microsoft Corp. | 6,174,668 | 1,106,562,252 | |||
PagerDuty, Inc.(1) | 1,358,382 | 28,675,444 | |||
salesforce.com, Inc.(1) | 859,539 | 139,202,341 | |||
Slack Technologies, Inc., Class A(1) | 1,411,000 | 37,659,590 | |||
Zendesk, Inc.(1) | 908,069 | 69,812,345 | |||
Zoom Video Communications, Inc., Class A(1) | 115,307 | 15,586,047 | |||
1,442,934,105 | |||||
Specialty Retail — 1.2% | |||||
TJX Cos., Inc. (The) | 2,211,885 | 108,492,959 | |||
Technology Hardware, Storage and Peripherals — 6.8% | |||||
Apple, Inc. | 2,126,769 | 624,844,732 | |||
Textiles, Apparel and Luxury Goods — 1.6% | |||||
NIKE, Inc., Class B | 1,703,519 | 148,512,786 | |||
TOTAL COMMON STOCKS (Cost $5,078,391,697) | 9,102,220,902 | ||||
TEMPORARY CASH INVESTMENTS — 0.9% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $27,732,245), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $27,169,460) | 27,169,453 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.25%, 8/15/27 - 8/15/49, valued at $51,556,937), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $50,540,028) | 50,540,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 42,279 | 42,279 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $77,751,732) | 77,751,732 | ||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $5,156,143,429) | 9,179,972,634 | ||||
OTHER ASSETS AND LIABILITIES† | 3,860,038 | ||||
TOTAL NET ASSETS — 100.0% | $ | 9,183,832,672 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 9,116,532 | USD | 9,791,876 | Credit Suisse AG | 6/30/20 | $ | 209,838 | |||
EUR | 6,824,276 | USD | 7,557,524 | Credit Suisse AG | 6/30/20 | (70,636 | ) | |||
EUR | 3,587,119 | USD | 3,902,570 | Credit Suisse AG | 6/30/20 | 32,845 | ||||
EUR | 2,222,264 | USD | 2,406,594 | Credit Suisse AG | 6/30/20 | 31,443 | ||||
EUR | 2,939,688 | USD | 3,195,176 | Credit Suisse AG | 6/30/20 | 29,945 | ||||
EUR | 3,132,168 | USD | 3,394,198 | Credit Suisse AG | 6/30/20 | 42,091 | ||||
USD | 80,649,329 | EUR | 74,174,626 | Credit Suisse AG | 6/30/20 | (727,377 | ) | |||
USD | 5,678,322 | EUR | 5,301,937 | Credit Suisse AG | 6/30/20 | (138,414 | ) | |||
USD | 5,264,485 | EUR | 4,881,982 | Credit Suisse AG | 6/30/20 | (91,519 | ) | |||
USD | 9,535,350 | EUR | 8,749,071 | Credit Suisse AG | 6/30/20 | (63,223 | ) | |||
USD | 3,499,342 | EUR | 3,149,666 | Credit Suisse AG | 6/30/20 | 43,855 | ||||
USD | 5,892,508 | EUR | 5,336,933 | Credit Suisse AG | 6/30/20 | 37,378 | ||||
USD | 6,597,744 | EUR | 6,036,859 | Credit Suisse AG | 6/30/20 | (25,272 | ) | |||
USD | 2,533,180 | EUR | 2,327,253 | Credit Suisse AG | 6/30/20 | (20,041 | ) | |||
USD | 4,286,927 | EUR | 3,919,584 | Credit Suisse AG | 6/30/20 | (13,234 | ) | |||
USD | 4,840,438 | EUR | 4,444,528 | Credit Suisse AG | 6/30/20 | (35,637 | ) | |||
USD | 3,626,234 | EUR | 3,359,643 | Credit Suisse AG | 6/30/20 | (59,618 | ) | |||
USD | 3,175,118 | EUR | 2,904,692 | Credit Suisse AG | 6/30/20 | (11,608 | ) | |||
$ | (829,184 | ) |
FUTURES CONTRACTS PURCHASED | |||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | ||||||
NASDAQ 100 E-Mini | 153 | June 2020 | $ | 3,060 | $ | 27,504,810 | $ | 5,928,534 | |||
S&P 500 E-Mini | 188 | June 2020 | $ | 9,400 | 27,282,560 | 5,824,953 | |||||
$ | 54,787,370 | $ | 11,753,487 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
USD | - | United States Dollar |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $5,156,143,429) | $ | 9,179,972,634 | |
Deposits with broker for futures contracts | 4,551,000 | ||
Receivable for investments sold | 40,018,952 | ||
Receivable for capital shares sold | 3,356,421 | ||
Receivable for variation margin on futures contracts | 544,276 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 427,395 | ||
Dividends and interest receivable | 2,234,706 | ||
9,231,105,384 | |||
Liabilities | |||
Payable for investments purchased | 35,960,259 | ||
Payable for capital shares redeemed | 3,521,561 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 1,256,579 | ||
Accrued management fees | 6,472,843 | ||
Distribution and service fees payable | 61,470 | ||
47,272,712 | |||
Net Assets | $ | 9,183,832,672 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 5,314,137,926 | |
Distributable earnings | 3,869,694,746 | ||
$ | 9,183,832,672 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $7,039,937,125 | 199,393,627 | $35.31 | |||
I Class, $0.01 Par Value | $1,379,641,155 | 38,260,570 | $36.06 | |||
Y Class, $0.01 Par Value | $50,172,867 | 1,390,714 | $36.08 | |||
A Class, $0.01 Par Value | $98,183,844 | 2,888,367 | $33.99* | |||
C Class, $0.01 Par Value | $11,881,360 | 375,720 | $31.62 | |||
R Class, $0.01 Par Value | $88,296,962 | 2,684,812 | $32.89 | |||
R5 Class, $0.01 Par Value | $354,380 | 9,818 | $36.09 | |||
R6 Class, $0.01 Par Value | $515,364,979 | 14,306,882 | $36.02 |
*Maximum offering price $36.06 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $419,129) | $ | 49,035,229 | |
Interest | 494,040 | ||
Securities lending, net | 488,679 | ||
50,017,948 | |||
Expenses: | |||
Management fees | 38,533,081 | ||
Distribution and service fees: | |||
A Class | 116,504 | ||
C Class | 48,084 | ||
R Class | 216,625 | ||
Directors' fees and expenses | 131,187 | ||
Other expenses | 5,293 | ||
39,050,774 | |||
Net investment income (loss) | 10,967,174 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 35,264,285 | ||
Forward foreign currency exchange contract transactions | 2,753,542 | ||
Futures contract transactions | 855,243 | ||
Foreign currency translation transactions | (15,334 | ) | |
38,857,736 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 359,950,358 | ||
Forward foreign currency exchange contracts | (450,015 | ) | |
Futures contracts | 10,321,266 | ||
Translation of assets and liabilities in foreign currencies | (7 | ) | |
369,821,602 | |||
Net realized and unrealized gain (loss) | 408,679,338 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 419,646,512 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | 10,967,174 | $ | 22,124,570 | ||
Net realized gain (loss) | 38,857,736 | 457,660,058 | ||||
Change in net unrealized appreciation (depreciation) | 369,821,602 | 661,567,516 | ||||
Net increase (decrease) in net assets resulting from operations | 419,646,512 | 1,141,352,144 | ||||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (480,259,219 | ) | (620,549,413 | ) | ||
I Class | (114,436,997 | ) | (135,799,946 | ) | ||
Y Class | (4,514,391 | ) | (5,869,002 | ) | ||
A Class | (7,229,137 | ) | (11,268,612 | ) | ||
C Class | (744,058 | ) | (1,173,312 | ) | ||
R Class | (7,119,319 | ) | (11,498,287 | ) | ||
R5 Class | (42,460 | ) | (45,748 | ) | ||
R6 Class | (41,181,311 | ) | (48,975,743 | ) | ||
Decrease in net assets from distributions | (655,526,892 | ) | (835,180,063 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 1,376,708,148 | (221,312,359 | ) | |||
Net increase (decrease) in net assets | 1,140,827,768 | 84,859,722 | ||||
Net Assets | ||||||
Beginning of period | 8,043,004,904 | 7,958,145,182 | ||||
End of period | $ | 9,183,832,672 | $ | 8,043,004,904 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2020 (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, 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.
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 exchange. 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.
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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. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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 certain types of investment securities and other financial instruments. 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 collateral requirements.
14
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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.
15
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. 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 non-Rule 12b-1 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, 2020 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 0.800% to 0.990% | 0.97% |
I Class | 0.600% to 0.790% | 0.77% |
Y Class | 0.450% to 0.640% | 0.62% |
A Class | 0.800% to 0.990% | 0.97% |
C Class | 0.800% to 0.990% | 0.97% |
R Class | 0.800% to 0.990% | 0.97% |
R5 Class | 0.600% to 0.790% | 0.77% |
R6 Class | 0.450% to 0.640% | 0.62% |
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, 2020 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 were $1,859,781 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2020 were $1,107,556,681 and $1,631,920,155, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 2,100,000,000 | 2,100,000,000 | ||||||||
Sold | 5,895,059 | $ | 203,515,373 | 6,174,389 | $ | 204,624,318 | ||||
Issued in connection with reorganization (Note 10) | 33,740,937 | 1,281,095,913 | — | — | ||||||
Issued in reinvestment of distributions | 12,608,306 | 463,439,351 | 20,752,173 | 599,737,810 | ||||||
Redeemed | (18,693,514 | ) | (655,826,326 | ) | (22,142,478 | ) | (738,868,587 | ) | ||
33,550,788 | 1,292,224,311 | 4,784,084 | 65,493,541 | |||||||
I Class/Shares Authorized | 460,000,000 | 460,000,000 | ||||||||
Sold | 3,576,625 | 126,424,123 | 8,201,339 | 284,251,396 | ||||||
Issued in connection with reorganization (Note 10) | 238,480 | 9,244,211 | — | — | ||||||
Issued in reinvestment of distributions | 3,019,127 | 113,217,452 | 4,549,653 | 134,032,787 | ||||||
Redeemed | (6,394,803 | ) | (225,790,543 | ) | (9,493,140 | ) | (319,770,751 | ) | ||
439,429 | 23,095,243 | 3,257,852 | 98,513,432 | |||||||
Y Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 85,522 | 2,884,331 | 193,293 | 6,309,777 | ||||||
Issued in reinvestment of distributions | 119,002 | 4,461,395 | 197,540 | 5,819,520 | ||||||
Redeemed | (279,104 | ) | (9,654,183 | ) | (401,561 | ) | (13,473,502 | ) | ||
(74,580 | ) | (2,308,457 | ) | (10,728 | ) | (1,344,205 | ) | |||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 343,493 | 11,329,304 | 583,026 | 18,601,566 | ||||||
Issued in connection with reorganization (Note 10) | 422,151 | 15,436,291 | — | — | ||||||
Issued in reinvestment of distributions | 164,961 | 5,847,619 | 335,059 | 9,354,848 | ||||||
Redeemed | (748,898 | ) | (24,985,452 | ) | (1,260,515 | ) | (40,816,895 | ) | ||
181,707 | 7,627,762 | (342,430 | ) | (12,860,481 | ) | |||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 33,483 | 1,038,751 | 63,391 | 1,766,765 | ||||||
Issued in connection with reorganization (Note 10) | 124,022 | 4,225,593 | — | — | ||||||
Issued in reinvestment of distributions | 20,026 | 661,725 | 39,522 | 1,041,792 | ||||||
Redeemed | (61,550 | ) | (1,919,655 | ) | (149,895 | ) | (4,554,998 | ) | ||
115,981 | 4,006,414 | (46,982 | ) | (1,746,441 | ) | |||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 211,538 | 6,778,619 | 339,606 | 10,447,195 | ||||||
Issued in connection with reorganization (Note 10) | 461,820 | 16,348,203 | — | — | ||||||
Issued in reinvestment of distributions | 205,542 | 7,043,451 | 417,329 | 11,334,663 | ||||||
Redeemed | (799,800 | ) | (25,966,144 | ) | (1,207,308 | ) | (36,468,093 | ) | ||
79,100 | 4,204,129 | (450,373 | ) | (14,686,235 | ) | |||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 504 | 18,155 | 2,974 | 101,028 | ||||||
Issued in reinvestment of distributions | 1,135 | 42,460 | 1,552 | 45,748 | ||||||
Redeemed | (6,390 | ) | (230,198 | ) | (1,305 | ) | (44,020 | ) | ||
(4,751 | ) | (169,583 | ) | 3,221 | 102,756 | |||||
R6 Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 2,457,736 | 89,790,554 | 3,277,264 | 109,281,671 | ||||||
Issued in reinvestment of distributions | 1,098,511 | 41,181,311 | 1,664,709 | 48,975,743 | ||||||
Redeemed | (2,355,701 | ) | (82,943,536 | ) | (15,267,638 | ) | (513,042,140 | ) | ||
1,200,546 | 48,028,329 | (10,325,665 | ) | (354,784,726 | ) | |||||
Net increase (decrease) | 35,488,220 | $ | 1,376,708,148 | (3,131,021 | ) | $ | (221,312,359 | ) |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 8,845,382,040 | $ | 256,838,862 | — | |||
Temporary Cash Investments | 42,279 | 77,709,453 | — | |||||
$ | 8,845,424,319 | $ | 334,548,315 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 11,753,487 | — | — | ||||
Forward Foreign Currency Exchange Contracts | — | $ | 427,395 | — | ||||
$ | 11,753,487 | $ | 427,395 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,256,579 | — |
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 notional exposure to equity price risk derivative instruments held during the period was $15,450 futures contracts purchased.
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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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $136,560,091.
Value of Derivative Instruments as of April 30, 2020
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* | $ | 544,276 | Payable for variation margin on futures contracts* | — | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | 427,395 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 1,256,579 | |||
$ | 971,671 | $ | 1,256,579 |
* | 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, 2020
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 | $ | 855,243 | Change in net unrealized appreciation (depreciation) on futures contracts | $ | 10,321,266 | ||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 2,753,542 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | (450,015 | ) | |||
$ | 3,608,785 | $ | 9,871,251 |
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
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9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 5,166,659,419 | |
Gross tax appreciation of investments | $ | 4,089,526,197 | |
Gross tax depreciation of investments | (76,212,982 | ) | |
Net tax appreciation (depreciation) of investments | $ | 4,013,313,215 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
10. Reorganization
On September 11, 2019, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of All Cap Growth Fund, one fund in a series issued by the corporation, were transferred to Growth Fund in exchange for shares of Growth Fund. The purpose of the transaction was to combine two funds with substantially similar investment objectives and strategies. The financial statements and performance history of Growth Fund survived after the reorganization. The reorganization was effective at the close of the NYSE on February 21, 2020.
The reorganization was accomplished by a tax-free exchange of shares. On February 21, 2020, All Cap Growth Fund exchanged its shares for shares of Growth Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||
All Cap Growth Fund – Investor Class | 36,344,493 | Growth Fund – Investor Class | 33,740,937 | ||
All Cap Growth Fund – I Class | 256,052 | Growth Fund – I Class | 238,480 | ||
All Cap Growth Fund – A Class | 451,934 | Growth Fund – A Class | 422,151 | ||
All Cap Growth Fund – C Class | 137,457 | Growth Fund – C Class | 124,022 | ||
All Cap Growth Fund – R Class | 495,557 | Growth Fund – R Class | 461,820 |
The net assets of All Cap Growth Fund and Growth Fund immediately before the reorganization were $1,326,350,211 and $8,778,658,792, respectively. All Cap Growth Fund's unrealized appreciation of $530,451,716 was combined with that of Growth Fund. Immediately after the reorganization, the combined net assets were $10,105,009,003.
Assuming the reorganization had been completed on November 1, 2019, the beginning of the annual reporting period, the pro forma results of operations for the period ended April 30, 2020 are as follows:
Net investment income (loss) | $ | 11,915,166 | |
Net realized and unrealized gain (loss) | 580,825,383 | ||
Net increase (decrease) in net assets resulting from operations | $ | 592,740,549 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of All Cap Growth Fund that have been included in the fund’s Statement of Operations since February 21, 2020.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2020(3) | $35.80 | 0.04 | 2.43 | 2.47 | (0.15) | (2.81) | (2.96) | $35.31 | 6.69% | 0.98%(4) | 0.21%(4) | 13% | $7,039,937 | ||
2019 | $34.94 | 0.08 | 4.70 | 4.78 | (0.08) | (3.84) | (3.92) | $35.80 | 16.35% | 0.98% | 0.24% | 30% | $5,937,959 | ||
2018 | $34.93 | 0.04 | 3.35 | 3.39 | (0.06) | (3.32) | (3.38) | $34.94 | 10.22% | 0.97% | 0.13% | 38% | $5,627,171 | ||
2017 | $28.64 | 0.08 | 7.67 | 7.75 | (0.17) | (1.29) | (1.46) | $34.93 | 28.26% | 0.98% | 0.26% | 48% | $5,648,965 | ||
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 | ||
I Class | |||||||||||||||
2020(3) | $36.56 | 0.08 | 2.46 | 2.54 | (0.23) | (2.81) | (3.04) | $36.06 | 6.77% | 0.78%(4) | 0.41%(4) | 13% | $1,379,641 | ||
2019 | $35.59 | 0.15 | 4.81 | 4.96 | (0.15) | (3.84) | (3.99) | $36.56 | 16.62% | 0.78% | 0.44% | 30% | $1,382,618 | ||
2018 | $35.52 | 0.12 | 3.40 | 3.52 | (0.13) | (3.32) | (3.45) | $35.59 | 10.46% | 0.77% | 0.33% | 38% | $1,230,065 | ||
2017 | $29.11 | 0.15 | 7.78 | 7.93 | (0.23) | (1.29) | (1.52) | $35.52 | 28.48% | 0.78% | 0.46% | 48% | $1,271,821 | ||
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 |
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) | |||
Y Class | |||||||||||||||
2020(3) | $36.61 | 0.10 | 2.48 | 2.58 | (0.30) | (2.81) | (3.11) | $36.08 | 6.86% | 0.63%(4) | 0.56%(4) | 13% | $50,173 | ||
2019 | $35.64 | 0.20 | 4.81 | 5.01 | (0.20) | (3.84) | (4.04) | $36.61 | 16.78% | 0.63% | 0.59% | 30% | $53,641 | ||
2018 | $35.54 | 0.17 | 3.40 | 3.57 | (0.15) | (3.32) | (3.47) | $35.64 | 10.61% | 0.62% | 0.48% | 38% | $52,601 | ||
2017(5) | $30.93 | 0.08 | 4.53 | 4.61 | — | — | — | $35.54 | 14.90% | 0.63%(4) | 0.43%(4) | 48%(6) | $56,218 | ||
A Class | |||||||||||||||
2020(3) | $34.52 | —(7) | 2.32 | 2.32 | (0.04) | (2.81) | (2.85) | $33.99 | 6.54% | 1.23%(4) | (0.04)%(4) | 13% | $98,184 | ||
2019 | $33.82 | —(7) | 4.54 | 4.54 | — | (3.84) | (3.84) | $34.52 | 16.06% | 1.23% | (0.01)% | 30% | $93,422 | ||
2018 | $33.94 | (0.04) | 3.24 | 3.20 | — | (3.32) | (3.32) | $33.82 | 9.94% | 1.22% | (0.12)% | 38% | $103,115 | ||
2017 | $27.86 | 0.01 | 7.46 | 7.47 | (0.10) | (1.29) | (1.39) | $33.94 | 27.95% | 1.23% | 0.01% | 48% | $113,348 | ||
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 | ||
C Class | |||||||||||||||
2020(3) | $32.37 | (0.13) | 2.19 | 2.06 | — | (2.81) | (2.81) | $31.62 | 6.13% | 1.98%(4) | (0.79)%(4) | 13% | $11,881 | ||
2019 | $32.18 | (0.23) | 4.26 | 4.03 | — | (3.84) | (3.84) | $32.37 | 15.23% | 1.98% | (0.76)% | 30% | $8,408 | ||
2018 | $32.67 | (0.29) | 3.12 | 2.83 | — | (3.32) | (3.32) | $32.18 | 9.12% | 1.97% | (0.87)% | 38% | $9,871 | ||
2017 | $26.97 | (0.21) | 7.20 | 6.99 | — | (1.29) | (1.29) | $32.67 | 26.99% | 1.98% | (0.74)% | 48% | $9,962 | ||
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 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||
2020(3) | $33.50 | (0.05) | 2.28 | 2.23 | (0.03) | (2.81) | (2.84) | $32.89 | 6.43% | 1.48%(4) | (0.29)%(4) | 13% | $88,297 | ||
2019 | $33.02 | (0.08) | 4.40 | 4.32 | — | (3.84) | (3.84) | $33.50 | 15.78% | 1.48% | (0.26)% | 30% | $87,302 | ||
2018 | $33.29 | (0.13) | 3.18 | 3.05 | — | (3.32) | (3.32) | $33.02 | 9.66% | 1.47% | (0.37)% | 38% | $100,915 | ||
2017 | $27.35 | (0.07) | 7.32 | 7.25 | (0.02) | (1.29) | (1.31) | $33.29 | 27.62% | 1.48% | (0.24)% | 48% | $104,368 | ||
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 | ||
R5 Class | |||||||||||||||
2020(3) | $36.59 | 0.08 | 2.46 | 2.54 | (0.23) | (2.81) | (3.04) | $36.09 | 6.76% | 0.78%(4) | 0.41%(4) | 13% | $354 | ||
2019 | $35.62 | 0.15 | 4.81 | 4.96 | (0.15) | (3.84) | (3.99) | $36.59 | 16.61% | 0.78% | 0.44% | 30% | $533 | ||
2018 | $35.53 | 0.12 | 3.40 | 3.52 | (0.11) | (3.32) | (3.43) | $35.62 | 10.45% | 0.77% | 0.33% | 38% | $404 | ||
2017(5) | $30.95 | 0.05 | 4.53 | 4.58 | — | — | — | $35.53 | 14.80% | 0.78%(4) | 0.27%(4) | 48%(6) | $6 | ||
R6 Class | |||||||||||||||
2020(3) | $36.56 | 0.10 | 2.47 | 2.57 | (0.30) | (2.81) | (3.11) | $36.02 | 6.84% | 0.63%(4) | 0.56%(4) | 13% | $515,365 | ||
2019 | $35.59 | 0.21 | 4.80 | 5.01 | (0.20) | (3.84) | (4.04) | $36.56 | 16.81% | 0.63% | 0.59% | 30% | $479,123 | ||
2018 | $35.53 | 0.17 | 3.40 | 3.57 | (0.19) | (3.32) | (3.51) | $35.59 | 10.60% | 0.62% | 0.48% | 38% | $834,003 | ||
2017 | $29.11 | 0.18 | 7.80 | 7.98 | (0.27) | (1.29) | (1.56) | $35.53 | 28.71% | 0.63% | 0.61% | 48% | $963,039 | ||
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 |
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, 2020 (unaudited). |
(4) | Annualized. |
(5) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
(7) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
25
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
26
Notes |
27
Notes |
28
Notes |
29
Notes |
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92358 2006 |
Semiannual Report | |
April 30, 2020 | |
Heritage Fund | |
Investor Class (TWHIX) | |
I Class (ATHIX) | |
Y Class (ATHYX) | |
A Class (ATHAX) | |
C Class (AHGCX) | |
R Class (ATHWX) | |
R5 Class (ATHGX) | |
R6 Class (ATHDX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Top Ten Holdings | % of net assets |
Fiserv, Inc. | 3.7% |
SBA Communications Corp. | 3.5% |
Cadence Design Systems, Inc. | 2.8% |
F5 Networks, Inc. | 2.8% |
Square, Inc., Class A | 2.6% |
Cognex Corp. | 2.6% |
Teleflex, Inc. | 2.4% |
Twitter, Inc. | 2.2% |
MSCI, Inc. | 2.2% |
Arista Networks, Inc. | 2.1% |
Top Five Industries | % of net assets |
Software | 11.4% |
IT Services | 7.8% |
Semiconductors and Semiconductor Equipment | 7.6% |
Health Care Equipment and Supplies | 7.2% |
Capital Markets | 5.2% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.7% |
Temporary Cash Investments | 0.9% |
Other Assets and Liabilities | (0.6)% |
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, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $980.30 | $4.92 | 1.00% |
I Class | $1,000 | $981.00 | $3.94 | 0.80% |
Y Class | $1,000 | $981.70 | $3.20 | 0.65% |
A Class | $1,000 | $979.00 | $6.15 | 1.25% |
C Class | $1,000 | $974.70 | $9.82 | 2.00% |
R Class | $1,000 | $977.30 | $7.37 | 1.50% |
R5 Class | $1,000 | $981.00 | $3.94 | 0.80% |
R6 Class | $1,000 | $981.70 | $3.20 | 0.65% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
I Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
Y Class | $1,000 | $1,021.63 | $3.27 | 0.65% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
R5 Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
R6 Class | $1,000 | $1,021.63 | $3.27 | 0.65% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.7% | |||||
Aerospace and Defense — 1.3% | |||||
HEICO Corp. | 595,655 | $ | 52,179,378 | ||
Auto Components — 1.1% | |||||
Aptiv plc | 653,936 | 45,481,249 | |||
Beverages — 1.2% | |||||
Constellation Brands, Inc., Class A | 294,694 | 48,533,155 | |||
Biotechnology — 4.3% | |||||
ACADIA Pharmaceuticals, Inc.(1) | 461,951 | 22,316,853 | |||
Alnylam Pharmaceuticals, Inc.(1) | 211,377 | 27,838,351 | |||
Argenx SE ADR(1) | 119,837 | 17,554,922 | |||
Exact Sciences Corp.(1) | 523,670 | 41,359,456 | |||
Immunomedics, Inc.(1) | 1,682,853 | 51,125,074 | |||
Turning Point Therapeutics, Inc.(1) | 328,260 | 16,908,673 | |||
177,103,329 | |||||
Building Products — 2.7% | |||||
Fortune Brands Home & Security, Inc. | 1,336,746 | 64,431,157 | |||
Trane Technologies plc | 532,039 | 46,510,850 | |||
110,942,007 | |||||
Capital Markets — 5.2% | |||||
LPL Financial Holdings, Inc. | 1,363,292 | 82,097,444 | |||
MarketAxess Holdings, Inc. | 94,758 | 43,115,838 | |||
MSCI, Inc. | 276,405 | 90,384,435 | |||
215,597,717 | |||||
Chemicals — 0.4% | |||||
Albemarle Corp. | 303,051 | 18,616,423 | |||
Commercial Services and Supplies — 0.6% | |||||
Cintas Corp. | 117,570 | 26,080,553 | |||
Communications Equipment — 4.9% | |||||
Arista Networks, Inc.(1) | 407,040 | 89,263,872 | |||
F5 Networks, Inc.(1) | 821,146 | 114,352,792 | |||
203,616,664 | |||||
Construction Materials — 0.7% | |||||
Vulcan Materials Co. | 250,239 | 28,269,500 | |||
Containers and Packaging — 1.4% | |||||
Ball Corp. | 888,881 | 58,301,705 | |||
Distributors — 1.1% | |||||
LKQ Corp.(1) | 1,745,741 | 45,651,127 | |||
Diversified Consumer Services — 1.6% | |||||
Bright Horizons Family Solutions, Inc.(1) | 290,075 | 33,779,234 | |||
Chegg, Inc.(1) | 741,010 | 31,678,177 | |||
65,457,411 | |||||
Electrical Equipment — 3.8% | |||||
AMETEK, Inc. | 1,003,794 | 84,188,203 |
6
Shares | Value | ||||
nVent Electric plc | 1,945,529 | $ | 36,284,116 | ||
Sensata Technologies Holding plc(1) | 1,026,930 | 37,359,713 | |||
157,832,032 | |||||
Electronic Equipment, Instruments and Components — 4.3% | |||||
Cognex Corp. | 1,923,730 | 106,266,845 | |||
Keysight Technologies, Inc.(1) | 729,876 | 70,630,101 | |||
176,896,946 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.5% | |||||
SBA Communications Corp. | 502,937 | 145,811,495 | |||
Health Care Equipment and Supplies — 7.2% | |||||
Align Technology, Inc.(1) | 125,714 | 27,009,653 | |||
DexCom, Inc.(1) | 206,308 | 69,154,441 | |||
Masimo Corp.(1) | 325,110 | 69,544,280 | |||
Teleflex, Inc. | 290,858 | 97,553,773 | |||
Varian Medical Systems, Inc.(1) | 294,170 | 33,647,165 | |||
296,909,312 | |||||
Health Care Providers and Services — 3.9% | |||||
Centene Corp.(1) | 1,127,405 | 75,062,625 | |||
Encompass Health Corp. | 1,314,612 | 87,093,045 | |||
162,155,670 | |||||
Health Care Technology — 1.7% | |||||
Veeva Systems, Inc., Class A(1) | 370,983 | 70,783,556 | |||
Hotels, Restaurants and Leisure — 5.0% | |||||
Chipotle Mexican Grill, Inc.(1) | 85,327 | 74,964,036 | |||
Hilton Worldwide Holdings, Inc. | 408,953 | 30,961,832 | |||
Las Vegas Sands Corp. | 887,542 | 42,619,767 | |||
Planet Fitness, Inc., Class A(1) | 950,816 | 57,362,729 | |||
205,908,364 | |||||
Household Durables — 0.8% | |||||
D.R. Horton, Inc. | 727,744 | 34,364,072 | |||
Interactive Media and Services — 2.2% | |||||
Twitter, Inc.(1) | 3,221,510 | 92,392,907 | |||
IT Services — 7.8% | |||||
Fiserv, Inc.(1) | 1,479,735 | 152,501,489 | |||
Square, Inc., Class A(1) | 1,632,153 | 106,318,446 | |||
Twilio, Inc., Class A(1) | 579,693 | 65,099,524 | |||
323,919,459 | |||||
Life Sciences Tools and Services — 2.4% | |||||
Bruker Corp. | 1,108,578 | 43,589,287 | |||
Mettler-Toledo International, Inc.(1) | 74,516 | 53,647,049 | |||
97,236,336 | |||||
Machinery — 1.9% | |||||
Graco, Inc. | 867,323 | 38,734,645 | |||
Parker-Hannifin Corp. | 238,953 | 37,783,249 | |||
76,517,894 | |||||
Personal Products — 1.0% | |||||
Shiseido Co. Ltd. | 705,200 | 41,599,564 |
7
Shares | Value | ||||
Professional Services — 2.8% | |||||
IHS Markit Ltd. | 653,802 | $ | 44,000,874 | ||
Verisk Analytics, Inc. | 478,190 | 73,081,778 | |||
117,082,652 | |||||
Road and Rail — 1.4% | |||||
J.B. Hunt Transport Services, Inc. | 554,717 | 56,092,983 | |||
Semiconductors and Semiconductor Equipment — 7.6% | |||||
Advanced Micro Devices, Inc.(1) | 1,538,680 | 80,611,445 | |||
Marvell Technology Group Ltd. | 1,522,550 | 40,712,987 | |||
Micron Technology, Inc.(1) | 1,279,975 | 61,298,003 | |||
Skyworks Solutions, Inc. | 432,365 | 44,914,076 | |||
Teradyne, Inc. | 866,877 | 54,214,487 | |||
Xilinx, Inc. | 347,539 | 30,374,909 | |||
312,125,907 | |||||
Software — 11.4% | |||||
Atlassian Corp. plc, Class A(1) | 389,565 | 60,573,462 | |||
Cadence Design Systems, Inc.(1) | 1,424,949 | 115,606,112 | |||
Coupa Software, Inc.(1) | 165,066 | 29,066,472 | |||
Envestnet, Inc.(1) | 512,293 | 32,028,558 | |||
Palo Alto Networks, Inc.(1) | 272,213 | 53,492,577 | |||
Proofpoint, Inc.(1) | 411,028 | 50,034,438 | |||
RingCentral, Inc., Class A(1) | 241,677 | 55,230,445 | |||
Splunk, Inc.(1) | 540,138 | 75,813,770 | |||
471,845,834 | |||||
Specialty Retail — 3.0% | |||||
Burlington Stores, Inc.(1) | 403,693 | 73,750,674 | |||
Five Below, Inc.(1) | 534,636 | 48,202,782 | |||
121,953,456 | |||||
Textiles, Apparel and Luxury Goods — 0.8% | |||||
lululemon athletica, Inc.(1) | 141,939 | 31,720,528 | |||
Trading Companies and Distributors — 0.7% | |||||
Fastenal Co. | 764,482 | 27,689,538 | |||
TOTAL COMMON STOCKS (Cost $3,593,923,985) | 4,116,668,723 | ||||
TEMPORARY CASH INVESTMENTS — 0.9% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $13,199,164), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $12,931,307) | 12,931,303 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.25%, 07/15/29, valued at $24,536,751), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $24,055,013) | 24,055,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 18,666 | 18,666 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $37,004,969) | 37,004,969 | ||||
TOTAL INVESTMENT SECURITIES — 100.6% (Cost $3,630,928,954) | 4,153,673,692 | ||||
OTHER ASSETS AND LIABILITIES — (0.6)% | (24,459,152 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 4,129,214,540 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
JPY | 179,614,440 | USD | 1,681,514 | Bank of America N.A. | 6/30/20 | $ | (6,425 | ) | ||
JPY | 94,567,320 | USD | 883,354 | Bank of America N.A. | 6/30/20 | (1,417 | ) | |||
JPY | 95,836,680 | USD | 892,772 | Bank of America N.A. | 6/30/20 | 1,003 | ||||
JPY | 183,422,520 | USD | 1,709,323 | Bank of America N.A. | 6/30/20 | 1,280 | ||||
JPY | 92,028,600 | USD | 864,094 | Bank of America N.A. | 6/30/20 | (5,833 | ) | |||
JPY | 95,836,680 | USD | 874,287 | Bank of America N.A. | 6/30/20 | 19,489 | ||||
JPY | 173,902,320 | USD | 1,607,611 | Bank of America N.A. | 6/30/20 | 14,207 | ||||
JPY | 99,010,080 | USD | 925,027 | Bank of America N.A. | 6/30/20 | (1,656 | ) | |||
USD | 34,004,670 | JPY | 3,702,088,440 | Bank of America N.A. | 6/30/20 | (521,109 | ) | |||
USD | 1,621,654 | JPY | 179,614,440 | Bank of America N.A. | 6/30/20 | (53,435 | ) | |||
USD | 3,064,433 | JPY | 335,111,040 | Bank of America N.A. | 6/30/20 | (60,822 | ) | |||
USD | 1,879,074 | JPY | 202,462,920 | Bank of America N.A. | 6/30/20 | (9,100 | ) | |||
USD | 904,250 | JPY | 98,375,400 | Bank of America N.A. | 6/30/20 | (13,201 | ) | |||
USD | 1,039,731 | JPY | 112,973,040 | Bank of America N.A. | 6/30/20 | (13,858 | ) | |||
USD | 1,254,703 | JPY | 135,186,840 | Bank of America N.A. | 6/30/20 | (6,053 | ) | |||
USD | 1,259,398 | JPY | 135,186,840 | Bank of America N.A. | 6/30/20 | (1,358 | ) | |||
USD | 1,796,892 | JPY | 193,577,400 | Bank of America N.A. | 6/30/20 | (8,416 | ) | |||
$ | (666,704 | ) |
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, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $3,630,928,954) | $ | 4,153,673,692 | |
Receivable for investments sold | 6,678,003 | ||
Receivable for capital shares sold | 1,341,653 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 35,979 | ||
Dividends and interest receivable | 796,786 | ||
4,162,526,113 | |||
Liabilities | |||
Payable for investments purchased | 26,891,580 | ||
Payable for capital shares redeemed | 2,593,305 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 702,683 | ||
Accrued management fees | 3,044,156 | ||
Distribution and service fees payable | 79,849 | ||
33,311,573 | |||
Net Assets | $ | 4,129,214,540 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 3,413,466,964 | |
Distributable earnings | 715,747,576 | ||
$ | 4,129,214,540 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $3,387,172,703 | 177,175,108 | $19.12 | |||
I Class, $0.01 Par Value | $264,412,642 | 12,664,251 | $20.88 | |||
Y Class, $0.01 Par Value | $60,648,449 | 2,859,409 | $21.21 | |||
A Class, $0.01 Par Value | $233,410,527 | 13,721,936 | $17.01* | |||
C Class, $0.01 Par Value | $31,495,146 | 2,625,803 | $11.99 | |||
R Class, $0.01 Par Value | $29,655,513 | 1,749,126 | $16.95 | |||
R5 Class, $0.01 Par Value | $1,066,717 | 51,087 | $20.88 | |||
R6 Class, $0.01 Par Value | $121,352,843 | 5,721,901 | $21.21 |
*Maximum offering price $18.05 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $15,201) | $ | 14,993,106 | |
Interest | 275,985 | ||
Securities lending, net | 12,730 | ||
15,281,821 | |||
Expenses: | |||
Management fees | 21,363,698 | ||
Distribution and service fees: | |||
A Class | 318,215 | ||
C Class | 178,744 | ||
R Class | 79,551 | ||
Directors' fees and expenses | 70,770 | ||
Other expenses | 3,357 | ||
22,014,335 | |||
Net investment income (loss) | (6,732,514 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 222,612,454 | ||
Forward foreign currency exchange contract transactions | 674,339 | ||
Foreign currency translation transactions | (5,774 | ) | |
223,281,019 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (302,725,235 | ) | |
Forward foreign currency exchange contracts | (762,835 | ) | |
(303,488,070 | ) | ||
Net realized and unrealized gain (loss) | (80,207,051 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (86,939,565 | ) |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | (6,732,514 | ) | $ | (17,330,407 | ) |
Net realized gain (loss) | 223,281,019 | 519,001,944 | ||||
Change in net unrealized appreciation (depreciation) | (303,488,070 | ) | 196,321,808 | |||
Net increase (decrease) in net assets resulting from operations | (86,939,565 | ) | 697,993,345 | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (393,425,597 | ) | (679,904,197 | ) | ||
I Class | (30,338,935 | ) | (41,064,427 | ) | ||
Y Class | (5,616,329 | ) | (1,986,316 | ) | ||
A Class | (31,178,565 | ) | (53,942,496 | ) | ||
C Class | (6,010,954 | ) | (13,662,155 | ) | ||
R Class | (3,890,228 | ) | (6,464,936 | ) | ||
R5 Class | (409,601 | ) | (529,611 | ) | ||
R6 Class | (13,008,625 | ) | (22,767,081 | ) | ||
Decrease in net assets from distributions | (483,878,834 | ) | (820,321,219 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 156,629,767 | 119,035,175 | ||||
Net increase (decrease) in net assets | (414,188,632 | ) | (3,292,699 | ) | ||
Net Assets | ||||||
Beginning of period | 4,543,403,172 | 4,546,695,871 | ||||
End of period | $ | 4,129,214,540 | $ | 4,543,403,172 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2020 (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, 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.
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 security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
13
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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 certain types of investment securities and other financial instruments. 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 collateral requirements.
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. 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 non-Rule 12b-1 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 pay ACIS an annual distribution and service
15
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, 2020 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 sales were $3,699,431 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $2,265,616 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, 2020 were $1,872,627,636 and $2,146,995,695, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 2,100,000,000 | 2,100,000,000 | ||||||||
Sold | 5,534,112 | $ | 107,155,522 | 8,881,792 | $ | 183,562,881 | ||||
Issued in reinvestment of distributions | 18,572,105 | 380,170,983 | 38,287,328 | 660,456,399 | ||||||
Redeemed | (17,224,522 | ) | (338,590,723 | ) | (40,207,691 | ) | (832,873,931 | ) | ||
6,881,695 | 148,735,782 | 6,961,429 | 11,145,349 | |||||||
I Class/Shares Authorized | 175,000,000 | 175,000,000 | ||||||||
Sold | 1,087,890 | 22,850,635 | 8,282,472 | 187,142,858 | ||||||
Issued in reinvestment of distributions | 1,292,245 | 28,868,755 | 2,030,579 | 37,809,381 | ||||||
Redeemed | (4,013,270 | ) | (88,266,221 | ) | (6,042,339 | ) | (132,802,177 | ) | ||
(1,633,135 | ) | (36,546,831 | ) | 4,270,712 | 92,150,062 | |||||
Y Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 1,651,724 | 39,169,005 | 879,608 | 20,066,401 | ||||||
Issued in reinvestment of distributions | 242,850 | 5,507,845 | 88,190 | 1,662,380 | ||||||
Redeemed | (285,308 | ) | (6,273,556 | ) | (106,938 | ) | (2,450,380 | ) | ||
1,609,266 | 38,403,294 | 860,860 | 19,278,401 | |||||||
A Class/Shares Authorized | 170,000,000 | 170,000,000 | ||||||||
Sold | 1,142,383 | 20,385,151 | 2,764,436 | 52,092,399 | ||||||
Issued in reinvestment of distributions | 1,643,351 | 29,958,297 | 3,291,370 | 51,312,456 | ||||||
Redeemed | (2,501,996 | ) | (44,178,874 | ) | (5,543,255 | ) | (103,070,801 | ) | ||
283,738 | 6,164,574 | 512,551 | 334,054 | |||||||
C Class/Shares Authorized | 70,000,000 | 70,000,000 | ||||||||
Sold | 75,850 | 979,596 | 219,280 | 2,780,542 | ||||||
Issued in reinvestment of distributions | 435,672 | 5,615,807 | 1,097,917 | 12,768,775 | ||||||
Redeemed | (622,801 | ) | (8,038,459 | ) | (1,930,896 | ) | (27,011,815 | ) | ||
(111,279 | ) | (1,443,056 | ) | (613,699 | ) | (11,462,498 | ) | |||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 191,293 | 3,410,721 | 346,118 | 6,576,154 | ||||||
Issued in reinvestment of distributions | 212,437 | 3,864,234 | 408,317 | 6,369,746 | ||||||
Redeemed | (329,918 | ) | (5,814,397 | ) | (594,071 | ) | (11,067,893 | ) | ||
73,812 | 1,460,558 | 160,364 | 1,878,007 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 36,954 | 876,217 | 21,011 | 467,950 | ||||||
Issued in reinvestment of distributions | 18,335 | 409,601 | 28,443 | 529,611 | ||||||
Redeemed | (159,976 | ) | (2,886,717 | ) | (17,479 | ) | (385,887 | ) | ||
(104,687 | ) | (1,600,899 | ) | 31,975 | 611,674 | |||||
R6 Class/Shares Authorized | 70,000,000 | 70,000,000 | ||||||||
Sold | 1,048,039 | 23,276,867 | 1,574,058 | 35,568,182 | ||||||
Issued in reinvestment of distributions | 573,408 | 13,004,903 | 1,207,802 | 22,767,071 | ||||||
Redeemed | (1,555,463 | ) | (34,825,425 | ) | (2,453,088 | ) | (53,235,127 | ) | ||
65,984 | 1,456,345 | 328,772 | 5,100,126 | |||||||
Net increase (decrease) | 7,065,394 | $ | 156,629,767 | 12,512,964 | $ | 119,035,175 |
17
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 4,075,069,159 | $ | 41,599,564 | — | |||
Temporary Cash Investments | 18,666 | 36,986,303 | — | |||||
$ | 4,075,087,825 | $ | 78,585,867 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 35,979 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 702,683 | — |
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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $43,961,963.
18
The value of foreign currency risk derivative instruments as of April 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $35,979 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $702,683 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2020, the effect of foreign currency risk derivative instruments on the Statement of Operations was $674,339 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(762,835) in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
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 | $ | 3,639,019,603 | |
Gross tax appreciation of investments | $ | 747,099,966 | |
Gross tax depreciation of investments | (232,445,877 | ) | |
Net tax appreciation (depreciation) of investments | $ | 514,654,089 |
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, 2019, the fund had late-year ordinary loss deferrals of $(15,290,520), 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.
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 | |||||||||||||
2020(3) | $21.74 | (0.03) | (0.24) | (0.27) | (2.35) | $19.12 | (1.97)% | 1.00%(4) | (0.30)%(4) | 43% | $3,387,173 | ||
2019 | $23.19 | (0.08) | 2.95 | 2.87 | (4.32) | $21.74 | 17.22% | 1.00% | (0.38)% | 82% | $3,702,699 | ||
2018 | $23.67 | (0.07) | 1.70 | 1.63 | (2.11) | $23.19 | 7.16% | 1.00% | (0.30)% | 85% | $3,787,202 | ||
2017 | $21.28 | (0.03) | 4.18 | 4.15 | (1.76) | $23.67 | 20.77% | 1.01% | (0.15)% | 56% | $4,083,669 | ||
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 | ||
I Class | |||||||||||||
2020(3) | $23.52 | (0.01) | (0.28) | (0.29) | (2.35) | $20.88 | (1.90)% | 0.80%(4) | (0.10)%(4) | 43% | $264,413 | ||
2019 | $24.66 | (0.04) | 3.22 | 3.18 | (4.32) | $23.52 | 17.50% | 0.80% | (0.18)% | 82% | $336,242 | ||
2018 | $25.00 | (0.03) | 1.80 | 1.77 | (2.11) | $24.66 | 7.35% | 0.80% | (0.10)% | 85% | $247,267 | ||
2017 | $22.34 | —(5) | 4.42 | 4.42 | (1.76) | $25.00 | 21.01% | 0.81% | 0.05% | 56% | $262,095 | ||
2016 | $25.62 | —(5) | (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 |
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) | |||
Y Class | |||||||||||||
2020(3) | $23.84 | —(5) | (0.28) | (0.28) | (2.35) | $21.21 | (1.83)% | 0.65%(4) | 0.05%(4) | 43% | $60,648 | ||
2019 | $24.90 | (0.01) | 3.27 | 3.26 | (4.32) | $23.84 | 17.68% | 0.65% | (0.03)% | 82% | $29,803 | ||
2018 | $25.19 | —(5) | 1.82 | 1.82 | (2.11) | $24.90 | 7.51% | 0.65% | 0.05% | 85% | $9,694 | ||
2017(6) | $22.84 | 0.02 | 2.33 | 2.35 | — | $25.19 | 10.29% | 0.66%(4) | 0.12%(4) | 56%(7) | $6 | ||
A Class | |||||||||||||
2020(3) | $19.61 | (0.05) | (0.20) | (0.25) | (2.35) | $17.01 | (2.10)% | 1.25%(4) | (0.55)%(4) | 43% | $233,411 | ||
2019 | $21.42 | (0.12) | 2.63 | 2.51 | (4.32) | $19.61 | 16.91% | 1.25% | (0.63)% | 82% | $263,578 | ||
2018 | $22.07 | (0.12) | 1.58 | 1.46 | (2.11) | $21.42 | 6.89% | 1.25% | (0.55)% | 85% | $276,813 | ||
2017 | $20.00 | (0.08) | 3.91 | 3.83 | (1.76) | $22.07 | 20.48% | 1.26% | (0.40)% | 56% | $353,039 | ||
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 | ||
C Class | |||||||||||||
2020(3) | $14.54 | (0.08) | (0.12) | (0.20) | (2.35) | $11.99 | (2.53)% | 2.00%(4) | (1.30)%(4) | 43% | $31,495 | ||
2019 | $17.18 | (0.19) | 1.87 | 1.68 | (4.32) | $14.54 | 16.06% | 2.00% | (1.38)% | 82% | $39,794 | ||
2018 | $18.22 | (0.23) | 1.30 | 1.07 | (2.11) | $17.18 | 6.13% | 2.00% | (1.30)% | 85% | $57,552 | ||
2017 | $16.92 | (0.19) | 3.25 | 3.06 | (1.76) | $18.22 | 19.58% | 2.01% | (1.15)% | 56% | $88,629 | ||
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 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||
2020(3) | $19.58 | (0.07) | (0.21) | (0.28) | (2.35) | $16.95 | (2.27)% | 1.50%(4) | (0.80)%(4) | 43% | $29,656 | ||
2019 | $21.43 | (0.17) | 2.64 | 2.47 | (4.32) | $19.58 | 16.66% | 1.50% | (0.88)% | 82% | $32,803 | ||
2018 | $22.13 | (0.18) | 1.59 | 1.41 | (2.11) | $21.43 | 6.62% | 1.50% | (0.80)% | 85% | $32,464 | ||
2017 | $20.10 | (0.13) | 3.92 | 3.79 | (1.76) | $22.13 | 20.16% | 1.51% | (0.65)% | 56% | $39,033 | ||
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 | ||
R5 Class | |||||||||||||
2020(3) | $23.52 | (0.01) | (0.28) | (0.29) | (2.35) | $20.88 | (1.90)% | 0.80%(4) | (0.10)%(4) | 43% | $1,067 | ||
2019 | $24.66 | (0.04) | 3.22 | 3.18 | (4.32) | $23.52 | 17.50% | 0.80% | (0.18)% | 82% | $3,663 | ||
2018 | $25.00 | (0.04) | 1.81 | 1.77 | (2.11) | $24.66 | 7.35% | 0.80% | (0.10)% | 85% | $3,053 | ||
2017(6) | $22.69 | —(5) | 2.31 | 2.31 | — | $25.00 | 10.18% | 0.81%(4) | (0.03)%(4) | 56%(7) | $114 | ||
R6 Class | |||||||||||||
2020(3) | $23.84 | 0.01 | (0.29) | (0.28) | (2.35) | $21.21 | (1.83)% | 0.65%(4) | 0.05%(4) | 43% | $121,353 | ||
2019 | $24.90 | (0.01) | 3.27 | 3.26 | (4.32) | $23.84 | 17.68% | 0.65% | (0.03)% | 82% | $134,822 | ||
2018 | $25.19 | 0.02 | 1.80 | 1.82 | (2.11) | $24.90 | 7.51% | 0.65% | 0.05% | 85% | $132,651 | ||
2017 | $22.46 | 0.04 | 4.45 | 4.49 | (1.76) | $25.19 | 21.22% | 0.66% | 0.20% | 56% | $186,335 | ||
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 |
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, 2020 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
24
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
25
Notes |
26
Notes |
27
Notes |
28
Notes |
29
Notes |
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92365 2006 |
Semiannual Report | |
April 30, 2020 | |
NT Growth Fund | |
G Class (ACLTX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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, 2020 | |
Top Ten Holdings | % of net assets |
Microsoft Corp. | 12.1% |
Amazon.com, Inc. | 9.1% |
Alphabet, Inc., Class A | 8.5% |
Apple, Inc. | 6.9% |
Visa, Inc., Class A | 5.5% |
PayPal Holdings, Inc. | 3.0% |
Facebook, Inc., Class A | 2.6% |
SBA Communications Corp. | 2.4% |
UnitedHealth Group, Inc. | 2.4% |
Union Pacific Corp. | 2.3% |
Top Five Industries | % of net assets |
Software | 15.9% |
Interactive Media and Services | 11.7% |
IT Services | 9.5% |
Internet and Direct Marketing Retail | 9.5% |
Technology Hardware, Storage and Peripherals | 6.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.9% |
Exchange-Traded Funds | 0.3% |
Total Equity Exposure | 100.2% |
Temporary Cash Investments | 0.1% |
Other Assets and Liabilities | (0.3)% |
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, 2019 to April 30, 2020.
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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
G Class | $1,000 | $1,068.00 | $0.05 | 0.01% |
Hypothetical | ||||
G Class | $1,000 | $1,024.81 | $0.05 | 0.01% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
3
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.9% | |||||
Aerospace and Defense — 1.7% | |||||
Lockheed Martin Corp. | 32,651 | $ | 12,703,198 | ||
Auto Components — 1.1% | |||||
Aptiv plc | 116,020 | 8,069,191 | |||
Biotechnology — 2.1% | |||||
Biogen, Inc.(1) | 19,438 | 5,769,782 | |||
CRISPR Therapeutics AG(1) | 8,350 | 410,820 | |||
Vertex Pharmaceuticals, Inc.(1) | 39,695 | 9,971,384 | |||
16,151,986 | |||||
Capital Markets — 0.5% | |||||
Charles Schwab Corp. (The) | 97,097 | 3,662,499 | |||
Consumer Finance — 0.4% | |||||
American Express Co. | 31,316 | 2,857,585 | |||
Electrical Equipment — 1.1% | |||||
Ballard Power Systems, Inc.(1) | 40,290 | 409,346 | |||
Rockwell Automation, Inc. | 42,243 | 8,004,204 | |||
8,413,550 | |||||
Electronic Equipment, Instruments and Components — 0.8% | |||||
CDW Corp. | 54,583 | 6,047,796 | |||
Entertainment — 1.7% | |||||
Liberty Media Corp.-Liberty Formula One, Class C(1) | 82,938 | 2,669,774 | |||
Take-Two Interactive Software, Inc.(1) | 42,972 | 5,201,761 | |||
Walt Disney Co. (The) | 48,830 | 5,280,964 | |||
13,152,499 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.1% | |||||
Equity Residential | 70,101 | 4,560,771 | |||
SBA Communications Corp. | 63,480 | 18,404,122 | |||
22,964,893 | |||||
Food and Staples Retailing — 0.5% | |||||
Walmart, Inc. | 31,697 | 3,852,770 | |||
Food Products — 1.3% | |||||
Beyond Meat, Inc.(1) | 21,410 | 2,119,376 | |||
Mondelez International, Inc., Class A | 147,877 | 7,606,793 | |||
9,726,169 | |||||
Health Care Equipment and Supplies — 4.0% | |||||
Baxter International, Inc. | 115,058 | 10,214,849 | |||
Boston Scientific Corp.(1) | 272,250 | 10,203,930 | |||
Edwards Lifesciences Corp.(1) | 17,997 | 3,914,348 | |||
Intuitive Surgical, Inc.(1) | 11,614 | 5,933,360 | |||
30,266,487 | |||||
Health Care Providers and Services — 2.8% | |||||
Quest Diagnostics, Inc. | 21,741 | 2,393,901 |
4
Shares | Value | ||||
UnitedHealth Group, Inc. | 62,551 | $ | 18,294,291 | ||
20,688,192 | |||||
Hotels, Restaurants and Leisure — 2.9% | |||||
Chipotle Mexican Grill, Inc.(1) | 6,756 | 5,935,484 | |||
Domino's Pizza, Inc. | 8,239 | 2,981,941 | |||
Las Vegas Sands Corp. | 96,913 | 4,653,762 | |||
Starbucks Corp. | 108,863 | 8,353,058 | |||
21,924,245 | |||||
Household Products — 1.6% | |||||
Procter & Gamble Co. (The) | 104,116 | 12,272,153 | |||
Insurance — 1.0% | |||||
Progressive Corp. (The) | 98,505 | 7,614,437 | |||
Interactive Media and Services — 11.7% | |||||
Alphabet, Inc., Class A(1) | 47,522 | 63,997,877 | |||
Facebook, Inc., Class A(1) | 94,775 | 19,401,390 | |||
Twitter, Inc.(1) | 146,357 | 4,197,519 | |||
87,596,786 | |||||
Internet and Direct Marketing Retail — 9.5% | |||||
Amazon.com, Inc.(1) | 27,582 | 68,237,868 | |||
Chewy, Inc., Class A(1) | 22,564 | 975,667 | |||
Expedia Group, Inc. | 28,503 | 2,023,143 | |||
71,236,678 | |||||
IT Services — 9.5% | |||||
Fastly, Inc., Class A(1) | 136,246 | 2,949,726 | |||
PayPal Holdings, Inc.(1) | 183,650 | 22,588,950 | |||
Square, Inc., Class A(1) | 6,511 | 424,127 | |||
VeriSign, Inc.(1) | 19,023 | 3,985,128 | |||
Visa, Inc., Class A | 231,593 | 41,390,301 | |||
71,338,232 | |||||
Life Sciences Tools and Services — 1.3% | |||||
Agilent Technologies, Inc. | 52,066 | 3,991,380 | |||
Illumina, Inc.(1) | 17,204 | 5,488,592 | |||
9,479,972 | |||||
Machinery — 1.7% | |||||
Cummins, Inc. | 76,189 | 12,456,902 | |||
Personal Products — 0.8% | |||||
Estee Lauder Cos., Inc. (The), Class A | 35,416 | 6,247,382 | |||
Pharmaceuticals — 4.1% | |||||
Merck & Co., Inc. | 185,916 | 14,750,575 | |||
Novo Nordisk A/S, B Shares | 173,767 | 11,095,726 | |||
Zoetis, Inc. | 38,357 | 4,959,944 | |||
30,806,245 | |||||
Road and Rail — 2.7% | |||||
Lyft, Inc., Class A(1) | 93,191 | 3,059,460 | |||
Union Pacific Corp. | 109,434 | 17,486,459 | |||
20,545,919 | |||||
Semiconductors and Semiconductor Equipment — 6.4% | |||||
Advanced Micro Devices, Inc.(1) | 8,568 | 448,878 |
5
Shares | Value | ||||
Analog Devices, Inc. | 66,914 | $ | 7,333,774 | ||
Applied Materials, Inc. | 96,086 | 4,773,552 | |||
ASML Holding NV | 34,723 | 10,314,423 | |||
Broadcom, Inc. | 33,484 | 9,094,924 | |||
NVIDIA Corp. | 56,345 | 16,468,517 | |||
48,434,068 | |||||
Software — 15.9% | |||||
Anaplan, Inc.(1) | 53,603 | 2,190,219 | |||
Datadog, Inc., Class A(1) | 38,071 | 1,717,763 | |||
Microsoft Corp. | 509,243 | 91,261,438 | |||
PagerDuty, Inc.(1) | 116,300 | 2,455,093 | |||
salesforce.com, Inc.(1) | 70,889 | 11,480,474 | |||
Slack Technologies, Inc., Class A(1) | 115,887 | 3,093,024 | |||
Zendesk, Inc.(1) | 74,450 | 5,723,716 | |||
Zoom Video Communications, Inc., Class A(1) | 9,470 | 1,280,060 | |||
119,201,787 | |||||
Specialty Retail — 1.2% | |||||
TJX Cos., Inc. (The) | 181,743 | 8,914,494 | |||
Technology Hardware, Storage and Peripherals — 6.9% | |||||
Apple, Inc. | 175,401 | 51,532,814 | |||
Textiles, Apparel and Luxury Goods — 1.6% | |||||
NIKE, Inc., Class B | 140,494 | 12,248,267 | |||
TOTAL COMMON STOCKS (Cost $382,558,765) | 750,407,196 | ||||
EXCHANGE-TRADED FUNDS — 0.3% | |||||
iShares Russell 1000 Growth ETF (Cost $1,749,538) | 13,238 | 2,287,262 | |||
TEMPORARY CASH INVESTMENTS — 0.1% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $422,389), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $413,817) | 413,817 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.25%, 8/15/49, valued at $788,060), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $767,000) | 767,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 597 | 597 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,181,414) | 1,181,414 | ||||
TOTAL INVESTMENT SECURITIES — 100.3% (Cost $385,489,717) | 753,875,872 | ||||
OTHER ASSETS AND LIABILITIES — (0.3)% | (2,611,758 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 751,264,114 |
6
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 768,854 | USD | 825,810 | Credit Suisse AG | 6/30/20 | $ | 17,697 | |||
EUR | 575,534 | USD | 637,373 | Credit Suisse AG | 6/30/20 | (5,957 | ) | |||
EUR | 302,524 | USD | 329,128 | Credit Suisse AG | 6/30/20 | 2,770 | ||||
EUR | 187,417 | USD | 202,963 | Credit Suisse AG | 6/30/20 | 2,652 | ||||
EUR | 247,922 | USD | 269,469 | Credit Suisse AG | 6/30/20 | 2,525 | ||||
EUR | 264,155 | USD | 286,254 | Credit Suisse AG | 6/30/20 | 3,550 | ||||
USD | 6,801,661 | EUR | 6,255,609 | Credit Suisse AG | 6/30/20 | (61,344 | ) | |||
USD | 478,888 | EUR | 447,145 | Credit Suisse AG | 6/30/20 | (11,673 | ) | |||
USD | 443,987 | EUR | 411,728 | Credit Suisse AG | 6/30/20 | (7,718 | ) | |||
USD | 804,176 | EUR | 737,864 | Credit Suisse AG | 6/30/20 | (5,332 | ) | |||
USD | 295,121 | EUR | 265,631 | Credit Suisse AG | 6/30/20 | 3,698 | ||||
USD | 496,952 | EUR | 450,097 | Credit Suisse AG | 6/30/20 | 3,152 | ||||
USD | 556,429 | EUR | 509,126 | Credit Suisse AG | 6/30/20 | (2,131 | ) | |||
USD | 213,639 | EUR | 196,272 | Credit Suisse AG | 6/30/20 | (1,690 | ) | |||
USD | 361,543 | EUR | 330,563 | Credit Suisse AG | 6/30/20 | (1,116 | ) | |||
USD | 408,224 | EUR | 374,835 | Credit Suisse AG | 6/30/20 | (3,006 | ) | |||
USD | 305,823 | EUR | 283,340 | Credit Suisse AG | 6/30/20 | (5,028 | ) | |||
USD | 267,778 | EUR | 244,971 | Credit Suisse AG | 6/30/20 | (979 | ) | |||
$ | (69,930 | ) |
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, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $385,489,717) | $ | 753,875,872 | |
Receivable for investments sold | 3,577,749 | ||
Receivable for capital shares sold | 288 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 36,044 | ||
Dividends and interest receivable | 200,351 | ||
757,690,304 | |||
Liabilities | |||
Payable for investments purchased | 2,758,191 | ||
Payable for capital shares redeemed | 3,562,025 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 105,974 | ||
6,426,190 | |||
Net Assets | $ | 751,264,114 | |
G Class Capital Shares, $0.01 Par Value | |||
Shares authorized | 780,000,000 | ||
Shares outstanding | 44,833,137 | ||
Net Asset Value Per Share | $ | 16.76 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 260,742,808 | |
Distributable earnings | 490,521,306 | ||
$ | 751,264,114 |
See Notes to Financial Statements.
8
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $39,361) | $ | 4,913,010 | |
Interest | 119,569 | ||
Securities lending, net | 61,793 | ||
5,094,372 | |||
Expenses: | |||
Management fees | 2,606,690 | ||
Directors' fees and expenses | 13,863 | ||
Other expenses | 15,633 | ||
2,636,186 | |||
Fees waived | (2,606,690 | ) | |
29,496 | |||
Net investment income (loss) | 5,064,876 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 123,012,257 | ||
Forward foreign currency exchange contract transactions | 272,127 | ||
Futures contract transactions | 1,408,205 | ||
Foreign currency translation transactions | (2,169 | ) | |
124,690,420 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (63,240,106 | ) | |
Forward foreign currency exchange contracts | (4,806 | ) | |
Futures contracts | (191,844 | ) | |
Translation of assets and liabilities in foreign currencies | 586 | ||
(63,436,170 | ) | ||
Net realized and unrealized gain (loss) | 61,254,250 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 66,319,126 |
See Notes to Financial Statements.
9
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,064,876 | $ | 13,258,376 | ||
Net realized gain (loss) | 124,690,420 | 117,578,603 | ||||
Change in net unrealized appreciation (depreciation) | (63,436,170 | ) | 56,285,542 | |||
Net increase (decrease) in net assets resulting from operations | 66,319,126 | 187,122,521 | ||||
Distributions to Shareholders | ||||||
From earnings | (121,765,935 | ) | (183,752,693 | ) | ||
Capital Share Transactions | ||||||
Proceeds from shares sold | 33,300,136 | 131,041,452 | ||||
Proceeds from reinvestment of distributions | 121,765,935 | 183,752,693 | ||||
Payments for shares redeemed | (425,590,505 | ) | (400,315,276 | ) | ||
Net increase (decrease) in net assets from capital share transactions | (270,524,434 | ) | (85,521,131 | ) | ||
Net increase (decrease) in net assets | (325,971,243 | ) | (82,151,303 | ) | ||
Net Assets | ||||||
Beginning of period | 1,077,235,357 | 1,159,386,660 | ||||
End of period | $ | 751,264,114 | $ | 1,077,235,357 | ||
Transactions in Shares of the Fund | ||||||
Sold | 2,157,406 | 7,637,963 | ||||
Issued in reinvestment of distributions | 7,300,116 | 12,655,144 | ||||
Redeemed | (23,953,362 | ) | (23,336,412 | ) | ||
Net increase (decrease) in shares of the fund | (14,495,840 | ) | (3,043,305 | ) |
See Notes to Financial Statements.
10
Notes to Financial Statements |
APRIL 30, 2020 (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 or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the G 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 exchange. 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.
11
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. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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 certain types of investment securities and other financial instruments. 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 collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
12
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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). The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that 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 ranges from 0.450% to 0.640%. The investment advisor agreed to waive the fund's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended April 30, 2020 was 0.62% before waiver and 0.00% after waiver.
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 were $220,459 and there were no interfund sales.
13
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2020 were $162,015,734 and $513,964,122, respectively.
5. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 728,997,047 | $ | 21,410,149 | — | |||
Exchange-Traded Funds | 2,287,262 | — | — | |||||
Temporary Cash Investments | 597 | 1,180,817 | — | |||||
$ | 731,284,906 | $ | 22,590,966 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 36,044 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 105,974 | — |
6. 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.
14
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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $14,921,284.
Value of Derivative Instruments as of April 30, 2020
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 | $ | 36,044 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 105,974 |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2020
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 | $ | 1,408,205 | Change in net unrealized appreciation (depreciation) on futures contracts | $ | (191,844 | ) | |
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 272,127 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | (4,806 | ) | |||
$ | 1,680,332 | $ | (196,650 | ) |
7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
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 | $ | 389,893,520 | |
Gross tax appreciation of investments | $ | 368,524,675 | |
Gross tax depreciation of investments | (4,542,323 | ) | |
Net tax appreciation (depreciation) of investments | $ | 363,982,352 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
16
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | 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) | |||
G Class | |||||||||||||||||
2020(3) | $18.16 | 0.10 | 1.12 | 1.22 | (0.27) | (2.35) | (2.62) | $16.76 | 6.80% | 0.01%(4) | 0.63%(4) | 1.21%(4) | 0.59%(4) | 19% | $751,264 | ||
2019 | $18.59 | 0.20 | 2.41 | 2.61 | (0.22) | (2.82) | (3.04) | $18.16 | 18.16% | 0.00%(5) | 0.63% | 1.20% | 0.57% | 43% | $1,077,235 | ||
2018 | $18.38 | 0.20 | 1.80 | 2.00 | (0.13) | (1.66) | (1.79) | $18.59 | 11.50% | 0.00%(5) | 0.62% | 1.09% | 0.47% | 53% | $1,159,387 | ||
2017 | $14.62 | 0.11 | 4.00 | 4.11 | (0.12) | (0.23) | (0.35) | $18.38 | 28.64% | 0.56% | 0.74% | 0.67% | 0.49% | 64% | $1,364,741 | ||
2016 | $15.57 | 0.11 | (0.06) | 0.05 | (0.07) | (0.93) | (1.00) | $14.62 | 0.49% | 0.78% | 0.78% | 0.74% | 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% | 0.77% | 0.52% | 0.52% | 82% | $1,051,077 |
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, 2020 (unaudited). |
(4) | Annualized. |
(5) | Ratio was less than 0.005%. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
18
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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
Notes |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92374 2006 |
Semiannual Report | |
April 30, 2020 | |
NT Heritage Fund | |
G Class (ACLWX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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, 2020 | |
Top Ten Holdings | % of net assets |
Fiserv, Inc. | 3.8% |
SBA Communications Corp. | 3.6% |
Cadence Design Systems, Inc. | 2.9% |
F5 Networks, Inc. | 2.9% |
Cognex Corp. | 2.7% |
Square, Inc., Class A | 2.7% |
Teleflex, Inc. | 2.4% |
Twitter, Inc. | 2.3% |
MSCI, Inc. | 2.3% |
Arista Networks, Inc. | 2.2% |
Top Five Industries | % of net assets |
Software | 11.6% |
IT Services | 8.1% |
Semiconductors and Semiconductor Equipment | 7.8% |
Health Care Equipment and Supplies | 7.4% |
Capital Markets | 5.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 102.3% |
Temporary Cash Investments | 0.8% |
Other Assets and Liabilities | (3.1)% |
2
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2019 to April 30, 2020.
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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
G Class | $1,000 | $983.50 | $0.05 | 0.01% |
Hypothetical | ||||
G Class | $1,000 | $1,024.81 | $0.05 | 0.01% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
3
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 102.3% | |||||
Aerospace and Defense — 1.3% | |||||
HEICO Corp. | 78,925 | $ | 6,913,830 | ||
Auto Components — 1.1% | |||||
Aptiv plc | 86,047 | 5,984,569 | |||
Beverages — 1.2% | |||||
Constellation Brands, Inc., Class A | 38,565 | 6,351,270 | |||
Biotechnology — 4.4% | |||||
ACADIA Pharmaceuticals, Inc.(1) | 58,761 | 2,838,744 | |||
Alnylam Pharmaceuticals, Inc.(1) | 27,647 | 3,641,110 | |||
Argenx SE ADR(1) | 15,289 | 2,239,685 | |||
Exact Sciences Corp.(1) | 69,334 | 5,475,999 | |||
Immunomedics, Inc.(1) | 217,407 | 6,604,825 | |||
Turning Point Therapeutics, Inc.(1) | 41,486 | 2,136,944 | |||
22,937,307 | |||||
Building Products — 2.7% | |||||
Fortune Brands Home & Security, Inc. | 172,994 | 8,338,311 | |||
Trane Technologies plc | 69,634 | 6,087,404 | |||
14,425,715 | |||||
Capital Markets — 5.4% | |||||
LPL Financial Holdings, Inc. | 179,496 | 10,809,249 | |||
MarketAxess Holdings, Inc. | 12,681 | 5,769,982 | |||
MSCI, Inc. | 36,386 | 11,898,222 | |||
28,477,453 | |||||
Chemicals — 0.5% | |||||
Albemarle Corp. | 40,548 | 2,490,864 | |||
Commercial Services and Supplies — 0.7% | |||||
Cintas Corp. | 15,566 | 3,453,006 | |||
Communications Equipment — 5.1% | |||||
Arista Networks, Inc.(1) | 53,044 | 11,632,549 | |||
F5 Networks, Inc.(1) | 107,349 | 14,949,422 | |||
26,581,971 | |||||
Construction Materials — 0.7% | |||||
Vulcan Materials Co. | 32,898 | 3,716,487 | |||
Containers and Packaging — 1.4% | |||||
Ball Corp. | 113,916 | 7,471,750 | |||
Distributors — 1.1% | |||||
LKQ Corp.(1) | 220,666 | 5,770,416 | |||
Diversified Consumer Services — 1.6% | |||||
Bright Horizons Family Solutions, Inc.(1) | 38,580 | 4,492,641 | |||
Chegg, Inc.(1) | 97,070 | 4,149,742 | |||
8,642,383 | |||||
Electrical Equipment — 3.9% | |||||
AMETEK, Inc. | 131,411 | 11,021,440 |
4
Shares | Value | ||||
nVent Electric plc | 259,024 | $ | 4,830,798 | ||
Sensata Technologies Holding plc(1) | 133,935 | 4,872,555 | |||
20,724,793 | |||||
Electronic Equipment, Instruments and Components — 4.4% | |||||
Cognex Corp. | 252,596 | 13,953,403 | |||
Keysight Technologies, Inc.(1) | 94,822 | 9,175,925 | |||
23,129,328 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.6% | |||||
SBA Communications Corp. | 65,780 | 19,070,938 | |||
Health Care Equipment and Supplies — 7.4% | |||||
Align Technology, Inc.(1) | 16,442 | 3,532,564 | |||
DexCom, Inc.(1) | 26,766 | 8,971,963 | |||
Masimo Corp.(1) | 42,650 | 9,123,261 | |||
Teleflex, Inc. | 38,281 | 12,839,447 | |||
Varian Medical Systems, Inc.(1) | 39,175 | 4,480,837 | |||
38,948,072 | |||||
Health Care Providers and Services — 4.0% | |||||
Centene Corp.(1) | 147,443 | 9,816,755 | |||
Encompass Health Corp. | 171,905 | 11,388,706 | |||
21,205,461 | |||||
Health Care Technology — 1.8% | |||||
Veeva Systems, Inc., Class A(1) | 48,182 | 9,193,126 | |||
Hotels, Restaurants and Leisure — 5.2% | |||||
Chipotle Mexican Grill, Inc.(1) | 11,173 | 9,816,039 | |||
Hilton Worldwide Holdings, Inc. | 54,709 | 4,142,018 | |||
Las Vegas Sands Corp. | 116,082 | 5,574,258 | |||
Planet Fitness, Inc., Class A(1) | 125,738 | 7,585,774 | |||
27,118,089 | |||||
Household Durables — 0.9% | |||||
D.R. Horton, Inc. | 95,292 | 4,499,688 | |||
Interactive Media and Services — 2.3% | |||||
Twitter, Inc.(1) | 421,148 | 12,078,525 | |||
IT Services — 8.1% | |||||
Fiserv, Inc.(1) | 195,360 | 20,133,801 | |||
Square, Inc., Class A(1) | 213,969 | 13,937,941 | |||
Twilio, Inc., Class A(1) | 75,085 | 8,432,045 | |||
42,503,787 | |||||
Life Sciences Tools and Services — 2.4% | |||||
Bruker Corp. | 146,066 | 5,743,315 | |||
Mettler-Toledo International, Inc.(1) | 9,776 | 7,038,133 | |||
12,781,448 | |||||
Machinery — 1.9% | |||||
Graco, Inc. | 114,994 | 5,135,632 | |||
Parker-Hannifin Corp. | 31,050 | 4,909,626 | |||
10,045,258 | |||||
Personal Products — 1.0% | |||||
Shiseido Co. Ltd. | 92,900 | 5,480,147 |
5
Shares | Value | ||||
Professional Services — 2.9% | |||||
IHS Markit Ltd. | 82,903 | $ | 5,579,372 | ||
Verisk Analytics, Inc. | 62,913 | 9,614,994 | |||
15,194,366 | |||||
Road and Rail — 1.4% | |||||
J.B. Hunt Transport Services, Inc. | 73,006 | 7,382,367 | |||
Semiconductors and Semiconductor Equipment — 7.8% | |||||
Advanced Micro Devices, Inc.(1) | 201,298 | 10,546,002 | |||
Marvell Technology Group Ltd. | 201,979 | 5,400,919 | |||
Micron Technology, Inc.(1) | 166,472 | 7,972,344 | |||
Skyworks Solutions, Inc. | 57,433 | 5,966,140 | |||
Teradyne, Inc. | 111,761 | 6,989,533 | |||
Xilinx, Inc. | 46,410 | 4,056,234 | |||
40,931,172 | |||||
Software — 11.6% | |||||
Atlassian Corp. plc, Class A(1) | 50,372 | 7,832,342 | |||
Cadence Design Systems, Inc.(1) | 186,285 | 15,113,302 | |||
Coupa Software, Inc.(1) | 22,016 | 3,876,798 | |||
Envestnet, Inc.(1) | 67,259 | 4,205,033 | |||
Palo Alto Networks, Inc.(1) | 34,963 | 6,870,579 | |||
Proofpoint, Inc.(1) | 52,663 | 6,410,667 | |||
RingCentral, Inc., Class A(1) | 31,234 | 7,137,906 | |||
Splunk, Inc.(1) | 69,578 | 9,765,968 | |||
61,212,595 | |||||
Specialty Retail — 3.0% | |||||
Burlington Stores, Inc.(1) | 52,550 | 9,600,359 | |||
Five Below, Inc.(1) | 68,197 | 6,148,642 | |||
15,749,001 | |||||
Textiles, Apparel and Luxury Goods — 0.8% | |||||
lululemon athletica, Inc.(1) | 18,811 | 4,203,882 | |||
Trading Companies and Distributors — 0.7% | |||||
Fastenal Co. | 101,214 | 3,665,971 | |||
TOTAL COMMON STOCKS (Cost $458,175,606) | 538,335,035 | ||||
TEMPORARY CASH INVESTMENTS — 0.8% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $1,465,462), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $1,435,722) | 1,435,722 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.25%, 8/15/49, valued at $2,726,938), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $2,669,001) | 2,669,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 2,073 | 2,073 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $4,106,795) | 4,106,795 | ||||
TOTAL INVESTMENT SECURITIES — 103.1% (Cost $462,282,401) | 542,441,830 | ||||
OTHER ASSETS AND LIABILITIES — (3.1)% | (16,506,868 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 525,934,962 |
6
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
JPY | 12,625,110 | USD | 115,175 | Bank of America N.A. | 6/30/20 | $ | 2,567 | |||
JPY | 22,909,140 | USD | 211,780 | Bank of America N.A. | 6/30/20 | 1,872 | ||||
JPY | 13,043,160 | USD | 121,859 | Bank of America N.A. | 6/30/20 | (218 | ) | |||
JPY | 23,661,630 | USD | 221,515 | Bank of America N.A. | 6/30/20 | (846 | ) | |||
JPY | 12,457,890 | USD | 116,369 | Bank of America N.A. | 6/30/20 | (187 | ) | |||
JPY | 12,625,110 | USD | 117,610 | Bank of America N.A. | 6/30/20 | 132 | ||||
JPY | 24,163,290 | USD | 225,179 | Bank of America N.A. | 6/30/20 | 169 | ||||
JPY | 12,123,450 | USD | 113,832 | Bank of America N.A. | 6/30/20 | (768 | ) | |||
USD | 4,479,628 | JPY | 487,697,130 | Bank of America N.A. | 6/30/20 | (68,649 | ) | |||
USD | 213,630 | JPY | 23,661,630 | Bank of America N.A. | 6/30/20 | (7,039 | ) | |||
USD | 403,695 | JPY | 44,146,080 | Bank of America N.A. | 6/30/20 | (8,013 | ) | |||
USD | 247,541 | JPY | 26,671,590 | Bank of America N.A. | 6/30/20 | (1,199 | ) | |||
USD | 119,122 | JPY | 12,959,550 | Bank of America N.A. | 6/30/20 | (1,739 | ) | |||
USD | 136,970 | JPY | 14,882,580 | Bank of America N.A. | 6/30/20 | (1,826 | ) | |||
USD | 165,289 | JPY | 17,808,930 | Bank of America N.A. | 6/30/20 | (797 | ) | |||
USD | 165,908 | JPY | 17,808,930 | Bank of America N.A. | 6/30/20 | (179 | ) | |||
USD | 236,715 | JPY | 25,501,050 | Bank of America N.A. | 6/30/20 | (1,109 | ) | |||
$ | (87,829 | ) |
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.
7
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $462,282,401) | $ | 542,441,830 | |
Receivable for investments sold | 685,112 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 4,740 | ||
Dividends and interest receivable | 105,274 | ||
543,236,956 | |||
Liabilities | |||
Payable for investments purchased | 3,433,845 | ||
Payable for capital shares redeemed | 13,775,580 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 92,569 | ||
17,301,994 | |||
Net Assets | $ | 525,934,962 | |
G Class Capital Shares, $0.01 Par Value | |||
Shares authorized | 600,000,000 | ||
Shares outstanding | 47,597,644 | ||
Net Asset Value Per Share | $ | 11.05 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 415,776,692 | |
Distributable earnings | 110,158,270 | ||
$ | 525,934,962 |
See Notes to Financial Statements.
8
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,985) | $ | 1,919,360 | |
Interest | 33,262 | ||
Securities lending, net | 1,681 | ||
1,954,303 | |||
Expenses: | |||
Management fees | 1,823,359 | ||
Directors' fees and expenses | 9,110 | ||
Other expenses | 7,497 | ||
1,839,966 | |||
Fees waived | (1,823,359 | ) | |
16,607 | |||
Net investment income (loss) | 1,937,696 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 33,902,531 | ||
Forward foreign currency exchange contract transactions | 94,099 | ||
Foreign currency translation transactions | (73 | ) | |
33,996,557 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (34,651,965 | ) | |
Forward foreign currency exchange contracts | (100,309 | ) | |
(34,752,274 | ) | ||
Net realized and unrealized gain (loss) | (755,717 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,181,979 |
See Notes to Financial Statements.
9
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,937,696 | $ | 3,852,250 | ||
Net realized gain (loss) | 33,996,557 | 80,423,875 | ||||
Change in net unrealized appreciation (depreciation) | (34,752,274 | ) | 20,173,100 | |||
Net increase (decrease) in net assets resulting from operations | 1,181,979 | 104,449,225 | ||||
Distributions to Shareholders | ||||||
From earnings | (81,790,080 | ) | (142,583,485 | ) | ||
Capital Share Transactions | ||||||
Proceeds from shares sold | 47,040,155 | 49,849,275 | ||||
Proceeds from reinvestment of distributions | 81,790,080 | 142,583,485 | ||||
Payments for shares redeemed | (124,111,248 | ) | (244,279,493 | ) | ||
Net increase (decrease) in net assets from capital share transactions | 4,718,987 | (51,846,733 | ) | |||
Net increase (decrease) in net assets | (75,889,114 | ) | (89,980,993 | ) | ||
Net Assets | ||||||
Beginning of period | 601,824,076 | 691,805,069 | ||||
End of period | $ | 525,934,962 | $ | 601,824,076 | ||
Transactions in Shares of the Fund | ||||||
Sold | 4,562,953 | 4,017,174 | ||||
Issued in reinvestment of distributions | 6,931,363 | 13,992,491 | ||||
Redeemed | (10,336,290 | ) | (19,173,722 | ) | ||
Net increase (decrease) in shares of the fund | 1,158,026 | (1,164,057 | ) |
See Notes to Financial Statements.
10
Notes to Financial Statements |
APRIL 30, 2020 (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 or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the G Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
11
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. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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 certain types of investment securities and other financial instruments. 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 collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
12
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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, 99% 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). The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The annual management fee is 0.65%. The investment advisor agreed to waive the management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended April 30, 2020 was 0.00% after waiver.
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 $549,300 and $1,076,057, respectively. The effect of interfund transactions on the Statement of Operations was $297,026 in net realized gain (loss) on investment transactions.
13
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2020 were $298,458,854 and $349,731,252, respectively.
5. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 532,854,888 | $ | 5,480,147 | — | |||
Temporary Cash Investments | 2,073 | 4,104,722 | — | |||||
$ | 532,856,961 | $ | 9,584,869 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 4,740 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 92,569 | — |
6. 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $5,951,199.
14
The value of foreign currency risk derivative instruments as of April 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $4,740 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $92,569 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2020, the effect of foreign currency risk derivative instruments on the Statement of Operations was $94,099 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(100,309) in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
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 | $ | 469,128,349 | |
Gross tax appreciation of investments | $ | 97,581,352 | |
Gross tax depreciation of investments | (24,267,871 | ) | |
Net tax appreciation (depreciation) of investments | $ | 73,313,481 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
15
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) | |||
G Class | |||||||||||||||||
2020(3) | $12.96 | 0.04 | (0.13) | (0.09) | (0.07) | (1.75) | (1.82) | $11.05 | (1.65)% | 0.01%(4) | 0.66%(4) | 0.69%(4) | 0.04%(4) | 54% | $525,935 | ||
2019 | $14.53 | 0.08 | 1.66 | 1.74 | (0.12) | (3.19) | (3.31) | $12.96 | 18.18% | 0.01% | 0.66% | 0.62% | (0.03)% | 92% | $601,824 | ||
2018 | $14.41 | 0.10 | 1.05 | 1.15 | (0.05) | (0.98) | (1.03) | $14.53 | 8.19% | 0.00%(5) | 0.65% | 0.71% | 0.06% | 90% | $691,805 | ||
2017 | $12.31 | 0.04 | 2.50 | 2.54 | — | (0.44) | (0.44) | $14.41 | 21.29% | 0.58% | 0.76% | 0.27% | 0.09% | 67% | $822,910 | ||
2016 | $13.65 | —(6) | (0.28) | (0.28) | — | (1.06) | (1.06) | $12.31 | (2.01)% | 0.80% | 0.80% | (0.02)% | (0.02)% | 73% | $649,951 | ||
2015 | $13.37 | (0.03) | 0.93 | 0.90 | — | (0.62) | (0.62) | $13.65 | 7.20% | 0.80% | 0.80% | (0.22)% | (0.22)% | 83% | $609,841 |
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, 2020 (unaudited). |
(4) | Annualized. |
(5) | Ratio was less than 0.005%. |
(6) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
17
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
18
Notes |
19
Notes |
20
Notes |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92375 2006 |
Semiannual Report | |
April 30, 2020 | |
Select Fund | |
Investor Class (TWCIX) | |
I Class (TWSIX) | |
Y Class (ASLWX) | |
A Class (TWCAX) | |
C Class (ACSLX) | |
R Class (ASERX) | |
R5 Class (ASLGX) | |
R6 Class (ASDEX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 10.0% |
Alphabet, Inc.* | 8.8% |
Amazon.com, Inc. | 7.9% |
Microsoft Corp. | 6.3% |
Mastercard, Inc., Class A | 5.6% |
UnitedHealth Group, Inc. | 4.3% |
Facebook, Inc., Class A | 4.0% |
PayPal Holdings, Inc. | 3.4% |
salesforce.com, Inc. | 2.4% |
Visa, Inc., Class A | 2.4% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
Interactive Media and Services | 12.8% |
IT Services | 11.4% |
Software | 10.3% |
Technology Hardware, Storage and Peripherals | 10.0% |
Internet and Direct Marketing Retail | 7.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.4% |
Convertible Bonds | 0.2% |
Rights | 0.1% |
Total Equity Exposure | 99.7% |
Temporary Cash Investments | 0.4% |
Other Assets and Liabilities | (0.1)% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,061.50 | $4.97 | 0.97% |
I Class | $1,000 | $1,062.50 | $3.95 | 0.77% |
Y Class | $1,000 | $1,063.40 | $3.18 | 0.62% |
A Class | $1,000 | $1,060.20 | $6.25 | 1.22% |
C Class | $1,000 | $1,056.40 | $10.07 | 1.97% |
R Class | $1,000 | $1,058.90 | $7.53 | 1.47% |
R5 Class | $1,000 | $1,062.40 | $3.95 | 0.77% |
R6 Class | $1,000 | $1,063.30 | $3.18 | 0.62% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.04 | $4.87 | 0.97% |
I Class | $1,000 | $1,021.03 | $3.87 | 0.77% |
Y Class | $1,000 | $1,021.78 | $3.12 | 0.62% |
A Class | $1,000 | $1,018.80 | $6.12 | 1.22% |
C Class | $1,000 | $1,015.07 | $9.87 | 1.97% |
R Class | $1,000 | $1,017.55 | $7.37 | 1.47% |
R5 Class | $1,000 | $1,021.03 | $3.87 | 0.77% |
R6 Class | $1,000 | $1,021.78 | $3.12 | 0.62% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.4% | |||||
Auto Components — 0.7% | |||||
Aptiv plc | 327,600 | $ | 22,784,580 | ||
Banks — 0.5% | |||||
JPMorgan Chase & Co. | 174,800 | 16,738,848 | |||
Beverages — 1.8% | |||||
Constellation Brands, Inc., Class A | 173,800 | 28,623,122 | |||
Diageo plc | 935,400 | 32,425,082 | |||
61,048,204 | |||||
Biotechnology — 4.1% | |||||
Biogen, Inc.(1) | 187,500 | 55,655,625 | |||
Regeneron Pharmaceuticals, Inc.(1) | 108,500 | 57,057,980 | |||
Vertex Pharmaceuticals, Inc.(1) | 94,900 | 23,838,880 | |||
136,552,485 | |||||
Capital Markets — 2.1% | |||||
Cboe Global Markets, Inc. | 278,600 | 27,687,268 | |||
Moody's Corp. | 55,700 | 13,585,230 | |||
MSCI, Inc. | 92,000 | 30,084,000 | |||
71,356,498 | |||||
Chemicals — 0.6% | |||||
Sherwin-Williams Co. (The) | 40,700 | 21,830,260 | |||
Containers and Packaging — 0.9% | |||||
Ball Corp. | 459,700 | 30,151,723 | |||
Entertainment — 2.3% | |||||
Electronic Arts, Inc.(1) | 394,300 | 45,052,718 | |||
Walt Disney Co. (The) | 286,800 | 31,017,420 | |||
76,070,138 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.1% | |||||
American Tower Corp. | 208,600 | 49,646,800 | |||
Equinix, Inc. | 78,600 | 53,070,720 | |||
102,717,520 | |||||
Food and Staples Retailing — 1.2% | |||||
Costco Wholesale Corp. | 130,200 | 39,450,600 | |||
Health Care Equipment and Supplies — 3.2% | |||||
Boston Scientific Corp.(1) | 665,900 | 24,957,932 | |||
Danaher Corp. | 195,000 | 31,874,700 | |||
Stryker Corp. | 265,700 | 49,534,451 | |||
106,367,083 | |||||
Health Care Providers and Services — 4.3% | |||||
UnitedHealth Group, Inc. | 497,600 | 145,533,072 | |||
Hotels, Restaurants and Leisure — 1.1% | |||||
Starbucks Corp. | 460,000 | 35,295,800 | |||
Industrial Conglomerates — 0.9% | |||||
Roper Technologies, Inc. | 90,900 | 30,999,627 |
6
Shares | Value | ||||
Interactive Media and Services — 12.8% | |||||
Alphabet, Inc., Class A(1) | 90,600 | $ | 122,011,020 | ||
Alphabet, Inc., Class C(1) | 129,100 | 174,112,006 | |||
Facebook, Inc., Class A(1) | 647,600 | 132,570,196 | |||
428,693,222 | |||||
Internet and Direct Marketing Retail — 7.9% | |||||
Amazon.com, Inc.(1) | 106,300 | 262,986,200 | |||
IT Services — 11.4% | |||||
Mastercard, Inc., Class A | 674,500 | 185,467,265 | |||
PayPal Holdings, Inc.(1) | 926,300 | 113,934,900 | |||
Visa, Inc., Class A | 450,500 | 80,513,360 | |||
379,915,525 | |||||
Machinery — 1.6% | |||||
FANUC Corp. | 135,900 | 22,409,115 | |||
Graco, Inc. | 716,300 | 31,989,958 | |||
54,399,073 | |||||
Multiline Retail — 0.7% | |||||
Target Corp. | 205,700 | 22,573,518 | |||
Oil, Gas and Consumable Fuels — 0.4% | |||||
EOG Resources, Inc. | 268,600 | 12,761,186 | |||
Personal Products — 1.4% | |||||
Estee Lauder Cos., Inc. (The), Class A | 265,000 | 46,746,000 | |||
Pharmaceuticals — 1.9% | |||||
Bristol-Myers Squibb Co. | 1,051,300 | 63,929,553 | |||
Professional Services — 4.0% | |||||
IHS Markit Ltd. | 941,200 | 63,342,760 | |||
Verisk Analytics, Inc. | 455,200 | 69,568,216 | |||
132,910,976 | |||||
Road and Rail — 0.4% | |||||
Canadian Pacific Railway Ltd. | 56,800 | 12,909,406 | |||
Semiconductors and Semiconductor Equipment — 4.0% | |||||
Analog Devices, Inc. | 448,700 | 49,177,520 | |||
Maxim Integrated Products, Inc. | 812,300 | 44,660,254 | |||
Texas Instruments, Inc. | 358,100 | 41,564,667 | |||
135,402,441 | |||||
Software — 10.3% | |||||
Adobe, Inc.(1) | 27,300 | 9,654,372 | |||
Microsoft Corp. | 1,181,100 | 211,664,931 | |||
Proofpoint, Inc.(1) | 206,900 | 25,185,937 | |||
salesforce.com, Inc.(1) | 498,600 | 80,748,270 | |||
VMware, Inc., Class A(1) | 128,600 | 16,913,472 | |||
344,166,982 | |||||
Specialty Retail — 4.0% | |||||
Home Depot, Inc. (The) | 222,400 | 48,890,192 | |||
Lowe's Cos., Inc. | 204,300 | 21,400,425 | |||
TJX Cos., Inc. (The) | 1,317,800 | 64,638,090 | |||
134,928,707 |
7
Shares/Principal Amount | Value | |||||
Technology Hardware, Storage and Peripherals — 10.0% | ||||||
Apple, Inc. | 1,139,500 | $ | 334,785,100 | |||
Textiles, Apparel and Luxury Goods — 1.8% | ||||||
NIKE, Inc., Class B | 676,300 | 58,959,834 | ||||
TOTAL COMMON STOCKS (Cost $1,392,622,040) | 3,322,964,161 | |||||
CONVERTIBLE BONDS — 0.2% | ||||||
IT Services — 0.2% | ||||||
Square, Inc., 0.50%, 5/15/23 (Cost $5,134,642) | $ | 5,601,000 | 6,308,126 | |||
RIGHTS — 0.1% | ||||||
Pharmaceuticals — 0.1% | ||||||
Bristol-Myers Squibb Co.(1) (Cost $832,404) | 390,800 | 1,762,508 | ||||
TEMPORARY CASH INVESTMENTS — 0.4% | ||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $4,829,888), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $4,731,872) | 4,731,871 | |||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.25%, 7/15/29, valued at $8,976,199), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $8,800,005) | 8,800,000 | |||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 3,268 | 3,268 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $13,535,139) | 13,535,139 | |||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $1,412,124,225) | 3,344,569,934 | |||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (2,365,597 | ) | ||||
TOTAL NET ASSETS — 100.0% | $ | 3,342,204,337 |
WRITTEN OPTIONS CONTRACTS | ||||||||||||||||
Reference Entity | Contracts | Type | Exercise Price | Expiration Date | Underlying Notional Amount | Premiums Received | Value | |||||||||
Target Corp. | 400 | Call | $ | 120.00 | 5/15/20 | $ | 4,389,600 | $ | (22,284 | ) | $ | (11,000 | ) |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 534,772 | USD | 366,383 | Morgan Stanley | 6/30/20 | $ | 17,859 | |||
CAD | 448,493 | USD | 312,095 | Morgan Stanley | 6/30/20 | 10,154 | ||||
CAD | 592,822 | USD | 419,426 | Morgan Stanley | 6/30/20 | 6,525 | ||||
CAD | 381,696 | USD | 268,405 | Morgan Stanley | 6/30/20 | 5,849 | ||||
USD | 7,644,098 | CAD | 11,144,330 | Morgan Stanley | 6/30/20 | (363,269 | ) | |||
USD | 348,202 | CAD | 500,976 | Morgan Stanley | 6/30/20 | (11,756 | ) | |||
USD | 869,399 | CAD | 1,248,066 | Morgan Stanley | 6/30/20 | (27,355 | ) | |||
USD | 265,522 | CAD | 373,744 | Morgan Stanley | 6/30/20 | (3,019 | ) | |||
USD | 387,549 | CAD | 551,471 | Morgan Stanley | 6/30/20 | (8,691 | ) | |||
USD | 450,781 | CAD | 630,196 | Morgan Stanley | 6/30/20 | (2,024 | ) | |||
USD | 285,181 | CAD | 397,998 | Morgan Stanley | 6/30/20 | (787 | ) | |||
$ | (376,514 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $1,412,124,225) | $ | 3,344,569,934 | |
Cash | 22,284 | ||
Receivable for capital shares sold | 445,310 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 40,387 | ||
Dividends and interest receivable | 1,444,668 | ||
3,346,522,583 | |||
Liabilities | |||
Written options, at value (premiums received $22,284) | 11,000 | ||
Payable for investments purchased | 1,016,088 | ||
Payable for capital shares redeemed | 414,894 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 416,901 | ||
Accrued management fees | 2,444,767 | ||
Distribution and service fees payable | 14,596 | ||
4,318,246 | |||
Net Assets | $ | 3,342,204,337 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,298,956,130 | |
Distributable earnings | 2,043,248,207 | ||
$ | 3,342,204,337 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $3,119,589,834 | 39,453,369 | $79.07 | |||
I Class, $0.01 Par Value | $103,642,086 | 1,283,956 | $80.72 | |||
Y Class, $0.01 Par Value | $58,440,659 | 722,343 | $80.90 | |||
A Class, $0.01 Par Value | $48,209,044 | 627,293 | $76.85* | |||
C Class, $0.01 Par Value | $5,467,605 | 81,573 | $67.03 | |||
R Class, $0.01 Par Value | $3,201,457 | 42,218 | $75.83 | |||
R5 Class, $0.01 Par Value | $7,750 | 96 | $80.73 | |||
R6 Class, $0.01 Par Value | $3,645,902 | 45,120 | $80.80 |
*Maximum offering price $81.54 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $39,539) | $ | 15,577,821 | |
Interest | 115,706 | ||
15,693,527 | |||
Expenses: | |||
Management fees | 16,272,011 | ||
Distribution and service fees: | |||
A Class | 56,032 | ||
C Class | 27,596 | ||
R Class | 7,985 | ||
Directors' fees and expenses | 52,857 | ||
Other expenses | 212 | ||
16,416,693 | |||
Fees waived(1) | (332,872 | ) | |
16,083,821 | |||
Net investment income (loss) | (390,294 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 110,254,225 | ||
Forward foreign currency exchange contract transactions | 966,993 | ||
Written options contract transactions | 444,129 | ||
Foreign currency translation transactions | 1,415 | ||
111,666,762 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 82,979,607 | ||
Forward foreign currency exchange contracts | (280,286 | ) | |
Written options contracts | (9,536 | ) | |
Translation of assets and liabilities in foreign currencies | 908 | ||
82,690,693 | |||
Net realized and unrealized gain (loss) | 194,357,455 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 193,967,161 |
(1) | Amount consists of $311,128, $10,884, $5,190, $4,482, $552, $319 and $317 for Investor Class, I Class, Y Class, A Class, C Class, R Class and R6 Class, respectively. The waiver amount for R5 Class was less than $0.05. |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | (390,294 | ) | $ | 20,145 | |
Net realized gain (loss) | 111,666,762 | 179,904,572 | ||||
Change in net unrealized appreciation (depreciation) | 82,690,693 | 274,093,557 | ||||
Net increase (decrease) in net assets resulting from operations | 193,967,161 | 454,018,274 | ||||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (167,943,997 | ) | (213,120,945 | ) | ||
I Class | (5,704,618 | ) | (5,385,005 | ) | ||
Y Class | (2,611,966 | ) | (1,027,005 | ) | ||
A Class | (2,383,411 | ) | (3,006,841 | ) | ||
C Class | (346,331 | ) | (473,987 | ) | ||
R Class | (178,475 | ) | (180,464 | ) | ||
R5 Class | (394 | ) | (476 | ) | ||
R6 Class | (158,543 | ) | (145,270 | ) | ||
Decrease in net assets from distributions | (179,327,735 | ) | (223,339,993 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 69,108,946 | 57,161,383 | ||||
Net increase (decrease) in net assets | 83,748,372 | 287,839,664 | ||||
Net Assets | ||||||
Beginning of period | 3,258,455,965 | 2,970,616,301 | ||||
End of period | $ | 3,342,204,337 | $ | 3,258,455,965 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2020 (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, 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.
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. Convertible bonds 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. Exchange-traded options contracts are valued at a mean as provided by independent pricing services. 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.
13
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. 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 certain types of investment securities and other financial instruments. 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 collateral requirements.
14
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. 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 non-Rule 12b-1 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, 2020, the investment advisor agreed to waive 0.02% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2021 and cannot terminate it prior to such date without the approval of the Board of Directors.
15
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended April 30, 2020 are as follows:
Management Fee | Effective Annual Management Fee | ||
Schedule Range | Before Waiver | After Waiver | |
Investor Class | 0.800% to 0.990% | 0.99% | 0.97% |
I Class | 0.600% to 0.790% | 0.79% | 0.77% |
Y Class | 0.450% to 0.640% | 0.64% | 0.62% |
A Class | 0.800% to 0.990% | 0.99% | 0.97% |
C Class | 0.800% to 0.990% | 0.99% | 0.97% |
R Class | 0.800% to 0.990% | 0.99% | 0.97% |
R5 Class | 0.600% to 0.790% | 0.79% | 0.77% |
R6 Class | 0.450% to 0.640% | 0.64% | 0.62% |
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, 2020 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 sales were $2,017,820 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $(203,618) 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, 2020 were $255,538,654 and $350,488,557, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 475,000,000 | 475,000,000 | ||||||||
Sold | 789,688 | $ | 61,100,895 | 800,738 | $ | 57,669,376 | ||||
Issued in reinvestment of distributions | 2,018,515 | 159,826,059 | 3,227,630 | 203,857,091 | ||||||
Redeemed | (2,219,229 | ) | (170,665,111 | ) | (3,621,970 | ) | (261,065,622 | ) | ||
588,974 | 50,261,843 | 406,398 | 460,845 | |||||||
I Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 175,787 | 14,291,244 | 647,839 | 49,485,276 | ||||||
Issued in reinvestment of distributions | 67,528 | 5,454,233 | 78,144 | 5,019,942 | ||||||
Redeemed | (274,772 | ) | (20,808,813 | ) | (356,766 | ) | (26,327,849 | ) | ||
(31,457 | ) | (1,063,336 | ) | 369,217 | 28,177,369 | |||||
Y Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 186,338 | 14,803,488 | 431,529 | 32,202,180 | ||||||
Issued in reinvestment of distributions | 31,872 | 2,578,781 | 15,293 | 982,580 | ||||||
Redeemed | (70,045 | ) | (5,334,132 | ) | (66,043 | ) | (4,978,500 | ) | ||
148,165 | 12,048,137 | 380,779 | 28,206,260 | |||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 116,784 | 9,396,268 | 60,310 | 4,251,171 | ||||||
Issued in reinvestment of distributions | 30,503 | 2,349,653 | 48,212 | 2,974,205 | ||||||
Redeemed | (68,595 | ) | (5,164,041 | ) | (106,841 | ) | (7,576,575 | ) | ||
78,692 | 6,581,880 | 1,681 | (351,199 | ) | ||||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 3,280 | 215,664 | 9,195 | 550,593 | ||||||
Issued in reinvestment of distributions | 4,778 | 321,908 | 8,020 | 439,266 | ||||||
Redeemed | (8,234 | ) | (531,158 | ) | (23,445 | ) | (1,502,183 | ) | ||
(176 | ) | 6,414 | (6,230 | ) | (512,324 | ) | ||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 7,147 | 535,292 | 11,175 | 787,619 | ||||||
Issued in reinvestment of distributions | 2,346 | 178,475 | 2,952 | 180,464 | ||||||
Redeemed | (7,157 | ) | (524,637 | ) | (5,809 | ) | (414,285 | ) | ||
2,336 | 189,130 | 8,318 | 553,798 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Issued in reinvestment of distributions | 5 | 394 | 8 | 476 | ||||||
R6 Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 18,887 | 1,506,407 | 12,413 | 902,406 | ||||||
Issued in reinvestment of distributions | 1,952 | 157,710 | 2,252 | 144,508 | ||||||
Redeemed | (7,487 | ) | (579,633 | ) | (5,652 | ) | (420,756 | ) | ||
13,352 | 1,084,484 | 9,013 | 626,158 | |||||||
Net increase (decrease) | 799,891 | $ | 69,108,946 | 1,169,184 | $ | 57,161,383 |
17
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 3,255,220,558 | $ | 67,743,603 | — | |||
Convertible Bonds | — | 6,308,126 | — | |||||
Rights | 1,762,508 | — | — | |||||
Temporary Cash Investments | 3,268 | 13,531,871 | — | |||||
$ | 3,256,986,334 | $ | 87,583,600 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 40,387 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 416,901 | — | ||||
Written Options Contracts | $ | 11,000 | — | — | ||||
$ | 11,000 | $ | 416,901 | — |
18
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 options contracts based on an equity index or specific security in order to manage its exposure to changes in market conditions. The risks of entering into equity price risk derivative instruments 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. A fund may purchase or write an option contract to protect against declines in market value on the underlying index or security. A purchased option contract provides the fund a right, but not an obligation, to buy (call) or sell (put) an equity-related asset at a specified exercise price within a certain period or on a specific date. A written option contract holds the corresponding obligation to sell (call writing) or buy (put writing) the underlying equity-related asset if the purchaser exercises the option contract. The buyer pays the seller an initial purchase price (premium) for this right. Option contracts purchased by a fund are accounted for in the same manner as marketable portfolio securities. The premium received by a fund for option contracts written is recorded as a liability and valued daily. The proceeds from securities sold through the exercise of option contracts are decreased by the premium paid to purchase the option contracts. A fund may recognize a realized gain or loss when the option contract is closed, exercised or expires. Net realized and unrealized gains or losses occurring during the holding period of purchased options contracts are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively. Net realized and unrealized gains or losses occurring during the holding period of written options contracts are a component of net realized gain (loss) on written options contract transactions and change in net unrealized appreciation (depreciation) on written options contracts, respectively. The fund’s average exposure to equity price risk derivative instruments held during the period was 661 written options 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $24,244,416.
Value of Derivative Instruments as of April 30, 2020
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 | Written Options | — | Written Options | $ | 11,000 | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 40,387 | Unrealized depreciation on forward foreign currency exchange contracts | 416,901 | |||
$ | 40,387 | $ | 427,901 |
19
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2020
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 written options contract transactions | $ | 444,129 | Change in net unrealized appreciation (depreciation) on written options contracts | $ | (9,536 | ) | |
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 966,993 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | (280,286 | ) | |||
$ | 1,411,122 | $ | (289,822 | ) |
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
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 | $ | 1,413,735,139 | |
Gross tax appreciation of investments | $ | 1,953,868,079 | |
Gross tax depreciation of investments | (23,033,284 | ) | |
Net tax appreciation (depreciation) of investments | $ | 1,930,834,795 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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: | 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 | |||||||||||||||||
2020(3) | $78.58 | (0.01) | 4.85 | 4.84 | — | (4.35) | (4.35) | $79.07 | 6.15% | 0.97%(4) | 0.99%(4) | (0.03)%(4) | (0.05)%(4) | 8% | $3,119,590 | ||
2019 | $73.74 | —(5) | 10.42 | 10.42 | (0.03) | (5.55) | (5.58) | $78.58 | 15.98% | 0.97% | 0.99% | 0.00%(6) | (0.02)% | 17% | $3,054,007 | ||
2018 | $71.92 | 0.04 | 6.20 | 6.24 | (0.21) | (4.21) | (4.42) | $73.74 | 8.94% | 0.97% | 0.99% | 0.06% | 0.04% | 22% | $2,835,970 | ||
2017 | $58.32 | 0.21 | 15.59 | 15.80 | (0.22) | (1.98) | (2.20) | $71.92 | 27.93% | 0.99% | 1.00% | 0.33% | 0.32% | 19% | $2,753,729 | ||
2016 | $61.57 | 0.20 | 0.30 | 0.50 | (0.25) | (3.50) | (3.75) | $58.32 | 0.98% | 0.99% | 0.99% | 0.36% | 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% | 0.99% | 0.35% | 0.35% | 24% | $2,440,319 | ||
I Class | |||||||||||||||||
2020(3) | $80.06 | 0.07 | 4.94 | 5.01 | — | (4.35) | (4.35) | $80.72 | 6.25% | 0.77%(4) | 0.79%(4) | 0.17%(4) | 0.15%(4) | 8% | $103,642 | ||
2019 | $75.02 | 0.13 | 10.63 | 10.76 | (0.17) | (5.55) | (5.72) | $80.06 | 16.22% | 0.77% | 0.79% | 0.20% | 0.18% | 17% | $105,310 | ||
2018 | $73.11 | 0.19 | 6.29 | 6.48 | (0.36) | (4.21) | (4.57) | $75.02 | 9.15% | 0.77% | 0.79% | 0.26% | 0.24% | 22% | $70,986 | ||
2017 | $59.25 | 0.31 | 15.87 | 16.18 | (0.34) | (1.98) | (2.32) | $73.11 | 28.20% | 0.79% | 0.80% | 0.53% | 0.52% | 19% | $60,895 | ||
2016 | $62.49 | 0.32 | 0.31 | 0.63 | (0.37) | (3.50) | (3.87) | $59.25 | 1.19% | 0.79% | 0.79% | 0.56% | 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% | 0.79% | 0.55% | 0.55% | 24% | $33,075 |
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) | |||
Y Class | |||||||||||||||||
2020(3) | $80.17 | 0.12 | 4.96 | 5.08 | — | (4.35) | (4.35) | $80.90 | 6.34% | 0.62%(4) | 0.64%(4) | 0.32%(4) | 0.30%(4) | 8% | $58,441 | ||
2019 | $75.13 | 0.22 | 10.64 | 10.86 | (0.27) | (5.55) | (5.82) | $80.17 | 16.38% | 0.62% | 0.64% | 0.35% | 0.33% | 17% | $46,034 | ||
2018 | $73.13 | 0.28 | 6.33 | 6.61 | (0.40) | (4.21) | (4.61) | $75.13 | 9.34% | 0.62% | 0.64% | 0.41% | 0.39% | 22% | $14,529 | ||
2017(7) | $63.80 | 0.22 | 9.11 | 9.33 | — | — | — | $73.13 | 14.62% | 0.64%(4) | 0.65%(4) | 0.59%(4) | 0.58%(4) | 19%(8) | $6 | ||
A Class | |||||||||||||||||
2020(3) | $76.58 | (0.11) | 4.73 | 4.62 | — | (4.35) | (4.35) | $76.85 | 6.02% | 1.22%(4) | 1.24%(4) | (0.28)%(4) | (0.30)%(4) | 8% | $48,209 | ||
2019 | $72.15 | (0.18) | 10.16 | 9.98 | — | (5.55) | (5.55) | $76.58 | 15.69% | 1.22% | 1.24% | (0.25)% | (0.27)% | 17% | $42,013 | ||
2018 | $70.45 | (0.14) | 6.07 | 5.93 | (0.02) | (4.21) | (4.23) | $72.15 | 8.67% | 1.22% | 1.24% | (0.19)% | (0.21)% | 22% | $39,459 | ||
2017 | $57.16 | 0.05 | 15.29 | 15.34 | (0.07) | (1.98) | (2.05) | $70.45 | 27.63% | 1.24% | 1.25% | 0.08% | 0.07% | 19% | $40,345 | ||
2016 | $60.41 | 0.06 | 0.29 | 0.35 | (0.10) | (3.50) | (3.60) | $57.16 | 0.73% | 1.24% | 1.24% | 0.11% | 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% | 1.24% | 0.10% | 0.10% | 24% | $41,737 | ||
C Class | |||||||||||||||||
2020(3) | $67.55 | (0.34) | 4.17 | 3.83 | — | (4.35) | (4.35) | $67.03 | 5.64% | 1.97%(4) | 1.99%(4) | (1.03)%(4) | (1.05)%(4) | 8% | $5,468 | ||
2019 | $64.79 | (0.63) | 8.94 | 8.31 | — | (5.55) | (5.55) | $67.55 | 14.82% | 1.97% | 1.99% | (1.00)% | (1.02)% | 17% | $5,523 | ||
2018 | $64.11 | (0.62) | 5.51 | 4.89 | — | (4.21) | (4.21) | $64.79 | 7.86% | 1.97% | 1.99% | (0.94)% | (0.96)% | 22% | $5,700 | ||
2017 | $52.51 | (0.39) | 13.97 | 13.58 | — | (1.98) | (1.98) | $64.11 | 26.66% | 1.99% | 2.00% | (0.67)% | (0.68)% | 19% | $5,668 | ||
2016 | $56.09 | (0.33) | 0.25 | (0.08) | — | (3.50) | (3.50) | $52.51 | (0.02)% | 1.99% | 1.99% | (0.64)% | (0.64)% | 16% | $4,570 | ||
2015 | $56.64 | (0.36) | 5.23 | 4.87 | — | (5.42) | (5.42) | $56.09 | 9.83% | 1.99% | 1.99% | (0.65)% | (0.65)% | 24% | $5,932 |
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 | |||||||||||||||||
2020(3) | $75.71 | (0.20) | 4.67 | 4.47 | — | (4.35) | (4.35) | $75.83 | 5.89% | 1.47%(4) | 1.49%(4) | (0.53)%(4) | (0.55)%(4) | 8% | $3,201 | ||
2019 | $71.56 | (0.36) | 10.06 | 9.70 | — | (5.55) | (5.55) | $75.71 | 15.40% | 1.47% | 1.49% | (0.50)% | (0.52)% | 17% | $3,019 | ||
2018 | $70.05 | (0.30) | 6.02 | 5.72 | — | (4.21) | (4.21) | $71.56 | 8.41% | 1.47% | 1.49% | (0.44)% | (0.46)% | 22% | $2,259 | ||
2017 | $56.92 | (0.11) | 15.22 | 15.11 | — | (1.98) | (1.98) | $70.05 | 27.30% | 1.49% | 1.50% | (0.17)% | (0.18)% | 19% | $3,518 | ||
2016 | $60.21 | (0.08) | 0.29 | 0.21 | — | (3.50) | (3.50) | $56.92 | 0.49% | 1.49% | 1.49% | (0.14)% | (0.14)% | 16% | $2,814 | ||
2015 | $60.12 | (0.09) | 5.60 | 5.51 | — | (5.42) | (5.42) | $60.21 | 10.38% | 1.49% | 1.49% | (0.15)% | (0.15)% | 24% | $3,295 | ||
R5 Class | |||||||||||||||||
2020(3) | $80.07 | 0.05 | 4.96 | 5.01 | — | (4.35) | (4.35) | $80.73 | 6.24% | 0.77%(4) | 0.79%(4) | 0.17%(4) | 0.15%(4) | 8% | $8 | ||
2019 | $75.04 | 0.13 | 10.62 | 10.75 | (0.17) | (5.55) | (5.72) | $80.07 | 16.20% | 0.77% | 0.79% | 0.20% | 0.18% | 17% | $7 | ||
2018 | $73.10 | 0.18 | 6.28 | 6.46 | (0.31) | (4.21) | (4.52) | $75.04 | 9.13% | 0.77% | 0.79% | 0.26% | 0.24% | 22% | $6 | ||
2017(7) | $63.83 | 0.17 | 9.10 | 9.27 | — | — | — | $73.10 | 14.52% | 0.79%(4) | 0.80%(4) | 0.44%(4) | 0.43%(4) | 19%(8) | $6 | ||
R6 Class | |||||||||||||||||
2020(3) | $80.08 | 0.13 | 4.94 | 5.07 | — | (4.35) | (4.35) | $80.80 | 6.33% | 0.62%(4) | 0.64%(4) | 0.32%(4) | 0.30%(4) | 8% | $3,646 | ||
2019 | $75.05 | 0.25 | 10.60 | 10.85 | (0.27) | (5.55) | (5.82) | $80.08 | 16.39% | 0.62% | 0.64% | 0.35% | 0.33% | 17% | $2,544 | ||
2018 | $73.13 | 0.31 | 6.29 | 6.60 | (0.47) | (4.21) | (4.68) | $75.05 | 9.33% | 0.62% | 0.64% | 0.41% | 0.39% | 22% | $1,708 | ||
2017 | $59.27 | 0.51 | 15.76 | 16.27 | (0.43) | (1.98) | (2.41) | $73.13 | 28.38% | 0.64% | 0.65% | 0.68% | 0.67% | 19% | $1,519 | ||
2016 | $62.51 | 0.41 | 0.31 | 0.72 | (0.46) | (3.50) | (3.96) | $59.27 | 1.35% | 0.64% | 0.64% | 0.71% | 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% | 0.64% | 0.70% | 0.70% | 24% | $9,841 |
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, 2020 (unaudited). |
(4) | Annualized. |
(5) | Amount is less than $0.005. |
(6) | Ratio was less than 0.005%. |
(7) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
25
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
26
Notes |
27
Notes |
28
Notes |
29
Notes |
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92357 2006 |
Semiannual Report | |
April 30, 2020 | |
Small Cap Growth Fund | |
Investor Class (ANOIX) | |
I Class (ANONX) | |
Y Class (ANOYX) | |
A Class (ANOAX) | |
C Class (ANOCX) | |
R Class (ANORX) | |
R5 Class (ANOGX) | |
R6 Class (ANODX) | |
G Class (ANOHX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Top Ten Holdings | % of net assets |
Teladoc Health, Inc. | 1.8% |
Chegg, Inc. | 1.8% |
Five9, Inc. | 1.7% |
Catalent, Inc. | 1.6% |
Tandem Diabetes Care, Inc. | 1.3% |
Hamilton Lane, Inc., Class A | 1.3% |
CACI International, Inc., Class A | 1.2% |
FirstService Corp. | 1.2% |
Silk Road Medical, Inc. | 1.2% |
Clean Harbors, Inc. | 1.1% |
Top Five Industries | % of net assets |
Biotechnology | 12.9% |
Software | 9.2% |
Health Care Equipment and Supplies | 5.6% |
Health Care Providers and Services | 4.7% |
Semiconductors and Semiconductor Equipment | 4.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.5% |
Temporary Cash Investments | 2.5% |
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, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,001.60 | $6.12 | 1.23% |
I Class | $1,000 | $1,002.70 | $5.13 | 1.03% |
Y Class | $1,000 | $1,003.30 | $4.38 | 0.88% |
A Class | $1,000 | $1,000.50 | $7.36 | 1.48% |
C Class | $1,000 | $997.00 | $11.07 | 2.23% |
R Class | $1,000 | $999.20 | $8.60 | 1.73% |
R5 Class | $1,000 | $1,002.70 | $5.13 | 1.03% |
R6 Class | $1,000 | $1,003.30 | $4.38 | 0.88% |
G Class | $1,000 | $1,007.80 | $0.05 | 0.01% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.75 | $6.17 | 1.23% |
I Class | $1,000 | $1,019.74 | $5.17 | 1.03% |
Y Class | $1,000 | $1,020.49 | $4.42 | 0.88% |
A Class | $1,000 | $1,017.50 | $7.42 | 1.48% |
C Class | $1,000 | $1,013.77 | $11.17 | 2.23% |
R Class | $1,000 | $1,016.26 | $8.67 | 1.73% |
R5 Class | $1,000 | $1,019.74 | $5.17 | 1.03% |
R6 Class | $1,000 | $1,020.49 | $4.42 | 0.88% |
G Class | $1,000 | $1,024.81 | $0.05 | 0.01% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 97.5% | |||||
Aerospace and Defense — 2.9% | |||||
AAR Corp. | 140,463 | $ | 2,750,265 | ||
Aerojet Rocketdyne Holdings, Inc.(1) | 258,981 | 10,654,478 | |||
Kratos Defense & Security Solutions, Inc.(1) | 319,831 | 4,803,862 | |||
Mercury Systems, Inc.(1) | 107,899 | 9,620,275 | |||
PAE, Inc.(1) | 451,943 | 3,836,996 | |||
31,665,876 | |||||
Automobiles — 0.5% | |||||
Winnebago Industries, Inc. | 117,013 | 5,191,867 | |||
Biotechnology — 12.9% | |||||
ACADIA Pharmaceuticals, Inc.(1) | 238,914 | 11,541,935 | |||
Acceleron Pharma, Inc.(1) | 128,260 | 11,611,378 | |||
Aimmune Therapeutics, Inc.(1) | 103,721 | 1,775,703 | |||
Amarin Corp. plc ADR(1) | 201,384 | 1,532,532 | |||
Amicus Therapeutics, Inc.(1) | 540,835 | 6,387,261 | |||
Arena Pharmaceuticals, Inc.(1) | 177,198 | 8,677,386 | |||
Biohaven Pharmaceutical Holding Co. Ltd.(1) | 63,251 | 2,979,122 | |||
Blueprint Medicines Corp.(1) | 90,591 | 5,329,469 | |||
ChemoCentryx, Inc.(1) | 100,307 | 5,317,274 | |||
Deciphera Pharmaceuticals, Inc.(1) | 58,920 | 3,416,182 | |||
FibroGen, Inc.(1) | 148,298 | 5,470,713 | |||
Flexion Therapeutics, Inc.(1) | 249,041 | 2,649,796 | |||
Global Blood Therapeutics, Inc.(1) | 83,559 | 6,393,935 | |||
Halozyme Therapeutics, Inc.(1) | 361,142 | 8,181,672 | |||
Heron Therapeutics, Inc.(1) | 200,557 | 2,859,943 | |||
Immunomedics, Inc.(1) | 339,199 | 10,304,866 | |||
Insmed, Inc.(1) | 369,058 | 8,488,334 | |||
Iovance Biotherapeutics, Inc.(1) | 252,259 | 8,110,127 | |||
Natera, Inc.(1) | 320,022 | 11,853,615 | |||
Principia Biopharma, Inc.(1) | 62,858 | 3,908,510 | |||
PTC Therapeutics, Inc.(1) | 134,004 | 6,823,484 | |||
Ultragenyx Pharmaceutical, Inc.(1) | 97,435 | 5,887,997 | |||
Viela Bio, Inc.(1) | 54,125 | 2,199,099 | |||
141,700,333 | |||||
Building Products — 3.4% | |||||
Builders FirstSource, Inc.(1) | 422,186 | 7,747,113 | |||
Fortune Brands Home & Security, Inc. | 162,120 | 7,814,184 | |||
Masonite International Corp.(1) | 163,354 | 9,650,954 | |||
Trex Co., Inc.(1) | 127,690 | 12,158,642 | |||
37,370,893 | |||||
Capital Markets — 2.9% | |||||
Ares Management Corp., Class A | 367,581 | 12,332,342 |
6
Shares | Value | ||||
Hamilton Lane, Inc., Class A | 217,147 | $ | 14,081,983 | ||
TMX Group Ltd. | 60,409 | 5,233,465 | |||
31,647,790 | |||||
Chemicals — 0.6% | |||||
H.B. Fuller Co. | 176,737 | 6,502,154 | |||
Commercial Services and Supplies — 3.9% | |||||
Brink's Co. (The) | 180,066 | 9,204,974 | |||
Casella Waste Systems, Inc., Class A(1) | 224,830 | 10,427,615 | |||
Clean Harbors, Inc.(1) | 235,599 | 12,588,055 | |||
IAA, Inc.(1) | 263,118 | 10,156,355 | |||
42,376,999 | |||||
Communications Equipment — 0.9% | |||||
AudioCodes Ltd. | 209,774 | 6,421,182 | |||
Lumentum Holdings, Inc.(1) | 44,953 | 3,637,147 | |||
10,058,329 | |||||
Construction Materials — 0.6% | |||||
Summit Materials, Inc., Class A(1) | 395,514 | 5,976,217 | |||
Containers and Packaging — 1.0% | |||||
Berry Global Group, Inc.(1) | 266,385 | 10,599,459 | |||
Diversified Consumer Services — 1.8% | |||||
Chegg, Inc.(1) | 448,169 | 19,159,225 | |||
Electronic Equipment, Instruments and Components — 0.7% | |||||
SYNNEX Corp. | 91,720 | 8,031,003 | |||
Entertainment — 0.9% | |||||
Zynga, Inc., Class A(1) | 1,359,360 | 10,249,574 | |||
Equity Real Estate Investment Trusts (REITs) — 3.1% | |||||
Americold Realty Trust | 172,922 | 5,289,684 | |||
CoreSite Realty Corp. | 77,387 | 9,378,531 | |||
Global Medical REIT, Inc. | 674,706 | 7,030,437 | |||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 291,583 | 8,161,408 | |||
Rexford Industrial Realty, Inc. | 103,927 | 4,231,907 | |||
34,091,967 | |||||
Food and Staples Retailing — 1.3% | |||||
Grocery Outlet Holding Corp.(1) | 291,816 | 9,708,718 | |||
Sprouts Farmers Market, Inc.(1) | 241,833 | 5,025,290 | |||
14,734,008 | |||||
Food Products — 0.8% | |||||
Freshpet, Inc.(1) | 119,440 | 9,006,970 | |||
Gas Utilities — 0.9% | |||||
Chesapeake Utilities Corp. | 110,400 | 9,701,952 | |||
Health Care Equipment and Supplies — 5.6% | |||||
Globus Medical, Inc., Class A(1) | 190,143 | 9,024,187 | |||
ICU Medical, Inc.(1) | 41,915 | 9,192,378 | |||
Insulet Corp.(1) | 44,633 | 8,914,103 | |||
OrthoPediatrics Corp.(1) | 126,201 | 6,164,919 | |||
Silk Road Medical, Inc.(1) | 308,935 | 12,938,198 | |||
Tandem Diabetes Care, Inc.(1) | 184,507 | 14,719,968 | |||
60,953,753 |
7
Shares | Value | ||||
Health Care Providers and Services — 4.7% | |||||
Acadia Healthcare Co., Inc.(1) | 164,427 | $ | 3,947,892 | ||
Chemed Corp. | 13,254 | 5,521,219 | |||
Encompass Health Corp. | 140,082 | 9,280,432 | |||
Ensign Group, Inc. (The) | 163,487 | 6,116,049 | |||
HealthEquity, Inc.(1) | 180,803 | 10,173,785 | |||
Pennant Group, Inc. (The)(1) | 237,119 | 4,692,585 | |||
R1 RCM, Inc.(1) | 1,170,528 | 12,079,849 | |||
51,811,811 | |||||
Health Care Technology — 2.5% | |||||
Health Catalyst, Inc.(1) | 285,054 | 7,602,390 | |||
Teladoc Health, Inc.(1) | 120,389 | 19,814,826 | |||
27,417,216 | |||||
Hotels, Restaurants and Leisure — 2.6% | |||||
Churchill Downs, Inc. | 86,929 | 8,712,025 | |||
Planet Fitness, Inc., Class A(1) | 136,366 | 8,226,961 | |||
Wingstop, Inc. | 97,042 | 11,380,115 | |||
28,319,101 | |||||
Household Durables — 1.1% | |||||
TopBuild Corp.(1) | 132,635 | 12,360,256 | |||
Household Products — 1.1% | |||||
Reynolds Consumer Products, Inc. | 378,565 | 12,276,863 | |||
Independent Power and Renewable Electricity Producers — 0.6% | |||||
Innergex Renewable Energy, Inc. | 473,539 | 6,354,904 | |||
Insurance — 4.3% | |||||
BRP Group, Inc., Class A(1) | 566,473 | 5,676,059 | |||
eHealth, Inc.(1) | 93,005 | 9,923,634 | |||
Goosehead Insurance, Inc., Class A(1) | 218,517 | 12,267,544 | |||
Kinsale Capital Group, Inc. | 72,224 | 7,844,971 | |||
Palomar Holdings, Inc.(1) | 194,698 | 11,389,833 | |||
47,102,041 | |||||
Internet and Direct Marketing Retail — 0.5% | |||||
Etsy, Inc.(1) | 87,403 | 5,669,833 | |||
IT Services — 3.1% | |||||
CACI International, Inc., Class A(1) | 52,189 | 13,054,556 | |||
I3 Verticals, Inc., Class A(1) | 191,823 | 4,457,967 | |||
Limelight Networks, Inc.(1) | 822,567 | 4,170,415 | |||
Repay Holdings Corp.(1) | 690,789 | 12,344,399 | |||
34,027,337 | |||||
Leisure Products — 0.8% | |||||
Callaway Golf Co. | 588,803 | 8,431,659 | |||
Life Sciences Tools and Services — 2.0% | |||||
NeoGenomics, Inc.(1) | 420,107 | 11,485,725 | |||
PRA Health Sciences, Inc.(1) | 109,111 | 10,529,212 | |||
22,014,937 | |||||
Machinery — 1.9% | |||||
Chart Industries, Inc.(1) | 192,293 | 6,868,706 |
8
Shares | Value | ||||
Kennametal, Inc. | 169,936 | $ | 4,352,061 | ||
Navistar International Corp.(1) | 288,731 | 6,863,136 | |||
RBC Bearings, Inc.(1) | 19,929 | 2,524,606 | |||
20,608,509 | |||||
Personal Products — 0.2% | |||||
Inter Parfums, Inc. | 58,656 | 2,621,337 | |||
Pharmaceuticals — 3.2% | |||||
Catalent, Inc.(1) | 252,103 | 17,432,923 | |||
Horizon Therapeutics plc(1) | 222,379 | 8,014,539 | |||
MyoKardia, Inc.(1) | 82,192 | 5,163,301 | |||
Optinose, Inc.(1) | 239,077 | 965,871 | |||
Reata Pharmaceuticals, Inc., Class A(1) | 21,986 | 3,477,306 | |||
35,053,940 | |||||
Professional Services — 0.9% | |||||
ASGN, Inc.(1) | 212,736 | 9,881,587 | |||
Real Estate Management and Development — 1.6% | |||||
Altus Group Ltd. | 135,934 | 4,104,534 | |||
FirstService Corp. | 150,497 | 13,012,187 | |||
17,116,721 | |||||
Road and Rail — 0.7% | |||||
ArcBest Corp. | 186,313 | 3,795,196 | |||
TFI International, Inc. | 142,768 | 3,959,082 | |||
7,754,278 | |||||
Semiconductors and Semiconductor Equipment — 4.7% | |||||
Entegris, Inc. | 99,693 | 5,406,352 | |||
Inphi Corp.(1) | 128,056 | 12,362,526 | |||
Lattice Semiconductor Corp.(1) | 410,735 | 9,245,645 | |||
MKS Instruments, Inc. | 78,339 | 7,851,918 | |||
Monolithic Power Systems, Inc. | 42,207 | 8,437,601 | |||
Power Integrations, Inc. | 81,609 | 8,352,681 | |||
51,656,723 | |||||
Software — 9.2% | |||||
Avalara, Inc.(1) | 75,119 | 6,713,385 | |||
Coupa Software, Inc.(1) | 33,681 | 5,930,887 | |||
Envestnet, Inc.(1) | 149,633 | 9,355,055 | |||
Everbridge, Inc.(1) | 88,598 | 9,868,045 | |||
Fair Isaac Corp.(1) | 21,581 | 7,616,798 | |||
Five9, Inc.(1) | 199,118 | 18,452,265 | |||
Globant SA(1) | 66,649 | 7,709,290 | |||
Model N, Inc.(1) | 391,022 | 11,284,895 | |||
Paylocity Holding Corp.(1) | 43,781 | 5,014,238 | |||
Rapid7, Inc.(1) | 193,328 | 8,806,091 | |||
RealPage, Inc.(1) | 156,384 | 10,085,204 | |||
100,836,153 | |||||
Specialty Retail — 1.8% | |||||
Lithia Motors, Inc., Class A | 80,881 | 8,942,203 | |||
National Vision Holdings, Inc.(1) | 421,229 | 11,162,569 | |||
20,104,772 |
9
Shares | Value | ||||
Textiles, Apparel and Luxury Goods — 1.2% | |||||
Crocs, Inc.(1) | 232,651 | $ | 5,641,787 | ||
Deckers Outdoor Corp.(1) | 48,382 | 7,197,306 | |||
12,839,093 | |||||
Thrifts and Mortgage Finance — 0.8% | |||||
NMI Holdings, Inc., Class A(1) | 636,824 | 8,609,860 | |||
Trading Companies and Distributors — 2.5% | |||||
Applied Industrial Technologies, Inc. | 187,175 | 9,806,098 | |||
SiteOne Landscape Supply, Inc.(1) | 113,185 | 10,031,587 | |||
United Rentals, Inc.(1) | 59,219 | 7,609,641 | |||
27,447,326 | |||||
Water Utilities — 0.8% | |||||
SJW Group | 141,358 | 8,415,042 | |||
TOTAL COMMON STOCKS (Cost $900,141,675) | 1,067,749,668 | ||||
TEMPORARY CASH INVESTMENTS — 2.5% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $9,642,568), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $9,446,886) | 9,446,883 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.25%, 7/15/29, valued at $17,925,279), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $17,573,010) | 17,573,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 13,700 | 13,700 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $27,033,583) | 27,033,583 | ||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $927,175,258) | 1,094,783,251 | ||||
OTHER ASSETS AND LIABILITIES† | 148,434 | ||||
TOTAL NET ASSETS — 100.0% | $ | 1,094,931,685 |
10
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
CAD | 2,505,460 | USD | 1,716,539 | Morgan Stanley | 6/30/20 | $ | 83,671 | |||
CAD | 3,647,037 | USD | 2,514,696 | Morgan Stanley | 6/30/20 | 105,755 | ||||
USD | 18,301,227 | CAD | 26,681,359 | Morgan Stanley | 6/30/20 | (869,726 | ) | |||
USD | 529,131 | CAD | 761,287 | Morgan Stanley | 6/30/20 | (17,865 | ) | |||
USD | 657,482 | CAD | 943,849 | Morgan Stanley | 6/30/20 | (20,687 | ) | |||
USD | 2,459,229 | CAD | 3,475,501 | Morgan Stanley | 6/30/20 | (37,970 | ) | |||
USD | 1,021,944 | CAD | 1,438,470 | Morgan Stanley | 6/30/20 | (11,619 | ) | |||
USD | 620,334 | CAD | 880,079 | Morgan Stanley | 6/30/20 | (12,016 | ) | |||
USD | 1,327,006 | CAD | 1,889,271 | Morgan Stanley | 6/30/20 | (30,464 | ) | |||
USD | 538,960 | CAD | 761,447 | Morgan Stanley | 6/30/20 | (8,151 | ) | |||
USD | 674,908 | CAD | 943,528 | Morgan Stanley | 6/30/20 | (3,031 | ) | |||
USD | 662,396 | CAD | 928,964 | Morgan Stanley | 6/30/20 | (5,078 | ) | |||
USD | 1,943,044 | CAD | 2,727,030 | Morgan Stanley | 6/30/20 | (16,368 | ) | |||
USD | 990,794 | CAD | 1,407,448 | Morgan Stanley | 6/30/20 | (20,478 | ) | |||
USD | 2,215,348 | CAD | 3,148,646 | Morgan Stanley | 6/30/20 | (47,001 | ) | |||
USD | 1,342,870 | CAD | 1,874,107 | Morgan Stanley | 6/30/20 | (3,703 | ) | |||
$ | (914,731 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CAD | - | Canadian Dollar |
USD | - | United States Dollar |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $927,175,258) | $ | 1,094,783,251 | |
Receivable for investments sold | 9,445,331 | ||
Receivable for capital shares sold | 716,875 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 189,426 | ||
Dividends and interest receivable | 10,194 | ||
1,105,145,077 | |||
Liabilities | |||
Payable for investments purchased | 7,525,711 | ||
Payable for capital shares redeemed | 792,706 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 1,104,157 | ||
Accrued management fees | 770,759 | ||
Distribution and service fees payable | 20,059 | ||
10,213,392 | |||
Net Assets | $ | 1,094,931,685 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 978,067,829 | |
Distributable earnings | 116,863,856 | ||
$ | 1,094,931,685 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $446,067,113 | 26,813,938 | $16.64 | |
I Class, $0.01 Par Value | $296,487,053 | 17,275,830 | $17.16 | |
Y Class, $0.01 Par Value | $19,698,234 | 1,133,822 | $17.37 | |
A Class, $0.01 Par Value | $77,478,009 | 4,872,839 | $15.90* | |
C Class, $0.01 Par Value | $4,456,698 | 319,113 | $13.97 | |
R Class, $0.01 Par Value | $6,519,951 | 423,735 | $15.39 | |
R5 Class, $0.01 Par Value | $7,158 | 417 | $17.17 | |
R6 Class, $0.01 Par Value | $70,653,598 | 4,067,962 | $17.37 | |
G Class, $0.01 Par Value | $173,563,871 | 9,890,850 | $17.55 |
*Maximum offering price $16.87 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $39,355) | $ | 2,597,051 | |
Interest | 130,428 | ||
Securities lending, net | 87,512 | ||
2,814,991 | |||
Expenses: | |||
Management fees | 5,794,782 | ||
Distribution and service fees: | |||
A Class | 100,447 | ||
C Class | 23,250 | ||
R Class | 16,584 | ||
Directors' fees and expenses | 16,768 | ||
Other expenses | 117 | ||
5,951,948 | |||
Fees waived - G Class | (654,674 | ) | |
5,297,274 | |||
Net investment income (loss) | (2,482,283 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (38,302,149 | ) | |
Forward foreign currency exchange contract transactions | 1,976,663 | ||
Foreign currency translation transactions | 20,237 | ||
(36,305,249 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 41,318,231 | ||
Forward foreign currency exchange contracts | (848,332 | ) | |
Translation of assets and liabilities in foreign currencies | (4 | ) | |
40,469,895 | |||
Net realized and unrealized gain (loss) | 4,164,646 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,682,363 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | (2,482,283 | ) | $ | (5,373,421 | ) |
Net realized gain (loss) | (36,305,249 | ) | 59,472,982 | |||
Change in net unrealized appreciation (depreciation) | 40,469,895 | 40,650,541 | ||||
Net increase (decrease) in net assets resulting from operations | 1,682,363 | 94,750,102 | ||||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (25,227,608 | ) | (48,639,063 | ) | ||
I Class | (16,816,143 | ) | (45,335,165 | ) | ||
Y Class | (535,213 | ) | (276,649 | ) | ||
A Class | (4,721,985 | ) | (10,279,016 | ) | ||
C Class | (312,537 | ) | (867,837 | ) | ||
R Class | (381,103 | ) | (773,910 | ) | ||
R5 Class | (395 | ) | (905 | ) | ||
R6 Class | (2,829,940 | ) | (4,560,472 | ) | ||
G Class | (9,051,157 | ) | — | |||
Decrease in net assets from distributions | (59,876,081 | ) | (110,733,017 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 300,416,513 | (19,942,776 | ) | |||
Net increase (decrease) in net assets | 242,222,795 | (35,925,691 | ) | |||
Net Assets | ||||||
Beginning of period | 852,708,890 | 888,634,581 | ||||
End of period | $ | 1,094,931,685 | $ | 852,708,890 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
APRIL 30, 2020 (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, Y Class, A Class, C Class, R Class, R5 Class, R6 Class and G 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 G Class commenced on April 1, 2019.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
15
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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 certain types of investment securities and other financial instruments. 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 collateral requirements.
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.
16
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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, 21% 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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. 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 non-Rule 12b-1 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 investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
17
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2020 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.100% to 1.500% | 1.22% |
I Class | 0.900% to 1.300% | 1.02% |
Y Class | 0.750% to 1.150% | 0.87% |
A Class | 1.100% to 1.500% | 1.22% |
C Class | 1.100% to 1.500% | 1.22% |
R Class | 1.100% to 1.500% | 1.22% |
R5 Class | 0.900% to 1.300% | 1.02% |
R6 Class | 0.750% to 1.150% | 0.87% |
G Class | 0.750% to 1.150% | 0.00%(1) |
(1) | Effective annual management fee before waiver was 0.87%. |
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, 2020 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 $11,984,250 and $268,652, respectively. The effect of interfund transactions on the Statement of Operations was $(53,170) 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, 2020 were $959,796,420 and $730,826,471, respectively.
18
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 335,000,000 | 335,000,000 | ||||||||
Sold | 6,258,320 | $ | 107,226,538 | 2,845,255 | $ | 48,155,202 | ||||
Issued in reinvestment of distributions | 1,317,045 | 23,588,268 | 3,224,826 | 45,566,788 | ||||||
Redeemed | (3,170,033 | ) | (52,679,727 | ) | (5,030,701 | ) | (84,023,120 | ) | ||
4,405,332 | 78,135,079 | 1,039,380 | 9,698,870 | |||||||
I Class/Shares Authorized | 210,000,000 | 210,000,000 | ||||||||
Sold | 2,786,043 | 44,053,078 | 2,861,828 | 48,997,525 | ||||||
Issued in reinvestment of distributions | 161,247 | 2,976,627 | 322,168 | 4,674,658 | ||||||
Redeemed | (2,588,374 | ) | (44,154,075 | ) | (6,320,416 | ) | (107,127,487 | ) | ||
358,916 | 2,875,630 | (3,136,420 | ) | (53,455,304 | ) | |||||
Y Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 813,468 | 13,006,052 | 250,309 | 4,433,763 | ||||||
Issued in reinvestment of distributions | 28,652 | 535,213 | 18,884 | 276,649 | ||||||
Redeemed | (58,706 | ) | (949,978 | ) | (14,128 | ) | (249,802 | ) | ||
783,414 | 12,591,287 | 255,065 | 4,460,610 | |||||||
A Class/Shares Authorized | 70,000,000 | 70,000,000 | ||||||||
Sold | 373,584 | 5,937,704 | 732,140 | 11,663,863 | ||||||
Issued in reinvestment of distributions | 267,760 | 4,586,734 | 722,004 | 9,804,810 | ||||||
Redeemed | (531,897 | ) | (8,618,505 | ) | (1,137,418 | ) | (18,386,791 | ) | ||
109,447 | 1,905,933 | 316,726 | 3,081,882 | |||||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 24,917 | 332,617 | 48,287 | 670,563 | ||||||
Issued in reinvestment of distributions | 18,317 | 276,405 | 61,607 | 747,908 | ||||||
Redeemed | (44,720 | ) | (631,682 | ) | (180,322 | ) | (2,539,818 | ) | ||
(1,486 | ) | (22,660 | ) | (70,428 | ) | (1,121,347 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 145,885 | 2,380,926 | 151,546 | 2,348,495 | ||||||
Issued in reinvestment of distributions | 22,612 | 375,133 | 57,798 | 763,516 | ||||||
Redeemed | (118,260 | ) | (1,796,009 | ) | (168,574 | ) | (2,650,675 | ) | ||
50,237 | 960,050 | 40,770 | 461,336 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | — | — | 1,498 | 25,253 | ||||||
Issued in reinvestment of distributions | 22 | 395 | 62 | 905 | ||||||
Redeemed | — | — | (1,553 | ) | (26,878 | ) | ||||
22 | 395 | 7 | (720 | ) | ||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 2,017,649 | 37,860,636 | 1,013,445 | 17,944,892 | ||||||
Issued in reinvestment of distributions | 151,577 | 2,829,940 | 311,295 | 4,560,472 | ||||||
Redeemed | (775,205 | ) | (13,794,874 | ) | (779,079 | ) | (13,919,920 | ) | ||
1,394,021 | 26,895,702 | 545,661 | 8,585,444 | |||||||
G Class/Shares Authorized | 140,000,000 | 140,000,000 | ||||||||
Sold | 10,189,958 | 191,173,625 | 458,459 | 8,429,061 | ||||||
Issued in reinvestment of distributions | 481,445 | 9,051,157 | — | — | ||||||
Redeemed | (1,234,461 | ) | (23,149,685 | ) | (4,551 | ) | (82,608 | ) | ||
9,436,942 | 177,075,097 | 453,908 | 8,346,453 | |||||||
Net increase (decrease) | 16,536,845 | $ | 300,416,513 | (555,331 | ) | $ | (19,942,776 | ) |
(1) | April 1, 2019 (commencement of sale) through October 31, 2019 for the G Class. |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,035,085,496 | $ | 32,664,172 | — | |||
Temporary Cash Investments | 13,700 | 27,019,883 | — | |||||
$ | 1,035,099,196 | $ | 59,684,055 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 189,426 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,104,157 | — |
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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $31,042,364.
20
The value of foreign currency risk derivative instruments as of April 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $189,426 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $1,104,157 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2020, the effect of foreign currency risk derivative instruments on the Statement of Operations was $1,976,663 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(848,332) in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 937,134,358 | |
Gross tax appreciation of investments | $ | 232,735,130 | |
Gross tax depreciation of investments | (75,086,237 | ) | |
Net tax appreciation (depreciation) of investments | $ | 157,648,893 |
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, 2019, the fund had late-year ordinary loss deferrals of $(4,792,294), which represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
21
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net 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 | |||||||||||||
2020(3) | $17.54 | (0.06) | 0.16 | 0.10 | (1.00) | $16.64 | 0.16% | 1.23%(4) | (0.70)%(4) | 71% | $446,067 | ||
2019 | $18.08 | (0.12) | 1.91 | 1.79 | (2.33) | $17.54 | 13.00% | 1.28% | (0.70)% | 92% | $392,956 | ||
2018 | $16.70 | (0.17) | 1.65 | 1.48 | (0.10) | $18.08 | 8.89% | 1.27% | (0.93)% | 116% | $386,455 | ||
2017 | $12.96 | (0.13) | 4.45 | 4.32 | (0.58) | $16.70 | 33.36% | 1.36% | (0.83)% | 70% | $361,029 | ||
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 | ||
I Class | |||||||||||||
2020(3) | $18.04 | (0.04) | 0.16 | 0.12 | (1.00) | $17.16 | 0.27% | 1.03%(4) | (0.50)%(4) | 71% | $296,487 | ||
2019 | $18.50 | (0.09) | 1.96 | 1.87 | (2.33) | $18.04 | 13.16% | 1.08% | (0.50)% | 92% | $305,249 | ||
2018 | $17.04 | (0.14) | 1.70 | 1.56 | (0.10) | $18.50 | 9.18% | 1.07% | (0.73)% | 116% | $371,030 | ||
2017 | $13.20 | (0.09) | 4.51 | 4.42 | (0.58) | $17.04 | 33.51% | 1.16% | (0.63)% | 70% | $219,881 | ||
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 |
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) | |||
Y Class | |||||||||||||
2020(3) | $18.24 | (0.03) | 0.16 | 0.13 | (1.00) | $17.37 | 0.33% | 0.88%(4) | (0.35)%(4) | 71% | $19,698 | ||
2019 | $18.65 | (0.06) | 1.98 | 1.92 | (2.33) | $18.24 | 13.34% | 0.93% | (0.35)% | 92% | $6,392 | ||
2018 | $17.16 | (0.07) | 1.66 | 1.59 | (0.10) | $18.65 | 9.29% | 0.92% | (0.58)% | 116% | $1,778 | ||
2017(6) | $15.34 | (0.06) | 2.46 | 2.40 | (0.58) | $17.16 | 15.67% | 1.01%(4) | (0.61)%(4) | 70%(7) | $6 | ||
A Class | |||||||||||||
2020(3) | $16.82 | (0.08) | 0.16 | 0.08 | (1.00) | $15.90 | 0.05% | 1.48%(4) | (0.95)%(4) | 71% | $77,478 | ||
2019 | $17.49 | (0.16) | 1.82 | 1.66 | (2.33) | $16.82 | 12.72% | 1.53% | (0.95)% | 92% | $80,127 | ||
2018 | $16.19 | (0.21) | 1.61 | 1.40 | (0.10) | $17.49 | 8.61% | 1.52% | (1.18)% | 116% | $77,764 | ||
2017 | $12.61 | (0.16) | 4.32 | 4.16 | (0.58) | $16.19 | 33.02% | 1.61% | (1.08)% | 70% | $80,654 | ||
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 | ||
C Class | |||||||||||||
2020(3) | $14.94 | (0.12) | 0.15 | 0.03 | (1.00) | $13.97 | (0.30)% | 2.23%(4) | (1.70)%(4) | 71% | $4,457 | ||
2019 | $15.92 | (0.25) | 1.60 | 1.35 | (2.33) | $14.94 | 11.84% | 2.28% | (1.70)% | 92% | $4,790 | ||
2018 | $14.86 | (0.32) | 1.48 | 1.16 | (0.10) | $15.92 | 7.83% | 2.27% | (1.93)% | 116% | $6,227 | ||
2017 | $11.70 | (0.25) | 3.99 | 3.74 | (0.58) | $14.86 | 31.99% | 2.36% | (1.83)% | 70% | $9,958 | ||
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 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||
2020(3) | $16.33 | (0.10) | 0.16 | 0.06 | (1.00) | $15.39 | (0.08)% | 1.73%(4) | (1.20)%(4) | 71% | $6,520 | ||
2019 | $17.09 | (0.19) | 1.76 | 1.57 | (2.33) | $16.33 | 12.39% | 1.78% | (1.20)% | 92% | $6,099 | ||
2018 | $15.86 | (0.25) | 1.58 | 1.33 | (0.10) | $17.09 | 8.41% | 1.77% | (1.43)% | 116% | $5,687 | ||
2017 | $12.40 | (0.19) | 4.23 | 4.04 | (0.58) | $15.86 | 32.61% | 1.86% | (1.33)% | 70% | $3,761 | ||
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 | ||
R5 Class | |||||||||||||
2020(3) | $18.05 | (0.04) | 0.16 | 0.12 | (1.00) | $17.17 | 0.27% | 1.03%(4) | (0.50)%(4) | 71% | $7 | ||
2019 | $18.51 | (0.08) | 1.95 | 1.87 | (2.33) | $18.05 | 13.21% | 1.08% | (0.50)% | 92% | $7 | ||
2018 | $17.05 | (0.14) | 1.70 | 1.56 | (0.10) | $18.51 | 9.12% | 1.07% | (0.73)% | 116% | $7 | ||
2017(6) | $15.26 | (0.07) | 2.44 | 2.37 | (0.58) | $17.05 | 15.56% | 1.16%(4) | (0.76)%(4) | 70%(7) | $6 | ||
R6 Class | |||||||||||||
2020(3) | $18.24 | (0.03) | 0.16 | 0.13 | (1.00) | $17.37 | 0.33% | 0.88%(4) | (0.35)%(4) | 71% | $70,654 | ||
2019 | $18.65 | (0.06) | 1.98 | 1.92 | (2.33) | $18.24 | 13.40% | 0.93% | (0.35)% | 92% | $48,763 | ||
2018 | $17.15 | (0.11) | 1.71 | 1.60 | (0.10) | $18.65 | 9.30% | 0.92% | (0.58)% | 116% | $39,687 | ||
2017 | $13.26 | (0.08) | 4.55 | 4.47 | (0.58) | $17.15 | 33.74% | 1.01% | (0.48)% | 70% | $28,077 | ||
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 |
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) | |||
G Class | |||||||||||||
2020(3) | $18.34 | 0.05 | 0.16 | 0.21 | (1.00) | $17.55 | 0.78% | 0.01%(4)(8) | 0.52%(4)(8) | 71% | $173,564 | ||
2019(9) | $17.43 | 0.05 | 0.86 | 0.91 | — | $18.34 | 5.22% | 0.00%(4)(10)(11) | 0.52%(4)(11) | 92%(12) | $8,326 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2020 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
(8) | The annualized ratio of operating expenses to average net assets before expense waiver and the annualized ratio of net investment income (loss) to average net assets before expense waiver was 0.88% and (0.35)%, respectively. |
(9) | April 1, 2019 (commencement of sale) through October 31, 2019. |
(10) | Ratio was less than 0.005%. |
(11) | The annualized ratio of operating expenses to average net assets before expense waiver and the annualized ratio of net investment income (loss) to average net assets before expense waiver was 0.93% and (0.41)%, respectively. |
(12) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2019. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
26
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
27
Notes |
28
Notes |
29
Notes |
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92366 2006 |
Semiannual Report | |
April 30, 2020 | |
Sustainable Equity Fund | |
Investor Class (AFDIX) | |
I Class (AFEIX) | |
Y Class (AFYDX) | |
A Class (AFDAX) | |
C Class (AFDCX) | |
R Class (AFDRX) | |
R5 Class (AFDGX) | |
R6 Class (AFEDX) | |
G Class (AFEGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Top Ten Holdings | % of net assets |
Microsoft Corp. | 7.6% |
Apple, Inc. | 4.9% |
Amazon.com, Inc. | 4.5% |
Alphabet, Inc., Class A | 4.1% |
Prologis, Inc. | 2.5% |
Bank of America Corp. | 2.3% |
Procter & Gamble Co. (The) | 2.3% |
NextEra Energy, Inc. | 2.2% |
Home Depot, Inc. (The) | 2.0% |
PepsiCo, Inc. | 1.9% |
Top Five Industries | % of net assets |
Software | 9.2% |
Interactive Media and Services | 5.8% |
IT Services | 5.7% |
Technology Hardware, Storage and Peripherals | 4.9% |
Internet and Direct Marketing Retail | 4.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.0% |
Temporary Cash Investments | 1.2% |
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, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $974.90 | $3.93 | 0.80% |
I Class | $1,000 | $975.70 | $2.95 | 0.60% |
Y Class | $1,000 | $976.60 | $2.21 | 0.45% |
A Class | $1,000 | $973.80 | $5.15 | 1.05% |
C Class | $1,000 | $970.10 | $8.82 | 1.80% |
R Class | $1,000 | $972.30 | $6.37 | 1.30% |
R5 Class | $1,000 | $975.70 | $2.95 | 0.60% |
R6 Class | $1,000 | $976.40 | $2.21 | 0.45% |
G Class | $1,000 | $978.40 | $0.05 | 0.01% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
I Class | $1,000 | $1,021.88 | $3.02 | 0.60% |
Y Class | $1,000 | $1,022.63 | $2.26 | 0.45% |
A Class | $1,000 | $1,019.64 | $5.27 | 1.05% |
C Class | $1,000 | $1,015.91 | $9.02 | 1.80% |
R Class | $1,000 | $1,018.40 | $6.52 | 1.30% |
R5 Class | $1,000 | $1,021.88 | $3.02 | 0.60% |
R6 Class | $1,000 | $1,022.63 | $2.26 | 0.45% |
G Class | $1,000 | $1,024.81 | $0.05 | 0.01% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.0% | |||||
Aerospace and Defense — 1.1% | |||||
Lockheed Martin Corp. | 49,896 | $ | 19,412,538 | ||
Air Freight and Logistics — 0.3% | |||||
Expeditors International of Washington, Inc. | 76,271 | 5,461,385 | |||
Auto Components — 0.6% | |||||
Aptiv plc | 149,874 | 10,423,737 | |||
Banks — 4.6% | |||||
Bank of America Corp. | 1,756,894 | 42,253,301 | |||
Citigroup, Inc. | 261,595 | 12,703,053 | |||
JPMorgan Chase & Co. | 305,583 | 29,262,628 | |||
84,218,982 | |||||
Beverages — 1.9% | |||||
PepsiCo, Inc. | 257,998 | 34,130,555 | |||
Biotechnology — 3.0% | |||||
AbbVie, Inc. | 212,259 | 17,447,690 | |||
Amgen, Inc. | 93,460 | 22,357,501 | |||
Biogen, Inc.(1) | 21,450 | 6,367,003 | |||
Vertex Pharmaceuticals, Inc.(1) | 37,550 | 9,432,560 | |||
55,604,754 | |||||
Building Products — 1.3% | |||||
Johnson Controls International plc | 508,946 | 14,815,418 | |||
Trane Technologies plc | 111,169 | 9,718,394 | |||
24,533,812 | |||||
Capital Markets — 3.1% | |||||
Ameriprise Financial, Inc. | 37,979 | 4,365,306 | |||
BlackRock, Inc. | 23,824 | 11,960,601 | |||
Morgan Stanley | 473,002 | 18,650,469 | |||
S&P Global, Inc. | 76,381 | 22,370,467 | |||
57,346,843 | |||||
Chemicals — 2.3% | |||||
Ecolab, Inc. | 63,453 | 12,278,156 | |||
Linde plc | 97,865 | 18,006,181 | |||
Sherwin-Williams Co. (The) | 20,529 | 11,011,140 | |||
41,295,477 | |||||
Communications Equipment — 1.6% | |||||
Cisco Systems, Inc. | 535,378 | 22,689,320 | |||
Motorola Solutions, Inc. | 44,582 | 6,411,337 | |||
29,100,657 | |||||
Consumer Finance — 0.7% | |||||
American Express Co. | 148,531 | 13,553,454 | |||
Containers and Packaging — 0.7% | |||||
Ball Corp. | 184,669 | 12,112,440 |
6
Shares | Value | ||||
Diversified Telecommunication Services — 1.6% | |||||
Verizon Communications, Inc. | 510,353 | $ | 29,319,780 | ||
Electric Utilities — 2.2% | |||||
NextEra Energy, Inc. | 176,946 | 40,895,760 | |||
Electrical Equipment — 0.8% | |||||
Eaton Corp. plc | 170,316 | 14,221,386 | |||
Electronic Equipment, Instruments and Components — 0.7% | |||||
CDW Corp. | 35,793 | 3,965,864 | |||
Keysight Technologies, Inc.(1) | 91,891 | 8,892,292 | |||
12,858,156 | |||||
Entertainment — 1.4% | |||||
Activision Blizzard, Inc. | 114,097 | 7,271,402 | |||
Walt Disney Co. (The) | 174,998 | 18,926,033 | |||
26,197,435 | |||||
Equity Real Estate Investment Trusts (REITs) — 3.4% | |||||
Prologis, Inc. | 510,716 | 45,571,189 | |||
SBA Communications Corp. | 55,625 | 16,126,800 | |||
61,697,989 | |||||
Food and Staples Retailing — 1.0% | |||||
Costco Wholesale Corp. | 33,518 | 10,155,954 | |||
Sysco Corp. | 157,495 | 8,862,244 | |||
19,018,198 | |||||
Food Products — 0.7% | |||||
Beyond Meat, Inc.(1) | 5,379 | 532,467 | |||
Mondelez International, Inc., Class A | 224,198 | 11,532,745 | |||
12,065,212 | |||||
Health Care Equipment and Supplies — 3.2% | |||||
Baxter International, Inc. | 174,732 | 15,512,707 | |||
Edwards Lifesciences Corp.(1) | 65,998 | 14,354,565 | |||
Medtronic plc | 248,376 | 24,248,949 | |||
ResMed, Inc. | 25,014 | 3,885,174 | |||
58,001,395 | |||||
Health Care Providers and Services — 3.5% | |||||
Cigna Corp. | 48,226 | 9,441,686 | |||
CVS Health Corp. | 273,811 | 16,853,067 | |||
Humana, Inc. | 28,869 | 11,022,762 | |||
UnitedHealth Group, Inc. | 94,019 | 27,497,737 | |||
64,815,252 | |||||
Hotels, Restaurants and Leisure — 0.8% | |||||
Starbucks Corp. | 198,124 | 15,202,055 | |||
Household Products — 2.9% | |||||
Colgate-Palmolive Co. | 172,522 | 12,123,121 | |||
Procter & Gamble Co. (The) | 350,248 | 41,283,732 | |||
53,406,853 | |||||
Industrial Conglomerates — 1.2% | |||||
Honeywell International, Inc. | 153,450 | 21,774,555 | |||
Insurance — 2.0% | |||||
Aflac, Inc. | 173,862 | 6,474,621 |
7
Shares | Value | ||||
Progressive Corp. (The) | 145,053 | $ | 11,212,597 | ||
Prudential Financial, Inc. | 99,891 | 6,230,201 | |||
Travelers Cos., Inc. (The) | 121,175 | 12,264,122 | |||
36,181,541 | |||||
Interactive Media and Services — 5.8% | |||||
Alphabet, Inc., Class A(1) | 55,125 | 74,236,837 | |||
Facebook, Inc., Class A(1) | 157,880 | 32,319,615 | |||
106,556,452 | |||||
Internet and Direct Marketing Retail — 4.8% | |||||
Amazon.com, Inc.(1) | 33,491 | 82,856,734 | |||
Expedia Group, Inc. | 73,670 | 5,229,097 | |||
88,085,831 | |||||
IT Services — 5.7% | |||||
Accenture plc, Class A | 111,244 | 20,601,276 | |||
International Business Machines Corp. | 79,666 | 10,002,863 | |||
Mastercard, Inc., Class A | 93,540 | 25,720,694 | |||
PayPal Holdings, Inc.(1) | 148,252 | 18,234,996 | |||
Visa, Inc., Class A | 171,314 | 30,617,238 | |||
105,177,067 | |||||
Life Sciences Tools and Services — 0.9% | |||||
Agilent Technologies, Inc. | 206,591 | 15,837,266 | |||
Machinery — 1.6% | |||||
Caterpillar, Inc. | 55,931 | 6,509,250 | |||
Cummins, Inc. | 90,202 | 14,748,027 | |||
Parker-Hannifin Corp. | 54,592 | 8,632,087 | |||
29,889,364 | |||||
Media — 0.8% | |||||
Comcast Corp., Class A | 389,699 | 14,664,373 | |||
Multiline Retail — 0.3% | |||||
Target Corp. | 46,221 | 5,072,293 | |||
Oil, Gas and Consumable Fuels — 2.1% | |||||
ConocoPhillips | 503,770 | 21,208,717 | |||
Phillips 66 | 131,479 | 9,620,319 | |||
Valero Energy Corp. | 107,801 | 6,829,193 | |||
37,658,229 | |||||
Personal Products — 0.3% | |||||
Estee Lauder Cos., Inc. (The), Class A | 36,316 | 6,406,142 | |||
Pharmaceuticals — 4.2% | |||||
Bristol-Myers Squibb Co. | 387,201 | 23,545,693 | |||
Merck & Co., Inc. | 379,531 | 30,111,989 | |||
Novo Nordisk A/S, B Shares | 191,160 | 12,206,339 | |||
Zoetis, Inc. | 84,686 | 10,950,747 | |||
76,814,768 | |||||
Professional Services — 0.7% | |||||
IHS Markit Ltd. | 202,816 | 13,649,517 | |||
Road and Rail — 1.8% | |||||
Norfolk Southern Corp. | 85,710 | 14,664,981 |
8
Shares | Value | ||||
Union Pacific Corp. | 109,247 | $ | 17,456,578 | ||
32,121,559 | |||||
Semiconductors and Semiconductor Equipment — 4.7% | |||||
Applied Materials, Inc. | 203,766 | 10,123,095 | |||
ASML Holding NV | 42,256 | 12,552,091 | |||
Broadcom, Inc. | 41,897 | 11,380,063 | |||
Intel Corp. | 365,947 | 21,949,501 | |||
NVIDIA Corp. | 77,796 | 22,738,215 | |||
Texas Instruments, Inc. | 62,469 | 7,250,777 | |||
85,993,742 | |||||
Software — 9.2% | |||||
Adobe, Inc.(1) | 44,532 | 15,748,296 | |||
Microsoft Corp. | 777,048 | 139,254,772 | |||
salesforce.com, Inc.(1) | 84,181 | 13,633,113 | |||
168,636,181 | |||||
Specialty Retail — 3.0% | |||||
Home Depot, Inc. (The) | 164,256 | 36,108,396 | |||
TJX Cos., Inc. (The) | 367,419 | 18,021,902 | |||
54,130,298 | |||||
Technology Hardware, Storage and Peripherals — 4.9% | |||||
Apple, Inc. | 308,015 | 90,494,807 | |||
Textiles, Apparel and Luxury Goods — 1.6% | |||||
NIKE, Inc., Class B | 260,171 | 22,681,708 | |||
VF Corp. | 104,588 | 6,076,563 | |||
28,758,271 | |||||
TOTAL COMMON STOCKS (Cost $1,723,911,724) | 1,812,796,361 | ||||
TEMPORARY CASH INVESTMENTS — 1.2% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $7,754,975), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $7,597,599) | 7,597,597 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.25%, 7/15/29, valued at $14,416,155), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $14,133,008) | 14,133,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 10,967 | 10,967 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $21,741,564) | 21,741,564 | ||||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $1,745,653,288) | 1,834,537,925 | ||||
OTHER ASSETS AND LIABILITIES — (0.2)% | (4,162,701 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 1,830,375,224 |
9
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 1,157,078 | USD | 1,242,794 | Credit Suisse AG | 6/30/20 | $ | 26,633 | |||
EUR | 589,917 | USD | 655,410 | Credit Suisse AG | 6/30/20 | (8,214 | ) | |||
EUR | 788,639 | USD | 873,375 | Credit Suisse AG | 6/30/20 | (8,163 | ) | |||
EUR | 414,541 | USD | 450,995 | Credit Suisse AG | 6/30/20 | 3,796 | ||||
EUR | 1,238,998 | USD | 1,339,109 | Credit Suisse AG | 6/30/20 | 20,191 | ||||
EUR | 301,708 | USD | 327,929 | Credit Suisse AG | 6/30/20 | 3,073 | ||||
EUR | 321,463 | USD | 348,355 | Credit Suisse AG | 6/30/20 | 4,320 | ||||
USD | 10,236,085 | EUR | 9,414,310 | Credit Suisse AG | 6/30/20 | (92,319 | ) | |||
USD | 720,698 | EUR | 672,927 | Credit Suisse AG | 6/30/20 | (17,568 | ) | |||
USD | 668,173 | EUR | 619,626 | Credit Suisse AG | 6/30/20 | (11,616 | ) | |||
USD | 1,210,235 | EUR | 1,110,440 | Credit Suisse AG | 6/30/20 | (8,024 | ) | |||
USD | 680,960 | EUR | 616,756 | Credit Suisse AG | 6/30/20 | 4,320 | ||||
USD | 622,187 | EUR | 569,294 | Credit Suisse AG | 6/30/20 | (2,383 | ) | |||
USD | 259,987 | EUR | 238,852 | Credit Suisse AG | 6/30/20 | (2,057 | ) | |||
USD | 439,979 | EUR | 402,277 | Credit Suisse AG | 6/30/20 | (1,358 | ) | |||
USD | 496,787 | EUR | 456,154 | Credit Suisse AG | 6/30/20 | (3,658 | ) | |||
USD | 372,170 | EUR | 344,809 | Credit Suisse AG | 6/30/20 | (6,119 | ) | |||
USD | 325,871 | EUR | 298,116 | Credit Suisse AG | 6/30/20 | (1,191 | ) | |||
$ | (100,337 | ) |
FUTURES CONTRACTS PURCHASED | |||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | ||||||
S&P 500 E-Mini | 113 | June 2020 | $ | 5,650 | $ | 16,398,560 | $ | 2,454,451 |
NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
USD | - | United States Dollar |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $1,745,653,288) | $ | 1,834,537,925 | |
Deposits with broker for futures contracts | 1,356,000 | ||
Receivable for capital shares sold | 1,374,782 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 62,333 | ||
Dividends and interest receivable | 1,852,427 | ||
1,839,183,467 | |||
Liabilities | |||
Payable for capital shares redeemed | 7,964,736 | ||
Payable for variation margin on futures contracts | 218,090 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 162,670 | ||
Accrued management fees | 444,350 | ||
Distribution and service fees payable | 18,397 | ||
8,808,243 | |||
Net Assets | $ | 1,830,375,224 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,815,470,453 | |
Distributable earnings | 14,904,771 | ||
$ | 1,830,375,224 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $523,474,696 | 17,774,713 | $29.45 | |
I Class, $0.01 Par Value | $150,177,115 | 5,086,815 | $29.52 | |
Y Class, $0.01 Par Value | $58,951,568 | 1,994,616 | $29.56 | |
A Class, $0.01 Par Value | $50,060,703 | 1,708,060 | $29.31* | |
C Class, $0.01 Par Value | $9,044,857 | 317,527 | $28.49 | |
R Class, $0.01 Par Value | $4,990,565 | 171,504 | $29.10 | |
R5 Class, $0.01 Par Value | $1,287,501 | 43,585 | $29.54 | |
R6 Class, $0.01 Par Value | $3,443,842 | 116,411 | $29.58 | |
G Class, $0.01 Par Value | $1,028,944,377 | 34,732,418 | $29.62 |
*Maximum offering price $31.10 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $43,429) | $ | 15,756,151 | |
Interest | 180,091 | ||
Securities lending, net | 5,272 | ||
15,941,514 | |||
Expenses: | |||
Management fees | 5,257,451 | ||
Distribution and service fees: | |||
A Class | 67,171 | ||
C Class | 48,379 | ||
R Class | 13,358 | ||
Directors' fees and expenses | 26,340 | ||
Other expenses | 11,925 | ||
5,424,624 | |||
Fees waived(1) | (2,659,693 | ) | |
2,764,931 | |||
Net investment income (loss) | 13,176,583 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (70,358,200 | ) | |
Forward foreign currency exchange contract transactions | 347,177 | ||
Futures contract transactions | (13,577,401 | ) | |
Foreign currency translation transactions | (6,001 | ) | |
(83,594,425 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | (737,672 | ) | |
Forward foreign currency exchange contracts | (72,810 | ) | |
Futures contracts | 2,454,451 | ||
Translation of assets and liabilities in foreign currencies | (1,273 | ) | |
1,642,696 | |||
Net realized and unrealized gain (loss) | (81,951,729 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (68,775,146 | ) |
(1) | Amount consists of $116,431, $30,501, $13,362, $13,434, $2,419, $1,336, $344, $568 and $2,481,298 for Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class, R6 Class and G Class, respectively. |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | 13,176,583 | $ | 3,393,891 | ||
Net realized gain (loss) | (83,594,425 | ) | 14,582,318 | |||
Change in net unrealized appreciation (depreciation) | 1,642,696 | 26,832,590 | ||||
Net increase (decrease) in net assets resulting from operations | (68,775,146 | ) | 44,808,799 | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (3,259,073 | ) | (9,479,446 | ) | ||
I Class | (962,442 | ) | (2,679,164 | ) | ||
Y Class | (510,247 | ) | (1,208,845 | ) | ||
A Class | (364,241 | ) | (3,252,169 | ) | ||
C Class | (67,854 | ) | (629,682 | ) | ||
R Class | (31,560 | ) | (210,019 | ) | ||
R5 Class | (11,626 | ) | (93,131 | ) | ||
R6 Class | (18,679 | ) | — | |||
G Class | (14,189,132 | ) | — | |||
Decrease in net assets from distributions | (19,414,854 | ) | (17,552,456 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 1,071,202,053 | 558,177,061 | ||||
Net increase (decrease) in net assets | 983,012,053 | 585,433,404 | ||||
Net Assets | ||||||
Beginning of period | 847,363,171 | 261,929,767 | ||||
End of period | $ | 1,830,375,224 | $ | 847,363,171 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
APRIL 30, 2020 (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 is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry.
The fund offers the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class, R6 Class and G 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 R6 Class and G Class commenced on April 1, 2019.
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 exchange. 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
14
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. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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 certain types of investment securities and other financial instruments. 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 collateral requirements.
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. 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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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, 76% 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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. 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 non-Rule 12b-1 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, 2020, the investment advisor agreed to waive 0.05% of the fund’s management fee. The investment advisor expects this waiver to continue until February 28, 2021 and cannot terminate it prior to such date without the approval of the Board of Directors. The investment advisor agreed to waive the G Class’s management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
16
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended April 30, 2020 are as follows:
Effective Annual Management Fee | |||
Management Fee Schedule Range | Before Waiver | After Waiver | |
Investor Class | 0.800% to 0.840% | 0.84% | 0.79% |
I Class | 0.600% to 0.640% | 0.64% | 0.59% |
Y Class | 0.450% to 0.490% | 0.49% | 0.44% |
A Class | 0.800% to 0.840% | 0.84% | 0.79% |
C Class | 0.800% to 0.840% | 0.84% | 0.79% |
R Class | 0.800% to 0.840% | 0.84% | 0.79% |
R5 Class | 0.600% to 0.640% | 0.64% | 0.59% |
R6 Class | 0.450% to 0.490% | 0.49% | 0.44% |
G Class | 0.450% to 0.490% | 0.49% | 0.00% |
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, 2020 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 were $9,165,216 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended April 30, 2020 were $1,321,841,363 and $280,969,688, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 230,000,000 | 230,000,000 | ||||||||
Sold | 15,194,014 | $ | 474,143,163 | 1,478,661 | $ | 42,448,717 | ||||
Issued in reinvestment of distributions | 100,919 | 3,228,400 | 373,564 | 9,230,761 | ||||||
Redeemed | (1,408,848 | ) | (39,457,438 | ) | (3,033,709 | ) | (85,434,146 | ) | ||
13,886,085 | 437,914,125 | (1,181,484 | ) | (33,754,668 | ) | |||||
I Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 2,317,504 | 67,621,114 | 2,840,717 | 80,856,818 | ||||||
Issued in reinvestment of distributions | 26,744 | 857,150 | 88,125 | 2,181,089 | ||||||
Redeemed | (741,643 | ) | (20,979,415 | ) | (795,266 | ) | (22,113,079 | ) | ||
1,602,605 | 47,498,849 | 2,133,576 | 60,924,828 | |||||||
Y Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 530,911 | 15,981,119 | 1,298,628 | 36,812,959 | ||||||
Issued in reinvestment of distributions | 15,895 | 509,737 | 48,822 | 1,208,845 | ||||||
Redeemed | (222,475 | ) | (6,728,328 | ) | (188,570 | ) | (5,485,398 | ) | ||
324,331 | 9,762,528 | 1,158,880 | 32,536,406 | |||||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 172,248 | 5,140,077 | 279,004 | 7,723,840 | ||||||
Issued in reinvestment of distributions | 10,059 | 320,586 | 113,811 | 2,808,849 | ||||||
Redeemed | (266,333 | ) | (7,826,022 | ) | (398,221 | ) | (11,099,073 | ) | ||
(84,026 | ) | (2,365,359 | ) | (5,406 | ) | (566,384 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 33,407 | 983,479 | 71,758 | 1,908,443 | ||||||
Issued in reinvestment of distributions | 1,854 | 57,571 | 22,210 | 538,156 | ||||||
Redeemed | (61,078 | ) | (1,799,627 | ) | (160,965 | ) | (4,368,416 | ) | ||
(25,817 | ) | (758,577 | ) | (66,997 | ) | (1,921,817 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 86,709 | 2,706,919 | 65,244 | 1,825,976 | ||||||
Issued in reinvestment of distributions | 997 | 31,560 | 8,544 | 210,019 | ||||||
Redeemed | (64,489 | ) | (1,765,585 | ) | (40,894 | ) | (1,140,492 | ) | ||
23,217 | 972,894 | 32,894 | 895,503 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 4,097 | 129,748 | 3,133 | 89,963 | ||||||
Issued in reinvestment of distributions | 350 | 11,238 | 3,761 | 93,131 | ||||||
Redeemed | (3,922 | ) | (98,738 | ) | (11,350 | ) | (311,587 | ) | ||
525 | 42,248 | (4,456 | ) | (128,493 | ) | |||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 85,460 | 2,577,656 | 154,326 | 4,599,937 | ||||||
Issued in reinvestment of distributions | 582 | 18,679 | — | — | ||||||
Redeemed | (99,822 | ) | (3,158,459 | ) | (24,135 | ) | (733,659 | ) | ||
(13,780 | ) | (562,124 | ) | 130,191 | 3,866,278 | |||||
G Class/Shares Authorized | 525,000,000 | 525,000,000 | ||||||||
Sold | 24,167,184 | 754,907,459 | 16,265,238 | 496,972,039 | ||||||
Issued in reinvestment of distributions | 442,167 | 14,189,132 | — | — | ||||||
Redeemed | (6,120,290 | ) | (190,399,122 | ) | (21,881 | ) | (646,631 | ) | ||
18,489,061 | 578,697,469 | 16,243,357 | 496,325,408 | |||||||
Net increase (decrease) | 34,202,201 | $ | 1,071,202,053 | 18,440,555 | $ | 558,177,061 |
(1) | April 1, 2019 (commencement of sale) through October 31, 2019 for the R6 Class and G Class. |
18
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,788,037,931 | $ | 24,758,430 | — | |||
Temporary Cash Investments | 10,967 | 21,730,597 | — | |||||
$ | 1,788,048,898 | $ | 46,489,027 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 2,454,451 | — | — | ||||
Forward Foreign Currency Exchange Contracts | — | $ | 62,333 | — | ||||
$ | 2,454,451 | $ | 62,333 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 162,670 | — |
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 notional exposure to equity price risk derivative instruments held during the period was $3,717 futures contracts purchased.
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
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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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $15,964,852.
Value of Derivative Instruments as of April 30, 2020
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* | $ | 218,090 | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 62,333 | Unrealized depreciation on forward foreign currency exchange contracts | 162,670 | |||
$ | 62,333 | $ | 380,760 |
* 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, 2020
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 | $ | (13,577,401 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | $ | 2,454,451 | |
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 347,177 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | (72,810 | ) | |||
$ | (13,230,224 | ) | $ | 2,381,641 |
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
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9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,762,511,551 | |
Gross tax appreciation of investments | $ | 162,184,748 | |
Gross tax depreciation of investments | (90,158,374 | ) | |
Net tax appreciation (depreciation) of investments | $ | 72,026,374 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||||
2020(3) | $30.40 | 0.16 | (0.91) | (0.75) | — | (0.20) | (0.20) | $29.45 | (2.51)% | 0.80%(4) | 0.85%(4) | 1.05%(4) | 1.00%(4) | 17% | $523,475 | ||
2019 | $28.19 | 0.33 | 3.77 | 4.10 | (0.22) | (1.67) | (1.89) | $30.40 | 16.10% | 0.80% | 0.84% | 1.14% | 1.10% | 33% | $118,225 | ||
2018 | $27.22 | 0.26 | 1.52 | 1.78 | (0.20) | (0.61) | (0.81) | $28.19 | 6.60% | 0.95% | 0.95% | 0.91% | 0.91% | 41% | $142,923 | ||
2017 | $21.75 | 0.23 | 5.51 | 5.74 | (0.27) | — | (0.27) | $27.22 | 26.61% | 1.00% | 1.00% | 0.95% | 0.95% | 18% | $135,315 | ||
2016 | $21.77 | 0.25 | (0.04) | 0.21 | (0.23) | — | (0.23) | $21.75 | 0.99% | 0.99% | 0.99% | 1.18% | 1.18% | 71% | $87,865 | ||
2015 | $21.31 | 0.26 | 0.46 | 0.72 | (0.26) | — | (0.26) | $21.77 | 3.51% | 0.99% | 0.99% | 1.23% | 1.23% | 33% | $95,072 | ||
I Class | |||||||||||||||||
2020(3) | $30.50 | 0.19 | (0.91) | (0.72) | (0.06) | (0.20) | (0.26) | $29.52 | (2.43)% | 0.60%(4) | 0.65%(4) | 1.25%(4) | 1.20%(4) | 17% | $150,177 | ||
2019 | $28.27 | 0.37 | 3.81 | 4.18 | (0.28) | (1.67) | (1.95) | $30.50 | 16.37% | 0.60% | 0.64% | 1.34% | 1.30% | 33% | $106,268 | ||
2018 | $27.30 | 0.33 | 1.51 | 1.84 | (0.26) | (0.61) | (0.87) | $28.27 | 6.80% | 0.75% | 0.75% | 1.11% | 1.11% | 41% | $38,188 | ||
2017 | $21.81 | 0.27 | 5.53 | 5.80 | (0.31) | — | (0.31) | $27.30 | 26.88% | 0.80% | 0.80% | 1.15% | 1.15% | 18% | $19,776 | ||
2016 | $21.84 | 0.29 | (0.05) | 0.24 | (0.27) | — | (0.27) | $21.81 | 1.19% | 0.79% | 0.79% | 1.38% | 1.38% | 71% | $5,637 | ||
2015 | $21.37 | 0.31 | 0.47 | 0.78 | (0.31) | — | (0.31) | $21.84 | 3.66% | 0.79% | 0.79% | 1.43% | 1.43% | 33% | $14,077 |
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) | |||
Y Class | |||||||||||||||||
2020(3) | $30.56 | 0.22 | (0.92) | (0.70) | (0.10) | (0.20) | (0.30) | $29.56 | (2.34)% | 0.45%(4) | 0.50%(4) | 1.40%(4) | 1.35%(4) | 17% | $58,952 | ||
2019 | $28.32 | 0.41 | 3.82 | 4.23 | (0.32) | (1.67) | (1.99) | $30.56 | 16.56% | 0.45% | 0.49% | 1.49% | 1.45% | 33% | $51,037 | ||
2018 | $27.33 | 0.36 | 1.52 | 1.88 | (0.28) | (0.61) | (0.89) | $28.32 | 6.93% | 0.60% | 0.60% | 1.26% | 1.26% | 41% | $14,485 | ||
2017(5) | $23.89 | 0.16 | 3.28 | 3.44 | — | — | — | $27.33 | 14.40% | 0.65%(4) | 0.65%(4) | 1.10%(4) | 1.10%(4) | 18%(6) | $383 | ||
A Class | |||||||||||||||||
2020(3) | $30.29 | 0.13 | (0.91) | (0.78) | — | (0.20) | (0.20) | $29.31 | (2.62)% | 1.05%(4) | 1.10%(4) | 0.80%(4) | 0.75%(4) | 17% | $50,061 | ||
2019 | $28.09 | 0.25 | 3.78 | 4.03 | (0.16) | (1.67) | (1.83) | $30.29 | 15.81% | 1.05% | 1.09% | 0.89% | 0.85% | 33% | $54,290 | ||
2018 | $27.13 | 0.19 | 1.51 | 1.70 | (0.13) | (0.61) | (0.74) | $28.09 | 6.31% | 1.20% | 1.20% | 0.66% | 0.66% | 41% | $50,489 | ||
2017 | $21.67 | 0.17 | 5.50 | 5.67 | (0.21) | — | (0.21) | $27.13 | 26.34% | 1.25% | 1.25% | 0.70% | 0.70% | 18% | $51,396 | ||
2016 | $21.69 | 0.20 | (0.05) | 0.15 | (0.17) | — | (0.17) | $21.67 | 0.74% | 1.24% | 1.24% | 0.93% | 0.93% | 71% | $97,012 | ||
2015 | $21.23 | 0.21 | 0.46 | 0.67 | (0.21) | — | (0.21) | $21.69 | 3.21% | 1.24% | 1.24% | 0.98% | 0.98% | 33% | $122,492 |
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) | |||
C Class | |||||||||||||||||
2020(3) | $29.56 | 0.01 | (0.88) | (0.87) | — | (0.20) | (0.20) | $28.49 | (2.99)% | 1.80%(4) | 1.85%(4) | 0.05%(4) | 0.00%(4)(7) | 17% | $9,045 | ||
2019 | $27.48 | 0.04 | 3.71 | 3.75 | — | (1.67) | (1.67) | $29.56 | 14.98% | 1.80% | 1.84% | 0.14% | 0.10% | 33% | $10,149 | ||
2018 | $26.63 | (0.03) | 1.49 | 1.46 | — | (0.61) | (0.61) | $27.48 | 5.51% | 1.95% | 1.95% | (0.09)% | (0.09)% | 41% | $11,277 | ||
2017 | $21.27 | (0.01) | 5.41 | 5.40 | (0.04) | — | (0.04) | $26.63 | 25.40% | 2.00% | 2.00% | (0.05)% | (0.05)% | 18% | $17,904 | ||
2016 | $21.29 | 0.04 | (0.04) | —(8) | (0.02) | — | (0.02) | $21.27 | (0.02)% | 1.99% | 1.99% | 0.18% | 0.18% | 71% | $18,640 | ||
2015 | $20.84 | 0.05 | 0.45 | 0.50 | (0.05) | — | (0.05) | $21.29 | 2.42% | 1.99% | 1.99% | 0.23% | 0.23% | 33% | $21,036 | ||
R Class | |||||||||||||||||
2020(3) | $30.12 | 0.09 | (0.91) | (0.82) | — | (0.20) | (0.20) | $29.10 | (2.77)% | 1.30%(4) | 1.35%(4) | 0.55%(4) | 0.50%(4) | 17% | $4,991 | ||
2019 | $27.93 | 0.18 | 3.77 | 3.95 | (0.09) | (1.67) | (1.76) | $30.12 | 15.56% | 1.30% | 1.34% | 0.64% | 0.60% | 33% | $4,466 | ||
2018 | $26.98 | 0.11 | 1.51 | 1.62 | (0.06) | (0.61) | (0.67) | $27.93 | 6.04% | 1.45% | 1.45% | 0.41% | 0.41% | 41% | $3,223 | ||
2017 | $21.55 | 0.11 | 5.47 | 5.58 | (0.15) | — | (0.15) | $26.98 | 26.03% | 1.50% | 1.50% | 0.45% | 0.45% | 18% | $3,910 | ||
2016 | $21.58 | 0.14 | (0.05) | 0.09 | (0.12) | — | (0.12) | $21.55 | 0.44% | 1.49% | 1.49% | 0.68% | 0.68% | 71% | $4,090 | ||
2015 | $21.11 | 0.16 | 0.47 | 0.63 | (0.16) | — | (0.16) | $21.58 | 3.01% | 1.49% | 1.49% | 0.73% | 0.73% | 33% | $5,680 |
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 | |||||||||||||||||
2020(3) | $30.52 | 0.20 | (0.92) | (0.72) | (0.06) | (0.20) | (0.26) | $29.54 | (2.43)% | 0.60%(4) | 0.65%(4) | 1.25%(4) | 1.20%(4) | 17% | $1,288 | ||
2019 | $28.29 | 0.38 | 3.80 | 4.18 | (0.28) | (1.67) | (1.95) | $30.52 | 16.36% | 0.60% | 0.64% | 1.34% | 1.30% | 33% | $1,314 | ||
2018 | $27.30 | 0.32 | 1.52 | 1.84 | (0.24) | (0.61) | (0.85) | $28.29 | 6.82% | 0.75% | 0.75% | 1.11% | 1.11% | 41% | $1,344 | ||
2017(5) | $23.89 | 0.15 | 3.26 | 3.41 | — | — | — | $27.30 | 14.27% | 0.80%(4) | 0.80%(4) | 1.07%(4) | 1.07%(4) | 18%(6) | $6 | ||
R6 Class | |||||||||||||||||
2020(3) | $30.56 | 0.22 | (0.92) | (0.70) | (0.08) | (0.20) | (0.28) | $29.58 | (2.36)% | 0.45%(4) | 0.50%(4) | 1.40%(4) | 1.35%(4) | 17% | $3,444 | ||
2019(9) | $28.05 | 0.21 | 2.30 | 2.51 | — | — | — | $30.56 | 8.95% | 0.44%(4) | 0.49%(4) | 1.18%(4) | 1.13%(4) | 33%(10) | $3,979 | ||
G Class | |||||||||||||||||
2020(3) | $30.64 | 0.28 | (0.91) | (0.63) | (0.19) | (0.20) | (0.39) | $29.62 | (2.16)% | 0.01%(4) | 0.50%(4) | 1.84%(4) | 1.35%(4) | 17% | $1,028,944 | ||
2019(9) | $28.05 | 0.37 | 2.22 | 2.59 | — | — | — | $30.64 | 9.23% | 0.00%(4)(7) | 0.49%(4) | 2.04%(4) | 1.55%(4) | 33%(10) | $497,635 |
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, 2020 (unaudited). |
(4) | Annualized. |
(5) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
(7) | Ratio was less than 0.005%. |
(8) | Per-share amount was less than $0.005. |
(9) | April 1, 2019 (commencement of sale) through October 31, 2019. |
(10) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2019. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
27
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Notes |
29
Notes |
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92359 2006 |
Semiannual Report | |
April 30, 2020 | |
Ultra® Fund | |
Investor Class (TWCUX) | |
I Class (TWUIX) | |
Y Class (AULYX) | |
A Class (TWUAX) | |
C Class (TWCCX) | |
R Class (AULRX) | |
R5 Class (AULGX) | |
R6 Class (AULDX) | |
G Class (AULNX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended April 30, 2020. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Pandemic Led to Severe Economic, Market Disruptions
Early in the reporting period, market sentiment was generally upbeat. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost global growth outlooks. Key U.S. stock benchmarks rose to record highs in mid-February. But that optimistic tone quickly collapsed. The COVID-19 outbreak originating in China rapidly spread worldwide, triggering health care crises, stay-at-home orders, shutdowns and recession fears. Stocks, corporate bonds and other riskier assets sold off sharply, while U.S. Treasuries rallied in a global flight to quality. Central banks and federal governments stepped in quickly and aggressively to stabilize global financial systems and provide financial relief.
Despite record U.S. unemployment and a first-quarter contraction in U.S. gross domestic product, market performance reversed again in April. Supported by significant fiscal and monetary stimulus and improving virus data, nearly every asset class delivered robust one-month gains. For U.S. large-cap growth stocks, the April rally generally led to solid gains for the six-month reporting period. Other stock and risk-asset indices also rallied in April but not enough to reverse earlier losses. Meanwhile, most U.S. and global bond indices delivered gains for the six-month period.
Promoting Health and Safety Remains Our Focus
With global COVID-19 infection rates slowing, segments of the economy are starting to reopen. But the return to normal, pre-pandemic life will take time and patience. We are monitoring the situation closely, and we continue to follow social distancing, work-from-home and other mandates from all relevant authorities. Additionally, our Business Continuity Plan ensures that we maintain regular business operations and the delivery of outstanding service.
We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we’re confident we will meet these current challenges. In the meantime, the health and safety of you, your family and our employees remain paramount.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2020 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 10.1% |
Amazon.com, Inc. | 8.4% |
Alphabet, Inc.* | 6.7% |
Microsoft Corp. | 6.3% |
Mastercard, Inc., Class A | 5.1% |
Visa, Inc., Class A | 5.0% |
Facebook, Inc., Class A | 4.4% |
UnitedHealth Group, Inc. | 3.9% |
salesforce.com, Inc. | 3.2% |
PayPal Holdings, Inc. | 2.4% |
*Includes all classes of the issuer held by the fund. | |
Top Five Industries | % of net assets |
IT Services | 14.8% |
Software | 12.6% |
Interactive Media and Services | 11.9% |
Technology Hardware, Storage and Peripherals | 10.1% |
Internet and Direct Marketing Retail | 8.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.8% |
Temporary Cash Investments | 0.2% |
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, 2019 to April 30, 2020.
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 through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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 11/1/19 | Ending Account Value 4/30/20 | Expenses Paid During Period(1) 11/1/19 - 4/30/20 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,090.40 | $5.04 | 0.97% |
I Class | $1,000 | $1,091.40 | $4.00 | 0.77% |
Y Class | $1,000 | $1,092.30 | $3.23 | 0.62% |
A Class | $1,000 | $1,089.20 | $6.34 | 1.22% |
C Class | $1,000 | $1,084.90 | $10.21 | 1.97% |
R Class | $1,000 | $1,087.70 | $7.63 | 1.47% |
R5 Class | $1,000 | $1,091.60 | $4.00 | 0.77% |
R6 Class | $1,000 | $1,092.40 | $3.23 | 0.62% |
G Class | $1,000 | $1,095.60 | $0.00 | 0.00%(2) |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.04 | $4.87 | 0.97% |
I Class | $1,000 | $1,021.03 | $3.87 | 0.77% |
Y Class | $1,000 | $1,021.78 | $3.12 | 0.62% |
A Class | $1,000 | $1,018.80 | $6.12 | 1.22% |
C Class | $1,000 | $1,015.07 | $9.87 | 1.97% |
R Class | $1,000 | $1,017.55 | $7.37 | 1.47% |
R5 Class | $1,000 | $1,021.03 | $3.87 | 0.77% |
R6 Class | $1,000 | $1,021.78 | $3.12 | 0.62% |
G Class | $1,000 | $1,024.86 | $0.00 | 0.00%(2) |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
(2) | Other expenses, which include directors' fees and expenses, did not exceed 0.005%. |
5
Schedule of Investments |
APRIL 30, 2020 (UNAUDITED)
Shares | Value | ||||
COMMON STOCKS — 99.8% | |||||
Automobiles — 2.3% | |||||
Tesla, Inc.(1) | 373,073 | $ | 291,698,317 | ||
Banks — 1.1% | |||||
JPMorgan Chase & Co. | 1,032,435 | 98,865,976 | |||
U.S. Bancorp | 1,304,000 | 47,596,000 | |||
146,461,976 | |||||
Beverages — 1.2% | |||||
Constellation Brands, Inc., Class A | 936,673 | 154,260,676 | |||
Biotechnology — 3.4% | |||||
Biogen, Inc.(1) | 424,944 | 126,136,127 | |||
Ionis Pharmaceuticals, Inc.(1) | 731,088 | 40,597,317 | |||
Regeneron Pharmaceuticals, Inc.(1) | 522,701 | 274,878,002 | |||
441,611,446 | |||||
Capital Markets — 1.3% | |||||
MSCI, Inc. | 491,778 | 160,811,406 | |||
Chemicals — 0.9% | |||||
Ecolab, Inc. | 570,582 | 110,407,617 | |||
Commercial Services and Supplies — 0.3% | |||||
Copart, Inc.(1) | 508,736 | 40,754,841 | |||
Electrical Equipment — 0.8% | |||||
Acuity Brands, Inc. | 634,000 | 54,898,060 | |||
Rockwell Automation, Inc. | 275,000 | 52,107,000 | |||
107,005,060 | |||||
Electronic Equipment, Instruments and Components — 0.7% | |||||
Cognex Corp. | 829,938 | 45,845,775 | |||
Keyence Corp. | 127,900 | 45,949,893 | |||
91,795,668 | |||||
Entertainment — 2.9% | |||||
Netflix, Inc.(1) | 536,667 | 225,319,640 | |||
Roku, Inc.(1) | 284,000 | 34,429,320 | |||
Walt Disney Co. (The) | 1,035,000 | 111,935,250 | |||
371,684,210 | |||||
Food and Staples Retailing — 1.9% | |||||
Costco Wholesale Corp. | 802,820 | 243,254,460 | |||
Health Care Equipment and Supplies — 5.2% | |||||
ABIOMED, Inc.(1) | 103,743 | 19,840,849 | |||
DexCom, Inc.(1) | 154,616 | 51,827,283 | |||
Edwards Lifesciences Corp.(1) | 746,146 | 162,286,755 | |||
IDEXX Laboratories, Inc.(1) | 326,000 | 90,497,600 | |||
Intuitive Surgical, Inc.(1) | 608,810 | 311,028,853 | |||
Tandem Diabetes Care, Inc.(1) | 380,056 | 30,320,868 | |||
665,802,208 |
6
Shares | Value | ||||
Health Care Providers and Services — 3.9% | |||||
UnitedHealth Group, Inc. | 1,728,000 | $ | 505,388,160 | ||
Hotels, Restaurants and Leisure — 3.5% | |||||
Chipotle Mexican Grill, Inc.(1) | 242,398 | 212,958,763 | |||
Starbucks Corp. | 2,380,085 | 182,623,922 | |||
Wingstop, Inc. | 516,716 | 60,595,285 | |||
456,177,970 | |||||
Household Products — 0.9% | |||||
Colgate-Palmolive Co. | 1,579,000 | 110,956,330 | |||
Interactive Media and Services — 11.9% | |||||
Alphabet, Inc., Class A(1) | 288,955 | 389,135,699 | |||
Alphabet, Inc., Class C(1) | 351,787 | 474,441,055 | |||
Facebook, Inc., Class A(1) | 2,746,176 | 562,169,689 | |||
Tencent Holdings Ltd. | 1,877,000 | 99,580,676 | |||
1,525,327,119 | |||||
Internet and Direct Marketing Retail — 8.4% | |||||
Amazon.com, Inc.(1) | 436,294 | 1,079,391,356 | |||
IT Services — 14.8% | |||||
Adyen NV(1) | 39,901 | 39,250,788 | |||
Mastercard, Inc., Class A | 2,392,700 | 657,920,719 | |||
PayPal Holdings, Inc.(1) | 2,528,716 | 311,032,068 | |||
Shopify, Inc., Class A(1) | 220,453 | 139,390,227 | |||
Square, Inc., Class A(1) | 1,742,670 | 113,517,524 | |||
Visa, Inc., Class A | 3,592,544 | 642,059,464 | |||
1,903,170,790 | |||||
Machinery — 1.7% | |||||
Donaldson Co., Inc. | 704,557 | 30,880,733 | |||
Nordson Corp. | 322,200 | 51,845,202 | |||
Westinghouse Air Brake Technologies Corp. | 1,365,607 | 77,047,547 | |||
Yaskawa Electric Corp. | 1,951,800 | 64,163,358 | |||
223,936,840 | |||||
Oil, Gas and Consumable Fuels — 0.3% | |||||
EOG Resources, Inc. | 847,000 | 40,240,970 | |||
Personal Products — 1.5% | |||||
Estee Lauder Cos., Inc. (The), Class A | 1,106,251 | 195,142,676 | |||
Road and Rail — 1.0% | |||||
J.B. Hunt Transport Services, Inc. | 1,273,835 | 128,810,195 | |||
Semiconductors and Semiconductor Equipment — 2.3% | |||||
Analog Devices, Inc. | 1,108,246 | 121,463,762 | |||
Applied Materials, Inc. | 1,566,108 | 77,804,246 | |||
Xilinx, Inc. | 1,090,291 | 95,291,433 | |||
294,559,441 | |||||
Software — 12.6% | |||||
DocuSign, Inc.(1) | 1,875,000 | 196,406,250 | |||
Fair Isaac Corp.(1) | 117,000 | 41,293,980 | |||
Microsoft Corp. | 4,520,765 | 810,166,295 | |||
Paycom Software, Inc.(1) | 312,000 | 81,438,240 |
7
Shares | Value | ||||
salesforce.com, Inc.(1) | 2,508,766 | $ | 406,294,654 | ||
Splunk, Inc.(1) | 373,000 | 52,354,280 | |||
Zoom Video Communications, Inc., Class A(1) | 284,000 | 38,388,280 | |||
1,626,341,979 | |||||
Specialty Retail — 2.9% | |||||
Ross Stores, Inc. | 1,430,729 | 130,711,402 | |||
TJX Cos., Inc. (The) | 4,939,724 | 242,293,462 | |||
373,004,864 | |||||
Technology Hardware, Storage and Peripherals — 10.1% | |||||
Apple, Inc. | 4,417,123 | 1,297,750,737 | |||
Textiles, Apparel and Luxury Goods — 2.0% | |||||
lululemon athletica, Inc.(1) | 208,482 | 46,591,557 | |||
NIKE, Inc., Class B | 2,371,108 | 206,713,196 | |||
253,304,753 | |||||
TOTAL COMMON STOCKS (Cost $4,481,972,035) | 12,839,052,065 | ||||
TEMPORARY CASH INVESTMENTS — 0.2% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.375% - 3.125%, 4/30/26 - 11/15/28, valued at $11,300,962), in a joint trading account at 0.01%, dated 4/30/20, due 5/1/20 (Delivery value $11,071,625) | 11,071,622 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.25%, 7/15/29, valued at $21,005,932), at 0.02%, dated 4/30/20, due 5/1/20 (Delivery value $20,593,011) | 20,593,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 77,710 | 77,710 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $31,742,332) | 31,742,332 | ||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $4,513,714,367) | 12,870,794,397 | ||||
OTHER ASSETS AND LIABILITIES† | (1,156,307 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 12,869,638,090 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||
EUR | 967,200 | USD | 1,038,849 | Credit Suisse AG | 6/30/20 | $ | 22,262 | |||
EUR | 715,824 | USD | 774,414 | Credit Suisse AG | 6/30/20 | 10,914 | ||||
EUR | 928,496 | USD | 1,010,148 | Credit Suisse AG | 6/30/20 | 8,501 | ||||
EUR | 1,260,473 | USD | 1,365,025 | Credit Suisse AG | 6/30/20 | 17,835 | ||||
USD | 20,348,415 | EUR | 18,714,800 | Credit Suisse AG | 6/30/20 | (183,523 | ) | |||
USD | 679,436 | EUR | 634,400 | Credit Suisse AG | 6/30/20 | (16,562 | ) | |||
USD | 762,004 | EUR | 706,638 | Credit Suisse AG | 6/30/20 | (13,247 | ) | |||
USD | 780,699 | EUR | 705,450 | Credit Suisse AG | 6/30/20 | 6,753 | ||||
USD | 1,152,601 | EUR | 1,037,426 | Credit Suisse AG | 6/30/20 | 14,445 | ||||
USD | 1,167,828 | EUR | 1,068,549 | Credit Suisse AG | 6/30/20 | (4,473 | ) | |||
USD | 779,164 | EUR | 715,824 | Credit Suisse AG | 6/30/20 | (6,164 | ) | |||
USD | 912,481 | EUR | 840,315 | Credit Suisse AG | 6/30/20 | (9,425 | ) | |||
USD | 2,040,450 | EUR | 1,882,928 | Credit Suisse AG | 6/30/20 | (25,303 | ) | |||
JPY | 212,059,540 | USD | 1,985,258 | Bank of America N.A. | 6/30/20 | (7,585 | ) | |||
USD | 27,988,268 | JPY | 3,021,053,700 | Bank of America N.A. | 6/30/20 | (186,162 | ) | |||
USD | 3,479,315 | JPY | 385,368,970 | Bank of America N.A. | 6/30/20 | (114,646 | ) | |||
USD | 2,202,303 | JPY | 240,832,830 | Bank of America N.A. | 6/30/20 | (43,711 | ) | |||
USD | 2,394,744 | JPY | 256,786,950 | Bank of America N.A. | 6/30/20 | (58 | ) | |||
USD | 1,955,642 | JPY | 212,432,990 | Morgan Stanley | 6/30/20 | (25,514 | ) | |||
$ | (555,663 | ) |
NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
JPY | - | Japanese Yen |
USD | - | United States Dollar |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
APRIL 30, 2020 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $4,513,714,367) | $ | 12,870,794,397 | |
Receivable for investments sold | 6,485,186 | ||
Receivable for capital shares sold | 3,562,269 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 80,710 | ||
Dividends and interest receivable | 2,832,625 | ||
12,883,755,187 | |||
Liabilities | |||
Payable for capital shares redeemed | 4,203,495 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 636,373 | ||
Accrued management fees | 9,232,763 | ||
Distribution and service fees payable | 44,466 | ||
14,117,097 | |||
Net Assets | $ | 12,869,638,090 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 4,301,426,836 | |
Distributable earnings | 8,568,211,254 | ||
$ | 12,869,638,090 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||
Investor Class, $0.01 Par Value | $11,896,218,637 | 226,432,516 | $52.54 | |
I Class, $0.01 Par Value | $402,696,874 | 7,354,838 | $54.75 | |
Y Class, $0.01 Par Value | $1,361,611 | 24,766 | $54.98 | |
A Class, $0.01 Par Value | $125,519,835 | 2,521,697 | $49.78* | |
C Class, $0.01 Par Value | $18,157,341 | 445,545 | $40.75 | |
R Class, $0.01 Par Value | $18,949,230 | 393,918 | $48.10 | |
R5 Class, $0.01 Par Value | $135,179 | 2,467 | $54.79 | |
R6 Class, $0.01 Par Value | $406,593,756 | 7,403,552 | $54.92 | |
G Class, $0.01 Par Value | $5,627 | 102 | $55.17 |
*Maximum offering price $52.82 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $58,171) | $ | 46,574,044 | |
Interest | 281,894 | ||
46,855,938 | |||
Expenses: | |||
Management fees | 59,820,505 | ||
Distribution and service fees: | |||
A Class | 149,780 | ||
C Class | 87,281 | ||
R Class | 46,271 | ||
Directors' fees and expenses | 199,952 | ||
Other expenses | 455 | ||
60,304,244 | |||
Fees waived - G Class | (17 | ) | |
60,304,227 | |||
Net investment income (loss) | (13,448,289 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (Note 4) | 255,089,399 | ||
Forward foreign currency exchange contract transactions | 1,409,605 | ||
Foreign currency translation transactions | (7,639 | ) | |
256,491,365 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 828,731,636 | ||
Forward foreign currency exchange contracts | (595,415 | ) | |
Translation of assets and liabilities in foreign currencies | 16,561 | ||
828,152,782 | |||
Net realized and unrealized gain (loss) | 1,084,644,147 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,071,195,858 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2019 | ||||||
Increase (Decrease) in Net Assets | April 30, 2020 | October 31, 2019 | ||||
Operations | ||||||
Net investment income (loss) | $ | (13,448,289 | ) | $ | (14,151,682 | ) |
Net realized gain (loss) | 256,491,365 | 652,663,454 | ||||
Change in net unrealized appreciation (depreciation) | 828,152,782 | 899,393,859 | ||||
Net increase (decrease) in net assets resulting from operations | 1,071,195,858 | 1,537,905,631 | ||||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (497,939,830 | ) | (730,083,401 | ) | ||
I Class | (15,792,365 | ) | (28,348,100 | ) | ||
Y Class | (53,531 | ) | (76,346 | ) | ||
A Class | (5,351,781 | ) | (7,623,683 | ) | ||
C Class | (935,790 | ) | (947,855 | ) | ||
R Class | (850,029 | ) | (1,360,937 | ) | ||
R5 Class | (4,210 | ) | (448 | ) | ||
R6 Class | (16,454,953 | ) | (25,190,411 | ) | ||
G Class | (217 | ) | — | |||
Decrease in net assets from distributions | (537,382,706 | ) | (793,631,181 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 48,762,151 | 116,179,202 | ||||
Net increase (decrease) in net assets | 582,575,303 | 860,453,652 | ||||
Net Assets | ||||||
Beginning of period | 12,287,062,787 | 11,426,609,135 | ||||
End of period | $ | 12,869,638,090 | $ | 12,287,062,787 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
APRIL 30, 2020 (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, Y Class, A Class, C Class, R Class, R5 Class, R6 Class and G 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 G Class commenced on August 1, 2019.
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.
13
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. 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.
14
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. 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 non-Rule 12b-1 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 investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
15
The management fee schedule range and the effective annual management fee for each class for the period ended April 30, 2020 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 0.800% to 0.990% | 0.97% |
I Class | 0.600% to 0.790% | 0.77% |
Y Class | 0.450% to 0.640% | 0.62% |
A Class | 0.800% to 0.990% | 0.97% |
C Class | 0.800% to 0.990% | 0.97% |
R Class | 0.800% to 0.990% | 0.97% |
R5 Class | 0.600% to 0.790% | 0.77% |
R6 Class | 0.450% to 0.640% | 0.62% |
G Class | 0.450% to 0.640% | 0.00%(1) |
(1) | Effective annual management fee before waiver was 0.62%. |
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, 2020 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 $6,986,160 and $5,529,333, respectively. The effect of interfund transactions on the Statement of Operations was $(370,185) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended April 30, 2020 were $683,050,793 and $1,058,784,129, respectively.
For the period ended April 30, 2020, the fund incurred net realized gains of $13,227,780 from redemptions in kind. A redemption in kind occurs when a fund delivers securities from its portfolio in lieu of cash as payment to a redeeming shareholder.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2020 | Year ended October 31, 2019(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 3,000,000,000 | 3,000,000,000 | ||||||||
Sold | 5,403,951 | $ | 270,373,714 | 7,271,579 | $ | 338,362,927 | ||||
Issued in reinvestment of distributions | 9,306,298 | 478,901,974 | 17,133,838 | 704,543,764 | ||||||
Redeemed | (13,251,933 | ) | (660,432,609 | ) | (19,883,790 | ) | (933,688,053 | ) | ||
1,458,316 | 88,843,079 | 4,521,627 | 109,218,638 | |||||||
I Class/Shares Authorized | 120,000,000 | 120,000,000 | ||||||||
Sold | 1,420,324 | 73,647,214 | 3,624,881 | 178,398,381 | ||||||
Issued in reinvestment of distributions | 257,034 | 13,774,479 | 611,707 | 26,101,541 | ||||||
Redeemed | (1,309,375 | ) | (66,133,482 | ) | (5,408,439 | ) | (271,836,094 | ) | ||
367,983 | 21,288,211 | (1,171,851 | ) | (67,336,172 | ) | |||||
Y Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 1,012 | 60,750 | 5,158 | 249,374 | ||||||
Issued in reinvestment of distributions | 534 | 28,722 | 918 | 39,247 | ||||||
Redeemed | (798 | ) | (42,234 | ) | (1,132 | ) | (51,484 | ) | ||
748 | 47,238 | 4,944 | 237,137 | |||||||
A Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||
Sold | 429,450 | 20,443,997 | 639,406 | 28,146,102 | ||||||
Issued in reinvestment of distributions | 103,252 | 5,038,693 | 182,881 | 7,165,291 | ||||||
Redeemed | (451,457 | ) | (21,320,739 | ) | (632,688 | ) | (28,166,501 | ) | ||
81,245 | 4,161,951 | 189,599 | 7,144,892 | |||||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 69,069 | 2,650,455 | 211,178 | 7,569,450 | ||||||
Issued in reinvestment of distributions | 20,036 | 802,646 | 26,806 | 877,102 | ||||||
Redeemed | (64,152 | ) | (2,413,304 | ) | (93,382 | ) | (3,442,472 | ) | ||
24,953 | 1,039,797 | 144,602 | 5,004,080 | |||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 81,045 | 3,812,590 | 197,063 | 8,482,452 | ||||||
Issued in reinvestment of distributions | 17,503 | 826,153 | 34,308 | 1,305,420 | ||||||
Redeemed | (76,889 | ) | (3,473,948 | ) | (199,457 | ) | (8,334,487 | ) | ||
21,659 | 1,164,795 | 31,914 | 1,453,385 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 638 | 34,693 | 2,002 | 94,159 | ||||||
Issued in reinvestment of distributions | 45 | 2,404 | 10 | 448 | ||||||
Redeemed | (23 | ) | (1,227 | ) | (339 | ) | (16,599 | ) | ||
660 | 35,870 | 1,673 | 78,008 | |||||||
R6 Class/Shares Authorized | 110,000,000 | 110,000,000 | ||||||||
Sold | 1,488,943 | 81,135,000 | 2,436,356 | 117,344,335 | ||||||
Issued in reinvestment of distributions | 304,162 | 16,339,604 | 587,616 | 25,097,065 | ||||||
Redeemed | (3,205,924 | ) | (165,293,611 | ) | (1,676,518 | ) | (82,067,166 | ) | ||
(1,412,819 | ) | (67,819,007 | ) | 1,347,454 | 60,374,234 | |||||
G Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||
Sold | — | — | 98 | 5,000 | ||||||
Issued in reinvestment of distributions | 4 | 217 | — | — | ||||||
4 | 217 | 98 | 5,000 | |||||||
Net increase (decrease) | 542,749 | $ | 48,762,151 | 5,070,060 | $ | 116,179,202 |
(1) | August 1, 2019 (commencement of sale) through October 31, 2019 for the G Class. |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 12,590,107,350 | $ | 248,944,715 | — | |||
Temporary Cash Investments | 77,710 | 31,664,622 | — | |||||
$ | 12,590,185,060 | $ | 280,609,337 | — | ||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 80,710 | — | ||||
Liabilities | ||||||||
Other Financial Instruments | ||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 636,373 | — |
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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $52,203,159.
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The value of foreign currency risk derivative instruments as of April 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $80,710 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $636,373 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended April 30, 2020, the effect of foreign currency risk derivative instruments on the Statement of Operations was $1,409,605 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(595,415) in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
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 | $ | 4,527,580,648 | |
Gross tax appreciation of investments | $ | 8,408,636,663 | |
Gross tax depreciation of investments | (65,422,914 | ) | |
Net tax appreciation (depreciation) of investments | $ | 8,343,213,749 |
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, 2019, the fund had late-year ordinary loss deferrals of $(14,548,155), which represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2020(3) | $50.27 | (0.06) | 4.56 | 4.50 | — | (2.23) | (2.23) | $52.54 | 9.04% | 0.97%(4) | (0.23)%(4) | 5% | $11,896,219 | ||
2019 | $47.74 | (0.06) | 5.92 | 5.86 | — | (3.33) | (3.33) | $50.27 | 13.83% | 0.97% | (0.13)% | 13% | $11,308,500 | ||
2018 | $44.59 | (0.06) | 5.82 | 5.76 | (0.07) | (2.54) | (2.61) | $47.74 | 13.44% | 0.97% | (0.12)% | 17% | $10,524,969 | ||
2017 | $35.83 | 0.07 | 10.39 | 10.46 | (0.10) | (1.60) | (1.70) | $44.59 | 30.42% | 0.98% | 0.17% | 16% | $9,593,102 | ||
2016 | $37.81 | 0.06 | (0.14) | (0.08) | (0.08) | (1.82) | (1.90) | $35.83 | (0.06)% | 0.98% | 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% | 0.22% | 16% | $8,273,589 | ||
I Class | |||||||||||||||
2020(3) | $52.25 | (0.01) | 4.74 | 4.73 | — | (2.23) | (2.23) | $54.75 | 9.14% | 0.77%(4) | (0.03)%(4) | 5% | $402,697 | ||
2019 | $49.39 | 0.03 | 6.16 | 6.19 | — | (3.33) | (3.33) | $52.25 | 14.05% | 0.77% | 0.07% | 13% | $365,036 | ||
2018 | $46.04 | 0.03 | 6.02 | 6.05 | (0.16) | (2.54) | (2.70) | $49.39 | 13.68% | 0.77% | 0.08% | 17% | $402,938 | ||
2017 | $36.95 | 0.14 | 10.73 | 10.87 | (0.18) | (1.60) | (1.78) | $46.04 | 30.66% | 0.78% | 0.37% | 16% | $322,059 | ||
2016 | $38.93 | 0.14 | (0.14) | — | (0.16) | (1.82) | (1.98) | $36.95 | 0.14% | 0.78% | 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% | 0.42% | 16% | $205,574 |
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) | |||
Y Class | |||||||||||||||
2020(3) | $52.42 | 0.03 | 4.76 | 4.79 | — | (2.23) | (2.23) | $54.98 | 9.23% | 0.62%(4) | 0.12%(4) | 5% | $1,362 | ||
2019 | $49.47 | 0.10 | 6.18 | 6.28 | — | (3.33) | (3.33) | $52.42 | 14.22% | 0.62% | 0.22% | 13% | $1,259 | ||
2018 | $46.07 | 0.11 | 6.02 | 6.13 | (0.19) | (2.54) | (2.73) | $49.47 | 13.85% | 0.62% | 0.23% | 17% | $944 | ||
2017(5) | $39.40 | 0.10 | 6.57 | 6.67 | — | — | — | $46.07 | 16.93% | 0.63%(4) | 0.43%(4) | 16%(6) | $6 | ||
A Class | |||||||||||||||
2020(3) | $47.79 | (0.12) | 4.34 | 4.22 | — | (2.23) | (2.23) | $49.78 | 8.92% | 1.22%(4) | (0.48)%(4) | 5% | $125,520 | ||
2019 | $45.67 | (0.17) | 5.62 | 5.45 | — | (3.33) | (3.33) | $47.79 | 13.54% | 1.22% | (0.38)% | 13% | $116,630 | ||
2018 | $42.80 | (0.17) | 5.58 | 5.41 | — | (2.54) | (2.54) | $45.67 | 13.15% | 1.22% | (0.37)% | 17% | $102,806 | ||
2017 | $34.45 | (0.04) | 10.00 | 9.96 | (0.01) | (1.60) | (1.61) | $42.80 | 30.10% | 1.23% | (0.08)% | 16% | $83,130 | ||
2016 | $36.43 | (0.02) | (0.14) | (0.16) | — | (1.82) | (1.82) | $34.45 | (0.31)% | 1.23% | (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% | (0.03)% | 16% | $72,004 | ||
C Class | |||||||||||||||
2020(3) | $39.65 | (0.24) | 3.57 | 3.33 | — | (2.23) | (2.23) | $40.75 | 8.49% | 1.97%(4) | (1.23)%(4) | 5% | $18,157 | ||
2019 | $38.77 | (0.43) | 4.64 | 4.21 | — | (3.33) | (3.33) | $39.65 | 12.69% | 1.97% | (1.13)% | 13% | $16,676 | ||
2018 | $36.96 | (0.45) | 4.80 | 4.35 | — | (2.54) | (2.54) | $38.77 | 12.32% | 1.97% | (1.12)% | 17% | $10,700 | ||
2017 | $30.17 | (0.28) | 8.67 | 8.39 | — | (1.60) | (1.60) | $36.96 | 29.12% | 1.98% | (0.83)% | 16% | $5,359 | ||
2016 | $32.36 | (0.25) | (0.12) | (0.37) | — | (1.82) | (1.82) | $30.17 | (1.03)% | 1.98% | (0.81)% | 18% | $3,306 | ||
2015 | $32.41 | (0.25) | 2.73 | 2.48 | — | (2.53) | (2.53) | $32.36 | 8.63% | 1.98% | (0.78)% | 16% | $2,968 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||
2020(3) | $46.31 | (0.17) | 4.19 | 4.02 | — | (2.23) | (2.23) | $48.10 | 8.77% | 1.47%(4) | (0.73)%(4) | 5% | $18,949 | ||
2019 | $44.47 | (0.28) | 5.45 | 5.17 | — | (3.33) | (3.33) | $46.31 | 13.26% | 1.47% | (0.63)% | 13% | $17,240 | ||
2018 | $41.84 | (0.28) | 5.45 | 5.17 | — | (2.54) | (2.54) | $44.47 | 12.87% | 1.47% | (0.62)% | 17% | $15,137 | ||
2017 | $33.79 | (0.12) | 9.77 | 9.65 | — | (1.60) | (1.60) | $41.84 | 29.75% | 1.48% | (0.33)% | 16% | $11,345 | ||
2016 | $35.85 | (0.10) | (0.14) | (0.24) | — | (1.82) | (1.82) | $33.79 | (0.55)% | 1.48% | (0.31)% | 18% | $9,066 | ||
2015 | $35.46 | (0.10) | 3.02 | 2.92 | — | (2.53) | (2.53) | $35.85 | 9.19% | 1.48% | (0.28)% | 16% | $9,637 | ||
R5 Class | |||||||||||||||
2020(3) | $52.28 | (0.01) | 4.75 | 4.74 | — | (2.23) | (2.23) | $54.79 | 9.16% | 0.77%(4) | (0.03)%(4) | 5% | $135 | ||
2019 | $49.42 | 0.01 | 6.18 | 6.19 | — | (3.33) | (3.33) | $52.28 | 14.04% | 0.77% | 0.07% | 13% | $94 | ||
2018 | $46.04 | 0.04 | 6.02 | 6.06 | (0.14) | (2.54) | (2.68) | $49.42 | 13.69% | 0.77% | 0.08% | 17% | $7 | ||
2017(5) | $39.41 | 0.07 | 6.56 | 6.63 | — | — | — | $46.04 | 16.82% | 0.78%(4) | 0.28%(4) | 16%(6) | $6 | ||
R6 Class | |||||||||||||||
2020(3) | $52.36 | 0.04 | 4.75 | 4.79 | — | (2.23) | (2.23) | $54.92 | 9.24% | 0.62%(4) | 0.12%(4) | 5% | $406,594 | ||
2019 | $49.42 | 0.10 | 6.17 | 6.27 | — | (3.33) | (3.33) | $52.36 | 14.22% | 0.62% | 0.22% | 13% | $461,623 | ||
2018 | $46.07 | 0.10 | 6.02 | 6.12 | (0.23) | (2.54) | (2.77) | $49.42 | 13.85% | 0.62% | 0.23% | 17% | $369,109 | ||
2017 | $36.97 | 0.18 | 10.75 | 10.93 | (0.23) | (1.60) | (1.83) | $46.07 | 30.86% | 0.63% | 0.52% | 16% | $233,309 | ||
2016 | $38.95 | 0.17 | (0.12) | 0.05 | (0.21) | (1.82) | (2.03) | $36.97 | 0.29% | 0.63% | 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% | 0.57% | 16% | $36,951 |
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) | |||
G Class | |||||||||||||||
2020(3) | $52.44 | 0.20 | 4.76 | 4.96 | — | (2.23) | (2.23) | $55.17 | 9.56% | 0.00%(4)(7)(8) | 0.74%(4)(7) | 5% | $6 | ||
2019(9) | $51.28 | 0.10 | 1.06 | 1.16 | — | — | — | $52.44 | 2.26% | 0.00%(4)(8)(10) | 0.78%(4)(10) | 13%(11) | $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, 2020 (unaudited). |
(4) | Annualized. |
(5) | April 10, 2017 (commencement of sale) through October 31, 2017. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2017. |
(7) | The annualized ratio of operating expenses to average net assets before expense waiver and the annualized ratio of net investment income (loss) to average net assets before expense waiver was 0.62% and 0.12%, respectively. |
(8) | Ratio was less than 0.005%. |
(9) | August 1, 2019 (commencement of sale) through October 31, 2019. |
(10) | The annualized ratio of operating expenses to average net assets before expense waiver and the annualized ratio of net investment income (loss) to average net assets before expense waiver was 0.62% and 0.16%, respectively. |
(11) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2019. |
See Notes to Financial Statements.
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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26
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27
Notes |
28
Notes |
29
Notes |
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-92363 2006 |
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 for semiannual report filings.
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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) | 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. |
(a)(4) | 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/ Patrick Bannigan | ||
Name: | Patrick Bannigan | ||
Title: | President | ||
Date: | June 25, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Patrick Bannigan | |
Name: | Patrick Bannigan | |
Title: | President | |
(principal executive officer) | ||
Date: | June 25, 2020 |
By: | /s/ R. Wes Campbell | |
Name: | R. Wes Campbell | |
Title: | Treasurer and | |
Chief Financial Officer | ||
(principal financial officer) | ||
Date: | June 25, 2020 |